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Sunday, May 29, 2016

The Week That Was, may 29, 2016

     Something smells fishy in Myrtle Beach, and the stench is emanating from the relationship between Founders Group International, a major presence in the Grand Strand’s golf industry, and its Chinese-controlled affiliate, Yiqian Funding. Although the parties are supposedly separate and distinct entities, it’s looking increasingly likely that FGI will be forced to sell some of its golf assets as a result of the financial troubles currently being experienced by Yiqian, which is being investigated for alleged fraudulent business practices. The Myrtle Beach Sun News reports that Dan Liu -- he’s one of FGI’s principals, a founder of the investment group that funds FGI’s purchases, and possibly the chairman of Yiqian -- blames Yiqian’s troubles on “the actions of a few employees” and competitors that “have been fabricating stories of the alleged fraud,” and he insists that the company “has done nothing illegal that he is aware of.” Nonetheless, he’s set out to “sell property to relieve the monetary shortage” at Yiqian, specifically “property in the U.S.” This is a strange and complex story that will almost certainly take months to unravel. If you’re wondering, FGI’s assets include 22 golf courses, a group of golf villas, 200 lots for single-family houses, more than 300 acres of raw land, a tee-time call center, and two companies that organize golf outings.

     Two of the oldest private clubs in Milwaukee, Wisconsin have laid the foundation for a merger. The boards of Tripoli Country Club, which was founded in 1921, and the University Club of Milwaukee, a city club that’s operated since 1898, have hammered out an agreement that will be voted on by their members this fall. In a press release, the properties described themselves as “two of the area’s most admired and historic private clubs” and said the merger would offer “the highest-quality experience and amenities available in the region to our combined 800 members.” What’s more, unlike other properties that have joined forces in recent years, Tripoli and the University Club claim to be “operationally and financially sound.” Tripoli features an 18-hole, Tom Bendelow-designed golf course. The University Club describes itself as a place where “the best and the brightest convene to build business connections, enjoy member camaraderie, and foster a deeper sense of shared community.”

      The leaders of Royal Troon Golf Club are metaphorically twisting arms to avoid losing the Open Championship. Royal Troon’s captain has written a letter to the club’s 800 members, politely urging them to vote in favor of accepting women as members lest they end up like their counterparts at Muirfield: True to their single-sex traditions but banned from hosting one of golf’s most coveted professional events. “We care very much for the reputation of Royal Troon Golf Club, and it is important that the club, much like the wider game, reflects the modern society in which we exist,” wrote Martin Cheyne, who noted that he and other club officials have been listening to “the public discussion surrounding the club.” Royal Troon will host this year’s Open, and, as the members of Muirfield have learned, the R&A is no longer inclined to award the event to men-only clubs.

