The Dukes of Hazards
With your back to the mahogany bar in the Golf Club of New England clubhouse, you can look out through floor-to-ceiling windows at the 18th hole, the final stop in a links odyssey through prime New England woodlands. Up the hill above that hole is the broad deck of a massive bachelor pad owned by John Tinios, a restaurateur and former club board member.
Tinios's perch is a lonely one. It's the only house that has actually been built in this particular 10-lot residential section of the club, whose 441-acre course was designed by Arnold Palmer and straddles the towns of Stratham and Greenland in southeast New Hampshire, just north of the Massachusetts border. Although half of the lots have been sold, there are no signs of further construction.
Altogether, the club is zoned for fewer than 40 residential lots. The number was kept small for one reason: privacy.
The Golf Club of New England was intended to be a limited-membership preserve for the area's wealthiest duffers. Its original members included Cabletron cofounder and former New Hampshire Governor Craig Benson, General Chemical CEO John M. Kehoe Jr., and Tyco CEO Dennis Kozlowski. They were joined by a group of Boston's rich (Fred Seigel of Energy Capital Partners) and famous (ex-Bruins Ray Bourque and Gord Kluzak). “The course is just phenomenal,” says Cleon Daskalakis, another former Bruin who joined. “The feeling of being out there is amazing. It's what golf is all about.”
The clubhouse sits like the knot of a bow tie between the course's front and back nines. The two halves loop deep into the beech and pine that make this part of New England so beautiful, running over exquisite bridges and taking the club's members, most of whom paid $65,000 to join, far from the stresses of their high-powered lives.
But things haven't been very peaceful around the Golf Club of New England since early last year, when it filed for bankruptcy. During the proceedings, members saw their stakes turned into part of a settlement package to repay Benson's investment company for millions of dollars of loans he made. Meanwhile, the club has wallowed in the shadow of some of its founders' foundering careers. By the time it opened for its second full season last spring, the golf club started by millionaires and intended for use by New England's most successful people was piling up unpaid bills from, among others, a fish market, a florist, and the guy who stitched the crest onto its shirts. Appraisers concluded that the club, which cost $25 million to build, was worth only about half that.
The club's troubles put its members in an awkward position none of them had anticipated. This was supposed to be downtime, says Terry Conklin, a North Hampton financial adviser who headed a members' committee appointed by the federal bankruptcy trustee. Who would've thought it would involve them in a bankruptcy? “That's not what everybody bought into.”
It's certainly not what Craig Benson thought his money was buying. “I didn't want to be a golf course owner,” Benson says. “I am, but I didn't want to be. I just wanted to belong to a golf course.”
Since Benson spent the better part of last year campaigning — unsuccessfully — for a second term as governor, even if he did want to own a golf course, it's obvious he wasn't planning to run it. Nevertheless, he agreed to loan the club $12 million in February 2001 for land acquisition and construction. That loan and a later one left him as the largest creditor when the club declared bankruptcy.
“If it had been correctly managed, it would never have gone into bankruptcy,” Benson says. “I don't know who did it, but at the end of the day, it was well over budget.”
He blames the board and management committees overseeing construction — largely a group of wealthy fellow executives — for letting costs run up in the midst of a down economy that also hurt the membership drive. In the first two years, membership reached a peak of about 180 — well short of the designated maximum of 275. That left the club several million dollars shy of the projected construction costs, which were supposed to be met through membership fees and real estate sales. Annual dues of $7,000, plus food and merchandise sales, were supposed to cover operating expenses.
Benson started off on the club's board of directors, with General Chemical's Kehoe as president. But after leaving the board in 2001 to make his first run for governor, Benson says, he didn't keep a close watch on construction.
It wasn't as if he didn't have reason to trust the other founders' financial acumen. Like Benson — who emerged with personal wealth estimated at more than $600 million after Cabletron went public — the other founders were people whose success was synonymous with the growth of New England's high-tech economy. But as time went on, he became aware the board was having problems. With the membership drive stalled, Benson agreed to loan the golf club about $2.5 million more in July of 2003. Around that time, the board underwent a substantial changing of the guard. Among the shifts was the installation of one of Benson's former Cabletron protégés, Tom Burkardt, as board president in place of Kehoe.
