Tough as the U.S. economy has been on golf in recent years, there has been an upside for John McConnell: buying opportunities. McConnell, a deep-pocketed former software entrepreneur, has bought seven private clubs throughout the Carolinas. He expected to close on his eighth, TPC Wakefield Plantation in Raleigh, in mid-July.
McConnell, 61, is a tiny player in a business increasingly dominated by big corporations. But he has a clear vision for his little portfolio of courses, and a lot of cash. That combination has many in the industry paying attention. “Golf has been decimated by investors who have no vision other than their short-term exit strategy,” says Davis Sezna, president of La Quinta Resort & Club. “Clubs have to earn their members to survive, and John understands that.”
McConnell’s first purchase was the Donald Ross-designed Raleigh Country Club, bought out of bankruptcy for $6.3 million in 2003. “One of their members I’d known for a long time said, ‘You ought to go buy that club.’ I said, ‘Really? I love that course.’ He set up a meeting, and it happened.” Since then McConnell has acquired courses by Tom Fazio (Treyburn Country Club and Old North State Club), Pete Dye (Cardinal Golf & Country Club), Arnold Palmer (Musgrove Mill) and Greg Norman (the Reserve Club). McConnell bought Sedgefield Country Club, another Ross layout and site of the PGA Tour’s Wyndham Championship, last December.
His total expenditure, including improvements to the courses, comes to approximately $33 million, he says. He has borrowed none of it.
McConnell’s philosophy starts with a simple idea: He believes traditional country clubs are viable businesses, assuming you run them right. The most important element, he says, is the golf course and he doesn’t want to hear about softening it or making it more player-friendly. “I asked Pete Dye for advice when he was working on the renovation of Cardinal. He told me, ‘Mr. McConnell, all I know is, my toughest courses have waiting lists.’ ”
Other key elements are outstanding service and a willingness to try new ideas. McConnell happily admits most of his “new ideas” come from other clubs. “That’s the beauty of business. If I see something I like, I’ll bring it to our clubs.” He cites a practice area he saw recently at Kiawah Island’s Cassique course. “We’ll do the same practice area at the Reserve, and members will love it.”
At a time when many private clubs are opening their doors to public play, McConnell resists it. “I’m convinced that the more access you give to people, the less interested they are in buying memberships,” he says. He does make one exception: Up to 15 groups a year may stay and play his courses as part of a “McConnell Golf Trail” promotion. Three-night, three-round packages start at $800 a person.
Part of his marketing to members, too, includes joining one club and playing his others up to 10 times a year. Initiation fees range from $5,000 to $45,000 and monthly dues from $350 to $600.
Having multiple clubs under one corporate umbrella is likely more important to McConnell than it is to most members. “One of the first things I learned is you need more than one club if you want to make money,” says McConnell, who made his fortune as a top executive at software companies Medic Computer and A4 Health Systems. Now he has one comptroller and two staffers handling essentially all the accounting for his clubs. Rather than employ multiple full-salaried general managers, he has one chief operating officer oversee a team of less-expensive “clubhouse managers.” All his ground crews report to one super, all his golf pros to one director of golf, all his cooks to one head chef, and so on.
Not every acquisition has greeted McConnell with open arms. Some Reserve members sued when he said he’d wipe out their membership deposits, which had been sold to them as refundable. He backed away, let the club go into bankruptcy (wiping out their deposits), and bought it a year later. A group of Sedgefield members also opposed the sale of their club, arguing its financial problems were manageable without his help. After nearly a year of wrangling, he got what he wanted. What won them over? “Reality,” McConnell says with a laugh.
Yes, reality is pretty sobering for the private-club business these days. And it’s likely to get worse before it gets any better. “There are way too many properties,” says McConnell, who notes that every week he is approached by at least one or two clubs looking for a buyer. “Consolidation happens in every business. Like any industry, there will probably be two or three companies that dominate.” Will his be one of them? Says McConnell: “I know we’ll continue to grow.”
By Ray McDonald
Unless you happen to be that fella from the Geico commercial who has been living under a rock, it should come as no surprise when I suggest that technological advancements of the past decade have propelled our methods and means of communicating with one another at speeds best measured in light years.
