Some astute commentators recently highlighted examples of the "toxic" real estate assets that are at the root of the massive, worldwide economic meltdown of the financial markets.
Lo and behold, these include almost $1 billion loaned by just one bank, Credit Suisse, for just three now-bankrupt, private luxury vacation clubs in the Rocky Mountains.
One has to wonder if perhaps Red McCombs wasn't hoping to jump on that financing bandwagon for his now dormant Village at Wolf Creek. And if he was, Credit Suisse has to be thanking its lucky stars it didn't get drawn into yet another luxury resort fiasco in the Rocky Mountains.
The reporting comes from one of the new Internet reporting sources, the type of Web-based news competition that is creating challenges for traditional newspapers like the just deceased Rocky Mountain News. New West is "a next-generation media company dedicated to the culture, economy, politics, environment and lifestyle of the Rocky Mountain West," according to its Web site, and is based out of Missoula, Mont.
Over the last year, three exclusive, private luxury clubs in Montana, Utah and Idaho have crashed and burned, each filing for bankruptcy. Each was touted as a private skiing and golf club. In each case, Credit Suisse was the unlucky or inept banker. The Yellowstone Club - $375 million. Promontory Club - $275 million. Tamarack - $270 million. All down the tubes.
Credit Suisse apparently gambled that demand for luxury housing would grow by leaps and bounds, that the supply of uber-wealthy individuals waiting their turn for a slice of the Rocky Mountain dream was limitless. In the last year, those dreams have come crashing back to earth.
The clubs touted their connections to the rich and famous. Bill Gates and the Yellowstone Club, tennis stars Andre Agassi and Steffi Graf at Tamarack, the Jack Nicklaus-designed golf course at Promontory. Profligate waste and absurd financial calculations apparently undid the management at each of these fledgling retreats, where initiation fees at the Yellowstone Club started at $250,000 and prospective members had to prove a net worth exceeding $3 million.
Credit Suisse's financial exploits in the world of luxury resort developments in the Rockies should be a cautionary tale for bankers and developers alike. It's hardly any surprise that the Village at Wolf Creek is on the ropes in this economic climate as well.
Red McCombs didn't get rich making stupid financial decisions, and he most certainly has no interest in investing his own billions in a risky and speculative city atop Colorado's snowiest mountain pass.
The Credit Suisses of the world are hopefully wiser if poorer for their experiences with the Yellowstone Club, the Promontory Club and Tamarack. That experience should dissuade other investors for at least a short while.
Readers can track the bankruptcy sagas of these and other luxury developments through New West's informative reporting and commentary. Check out its online news source at NewWest.net.
firstname.lastname@example.orgMark Pearson is director of the San Juan Citizens Alliance.