6 Golf Inc. Fall 2014
hole equivalent courses.
Only Troon, with 217 18-hole equivalent courses, is larger. But Troon is a
third-party operator. Troon’s own deal
gives it the financial resources to expand
its management base.
Dana Garmany, CEO of Troon, said
most growth would likely be through private clubs. Roughly one-third of its portfolio are private clubs.
“We may look at consolidation of small
companies,” Garmany said. “[But] We
don’t plan to acquire assets. We will stay a
Garmany said Kohlberg’s short-term
investment matches his timeframe, which
is to allow the company to grow fast, with
the possibility that he will then step aside.
Hinckley, meanwhile, will run American Golf in addition to his company,
Century Golf Partners.
Newcastle Investments made a $110
million investment into American Golf
in 2006. In December, it restructured the
company’s debt, funding $54.5 million of
its $109 million debt. It also acquired the
equity of American Golf and a ground
lease for $2.5 million.
Paul Major, CEO of American Golf,
decided earlier in the year that be wanted
to leave the company after he had completed its recapitalization, and Newcastle
recognized it had no experience running golf courses. As such, Newcastle
approached Hinckley about running the
company and creating a strategic vision
“We think this is a fantastic market to
grow our existing courses and there are
opportunities for more deals,” Hinckley
said. “Smart, well-equipped operators
can do very well in what is still a highly
fragmented, unsophisticated industry.”
Guerra agreed that proven managers
will continue to grab market share.
“The quality and bigger operators with
proven success will continue to consoli-
date and dominate the industry,” he said.
“That is a good thing. There will be com-
petition, but at the same time, economy
of scale will drive things.”
But Parthenon Capital was looking for
an exit strategy and that forced Guerra to
look at all finance options.
Ekovich said most of the recent deals
have helped the management companies
cut debt, and that means they will have
more funds to invest into properties or
grow through acquisitions.
Blake Walker, CEO and managing
partner for Texas-based Arcis Equity
Partners, began buying golf courses as
soon as that company was founded in
“The quality and bigger
operators with proven success
will continue to consolidate
and dominate the industry.
That is a good thing. There
will be competition, but at
the same time,
economy of scale
will drive things.”
2013. It acquired the 63-hole BrightStar
Golf Group portfolio, which includes
TPC Snoqualmie Ridge in Snoqualmie,
Wash., and The Club at Pradera at Parker,
The CNL deal is a much bigger acquisition, but the price is consistent with its
estimated net asset value. CNL reported
that net cash from the deal would be
around $208 million, after repayment of
approximately $89.9 million in debt.
Despite the large acquisition, Walker
said the company will continue to be opportunistic.
ClubCorp also expects to continue to
be an active buyer. Eric Affeldt, CEO, said
the company still has $135 million in capacity for further deals.
It also intends to invest into capital
projects during the next two years to improve Sequoia’s golf courses and practice
facilities, create or update indoor and
outdoor dining and social gathering facilities, and add family-friendly pool
amenities and enhance fitness facilities.
Guerra said Sequoia was hampered in
recent years by a lack of capital, and that
ClubCorp should be able to make investments into amenities and services that
will have an immediate pay off.
ClubCorp, which already manages
110 golf facilities with a combined 140
18-hole equivalent golf courses, will add
30 owned, three leased and 17 managed
properties to its portfolio through the
deal. When the acquisition is complete,
it will operate 157 facilities with 194 18-