The Week That Was, june 26, 2016

     A new financial analysis suggests that Donald “the Candidate” Trump’s golf properties aren’t as great as they’ve been cracked up to be.
     Reuters has determined that Trump’s golf operations are at best just “breaking even or making modest gains” and that, despite his supposed business acumen, the presumptive Republican nominee for president “could have lost hundreds of millions of dollars investing in golf.”
     Perish the thought, but if what Reuters says is true, Trump’s golf properties may not be more profitable than his casinos were.
     Here’s how it all boils down: Based on figures gleaned from public records, Reuters has concluded that Trump has spent $330 million on existing golf properties or on land that he’s turned into golf properties, plus $800,000 on improvements to his properties. The total: $1.13 billion. To determine what the portfolio is currently worth, the news service used standard golf-industry valuation practices but increased the value of properties that have development potential or “trophy status.”
     The unfortunate result: It appears that Trump’s golf holdings might only fetch between $500 million and $600 million on the open market.
     Not surprisingly, Trump disputes Reuters’ calculations. “The golf courses are doing very well,” he insists. “Every one of them makes a lot of money.”
     Of course, Trump’s claims can’t be verified. In the absence of reliable information, all anyone can do is speculate.

     Two decades after it was originally proposed, the first of the new-wave international golf ventures in Cuba has been taken off life support. The Associated Press reports that 360 VOX, a development group based in Montreal, Quebec, is “preparing to break ground” on Jibacoa, a ridiculously long-overdue resort community that’s slated to take shape on waterfront property near Santa Cruz del Norte, about 45 miles east of Havana. Promises associated with Jibacoa haven’t often been kept, but 360 VOX says it’s going to break ground late next year on 2,700 villas and apartments, four high-end hotels, and a 27-hole golf complex. “One thing you need to have here is patience,” one of the firm’s principals noted. “Companies shouldn’t come to Cuba if they don’t have a long-term view.” If history is any guide, though, it wouldn’t be wise to put any bets on 360 VOX’s chances. Jibacoa has already put one Canadian company out of business, and it’s arguably the quintessential cautionary tale about golf development in Cuba, where so much has been promised but nothing has so far been delivered. Hopefully, 360 VOX has deep pockets.

Transactions, june 24, 2016

     Gilroy, California. Our nation’s number-one Jack in the Box franchisee has acquired his second golf property, this one in the garlic capital of America. An entity controlled by Aniil Yadov has reportedly paid $3.8 million for Eagle Ridge Golf Course, an 18-hole track that was co-designed by Johnny Miller and David Dale of Golfplan. The Silicon Valley Business Journal reports that the seller was a group affiliated with Zgolf, a golf operator that acquired Eagle Ridge last year “for around the same price as it just sold for.” Eagle Ridge, which opened in 2000, is the centerpiece of a community that was reportedly developed by Shapell Industries. Yadov, who’s said to own 219 Jack in the Box restaurants and more than 40 other eateries, also owns Pala Mesa Golf Course in Fallbrook, California.

     Three Rivers, Michigan. A group of investors has purchased Sauganash Golf Club, which features an 18-hole course designed in part by A. W. Tillinghast. “We had heard rumors that the property was going to be sold to farmers and turned into a cornfield,” one of the 20 new owners told the Three Rivers Commercial News, adding, “We didn’t want to give up on this place.” Neither the investors nor Bob Bales, the seller, have announced the sales price. Tillinghast, who’s been called “one of the greatest course architects in the history of golf,” reportedly had a hand in the construction of 265 golf courses. His original designs include the Black course at Bethpage State Park in New York, Baltusrol Golf Club in New Jersey, Interlachen Country Club in Minnesota, and San Francisco Golf Club in California. He designed Sauganash’s original nine holes, which opened in 1924.

     Atlanta, Georgia. As a result of a land swap with the city of Atlanta, the state of Georgia will soon take control of the run-down, 84-year-old Bobby Jones Golf Course. The 18-hole track, which honors the legendary amateur golfer who co-designed Augusta National Golf Club, is said to need “significant upgrades” that city officials didn’t wish to pay for. The state has agreed to spiff it up, but with a major change: The state doesn’t believe the course can survive in its current incarnation, so it’s hired Bob Cupp to turn it into a nine-hole reversible layout. Cupp’s influence, presumably, is the reversible, Tom Doak-designed course that will soon open at Forest Dunes Golf Club in Roscommon, Michigan.

