Palisades Tennis Club Splitting Up, But Playing On

*EDITOR’S NOTE: On Friday, Palisades officials wrote on social media that “last minute negotiations have opened up” and the move-out date has been pushed back as they work on a long-term deal, with the possibility of a 10-year extension. In the meantime, things will go on as normal at the Club.*

A longtime local tennis club is set to break up its property, but plans to continue on in some capacity, as the club owner and one of the property owners failed to reach an agreement.

Palisades Tennis Club sits on two separate parcels of land at 1171 Jamboree Rd.

The first parcel, comprised of courts 1–6 and the parking lot, is leased from the Hyatt Regency Newport Beach, which has recently renewed their lease with Palisades, club owner Eric Davidson confirmed in a phone call on Wednesday.

The other parcel, comprised the back half of the tennis club property and the clubhouse building, is owned by Newport Beach resident and real estate investor Russ Fluter. No deal has been made and Palisades has been ordered to vacate the property by Saturday.

The 45-year lease for back part of the property ended on Aug. 31, but Palisades was granted a temporary extension during negotiations.

In August, Fluter previously expressed “no interest” in renewing or extending the club’s lease. However, following a passionate member-driven letter campaign and some positive conversations club officials were “cautiously optimistic” for a deal.

Both leases expired on Aug. 31 so Davidson was negotiating with both Fluter and the hotel property owners.

Discussions with the hotel for were on and off over the last few months, but all were very positive, Davidson said. They completed the deal on Jan. 20 (retroactive to Aug. 31) for a one-year lease that essentially rolls over annually, he explained.

Conversations were also going amicably with Fluter, Davidson said, but they never reached an agreement. They were going back and forth with numbers and possible extension leases, but couldn’t settle the matter, he said.

Davidson said he has asked Fluter what he wants but has gotten inconsistent answers.

“I think I’ve been specific and clear in what I believe is best for Palisades,” Davidson said. “He’s chosen to disagree.”

Near end of January, they entered into a stipulated judgement which set the Feb. 29 date to vacate. Palisades paid the back rent and attorney fees, Davidson confirmed.

There were still some discussions about the property and Palisades officials were still cautiously optimistic, but about a week ago Fluter conveyed that he had “no interest whatsoever” in giving an extension, Davidson explained, and the Feb. 29 was locked in.

In a letter to members shared on Sunday, Davidson wrote that he did his best to work with Fluter, but negotiations eventually came to a “standstill.”

“We must face the fact that it’s time to implement the backup plan,” Davidson wrote.

Notice was served on Tuesday, Davidson said. They had held out hope for a 60-day extension but it was not granted, he confirmed on Thursday.

They are preparing to vacate the property over the weekend, he added.

“Shutting down the clubhouse and moving all our possessions from the Fluter property by Monday will be difficult, if not impossible,” Davidson said.

All of the furniture, nets, lights and everything else belongs to the tennis club, he pointed out.

Palisades officials will move a modular building with as many full-facility services as they can manage, including a pub, social area, and lavatory facilities, onto the Hyatt property to replace the current clubhouse. They will operate with the six tennis courts that are on Hyatt land. Palisades members will still be granted access to Hyatt pools, workout facility and restaurants.

The current plan is to manage the courts as they previously did, with the Ladies’ Leagues continuing as close as possible to business-as-usual (there may be a 30-minute adjustment to the schedule). The High School Boys Tournament will be held in March as planned, as well as other calendared events for the remainder of the year. They intend to operate the courts on a drop-in basis during the weekends to continue to ensure good matches.

For security reasons, they will also install a fence separating the two properties, Davidson said.

Fluter’s property is essentially landlocked, although access through the parking lot could allow for a drop-off/pick-up area. It is also possible to take out a couple of courts to add parking.

It’s unknown what Fluter’s plans are for the property.

Fluter had no comment on the issue during a call on Wednesday and directed that questions be forwarded to a local marketing and PR company. Company representatives did not respond to a request for comment by the time of publication.

