Coming Up Fast

By | August 29th, 2013
Waterfall Club, Clayton, Ga.

Waterfall Club, Clayton, Ga.

As management firms of all types and sizes continue to drive industry innovation and investment, an emerging group of key players bears special watching.

In C&RB’s last special report on the role and influence of management companies on the golf and club business (“Power Players,” August 2011), much of the focus was on how the then-just-ending economic downturn had helped fuel overall growth in the management firm sector, with U.S.-based management companies showing 11 percent growth in 2010 alone. Much of that growth, it was noted, was being experienced by the biggest names in the business, including ClubCorp, KemperSports, Troon Golf, Billy Casper Golf, EAGLE Golf and OB Sports, which all showed significant growth in the number of individual properties in their portfolios from 2006 to 2011.

SUMMING IT UP

  • Management companies have continued to extend their impact on the club business as the economic recovery has continued.
  • A “new breed” of well-capitalized management firms is putting its stamp on the industry with acquisitions and creative solutions for challenges    that have often proved too much for individual properties to meet on their own.

In the two years since that report, that momentum certainly hasn’t subsided for the major players as the recovery has continued. If anything, it’s found more fuel, with a steady stream of significant new announcements confirming how management firms are continuing to make new inroads, both in terms of their overall reach into the industry and in the types of properties they’re now acquiring or being entrusted to manage.

This issue’s news roundup, for example, includes two of the latest notable developments: ClubCorp’s filing for a $100 million initial public offering on the heels of first-quarter revenues that grew 3.5 percent from the same period in 2011, and the appointment of KemperSports to manage Hamilton Farm Golf Club in Gladstone, N.J., a prestigious private club that had previously been operated independently.

Earlier this year, Troon Golf, which has made strong strides with its Troon Privé division, made a similar impact with the announcement that it had been selected to manage The Club at Cordillera, after that property in Edwards, Colo., was acquired at auction for $14.2 million in December 2012 by Wind Rose Properties, LLC.

New Teams to Watch
While the most well-known names among management firms continue to extend their impact in this fashion, the sector has seen an equally significant development over the past two years: the continued emergence of important new players that are also doing their part to reshape, redefine and refute traditional notions about what management firms can, and can’t, do.

Belmont CC's third hole

Belmont CC’s third hole

Past and Future

Belmont Country Club and Toll Golf have a history.

Toll Brothers secured the Ashburn, Va., land and Manor House in 1995, with plans to build a gated community and golf course. The property holds its own historical significance, with the Manor House listed as a National Historical Landmark dating back to the 1790s. In 2001, the club opened its doors on September 10, the day before the September 11th attacks.

But the partnership is also investing in the future, particularly through the club’s golf program. On May 31, 2013, the property unveiled a new practice range and golf academy at a ribbon-cutting event. The new facility is nearly three times the size of the former range, with over 18 acres of driving area, 71,000 sq. ft. of teeing space, and almost 3 acres of short game space.

“While the old range was adequate, we knew there was definitely room for improvement,” says Maurice Darbyshire, General Manager of Belmont and Vice President of Toll Golf. “This became increasingly apparent through our annual member surveys.”

The club looked to create a large grass tee that would remove the need for members to ever hit on artificial turf mats. A new strain of Bermuda grass called Latitude 36 was used in the grass teeing area to shorten recovery time during the summer heat from weeks to days.

On top of the expanded facility, the club also grew its instruction program. “The vision was to create an academy that could match the quality of the new and improved range,” says Darbyshire. Belmont and Toll forged a relationship with Mitchell Spearman, who Darbyshire notes “has a proven track record of teaching other instructors to understand his philosophy—and his local lieutenant at Belmont, Stephen Moskal, is no different.”

The result is the Mitchell Spearman Golf Academy, which in its first five weeks of affiliation with Belmont, Darbyshire says, has already seen 90 children come through weekly camps and countless adults take group and private lessons.

The club opted to open the academy to the public, for two reasons. “We recognize that exposing non-members to the practice facility will allow both businesses to be more successful,” Darbyshire says. “Obviously, Mitchell Spearman wants to have his team teaching as many people as possible for the growth of game, and we think exposure to our world-class facility will lead to new members.”

In fact, Darbyshire adds, two new members have joined the club as a direct result of the academy’s programming, and the “driving range is now on equal footing with the golf course and clubhouse experience.”

To encourage members to take part in the club’s newest addition, a Thursday happy hour on the range allows golf professionals, as well as Mitchell Spearman Academy professionals, to provide attendees with complimentary tips for improving their game—a venture Darbyshire says has been well-received.

“The size and scope of the entire facility allow us to program without impacting the entire membership,” Darbyshire says. “We consider it the best of both worlds.”    —Brandi Shaffer

Often lumped together under the misleading heading of “boutique” firms, these companies—which include McConnell Golf, the Toll Golf division of Toll Brothers, Concert Golf Partners, Affiniti Golf Partners, Sequoia Golf, Pacific Hospitality Group, and others—are in fact anything but the startups or fledgling operations that name might imply.

