This business deal was full of holes.

• Author: Speizer, Irwin
• Position: Golf Trust of America's financial problems - Brief Article

Tiger Woods makes tough shots look easy. But for most duffers, golf is the opposite: Easy shots end up in the rough. Ditto for the business of golf. Just ask Bank of America, which shanked a golf deal that was supposed to soar like a Woods tee shot. Instead, loans wound up in default, and the bank, in court.

The Charlotte-based bank bet on Golf Trust of America Inc., a Charleston, S.C.-based real-estate investment trust. Golf Trust wanted to consolidate course ownership, just as BofA had done to banking. It wound up collecting a bunch of money losers.

Too bad the bank hadn't consulted investment analyst Casey Alexander of Gilford Securities in New York. He would have told them golf is a rotten business, catering to fickle players and often run by people who let their passion for the game overrule prudence. "There's some retarded cachet to being in the golf business that causes people to make noneconomic decisions."

Golf Trust was not only in the wrong business -- golf-course consolidation -- but in the wrong places -- overbuilt locations such as Myrtle Beach and Central Florida.

It began in 1997 by raising $73 million in a stock offering. The next year, Bank of America led a group of banks in providing a line of credit. At one point, the balance swelled to $169 million. BofA had the biggest piece, $60 million. Golf Trust had 42 courses, most leased to operators.

Within two years, operators were missing lease payments, and Golf...