Golf Course Ownership Structure

[Jonny Jackson]

Hi All

I was hoping to receive some guidance on how other Golf Clubs are structured, I have been a member of a Golf Board for several years and have always thought our structure was overly complicated and probably quite costly, we have 2 companies in place to manage the golf club and land.

The idea of the 2 separate companies has been long standing, the initial reason for running separate companies was that Company A ran up £100,000s of pounds in debt due to mismanagement and nearly ended up folding. To protect the club and it's members in future two companies were established, one owning the course and land, the other holding everything else. The thought process is/was if Company B ever ran into financial difficulties or was sued for any reason (insurance claim etc..) the golf course itself would be protected and could carry on.

Company A - owns the golf course/land only (and a 49.99% shareholding in company B)

Company B - owns everything else (and is responsible for employees etc..)

If someone hurt themselves on the course, would they be suing the golf club (company B) or would they sue the owners of the land (company A).

I'm not a lawyer but my concern is in the event of a lawsuit/legal claim a good lawyer would argue they are the same business and the holding of assets in separate companies would fail to protect the club - my thoughts are for everything to be merged in one company for ease of administration and reduce costs.

Any opinions would be greatly appreciated.

Many thanks

JJ.

 

[Neilds]

Would insurance just cover any claims for injury sustained on the course? No reasons for suing and stuff?

 

[Lord Tyrion]

The idea of splitting the club is standard in many businesses, same with football clubs. As you mention, it is there to protect the core aspect of the club, the course. I'd be leaving well alone, it is serving its purpose.

Post no. 2 covers the insurance query.

 

[Bunkermagnet]

Surely by having it as 2 seperate companies, there has to be 2 or every bill as both are seperate entities as far as HMRC are concerned?
I don't see how that makes much sense.
As I read it, if Company A goes bust, the course could be sold off for housing leaving a golf club clubhouse and employees but no course.

 

[Lord Tyrion]

Surely by having it as 2 seperate companies, there has to be 2 or every bill as both are seperate entities as far as HMRC are concerned?
I don't see how that makes much sense.
As I read it, if Company A goes bust, the course could be sold off for housing leaving a golf club clubhouse and employees but no course.

A is unlikely to be the one going bust. A will have minimal costs and will receive rent from B as its income. This may be a nominal amount, it may be more for tax purposes. This protects the course, keeps it safe. The key costs will be lumped into B, that is where the danger lies. If B goes, then C can emerge without the debts. A is untouched and will rent the course to C instead of to B.

 

[The Squirrel]

whether the division into two entities truly protects A from B’s debts and liabilities is a question only a lawyer can answer, and only after seeing the documents related to the structure. Randoms on a golf forum can’t tell you.

If the question is specifically related to unforseen legal liabilities then good Public Liability Insurance removes a lot of that risk. Ineffective financial management is (as you have experienced) a far greater risk in your average golf club.

 

[doublebogey7]

Would insurance just cover any claims for injury sustained on the course? No reasons for suing and stuff?

Not if the club were deemed to be negligent in some way.

 

[Lord Tyrion]

Not if the club were deemed to be negligent in some way.

That applies in any situation. It's up to all organisations to be competent on that front.

 

[doublebogey7]

That applies in any situation. It's up to all organisations to be competent on that front.

Of course, but some seem to be of the misunderstanding that insurance will always pick up the tab.