Sunday, May 22, 2016

The Week That Was, may 22, 2016

     Thanks to a loophole in securities laws, Phil “the Gambler” Mickelson -- one of America’s wealthiest sports personalities and one of professional golf’s bona-fide superstars -- has avoided criminal prosecution in an insider-trading case that’s hung over his head for nearly two years. It’s often said that the true scandal of U.S. criminal justice isn’t what’s illegal but rather what’s legal, and Mickelson’s “investments” in Dean Foods serve as a case in point. Though the Securities & Exchange Commission has determined that he was “unjustly enriched,” with nearly $1 million in “ill-gotten gains,” his only punishment will be the financial equivalent of a slap on the wrist.
     Here are the gory details:
     -- Mickelson was part of a stock-trading scheme that involved Thomas Davis, the former chairman of Dean Foods, and Billy Walters, an infamous gambler and arguably the most influential person in Las Vegas’ golf scene. Beginning in 2008, the SEC alleges, Davis began providing inside information about Dean Foods to Walters, and over the next few years Walters used the knowledge to make roughly $40 million in profits on his “investments” in the company. Davis, who’s said to live “a country club lifestyle,” has admitted guilt and is cooperating in the government’s case against Walters, who’s been on the SEC’s hit list for years.
     -- Walters is said to be an outstanding amateur golfer, and he and Mickelson occasionally “play golf together,” according to the Wall Street Journal. As their relationship blossomed, Mickelson began to place bets with Walters. The gambles didn’t always pay off, however, and the SEC contends that Mickelson became indebted to Walters.
     -- In 2012, a time when Mickelson’s total stock holdings reportedly totaled $250,000, Walters encouraged Mickelson to buy some of Dean Foods’ stock. Within days, using three brokerage accounts, Mickelson purchased $2.4 million worth.
     -- Mickelson’s “investments” paid off in spades. He quickly turned a profit of $931,000 -- a return of nearly 39 percent -- and was, according to the SEC’s civil complaint, able to “pay off his debts with the proceeds of the trade.”
     -- The SEC can’t make a criminal charge stick against Mickelson because securities laws stipulate that people accused of insider trading must be fully aware that they’ve received information that isn’t available to the general public. In the Dean Foods case, Walters qualifies but Mickelson doesn’t. Therefore, Mickelson has been named as a “relief defendant,” a term that Fortune defines as “someone who is not accused of wrongdoing but has received ill-gotten gains as a result of others’ illegal acts.” The SEC apparently puts Mickelson’s actions in the category of “conduct that we think is nefarious and undermines fairness in the markets” but cannot be prosecuted. Pay attention: When it comes to securities laws, ignorance is bliss.
     -- So far, Mickelson’s participation in this sorry affair hasn’t cost him his place on the PGA Tour or any corporate endorsements. In fact, if nothing changes from here on out, his penalty for acting on advice from a long-time SEC target will amount to mere pocket change for someone who’s worth hundreds of millions of dollars. The SEC will require Mickelson to return the $931,000 that he made on his “investments” plus $105,000 in interest. And of course, he’ll have to pay his legal fees.
     -- According to his chief lawyer, in these proceedings Mickelson was merely “an innocent bystander.” And, in a statement that makes one wonder about the nature of corporate ethics, the lawyer contends that Mickelson “subscribes to the same values” as “the companies he represents,” a group that includes Callaway Golf, Exxon, Rolex, and KPMG. The companies may not agree.
     Regarding Mickelson’s involvement in the Dean Foods fiasco, a question lingers: If Mickelson’s debt to Walters amounted to less than $931,000, as the SEC’s complaint indicates, why didn’t Mickelson simply write a check to cover it? It certainly wasn’t because he doesn’t have the money. Heck, he put his hands on $2.4 million within days of getting Walters’ tip.
     Or, to put it another way: Why would a rich, famous, well-liked sports celebrity risk his reputation by acting on a recommendation from a gambler who’s repeatedly clashed with the SEC?
     It’s a question that only Mickelson can answer, and one that he almost certainly never will.

      Believe it or not, not all dinosaurs are extinct. A few of them can be found in East Lothian, Scotland, living among the Honourable Company of Edinburgh Golfers, and last week they ganged up to prevent Muirfield from admitting women as members. The R&A responded swiftly, removing the club from its place in the rotation for the Open Championship and serving notice to Royal Troon, which will soon take its own vote on whether to remain a men-only club. “The Open is one of the world’s great sporting events,” the R&A warned, “and going forward we will not stage the championship at a venue that does not admit women as members.” Muirfield’s attempt to break with 272 years of exclusionary tradition was derailed by a Just Say No campaign initiated by a relative handful of members (33 by actual count) who argued that women would be “likely over time to question our foursomes play, our match system, the uncompromising challenge our fine links present, our lunch arrangements.” The club’s attempt to open its doors to women fell short by 16 votes.

     Like Hulk Hogan, Dennis Rodman, Bobby Knight, John Daly, Curt Schilling, Lou Holtz, and other old-school sports celebrities, Jack Nicklaus has pledged his political allegiance to Donald Trump. “Donald’s terrific,” Nicklaus recently said, praising the presumptive nominee for “turning America upside down” and “awakening the country.” The money shot: “He’s a good man. And certainly, if he’s the one that’s on the ticket, I’ll be voting for him.” Nicklaus, a champion of conservative causes, last helped to make American great again by holding a fundraiser for Rick Scott, the Tea Party governor of Florida.

     Finally, a question apropos of nothing in particular: Whatever happened to Hack Golf?

