[Proposal #17]: LinksDAO Scottish Golf Course Purchase

Proposal Name: Golf Course Purchase - Scotland Authors: cbruce, Bez, Jim, nickwalkermsu Link to Commonwealth: https://commonwealth.im/linksdao/discussion/10108-proposal-17-linksdao-golf-course-purchase-scotland

TL;DR: In our search for our first golf course to purchase, we have identified a promising property in Scotland called Spey Bay Golf Club. This vote is to determine if we should move forward with submitting an offer and working to purchase the course.

Spey Bay Golf Club “sits on the stunning Moray coastline at the mouth of the River Spey, opened in 1907 and was designed by Leith-born golfer and distinguished golf course designer Ben Sayers”. According to golf architect Robin Hiseman it is “a charming course, but almost entirely overlooked by the golfing world. It could be very special.” https://www.msn.com/en-gb/sport/golf/golf-course-on-stunning-coastline-in-north-of-scotland-goes-up-for-sale/ar-AA1721pX?li=BBoPWjP https://www.ukgolfguy.com/golf-blog/british-restoration-opportunities

We believe this is a great opportunity that is both playable today and has unique potential to become an elite links golf course for our membership. We intend to execute this purchase while maintaining velocity on our efforts to acquire course(s) in the US.

Funding: Current “guide price” for the property is £750,000 (~$900,000), and we would expect to use an amount in this vicinity (but could be more) for course purchase. The course purchase would be financed with capital from our fundraise, however, a similar amount would subsequently be transferred from the treasury to a corporate bank account to support ongoing LinksDAO operations.

Rationale: A primary goal of LinksDAO from the outset has been to purchase an extremely high quality golf course for our members to call their own - shaping the course and club culture with the direction of the DAO, and creating the future of a golf and leisure club in the process.

Based on the geographic footprint of our membership, and feedback from the DAO in previous polls and messages from members of the community, our search efforts over the past year have focused, and continue to focus, almost exclusively on courses in the US, but this listing was too special to ignore and the timing of the sale requires us to act now should we decide to participate in the process.

A LinksDAO acquisition provides a unique value proposition to any course and its surrounding community. We are an avid, global group of golf enthusiasts who also embrace all of the potential the next generation of golfers bring. Technology, inclusivity, excitement, and entrepreneurship are in our DNA. Guided by the DAO, with strong leadership business experience, we aim to seize the opportunity presented in this proposal to make Spey Bay GC a truly epic destination for members and their families, and a place local golfers are proud to call home.

Links golf is our namesake - we hold in highest regard Scotland’s gift to the world, and aim to coordinate our thriving community with great golf architects and designers to make Spey Bay one of the best Links courses in the world. If approved, LinksDAO will also utilize its unique network of partners and relationships with Callaway / TopGolf, Holderness & Bourne, Bridgestone, and numerous others to augment the onsite experience for players.

Spey Bay Golf Club in Scotland (listing here, drone video of golf course here, location here) recently came across our radar and the course acquisition committee has commenced a review of relevant details like operational costs, development rights, and other due diligence, and determined this opportunity is worth pursuing for three primary reasons:

1. The potential “ceiling”, or upside, on this course in terms of golf experience, quality, and rankings on world lists, is incredibly high

• The course is a true Scottish links course (there are only 247 true links courses in the world, and Spey Bay is one of them) built in 1907 right on the North Sea, with 12 holes directly on the water
• Due to environmental restrictions there are virtually no new links courses built on the coast in the UK (and most developed areas), and it is rare for one to hit the market - so this represents a unique opportunity
• There is both enough land, and the proper zoning and permitting, to allow for both improvements to the course, and other additions such as lodging, practice facilities and/or golf facilities (eg, short course or putting course)
• As an indication of quality, we have already had four architects with top 100 credits as well as another architect widely believed to be two of the best up-and-coming people in the industry respond to us expressing uniqueness of the opportunity and their desire to work on the course with us. The list of architects we’ve updated about this opportunity includes Bill Coore, Gil Hanse, David McLay Kidd, Rob Collins, Tim Jackson, Andrew Green, Brian Schneider, Kyle Franz, Beau Welling, Mike DeVries, and Keith Rhebb.
• It has also been identified as one of the top restoration opportunities in Britain among such legendary courses as St Andrews, Royal Aberdeen, Royal Lytham and others.

