Private equity buyers back in golf 6

Fall 2011

Mostthe Powerful People inGolf Goodbye Tiger, hello Rory. While management execs still dominate, the world of golf continues to grow beyond the U.S. Top News Private equity back in golf Two funds have started rolling up distressed golf courses, and others are expected to enter the market soon. Why the recapitalization of golf should be good for the industry. By jack crittenden

Several private equity funds are currently new company, Concert Golf Partners, has economy is down.” considering whether to enter the golf cash on hand and can close deals within He said Concert Golf Partners is a market, and a few have already started 30 days. He expects to invest $50 million good buyer for equity clubs facing bank acquiring distressed golf courses. into golf courses over the next year and pressure, bank-owned courses and courses While it is unclear how many funds is hopeful to acquire five to 10 private or like Heathrow, which was foreclosed on in will enter golf and how much money public courses. March. will be invested, some long-time insiders “We are interested in hearing from Nanula said he has two other courses believe that golf will see a significant owners of clubs who want to do something under letter of intent — one in Florida and recapitalization over the next few years. fast,” Nanula said. “There is a large volume one in Arizona. “It has taken time, but Tom Bennison, a 27- people are seeing that year veteran of ClubCorp, opportunities are good and has joined forces with they are planning to venture Charlie Staples and Mike into [the golf market],” said Miraglia to acquire golf Jerry Hinckley, senior vice courses. Their partnership, president and managing Fore Golf Partners, has director for Real Estate attracted several investors Assets at Textron Golf and led to the purchase of Finance Division. “The Feather Sound Country recapitalization of golf Club in Clearwater, Fla., in will take place, and it is an August. optimistic sign.” “It is a good story for Hinckley oversees the golf industry when you Textron’s holding company, can secure sophisticated Great Oaks Golf, which investor capital,” Bennison currently has 29 courses — Peter Nanula (left) and Tom Bennison (right) each head investment said. “It shows investor all properties that Textron groups that hope to acquire and manage distressed properties. Both confidence in golf.” Financial has taken over recently acquired their first course. Bennison said this in the last three years. is an “unprecedented Hinckley said 20 of those acquisition environment courses are currently listed for sale and of tire kickers out there who spend a lot of as club owners and lenders seek liquidity that he has spoken with many potential time, but don’t really have the money [to from these businesses.” He said Fore Golf buyers, some that have capital and are buy]. That story is getting very tiresome Partners is a cash buyer that is familiar serious. for owners and brokers.” with most major U.S. markets and able to Peter Nanula is one such buyer. Nanula, The company is focused on courses close quickly. who ran Golf Management that have one million people within 20 He declined to disclose the purchase from 1993 to 2000, reentered the golf minutes of the golf course, revenue above price for Feather Sound, but said he market in July with the acquisition of $3 million a year and that are not currently is looking for courses that are selling 0Heathrow Country Club in Lake Mary, professionally managed. between .75 to 1.3 times gross revenue. Fla., for $3.5 million. “That rules out of a lot of clubs in “Most of these courses either have a Nanula, a Harvard-trained lawyer with tourism markets like Las Vegas and Palm negative EBITDA or so little that you can’t a background in private equity, said his Springs,” he said. “They struggle when the value them based on it,” he said.

