The Week That Was, may 12, 2013

     Two of New Zealand’s oldest, most prominent golf clubs appear to be on the verge of a merger. Fit to be tied are Royal Auckland Golf Club and Grange Golf Club, which are located on adjacent property in suburban Auckland, on the North Island. Between them, the clubs have hosted every major amateur and professional championship the nation has to offer, including the New Zealand Open on numerous occasions. Presuming the talks successfully conclude, most of Grange’s 112-acre property, which is said to be worth more than $40 million (about $34 million U.S.), would be sold to a residential developer. “This land is highly valuable,” a local real estate agent told the New Zealand Herald. “It would be a very desirable opportunity.” Not all of the Grange is likely to be lost, however. The clubs may hold on to four or five holes, either to be incorporated into Royal Auckland’s layout or to stand alone as part of a practice facility.

     The original version of the preceding post first appeared in the May 2013 issue of the World Edition of the Golf Course Report.

     Golf still contributes far more to California’s economy than many other popular forms of entertainment -- amusement and theme parks, fitness-related activities and recreational sports, movie theaters and drive-ins -- but its impact has declined since the state fell into the grip of the Great Recession. In 2011, according to a study by SRI International and GOLF 20/20, golf was worth $13.1 billion in direct and indirect spending, $2 billion less than in 2006. The number of jobs supported by golf in the Golden State has also declined, from 160,000 in 2006 to 128,000 in 2011. On the operations side of the business, California’s golf facilities -- 921 golf courses, 84 stand-alone ranges, and 65 miniature golf properties -- generated $3.34 billion in revenues in 2011. However, only $8.4 million was spent on the construction of new courses in 2011, an amount so low it would be instructive to learn when it was last matched.

     From heavy-metal guitarist to golf course designer, K. K. Downing’s career trajectory has been like no other in our business. And now the former Judas Priest front man is proceeding with the next phase of development at Astbury Hall, his 320-acre estate in
 

Shropshire, England, with an eye toward landing an event on the European Tour. “If you look at the Belfry or Gleneagles, the difference is they have bars and hotels around the course,” Downing’s development partner told the Birmingham Post. “That is what the PGA are looking for, and that is why this is a huge opportunity for Astbury Hall.” This summer, Downing expects to break ground on 45 holiday houses, to be followed by a hotel, a spa, and a high-quality restaurant. The construction will reportedly be funded by investors from the United Kingdom and China.

     Things may soon get a little easier for golf developers in Cyprus. Drowning in debt and suffocated by a fast-shrinking economy, these days Cyprus, like many nations desperate for growth, has decided to get into the swim of tourism in a bigger way. This year the nation’s government is expected to issue licenses for one or two casinos and offer what’s been described as “an incentive scheme aiming at accelerating the construction of golf courses.” Cyprus currently has five or six golf properties, depending on who’s doing the counting, and there are two in the Turkish-controlled northern part of the country. For years, however, the mythical birthplace of Aphrodite has believed that it could support as many as 14 courses, and it appears that the nation’s tourism interests believe that their construction has become a necessity. Of course, the nagging problem in Cyprus continues to be a lack of water.

     The original version of the previous post first appeared in the May 2013 issue of the World Edition of the Golf Course Report.

     After the PGA Tour dropped its planned suspension of Vijay Singh, how did the admitted user of a banned substance express his appreciation? He slapped the Tour with a lawsuit, as punishment for treating him unfairly and damaging his reputation. “I am proud of my achievement, my work ethic, and the way I live my life,” Singh said in a statement distributed by the Associated Press. It’s hard to predict where the sport goes from here. When a professional organization doesn’t enforce its regulations, you eventually get chaos.

     What’s the likelihood that Trinity Forest Golf Club gets built? You can bet your house on it. The much-ballyhooed development venture in Dallas, Texas is “moving about as fast as you will see any project of this scale and complexity go through city hall,” the Dallas Morning News reports. In addition, the newspaper says that the entity created to operate the club, the Company of Trinity Forest Golfers -- the name is a salute to Muirfield’s Honourable Company of Edinburgh Golfers in Scotland -- is “well on its way to raising the money it needs to build the course.” The deal will likely be finalized by the end of August, and the groundbreaking for the club’s Coore & Crenshaw-designed course is expected to take place soon afterward.