2. The price is low - both in terms of other course options and relative to our view of its potential

• Even a price of triple the “guide price” would be cheaper than most mediocre courses we have assessed thus far in the US
• Additionally, the ongoing and annual maintenance for this course, like virtually all links courses, is materially lower than parkland courses that we have evaluated in the US

3. We believe that we can make this purchase without significantly affecting our efforts to purchase, and then improve, a course in the US

• A cash outlay of this size would not significantly affect our remaining course purchase budget, and in fact would not change our ability to purchase any of the 4 US course options that we are deepest in diligence on. Additionally, while cash is of course important, we have a variety of financing and structuring mechanisms available on courses we are pursuing in the US such that we are not limited to only courses that are less than our current available cash.
• The cost to operate this course is incredibly low, due to both its geography and course’s current maintenance regime - so this will not represent an ongoing drain on cash
• We will enlist a management company (whether Kemper, or a UK-based option) and other 3rd party providers such that the team’s time is not fully consumed with the details of taking over operations of the course
• While it will take up some of the team’s time to do due diligence and execute the deal, the fact is that we are constantly assessing many course purchase options (>30 currently being reviewed, 5 in later stage diligence)
• We expect the offer / negotiation / closure process to be done in 45 days or less, so the diligence process will not have a major impact on the team’s time.

Ultimately, we think this is a unique and compelling course opportunity that we may not find again, and we think we can execute on it without affecting our ability to also acquire a course in the US in the very near term. A subsequent proposal could outline a scholarship fund to make visits to Spey Bay accessible to LinksDAO members who may not otherwise have the opportunity to travel to Scotland, in line with our mission of accessibility and inclusivity.

Proposal Details: The course is currently listed for sale (here) with a deadline for submitting offers this Thursday at 12pm GMT / 7am EST. This deadline is for those interested to submit their “highest and best” offers, after which point the sellers will evaluate the offers and enter into a closing process with their preferred option.

We are aware, both through the selling agents, and through other contacts in the golf industry, and there are multiple parties interested in purchasing the property, including other international buyers like ourselves. Please note that an affirmative vote here does not guarantee our purchase of the course - that is contingent on our offer being accepted, running a complete due diligence process, and successfully negotiating a purchase agreement with the sellers.

This proposal is to approve our acquisition committee of cbruce, Bez and Jim to move forward with creating and submitting an offer to purchase the course, and if accepted, move forward with negotiation and closing the deal. The committee will be empowered to price our offer in their best discretion, including prices over the “guide price”. We are not including a cap on our offer price as part of this vote to avoid compromising our negotiation and bidding position during this process (see: ConstitutionDAO), however, the committee will be instructed to only submit an offer that in their judgment, does not compromise LinksDAO’s ability to purchase a course in the US in 2023. On the other hand, if the committee finds anything in the course of negotiation and due diligence that they believe makes continuing with the purchase process not in the best interest of LinksDAO, they will be empowered to discontinue the process.

In the event of a passing vote and closure of a deal requiring wiring of funds, a treasury transfer to LinksDAO’s bank account would occur within the next 30 days to allow for continued operations of the business.

References: Course website: http://www.speybay.co/ Drone video of course: https://youtu.be/qcdGXHlqLTQ Real estate listing: https://www.struttandparker.com/properties/spey-bay-golf-club-caravan-park Location (Google Maps): https://goo.gl/maps/dbXLa33J7Y9MdRw97 List of “true links courses”, including Spey Bay: https://migrantgolfer.com/the-true-links-courses-of-the-world/ List of top restoration opportunities in Britain, including Spey Bay: https://www.ukgolfguy.com/golf-blog/british-restoration-opportunities

Major Milestones: M1 - offer submission deadline, Thursday Feb 23, 12:00 GMT M2 - offer acceptance (~late Feb) M3 - due diligence, negotiation of purchase agreement, and other legal/compliance steps (expected Mar-Apr) M4 - close of deal, purchase is purchased by LinksDAO (expected sometime Mar-May)

Effort: Medium

Voting: Yes: I support LinksDAO moving forward with submitting an offer for Spey Bay Golf Club with the intent to successfully purchase the course No: I do not support LinksDAO moving forward with submitting an offer for Spey Bay Golf Club, and wish that they stop engaging with the sellers in this process Abstain: Neither for nor against, but recording this vote counts toward reaching Quorum.

What Happens After the Vote: If Yes, LinksDAO’s acquisition committee will engage parties necessary to construct a compelling offer for the purchase of Spey Bay Golf Club, and plan to submit an offer by the Thursday deadline with the full intent of successfully purchasing the golf course. Funds would be transferred to LinksDAO’s bank account within the next 30 days to allow for the continued operations of the business in the scenario that the deal closes.

If No, LinksDAO’s acquisition committee will stop engaging immediately and no longer pursue a purchase of Spey Bay Golf Club