SO . . . .WHO OWNS THE BADIN INN GOLF RESORT AND CLUB???
At present, the Kinnecoms are still the original founders and owners, but we did sign a sales agreement in May with three silent investors we have.
In that agreement, they agreed to buy us out within 90 days with a 25% premium paid for our shares if we agreed to turned over the possession and management of the club to them right then and there. They also agreed to buy our two houses within 30 days, so we vacated the houses and moved back to Florida.
On August 21st, it will be 90 days since we signed that agreement, but there has been no closing nor has there been any communication to us from the buyers, as our requests for a dialogue have simply been ignored.
We still,own the houses and still own the club; we're still paying mortgages on empty houses that were supposed to be bought in June, a number of other matters have occured, and at this point, you might guess that we are a bit frustrated and unhappy.
I have been asked the question often "Who are these silent investors?" I will leave it up to them to provide you with a full bio, but for now, I can tell you that Martha and I thought we had met some decent people who supported our efforts to buy and renovate the club. Two of the three people many call 'the investors' were really our partners and we thought, friends. One of them brought in a minority investor last November, and now, these three are running the club without us, from their offices in Florida and Colorado.
The story goes like this:
Many of you know them as Scott and Don. Most recently, we added the minority shareholder, Chet. But for most members at the club, you are familiar with Scott and Don, and perhaps even their families. They have been to the club many times during the past three years, and you have probably seen us out on the golf course together, or in meetings, or having dinner together.
When Martha and I first started looking for a new venture in 2004, we looked high and low through the southeast for inns, b&bs, small hotels and golf courses. We found several, but nothing was “just right” until April 3, 2005 when our eyes first saw the Stanly County Country Club, now known as The Badin Inn.
It had everything we were looking for: mild climate (though colder in the winter than we thought!), golf, inn potential, restaurant potential, complete resort potential, and a great community.
We did our due diligence and research for several months, and then, with the help of our family and friends, we put together the money for a down payment and start-up operations. Martha and I invested most of our net worth into it.
But, as we studied the property that spring and summer, our plans expanded. We wanted to open the inn right away, open a restaurant, restore the golf course, and develop the property to its full potential. So, we decided to look for some additional investors. I put together a proposal package and shared it with a few people.
In August of 2005, we showed the property to some friends we knew from Best Western. They were in the process of selling their resort in Florida, and inching a little closer to the retirement business. They are both great golfers and smart hoteliers, and it was a great match. We were really excited they joined in. Many of you have seen Don and Nan at the club from time to time.
About the same time, I was pretty active in the Venice business community and served on the board of directors of the chamber of commerce there. I asked the then president of chamber, who I knew was a financial planner, if he knew anyone who might be interested in investing into the club. He said he and his wife might be personally interested, and after he saw it and talked to Howard, the deal was done. Scott and Julie came onboard as our silent partners as well.
We formed the company and bought the club on September 30, 2005. As I look back, I think everyone got involved because we liked and respected each other, and had common family values, morals and ideals. We expected to someday make some money from it, but we were all interested in Badin. Through 2005 and 2006 it was a good partnership and for the most part, they were indeed 'silent investors.' They were very helpful for us when we needed advice and input - and more capital.
And then, 2007 came and we bought townhouses, and ultimately brought in a new investor. Now, with all the time I have on my hands now, I have plenty of opportunity to not only look to the future, but to also look backward with more clarity. Perhaps we didn’t need investors in the first place. Perhaps we should have operated it more like Howard did. Perhaps we expanded too quickly. We certainly should never have bought any of the townhouses.
In any event though, it is obviously that our need for more and more cash to expand operations, complete all the capital improvements and open all the profit centers we wanted ultimately made our silent partners become less and less silent.
Next: Part II – 2007
Continued….part 2
Throughout 2006 and 2007, we renovated the inn building, opened a full service restaurant, completed a lot of restoration work on the golf course, purchased a lot of furniture and equipment, bought townhouses throughout Badin, grew our membership by more than 125, and expanded our staff from about 7 to 50. It was like opening four new businesses all at the same time. As the members know, we worked like dogs.
Scott convinced us to hired a guy he knew named Bill Futterer to come up with a business and marketing plan for us. The essence of his plan was to create a Pinehurst type of resort by buying a bunch of the townhouses and building condos. Scott stayed at the famed Greenbrier and got some ideas from that as well.
This plan cost us $35,000, and Scott was all for it, so I figured it must be good. It all sounded pretty exciting in the beginning, but as the plans continued to grow, and now in hindsight, this was much larger than our original plans. It was going to cost a lot of cash – which we didn’t have – and time, which everyone knows we were already investing all of ours into the club.
As the expanded plans evolved, Scott and Don invested more capital, and we exchanged it for less stock. It was a slow process, but our dream completely changed from our own ‘mom and pop’ business to Scott’s much grander plans which he calculated would have ultimate payouts to us in the years to come in the tens of millions of dollars.
Although we lost some stock, our equity actually increased as the property was completely renovated and restored with vast improvements, and we purchased a bunch of townhouses in Badin, and made plans for condominiums. Although I was concerned about loosing the number of shares, I remember one conversation with Scott in which he used his expertise as a financial planner by counseling me with something like, “I would rather have 1% of all the gas stations in the country rather than 100% of a single gas station on Venice Avenue.”
