Is Big Business Better Business

By | July 1st, 2006
KemperSports’ Bolingbrook (Ill.) GC has three restaurants in its 76,000 sq. ft. clubhouse and a 900-seat banquet facility. Crumbling the “cookie cutter” myth about outside management, the club does over $5 million in annual F&B sales.

First there was golf, as a way to escape the pressures of business. Then there was the golf course and club, as a way to do some business while playing golf. This proved to be such a popular concept that now there’s a big, and growing, business in taking all the headaches of running the courses and clubs away from the people who own and use them—so they don’t have to do anything again but play golf.

Just how big this business has become was highlighted by the recent announcement (C&RB, June 2006, pg. 6) that ClubCorp, which invented the whole concept of outside club management, was putting itself up for sale. The numbers that were thrown out as the bidding began, to indicate just how much ClubCorp might be worth (the initial price tag was said to be set at $2 billion), also touched off a renewed debate about the merits—and dangers—of using outside golf, club and resort management services.

Cookie Monsters?

On the one side of this debate are those who point to the very name “ClubCorp” and its decidedly un-clublike headquarters building in Dallas, and decry it all as symbolic of the corporate greed, spreadsheet management and cookie-cutter sameness that ultimately leads to innocent club and resort properties, and their members and managers, getting bought and sold and flipped around like so many commodity-exchange trading slips.

KemperSports’ Desert Willow Golf Resort

On the other side are those who ask why people who join or invest in club properties after a lifetime of hard work would not want to see those investments managed by experts, especially when the alternative may be having to step up themselves to take on the added burden of running the clubs. (A second question is then usually asked at this point: Does anyone really believe that clubs where management is beholden to constantly changing volunteer committees is really a good alternate solution, as evidenced by all the troubled private properties that are out there?)

Zmetrovich (above left) and Lockhart (right) have partnered to hunt new kinds of trophies.

Or, in the case of courses owned by municipalities, it’s asked why it’s a good use of taxpayer dollars, or a good service to the community, to have bureaucrats trying to run driving ranges and snack bars the same way they run buses or sewer systems.

Here to Stay

   
 Zmetrovich (above left) and Lockhart (right) have partnered to hunt new kinds of trophies.

While this discussion rages, there’s no disputing that golf management companies (GMCs) continue to exert a growing influence on the club and resort business. And yes, while there’s been discomfort and disruption for members and guests of properties that have been unwilling victims of the some GMCs’ portfolio-shuffling— with the prospect of more to come—there are also many cases of properties that have been greatly improved, and even saved, when outside management firms have come to the rescue.

So no matter what kind of shakeouts may still lie ahead, management firm exectives feel that the underlying soundness of the concept, combined with ever-rising competitive pressures, only stand to make their companies an option that more club owners and operators will want to look at in the future—particularly in certain segments of the industry.

“The dramatic increase over the last 15 years or so in the sophisticationlevel of golf management, combined with the increased number of competitor clubs in many markets, has made it more important than ever to utilize specialized expertise in golf course operations to improve profitability,” says Christopher Schiavone, President/CEO of RDC Golf Group, one of many emerging “boutique” GMCs to come on the scene in recent years.

“While the increase in aggregate golf rounds has been negligible over the last 10 years, the increase in golf facilities has been substantial, especially in certain markets,” Schiavone adds. “More clubs are competing aggressively for outing and high-end daily fee play to generate additional revenues and augment dues income. Effective golf marketing and membership personnel are difficult to find, and volume purchasing can lower expenses.”

For all of these reasons, Schiavone believes that “the percentage of facilities managed by companies such as ours will rise over the next 10 years. With government increasingly in the golf business and golf continuing to be an amenity for large residential developments,” he notes, “organizations that do not consider golf management as their primary expertise will look to [GMCs] to efficiently oversee their properties.”

Keeping Score

Just how much does management company penetration into the club and resort business stand to grow? Michael Zmetrovich, who along with fellow former Nicklaus Companies executive Lee Lockhart was inspired to form Trophy Golf Management earlier this year by what they see as significant shifts in the club market, says he expects his new firm to be managing 20 properties by the end of the decade.Overall in that same timeframe, Zmetrovich adds, “We expect the percentage of properties with management company arrangements to increase 25 percent, due to many existing facilities—including some private member-owned clubs—underperforming and needing both expertise and capital.”

