The Week That Was, august 25, 2019

     Concert Golf Partners is once again flush with cash.
     The Newport Beach, California-based owner/operator has secured a $100 million financial commitment that secures its place at the top of the club-acquisition food chain. Peter Nanula, Concert’s chairman, figures that the money will enable his firm to add eight to 10 private clubs to its portfolio and make capital improvements to both new and existing properties.
     “For a lot of clubs, it all comes down to capital,” Nanula notes. “Because we have capital, we can solve problems and take on risks that clubs can’t.”
     The new funding ensures that Concert, which owns 20 clubs, will be able to compete for properties with ClubCorp, its much larger and most significant rival. Both companies are among a very small group of owner/operators that have money for acquisitions, and both are on the prowl for the same type of property: Mid- to upper-tier “lifestyle” clubs in metropolitan areas that have lost members or become burdened with debt and now find themselves in need of money that will allow them to make the facility improvements they need to remain competitive in their markets. Generally speaking, Concert and ClubCorp target member-owned clubs that generate revenues of $5 million to $10 million annually.
     Although the companies are always seeking to increase their holdings, 2019 has been a quiet year for them. Concert has acquired just one property, Plantation Golf & Country Club in Venice, Florida, while ClubCorp, as best I can determine, hasn’t made a purchase since late 2018, when it bought Ridge Club, a venue in Sandwich, Massachusetts that’s changed hands at least five times since 2003.
     In fact, the companies’ portfolios are so similar that ClubCorp tried to buy 16 of Concert’s clubs in the spring of 2018. The prospective sale collapsed in the late stages of the negotiations, due to what Nanula described at the time as disagreements related to price, terms, and “softer issues” concerning “commitments we have made to our members.”
     Concert has twice previously amassed investment funds that provided it with a total of $150 million, money that it used to acquire seven golf properties in Florida and 13 in Indiana, North Carolina, Pennsylvania, and seven other states. The money in the first two funds came from 60 to 80 high-net-worth individuals and families. The third fund has commitments from some of those same individuals and families as well as from a pair of New York City-based entities, Fireside Investments and Blackstone Tactical Opportunities.
     Nanula says that Fireside and Blackstone have expertise in hospitality, and he believes that their counsel will be valuable to Concert in the future. “As we grow,” he explains, “it’ll be useful to have professional investors with experience in hospitality.”
     Concert’s next acquisitions aren’t right around the corner. Nanula reports that he has “a number of possibilities in the pipeline,” but no purchases are imminent. He hopes to acquire one or two clubs before the end of the year, but he acknowledges that it’ll take “a few years” to spend the $100 million he now has to spend.
     “We’re going to keep doing what we’ve been doing,” he says. “All 20 of our clubs are successful and thriving, and each one has exceeded the business plan we set for them. We have a model that works.”
     Concert was scheduled to finalize the transaction for the third fund last week.

     Duly Noted – The owners of Congaree Golf Club, who’ve convinced the golf media that they “aren’t interested in attention,” are bidding to host the Presidents Cup competition in 2025. The event, one of the biggest and brightest in golf, features the world’s greatest golfers, gets international media coverage, and attracts thousands of fans from all over the planet. . . . While promoting his “re-imagining” of the defunct Desert Inn Golf Course in Las Vegas, Tom Fazio seized an opportunity to articulate a bit of his design philosophy. “There are no rules in course design, and there are endless possibilities,” he told the Las Vegas Review Journal. “That flexibility is what makes it fun.” . . . Thailand has downgraded its tourism expectations for 2019, and Golfasian reports that hotels in the nation’s top golf destinations – among them Pattaya and Hua Hin – are offering “great deals with price rollbacks to levels of what they were 3-4 years ago.” This news ought to serve as a warning to developers in Vietnam and other emerging golf nations: Just when you start thinking that the sky’s the limit, along comes an economic downturn.

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