RANCHO MURIETA, CA (MPG) - Rancho Murieta Country Club Board President and acting General Manager Eric Dutton delivered sobering news about the club’s viability in his most recent update emailed to members on Dec. 31.

While the board intends to keep the club operational in 2025 and is exploring options for the remaining three years of its lease to facilitate a sale, a prominent golf management company has concluded that the club is in a “death spiral.”

Dutton described 2024 as an unprecedented year.

“The deal between RMP and a prospective buyer of the club fell through, we did not file for bankruptcy as expected, and we managed to remain operational and profitable the entire year,” he wrote.

Although the board plans to continue operating the club in 2025, reductions in services or staff will be unavoidable without a dues increase exceeding 5%. Strategies to address the financial shortfall will be discussed at the next board meeting at 6 p.m. Thursday, Jan. 30.

The club operates under a somewhat unusual arrangement, as it does not own the golf courses or clubhouse. The lease is set to expire on Oct. 31, 2028. The property is owned by Rancho Murieta Properties (RMP), with Carol Anderson Ward serving as the primary investor and attorney Greg Dyer acting as the chief operating officer.

The rest of Dutton’s email made it evident that the club’s prospects for achieving financial viability are extremely slim.

The most concerning assessment of the club’s future came from Troon Golf, a prominent golf course management company. Last summer, RMP enlisted Troon to evaluate its facilities, finances and member usage.

In his update, Dutton attached a Sept. 14 letter from Dyer, who reported that Troon came up with six sobering conclusions after its assessment.

1. The club is in a “death spiral,” experiencing ongoing and projected losses despite rising revenues.
2. The club’s lack of capital investments in its facilities has negatively affected member experience.
3. The 50-year-old water system on the North Course needs to be replaced at an estimated cost of $4.7 million, while the system on the South Course is projected to require replacement within the next 10 years.
4. Without a significant capital investment, Troon’s recommended solution is to downsize the facility from a 36-hole course to a single 18-hole course.
5. The club’s facility is unlikely to attract any third-party buyers given its current state, and Troon has no interest in managing the club under these conditions.
6. Any model will require between $4.2 million and $14.7 million in additional capital.

In his update, Dutton explained that the board had planned to share Dyer’s letter with the membership in October. However, a golf club broker requested it be withheld during his search for a buyer, “for which we now know there is not one.”

In an interview with the River Valley Times, Dutton clarified that the six conclusions from the Troon assessment were taken directly from the report’s executive summary. He also noted that the board was not given an opportunity to provide feedback on the draft report.

“The bottom line is we never got to see the report to respond back to the information,” he said. “In fact, we have never seen the final report. It’s only been an executive summery.”

An example of failing to verify assumptions and numbers with the board before finalizing the report involves the North Course irrigation system.

“What really needs to be replaced are the main artery pipelines that run underneath the ground and are 50 years old,” Dutton explained. “The upper portion, the sprinkler heads, the computerized system are all newer.”

On the other hand, the club didn’t pay for the Troon assessment.

“RMP did it, so it is their property, and we really don’t have a right to step in the middle of it,” Dutton said.

Going forward, RMP has made it clear that they are just a “landowner and landlord, and not a golf course operator,” Dutton told members in his update. Nor is RMP willing to invest additional capital in the property.

Dutton said options for a potential member purchase of the club were discussed during a Dec. 4 meeting at the Murieta Inn. He noted that his board wasn’t invited to the meeting, but he decided to attend after receiving text messages about “some sort of meeting.”

Dutton anticipated the meeting would focus on water rights and development, which it did during the first half. However, the discussion later shifted to the club’s existence and future.

“It was clear at this meeting the RMP is not aggressively searching for a buyer,” he noted.

Various options for a member purchase of the club were “tossed about, but all were lacking in substance and viability,” Dutton wrote. Nor would a member purchase provide enough revenue for a swimming pool or a community center.

Considerations regarding purchase of the club abound, according to Dutton.