     York, Pennsylvania. Rodney Krebs has come to the rescue of Regents’ Glen Country Club, a deeply troubled, 18-year-old venue that was forced to close last fall. Krebs reportedly paid $5 million for Regents’ Glen, the centerpiece of a community that the York Daily Record says “had been plagued with financial problems in recent months.” The club features an 18-hole, Arthur Hills-designed layout that Krebs believes is “without a doubt the best golf course in the area.” It’s open again, and Krebs plans to complete the master plan for the community that accompanies it.

      Pataskala, Ohio. T&R Properties has acquired its second Columbus-area golf property. The Dublin-based developer has reportedly paid $2.5 million for Cumberland Trail Golf Club, a facility that features a golf course designed by Michael Hurdzan. According to the Columbus Dispatch, T&R plans to make $500,000 worth of upgrades to the 17-year-old course, as it believes that an improved golf course will help it sell 100 single-family houses. Not to raise any red flags, but T&R recently submitted plans to build houses on nine of the 18 holes at its other golf property in the area, Delaware Golf Club. News reports about the proposal don’t say whether the company intends to raze Delaware’s Donald Ross-designed holes or its Hurdzan-designed holes.

     Sebring, Florida. A former McDonald’s franchisee has acquired Spring Lake Golf Resort and its 45-hole golf complex. Edd Vowels, a retiree who confesses to be “dumb to the golf course world,” told the Tampa Tribune that he made the investment because the bank that controlled the 16-year-old, financially troubled property was threatening to close it. “Somebody had to step up and do something,” Vowels said. “A lot of my friends live out here, and if the course closed, their property values would go down the tubes.” Spring Lake features two regulation-length 18-hole courses and a nine-hole, executive-length track.

     Jamesville, New York. Thanks in part to donations from both corporations (among them Wegmans Food Markets) and local charities (the Jim & Juli Boeheim Foundation), the First Tee of Syracuse has found a permanent home. The non-profit group has acquired Butternut Creek Golf Course, which features a nine-hole, Barry Jordan-designed golf course. “We needed a home,” the group’s executive director told the Syracuse Post-Standard. “This is the perfect site for us.” Improvements are forthcoming, the newspaper reports, including classrooms where the “core-value instruction” that is “the focus of First Tee’s mission” will take place. Just wondering: When did golf instruction stop being “the focus of First Tee’s mission”?

The Week That Was, june 19, 2016

     The wealthy owner of the Broadmoor, one of the premier golf resorts in the American West, has taken sole control of Sea Island resort, an equally prominent golf resort on St. Simons Island in Georgia. Philip Anschutz has been a minority owner of Sea Island since 2010, when he and three investment groups rescued it from bankruptcy protection, reportedly for $212.4 million. Anschutz hasn’t revealed what he paid to buy out his partners, but over the past five years he’s added two historic golf venue to his corporate holdings. In a press release, Sea Island’s president said that the purchase will bring “a level of stability, continuity, and long-term commitment” to Sea Island -- qualities necessary to restore some of the property’s lost luster -- and create “a marriage of two unique, five-star resort destinations” that offer “a wide range of offerings and experiences.” Anschutz, who’s said to be worth $10.6 billion, made his fortune in oil, railroads, and telecommunications, and these days he also owns newspapers and invests in movies and professional sports teams (the Los Angeles Lakers, the Los Angeles Kings). He bought the famed Broadmoor, in the mountains outside Colorado Springs, Colorado, in 2011. With Sea Island, he gets a luxurious, private waterfront resort community that features high-priced houses, a couple of hotels, a spa, a beach club, five miles’ worth of beaches, and a service team that reportedly “epitomizes Southern hospitality.” And, like the Broadmoor, it has three 18-hole golf courses drenched with architectural significance. Harry Colt, Charles Alison, Walter Travis, Tom Fazio, and Rees Jones are among the architects who’ve worked at Sea Island.

     Pacific Links International has put another one of its U.S. golf properties on the market. This time it’s the Golf Club at SouthShore, a venue in suburban Las Vegas, Nevada that’s anchored by an 18-hole, Jack Nicklaus “signature” layout. Colliers International hasn’t listed a price for the club, but it believes that Nicklaus’s 20-year-old course “ignites a golfer’s passion and provides a peaceful escape.” PLI, a Chinese/Canadian company that operates an international network of limited-access membership golf clubs, has been disposing of golf assets for more than a year. Since March 2015 it’s parted with (or agreed to part with) two of its five properties on the island of O’ahu in Hawaii (Kapolei Golf Club and Olomana Golf Links) as well as another Las Vegas-area property, DragonRidge Country Club, and Pete Dye Golf Club in Bridgeport, West Virginia. PLI hasn’t publicly explained why it’s looking to rid itself of ownership responsibilities, but it has acknowledged that its membership network has become its “primary focus.” The company still owns one course in metropolitan Las Vegas, Southern Highlands Golf Club, and three on O’ahu: Royal Hawaiian Golf Club, Makaha Golf Club, and Makaha Valley Country Club.

