Who's buying golf courses?

"Dear Valued Member," the letter from DuPont Country Club manager Jeff Bradway begins: "Today we are announcing DuPont will initiate a process to explore a potential sale of the DuPont Country Club.  Our priority will be securing a bright future for the Club... During this process, the Club will continue to operate as usual... 

"We recognize the importance of the Club to its members -- and to the Wilmington community -- and have made maintaining the property as a club a requirement of any sale agreement.  We expect the DuPont name will remain... We have not set a timeline." He adds that the "right buyer" will "enhance the club."  

Nearby, the former Hercules Country Club, sold around the time owner Hercules Inc. was sold to Ashland Oil, is now a Toll Bros. development. A Wilmington developer has a deal to build at the (historically Jewish) Brandywine Country Club; half of (historically Italian) Cavaliers was also sold for housing development. 

In Malvern, Chester County, Concert Golf Partners has agreed to "recapitalize" White Manor  Country Club, paying off the club's debt (it was redesigned and renovated by Bobby Weed in 2003 at a cost of $6 million, which higher dues didn't pay down,) and also investing "more than $1 million into immediate capital projects," Golf Inc.'s Jack Crittenden writes here.

Concert Golf, headed by Peter Nanula (former head of Arnold Palmer Golf), based in Newport Beach, Calif.,  has raised $150 million and acquired, so far, "14 clubs, including longtime member-owned clubs such as Blue Hill Country Club in Boston, Crestview Country Club in Wichita, and MacGregor Downs Country Club in Raleigh, N.C.," Golf Inc. added.

White Manor members tell me Concert has agreed to keep the golf club going at least 7 years. 

UPDATE: Concert's Nanula tells me he's "looking for more (golf clubs) in the area.  Clustering can help: members get more than one place to play golf, and we gain some small economies of scale."

In Glenside, North Hills Country Club members have been told club managers are making arrangements with Club Corp. of Dallas.  

Two readers have told me they believe Philmont Country Club in Huntington Valley is making a similar arrangement, with a guarantee to keep the club going at least five years. The club considered a partial sale to Toll Bros. a few years back, as I reported at the time.  

How can investors run a golf course and turn attractive profits, if its members, on their own, can't arrange to pay down their debt? "We are not a 'private equity investor' at Concert Golf Partners," responds Concert's Namula.

"Our firm has 20+ years of owning and operating country clubs, so we are a private club hospitality firm.  Our capital comes from wealthy families who invest for the long term...

"Our sole business is preserving and enhancing country clubs.  We make money, like hotel companies and restaurants, by operating more efficiently, attracting new members, and utilizing the club facilities better.  

"We save lots of money from our volume purchasing discounts, as compared to a standalone member-owned club, and we pay off all bank loans when we recapitalize the club with equity – so there are no more debt service payments going to the bank.

"Usually, these two simple changes mean that our clubs start out with a $500,000 to $750,000 annual cash flow advantage compared to the member-funded clubs nearby.  This allows us to invest in the facilities, and keep on investing." (Members say that when Concert takes over, fees drop. In that case, doesn't cash flow drop too?)   

"Last, we have never sold a single club.  We are in the private club operating business, after all.  As Mr. Bradway at DuPont CC states, we always guarantee in writing that our clubs will remain private clubs after we invest our capital in them." 

I noted in the earlier version of this item that my correspondents have assumed these courses will end up getting developed for homes in the next few years. But that's not Golf Concert's goal, Nanula says.

ALSO: In some parts of the country foreign money is making bets on golf properties. In 2015 Nanjing, China investor Dan Liu's Founders Group bought 12 South Carolina courses for $19.2 million, according to this Horry County news site.

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