UPDATE AT: 4:31 p.m.
The Mountain City Club, a Chattanooga landmark since 1889, is weighing an offer for the purchase of substantially all its assets from the owner of the nearby Westin Hotel.
Dan Saieed, president of the private business club downtown, said in a letter to members that because it has experienced significant and continuing challenges relating to its financial status, the board is examining the potential sale to Chattanooga businessman Byron DeFoor.
"This is due in large part to the substantial reduction in our membership (from approximately 700 members to just above 300 at the present time) while, at the same time, we have experienced an increase in our expenses," Saieed said.
He said that expenses are expected to increase with the aging of the 729 Chestnut St. building and the necessity for increased maintenance for the 27,000-square-foot, three-level structure.
"Our building was originally designed to support approximately twice the current membership," he said. "Because of fixed expenses, the increased need for maintenance, and significantly lower revenue, the club finds itself in a precarious financial condition."
Byron DeFoor speaks to a guest during the grand opening of the new downtown Westin Hotel on Thursday, Nov. 30, 2017, in Chattanooga, Tenn. The luxury hotel was developed by brothers Byron and Ken DeFoor."We did not approach him but he made the approach to us," Saieed said. "In an interest to provide options to the club, we requested that the potential buyer submit a non-binding letter of intent outlining the proposed transaction. The board is now examining this option and will be reporting more details and sharing the letter of intent with the membership in the near future."
A proposed purchase price for the assets of the club, one of the oldest in the Southeast, was not announced.
Neither Saieed nor DeFoor returned multiple calls seeking comment about the proposed deal.
Saieed said in the letter an option to sell would include a move by the club to another facility "consistent with the club's highest traditions, but which would be more manageable from a financial standpoint."
"Rest assured that all the members will be kept abreast as this process continues and official meetings will be conducted with the membership to guarantee member approval," Saieed said.
The club's financial problems aren't new. Three years ago it was struggling but was able to add more than 100 new members.
"There's a big conversation in America right now, and the topic is whether there is a place for a city club anymore," Bob Franklin, then-president of the club, said at the time. "That's the big question, is whether there is still a market for that."
At the time, a couple of challenges were to change the club's image as an old white men's club and to renovate the red brick building.
More than $500,000 in renovations reinvented the club's second floor, transforming it into a business center complete with free Wi-Fi and quiet work spaces, along with work to other parts of the facility.
Also, members looked at what interested young people who they were trying to attract. They determined that young professionals would pay for communal work spaces and participating in business incubators.
In addition, the club had to face its past.
"We have not discriminated in 30 years, but people still ask, 'I'm a woman, I'm Jewish, I'm Catholic, would I be welcome?'" Franklin said at the time. "Of course, all are welcome. You've got to become welcoming to every race, every gender."
Saieed noted in his letter that the financial and membership concerns have been the source of concentrated attention by this and previous boards to improve the club's financial situation by increasing membership and reducing expenses.
For instance, he said, a committee was formed to study the optimization of parking lot revenues.
However, after extensive research, the committee concluded that even increased revenues were not sufficient to return the club to profitability, Saieed said.
"The board also looked into other ways to increase revenue such as a dues increase, which in fact was recently adopted," he said. "However, it is apparent that these measures have not resolved the extreme financial issues facing the club."
DeFoor and his brother, Ken, last year opened the Westin Hotel just across Pine Street from the club in the former BlueCross BlueShield of Tennessee headquarters building. Also, they purchased buildings across Eighth Street from the Mountain City Club.
The club has counted well-known city fathers like Adolph Ochs, Samuel Patton and Harry Scott Probasco among its founding members.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.