Thunderbirds Golf Club faces foreclosure, with it a big dream may crash and burn
PHOENIX, Ariz. - Last fall, one of the most well-known non-profit organizations in Phoenix, the Thunderbirds, opened a challenging golf course in the south part of the city. Next door was a new nine-hole short course where children learn how to play golf.
Hopes were high for this Thunderbirds Golf Club and what it would do for South Phoenix, a low-income area working its way out of economic doldrums. The target-style desert course, designed by PGA Tour Design Services with advice from PGA players Billy Mayfair, Howard Twitty and Tom Lehman, was built on the site of a deteriorating golf resort that had fallen on hard times.
The course was named No. 5 on a top 10 new public courses list in Sports Illustrated, and it's easy to see why. The holes meander around 147 acres on the flanks of South Mountain, and from some tees golfers can see dramatic views of the downtown skyline. The junior course was a jewel, designed by Tom Fazio.
But in mid-September, less than a year later, Bank One, the lender for the project, went to court to have a receiver - IntraWest Golf Management - appointed to run the course. Now Dec. 27 has been set for a court-supervised auction of the property.
"We still own the course," said Scott Henderson, Big Chief of the Thunderbirds and an attorney in Phoenix for 20 years. "But there's a receiver in place to manage it, and it's in our best interests to go along with that. The bank also started foreclosure proceedings a couple of months ago."
The sale of the course is not a certainty, said Henderson, who spoke frankly about the situation. "We're trying feverishly to find new partners to restructure the financial arrangements and keep going."
Regrets about the project
Henderson acknowledged that some Thunderbirds now view their involvement in the project as a mistake. "We are first of all a charitable group," Henderson said, "and it's hard for us to continue to fund the losses. If we were a for-profit group, we might have tried harder to make a turnaround in four, five, six years. But it's time for us to get back to our non-profit function. It's not part of our goals to fund a daily-fee golf course."
The Thunderbirds, a group with 55 active members, have raised about $20 million for charities in the past 15 years, mainly through sponsorship of the Phoenix Open, one of the biggest tournaments on the PGA Tour. But during the past year, much of the group's resources and energy were put into keeping the new golf club afloat amid a series of economic disasters.
For starters, the course was close to opening before the terrorist attacks on Sept. 11, 2001. "Tourism fell off the wall. And a major part of our great plan was to generate group play," Henderson said. "Suddenly groups didn't travel any more. Then there was the recession, and we didn't have a core group of regular customers established to play at the course."
Business picked up in March during baseball spring training. But by May, courses in Phoenix and Scottsdale were waging a green-fee price war as they angled for local dollars. Suddenly big-name, gold-plated courses were offering tee times at huge discounts, luring golfers who might otherwise have given a course like the Thunderbirds a try. By mid-summer, several local contractors, who helped build the course, had filed liens against the club for unpaid bills of more than $500,000, according to Maricopa County records.
Water crisis at course
But the most serious blow came in July after about 80 teen-agers playing a tournament at the course came down with a stomach bug, the No rwalk virus that causes nausea, vomiting, diarrhea, fever and headaches.
Although the virus is a common ailment from which most victims recover quickly, one golfer from that junior tournament died. Fifteen-year-old Nils Beeman of Ahwatukee Foothills choked to death at his home on his own vomit. Last week, the Maricopa County Medical Examiner's Office said that tissue testing did not find evidence of the virus in the dead youth, but the autopsy still points to the conclusion that he had been afflicted with the same ailment.
During the summer, health department officials blamed the illnesses on contaminated water or ice dispensed at the course. They then cracked down on the water and ice handling at courses throughout the Valley of the Sun. But business dropped off drastically at the Thunderbirds Golf Club while the investigation continued.
Last week Beeman's parents filed a $20 million lawsuit against Thunderbird Golf LLC, owners of the course, according to Henderson.
During this crisis, the Thunderbirds were struggling to find a new title sponsor for the Phoenix Open. After sponsoring the Phoenix Open for four years, Xerox initially declined to sign a new contract. In the end, however, the company came to the rescue by signing a $2 million, one-year deal. If the Thunderbirds had not found a sponsor, the group was planning to go it alone by selling air-time for television commercials.
Business back up
This fall, play has rebounded, but it's not been enough to keep the bank at bay.
"We are definitely bouncing back," said Greg Leicht, director of golf at the club, talking about the rounds played. "But we were hit pretty hard in the summer. The water crisis affected all golf courses, not just us. We cooperated 100 percent with the health department. We now use nothing but bottled water and purchased ice."
Leicht said he believes that overbuilding of courses in the Phoenix area has affected the situation. "When overseeding was going on this fall and about one-third of the courses were closed at a time, we were very busy. When everyone was open again, business dropped off."
Thunderbirds LLC, the for-profit ownership, bought the club after reachibg an arrangement between the Thunderbirds and the Luther Alkhaseh family, original owners of the 160 acres where the course is built. The Thunderbirds put about $12.5 million into developing the course. The Alkhasehs, who live in the San Bernardino area, put up the land, estimated to be worth $8 million to $10 million. They also donated the land used for the junior course, where the Thunderbirds' First Tee Youth Academy was supposed to hold classes and tournaments.
"We're hoping to resolve the problems so the larger golf course can be saved," said a member of the family, Jacqueline Alkhaseh.
Problems for First Tee
Another casualty of the financial crisis was the First Tee, a local branch of the national golf organization that introduces kids to golf. The First Tee of Phoenix at the Thunderbirds Golf Club was launched this past fall at a dedication ceremony that featured several golf celebrities. PGA Tour head Tim Finchem was on hand, as was former vice president Dan Quayle, an avid golfer.
The First Tee Academy was supposed to be funded with the Thunderbirds' share of proceeds from the golf course, but there were no profits. In addition, the Thunderbirds have had trouble qualifying with the federal government for tax-exempt status for their youth program. So the First Tee classes and tournaments have stalled.
Meanwhile, faces are changing at the golf course. IntraWest of Scottsdale has replaced the previous manager of the course, Western Golf. The previous director of golf has moved on to another job. The PR firm that handled the club's account is no longer in the picture.
Ben Keilholtz, marketing manager for IntraWest, said that the goal is "to position the club as a value to local players and make it more affordable for destination players. We're spending significant dollars on an advertising campaign to get the word out."
"Our core player is not going to be the guy staying at the Princess Resort in Scottsdale, it would be people visiting Ahwatukee or the Wild Horse Pass Resort in Chandler. But we do expect the radius to expand when you're talking about people who live here and would drive down from Scottsdale."
Some have questioned how the Thunderbirds course can succeed when it's located amid deteriorating subdivisions and businesses in South Phoenix, but Keilholtz said, "The South Mountain corridor is shaking its downscale image and inner-city feel. You can drive from I-10 down Baseline toward Central and pass a half-dozen nice courses."
Another sign of good times ahead might be that a variety of tournaments have been scheduled at the course in recent weeks. Last week, the state high school golf championships were held at the Thunderbirds and attracted a field of 200. Keilholtz said that's a definite signal that most people now think the water issue is no longer a health threat.
The club is not out of the woods yet, but the Thunderbirds can survive with patience, hard work - and more money. "This is a course that has a huge amount of potential," said Leicht, the director of golf. "In less than five years, there should be a nice cash flow."
November 8, 2002