The President and founder of another new management firm, Bob Wurtz of Heathland Hospitality Group, sees Zmetrovich’s call and doubles it, stating his belief that “fifty percent of clubs will incorporate some form of a professional management company over the next five years.”

And Hud Hinton, President and COO of one of the largest management firms, Troon Golf, adds that his company expects to add about 25 new facilities a year (counting developments as well as fully operating facilities) through the end of the decade.

Christopher Schiavone, President/CEO, RDC Golf Group

All of this number-tossing, though, sparks another debate: Does getting bigger translate to getting better in the golf management company business? While their ability to amass buying power and supporting resources through their assembled properties is one of the strongest cards that GMCs can play when pitching their services, many management firm executives are wary of the dangers that may come from putting too much emphasis on size—in particular, the dreaded charges of corporatitis and cookie-cutter management.

“I expect that Kemper-Sports will continue to g
row its portfolio and, to the extent that other companies are able to provide a valuable service, they will grow as well,” says Steve Skinner, President of the management firm that was tabbed to help open and develop Bandon Dunes Golf Resort, frequently cited as one of the industry’s most spectacular success stories in the postboom era (C&RB, September 2005).

“We believe in steady and managed growth, but do not set specific growth targets for our company,” Skinner adds. “We believe in a decentralized management approach and focus our time and energies on individual properties and the local brand, identity and vision, not the KemperSports brand. That’s why you won’t see [our] logo take top billing—we make the golf course the ‘star’.”

Hud Hinton, President/COO, Troon Golf

Adds Lee Lockhart of Trophy Golf Management: “As an old friend of mine once said, ‘Sometimes small is big.’ Not all management companies are big and corporate. The small boutique firms, where senior executives are involved day to day, may prove to be best able to provide the individual attention and customized approach to make their clients and properties successful.”

 

Troon Golf ’s Hinton notes that the same charges about the dangers of “big business” were heard in the hotel industry 25 years ago—and then as now, as in any business, differentiation eventually becomes evident, and it doesn’t have anything to do with size.

“The small, independent hotels that were [being recognized for] offering specialized service are now mostly being managed by the Starwoods, Four Seasons and Marriott of the worlds,” Hinton says. “[The larger operators still] have a customized service approach and in turn, a niche market for their brand.”

 

Tom Isaak, President, CourseCo

Tom Isaak, President of CourseCo, an emerging GMC that specializes in management of public courses in the West, captures what he feels is the difference-making factor most directly of all. “I’m not interested in being a corporate monolith,” says Isaak. “I just want to have fun running golf courses.

Ideas Both Big and Small

In the following pages of this special report, Club & Resort Business looks at how golf management companies are using their corporate resources, and helping their individual properties, meet the challenges now found in each area of club operations, including those not directly related to golf.

Certainly, in exploring how GMCs are helping their clientele innovate and achieve efficiencies in each discipline—from design and renovation, to recreation and fitness, to food and beverage operations, as well the areas they know best (course and grounds maintenance and pro shop/golf operations)—there is no clear cut evidence that the firms with the biggest portfolios have any inherent advantage over those that are just starting out, or have purposely limited their size.

Steve Skinner, President, KemperSports Management

(This is also why we have not confined our listing of management firms to just the largest companies as determined by number of properties or “hole equivalents” managed, as is commonly seen in other industry publications. In addition to difficulties related to trying to find common bases of comparison from which to make size-related rankings—because of varying definitions of just what a “management firm” or “property” might be—we also felt it was important to provide exposure for many of the emerging companies that are also available to serve club and resort properties that might be looking for outside help.)

After all, as Trophy Golf Management’s Lee Lockhart says, “The single most compelling reason to consider using a golf management company today is their experience.”