Friday, May 20, 2016

Desolation Row, may 20, 2016

     San Bernardino, California. The golf course that got 15 minutes of fame during the recent terrorist shootings in San Bernardino may soon be history. San Bernardino Golf Club, a venue that dates from 1969, is located across the street from the office building where the killings took place, and some survivors took refuge on its grounds. Now the course’s owner, the city of Riverside, is negotiating with a development group that hopes to turn the club’s 62 acres into an industrial park. The city of San Bernardino hasn’t yet weighed in on the proposal, but it’s bankrupt and may therefore welcome the jobs that development might bring.

     Lexington, South Carolina. It’s time to cue the theme from “Dragnet,” because the 12-hole StoneBridge Golf Course has been sold to a home builder. A division of D. R. Horton appears to have paid between $900,000 and $1 million for the par-3 track, figuring that its 20 acres can comfortably accommodate 150 houses. The seller, Tom Wingard, opened StoneBridge in 2007, just as the economy was being flushed down the proverbial toilet, and he told the State that operating the course had become “a struggle.”

     Mount Juliet, Tennessee. The clock is ticking on Windtree Golf Course, a venue that’s been around since either 1986 or 1991, depending on who’s writing the history. The course’s co-owners, Monty Mires and Danny Hale, have concluded that suburban Nashville needs more houses, so they’ve petitioned for a rezoning that will allow them to build 400 of them. If local officials approve their plans, the partners will turn Windtree’s clubhouse into a community center, and they may preserve a few of the course’s John LaFoy-designed holes, a sentimental gesture that some prospective home buyers may appreciate.

     Pelican Rapids, Minnesota. In its next life, Rolling Hills Golf Course will be an RV park. The nine-hole, 42-acre course, designed by Jimmy Flem, has been owned by members of the Flem family since it opened in 1966. They plan to sell it to a fellow who originally tried to buy it in 2013.

     Wesley Chapel, Florida. Quail Hollow Golf & Country Club, which claims to have “one of the finest 18-hole championship golf courses in the state of Florida,” is officially on the endangered list. Quail Hollow was established in the mid 1960s but went out of business during the Great Recession, and now its owner, an LLC controlled by Andre Carollo, aims to capitalize on an improving economy by turning the club’s 175 acres into a gated community of 400 homes. It’s a significant change of direction for Carollo, who purchased Quail Hollow in 2010, reportedly for $1.7 million, and reopened the club a year later. Obviously, the golf business wasn’t all he’d hoped it would be.

     Pine Bluff, Arkansas. The local army base has decided to close its golf course. Citing “a steady decline in memberships and daily play,” Pine Bluff Arsenal expects to turn out the lights at Pine Haven Golf Course by the end of the month. The course’s nine-hole layout opened in 1948.

     Vacaville, California. Time has run out on Green Tree Golf Club, a 27-hole venue that’s operated since the early 1960s. “The golf course has not been economically viable for many years,” said Jim Syar, a member of the family that’s owned the property from the beginning. The numbers tell the story: According to the Reporter, Green Tree once rang up more than 110,000 rounds of golf a year, but today it gets only about 30,000. The property’s 18-hole course was designed by William F. Bell.

     Moore, Oklahoma. If local officials can be persuaded, Broadmoore Golf Course is going to become a subdivision. The course has operated since 1962, and a local television station says that home owners in the Broadmoore community “are furious about the possibility of more homes being built there.”

     Delaware, Ohio. If a proposal submitted by T&G Properties is approved, Delaware Golf Club is going to lose nine of its 18 holes. So you tell me: Will T&G close Delaware’s Donald Ross-designed holes, its Michael Hurdzan/Fuzzy Zoeller-designed holes, or a combination of both?

Sunday, May 8, 2016

The Week That Was, may 15, 2016

     The PGA Tour is bringing its “branded” version of golf to Colorado. The tour plans to establish a Tournament Players Club in Berthoud, roughly 40 miles north of Denver, as part of a 1,200-unit community called Heron Lakes. A group operating as Heron Lakes Investments LLC has reportedly broken ground on TPC Colorado’s $15 million golf course, which could have its “soft” opening in the summer of 2017. One potential fly in the ointment: The Business Den says that the developers are still “working on bank financing.” TPC Colorado’s 7,900-yard layout -- it’ll reportedly be the first new course to open in Colorado since 2009 -- has been designed by Art Schaupeter, who previously designed a course for the people behind Heron Lakes in Windsor, Colorado (Highland Meadows Golf Course). At an appropriate time in the future, the tour is expected to bless TPC Colorado with an event on the Web.com Tour.

