Going Broke Going For Broke
Artist's View of San Antonio Hill Country Resort Courtesy: JW Marriott
You know times are bad when even the casino corporations are losing billions. How far behind can golf resorts be?
The Las Vegas Sands Corporation is halting a 13 billion dollar project in Macau, the gambling capital of Asia, because it can't get ongoing funding to finish. In order to mothball the project, which includes something like 2 hotels and 3 casinos, Sands Corp. has to find 118 million dollars U.S. to pay off contractors.
It certainly doesn't take that kind of money to build a quality golf resort, but if casino projects in Asia are being parked because of the ongoing credit crisis globally and none of the Big Three automakers in Detroit can convince the lame-duck Congress to kick in a dime, what chances do golf related real estate projects have?
There's a story over at WorldGolf.com about a project in San Antonio, Texas. An enormous hotel, water park, spa and six restaurants begging for consumer spending to survive.
It's typical of many such golf resorts now being built to tap into enormous pools of retirement savings belonging to aging Baby Boomers.
The story's author, Mike Bailey, buys the company's line that the project will be finished and everything will be fine because San Antonio is "vibrant" right now. Let's check in next Friday and see if it's still vibrant.
Things are changing that fast.
The project is well along and may be finished – funding has been in place since day one and a deal's a deal – but those 1000 hotel rooms will sit largely empty while the two surrounding golf courses by Greg Norman and Pete Dye will be pretty much idle for at least a year. And the developer will be paying increasing interest levels on the outstanding debt.
Why? Look no further than the S and P 500 stock index on Wall Street. This index tracks 500 blue-chip corporations, the kind widows and orphans love because they're stable, rich and always pay dividends. We're talking companies like Citigroup, Xerox, General Electric, Wal-Mart, Microsoft, Pfizer, Exxon-Mobil and others.
Only two of the corporations listed on the S and P 500 were trading above $100 US last week. 10 other companies – 10 of them – were trading below $10 a share.
There is tremendous fear among investors, bankers and governments (consider what China is facing in mass factory closings, rioting over job losses and escalating unemployment).
I'm sorry, Mr. Bailey, but that project in San Antonio is going nowhere for the foreseeable future.