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No Holes Barred: Color This Business Green
By Andrea WoodRon Klingle's favorite color must be green. Not because it's the color of money -- his American Waste Services Inc. netted investors big bucks before two its operating units were sold -- or because it's the vibrant hue of his spin-off company's golf courses. Whether the environmental industry or the recreation business: color this entrepreneur's entire career green -- and still blooming."There's a point in time when what we're doing here is going to make the cover of some national golf magazine," Klingle says with the certainty of a man who has earned his Midas touch.Klingle is the chairman of Avalon Holdings Corp., a publicly traded Howland company that signed a 50-year lease in November to operate the former Squaw Creek Country Club in Vienna, and has owned and operated the Avalon Lakes Golf Course in Warren since 1990. By marketing both facilities as the Avalon Lakes Golf and Country Club, Klingle is structuring membership packages to provide access to two championship golf courses -- plus the renovated and expanded Squaw Creek clubhouse -- for less than half the costs of a typical country club membership."It's without a doubt the best deal in golf -- anywhere in the country," he declares. "Country clubs are losing money just about everywhere. We're putting together a concept that makes sense for everybody because it's a business -- not a country club."So much sense that Klingle smiles as he answers "no comment" when asked if he's been approached by other country clubs struggling with sharp declines in dues-paying members."We saw the handwriting," says Dale Damioli, president of MVI Homecare, Liberty, and the president of Squaw Creek Country Club when the lease was negotiated with Avalon Holdings Corp., a process than took 12 months to complete. "Ten years ago our club had 300 members," he relates. "Last year we had 140 members, and the median age of members was over 70. Sooner or later we knew we would have to sell or go public."The members of Squaw Creek Country Club retain ownership of the club's assets. They pay just $3,000 a year for access to the Squaw Creek golf course and clubhouse. Only now they can play golf at Avalon Lakes -- and pay no greens fees at either facility. "It's a lot of value compared to the traditional country club model," Damioli says.No year-end member assessments to cover club losses, no minimum monthly food-purchase requirements plus a larger clubhouse with $3.5 million in improvements: "The members are very excited," confirms Bruce Tamarkin, a member of the Squaw Creek Country Club's board of directors. "We're getting a premier clubhouse as nice as you'll find anywhere in the country."Klingle can barely contain his excitement (and pride) as he guides a reporter and photographer through the $3.5 million work-in-progress that will open for dining June 1. Every clubhouse improvement is first class: New kitchens, dining and banquet rooms, meeting areas, a fitness center and pro shop. There's even a new entrance with a golf-course view, all designed by Klingle.In lieu of rent, Avalon Holdings Corp.'s 50-year lease with Squaw Creek calls for $1.5 million worth of improvements to the facilities every 10 years but Klingle says he accelerated the investment schedule, figuring more upgrades sooner would sell more memberships sooner."When someone walks out of here," he explains, "I want them to think, 'I don't think I paid enough money,' which was my experience when I first went to Disneyland. We'll be successful because we don't nickel-and-dime people."Want wine with dinner? Pick out a bottle from the 150 varieties displayed and you'll pay state minimum prices. Want a case of wine? The cost is discounted 10%.Want to buy a golf shirt at the pro shop? All merchandise is priced 15% over cost. "We started this pricing last year" at Avalon Lakes, Klingle says. "We sold three times as much merchandise as ever before, and made twice as much profit. We're happy, our members are ecstatic, and they're bringing their friends in to shop at our pro shop."This year Klingle's company has sold some 800 golfing memberships and another 125 social memberships, he says, which puts Avalon Golf and Country Club on track to beat projections. Nonmembers can play golf at Squaw Creek and Avalon Lakes but a single round costs $135 per person at Avalon, $85 at Squaw Creek.Net operating revenues of Avalon Holdings Corp.'s golf and related operations segment were $2.7 million in 2003, compared to $1.9 million in 2002. The segment's income before taxes was $100,000 in 2003 compared to a $300,000 loss in 2002. The golf units represented just 3% of the company's total 2003 revenues of $53.5 million.Avalon Holdings Corp. was spun off in 1998 from American Waste Services Inc., which was co-founded in 1986 by Klingle, a Hermitage, Pa., native who obtained a degree in chemical engineering from Youngstown State University in 1970.American Waste bought the Avalon Lakes golf course in 1990 for $3 million, not so much because Klingle is an avid golfer -- his handicap is 22 -- but because he wanted to build the company's headquarters on land overlooking the golf course.At its peak, American Waste Services operated solid waste landfills, a waste disposal brokerage division, an environmental remediation, engineering and consulting business and a waste hauling company, Dart Trucking. The landfills and garbage collection business were purchased by USA Waste (now Waste Management Inc.) in 1998 for $150 million in cash, resulting in the spin-off of the remaining units to the new corporation, Avalon Holdings.For 2003, Avalon Holdings reported a $1.9 million loss from continuing operations, compared to a $4.6 million loss in 2002.Klingle says the environmental business became a "mature industry in the 1990s. As more competitors got into the industry, prices were driven down and profit margins disappeared."The 2002 recession caused a number of big manufacturers to go bankrupt, he adds, and not pay their bills -- which accounts for nearly $10 million of his company's losses. The situation is being remedied, Klingle says, by selling the company's analytical laboratory and remediation businesses, closing the engineering and consulting services unit and some of Dart Trucking's terminals, and better managing collections from customers of its waste disposal business.At the annual meeting of shareholders April 30, Klingle is expected to detail his turn-around plan as he points out Avalon Holdings Corp. has no debt "and $10 million in cash."Klingle will also explain how he is focusing his time on the golf business. "It's a lot of fun," he says. "You meet great people, and it's outdoors."Contact Andrea Wood at [email protected]"