6 Golf Inc. Fall 2011 Top News

Steve Ekovich, vice president and People on the Move n Jamey Clark is now general manager at Stonebridge Golf Club of New Orleans in director, National Golf & Resort Group of Gretna, La., a KemperSports facility. Most n Sam Sakocius has Marcus & Millichap, said that a lot more recently, Clark served as general manager at formed Project Control Oak Harbor Golf Club in Slidell, La. opportunity funds, vulture funds and International LTD, a private equity funds will enter the golf Hong Kong chartered n Andrews Times Golf Management (ATGM), market. company conducting based in Shenzhen, now represents Swan Golf He said those investors are mainly business globally. PCI Designs in China and East Asia. Raymond has been formed to looking for opportunities in the value- Tang, managing director of ATGM, will act provide select clients as SGD’s representative, assisting with the added category — courses that offer with customized consulting and project promotion, marketing, project sourcing and revenue from more than just golf. Ekovich management programs throughout the world. client liaison. said these opportunities include properties n Jeff Burkle joined Affiniti Golf Partners n Somerby Golf Club and OB Sports that include residential communities that as a strategic partner, responsible for new appointed Kurtis Pitcher as the general weren’t completed, or 36-hole courses business development and acquisitions. He manager for the private club in Byron, Minn. that are underperforming and could have was previously senior vice president of Credit Pitcher is responsible for all club operations, & Product Development for Textron Financial golf operations, food and beverage and part of the course converted to condos or Corporation’s Golf Finance Division. marketing. apartment buildings. He said this is good news for a market that spent the worst of the recession with they were in 2007, that is a possibility.” courses in Denver and Chicago with other frozen capital and tremendous uncertainty. Logan said Eagle is working with a owners. Dana Garmany, CEO of Troon Golf, the bank to find interested investors, but it is Nanula, who is based in Newport world’s largest management company, said still early in the process. He said the idea Beach, Calif., entered golf in 1993 as an he has met with thee potential investor is to buy undervalued courses in cluster investment banker when he felt there were groups who are still hesitant to enter the markets. Eagle is focusing on Phoenix, good growth opportunities. He acquired market, due to a lack of exit strategy. Houston, San Antonio and other markets 30 golf courses, but sold the company in “We can guarantee a good yield on in the southern United States, where 2000 when it seemed golf’s future was their money,” he said. “The problem is weather is not a factor. dimming. that people want to get out in three to five The management company recently He has been a private equity investor years, and there is no institutional buyer. added its 77th golf course, Bluebonnet since then and decided to jump back into If you have 100 golf courses, how do you Country Golf Course in Navasota, Texas, golf about six months ago after seeing sell them?” under a management contract. courses selling for bargain prices. He plans Two Japanese companies, Pacific Golf “Whether it’s a good management deal, to operate the courses on his own and is in Management and Accordia Golf, rolled lease or acquisition, we’ll take it,” Logan the process of hiring personnel. up more than 100 distressed golf courses said. “If we believe we can turn [the golf “We are not building a management during the country’s real estate depression course] around, we will take it. We try to company,” he said. “We will be owner- in the early 2000s. Both went public after be very disciplined about that.” operators with our own team. We want to about five years. But Garmany said that is Eagle currently has 58 courses in triple talk to the top 2 percent. People with track not an option in the United States, as the net leases — 43 of which are owned by records of producing top results.” value of the company would need to be CNL. It manages 16.5 courses and owns Bennison’s group also plans to operate near a billion to get serious interest from 3.5 others. Eagle is owned and run by Joe its courses. Staples, who has been in the mutual funds. Munsch, who acquired the company in golf industry for 40 years, is considered the Still, he expects large investors to enter 2008. Since he took over, the company’s “highest margin” operator in the industry. the industry. portfolio has been relatively stable, despite Miraglia has 26 years in the golf business, “There really is a great opportunity to what this magazine reported in the and co-owns Fore Golf with Staples. Fore make a nice yield,” he said. “Somebody Summer 2011 issue. Golf has 13 courses in Florida, Northern will do it.” “We have lost a few management Virginia, Maryland and Ohio. Eagle Golf is hopeful it can acquire contracts, but have gained more than we Investors in the joint venture include courses soon. lost,” Logan said. “The CNL courses are Dallas businessmen John Pigott and Bruce “We would love to own 30 to 40 courses stable and long term.” Leadbetter; Harold Handelsman, counsel in 10 years from now,” said Eric Logan, Logan said the 43 CNL courses are to the Pritzker family of Chicago for 35 chief financial officer for Eagle. “With under 20-year leases that were signed in years; and Christopher Bancroft, a former course values 50 to 70 percent lower than 2009. The company also has leases for Director of Dow Jones & Company.

