Eagle's Nest Country Club, a 45-year-old, member-owned club in Phoenix, officially retired $4.8 million in bank debt last month and saved itself from possible closure after an 11th-hour fundraising appeal that spurred many of its 500 members to open their hearts and checkbooks.
"We're really member-owned now," incoming president Mary Kay Mosch said.
The club, with an 18-hole golf course, an Olympic-sized pool and eight Har-Tru tennis courts, opened in 1970 as Towson Golf and Country Club. That's still the corporate name, but the operating name is Eagle's Nest, which refers to the club's historic tract that dates to 1684. The club is widely known as Eagle's Nest and is referred to as such on its website, www.eaglesnestcountryclub.com.
The club has been accumulating debt "from day one," according to Mosch, outgoing club president Bart O'Brien and treasurer Chester Hobbs. The club borrowed $3.5 million in 2002 from a bank they would not name, to finance expansion and modernization, they said.
In 2010, the club borrowed more money, this time for a new irrigation system for the golf course, bringing its debt to $5 million. The club pared that down to $4.8 million, the three officials said.
At the time, the club was appraised at $9 million, but after the bank that had been lending them money merged with another bank, another appraisal was required, and the new appraisal dropped the value of the club below the loan, club officials said.
Earlier this year, with the loan coming due in June 2016 and the club's line of credit due in August 2015, the club tried to refinance its debt. Although the club has never missed a loan payment, none of the banks that club officials approached would make them another loan, at a time when many country clubs are struggling to survive, Mosch said.
Many banks don't even have a country club in their portfolio, Mosch said.
"A lot of banks don't do business with clubs, because more clubs go out of business than keep going," said Mosch, of Sparks, a retired medical industry executive, whose husband, Jim Mosch, is chief operating officer of Dentsply, a manufacturer of dental equipment and supplies.
A case in point close to home is the defunct Chestnut Ridge Country Club, in Lutherville. Chestnut Ridge was more than 50 years old when it closed in 2011 amid financial problems and a legal fight with dozens of former members the club said owed it money, according to a report in The Sun at the time.
Word of Eagle's Nest predicament leaked out.
"The rumor mill was (such) that people would pat me on the back and say, 'I'm sorry you're closing,'" said O'Brien, of Jacksonville, who owns rental properties in the area.
"I got so tired of people saying, 'Eagle's Nest is going under,'" Mosch said.
"We talked to every bank (locally), big and small, and we got the same answer: You're a country club. We can't loan you $4.8 million," said Hobbs, an attorney who lives in Phoenix. "We knew we needed to deal with the situation as a whole."
And they knew there wasn't enough time to alleviate the problem by recruiting more club members.
"We knew we could not recruit our way out of this," because membership "was not as robust as it once was," Mosch said.
They went back to the bank that loaned them the money and began negotiating a settlement, in which the bank ultimately agreed to accept $2.5 million to retire the $4.8 million debt. During those negotiations, club officials called a series of town hall meetings with the membership, including one on July 27 that Mosch described as "a put-it-on-the-line meeting."
"We have to save this place. Nobody is going to save this place but us," Mosch said club officials told members. "We needed to know our membership would step up."
The bank agreed Sept. 3 to accept $2.5 million, but only after the club offered to raise the money in 30 days. The club then started a frantic fundraising campaign called "The Drive to Debt Freedom."
As it turned out, about two-thirds of the members chipped in money, including some that officials knew were struggling themselves. Some families couldn't afford to, but committed to keeping up their memberships, Mosch said. Even some former members donated money and promised to come back.
The debt was officially retired Oct. 6, and the club threw a big party Oct. 9. The club is now debt-free, "and it all came out of the membership," Hobbs said.
The officials said they are proud to have bucked a national trend that has seen the closure of many country clubs in similar circumstances.
They are also excited that the debt retirement increases the club's cash flow substantially.
"It relieved $320,000 a year of debt service," O'Brien said.
And it has brought club members closer together.
"The membership is more united than it's ever been," Mosch said.
Eagle's Nest has survived despite skeptics who once said that a member-owned club would never fly.
"Yesterday, it got off the ground," The Sun reported in December of 1970.
It has also survived despite its location near the Loch Raven Reservoir, which precludes building homes on the property because it doesn't lend itself to a properly designed septic system, Mosch said.
Although former members include legendary Baltimore Colts quarterback Johnny Unitas, Orioles third baseman Brooks Robinson and Colts running back Tom Matte (who is still a member), the majority of members are local residents, many of them families.
"We're very family-friendly," said Mosch. "We have a lot of good, ordinary people. Everybody knows everybody."
The club's golf pro, Director of Golf Mike Welsh, has been there for 32 years. Receptionist Barbara Baldwin's husband, Jeff, is the chef. The club caters to its 380 families with programs such as a breakfast club for new members, and its golf course is home to Towson University's golf teams.
The club also caters weddings on a patio with a deck overlooking the 18th hole of the idyllic golf course and the Towson skyline barely visible in the distance.
In an effort to recruit new members and keep its current members, the club has done away with initiation fees, which Mosch said were $20,000 per family when she joined about 18 years ago, but O'Brien said had dropped to $10,000 when he came about eight years ago.
For now, the club charges only monthly dues ranging from $250-$750, depending on the services members want, although officials say they will re-institute initiation fees in March 2016, as the club rebuilds capital in the wake of the debt retirement. Some of the initiation fee revenue will be earmarked for upgrading bunkers and greens on the golf course, as called for in the club's master plan, officials said.
Nobody is more excited about the club's financial rebirth than O'Brien, whose two-year term ends Nov. 10.
"This is such a huge accomplishment," O'Brien said. "Together, we have accomplished something few clubs have ever done. Many clubs around the country and in our local area are struggling to survive. For our membership to step up like they have to resolve our long-term debt issue says a lot about their dedication to Eagle's Nest."
O'Brien is glad that his term is ending after a tumultuous time in the club's history.
"It became a full-time job," he said.
When asked if they would consider borrowing money in the future, O'Brien and Mosch cried out in unison with a resounding "No!"
"Not on my watch," Mosch said. "Nobody wants us to ever get in that situation again."