Courses, Destinations & Lifestyles

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By Jeff Thoreson

In a golf economy that appeared to be stabilizing over the last few years, a strange thing seems to be happening – there are a lot of really good golf courses for sale. Among them are several that were once – or still are – considered the best of the best. But now their futures are suddenly a bit cloudy.

Perhaps the biggest storm is brewing over Bulle Rock in Havre de Grace, Maryland. The mega-awarded Pete Dye layout has been at the top of the Middle Atlantic public heap since opening day in 1998, but could the course named for a thoroughbred racehorse be on its final lap? Embroiled in a tax dispute with the city, the owner (Harbor East Management Group, which is not otherwise in the golf business) has put the course and the surrounding development project on the market in separate listings.

Harbor East, which has developed dozens of commercial and residential projects in the Baltimore region, ended up owning Bulle Rock after an investment partner went bankrupt several years ago. If the course doesn’t sell or if an agreement is not reached with the city over the 5 percent amusement tax that kicked in this year, the owner has said it may not keep the course open. According to a report in the Baltimore Business Journal, a letter from the developer to residents in late April stated that the course would remain open “for this season,” leaving the future of the Middle Atlantic’s best public course rather foggy.

If the course does sell, it may eventually be a different Bulle Rock. Original developer Ed Abel built the course, and lured Dye to do the design work, with the intent of having no houses on the course. At least two areas on the course – the ridge overlooking the fifth green and sixth hole and the area to the left of the 11th tee – could be developed as part of the sale of the community. The course and its impeccable conditioning would likely not change but the pure golf aspect of the course that players from Philadelphia to Washington, D.C., have come to appreciate over the last 19 years might be impacted.

“There’s a lot of unknown questions right now,” says general manager Rick Rounsaville. “If it gets sold, who knows what direction the new owner might take. Anything is possible at this point, but right now it’s business as usual.”

Other high-profile courses are also looking for new owners. Traditional Golf Properties has the Williamsburg triumvirate of Royal New Kent, Stonehouse and Brickshire on the market. Stonehouse and RNK were named the best new public courses in the country in back-to-back years in 1997 and ’98 when the game was riding high and the trend in golf course design was to build monumental and difficult courses.

Highly regarded Mattaponi Springs has been on the market for several years without selling, even though it has appeared in the top 50 of the list of America’s 100 greatest public golf courses. It suffers from being a great course in a rural location – Ruther Glen between Fredericksburg and Richmond – where the local population isn’t big enough to support it.

King Carter Golf Club in Irvington, Virginia, is also on the market and also located in a rural area. River Run Golf Club, one of the courses that put Ocean City, Maryland, on the map as a golf destination, and the Jim Furyk-designed Frog Hollow in Delaware have recently been listed as well.

In April, Kingsmill Resort in Williamsburg went off the market when it was purchased by Fort Worth, Texas-based Escalante Golf. While not as high-profile, several other courses have recently sold. Former Philadelphia Eagles quarterback Ron Jaworski’s golf empire has been active in purchasing lately. It bought Downingtown Country Club outside of Philadelphia two years ago. The Links at Challedon in Mount Airy, Maryland, has changed hands twice recently. Central Virginia stalwarts Kiskiack Golf Club, Meadows Farms Golf Course and The Crossings all have new owners in the last few years.

Larry Hirsh of Golf Market Analysts near Philadelphia says the number of courses for sale in the Middle Atlantic in the last couple of years might just be a market correction.

“I think what’s happening is that the Middle Atlantic has not been an area where a tremendous amount of activity has occurred, and it’s starting to happen now,” Hirsh says. “There hasn’t been a tremendous amount of activity here like there has in the South and California and Arizona.”
And others say the number of quality courses on the market is likely just a coincidence.        
“Whether the golf course is good, great or not so good, it’s all about the investment,” says Jeff Fleishman of Williamsburg, Virginia-based Golf Business Advisors. “It’s all about the return on the investment. In some cases, bank notes may be coming up, or due or past due and their (owners’) returns haven’t been as good as they hoped and so they’re looking to liquidate and figure out how to pay off the bank.”

Although rounds of golf played appears to be stabilizing after years in a downward spiral, pressure from competition in an over-built market like the Middle Atlantic has forced green fees down, making course ownership much more difficult than it was 20 years ago regardless of whether you’re a one-off owner or have multiple courses.
Unfortunately, for some of the current owners of these layouts, they got into the golf business for emotional reasons rather than based on sound, fundamental business decisions. There are plenty of stories of golf lovers who bought courses on the downward slant of the game’s economy in the last four or five years for what appeared to be great prices but got overrun by the complexity of the business or the cash flow needed to make ends meet. And there are still owners out there who spent millions building monumental courses at the game’s height and now can’t seem to give them away.

“There aren’t the ego buyers out there any more,” says Robert Waldron of Florida-based Marcus & Millchap, which is listing Bulle Rock and several other Middle Atlantic courses. “People that are buying golf courses are also looking at hotels, apartment buildings, shopping centers. They may see more potential in those.”
In central Virginia, two recent sales might indicate two opposing directions course ownership is headed. The Crossings Golf Club was bought at the end of 2014 by Fortress Investment Group for $2.4 million as part of a nationwide 46-course, $306.5 million grab. CNL Lifestyle Properties, an Orlando, Florida-based REIT, sold the course which it had bought in 2008 for just over $10 million.

As course values continue to slide, there are good deals to be had not only by well-funded investment groups, but by savvy local businessmen as well.

Carl Zangardi proves the mom-and-pop owner/operators still have a place in the business that is increasingly dominated by corporate owners. Zangardi and his wife, Cindy, bought Kiskiack Golf Club near Williamsburg last year.

Zangardi retired from a successful career in the financial services industry at the end of 2015, just before Kiskiack went on the market. He had been a member at Kiskiack for years, and when he looked at the financial aspect of it, he decided it was worth exposing some of his capital in golf in the Williamsburg market. He bought the course for about $1.4 million, roughly half of its assessed value, from a Florida corporation that was consolidating its course ownership to the South. For Zangardi, buying the course was a way to simply add another element to his portfolio, not something he needs huge returns on to live off of, and the fact that much of the staff had been at the course for years gave him a solid personnel foundation.

“I’m looking for a very modest return,” he says. “We have financial goals that are not consistent with what the big corporations that own golf courses are used to expecting.”
He also bought the course with an eye toward the future. Right now there isn’t a single house on the course, but as the Williamsburg area continues to expand, the property just off Interstate 64 could be valuable to his kids and grandkids as something other than a golf course. While he’s given some thought to what that might be, anything from a housing development to a solar farm, for now he’s focused on golf.

“We have a good handle on what we’re doing. We have a bunch of younger guys who are smart and not going to do stupid things,” he says. “I believe, but I could be dead wrong, that if I have a space that is very attractive and staffed with very nice people, there are going to be enough guests that want the experience to cover us for the next 10 to 15 years.”

For owners now trying to sell, the future doesn’t look that secure. [END]