The Week That Was, april 13, 2014

     After bottoming out in 2012, the prices of U.S. golf properties are rising quickly. According to figures provided by Marcus & Millichap’s National Golf & Resort Properties Group, the average price of an operating, regulation-length golf course increased by 57 percent last year, to $4.25 million. “The golf-course sales market looks to be recovering and stabilizing,” M&M’s Steven Ekovich told Bloomberg. “Bank financing is slowly returning, the average sales price is rebounding, there are fewer foreclosures and bank repossessions, and more courses are back to producing positive cash flow.” U.S. golf properties are still valued at far less than they were in 2006, when they hit a peak of $7.33 million, but course owners who’ve managed to hold on through the darkest days of the Great Recession appear to again have a reason to believe.

     A California-based, Chinese-owned golf-course owner has been accused of running a Ponzi scheme. The Securities & Exchange Commission has filed a complaint against World Capital Market, Inc. and other entities controlled by Ming Xu, alleging that they defrauded tens of thousands of investors in a bogus venture that involved cloud computing services. The Riverside Press-Enterprise quotes from the complaint: “This matter involves an ongoing pyramid scheme, Ponzi scheme, and misappropriation of investor funds through an unregistered securities offering that targets members of the Asian-American and Hispanic-American communities, as well as foreign investors.” The SEC estimates that the scheme raised $65 million, part of which was used in 2013 to purchase Golf Club at Glen Ivy in Corona and Links at Summerly in Lake Elsinore. Both properties are currently being operated by a receiver.

     When it comes to spending on golf construction, few private developers would dare run up a tab like the City of New York. Citing figures provided by the city’s budget office, the New York Daily News reports that the municipal layout in the Bronx will cost taxpayers $181.4 million plus $54.6 million for a waterfront esplanade and various other items. The total amount: $236 million, an amount that qualifies it as “one of the most expensive golf courses ever built.” (Thankfully, taxpayers won’t have to foot the cost of the track’s $10 million clubhouse.) The Daily News identifies just two golf properties that cost more: Trump National Golf Club in Los Angeles, California ($260 million) and Liberty National Golf Club in Jersey City, New Jersey ($250 million). New York City’s course, a Jack Nicklaus “signature” track, is scheduled to open in the spring of 2015.

     Thanks to what’s been called a “frugality campaign to curb excess,” fewer wealthy government officials are showing up at China’s golf courses these days. As a result, says China Daily, some high-priced spreads have been compelled “to swing toward the middle class.” Since late 2012, the newspaper reports, the Communist Party’s Central Commission for Discipline Inspection has forced people in a position of power to return any membership cards they received as gifts from the owners of golf clubs. Such gifts can, after all, be viewed as a form of bribery. “If officials accept membership cards,” explained the editor of a golf magazine, “they will be more likely to abuse their power to seek gains for the businesspeople who provide them.” The purification initiative has led to a loss of play at some Chinese courses, presumably because even the rich think that golf costs too much.

     Continuing a process it initiated last year, a Canadian lender has taken possession of four Charlotte-area golf properties that had been part of Jeff Silverstein’s financially distressed Carolina Trail. Toronto-based Romspen Investment Corporation now owns Tradition Golf Club in Charlotte, the Divide Golf Club in Mathews, Birkdale Golf Club in Huntersville, and Highland Creek Golf Club in Charlotte. The company has vowed to restore all four courses to what it described as their “rightful place” among the area’s top daily-fee venues, but it ticked off some of its customers by announcing that it won’t honor any memberships that the Carolina Trail previously sold. Romspen also extended loans to one other course in the Carolina Trail, Waterford Golf Club in Rock Hill, South Carolina. It’s reportedly in the process of buying Waterford out of foreclosure.

     Under IMG’s ownership, the annual Golf Business Forum is taking on a decidedly different character. Gone is the emphasis on development that was prevalent when KPMG’s Golf Advisory Practice ran the event, and so is the parade of architects -- Jack Nicklaus, Gary Player, Nick Faldo, Greg Norman, and Annika Sorenstam among them -- who attracted so many attendees. The familiar faces have been replaced with speakers who have only an indirect relationship to golf, among them representatives of HSBC, YouTube, McLaren Applied Technologies, Etihad Airways, and Dubizzle. In addition, the topics to be discussed at this year’s event -- it’ll be held in Abu Dhabi later this month -- have changed dramatically. They include “the business case for golf sponsorship,” “golf’s future as a televised product,” “how to pitch your business idea,” and “how the next generation of performance data analysis technology is changing professional sport.” Some things never change, but the Golf Business Forum isn’t one of them.

     Just weeks ago, a socio-cultural commentator claimed that farming was “the new golf.” Before that, “the new golf” was at various times gardening, meditation, yoga, or triathalon competitions. The latest: bicycling. “Cycling is the new golf,” contends the Canberra Times. The newspaper describes the sport as “a trend that’s being observed Australia-wide,” especially among white-collar professionals looking to network. Here’s the technical analysis: At the turn of the past century, according to data provided by Bicycle Network Victoria, Australia was home to 1.3 million golfers and 649,000 bicyclers. Today, the numbers have essentially reversed. In 2011-12, Australia had 860,500 golfers and nearly 1.37 million bicyclers. Nobody knows if the trend will hold, but anyone hunting for “the new golf” knows that cycling sure beats yoga.

     Can the golf business capitalize on a truly awesome celebrity golf sighting? Beyonce, the mega-star singer and actress, hit the links during a vacation at Casa de Campo in the Dominican

Republic. She and her husband, Jay Z, posted pictures to prove it. Her outfit may not conform to accepted golf traditions, but it would be a mistake to discourage her. She’s a certified trend-setter, Golf Digest says she has 11 million Instagram followers.