10 Golf Inc. September/October 2017
the loss of golf’s big commercial lenders is
being felt acutely.
Textron, GE Capital and CapMark were
comfortable with golf operations, and they
were willing to provide loans — billions of
dollars worth — secured solely by the properties being purchased. With their money,
they laid the foundation for golf’s growth
in the 1990s. But like their customers, they
were victimized by the Great Recession.
They were forced to foreclose on numerous
properties and eventually to liquidate their
Today, buyers seeking loans for purchases of public tracks have limited options.
Most banks won’t even consider extending
credit on a golf transaction. Those willing
to contemplate the possibility will typically
require a 50 percent down payment and a
personal guarantee on the amount being
financed. The U.S. Small Business Administration and the U.S. Department of Agriculture will guarantee some bank loans,
but only for buyers who can meet strict
“I wish it was a bigger box,” said Jerry
Hinckley of Leisure Financial Group, a
loan originator founded by former Textron
executive Ray Muñoz. “We get paid when
we do deals, so we’re as aggressive as we can
be. We’re always trying to find new lenders.”
Purchases of member-owned private
clubs are easier to finance. Lenders liken
daily-fee courses to hotels, which generate
revenues only when they book their rooms.
But clubs that collect monthly dues don’t
need to book tee times to generate income.
Rain or shine, summer or winter, their cash
flow is consistent, and consistency is the
muscle of finance.
If buying private clubs were easy, however, golf’s multicourse owners would be
buying more. Clubs are by and large reluctant to sell, and today only two ownership
groups absolutely, positively have money
in their pockets: Concert Golf, which can
tap a pair of investment vehicles funded
by dozens of affluent Americans; and
ClubCorp, a publicly traded cash cow that
recently agreed to sell itself to a giant private equity firm for $1.1 billion. Although
most other multicourse owners have established relationships with investors and
equity partners, their ability to access funds
quickly seems less certain.
But while ClubCorp and Concert Golf
are ready and willing to buy, they have no
interest in the vast majority of our nation’s
4,000 private clubs. Like most other multicourse owners, they don’t target properties at the very top of the market, which are
wealthy and will never be for sale, or the
ones at the very bottom, which don’t have
much upside potential.
Instead, they target the roughly 1,000
member-owned clubs that generate
between $5 million and $10 million in
annual revenues — and not even all of
them, really. Nanula estimates that only
about half of the clubs in this group face the
kind of financial urgency that might cause
them to consider a sale: a fatiguing debt
load, perhaps, or maybe a desire to fund
capital improvements without risking an
assessment that could cost them members.
In other words, even purchasers with
money have a very small sweet spot. Club-
Corp and Concert Golf may believe that
consolidation will solve some of golf’s
problems, but if they can only buy six prop-
erties a year, it’s going to take them a cen-
tury to do it.
On its own, the number of annual sales
doesn’t appear to be an economic indicator for the golf industry. Ekovich said more
sales don’t necessarily correlate to financial
vigor, and fewer sales don’t necessarily signal impending danger.
That being said, stagnation isn’t an ideal
business model. What we’re seeing in golf
today resembles the housing market in the
aftermath of the economic crash, when
buyers were uncertain, sellers mostly desperate and lenders virtually nonexistent.
Ekovich said he believes the situation
will be rectified as golf operations improve,
perhaps sooner rather than later. His data
indicates that the business bottomed out in
2012 and is slowly gaining strength.
“We’ve rounded the corner and are on
our way up,” he said. “There is strong evidence that the industry is returning to
Hinckley, likewise, believes the industry
is recovering. He sees avid golfers playing
more rounds and families having more
discretionary income that might be spent
on club memberships — factors that will
eventually restore the confidence of buyers,
sellers and financiers.
“There are indications that things have
stabilized,” he said. “A lot of challenges have
The thing is, nobody is willing to predict
when course owners and operators will
be able to get their heads blissfully above
water. It could take a year or five years, or it
might never happen. Shudder the thought,
but the state of the business today may be
the new normal.
That’s what worries buyers such as
“We’ve never been constrained by fund-
ing issues,” he said. “In fact, our private
equity partner wants us to be more aggres-
sive. But we know what’s out there. People
aren’t making great returns anywhere in
For now, therefore, one of the golf indus-
try’s most stubborn problems persists:
Buyers can’t get in, and owners can’t get
“Debt is a big
now. “You can get
[financing], but it’s
MANAGING DIRECTOR, CBRE