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As Trump Knows, It's Time to Invest in Golf: World Golf Foundation

Image: As Trump Knows, It's Time to Invest in Golf: World Golf Foundation
In this, May 27, 2010 file photo, Donald Trump holds a golf club during a media event. (David Moir/Reuters/Landov)

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Monday, 02 Mar 2015 07:40 PM Current | Bio | Archive

Editor's Note: In an effort to bring a diverse array of opinions and perspectives to Newsmax's A Golfer's Life, we are actively seeking contributions from industry leaders and newsmakers from the world of golf. The following column has been submitted by Steve Mona, CEO of the World Golf Foundation. Mona has been ranked as one of Golf Inc.'s "Most Powerful People in Golf" for the past 13 years, and in 2014 he placed higher on the list than Tiger Woods.

“Buy low, sell high.” Every economist, financial advisor and investor in the world knows this time-tested stock market adage. It is equally applicable to today’s golf industry, particularly when it comes to courses. Through myriad economic cycles over the last 100 years, golf has remained an integral part of the American sporting landscape. While many pundits are proclaiming it a “dying pastime,” savvy investors are seeing through the clutter and betting on the game’s future viability.

Buying and Managing Golf Courses

One of the biggest “bulls” when it comes to purchasing golf facilities is Donald Trump. His portfolio, which seemingly grows by the week, currently features 17 courses in five different countries. One of his first forays into the golf business, Trump National Golf Club in Bedminster, N.J., was recently named host of the 2022 PGA Championship. It is the first men’s major championship to be awarded to one of his properties.

Trump’s optimism isn’t an outlier. Many private equity and investment firms have targeted golf courses as a “buy” under current market conditions. The recent flurry began in December 2013, when Newcastle Investments recapitalized American Golf – owner and operator of nearly 100 golf courses – by funding $54.5 million of its $109 million debt.

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Things heated up even more this past summer. In July 2014, Kohlberg & Co. and Great White Shark Enterprises – golf legend Greg Norman’s organization – completed a significant transaction with Troon Golf to provide new capital for accelerated growth (Golf Inc., July 2014). Currently, Troon owns or operates close to 100 courses in the U.S.

That same month, Arcis Equity Partners acquired 48 golf courses from CNL Lifestyle Properties (Golf Inc., July 2014).

Then in August, ClubCorp shocked the golf and real estate industries by purchasing Sequoia Golf for $265 million. The acquisition increases ClubCorp’s portfolio of golf and country clubs to 210 (Atlanta Journal-Constitution, August 2014). ClubCorp’s acquisition of one of the industry’s top golf course management firms in the U.S. promises to improve efficiencies and provide customers with more playing options.

Another success story is Billy Casper Golf, owner and operator of 150 golf courses in 26 states and the District of Columbia. This year alone, the company has added 15 courses to its portfolio.

Recapitalization

These investments in golf courses point to the industry’s upside. But purchasing golf courses at a great value is only part of the discussion. Private equity firms and entrepreneurs also see the importance of investing in the clubs and courses they already own.

According to a McGladrey LLP report from August 2014, capital improvement projects at Florida private clubs are averaging $5.6 million, as stated by Philip Newman, McGladrey partner and national private clubs industry leader, in the August 2014 issue of Club & Resort Business:

“We are seeing a significant reinvestment in club amenities and a determination to offer members more choices of services and activities. Running your club like a business isn’t just about cutting costs; it’s about understanding the lead indicators that drive financial results, then measuring, reading and reacting to those indicators with a speed that truly affects operating results. The most successful clubs today are meeting that challenge.”

Some courses have gotten creative and introduced “crowdfunding” to raise money to refurbish the course or clubhouse. Brandermill Country Club in Midlothian, Va. pursued this strategy in 2013 and raised nearly 75% of its $300,000 goal. Fundraising options included buying bulk greens fees at a reduced cost or purchasing bricks to be laid in the patio’s new foundation (Golf Business, May 2014).

Even golf courses that closed their doors during the recession are now reopening. Reflection Bay Golf Course at Lake Las Vegas in Henderson, Nevada shuttered in 2009, but the par-72 layout designed by Jack Nicklaus and 35,000-square-foot clubhouse recently reopened.

Outlook for Golf Courses

Recently, media have spent a great deal of time focusing on golf course closures. These closures represent less than 1 percent of the U.S.’s approximately 15,500 golf facilities. There were 157.5 closures in 2013, which is relatively flat compared to recent years (154.5 in 2012; 157.5 in 2011). In total, less than 650 golf facilities have closed the past eight years.

This compression in the U.S. golf industry is natural as supply and demand reach equilibrium. The golf industry is working toward an inventory of courses that incrementally supports the growing demand for the game. In the U.S. alone, there are still close to 26 million golf participants.

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The U.S. economy has endured two significant recessions since the start of the century, but golf has fared well compared to similar sport and recreation industries. The outlook is favorable and NGF predicts golf course openings will remain steady at around 20 per year in the near-term.

Conclusion

The golf industry is being revitalized, as evidenced by the capital investments being made on numerous fronts. Local municipal courses to world-class resorts are being purchased at very good values. Recapitalization has led to clubhouse and course improvements as well as an expansion in customer offerings. Golfers are experiencing a larger selection of amenities and receiving more “bang for their buck” along the way.

About Steve Mona
Steve Mona became the World Golf Foundation’s Chief Executive Officer (CEO) in March 2008. Mona served as tournament director of the Northern California Golf Association from September 1980 to January 1982. He moved to assistant manager of press relations for the United States Golf Association from January 1982 to June 1983, at which time he became Executive Director of the Georgia State Golf Association. In November 1993, he became CEO of the Golf Course Superintendents Association of America.

In 2014, Steve was named to Golf Inc.'s "Most Powerful People in Golf" for the 13th consecutive year and ranked above Tiger Woods.

World Golf Foundation develops and supports initiatives that positively impact lives through the game of golf and its traditional values. Founded in 1993, The Foundation is supported by major international golf organizations and professional Tours, and provides oversight to World Golf Hall of Fame, The First Tee, GOLF 20/20 and other industry initiatives in support of its mission.

For more information, visit www.worldgolffoundation.org.

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While many pundits are proclaiming it a "dying pastime," savvy investors are seeing through the clutter and betting on the game’s future viability. A column by World Golf Foundation CEO Steve Mona.
trump, invest, world golf foundation
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2015-40-02
Monday, 02 Mar 2015 07:40 PM
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