     A New York City-based investment banking firm wants you to believe that Baby Boomers will soon lift the U.S. golf industry out of its persistent doldrums. Based on a survey of 410 Americans (Warning: Small Sample Size) who plan to retire within six years (Warning: Even Smaller Sample Size), Jefferies Group has concluded that future Baby Boomers are going to take up golf in significant numbers and deliver at least 50 million “incremental rounds,” whatever they’re supposed to be, to our nation’s golf properties. This is good news, to be sure, but it begs an important question: How seriously should we take Jefferies’ data? As Bloomberg helpfully notes, the survey’s respondents are richer than the average Baby Boomer, a fact that makes the findings unreliable. What’s more, as Jefferies itself admits, it “skewed the survey” toward men -- 69 percent of the respondents -- so it could “get more robust answers around golf.” So there you have it: Jefferies’ survey is merely a publicity stunt. Anyone thinking about making an investment based on such flawed data should be reminded that synonyms for skew include words such as misrepresent, falsify, and fake.

     As part of a broad-based campaign to inject some life into what’s been described as “a plodding economy,” South Korea is hoping to persuade its citizens to play more golf. According to Reuters, South Korea’s 50.6 million people already spend about $13 billion annually on golf -- almost $260 per capita -- but the government believes that they’d spend more if the sport wasn’t so darned expensive and inaccessible. So, to address those problems, the government is trying to reshape the golf industry by encouraging public courses to lower their greens fees and offering incentives to help private clubs go public. By taking these steps, the government has opened the door to a brave new world for golf in South Korea. It’s too soon, however, to determine if the nation’s course owners and operators will buy what the government is selling.

     South Korea’s efforts to boost golf participation may soon take on a special urgency, because Reuters reports that interest in golf in the nation is “plateauing.” Citing data provided by the Korea Leisure Industry Institute, the news service says that the nation’s 473 golf courses recorded only a 5.3 percent increase in visits last year, the lowest number in three years. Although such an increase would be a cause for celebration in the United States, it’s a disappointment for South Korea’s golf industry, which is said to have posted annual double-digit increases in play though most of the 2000s.

     This week, the European Tour added a pair of Portuguese golf communities to its real-estate network, a chain that now includes 21 high-end spreads in Austria, England, France, Germany, Malaysia, Spain, Thailand, and other nations. The newcomers to the collection are Bom Sucesso, roughly an hour’s drive north of Lisbon, and Tróia Golf Resort, a slightly longer drive south of the city. Both communities have 18-hole courses. Bom Sucesso and Tróia form a troika of European Tour Destinations with Quinta do Lago, a community on the Algarve that features three 18-hole tracks. Bom Sucesso features a Donald Steel-designed course that opened in 2008, while Tróia’s 35-year-old, Robert Trent Jones-designed layout has been described by Top 100 Golf Courses as “magnificent, engaging, and also highly under-rated.” All told, the European Tour has added four communities to its holdings so far this year, matching the number it added in 2015. The previous additions of 2016 are ">Lighthouse Golf & Spa Resort in Bulgaria and Albatross Golf Resort in the Czech Republic.

Friday, May 6, 2016

Transactions, may 6, 2016

     Middletown, Rhode Island. A Boston-area development group is the new owner of a venue that calls itself “one of New England’s finest golf courses.” Combined Properties has purchased, for an undisclosed price, the 350-acre Newport National Golf Club. “As a golf enthusiast and resident of the community,” Combined’s president said in a press release, “I was thrilled when this rare opportunity presented itself.” The club’s featured attraction is its 18-hole Orchard course, a co-design by Arthur Hills and Drew Rogers that opened in 2002.

     Wellington, Florida. Mark Bellissimo is trying to capitalize on whatever synergies exist between golf and polo. Bellissimo, the principal of the group that owns the Palm Beach International Equestrian Center, has acquired the nearby Wanderers Club, reportedly for slightly more than $6.86 million. The seller was a trust affiliated with John Goodman, who’s currently serving time for driving under the influence and manslaughter. In 2005, Goodman reportedly paid $9 million for what was then called Wellington Golf & Country Club, and he hired Peter Jacobsen and Jim Hardy to redesign the club’s 18-hole, Johnny Miller-designed golf course. The new Wanderers Club added a polo field to its driving range, and the Palm Beach Post reports that Bellissimo intends to run shuttles between his polo club and the golf club “to increase the reach of his budding equestrian empire.” Incidentally, the Wanderers is said to have a second golf course, an 18-hole, executive-length track, that’s still for sale.