Instead, they are well-capitalized, and often led by highly experienced executives who were instrumental in the success of larger management companies or other businesses, and are now helping their new companies build impressive portfolios in specific regions of the country or by grouping properties that share common profiles, and can thus share best practices and other resources.

While the companies in this layer of the management firm business may not have the biggest numbers, at least in terms of how many properties they currently run, they have certainly shown a propensity for developing profitable and innovative operations, and as a result have also put themselves on the map as important industry players to watch, especially in the post-recession club business. Further, they are aggressively pursuing additional acquisitions, often offering inventive solutions to help rescue troubled club properties that would have otherwise succumbed under the weight of the overwhelming challenges brought upon them by the latest downturn.

Smoke Rise CC's upgraded tennis facility

Smoke Rise CC’s upgraded tennis facility

Peachy Partnership

When Sequoia Golf took over management of Smoke Rise Country Club in Stone Mountain, Ga., three years ago, Director of Tennis Mark Avedikian had already been in his position for two years and was in the process of bulking up the program.

“When I first came to Smoke Rise, the former General Manager handed me a jumble of keys and said ‘go to it,’ ” Avedikian says. “There was no real structure.”

Using the know-how he developed from his position as Director of Tennis at Druid Hills Golf Club in Atlanta, Avedikian went to work expanding the program by adding specialty clinics and events, including weekly social round-robins and a 16-team league with 15 to 20 people per team.

“The goal was to give the membership the option to come out and play even without a partner—to make it easy to come out,” Avedikian says.

But to allow the tennis program to thrive, Smoke Rise needed back-of-house support, organization and efficiency, to let the stars of the property shine at doing what they do best.

“With Sequoia coming in, it helped stabilize the club,” Avedikian says. “I was working hard, but we didn’t have any [technology] support or marketing. They changed the structure of initiation fees to bring in more members.

“Before, it was kind of ‘let’s do what we can to keep it going,’ ” he notes. “But it’s run like a company now.”

The foundation and security that Sequoia was able to provide helped to propel Smoke Rise’s tennis program, along with an anonymous donation that resulted in an upgraded facility that now includes eight lit courts (four clay and four hard), stadium-style stackstone viewing areas on hilly terrain, a full-service pro shop, new locker rooms and a café.

With a high-end facility and well-organized program, Smoke Rise went on to win the 2012 Georgia Peach Award, which acknowledges the best overall tennis program, taking into account the cutting-edge facility and high standards of appearance, cleanliness, and service offered within day-to-day operations. Avedikian was also nominated for Director of the Year.

Sequoia’s impact at Smoke Rise has also bolstered the golf program, including a renovation of the course’s greens. Avedikian used that opportunity to offer a free quick-start six-week clinic to bring in golfers to the tennis program, targeting people who haven’t played tennis in years. While the initiative didn’t result in much league play, it did encourage social play, and resulted in a mix of players at all levels.

“The main benefit of the partnership [with Sequoia] is making everyone feel they’re part of the tennis community,” Avedikian says. “The same people always play with others at the same level and they never mix. So my goal is to now have everyone find out that ‘wow, the levels really aren’t that different.’ They make new friends and it’s a team effort, with everyone in the group pushing as one.”   —Brandi Shaffer

Examples of these types of acquisitions made recently by management firms in this sector include Toll Golf’s purchase  of Snowmass Club, a private country club in Snowmass Village, Colo., that was previously owned by Aspen Skiing Company; Pacific Hospitality Group, Inc.’s acquisition of the historic Warner Springs (Calif.) Ranch at auction; and three additions made in the last year by Concert Golf Partners, the Newport Beach, Calif.-based firm led by Peter Nanula, founder and CEO of Arnold Palmer Golf Management from 1993 to 2000.

In between adding the Golf Club of Amelia, the private club in Amelia Island, Fla., that is affiliated with a Ritz-Carlton resort, through an all-cash transaction with Fidelity Mutual last July, and acquiring the Emerald Greens Golf Resort & Country Club in Tampa, Fla., this May in another all-cash deal with Convergent Capital, Concert Golf acquired the historic Country Club at Woodmore in Mitchellville, Md., at the end of last year. In that deal, Concert Golf acquired Woodmore’s loan from M&T Bank, again in an all-cash transaction. Working with the club’s Board, Concert Golf then assumed ownership of the private club, which was founded in 1923 and has a rich golfing history in the Washington, D.C., area, but had then seen its standing slip in that competitive market.

Waterfall Club, Clayton, Ga.

Waterfall Club, Clayton, Ga.

Water Works

When Affiniti Golf Partners expanded its Georgia portfolio in January 2013 to include Waterfall Club in Clayton, Ga., it was just a “natural progression,” according to Jason LeBlanc, Waterfall’s General Manager.

