Aug. 13--The Links Group, which owns Cypress Bay in Little River and several other golf courses, is filing for bankruptcy. 

The sluggish golf market has landed The Links Group Inc. in bankruptcy court, heightening concern about the local golf industry's ability to survive in slow times. 

Court papers from The Links Group's Chapter 11 bankruptcy provide a rare glimpse into an industry that has stagnated in recent years along the Grand Strand. 

After three consecutive years of slowing traffic on the greens, The Links Group -- the Grand Strand's largest golf management firm -- now owes about $3 million in overdue taxes, payroll, lease payments and other expenses. The company's debts total about $8.3 million compared with assets of $4.8 million. 

The Links Group's financial woes are a concrete sign that Myrtle Beach's thriving golf industry has hit a wall. 

The number of paid rounds played at Grand Strand golf courses hasn't shown any significant growth in years despite a boom in course construction. The result: About 25 area courses are now for sale, according to Golfweek magazine. 

"We are overbuilt. We didn't get the boost from the Senior Tour we had hoped for, and the number of golfers is static," said Donald Wizeman, chief executive officer of Myrtle Beach based-International Resort & Golf Resources Inc., a golf research and consulting firm. "That's what put us in this calamity that we are in." 

But Ken Folkes, president and founder of The Links Group, is confident his company can bounce back and pay off its debts by expanding its management firm, according to the company's reorganization plan filed in U.S. Bankruptcy Court. 

Folkes also said he can expect between $1 million and $4 million in investments from MemberTee Management LLC, a N.C. company. Folkes eventually hopes to manage at least 20 golf courses. 

The golf slowdown isn't unique to the Myrtle Beach area. 

Rounds played nationwide this year are down 5.2 percent compared with the same period in 2000, according to Golf Datatech, a research company. 

Although the industry attracts between 1.5 million and 3 million new golfers each year, about that same number give up the sport annually because it's too hard, too expensive or for other reasons, according to the National Golf Foundation, a Florida-based market research company. 

Golf Holiday has lured the Senior PGA Tour and the Canadian Tour to the Grand Strand in recent years and has boosted its advertising in women's magazines to attract more golfers and lure niche markets. 

Despite those efforts, the number of Americans taking golf vacations along the Grand Strand each year -- about 1 million -- has remained the same during recent years, Wizeman said. 

The static flow of golfers to the Grand Strand has been out of step with the golf course building frenzy of the late 1990s. Eighteen area courses have opened in the past 28 months -- with two more scheduled to open this fall. 

Wizeman said the Grand Strand would have to attract at least 400,000 more golfers to renew prosperity in the local golf market, which has 117 courses open for business. 

Mickey McCamish, president of Myrtle Beach Golf Holiday, however, is more upbeat about the Grand Strand's future golf outlook. He is encouraged by the recent -- albeit small -- increase in paid golf rounds and is confident that stepped-up marketing efforts will pay off. 

This year, McCamish secured a marketing grant totaling $149,000 -- a 45 percent increase over last year -- from the S.C. Department of Parks, Recreation and Tourism after convincing the state that more money is needed to compete with other golf markets. 

"I am very positive about the next couple of years," McCamish said. "There is a growing awareness about Myrtle Beach and what makes us unique." 

The number of paid golf rounds played along the Grand Strand increased from about 3 million in 1990 to 4.07 million in 1999. After a decline in golfers last year and the first half of 2001, Golf Holiday said paid rounds rebounded over the summer, putting the area on course for a 0.4 percent increase in golfers. However, that still represents a 0.3 percent decline from the 1999 totals. 

The National Golf Foundation expects demand for golf will grow nationwide by 1 percent to 2 percent annually. 

But Judy Thompson, a spokeswoman for the National Golf Foundation, said there are opportunities to grow by as much as 4 percent a year if creative marketing strategies targeting women and children are successful. 

The Links Group is scheduled to appear Monday in U.S. Bankruptcy Court in Columbia in hopes that a judge will approve the company's reorganization plan. The judge's decision is based on endorsement from creditors, and Folkes said a majority already have approved the plan. 

In court documents, The Links Group blames its 2000 losses on flooding and a slow season. 

Folkes said in a recent interview that he started seeing signs of a slowdown in 1997. 

