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When Europe’s number one Suzann Pettersen tees off at the Solheim Cup on Friday, viewers can expect televised shots of a beautifully restored 19th-century castle, glistening trout-filled lakes and emerald green fairways.
But while the Solheim Cup, a battle between Europe and the US’s top women golfers, brings Ireland’s golfing prowess back into the spotlight five years after it hosted the Ryder Cup, all is not well with the Irish golf industry.
The severe economic downturn in Ireland has forced banks to stop lending and consumers to stop spending, prompting a crisis in an industry that expanded rapidly during the Celtic Tiger boom.
Killeen castle, where the Solheim Cup is to be held, about 40km west of Dublin, is one of 11 luxury golf resorts linked to loans under the control of Ireland’s National Asset Management Agency (Nama), the “bad bank” set up to take over the toxic property loans of the country’s banks.
Several other golf courses, including that at the Lough Erne Hotel and Golf Resort in County Fermanagh, where US open champion Rory McIlroy is the touring professional, have seen the companies that own them placed in administration or receivership.
“It is beyond doubt there is an oversupply of golf courses in Ireland,” says Pat Finn, general secretary of the Golfing Union of Ireland.
“In the last 10 years we had a lot of trophy courses and country club resorts built. There was a certain prestige attached to membership of these resorts and this factor was at play in the Celtic Tiger.”
About 100 golf courses were built between 1995 and 2010. Club memberships peaked at 177,149 in 2004, says the Golfing Union of Ireland.
The downturn, which has seen unemployment rise to 14.5 per cent, has caused memberships to plummet 13.5 per cent to 153,278, although the number of courses registered with the union remains unchanged at 430.
Golf is closely connected with the property boom and bust that brought Ireland to the brink of bankruptcy. Some of the biggest property deals were struck by builders and bankers in golf clubhouses. Developers took advantage of tax breaks, which were offered for new hotel developments, to build trophy courses linked to luxury hotels and holiday home complexes.
“The corporate trade is what put the price up – it was all about meeting developers on the golf course,” says Philip Murphy, general manager at the Radisson Blu Farnham estate, a luxury hotel, spa and golf resort set on a 16th-century estate in County Cavan.
Druids Glenn, the luxury golf resort where former Anglo Irish Bank boss Sean Fitzpatrick met Irish prime minister Brian Cowen for a round in July 2008 as the bank teetered on the brink of collapse, used to charge a joining fee of €45,000 on top of annual membership fees.
Public revelations about the meeting contributed to Cowen’s resignation as leader of Fianna Fail in January this year, precipitating a general election.
“We have had to adjust our rates. Ireland probably was over-priced during the boom,” says Richard Collins, chief executive at Druids Glenn.
To cope with the economic downturn, Mr Collins has restructured the resort and shed jobs. But he says he faces unfair competition from Nama, which he claims is using taxpayers’ money to keep golf clubs with massive debts afloat.
“These resorts are being run irresponsibly with pricing and service levels that are not economically viable. The law of the jungle has to apply and some clubs have to shut,” says Mr Collins.
But deciding which golf courses are viable and which should be closed is complex.
“We have to consider a range of factors such as the extent of borrowings, who owns the business -members or a corporate entity – the difficulty in assessing the value of any alternative use and the quality and reputation of the golf course,” says John Hansen, a partner at KPMG, the accountancy firm, which is handling the administration of seven courses.
So far, KPMG has closed just two resorts.
Developer Joe O’Reilly and his partners invested €120 million in Killeen Castle before the Irish property market collapsed, prompting his loans to be taken over by Nama. The state-run “bad bank” is overseeing the development of the resort, which should get a boost from hosting the Solheim Cup, which attracts a television audience of about 300m. But providing a return on investment will be a challenge.
So far, 27 of the planned 162 houses on the resort have been built but just 12 have been sold, despite price cuts of 25-40 per cent. The international hotel operator Starwood has also pulled out of the project, leaving the castle vacant.
Despite the difficult economic situation, Barry O’Connor, general manager of the Killeen Castle resort, says he is confident for the future, pointing out that the club has already attracted 340 members.
“The plan for Killeen Castle is 5-10 years,” says Mr O’Connor. “We are only open two years and we are washing our face already … Golf has not gone away in the recession. People still want to play.”