In a press release shared on Monday, officials announced Davidson as the new owner of Palisades Tennis Club and a renewed lease with the Hyatt Regency Newport Beach.

Davidson is the Chairman of the Board of World Team Tennis and owner of the Orange County Breakers tennis team.

Putting his Breakers team owner hat on, Davidson said it’s an inconvenience and awkward, but they’ll find a place to play.

Ken Stuart, who has owned the club since 1995, has decided to step down.

Stuart turned over ownership to Davidson late last year.

“I had a good run,” Stuart said in a phone call Wednesday.

He’s been with the club in some capacity since the beginning, when legendary local resident John Wayne helped create it.

When he bought the club more than 20 years ago he met with Fluter and there didn’t appear to be any big plans for the property.

He absolutely cannot fault Fluter for trying to make the most out of his property, Stuart emphasized.

“I think that’s natural for a real estate investor,” he added.

Although he is surprised at this outcome.

“I’m shocked,” Stuart said. “They’re two nice guys, Eric and Russ, that can’t quite seem to get together to make a deal… But I hope they can work something out.”

Stuart, who emphasized that he is an outside observer in this process, pointed out that there may be a fight over the easement and ingress and egress to the property. The clubhouse also has to be updated, Stuart noted, and that it may require approval from the California Coastal Commission, which could take years.

“It doesn’t make sense to split it up,” Stuart commented.

It’s zoned recreational so the simplest solution would be to keep it as one facility. If for no other reason than it can’t be used for anything else, Stuart said.

Mayor Will O’Neill noted in a phone call this week that he doesn’t know of any anticipated change in zoning.

Currently, Palisades has about 400 members, or up to 800 individuals since “members” can be couples or families.

Due primarily to this situation, the club has lost approximately 200 members over the past two years or so, Davidson said.

“As the situation has become more dire we continue to lose members at an accelerated rate,” he said.

Davidson confirmed that the 31 employees at the club will still have their jobs for at least the next six months.

“The intent of the club is to employee all of those people going forward for up to six months and hopefully we’ll have a resolution by then…a long-term plan,” Davidson said. “Whether that’s negotiation with Fluter or we found another site or we decide to be a six court club… what that long-term solution is I don’t know.”

Some employees have been at the club for 15 years or more, some members as many as 25–30 years.

“To see them lose such a big important part of their lives and a big part of the community is very difficult,” Davidson said.

As a longtime Palisades member himself, it’s been a challenging time, Davidson said.

Depending on what that solution works out to be could considerably change the plans for the future of the club.

If they stick with the six-court option, Palisades could work with the hotel and build a smaller, permanent clubhouse.

It’s important that the legacy of Palisades continue, Stuart emphasized.

“I feel very strongly that if the legacy is to continue in the city, for the benefit of the sport, the city, and the county, that Eric Davidson is the man,” for the job, Stuart said.

It is possible for the legacy to continue at another location, Stuart said, in addition to the six courts they currently run.

Stuart expressed excitement over, as he calls it, Palisades “3.0,” whatever that may be. Davidson has some “amazing” ideas for the club, he added.

Davidson has previously expressed plans to make a major capital investment in Palisades to “completely rebuild and renovate the club to world-class standards.”

Los Angeles-based real estate investment and development firm Woodridge Capital Partners bought the Hyatt Regency Newport Beach in June 2018. They are also working on a long-term renovation plan for the hotel.

Davidson is not somebody who will sit on his hands, Stuart said.

“He’s going to move forward, whatever that means, I don’t know,” Stuart said. But “I’m very optimistic.”

In his letter to members, Davidson emphasized that the members are what make Palisades special, not the physical items or land. The people at Palisades have made it a community, he added. Their “deepest desire” is to keep the Palisades family together, he added.

“Even in the face of this challenge, we firmly believe that Palisades has an exciting future,” Davidson wrote. “We have big plans for improvements and expansion of Palisades, even without Mr. Fluter’s property. In fact, our vision is for the club to become even bigger and better over the next year.”