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The Keys to Longboat
The Longboat Key Club's owners want to add new development to some of their property. Have the townfolk put aside past differences?
By Matt Walsh
Editor
Go back to the early and mid-1990s on Longboat Key. If you were a newcomer to the Key and spotted W. Shane Eagan and A. Thomas Rasmussen, the operating partners of the Longboat Key Club and the Resort at Longboat Key Club, it would not be a stretch to say: "Who are these guys? Gangsters?"
They looked the stereotype: mustachioed, slicked-back hair and typically wearing black - shirts, slacks, shoes and shades. At public functions, they were always polite but not chatty, men of few words. They tended to keep to themselves, usually off to the side, standing with a small circle of friends and keeping what looked to be a wary, observant eye on their surroundings.
Eagan drove the Key in a black Mercedes sedan, with windows almost as dark as the paint. Rasmussen could be seen riding low in a tinted-window, yellow Porsche roadster. On weekends, it was not uncommon to see them in blue jeans, riding boots and vests, heads topped with bandanas and the proverbial shades, straddling two Harley Davidsons. They were part of the Baby-Boomer biker boys and were known on occasion to ride in many of the local and some national bike bashes.
One year in The Longboat Observer's annual April Fool's spoof edition, they showed a mocking sense of humor of Longboat's snooty reputation when they announced, in jest, the Longboat Key Club would host a week-long biker fest, complete with women mud wrestling and a swap meet on the pristine beach. Many Longboaters were aghast, but the joke helped fuel the mystery around Eagan and Rasmussen, who, over the years, rarely have commented in public or given interviews.
Indeed, their reclusiveness has seemed to rub a raw nerve in many of the longtime members of the Longboat Key Club. Talk to some of these old-timers, and it's rare to hear them give glowing reviews of Eagan or Rasmussen. Some members say Eagan is the antithesis of customer friendly. "You know, Shane is not the gentlest person in a fight," says one club member who asked that his name not be used. Says Club member Al Green, a frequent critic of Eagan and the Key Club: "Shane has an unfortunate personality."
And yet, Andrew Vac, who owns a Longboat Key realty and who worked for Eagan and Rasmussen, says: "If you ask anyone who works at that resort, they love Shane. He's a people person." Told that club members would laugh at Eagan being called a "people person," Vac says: "Then they don't know him."
At the same time, that club member who said Eagan is a fighter will tell you from experience Eagan is among the most generous corporate citizens in greater Sarasota. Eagan's company, Shannon Resort Group, the firm that manages the Key Club, is annually among the top three donors to the Longboat Key Center for the Arts. It also donated $55,000 to the center's capital campaign. One employee told GCBR the company for several years has had a $3 million cash line item in its budget for community contributions. Throughout the life of the Florida Winefest & Auction, an event that benefits more than 60 local children's charities, Shannon Resort Group easily has been the event's largest monetary and in-kind donors. (That has been a source of grief among some club members because the event required the club to shut down one of its golf courses for 10 days. Says Eagan: "I would think the members of the Longboat Key Club would be proud of the fact that they're members of a club that has contributed so much to the community.") One of the Key Club executives describes Eagan as "charitable to a fault." He has helped pay for employees' educations and the funerals of employees' family members. After the Key Club's 400 employees voted to forego a Christmas party and take cash instead, Shannon gave its largely blue-collar employees $30,000 in cash.
Covert, reclusive, vilified, people-oriented, charitable. It's safe to say Eagan and Rasmussen are enigmas.
How these two entrepreneurs became the owners and stewards of one of the most prized jewels of Gulf Coast waterfront real estate is an unlikely story. How they've managed this gem is a chronicle of ambitious business visions that have been scaled back to their roots. And what they want to do with the Longboat Key Club next will thrust these two march-to-their-own-beat entrepreneurs into the center of attention (and probably controversy) again in wealthy Longboat Key - just as they were nearly 14 years ago when they and a group of silent partners purchased the Longboat Key Club from Arvida/JMC.
Eagan and Rasmussen are hoping to invest $20 million into the club's grounds. They want to tear out 45 aging golf holes and replace them with 45 newly designed holes; eliminate one of two tennis complexes and build one, larger center with a new clubhouse and snack bar; and they want to expand the club's existing fitness center to include expanded exercise space and a full-service spa. And they want to finance this with the development of 20 single-family homes on the club grounds, each selling for between $5.5 million and $6.4 million.
The trick is obtaining approval from the town of Longboat Key, a place that, historically, has been to developers what Iraq has been to American GIs. But for all of Longboat Key's roughly 10,000 property owners, the Key Club's plans are crucial to the future value of their pricey real estate. On this 11-mile-long barrier island of 10,000 residential units ($4.6 billion taxable value vs. $5.6 billion value for Sarasota, population 50,000), the future value of real estate hinges to great degree on the attractiveness of the Key Club golf courses. If the Key Club falters, so will the rise in Longboat's property values.
"We don't want the Key Club to be an 'also ran,' " says Rasmussen. "We want it to be something the members are proud of and the town is proud of. The homes will give us the opportunity to take it to the level it used to be without overburdening our members (with dues increases).