     Rutherfordton, North Carolina. Mark Bellissimo has also purchased a golf course to complement his polo operation in North Carolina. Bellissimo and his partners have closed on Cleghorn Plantation Golf & Country Club, a 44-year-old property that’s said to be less than seven miles from their Tryon International Equestrian Center. Cleghorn, which features an 18-hole, George Cobb-designed golf course, will henceforth be known as the Fairways at Tryon Resort.

     Cornwall, New York. One of our nation’s oldest golf properties, one that’s been in financial trouble of late, has changed hands. Storm King Golf Club, which had its debut in 1894, has been rescued by Adrian Goddard, a real-estate developer, and his wife, Donna. No need to fear for the course’s future, however, because it appears that deed restrictions will oblige the Goddards to continue operating the club and its nine-hole course. Besides, Adrian Goddard told the Middletown Times Herald-Record, “I can’t think of anything nicer than just sitting here and peering out across the valley.” To be sure, though, Storm King has most certainly seen better days. The newspaper reports that a “combination of heavy debt and declining membership” had “spun the club into bankruptcy,” and the Goddards bought it from a local bank for an undisclosed amount.

     Henderson, Kentucky. An offer has been placed on the defunct, rapidly over-growing Players Club. Mike Chambers has agreed to buy the 18-year-old venue, which closed in March and which has likely met its permanent end. The Players Club had once been owned (at, at the time of its closing, was being leased) by Danny McQueen, a member of the Kentucky Golf Hall of Fame and the owner of several golf properties in the state. The Gleaner says that the club lost about $250,000 over the last four years of McQueen’s ownership. “It didn’t get the support it needed, and we couldn’t make it work,” McQueen confessed. Earlier this year, McQueen sold one of his remaining courses, Dix River Golf Course in suburban Lexington. He still owns two venues in Nicholasville, Keene Trace Golf Club and Golf Club of the Bluegrass. Chambers hasn’t announced any plans for the Players Club property, but the Gleaner says that “it appears the site’s days as a golf course may be over.”

     Mount Pleasant, South Carolina. The owner of two golf properties in Mount Pleasant has acquired a third. Jim Feeney, acting through an LLC, reportedly paid $5.5 million for Dunes West Golf & River Club, a venue that’s been described as “a trophy property in the Charleston market.” The club, which opened in 1991, features an 18-hole, Arthur Hills-designed golf course. Feeney, who’s said to be a New Jersey-based investor, bought the club and other real estate from a group led by John Wieland Homes, which is developing the accompanying Dunes West community. Feeney’s other holdings in the city are RiverTowne Country Club and Snee Farm Country Club.

     Orrington, Maine. The financially at-risk Rocky Knoll Country Club is facing an uncertain future. Erlene “Stella” Morgan, a self-described “self-made businesswoman,” paid $350,000 for the property at a foreclosure auction in March. She didn’t commit to operating the club and its 18-hole course, and, when asked if she would honor previously sold memberships, she reportedly replied, “I will honor [them] if we continue the course.” Orrington’s town manager told the Bangor Daily News, “I would not be surprised if she was looking to develop something, but I do not know.” The newspaper reports that Morgan placed the only bid on the 16-year-old club, which has an assessed value of $629,000.

     California, Kentucky. The owners of a small grocery-store chain have purchased the former Flagg Springs Golf Course. Vic Dawn and Scott Schoulties, who operate a trio of Marketplace stores, paid an undisclosed amount to Jack Morris for the 120-acre Flagg Springs property. The club, which opened in 1997, is now known as Twin Bridges Golf Club.