“Affiniti has a large management presence in Georgia, having built and managed many clubs in the area over the past twenty years,” LeBlanc explains.

In the time Affiniti has handled operations at the club, it has not made changes to the property’s management team, but instead has offered “more resources, tools and systems to help them achieve their desired goals,” LeBlanc says.

One area Affiniti honed in on was the community’s connection to Lake Burton, a 2,775-acre reservoir with 62 miles of shoreline. The club purchased a pontoon boat and placed a series of kayaks at the club’s dock on the lake.

“It was rewarding to see how quickly the members, and especially full-time residents who live inside the Waterfall community, took to the added recreational amenities,” LeBlanc says. “We have been pleasantly surprised at the number of boat rentals thus far and how many reservations we have for the remainder of the season. It’s apparent not everybody wants to maintain their own boat, and it helps that we keep pricing to our members well below competitors on the lake.”

With lakefront access, the club is able to offer unique water-oriented recreational activities, including water skiing, tubing, and monthly cocktail cruises.

“The trend has been that the club is being used more comprehensively to enhance the members’ ‘lake’ lifestyle,” says LeBlanc.

To further bolster the recreational program, the club has formed relationships with local outfitters and outdoor recreational facilities, to offer members preferred access. Blackhawk Fly Fishing offers a premiere, private stretch of trophy trout fishing on nearby Soque River, and Blackhawk proprietor Abby Jackson is even helping the club plan a members’ outing in the fall.

“The outing begins with a half-day of fly fishing followed by lunch prepared on-site by the club’s chef, who will use produce directly from Blackhawk’s garden,” LeBlanc says. “We hope this will be a unique outing that will be a club tradition for years to come.”

Other unique forms of recreation facilitated by the club include treetop zip-lining, whitewater rafting and guided hikes through Chattahoochee National Forest’s waterfalls.

LeBlanc estimates that 90% of Waterfall’s 235 members also utilize the club’s indoor amenities, housed in a 52,000-sq. ft. Athletic Center that includes a junior Olympic pool, indoor tennis and basketball facilities, indoor golf hitting cages, fitness center, steam room, sauna and Jacuzzi.

The majority of the club’s members and guests live on Lake Burton, outside of the Waterfall community. So, as an added bonus, Waterfall offers a complimentary shuttle service from the club’s dock on Lake Burton to its mountaintop Lodge and Athletic Center, cutting the trip in half. During the summer months, a club concierge is designated to coordinate most club activities and run the shuttle.

“Members want to ‘shake off’ the workweek or their various travels by getting ‘lost’ in the tranquility of golf here, with its views of the North Carolina mountain peaks,” notes LeBlanc. “The fitness and recreation programs are no different.”   —Brandi Shaffer

“The club’s bank wanted the loan off their books by year-end and the member-owned club was tired of dealing with their lender and constantly assessing the membership,” Thomas Moran, Concert Golf’s Director of Business Development, told C&RB in announcing the Woodmore acquisition. “We solved both problems by buying the loan and doing a friendly ‘deed in lieu’ with the members. We are now putting over $1 million in improvements into the club while bringing stability going forward. “

Sensible Solutions
The growth strategies being implemented by some of the newer players in the management-company sector don’t always involve additions to their portfolios. McConnell Golf, LLC, the Raleigh, N.C.-based firm that owns and operates private clubs in North and South Carolina, announced earlier this year that it would merge two of its properties that are both located in Greensboro, N.C. By combining Cardinal Golf & Country Club with Sedgefield Country Club, McConnell created the only private club in the country with both a Donald Ross-designed course (at the original Sedgefield property) and a Pete Dye creation (at the former Cardinal property). The combination, it was noted, also gave members of the merged clubs the opportunity to now play one golf course with Bermuda greens and another with bentgrass, to offer optimal conditions throughout the year in Raleigh’s transitional climate.

Waterfall Club, Clayton, Ga.

Waterfall Club, Clayton, Ga.

“We believe this combination will be a very strong brand in the market and will help solidify the future for both venues,” said John McConnell, McConnell Golf’s founder and CEO, in announcing the merger. “We certainly will gain synergies in operations, and feel this brand will be stronger in attracting new members to the combined clubs.”

The management firm also noted it would continue to invest in both facilities, including substantial clubhouse improvements at Cardinal, which McConnell purchased in 2006 (the firm acquired Sedgefield in February 2011).

Similar beyond-the-traditional-box creativity is being directed by other emerging management firms at properties throughout the country, as illustrated by the examples contained within this report. And it doesn’t appear there will be any shortage of new examples in the months and years ahead. “We’re getting calls every day from clubs that wouldn’t have considered [outside management] five years ago,” says an executive with one of the leading “new breed” firms. “The timing has never been more right, both for those of us that have the means to acquire or invest resources [in club and resort properties], and for those clubs that are realizing it’s getting much tougher trying to make it on their own.”