     Ernie Els made his first appearance in Vietnam last fall, as he was the guest of honor for the ceremonial ground-breaking of an Els-branded training center in suburban Hà Nội that will offer the area’s golfers “a Tour-player-for-a-day experience.” The 30-acre Els Performance Golf Academy is expected to open sometime this summer. It’ll feature a nine-hole par-3 course and a short-game practice area, and it’ll be managed by Troon Golf, which is likewise making its first appearance in Vietnam. The academy is one of the attractions at Ecopark, a “a modern, civilized, and environmentally friendly” master-planned community whose residents will be able to “live life to the fullest.” Els believes that Vietnam is “one of golf’s most vibrant markets right now,” and his recent visit won’t be his last, because his website indicates that he has two other golf commissions in the nation.

     The original version of the preceding post first appeared in the November 2015 issue of the World Edition of the Golf Course Report.

Vital Signs, june 17, 2016

     This year’s Golf Investor Sentiment Survey delivers a mixed message: Members of the investment community continue to view the golf industry favorably, it says, but they aren’t quite as confident about our economic prospects as they were last year.
     Such a conclusion begs an obvious question: Is this good news or bad news?
     Marcus & Millichap’s Leisure Investment Properties Group, the entity the conducted the survey, believes on the one hand that the data it’s collected reflects “a considerable drop in optimism.” The point is hard to dispute, for the group’s investment index, its annual rendering of investors’ feelings about our business, has fallen to 57.1, a 10 percent decline from the 63.4 recorded in 2015.
     On the other hand, though, any fair reading of the data suggests that investors are clearly positive about U.S. golf operations in 2016. Regarding daily-fee golf, more than half of the respondents (55 percent) believe that the number of rounds played at their facilities will increase, while only 11 percent expect a decrease. And regarding private clubs, there’s also considerable faith: 58 percent of the respondents expect membership numbers to increase, 48 percent expect annual dues to increase, and 36 percent expect initiation fees to increase.
     It’s also important to emphasize that the investment index for 2016 remains well above 50, which means that the survey’s participants are, by and large, giving golf the proverbial thumbs-up. No matter how you slice it, we’re in a far better place than we were in the beginning of this decade.

     You can count John McConnell among those who are expressing confidence in golf’s near-term future. “We see the light at the end of the tunnel, because the industry has turned around,” he recently told the Raleigh News & Observer. Some might disagree with McConnell’s analysis, but his ownership group appears to have found a winning formula for golf operations. Since 2003, McConnell Golf has reportedly invested $25 million in a dozen golf properties, 10 of which had been bleeding red ink. Today, according to the News & Observer, all but four are profitable. What’s more, the business as a whole is said to be in the black.

The Week That Was, june 12, 2016

     Don’t be surprised if Phil Mickelson soon suffers an injury that prevents him from playing on the PGA Tour for a few months, or if he decides to take some time off to sharpen up his game. Just weeks after he agreed to pay a fine in connection with an insider-trading case, Mickelson has been linked to a money-laundering scheme that was designed to cover what court documents describe as “losing wagers.” The scheme involves one of Mickelson’s gambling associates, Gregory Silveira, who’s pleaded guilty to transferring $2.75 million between bank accounts in what his lawyers said was a “misguided desire to help friends.” Specifically, the lawyers said, Silveira moved the money “virtually as a personal favor to an individual who did not wish his wagering activity to become public.” Mickelson wasn’t mentioned by name, but Bloomberg has three sources who say that he was the gambler whose identity is being protected. Mickelson hasn’t been charged with any criminal wrongdoing, but the accusations floating around him must surely be a cause for distress at the image-conscious PGA Tour. In one regard, though, Mickelson is lucky: If the tour decides that a suspension or some other punishment is in order, as per its policy the terms won’t be announced publicly.

     Our nation’s attention may currently be trained on Trump University’s court hearing in November, but before then Donald “the Candidate” Trump will have other legal fish to fry. Come August, the Presumptive Nominee is expected to appear before a judge in Florida, in a case involving the former Ritz-Carlton Golf Club in Jupiter, a venue that now operates as a Trump National golf club. Some members have sued Trump, alleging that he breached contracts by canceling the memberships of about 60 Ritz members and failed to refund their refundable membership deposits. According to various reports, $6 million is at stake. Trump bought the Ritz in 2012, reportedly for $5 million. On the filing he made to the Federal Election Commission, he values it at more than $50 million.