     Speaking of Coore & Crenshaw, Darius Oliver has put the design duo’s recently opened golf course on Hainan Island on his Planet Golf World 100. Shanqin Bay Golf Club, the first Chinese property to earn a spot on the list, is the centerpiece of a pricey private club created by Wang Jun, the princeling and former arms trader who now serves as the vice chairman of the China Golf Association. Shanqin Bay checks in at #49, ahead of Chicago Golf Club (#50), the West course at Winged Foot in New York (#52), the Alisa course at Turnberry (#53), and Cape Kidnappers in New Zealand (#60). “There is quality all over Shanqin Bay, and the only real disappointment is that so few golfers will ever get to play the course,” Oliver writes. “Had it been more accessible, this could have been a real game-changer for Chinese golf.” If you’re wondering about the price of admission, take a deep breath: Oliver reports that the club’s initiation fee is about $1 million.

     The top golf course in Egypt is the Allegria, an 18-hole, Greg Norman-designed track that opened in 2010. “The Allegria stands head and shoulders above all the other golf developments that have opened for business in Egypt since the late 1990s, and it sets a very high benchmark for world-class golf in the region,” says Top 100 Golf Courses of the World, which has produced what it calls “the first ever” ranking of the nation’s finest venues. While Norman can brag about being number one, however, two U.S. architects have claimed four spots on the list. John Sanford has the #3 and #10 courses (Taba Heights Golf Club and Madinat Makadi Golf Course), while Karl Litten has the #7 and #9 courses (the Championship track at Dreamland and Stella Di Mare Golf & Country Club). The rest of the list includes courses by three other “signature” designers (Nick Faldo, Gary Player, Peter Thomson) as well as work by Peter Harradine and Yves Bureau.

     These days, golf is getting dressed -- or is it re-dressed? -- to the nines. Bill Pennington of the New York Times has written an ode to playing nine holes, and Golf Digest is leading an initiative that it hopes will encourage nine-hole play. Talk about your major departures: Golf has been selling 18-hole rounds as the real thing for decades, while nine-hole courses have been classified as second-class citizens. Was all that merely a sales job, persuading us to buy something we really didn’t want or need? Less than 30 years ago, Pennington notes, “there was no stigma” attached to the number nine, and he encourages us to make Time for Nine. Golf Digest’s editor in chief explains his thinking this way: “Every other recreation, it seems, takes more or less two hours: movies, dinner, cocktail parties, tennis, bowling, going to the gym. If golf were invented today, it would be a nine-hole game.” Clearly, this reinvention is going to take some getting used to. But maybe the Golf Channel has come up with a slogan that hits the marketing nail on the head. “Nine holes are better than nothing.”

Transactions, may 10, 2013

     Nearly 1,300 U.S. golf properties have been sold since 2007, with the largest number of transactions taking place in Florida (150), Michigan (86), California (70), Texas (ditto), and Ohio (65). This factoid was discovered in an analysis by the National Golf Foundation, along with several others about the nature of the sales that have occurred in recent years. Among them: The sales have mostly involved privately owned public courses. These facilities represent 59 percent of the nation’s existing golf supply, but they’ve accounted for almost 80 percent of the total sales. In addition, relatively new courses have been sold in somewhat disproportionate numbers. Roughly 40 percent of the sales have involved properties that opened after 1990, even though such properties represent only 27 percent of the existing supply. Finally, 52 percent of the transactions have involved properties that offered peak-season, weekend greens fees of $40 or less, while 35 percent involved properties that anchor real estate developments.

     Pacific Links International’s shopping spree continues, this time with the company’s first golf property in California. PLI has added Dove Canyon Country Club in Irvine to its fast-growing portfolio, which includes five golf properties in Hawaii and three in Nevada and West Virginia. PLI bought Dove Canyon, which features a Jack Nicklaus “signature” golf course, from Sanyo Foods Corporation of America, a division of Japan’s largest manufacturer of ramen noodles.