Fall 2011 www.GolfIncMagazine.com 7 Mostthe Powerful People in Golf Goodbye Tiger, hello Rory. While management execs still dominate, the world of golf continues to grow beyond the U.S.

Amid foreclosures, struggling private plagued by injuries that had him sitting to manage — and not own — golf courses. clubs and a stagnant development market, out both the U.S. and British Opens Opportunistic buyers are starting to the world of golf saw a burst of hope this and withdrawing from the Players make waves in the industry and on our past year. It came in the face of Rory Championship after only nine holes. list, including Peter Nanula, who returns McIlroy. Woods capped off the summer by firing to our ranking for the first time in more Not since ’ heyday has a his long-time caddy and losing more than 10 years. new golfer had such a profound impact endorsements. For the first time since Those working in China continue to see on the state of the industry. And while 1998, he is not on our power list. their power rating rise, including David many are hopeful that the Irish kid can In his place, albeit in the last spot, is and Ken Chu (moving up to No. 4) and boost golf, there have only been a few McIlroy. Thanks to his ascending star, Wang Jun, who joins our list for the first individuals who, like Arnold Palmer, have along with that of other European players, time. Overall, there are nine new people ever achieved such a task. a host of Europeans moved up our power on the list this year — the second year in Not even Tiger lived up to his billing. rankings. Chubby Chandler makes his a row we have seen turnover greater than When this magazine premiered our power debut at No. 19, and George O’Grady, 20 percent. And that is a reflection of golf, ranking in 1998, Woods was placed on the executive director of the European PGA an industry in flux and one that is not sure list because of what he might do. But just Tour, moved up 10 spots to No. 9. if it is healing or getting sicker. But one when he started to take an active interest But the list is still dominated by thing is for sure — it is changing. in the business of golf, his star fell sharp management company executives, and suddenly. His descent continued this including Dana Garmany, who returned Jack Crittenden, Robert Vasilak, Elizabeth past year, as the stress of divorce took a to Troon Golf after a one-year hiatus and Ewing and David McPherson compiled toll. took our top spot for the first time. As this story, with feedback from Trevor His return to tournament play was Garmany said recently, this is a good time Ledger and Bruce Buckley.

32 Golf Inc. Fall 2011 dominance of United States. Lesnik, who has taken the The past year has only added to Keiser’s European Tour golfers reins from his father, Steve, was heavily reputation as a visionary developer of over the past year, with involved with the USGA and bringing world-class links courses, and it doesn’t four out of the top 10 the 2015 U.S. Open to Chambers Bay. look like he’s going to be changing that players in the world KemperSports is also gearing up for a anytime soon. calling Europe home. big renovation project in Puerto Rico to Many see O’Grady as be complete this fall, after working with central to that success. Robert Trent Jones, Jr., on a makeover of JiM hinckLey Accolades on the course were matched his dad’s original design. CEO, Century Golf Partners/ by a strong showing of it, as O’Grady Arnold Palmer Golf managed to shepherd the Race to Dubai Management through the world’s tough financial Joe Steranka # 2010 Ranking: 11 climate to offer a $7.5 million earnings CEO, PGA of America 13 United States pool in its third year. With an exciting # 2010 Ranking: 10 While many companies were adding crop of young players, look for O’Grady’s 11 United States management contracts to their revenue influence to continue to grow over the After 23 years with The PGA of America stream in the past year, Hinckley oversaw coming years. — five of them as CEO — Steranka has a major purchase developed a reputation as a respected for Century as the thought leader in the industry. In the company moved from Steve Skinner & past year, Steranka management to # JoSh LeSnik prepared for the launch ownership of a five- 10 CEO and President, of Golf 2.0, a long-term course resort portfolio KemperSports strategic plan designed in Myrtle Beach, S.C., 2010 Ranking: 7 (Steve Skinner to grow the game to 40 including the Legends, and Steve Lesnik) million players by 2020. the Heritage Club and Oyster Bay. But United States Steranka also serves Hinckley added to the management as chairman of We Are side as well, with the addition of the The guys at the top of KemperSports are Golf, which recently lobbied to get tax 27-hole Medallion Club in Westerville, being closely watched as they maintained relief for courses devastated by natural Ohio, to the 64 other courses already their aggressive growth despite the tough disasters. An expert on the global growth under operation by Arnold Palmer Golf economy over the last year. They added of the game, Steranka is co-founder Management. five more courses to their portfolio, for of the World PGA Alliance, which a total of 107 properties managed in the supports standards for golf professionals worldwide. Peter nanuLa # CEO, Concert Golf Partners 14 2010 Ranking: NR MichaeL keiSer United States Developer # Peter Nanula was last on our power list 2010 Ranking: 16 in 1998, when he was CEO of Arnold United States 12 Palmer Golf Management. A lawyer Keiser is moving full-steam ahead. His with a background in Cabbot Links opened for limited play private equity, he had on Cape Breton Island, Nova Scotia, in pulled together more July. He also has a fifth Bandon course than $135 million for — Bandon Preserve — the acquisition of golf under construction and courses and landed is in discussions with himself in the top 10 Oregon officials to open of our inaugural power a 27-hole municipal ranking, above Dana Garmany. However, course with architect he left the golf industry less than two years Gil Hanse in Bandon. later, when his primary investor sought an

