In financial terms, a debenture is defined as a long term financial commitment that is often employed by big companies as well as governments as a means to raise funds. Debentures are also often referred to as shares or bonds and are similar to bonds in that the party issuing the debenture or bond in effect owes the receiving party a debt. Debentures differ from bonds in that they are not secured on any specific asset while a bond could be secured on an item of increased financial interest in terms of the security offered in return for the debt.
When speaking of larger companies, debentures may be issued to raise funds for the purchase of new premises or to undertake any major works, particularly in the cases of the sports and arts in which debentures have been used very successfully to contribute to acquisitions of construction of sporting venues. Wimbledon Tennis Club for example, introduced debentures in the 1920s to be able to purchase the current famous venue in SW18 and currently operates a structure involving procurement of debentures every 5 years. A more recent example would be the huge venue that is the new Wembley Stadium that was not built without the help of debentures being sold.
Those holding debentures are then entitled to benefits such as availability on the best seats on Centre Court for the period of the debenture and a number of large popular venues for concerts, football and tennis matches offer debentures.
Debentures are usually transferable and the owner has full rights to sell the debenture on at profit, for this reason you would see debentures for popular venues being sold for serious amounts of money. The advantages of course are that the debentures are not pledged against assets and therefore do not place any added burden on the assets of the issuer, but rather, offer the owner privileges or rights.
In terms of Golf debentures, they are essentially shares in the golf course that are available for anyone to buy in to and offer the owners specific privileges and rights over the golf course as far as prices and actual play are concerned against non debenture holders. For example, cheaper or even free green fees for a set period or duration of the debenture may be on offer and it is often found that golf clubs offer debentures and holders are known as members.
It is no great surprise therefore that the golf debentures are also a popular method of raising funds amongst developers of residential resorts set around golf resorts. Polaris World for example, reportedly the largest developer of residential tourism in Europe, is currently building a number of residential resorts in the area of Murcia, South East Spain and introduced golf debentures in November 2007. There are currently a number of resorts under construction and some already being played.Together, the total number of 9 golf courses that are being designed by the world renowned Jack Nicklaus and his company Nicklaus Design, will be known as the Nicklaus Golf Trail and the golf debentures entitle the holder to preferential rates on the green fees for the first couple of years of the 25 year debenture as well as discounted rates.
Golf debentures do not come cheap though, and as they pass hands on the resale market they can go for upwards of 40,000EUR as has been seen in the case of another popular development in the region, the La Manga Club which is also famous for other sporting venues and activities. If you are a keen golfer and live on a residential complex where you have endless opportunities to play golf, then a golf debenture may be just what you need.
by Louise James