"The renovation also increases the value of our investment," he says. "Our shareholders aren't walking away with a lot of money from this. This is a long-term play."
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Eagan and Rasmussen grew up at opposites ends of the country. Eagan spent his childhood in Newtown, Conn., located on Interstate 84 between Danbury and Naugatuck in the southwest corner of the state. Rasmussen grew up Las Vegas. Their families possessed modest means.
Eagan, 57, earned a mechanical engineering degree from the University of Bridgeport; Rasmussen, 55, earned a bachelor's in business administration from the University of Nevada at Las Vegas. They met in Orlando in 1974 when they started working for a man named Skip Brown, developer of the Sheraton Twin Towers. "When we were there, filling 10 rooms a was a good night," Rasmussen says.
Eagan left Orlando in the late 1970s, becoming something of a hotel management gypsy - a food and beverage director in 1979 at a hotel in the Virgin Islands; opened a Radisson in downtown St. Louis; spent time in Hilton Head, S.C. Rasmussen, meanwhile, opened a new Hilton in downtown St. Petersburg in the mid-1980s and joined the Grenelefe Resort near Orlando in 1980.
They came together again in 1983 at Grenelefe, which they operated for Marine Midland Bank. The mission was to keep it going until Marine Midland could find a buyer. They did and put themselves out of jobs, albeit with pay parachutes. That's when Eagan and Rasmussen decided to pool their skills and become hotel owners.
But that takes capital and some serendipity. As Eagan and Rasmussen teamed up, Thomas R. Holmes, a wealthy business investor and a childhood friend of Eagan since age 10, wanted to go into the hotel business with one of his friends. The four - Holmes, Laurence Smith of Naugatuck, Conn., Eagan and Rasmussen - formed Shannon Resort Group Inc. Eagan and Rasmussen went in search throughout the Southeast for hotels to buy.
As Eagan tells it, Holmes "fell in love" with the Longboat Key Hilton and Longboat Key. In November 1987, they signed a contract to purchase it for $8.4 million. It was the first of what the partners wanted to become many hotels.
On April 2, 1988, Eagan and Rasmussen began new careers as the operating partners of a hotel company: They found themselves running the Hilton's kitchen for breakfast. Some of the hotel's staff quit, as Rasmussen says, because "they didn't like some of our rules - like no smoking in the kitchen and no drinking on the job."
Three months later, Eagan and Rasmussen read a headline and story in The Longboat Observer, which, had it been printed in The New York Times, would have generated an investment stampede. The story reported that Bob Wilhelm, Arvida Co.'s Longboat Key director, said the development company's Longboat Key assets were for sale at the right price. The chief asset: The Longboat Key Club and Resort.
At 2 p.m. the next day, Eagan and Rasmussen were sitting in Wilhelm's office.
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It took two years for the Shannon partners to close the purchase. One of the stickiest issues involved an agreement between Arvida and the town of Longboat Key. The town had a right of first refusal to purchase the golf courses for the same price upon which Arvida and Shannon had agreed - $22 million.
A vote of the Longboat Key Town Commission determined the fate of Shannon's deal. The vote also became the source of deep-rooted animosity that many pre-Shannon club members still hold for Eagan and Rasmussen.
Longboat commissioners fell under intense pressure from various factions in town to buy or not buy the golf courses. One group urged the commissioners to buy the courses then flip them to their group. Eagan and Rasmussen's lawyer bluntly threatened the commissioners that if they bought the courses and then flipped them, he would sue the town and them personally. The final vote was 3-4 - the commission decided not to buy the courses.
On April 30, 1990, an entity known as Key Club Associates closed on the purchase of the Longboat Key Club and Resort. Price tag: $25 million. Eagan, Rasmussen, Holmes and Smith now had new partners and shareholders. To help finance a third of the acquisition, Holmes attracted a business associate, Joseph Lesser, the chairman and chief executive officer of New York-based Loeb Partners Realty, the real estate arm of what used to be the well-known investment banking firm of Loeb Rhoades & Co. The group also borrowed $18 million from NCNB Corp.
Rather than celebrate, Eagan, Rasmussen and partners found themselves on the receiving end of a series of lawsuits. The town of Longboat Key and members of the Key Club sued Key Club Associates, among other things, for what became known as the "Tee Time" lawsuit. Members fumed, claiming the resort's hotel guests were being given priority tee times over members - a practice contrary to a "memo of understanding" that existed between Arvida and the town. Eagan said the memo of understanding was not a binding legal agreement - a position that infuriated members even more. Arvida also had an agreement that said Key Club members only could be residents of Longboat; Eagan changed that. He also raised the initiation fee.
"The whole atmosphere changed," said club member Al Green. "It was now being operated more or less like a business, not like an equity club."
Bingo. "Arvida used it as a tool to sell real estate," Rasmussen says. "Even though Arvida had a hotel management division, it was not operating the resort. The staff didn't have any cost pressures. We changed the philosophy from the focus on real estate sales to the ongoing day-to-day club and resort operations. We had to rely on the club and resort as opposed to real estate sales for revenue."
In other words, Eagan and Rasmussen had an $18 million mortgage to pay and shareholders to please. They had to run a business.