But it was too late. Building costs were already $4 million more than the original estimate, according to Burkardt. “As they went along and they were making decisions about granite countertops and fixtures, they got away from the budget,” says the club's attorney, Daniel Sklar of Nixon Peabody. “Some of that may have been caused by a feeling it didn't matter that much. If they were off a little bit, Craig Benson would cover it.”
As cost overruns continued to put pressure on the club's ability to pay down its debt, members refused a request from the board for emergency cash. Kehoe and another former board member argue that such overruns are an inevitable part of construction. “You ever build a new house?” Kehoe asks.
Benson sees the discrepancy less benignly. “The shower doors in the clubhouse are inch-and-a-half-thick mahogany,” he sniffs. “If you know you're way over budget, you're not putting up inch-and-a-half-thick mahogany.”
But disagreement over who is to blame continues on down the line. Paul Kneeland, who says his construction company is still owed nearly $600,000 for work it did on the clubhouse, holds the former governor responsible. “When you loan this entity $15 million, do you just turn it over willy-nilly and say, Do what you want?” he asks. “You're not talking about going out and just buying a sofa. [Benson] was also the caretaker of other people's money. He failed to do that.”
Dogged during his reelection campaign by ethics questions and a projected $300 million state budget deficit, and with the bankruptcy also nipping at his heels, Benson became the first New Hampshire governor in 78 years to lose his bid for reelection. He's not alone in his change of fortunes. Kozlowski and one of his former colleagues are on trial for allegedly stealing more than $170 million from Tyco shareholders. General Chemical filed for bankruptcy under Kehoe's watch.
That's quite different from the way things were just a few years ago, when these same executives were riding high and the high-tech manufacturing sector created a wealthy class that might once have settled along Route 128, but instead built fat homes in the Portsmouth, New Hampshire, suburbs. Business is often done on golf links, and so the state's ambitious class needed a place to play. There were other courses nearby, of course; Benson himself belonged to three, but complained that he had to wait too long for tee times.
The executives wanted something in their own backyards with the cachet of the Nantucket Golf Club. For a brief time, it looked as though they had succeeded. Arnold Palmer himself showed up at the groundbreaking, and ABC's Primetime Live shot an over-the-top wedding party held in the $4 million clubhouse. But while the golf world's response was positive, financial problems continued to mount. In November 2003, Burkardt approached Benson for a third loan. This time, he said no. By early last year, the Golf Club of New England was defaulting on its bills to creditors large and small, leaving many observers bewildered.
“These are the community leaders, the business leaders of the state,” says Kneeland, the clubhouse contractor. “I was sure I was going to get paid. How would these people stiff us? There are several of them on their own that could have written checks to pay for the clubhouse.”
Kneeland holds a lien that he believes separates him from those creditors who were forced to accept 25 cents on the dollar in the bankruptcy proceedings. He considered accepting, but points out that the money he's waiting for isn't just his. It's owed to subcontractors — people who installed clubhouse windows and painted the walls — and they voted no. “These people are in their $8,000 Econoline vans,” he says. “When they see the Mercedes and Hummers pulling into the parking lot, they can't understand why they can't get paid.”
From inside the golf shop, with its view of the 1st and 10th holes, club pro Brad Sweet watches to make sure that foursomes don't run into each other or overlap. At a course where tee times are verboten and busy executives are supposed to be able to stop in at their convenience, managing the flow of play is of paramount importance.
Sweet is a father of two in his first head pro position. Like many of the club's employees, he spent much of last year living with the disquieting knowledge that, through no fault of his own, the bankruptcy could cost him his job. Nevertheless, he's eagerly anticipating the new season and is relying on Benson's enthusiasm for the club to make everything work out as planned.
At least Sweet has one thing going for him: Benson's own golf game, which the former governor admits shows the rust of elected office. His handicap is a lousy 18. He only got to play three times last year. But for now, at least, Benson, like many of the founders tarnished by the club's demise, has a place to work on that game. And he has plenty of free time to practice.