     Sault Ste. Marie, Michigan. Two members of a local family aim to breathe new life into one of the state’s oldest golf courses. Fred Benoit, Sr. and his son, Fred Benoit, Jr., have agreed to pay $450,000 for the Crossings at Sault Ste. Marie, an 18-hole layout that the Sault Ste. Marie Evening News says “had fallen on hard times” in recent years. According to the newspaper, the city will net just $22,000 from the sale after it pays the property’s debts and obligations. The Crossings was reportedly founded by employees of Union Carbide Corporation and opened in 1901, 1903, or 1906, depending on who’s writing the history. Back then, the course had nine holes and was the centerpiece of what was called Sault Ste. Marie Country Club, and it stayed that way until the mid 1980s, when Jerry Matthews redesigned the original nine and added a second nine. Fred Benoit, Jr. told the newspaper that he and his father hope to make the course “one of the top semi-private golf clubs in northern Michigan.”

Sunday, May 1, 2016

The Week That Was, may 1, 2016

     Bob Husband is back to buying and operating golf clubs again. Husband’s new ownership group, Bellagio Road, has agreed to acquire Rancho Murieta Country Club, a venue in suburban Sacramento, California that dates from the early 1970s but has had financial difficulties in recent years. Although the transaction hasn’t yet closed, the sale has been approved by 95 percent of Rancho Murieta’s 1,040 members, and the club’s president believes it’ll provide “the cash infusion and capital improvements we so badly need.” Husband was most recently the president of Heritage Golf Group, whose portfolio has shrunk to nine properties in five states, and before that he was the president of another ownership entity, Cobblestone Golf Group. (Before that, he led a division of ClubCorp.) Husband hasn’t announced a game plan for Bellagio Road, but at this point it appears that he views it as a boutique firm. “I don’t want to run 20 or 25 courses. I want to run one or two,” he told RanchoMurieta.com. “I’m not saying I won’t buy two or three, but my goal is to buy one at a time and run it and see how it goes and maybe buy another. I just don’t know yet.” Rancho Murieta features two 18-hole golf courses, one originally designed by Bert Stamps (it was later redesigned by Arnold Palmer) and one by Ted Robinson. If Husband can complete the purchase, he intends to build a pool and a fitness center, a move that he believes will add nearly 500 new members to the club.

     Peter Nanula’s investment group is poised to acquire its 13th golf property. Concert Golf Partners has agreed to buy Crestview Country Club, a financially troubled venue in Wichita, Kansas that features a pair of 18-hole, Robert Trent Jones-designed golf courses. The club, which admits to being “faced with a number of unpleasant decisions” that need to be made, believes the sale will liberate its leadership from “a very difficult business.” A price hasn’t been announced, but if the transaction is completed Concert Golf will eliminate Crestview’s debt, initiate a series of capital improvements, and, according to the club’s board of directors, “run the club the way a country club should be run in today’s market.” Concert Golf currently owns a dozen golf properties in eight states, and it’s said to have its eyes on a club in Rockville, Maryland. Crestview was founded in 1921 and claims to be the state’s only 36-hole facility.

     If there’s smoke in Beijing, might there be fire in Myrtle Beach? It’s a question people are asking, because the Chinese parent of Founders Group International, the owner of 22 golf courses on the Grand Strand, is being investigated for possible fraudulent business practices involving as much as $1.5 billion. The Myrtle Beach Sun News, citing reports in Chinese publications and other sources, says that Yiqian Funding’s troubles with the law are related to “U.S. golf course purchases” and involve “a Ponzi Scheme, shell companies, and internet fraud.” Not surprisingly, the accusations are worrisome to elected officials in Myrtle Beach. “I need to find out more about what’s going on,” the city’s mayor told the Sun News. “It would be a black eye on what we’re looking at down the road and how people look at a Chinese investor and where all this money is coming from.” Representatives from both Yiqian and Founders Group have professed their innocence.

     Greg Martin has become the new president of the American Society of Golf Course Architects. The Batavia, Illinois-based designer hasn’t announced any initiatives that he intends to pursue, but he believes that golf architecture is “an opportunity to establish an exceptional interaction between man and the natural environment while solving cultural, environmental, or engineering requirements.” Martin’s best-known course is probably Rich Harvest Links, an 18-hole track in Sugar Grove, Illinois that hosted the Solheim Cup in 2009 and will host the NCAA Division I men’s and women’s championships in 2017. Martin replaces Steve Smyers, who replaced Lee Schmidt.