     Newport Dunes, a moribund golf community in Port Aransas, Texas, has new owners who predict a brighter future. The 722-acre community, now called Palmilla Beach Resort & Golf Club, has been purchased by a Koontz McCombs, a development group led by Red McCombs. Palmilla Beach features a five-year-old, Arnold Palmer-designed golf course and a master plan that calls for waterfront houses, three hotels, meeting space, and other attractions. “The greatest recreational properties in the world are in Texas,” McCombs said in a press release, “and I put the opportunities in Port Aransas at the top of the list.” Over the years, McCombs has been an auto dealer, a co-founder of Clear Channel Communications, and a sports mogul (Minnesota Vikings, Denver Nuggets, San Antonio Spurs). He may eventually start to build a golf portfolio, as he’s part of the group that aims to build a Tiger Woods-designed golf course in Mexico.

     MCO Properties has two suitors for FireRock Country Club, which means that the only private golf club in Fountain Hills, Arizona will soon have new owners. In late April, an investment group led by Phil Mickelson made an unsolicited offer for FireRock, which features an 18-hole, Gary Panks-designed golf course. But Mickelson’s offer was countered by the club’s members, who have a right of first refusal. The Fountain Hills Times reports that FireRock “has been operating at a deficit,” but the members nonetheless agreed to meet MCO’s $5.5 million asking price.

     Arizona’s first golf resort, one that used to attract a parade of Hollywood stars, has new owners. The San Marcos Golf Resort in Chandler, a vacation destination for 100 years, has been sold to La Jolla, California-based Interwest Capital Corporation, reportedly for $11 million. The property features a 249-room Crowne Plaza hotel and an 18-hole, Harry Collis-designed golf course. It’s listed on the National Register of Historic Places, and in its heyday its rooms were filled by people like Fred Astaire, Bing Crosby, Gloria Swanson, Joan Crawford, and Clark Gable. In an attempt to recover some of the resort’s luster, Interwest plans a multimillion-dollar overhaul that includes upgrades to the golf course.

     Sea Trail, a fading golf resort in Sunset Beach, North Carolina, may soon be freed of bankruptcy protection. The Myrtle Beach Sun News reports that an unidentified entity has agreed to buy the 2,000-acre club, which features 18-hole golf courses designed by Rees Jones, Dan Maples, and Willard Byrd. If the sale goes through, the prospective buyer will also own 400 units of rental housing, a convention center, an undisclosed number of unsold lots, and roughly 240 acres’ worth of developable property. This is a serious offer, because the buyer has reportedly put down a $1 million deposit that’s refundable only if Sea Trail can’t secure court and lender approval for the sale.

     Tariq Khan, the owner of five 7-Eleven stores on Long Island, has acquired Middle Bay Country Club in Oceanside, New York. The club had been in financial distress and couldn’t recover from damage inflicted by Superstorm Sandy. Khan, a club member, has given the property a new name, South Bay Country Club, and plans to open it to the public.

     Less than four months after the lights were turned off at Country Club at the Legends, a sales agreement for the 24-year-old property in Eureka, Missouri appears to be in place. The St. Louis Post-Dispatch, citing an announcement made at a recent city council meeting, reports that “three groups” have joined forces to buy the club from the heirs of Carmelo Natoli, who died late last year. The new owners haven’t been identified, and their plans for the property and its 27-hole golf complex are unknown. However, several weeks ago Natoli’s daughter told the Eureka-Wildwood Patch that she was “looking for someone who will respect the course and maintain it the way my father would want it.” The club, which has been closed since late January, is expected to reopen in June.

     A Los Angeles, California-based investor has agreed to buy his second financially troubled golf property in Kansas. Two years ago Nati Saidoff, the principal of Capital Foresight, bought Brookridge Golf & Country Club in Overland Park and rebuilt its dwindling membership. Now he aims to breathe new life into Leawood South Country Club in Lenexa, the centerpiece of a community that opened in 1969. “Leawood South is a fine old club in a very nice neighborhood, but it’s experiencing what Brookridge was undergoing and was ready to shut its doors,” a Brookridge official told the Kansas City Star. Saidoff’s revival strategy involves converting the club’s banquet space into a fitness center. Hey, it worked at Brookridge.