36 Golf Inc. Fall 2011

032-43MostPowerful.indd 36 9/14/11 12:05 PM exit. But the moneyman is back in golf # Rai Sahi constant traveler, designing and building with Concert Golf Partners, convinced 16 SEE NEXT PAGE golf courses in dozens of nations on six that now is a great time to buy. He has $50 continents. Although he’s worked for a million to invest, bought his first course sultan (of Brunei) and done his share of in July and is aggressively seeking other projects in the so-called civilized nations, deals. He could close 10 this year and Ronald Fream he followed his heart, chasing adventure Architect, Golfplan has the know-how to secure another $50 and unpredictability in far-away places 2010 Ranking: 15 million in funding. If all falls right, Nanula where golf is — or at least was — barely # United States could spearhead the recapitalization of 17 known. He found his true calling in the golf, leading to far brighter times for an For more than 40 years, Ronald Fream has challenge of blazing trails. industry that has been strapped for cash. been on a mission. While his competitors What other architects couldn’t tolerate have chased prestige — hotels without flush toilets, meals eaten # projects and cashed big on dirt floors in huts — Fream viewed as 15 Nick Faldo paychecks, Fream has delightful inconveniences. When there Chairman, Nick Faldo Golf taken golf to places it’s wasn’t enough money to do the job right, 2010 Ranking: 14 never been, spreading he figured out how to get the job done. United Kingdom the gospel known as Unlike some other architects, he was He was once characterized by his failures “growing the game.” willing to strip the game of its five-star (the British tabloids used to call him Nick Since the early pretensions. He allowed its rough, ancient Foldo), but Faldo eventually became one 1970s, when he edges to show and dressed it in clothes of the golf industry’s established Golfplan, Fream has been a appropriate to the place he was in. For biggest successes. During a period that stretched roughly from the mid-1980s to the mid-1990s, Faldo — Sir Nick as he’s known in the U.K. — was arguably the best player in the world. He won 40 professional events (including six majors), spent 98 weeks ranked as the world’s No.1 player and was inducted into the . Since then, Faldo has hit big as a television commentator. The gig has put him squarely in the public eye and helps to market his other golf ventures, which include instructional tomes, practice facilities in Florida and California and golf course architecture. Faldo’s career as a course designer hasn’t yet achieved lift-off in the U.S. — where he’s opened just five courses — but his brand flies high internationally. Nick Faldo Design, which opened in 1991, has completed 18 courses in 16 foreign nations, and it currently has others under construction in Vietnam, India and Cambodia. So in one way or another, the next voice you hear may be Faldo’s.

Fall 2011 www.GolfIncMagazine.com 37