And in the fast-moving and fast-growing world of golf management companies, the definition of “experience” is now literally changing by the day. C&RB

Guide to Golf Management Companies
Company
HQ Location
Web Address
# Props.*
as of 7/1/06
Props.
Breakdown
# Added
1stH ‘06
Notes
American Golf Corp.
Santa Monica, CA
173
65% public
12% semi-pri
23% private
(n/a)
Largest state concentration: Calif. (67)
Arnold Palmer Golf Management – see Century Golf Partners
Billy Casper Golf
Vienna, VA
64
92% public
5% private
3% resort
5
Longest standing relationship:
Stoneleigh CC (Round Hill, VA)-1990
Largest state concentration: Illinois (13)
Century Golf Partners
Dallas, TX
36
53% public
47% private
(n/a)
Largest state concentration: Texas (16)
ClubCorp
Dallas, TX
163
44% private
40% bus/sports
8% semi-pri.
6% public
2% resort
(n/a)
CourseCo
Petaluma, CA
13
85% public
15% semi-pri.
1
Longest standing relationship:
Riverside GC (Fresno, CA)-1989
Crown Golf
Glenview, IL
18
67% public
22% private
11% resort
(n/a)
Largest state concentration: Fla. (6)
Evergreen Alliance Golf Ltd.
Dallas, TX
24
(n/a)
(n/a)
Largest state concentration: Texas (16)
Heathland Hospitality Group
Blue Bell, PA
4
95% private
1
Longest standing relationship:
Huntingdon Valley (Pa.) CC—2004
Heritage Golf Group
San Diego, CA
13
(n/a)
1
Largest state concentration: SC (4)
HonoursGolf
Birmingham, AL
13
77% semi-pri1
5% private
8% public
(n/a)
Longest standing relationship:
Kelly Plantation (Destin, FL)—1998
Intrawest
Scottsdale, AZ
13
(n/a)
(n/a)
Total includes 5 Raven GCs
I.R.I. Golf Management
Tucson, AZ
20
(n/a)
(n/a)
Largest state concentration: Texas (7)
KemperSportsManagement
Northbrook, IL
56
80% public
11% resort
7% private
2% athletic
8
Longest standing relationship:
Vernon Hills (Ill.) GC—1980
LinksCorp
Deerfield, IL
18
(n/a)
(n/a)
Longest standing relationship:
Temple Hills GC, Nashville, TN—1994
Meadowbrook Golf
ChampionsGate, FL
17
(n/a)
3
Largest state concentration: Florida (8)
OB Sports
Scottsdale, AZ
24
71% pub/res
(n/a)
Largest state concentration: AZ, CA, NV (4)
PGA Tour Golf Course Props.
Ponte Vedra Beach, FL
22
64% private
36% pub/res
(n/a)
Largest state concentration: Florida (5)
Premier Golf Management
Pacific Palisades, CA
19
(n/a)
(n/a)
Largest state concentration: Ohio (8)
RDC Golf Group, Inc.
Monroe Township, NJ
6
33% private
50% semi-pri
17% public
0
Longest standing relationship:
Tuscawilla CC (Winter Springs, FL)—1997
SunBelt Golf Corp.
Birmingham, AL
10
100% public
0
All in Alabama (Robert Trent Jones Trail)
Troon Golf
Scottsdale, AZ
175
31% resort
29% private
22% daily fee
18% semi-pri
3
Longest standing relationship:
Troon North GC (Scottsdale, AZ)—1990
Trophy Golf Management
Hobe Sound, FL
4
25% private
25% resort
50% lodging
1
Longest standing relationship:
Coral Creek Club (Placida, FL)—2005
Western Golf Properties
Lake Forest, CA
15
47% public
33% private
20% semi-pri
1
Longest standing rel
ationship:
Falcon’s Fire GC (Kissimmee, FL)—1993

(Not intended as a comprehensive listing, but as a representation of the variety of established and emerging firms now providing management services to the club and resort industry. Data drawn from direct responses to C&RB survey and/or companies’Web sites. Driving range-only sites not included in property counts.Send corrections/additions to jbarks@clubandresortbusiness.com)

Who’s Not #1?
 
Company
Properties Managed, in Hole Equivalents (July ‘06/July ‘05)
1.
American Golf
185.5/182
2.
Troon Golf
175.5/157.5
3. ClubCorp 134/142
4. KemperSports 68/63
5. Billy Casper Golf 62/56.5
6. Marriott Golf 58/31
7. Century/Arnold Palmer Golf 45.5/46.5
8. ClubLink (Canada) 34/36
Rankings based on size are moving targets that can be misleading—and may be missing the point.
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