The Week That Was, may 5, 2013

     If ever a person and a place seemed made for each other, they would be Donald Trump and Dubai. And now, these soul mates have officially been joined in corporate marriage. Damac Properties, one of the premier developers of luxury housing in the Middle East, has purchased the rights to build Trump International Golf Club Dubai. The club and its 18-hole, championship-worthy golf course will anchor Damac’s 642-acre Akoya planned community, which will feature high-priced houses, high-end hotels, and high-profile retailers, all tailored to meet the needs of the world’s highest high rollers. “Dubai is an incredible city that truly understands the meaning of luxury,” Trump said in a press release. “Trump International Golf Club Dubai will be built to world-class levels, exceeding all expectations. There will be nothing like it in the region and beyond.” The course will be the 14th in Trump’s fast-growing collection, and it was announced just a week after Trump revealed that he’s hired Coore & Crenshaw to design a track in Charlottesville, Virginia. Like him or not, he clearly reigns as the golf industry’s most fervent developer.

     In an effort to land one (or more) premier golf championships -- the U.S. Open, the PGA Championship, the Ryder Cup -- the Broadmoor resort is trying to secure permission to redesign two of its golf courses. The issue, as it is so often these days, is length. To play a really high-profile event in high-altitude Colorado Springs, Colorado, the Powers That Be in golf think the Broadmoor needs an 8,100-yard venue, a venue the resort believes it can create by combining the best holes from its 7,355-yard East and 7,016-yard West courses, along with some additional lengthening here and there. But this project, as complicated as it may be, is just part of what needs to be done. To do the combining, the resort also needs to relocate a road that runs through its 3,000-acre property. I don’t know about you, but I hear a lot of cash registers ringing. What’s your guess about what it’ll cost to undertake such a venture? Because there’s an easier, cheaper solution: A less lively ball.

     Greg Norman can breathe easier: The referendum intended to block his golf complex in Croatia has failed. As a result, Norman and his Israeli development partners -- a group led by arms dealer Aaron Frankel and his wife, Maja, one of Croatia’s former economic ministers -- can proceed with Golf Park Dubrovnik, which will include houses, hotels, an equestrian center, and other attractions. Curiously, the outcome of the referendum was decided not by the actual votes cast but by turnout. Fewer than one-third of the city’s eligible voters bothered to participate, and Croatian law decrees that a referendum isn’t valid without a 50 percent turnout. Fewer than 2,000 voters endorsed the project, according to News Limited Network, while more than 10,000 were against it.

     Ever notice how closely Annika Sorenstam’s career mirrors Greg Norman’s? As professional golfers, both were grand champions and veritable living legends. Then, like Norman,



Sorenstam began a second career that includes not only course design but charitable foundations, grow-the-game initiatives, and the marketing of branded merchandise: clothing, perfume, wine, and whatever comes next. And now we get news of another parallel: Pacific Links International, which employs Norman as one of its “international ambassadors,” has inked Sorenstam to a term in the same role. “Her global brand and universal appeal to golfers of all ages, genders, and abilities makes her an ideal spokesperson for our burgeoning business,” the company’s CEO said in a press release.

     Sometime this month, TaylorMade Golf Company is expected to break ground on a new manufacturing center in Liberty, South Carolina. The plant, which will produce PGA Tour-quality golf balls, will replace an existing leased facility in nearby Westminster. To win TaylorMade’s business, Pickens County provided the company with tax breaks and other incentives, including free land. “They were looking at moving to Georgia,” a local economic-development official told the Anderson Independent Mail. “We worked hard to keep them in South Carolina.” TaylorMade produces 8 million dozen golf balls annually, and it expects to make at least 2.5 million dozen of them in Liberty. The production lines are scheduled to start rolling early next year.

