HOWLAND Avalon Lakes operator seeks to buy Squaw Creek

Avalon Lakes will make money with growing membership, executive says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
HOWLAND -- The company that operates Avalon Lakes Golf Course has been negotiating to buy Squaw Creek Country Club as it tries to stop three years of financial losses.
Officials from the two courses haven't reached a deal but could still continue to talk, said Ron Klingle, chairman of Avalon Holdings Corp.
"We are still interested," he said after the Howland-based company's annual shareholders meeting.
Dale Damioli, president of Squaw Creek, said club officials are exploring "strategic alliances in order to stabilize our future for the long term."
He said officials have talked with other area clubs about a potential merger as well as companies that have experience in marketing and operating upscale country clubs.
He said Squaw Creek has had a "dramatic decline" in membership over the past 10 years.
The Vienna course is the home of the LPGA Giant Eagle Classic, which used to be played at Avalon Lakes.
Klingle said that adding one or perhaps two courses to Avalon Holdings would improve the company because golfing members would have more options.
"My goal always has been to not only have the best course in the country but also the best golf club," he said.
Avalon Holdings tried to acquire Oak Tree Country Club in West Middlesex, Pa., in Mercer County in 2001 but was turned down.
Klingle said he is sure Avalon Lakes will make money this year.
No profit since remodeling
The course hasn't made a profit since the company spent $8 million to remodel it in 1999 and 2000. The company recently spent $3 million to build a new clubhouse.
As part of the remodeling, the course raised the greens fee from $50 to $150 and sold memberships. Members can elect to pay $1,000 a year and $50 a round or $3,000 a year and golf for free.
Klingle said he is confident the course will be in the black this year because the number of memberships rose steadily last year and now stands at about 580. He intends to cut off memberships at 600.
Golf course revenues last year were $1.9 million, up $700,000 from the year before.
One stockholder who attended the annual meeting said he continues to be disappointed with the course's finances. The course had a positive cash flow of $500,000 a year before the renovations so it should be producing about $2 million a year now, said Paul O'Leary, general partner of Raffles Associates of New York.
Considered action
O'Leary, whose company owns 170,000 shares of Avalon Holdings stock, said he is so disappointed in the company's performance that he considered assembling a slate to oppose the board of directors nominated by the company. He said he didn't follow through after learning that company bylaws would make that too difficult.
He pointed out, however, that others expressed frustration by voting against board nominees. The company's nonexecutive board members were re-elected by a vote of 1.5 million shares to 900,000 shares.
O'Leary criticized company investments in the course at last year's meeting but this year only asked for an update on the golf course and an explanation of the goals of Ted Wesolowski, who took over as president and chief executive in January.
Goals for company
Wesolowski, who came from a Pittsburgh law firm, said his biggest goal is to develop a "game plan" for the company, which lost $5.8 million last year. He said the plan will require a hard look at operations.
In the meantime, he said he has been developing goals for each of the company's business units, revamping the company's credit and collection system, and improving efforts to find new customers.
Avalon Holdings has been hurt the past couple of years as its industrial customers have struggled and left Avalon Holdings with unpaid bills. Its subsidiaries transport hazardous waste, perform environmental consulting, broker waste disposal and manage landfills.
Wesolowski said Avalon Holdings won't be able to eliminate uncollectible accounts, but it can do a better job of monitoring accounts to reduce the number of bad debts.
He is meeting with the leaders of all subsidiaries once a month to review progress on plans developed to improve each operation. A series of financial targets have been developed within each subsidiary, he added.
shilling@vindy.com