"The writing was on the wall," Folkes said. "We knew we were in for a tough time." 

By 1998, three of The Links Group's courses lost money. In 2000, the number swelled to seven, with Cypress Bay falling $327,345 short in meeting its expenses. 

The Links Group has reported negative operating incomes during the past three years, which peaked in 2000 with a deficit of $2.3 million. 

But The Links anticipates an immediate turnaround under its reorganization plan. With plans to lease at least 20 golf courses, The Links Group estimates profits of $216,674 in 2001, rising each year to $4.278 million in 2005. 

Wizeman doubts The Links Group's reorganization plan will provide a longterm solution, and instead predicts the plan might buy the company a year, but eventually The Links Group will flounder again. 

Wizeman said the golf courses in The Links Group, which include some of the Grand Strand's oldest and cheapest, will have a tough time competing with the newer courses. 

But Wizeman said the Strand's newest golf courses also are vulnerable because they have steep debt and have been forced to drop greens fees to stay competitive. 

But Folkes and Cal Rogers, a founder of MemberTee Management, are much more optimistic about their company's prospects in the lukewarm golf climate. 

Folkes admits his courses are "middle of the pack," but said they can still be enticing to vacationing golfers. 

"You have people coming here who have to play on the best courses," Folkes said. "And then, after a few days they have spent a lot of their money so they are looking for something more affordable." 

Tom Regan, chairman of the University of South Carolina's Sports and Entertainment Management Program, doesn't foresee any major increases in the number of golfers coming to Myrtle Beach unless "courses are lit and golfers can play at night." 

Regan said courses can boost profits by consolidating administrations and offering more rounds of golf on a daily basis. 

But the golf picture is not all gloomy. Regan said the fierce competition is good for consumers, who can play golf at rolled-back prices. And for business owners with the bankroll to weather a few down years, golf courses can represent an attractive investment. 

Rogers said he expects the golf market to stay flat for about two more years, then rebound when golfers who might have skipped vacations because of economic jitters start returning to the Grand Strand. 

Even if the economy doesn't heat up, Rogers said the Grand Strand is well positioned because it offers an affordable golf vacation and is within driving distance of several cities. 

Rogers said MemberTee Management was established specifically to buy The Links Group. If the reorganization plan is approved, MTM will own 75 percent of the company and ClubLink Corp. of Canada will control the remaining 25 percent. At the time of the filing, ClubLink owned 92 percent of The Links Group's preferred stock. 

Rogers, who is part owner of Eagle Ridge Golf Course in Raleigh, N.C., would be the chief executive officer under the proposed reorganization. He would have an annual salary of $156,600 per year, based on the number of golf courses under The Links Group's management at the time of the filing plus recently signed leases at two new courses. 

Folkes would remain president of the company and his salary would be $140,940 per year. 

Since the bankruptcy filing, The Links Group has signed leases to manage Island West Golf Club in Hilton Head Island and Royal Oaks Golf Course in Manning. The Links Group also is negotiating Meadowlands Golf Club and Farmstead Golf Club in Calabash, N.C. Folkes said he also is in discussions with American Golf to take over its leases at River Oaks Golf Club in Myrtle Beach and Carolina Shores Golf Club in Carolina Shores, N.C. 

Thurmon McLamb, co-owner of Cypress Bay Golf Course, said he's been pleased with The Links' management and recently extended the course's contract with The Links Group for 15 years. He said the company keeps his course well maintained and has been responsive to his complaints. 

"They take care of everything," McLamb said. 

McLamb said he has The Links Group manage his course because they have expertise in running golf courses. He added that The Links Group has paid its lease on time until last year. 

Not everyone is promised the money owed to them without compromise. 

Rogers said ClubLink "took a financial hit" from the bankruptcy. And Bank of America has agreed to restructure a $3.6 million loan so the remaining debt -- $2.4 million -- will be stretched over a 15-year schedule instead of just three years, reducing The Links Group's monthly payments. 

For The Links and many others, Regan sees a tough road ahead. 

"The courses that are strong, good and well-managed will survive," he said. "Those that haven't kept up will have it difficult." 

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(c) 2001, The Sun News, Myrtle Beach, S.C. Distributed by Knight Ridder/Tribune Business News.