     The Seattle Times has taken the pulse of the golf business in the Puget Sound region, and it’s concluded that “some public courses and private clubs remain in trouble even as the economy improves and rounds increase.” A dozen courses have closed in the area over the past four years, the newspaper reports, and “much of the shakeout is coming at low-key, affordable courses where players new to golf felt comfortable.” This is, regrettably, a story we’ve heard many times previously. “Unfortunately, it is the smaller golf courses that are suffering,” the executive director of the Pacific Northwest Golf Association told the Times. “That’s interesting to me because they are the most cost-effective way of playing.” But all the news isn’t gloomy. Many of the area’s course owners and operators are said to be optimistic about the future, primarily because the number of rounds being played is up. “Essentially, we’ve recovered to close to where we were in 2007, before the economy was turned off and the rains were turned on,” notes the president of a local management company. The bottom line: The business is improving, but it’s still not out of the woods.

     On the nation’s other coast, there are also signs of life. “Massachusetts golf courses are optimistic that business is on the upswing as the 2013 season gets underway,” the Boston Globe reports. The amount of play at Boston’s municipal courses is said to be up by 10 percent over the results posted in 2012, and the number of players participating in local tournaments is also on the upswing. “And the weather hasn’t even been as good as it was last year,” said the general manager of the city’s courses. “That’s why those numbers are surprising. It gives us hope that things are starting to turn around.” One problem: The golf properties hurt worst in the area during the Great Recession, according to the Globe, were recently established private clubs. Until business at those clubs bounces back, a full recovery isn’t likely to arrive.

     Not so long ago -- in 2000, or thereabouts -- the United States had the highest share of employed 25- to 34-year-olds among the world’s large, wealthy nations. Today, it has the lowest. In addition, according to statistics provided by the U.S. Labor Department, workers between the ages of 25 and 34 are the only group earning less today than they did in 2000. As vital signs go, this is another unfortunate one for the golf industry. Young adults simply don’t have enough disposable income, let alone the inclination, to play golf.

     Notice to golf-industry workers in the People’s Republic: You can’t breathe the air, you can’t drink the water, and, for now at least, you can’t eat the meat. This week the New York Times reported that traders in eastern China have been packaging rat meat as lamb or mutton, and unsuspecting diners have been eating it. Since January, the newspaper reports, Chinese authorities have arrested more than 900 people suspected of selling “fake, diseased, toxic, or adulterated meat.” Seriously, is China really the future of golf development? When do we finally decide that enough is enough?

Vital Signs, may 3, 2013

     The pace of golf construction in China continues to slow. In 2010, 52 new courses opened in the People’s Republic. The number slipped to 45 in 2011 and fell again last year, to 39, according to figures provided in Forward Management Group’s recently released China Golf Industry Report. The nation’s moratorium on golf construction is partly to blame for the decline, of course, but China Daily suggests that the previous pace of construction was simply unsustainable and notes that “designers are far from convinced that the explosion of golf’s popularity in China is petering out.” And let’s give credit where it’s due: While construction has clearly slowed, China’s golf industry continues to add to its inventory. Forward Management now counts 587 courses in the nation, with more are on the way. Optimism reigns because the moratorium is merely “a supposed ban,” says China Daily, which also hints that determined developers can find loopholes in “the opaqueness of the rules.”

     Will the future of golf development in the world’s second most-populous nation be compromised by a lack of water? Less than two years ago, KPMG’s Golf Advisory Practice predicted that India “may need to build up to 100 new courses to satisfy the demand over the next decade.” But last summer in Delhi, severe water shortages forced hospitals to delay surgeries and shopping malls to shut off their air conditioners. What’s more, last year a British newspaper asked a question that India’s golf developers really can’t answer: “How sustainable are these water-thirsty golf courses based on residential projects?” All this foreshadows an impending battle over water, a battle that I fear India’s golf industry isn’t prepared to fight. When anxious people in hospital beds discover that even well-managed 18-hole golf courses drink, on average, 136,000 gallons of water every day -- water that could be used to sterilize clamps and scalpels -- the construction spigot won’t remain open for long. If our industry ignores this issue, we risk losing a true hot spot for growth. And it needs to be addressed now, before India and other parched nations go so dry that they can no longer swallow the thought of building more golf courses.