It took two years before all of the lawsuits were settled. Each side won some and lost some. Says former Longboat Mayor Jim Brown: "In terms of member relations, that first two to three years overwhelms everything. It's something they haven't recovered from. Since then, they've tried hard to run a good club. Everyone gives them credit for trying. I'd say they're close to a C-plus or B-minus. That's all the way up from an F. In the last year they've been working hard to get along with the town and members."
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With the lawsuits behind them, Eagan and Rasmussen resumed their group's ambition to own multiple hotels. In January 1995, they acquired for $13.4 million the Holiday Inn-Lido Beach, financing $9 million of the purchase price. Not long after, their Shannon Resort Group took on the management of the Serenoa Golf Club in Sarasota County. And while on a ski lift in Aspen, Rasmussen struck up a conversation with his seat mate. A French bank wanted to unload a 90-room Aspen hotel at the foot the mountains. Shannon began managing that, too, with an option to buy. Says Eagan: "Let me ask you: If you had a chance to operate a hotel in Aspen, would you?"
The allure was greater than the opportunity. Rasmussen says the work ethic of the Aspen staff was lousy. The French bank's price was about $12 million more than what Eagan and Rasmussen though the hotel was worth. After two years, Shannon ended the Aspen adventure. "Fortunately for us that deal didn't work out," Rasmussen says. "It wasn't big enough to create critical mass."
Back in Longboat, Rasmussen says, operating three hotels was not too taxing. Their management style in the past was to give their operating executives a lot of freedom and create an entrepreneurial environment that allowed managers to make a lot of the decisions. And while Eagan and Rasmussen work in an office building off the premises of the resort, Eagan is known to appear at the club at unpredictable hours. He and Rasmussen also are regarded as methodical and structured. Says Amy Drake, a former senior vice president and general manager of the club: "Shane says, 'Here's what I see. Make it happen.' "
Eagan is also considered the visionary, able to size up a situation quickly. Rasmussen is the finance guy. They both communicate regularly with their outside partners.
As they expanded, Eagan and Rasmussen learned that multiple properties didn't create the efficiencies they expected. Accounting could be combined, but that was about it. None of the three hotel operations could be marketed together because they appealed to distinctive audiences. "The success of the Key Club is ensconced in its privacy," Eagan says. "We couldn't let the other hotel's guests use the Key Club."
Adds Rasmussen: "You couldn't even interchange employees. You can't bring Holiday Inn people to the Key Club."
Having peaked at three hotels, two golf clubs, 675 employees and $46 million in annual revenues in 1997 (not to mention more than $20 million in long-term debt), the group's strategy was on the verge of a dramatic shift. Two of the original four partners - Holmes and Smith - wanted to cash out. Neither Holmes nor Eagan will talk about it (their lawyers advised them not to), but the two childhood friends ended their partnership on unfriendly terms.
In September 1997, Shannon sold the Hilton and Holiday Inn-Lido Beach for $28 million, a gain of $6.3 million. Six months later, Key Club Associates and Shannon Resort Group - with the backing of Loeb Partners Realty, a long list of limited partners and San Francisco-based Nomura Asset Capital Corp. - bought out Holmes and Smith and recapitalized the Longboat Key Club. The sale price: $60 million, nearly two and a half times the group's 1990 purchase price. The loan from Nomura was for a maximum of $45 million. Holmes' comment: "I did very well."
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By the time of the refinancing, Eagan and Rasmussen say they had begun to lose their appetite for an expansive empire. They also knew the Key Club was showing signs of age and would need major capital investments to keep it among Florida's elite resorts and golf clubs. The competition - University Park Country Club and Lakewood Ranch's country club - had caught it.
"It would be difficult to manage the other properties knowing what we faced," Eagan says. Besides, he adds, "When we bought out the other partners, we made a strong commitment to the other partner to be involved in the Key Club."
For nearly three years now, Eagan and Rasmussen have been working with golf course architects and agronomy experts to redesign the club's 45 holes in a way that will use much less water - and still create a premier golf course design.
They've also paid for lawyers to spend hours researching whether the Key Club's existing development rights will permit it to add the multimillion-dollar homes. They are crucial to the club's overhaul. If the Town Commission rejects them, Eagan and Rasmussen will lose a key source of profits, which they hope to use to finance their fitness center, spa and new tennis center.
Eagan and Rasmussen also are expecting the town to exact some concessions. "We're very willing to do within reason what the master association requirements are and what makes them feel comfortable," Rasmussen says. "But the mindset that we are our predecessor - developers - is not right. We're not developers. We're developing a one-time piece as the financial engine for the improvement of the club."
Eagan and Rasmussen will begin to make their case Feb. 17. That's when they'll appear with their plans before Longboat Key's Planning and Zoning Board - and, likely, before a roomful of Longboat property owners.
Ask resident Green, one of the parties that sued Key Club Associates back in 1990 and a frequent critic of Eagan, his position on the club's plans, he says: "My enlightened self-interest says if he enhances the golf course and facilities, let him make a few bucks. But we (the town) should get something out of this."
Some memories never fade.
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