Mark Zuckerberg started Facebook in February 2004. Seven years later his brainchild reached 750 million users. Along with Twitter, LinkedIn and the many other social networking services — not to mention laptops, iPhones, PDAs and the ubiquitous “tablet” computers — most people these days communicate with one another and organize their lives in ways that did not exist as recently as the turn of the 21st century.
Fifteen years ago, you could walk into almost anyone’s house and be fairly certain they had a calendar hanging from the refrigerator that showed everything the family had going on — parties to which they had been invited, tee times, even their favorite photos and keepsakes. There was always a constant reminder of the important events and memories taped to the refrigerator. Often, too, the calendar people used was the one provided by their Club from its monthly newsletter.
Unfortunately, the mind-bending technological advances that occur seemingly on a daily basis spawned an unanticipated downside for clubs, which, given all the pressures on the discretionary dollar from restaurants and other venues of entertainment, has relegated clubs to background status simply because they failed to remain at the forefront of a family’s social activities. In other words, they lost their spot on the member’s refrigerator.
During the past five years or so, clubs began transitioning to “paperless” communication with their members — mostly incorporating their websites for information regarding upcoming itineraries. Clubs began looking for ways to trim cost and under the assumption that because most members were going online, the Club could use the internet to communicate with their members. But instead of saving money, most clubs found themselves replacing the cost of printing and mailing newsletters with those of building and maintaining websites and online newsletters. While it is a fact that most members have transitioned to the internet, they have not transitioned to the Club’s online newsletter and worse still, are not using the electronic club calendar as their home base for planning social activities.
Clubs have spent most of the last decade pouring thousands of dollars per year into member websites and thousands more to keep these sites updated and current. Yet, if you were to ask the members about their Club website you would likely hear: “I don’t use it much because the information does not change very often.” Keeping a static site updated has become a no-win and very expensive proposition for clubs.
Indeed, with technology people have abandoned their habit of posting club information in a physical place throughout the home. It is simply not how people keep their calendars anymore. Today most club members maintain some type of electronic calendar and communicate with friends and family through social media outlets. The 21st century go-to spot for planning and sharing has moved from the refrigerator to the smartphone.
The good news is that this provides us the opportunity to change, and once again place our social offerings at the front and center of our members. So, what is the answer? Don’t know if I have all the answers, but the past has proven that it will not be accomplished through websites and static information delivery. Members today communicate via social media. If we are to be relevant then this is the stage on which we must play. Last year’s CMAA show in Orlando demonstrated that we as vendors and club operators are attempting to communicate to our members in a manner that is inconsistent with how members connect with friends, family and co-workers.
That is why we at ClubSoft decided it was time to change our thinking and build on the social networking concept as our go-forward strategy. Born from this change is the ClubSoft Links product. Unlike any other offering in the private club market, our Links product is not a website; it’s a social media site — a private network that engages club members instead of merely informing them. It allows your members to help you replace your current website with an interactive “Online Community.”
No longer do members log in to the same private site with a single home page. Instead, members are directed to their own, private, actionable homepage that is populated by their activities and specific Club happenings that you want them to learn about. In other words, your members help you keep your site relevant and updated. Clicking on an event not only schedules it on the member’s calendar, but also RSVPs back to the club. Think about Facebook, how much time do you think they spend updating their site with new information? The answer is very little because the millions of users do the work for them.
It turns out the private club market is a natural fit for social media and why wouldn’t it be? We have seen clubs’ member logins increase from hundreds per month to a remarkable thousand per month in a short 90 day period after the transition to a social networking solution.
But the more powerful impact on club operations is when you tie a comprehensive reservation engine to the social network. This is the proverbial “tipping point” that turns the lights on. By having the two married you are now giving your members the tools to virally populate your events, court reservations, spa reservations, and tee times. Members create their groups and the “Online Community” can notify others when reservations are made. The possibilities become endless and you are placing your best ambassadors in a position to help you every time they make any kind of reservation.
Sometimes we get a second chance to correct a past mistake. The time for the private club industry to rethink electronic communications is now. It will be interesting to see which clubs embrace “the new refrigerator.”Read More