     The original version of the preceding post first appeared in the January 2013 issue of the World Edition of the Golf Course Report.

     Data compiled by the Employee Benefits Research Institute indicates that 57 percent of U.S. workers have socked away less than $25,000 for their retirement. (The amount doesn’t include the value of their houses, which may no longer be worth much either.) This number is so low it’s hard to believe. So if you’ve ever wondered why Baby Boomers don’t play as much golf as their forebears in previous generations, maybe it’s because they can’t afford to.

     Don’t fret, but your golf club’s superintendent may be making more money than you are. The average head superintendent in the United States earned $82,573 last year, according to a study by the Golf Course Superintendents Association of America, while the average “certified” superintendent now takes home $98,187.

     Yes, the number of rounds played on U.S. golf courses got a nice, 5.7 percent bump last year. Nonetheless, our nation’s average 18-hole golf course saw just 32,000 rounds in 2012, which the National Golf Foundation says is 20 percent less than it got in the late 1980s.

     Most U.S. golf properties remain reluctant to raise their greens fees, but exactly how price-sensitive are today’s golfers? When the operators of the city of Palatka, Florida’s golf course raised their annual fees, they got a pleasant surprise: They sold more memberships. “We increased membership prices by 10 percent, and the membership increased 35 percent,” one of the course’s managers told the Florida Times-Union. The explanation? Long-overdue upgrades to the neglected course and its clubhouse attracted formerly disenchanted customers, and improved service keeps them coming back. “We found out that our customers are not price-sensitive,” the manager explained. “They’re conditioning-sensitive, and they’ve been coming back since they found out what kind of shape we were in.” All of which leads me to ask a critical question: How well do the nation’s golf courses know their customers?

     It’s easy to understand why most companies in the U.S. golf industry concentrate on the top end of the market: That’s where the money is. And in recent years, more and more money has been flowing upward. Between 2009 and 2011, according to a study by the Pew Research Center, our nation’s upper crust -- the top 7 percent of U.S. households -- increased their average net worth by 28 percent, while everybody else’s net worth fell by 4 percent. “It has been a very good recovery for those at the upper end of the wealth distribution,” one of the study’s authors said to the Washington Post. “But there has been no recovery for the lower 93, which is nearly everybody.” All this is confirmation of an old story: The rich get richer.

new zealand Manukau on the Move

     After several false starts, a financially struggling, 80-year-old golf club in suburban Auckland, New Zealand is moving forward with plans to relocate.
     Manukau Golf Club won’t be going far, as its new, 152-acre home -- currently a potato farm -- will be only about five miles from its existing property in Manurewa. An Auckland-based home builder, Fletcher Residential, has reportedly agreed to pay nearly $42 million (U.S.) for the club’s 112-acre property.
     With Fletcher’s money, Manukau plans to build an 18-hole, “international-standard” golf course, a multi-purpose clubhouse, a banquet center, and a short-game practice area. The club expects to pocket a surplus of $11 million or more after the construction is complete.
     Club officials believe the new course will be Auckland's best golf venue. The 6,807-yard track will be designed by Brett Thomson of RBT Design, a former associate in John Darby’s golf design firm. While working for Darby, Thomson helped to design a pair of courses on the South Island, Clearwater Golf Club in suburban Christchurch and Hills Golf Club near Arrowtown.
     The course will carry the “signature” of Phil Tataurangi, a touring pro who was born in Auckland.
     Manukau has been contemplating the move since the late 2000s, when a decline in membership compromised its ability to cover its debt and operating expenses. The club’s more than 700 members approved the deal with Fletcher in early 2013, by an overwhelming margin.
     “The traditional membership model is broken,” the club’s general manager, Stewart Halligan, told the New Zealand Herald after the vote. “We’ve got to have additional revenue streams, and we must also establish a pipeline to build membership.”
     Fletcher plans to build roughly 600 houses on Manukau’s property.
     Manukau’s new digs aren’t expected to be ready for move-in until the fall of 2016. The club will remain in place until the new facilities are built.

     The original version of the preceding post first appeared in the February 2013 issue of the World Edition of the Golf Course Report.