Ayala offer divides sports club members

Leisure estate operator Makati Sports Club (MSC) pitched to members a P5-billion plan to sell a 7,000-square meter lot—more than half of its existing site in upscale Salcedo Village, Makati—to fund the redevelopment of the remaining area into a “world-class” clubhouse.

This is on the heels of a standing offer from property giant Ayala Land Inc. (ALI) to buy this parcel of land for P4 billion.

ALI has yet to agree to a higher valuation but the club may opt to bid it out instead of negotiating with just ALI to get the maximum valuation, a board member told the Inquirer.

During a town hall meeting called to discuss the redevelopment plan on Saturday, MSC’s proposal did not sit well with some members. There were calls for a deferral of the voting on this matter, originally scheduled at the end of this month. Some opposed the lot sale due to valuation issues while others called on the board to explore other ways of raising money to upgrade the club without giving up more than half of its property.

MSC, the first proprietary nonstock, nonprofit, sports and social club in the Philippines, has started to solicit proxies for a redevelopment plan that will require concurrence from two-thirds of its members. Based on MSC’s presentation on Saturday, it is seeking consent for the following:

subdivide MSC’s 13,000-square meter property into two lots: one with 6,000 square meters (sq m) reserved for the new clubhouse and another with 7,000 sq m earmarked for sale;

undertake the rezoning of the subject property from “recreation” to “mixed-use residential-commercial zone with a floor area of 16 times the existing lot area;

sell 7,000 sq m of the property for a minimum of P5 billion, and

construct a “world-class” clubhouse on the 6,000-square meter property that will remain with MSC.

At the time the club was founded in 1975, the value of the property was P52 million or P400 a square meter. MSC’s proposal valued the lot at P714,285 a sq m or more than P9 billion for the entire property. Out of the P5 billion in cash from the sale, around P3 billion was proposed to be used to build more amenities and facilities, such as additional parking slots, state-of-the art function rooms, spa and wellness center, basketball and volleyball courts, expanded gym, digital golf, indoor archery and futsal facilities.

Post-redevelopment, there will still be an excess fund of P2 billion. The club said its members would benefit in the following ways: a possible increase in the value of their club share; suspension of monthly dues for at least 10 years; reduction of dues of registered player-members of racket sports during construction phase and eventual access to a “world-class” clubhouse with more high-end function rooms and additional facilities.

But Vergel Santos, a club member and a veteran journalist, said he and many other members were opposing what seemed to be a railroading of the club’s redevelopment.

“I think the basic objection is there is a big sale and no member is making any real gain on it. I would imagine that the sentiments are not wholly identical. Some don’t want it because they don’t make money while some don’t want it because for them, it’s a violation of a tradition,” he said.

Personally, Santos said he was against the sale as “agreeing to build all these fantastic facilities would seem to overlook the very idea that this club has been founded as a community.” “You think we’re interested in the money? We’re interested in the club,” he said.

Others are opposing the proposed sale due to “gross undervaluation.” Current land values in this area of Makati are now hovering at P1 million a sq m.

The proposed 10-year moratorium on monthly dues is not even a good incentive because this was only equivalent to about P300,000 in cash, Santos said.

Furthermore, MSC, as a nonprofit organization, can not pay out the excess money as dividends. One option that may be more acceptable is for Ayala to make a tender offer for members’ shares, Santos said.

He added that MSC could also raise funds to modernize the club without selling any portion of its valuable land. If MSC were to issue nonvoting shares, Santos said it could immediately raise P1 billion.

Others viewed the P3-billion allotment for club redevelopment as “too much.” A fund manager and club member said redevelopment cost could be capped at P1 billion. At the same time, this member noted that some of them were “not comfortable to have the club sit on the remaining cash after development expenses.” —DORIS DUMLAO-ABADILLA