C&RB sat down with C.A. Roberts, President for Scottsdale, Ariz.-based OB Sports to talk about the club industry from his perspective.
Q: How has the total number of properties under your management, and the breakdown by type, changed over the past five years?
Out of 42 golf courses, 31 are daily fee and 11 are semi-private/private. In the last year, we’ve added about 8 properties. We don’t own any of them, only manage.
That pace of growth is a little faster than average for us. We were founded in 1972 when Orrin Vincent became the Director of Golf at a new facility called Edgewood Tahoe. Orrin handpicked a unique team of experts to assist him – individuals whose talents encompassed all aspects of the golf business. Under the title of OB Sports, this team began managing, building, and consulting for additional facilities throughout the country.
Over the years, OB Sports continued to grow into a highly knowledgeable team of business people who truly understood the golf market. How to find the best locations. How to make a facility unique. How to make each aspect of the facility profitable. How to build a strong team that could achieve greatness at a golf facility.
We went through a phase in the mid 90s where we built and owned properties, but we sold those in 2000. That was a sort of rebirth for us. Since 2000, we’ve been management contract only. We’ve grown at about 3-4 projects a year.
Q: In terms of specific properties that have been added or dropped, what would you cite as the most notable and significant changes to your portfolio in the past five years, and why?’
Most of our contracts are short and mid-term. Even if it’s a 5-year contract, contracts end and we’ve had contracts where they were terminated upon a sale, like with Sedgefield CC, for example. It was an equity owned club that was sold to McConnell Golf. We actually encouraged the sale because it was better for the club. If we were trying to protect ourselves, we probably wouldn’t have pushed for it, but it was the right thing for the club. We encouraged the members to accept the sale .
People ask me a lot of times: “What kind of course is OB looking for?” It doesn’t work that way, we have a lot of nice courses in our portfolio, you’ll never find anything that says a project has to be this, this and this. Some of our best success stories are client-oriented not so much course-oriented. We look to make our clients happy, depending on their goals.
Q: Did the recession create more opportunities for management companies than they would have otherwise had over the past five years?
Yes, I think so. I think in a couple of ways. In one sense, there was an “I don’t need a management company feeling” before the recession. Now they’re starting to reevalute and say, maybe we need some professionalism around us.
At the same time, there have been a lot of projects that have been taken over by banks and management companies are an easy sell to a bank.
Q: At the same time, how did the recession affect contracts and fees, in the case of properties managed for outside ownership?
We certainly lost some contracts. We’ve had projects go away especially on the residential development side of things. On the other side of that, Banks tend to hire us right away.
One of the advantages of being a management company is that we’re skilled at ramping up in a hurry. We can take over a property and settle the issues (liquor license, business license, etc.) that a stand-alone manager might not be able to solve quite so quickly.
We get a lot of calls from properties that are troubled. They realize they have problems and they think a management company will solve it. But that’s not always the best case. Sometimes they need to fail and restructure to ultimately succeed. We get a lot of calls from people that we can’t help.
Because we’re privately held, we don’t have to grow for the sake of growth. We grow for the good of the company. If we make 10% more or 10% less, that’s our business, but there isn’t a mandate for it. We can be different in our deal structure. We were doing that before the economy. We’ve always approached a project as: “Let US fit in to YOUR club. Where do you need help?”
Sometimes we’ll have a club where the owner is basically the manager. And he/she wants to control the marketing and the menu. Then I can say, that’s fine. You can continue to control those things, but let us come in and help with agronomics, centralized accounting services, marketing database, etc. Let us bring some management company toys to you, but instead of charging a certain fee, we’ll give you a deal.
And with 42 projects; each is a different snowflake.
We’re trying to get over the psychological side of management companies making your club cookie-cutter.
For example, at Angel Park, the OB Sports brand is very evident. In Vegas, people know our name and they react to it. Meanwhile at Talking Rock in Prescott, you’d never know we help them. You’re not going to find the OB brand on the slogans or in the marketing or anywhere in the clubhouse. Our name wouldn’t help them. Instead, we’re providing a different role there. The manager onsite is great. We do accounting, HR, we advise on the marketing, but they have their own look, brand and feel. We give them our ideas, and they pick and choose what is best for their club.
Q: How do you manage that though?
The buying power is the same, there are systems and controls that are the same across the board. We give them the management company toys and say you can use it as is or you can customize it. We don’t tell our GM here is exactly how you have to do it. Instead we say, “here’s what we would recommend, but tell us how you do it, and we’ll get all the managers on the phone and share best practices.” Our GMs share ideas with each other. It’s the nature of our business. The managers that are good at their jobs, love working with us because we reward success.
We can also be an advocate for our staff members. Say, for example, the owner comes along and they don’t know anything about the manager’s job, but they have an opinion of him/her. We can tell the owner how it is, whether the manager is great or not. We can defend our managers and stand up for them if we need to. And we can replace them if we need to. We can also recruit fabulous guys and gals because our reach is much broader. The owners and the managers ultimately respect us because we respect them.
Q: Do you feel that the primary opportunities for management firms in the club and golf market come from “troubled” clubs, or do you have something to offer properties that are prospering on their own?
There has been an attitude of change toward management companies in the eyes of ownership groups and even the golf professionals themselves. For a long time, they were seen as a little too corporate, a little too cookie-cutter. Now those groups are saying, “Well, let’s hear what they have to say.”
Let’s talk about the manager. If you went to a manager and you said, “I’m going to bring in a management company,” that person will rattle off a list of reasons why a management company should not be brought it. He’ll say, “they’ll charge a fee, they’ll change the culture, and here are 90 other reasons why you shouldn’t hire them.” I would tell that owner or manager when I talk to them that first, it’s not like we have 5 or 10 GMs ready to come take your job. Second, if you’re good at your job, you’ll love working with our group. If you’re not, we’ll find that out in a hurry. What’s interesting to me is that many of our managers were that “don’t do it” guy before us. Now, those guys are huge fans of OB sports. They get buying power. They get support.
On the other side of that, bad managers do not hold us hostage. We can let someone go. Our corporate person can step in where we need them to. We know how to do a job search quicker and faster than the onsite manager does, too, and there is no add-on charge for that or anything for that matter. There is no nickel and diming. We give them all the buying power. They keep all the savings.
Q: With the industry now appearing to stabilize again, what is your long-term strategy for your portfolio and the properties within it?
We’ve been reluctant to get into ownership because it runs the risk of changing our culture. We run the risk of owning a course and other courses then saying well, you care more about the course you own than us. It could change the dynamic of the team. We want to treat all equal, all in. Going forward, we might take on a lease where we weren’t doing that before. We’re taking on more incentive in that case though. For example, if the club wasn’t doing well before, we could come in and do a better job turning it around. Then we could ask the owner to you incentivise us to turn it around.
Going forward, we might take bigger risk with contracts based on better performance.
Q: What can all clubs and courses in the market, including those that will always remain independent, learn from the programs and practices at OB Sports?
You need to operate as efficiently as you can. We are able to benchmark clubs against other clubs around them to gauge how it should be run. We can line them up, dollar for dollar, against someone else just like them. Then, they can use that information as they need to.