Maybe if you wanted to have a lot of money, it would be great to have stock in all the gas stations. But Martha and I were more like Don’s parents, who owned and managed their Clearwater, Florida hotel until they passed away. That was all we wanted in life. We didn’t get into it for great accumulation of more and more digits. This was simply our life. Badin was where we moved to, lived on a daily basis, and we integrated into the community like we had been there for 50 years. We made more friends in Badin in 3 years than we did in Venice in 20 years. This was our livelihood and daily life, not just another investment to put on a balance sheet.
It’s too bad Scott didn’t know Bill and Helen Dwelly. Bill and Helen owned a place in Rhode Island for probably 50 years, which today, we’d call either a country store or a convenience station. They worked there day and night, 7 days a week, and took one week off in the winter each. He would take his week while she worked; then on his return, she would take her vacation while he worked. Their place called “Babbies” was their life and dream. It was all they wanted. We ran into Bill at a parade in my hometown years later when Bill was in his later years and in failing health. He had sold Babbies and had amassed millions of dollars by then, but lived in a modest house, drove a used car, and dressed like Sam Walton. I asked Bill how he was doing and he said something like “Lousy. I don’t have anything to do or anything valuable anymore. All I have is money.”
As time went on through 2007, it became more and more difficult to change this evolution of our dream, so we adapted. Scott wanted more and more spreadsheets and reports and conference calls, which really hampered my ability to run the business, but thankfully, Martha was ever present to manage the staff, meet and greet the members and guests, run errands and lug baggage up the three flights of stairs for our inn guests. We worked from first thing in the morning to last thing at night, seven days a week.
Throughout 2006 and 2007, we trusted Scott completely as he was a professional expert in financial planning, and was very active in his Venice church and community. We assumed that once we broke even in 2008, perhaps he would focus less on these grand plans and that he would revert back to being a ‘silent’ investor and that I could get back to the business of running the Badin Inn Golf Resort.
In November of 2007, we were introduced to a Venice, Florida client and friend of Scott’s named Chet, who had already purchased a number of the townhouses in Badin. We really didn’t know too much about Chet, but he was very interested in Badin and seemed to really appreciate the inn and club. So, we sold him a minority interest of only 4 shares, as it would help us with the ditch-to-stream project, and it seemed to make sense so that he could merge his interests in the townhouses with our goals at the club.
But, only a month later, in December of 2007, things began to change.
Next – Part III
Continued….
Within six weeks of selling Chet the 4 shares, it became apparent to us that Martha and I had much different objectives than our investor/partners. We wanted our own dream, our own business, and our own life in Badin. They wanted something totally different. By February, we learned that Chet and Scott wanted to direct their interests in Badin independent of us. Three months later, we learned that Don felt the same way when the three of them told us they wanted to move in a new, independent direction, without us, starting that very afternoon. The suddenness of a one-hour notice was a total shock to us, a big blow to our egos, and a distressing event that still lingers on - since there still has been no closure.
They agreed to pay us a 25% premium on our ownership interest within 90 days and agreed to purchase our two houses in Badin within 30 days, provided we give them possession and management of the club immediately – that day, Friday May 23rd, which we did. Shaken and traumatized, we signed the contract they had prepared, and another one of Scott’s friends from Venice, Mike Levine, was hired as a temporary manager.
Soon thereafter, we vacated the houses in Badin for their purchase and we agreed to not step foot on the club property again, giving them full authority to manage the club without us. This seemed like bad – even cruel - strategy to us, and it has been particularly harsh on us, for we had made many friends in the community and club, and had invested much more than just digits and money and spreadsheets into the club – we had invested our total human lives into it and the community. We love the club and our members and customers and staff. This wasn't just a financial investment for us; it was our life, and to not have the ability to say goodbye has been particularly difficult and heartbreaking.
Can you imagine if your ties to your home, work, church, community, friends, co-workers, future, past and present daily routine were all suddenly deleted in one day? Some people call that death. And this is exactly how we still feel today. There has been no closure and until our investor/partners honor their agreement to purchase our ownership interest in the club and houses in Badin, there is no opportunity for us to move onto something new – and shift our focus and energies.
So, here we are, 90 days later in mid-August, our houses lay vacant, our life’s savings wrapped up in the property which we still own but agreed not to access, a total stranger is managing it, our personal possessions are still there, we are without income, and yet we are still paying the bills. Some people would call that dumb – and that too is exactly how we feel.
So, although we do not know much about Chet, we do know Scott and Don well enough that there is a ray of hope they will honor their obligations to us and our families within the 90 days – which is this Thursday, August 21st. We have always believed that they were honest men who were true to their word, and we believe they are men of Christian values, so we hold out hope that their faith will lead them to do what is right, so that we can all move on for constructive – not destructive - purposes. [update: we have made two offers to them in the past couple of weeks, but they continue to make no attempt to respond to us.]
We would like to report to our club membe[rs and friends that we feel good about leaving the club in good hands. The Badin Inn is a trophy for the citizens of Stanly County – sort of a de facto crown like Pinehurst is for Moore County. Ownership of the club is merely stewardship; it really belongs to all the past, present and future generations of Stanly County. The torch of stewardship should be passed on with honor and pride, and with a clean slate for the current enjoyment and future legacy of the members and community.
So at best, on day 90, we can only hope that the power of prayer will reach our investor/partners to seek counsel from their hearts, and pastors, and their faith, not their lawyers and spreadsheets, and that we can all shake hands later this week and give the members a fresh perspective of what to expect for the future of their club. [update: pray harder. As we extend our hand for a civil resolution, we get silence in return.]
