The Pellucid Perspective - September 2012 - (Page 2)

GOLF INDUSTRY FINANCE New golf industry financing sources emerge Existing notes, renovation costs and equipment lease and finance targeted by new industry players By Jim Dunlap eclining participation is undoubtedly the number one New finance sources surface problem facing the U.S. golf industry, but in any gathIf we accept the premise that people who understand the ering of golf stakeholders, it won’t take long before fi- golf business may be better lending partners, there have been nancing, or lack of it, comes up in the conversation. Whether several recent positive developments for worthy borrowers. it’s money for new course development, acquisitions, deferred Concert Golf Partners principal Peter Nanula and industry vetmaintenance or plain old operating capital, that ship has sailed, eran Tom Moran have teamed to buy up existing golf course and taken the lenders with it. As one cynical industry observer notes from lenders, longtime Nicklaus Design sales and mansaid (OK, that was me), if you mention the word golf to a lender agement executives Timothy Kenny and Carl Mistretta have today, you’d better be inviting him or her to play, because other- formed a company called Signature Golf Partners to provide wise they’ll immediately have another important call they have equity financing for course renovations, and the major lending to take. firm of EverBank Commercial Finance has created a division In the halcyon days of the 1990s and early 21st Century, the headed by veteran golf industry lender Tom Barber to finance traditional industry lenders (Textron, GE, Capmark, GMAC golf course equipment leasing and purchase transactions. and the like), the major banks, and even your friendly neighborNanula and Moran’s new entity will draw on the financial hood banker were handing over cash to golf backing of Freestone Capital to acquire developers and operators with both hands. existing golf course loans from lenders If we accept the Quite obviously, those days are gone, and and, in many cases, extend those notes. In so are some of the aforementioned lendwhat is likely no coincidence, the borrower premise that people ers, while the rest have put “Closed” signs courses the new group will favor are those who understand the in the former golf lending department. with price tags and trailing revenue totals Their executives, who used to be among similar to the courses that Nanula’s group golf business may the most popular folks in the room at most has been purchasing lately. be better lending golf industry gatherings, now find them“We’ll be looking at primarily the same selves doing “asset management,” which, type assets that we’ve been looking to acpartners, there have roughly translated, means trying to keep quire, with notes closer to $2 million, but been several recent the doors open and the grass green at their we’re looking for trailing revenues of $3 foreclosed courses until they can sell them positive developments million and up,” Moran said. “Our ideal for 50 cents, or much less, on the dollar still target is a bank or financial institution that for worthy borrowers. is seeking to monetize a position they don’t owed on the note. One of the reasons cited by golf peowant to be in any more. We expect to get ple for the current disconnect between a wide range of opportunities, probably 80 lenders and golf is that many lenders just percent of which we’re not interested in, don’t understand the golf business. Granted, that shouldn’t but if we see something that makes sense, there’s not really any have been a problem with those traditional golf lenders constraint on capital.” mentioned earlier, but even they fell prey to the good times, Realizing that golf course design is not exactly a growth inand perhaps the lurking thought that golf ’s been around for dustry these days, and lack of financing is a big factor, Kenny over 100 years, and would surely continue to grow and pros- and Mistretta, along with Kenny’s son Kevin, a course memper, particularly if there was a nice new housing develop- bership structuring specialist, decided to try to find investment ment coming along next door, full of prospective players and partners willing to fund major course redesigns or renovations club members. Many local bankers had no clue about golf as for suitable golf properties. To Kenny and his group, that genera business, but they’d done well in financing good old Bob’s ally means courses in a year-round golf climate that might benother business ventures, so why not roll the dice with him efit from a course makeover by an architect with enough name on his golf venture? recognition to add both expertise and marketing cachet. Obvi- D 2 The Pellucid PersPecTive September 2012

Table of Contents for the Digital Edition of The Pellucid Perspective - September 2012

The Pellucid Perspective - September 2012
New golf industry financing sources emerge
How is your course really doing?
Industry finally warming to SNAG Golf
Sometimes figures lie, and liars figure
Course construction work showing some signs of life
August golf weather impact: Another winner
Chesapeake area courses hanging on by a claw
Phoenix considers options for municipal courses, including closure
FedEx Championship is confusing, but Rory isn’t

The Pellucid Perspective - September 2012