“If RMCC (the club) buys it, all the current liabilities and issues stay in place,” he wrote. “If a member group purchases it, RMCC will still need to file for bankruptcy.”

During the Dec. 4 meeting, it was mentioned that RMP could implement a 60-plus-day closure of the entire property. Under this plan, RMP would hire a firm to maintain the course for future sale or potential operation. While this approach might eliminate RMP’s pension liability, it would not absolve the club of its other liabilities. The deadline for the club to submit an offer to purchase the property is Oct. 31, 2025, with the lease set to expire on Oct. 31, 2028.

“Since the deal collapsed with the prospective buyer, it has been easy to see that we have been nothing but pawns in this process,” Dutton wrote.

The positive financial progress in 2024 has given RMP additional time to pursue a resolution with either an internal or external buyer. Dutton also pointed out that the club’s continued operation avoids the need for RMP to hire a firm to manage and maintain the facilities in the event of bankruptcy.

“This operational model also ensures the monthly lease payment of almost $24K covers the loan payment RMP states they have on the property,” he wrote.

“We, the Club, will continue to facilitate anything that get us to the sale of the property inclusive of the original goal of including a pool and community center,” he added.

After a thorough discussion of this information over the past few months, the board approved a preliminary 2025 budget that includes a maximum dues increase of 5%, as permitted by the by-laws. The increase is set to take effect on April 1.

Dutton said the existing dues are insufficient to meet operating financial needs, as operating costs have risen by at least 5%, and insurance costs have increased significantly. He also noted that the current dues structure is below the median levels of other clubs in the same market.

 “Without an increase in revenue, this shortfall can only be covered by a reduction in services and/or personnel,” Dutton wrote.

The final budget process will explore alternatives to address this deficiency for the remainder of the lease term. The board is in the process of finalizing the 2025 budget, which is scheduled for adoption at the Jan. 30 board meeting.

In his update, Dutton outlined three recommendations from Troon, emphasizing that none of them included provisions for a community center or pool.

1. The Status Quo Model entails operating without increasing dues beyond the 5% annual limit allowed by the bylaws. This approach is anticipated to lead to insolvency and the club being returned to RMP.
2. Model 1 proposes eliminating one golf course and assumes a 20% reduction in membership. Under this model, monthly dues for golf members would be $700 plus a $100 capital fee, while social members would pay $120 plus a $25 capital fee. The initiation fee would be set at $10,000, and tournaments would be limited to Mondays.
3. Model 2 proposes retaining both courses and assumes a 25% reduction in membership, offset by the addition of 20 new members annually. Under this model, monthly dues for golf members would increase to $800 plus a $100 capital fee, while social members would pay $150 plus a $25 capital fee. The plan also includes a $15,000 initiation fee.

Despite the three options, Dutton stated that the only choice would be the Status Quo Model unless the membership votes to either amend the bylaws or approve a one-time dues increase exceeding 5%.

Dutton said that club will operate in 2025 “as if we will always be in business.” He noted that the club has sufficient funds in the bank to cover wages and pay invoices for products and services. Additionally, it maintains contracts with the culinary and grounds unions.

“Unless some significant financial event occurs that costs an overwhelming amount of money, we should be able to continue operating through the end of 2025,” Dutton wrote. “Going forward our goal is to maintain and enhance member experiences at the club.”

In addition to the sobering assessment from Troon, the RMP letter included other notable statements. Dyer emphasized that the golf courses enhance Rancho Murieta with their year-round scenic beauty and are a valuable community asset.

“However, the community has not maintained the asset, and it is in danger,” he stated.

Dyer also highlighted that the golf courses and the Rancho Community Services District (RMCSD) are co-dependent. Per the state Water Resources Control Board, the district must dispose of its treated wastewater on the golf courses, where it is used to irrigate the turf.

"Frankly, a big part of any golf course solution is an RMCSD-financed refurbishment of the irrigation/wastewater disposal system that should be financed by all water users in RMCSD, including future water users, " Dyer wrote.