John McConnell dropped one course in his college career at Virginia Tech – computer programming.
So, of course, he went on to earn millions as the chief executive of a medical software company, changing the trajectory of his life and, along the way, changing the golf business in the Carolinas and beyond.
“I only wrote one program in my life. It was tax billing for the town of Christiansburg (Virginia). I said to myself, ‘Thank God I’m in sales, because this stuff would kill me,’” McConnell said recently, sitting in the dining room of the Old North State Club, one of 14 clubs his McConnell Golf company now owns and operates.
Funny how life works.
McConnell learned the computer business working for Burroughs Corporation and used his background in finance and sales to turn a later job at a small software company into a multimillion-dollar empire built on software for physicians. He saw an opening, trusted his instincts and when he sold Medic Computer for $923 million in 1997, McConnell pocketed a reported $62 million.
He got back in the medical software business, turned it into another substantial windfall and never imagined he would ultimately become one of the most influential people in golf in the Southeast.
McConnell was playing golf at Raleigh (North Carolina) Country Club in 2003, the last course designed by Donald Ross, located close to the downtown business district in the state capital. The course was on the verge of disappearing, its credit so poor it couldn’t afford to stock golf balls in the pro shop.
“I saw what was getting ready to happen to that property. You’re only five minutes from downtown Raleigh, right? This doesn’t seem right. That was a stage in my life where I was trying to figure out what I might be doing,” McConnell said.
“Once I got out of the software industry, I just kind of took a shot and bought that club. It’s kind of like the farm guy who loves horses, and all of a sudden he’s got 50 horses and they’re eating all the hay.”
“The eye-opening moment to me was realizing very quickly that you’re not going to make much income on one golf course. … After a while you go, ‘OK, if you’re going to really be in this business, you have to have more than one.’ That’s when we started looking around to expand.” – John McConnell
McConnell quickly determined that owning one golf course wasn’t ideal, so he embarked on building a collection of courses – higher-end layouts with big-name designers or located in regions ripe for growth. One course became two then became four and now there are 14 through the Carolinas, Tennessee and Virginia.
“The eye-opening moment to me was realizing very quickly that you’re not going to make much income on one golf course. It’s just your economy of scale. You’ve got a general manager, a superintendent, a golf pro, and I’m coming out of an industry where we consolidated a lot of competitors because you get economies of scale and reduce the overhead in the back office, things like that,” McConnell said.
“After a while you go, ‘OK, if you’re going to really be in this business, you have to have more than one.’ That’s when we started looking around to expand.”
Today, McConnell Golf’s portfolio includes, among others, Sedgefield Country Club in Greensboro, N.C. (site of the PGA Tour’s Wyndham Championship); Musgrove Mill in Clinton, S.C.; Holston Hills in Knoxville, Tennessee; The Cardinal by Pete Dye in Greensboro; The Reserve Golf Club at Pawleys Island, S.C.; Treyburn Country Club in Durham, N.C.; and the Country Club of Asheville in North Carolina.
Click on images above to enlarge: No. 2 at Sedgefield Country Club (top row, left), No. 3 at Musgrove Mill, No. 4 at The Cardinal, No. 1 at The Reserve (bottom row, left), No. 3 at Treyburn and No. 3 at the Country Club of Asheville.
It was The Cardinal that sent McConnell Golf down the road that turned into a model others have studied.
“That one needed a big renovation. In the days we are living, I never would have bought it, but at the time there weren’t many private clubs for sale and having a Pete Dye golf course … I thought about the golf courses more than I did the business model. We think much more business model today,” McConnell said.
What is the McConnell business model?
“It’s how many rooftops there are near you, number one,” McConnell said, noting the irony of being at Old North State, which is about 50 miles from Charlotte and located in a remote area on Badin Lake, defying the McConnell model. “A place like this, we made money here two years ago for the first time since 1995. Obviously this put us on the map when I bought this one, because it was in the top five of the state, great golf course, beautiful property, but it was never going to make money. Standalone it would never make money because there’s just not enough people out here.
“You start driving the revenue model from other clubs. So people at McConnell Golf … now we’ve got I think around 7,500 members, and almost 6,000 of those are golfers.
“In the old days, and I used to be part of that, you would go down to Pinehurst spending a thousand dollars a day playing a couple average golf courses and whatever. Now they come down here. They’ve got the whole place to themselves and they’re paying for cart fees. But they’ll bring their buddies with them. You get the revenue at the lodge, you get the food and you get the greens fees. This (eight-room) lodge now is packed all year.”
“We picked up two clubs last year, and they were home runs. If you could find those every year, I’d take as many as I can get.” – John McConnell
McConnell is intent upon staying within a general geographic footprint around the Carolinas, and he has an operating model that works. He’s always on the lookout to add to his collection of courses, but he’s selective.
“We’re always looking for the right club, but they’re not as prevalent as they were five years ago. I’d get calls every week five years ago. I don’t do that now,” McConnell said.
“We picked up two clubs last year, and they were home runs. If you could find those every year, I’d take as many as I can get.
“We always said in the software business, if you build it, they will come and try to buy you. And we certainly get opportunities from the bigger entities to buy us because we have a very consolidated portfolio of great clubs in an area that do well financially, so we’re a unique product.”
When McConnell bought Sedgefield Country Club in 2011, it was showing its age. It needed new greens, the clubhouse needed updating and the Donald Ross design wasn’t the attractive place it had been.
“He bought the club and improved every aspect of it,” said Mark Brazil, executive director of the Wyndham Championship and president/CEO of the Piedmont Triad Charitable Foundation. “When he agreed to put in Champion bermuda greens, that was as big an improvement as you could have at Sedgefield.
“We ask a lot of him and he has never said no. This has been an arm-in-arm relationship.”
The McConnell model allows members of one club to play golf at any of the other 13 clubs. Given the geographic proximity of most courses, the flexibility is an attractive selling point.
Members are allowed to play other McConnell courses 12 times a year at no charge. After that, they are required to pay a greens fee.
For someone at Providence Country Club in Charlotte, it’s less than a two-hour drive to Sedgefield or Musgrove Mill and just over three hours to Porters Neck in Wilmington. Old North State Club, regularly ranked among the top 10 courses in North Carolina, sits near the middle of the state, making it easily accessible from multiple clubs.
Last year, McConnell said, only five people played more than 12 rounds outside their home club.
“It sounds good on paper, but the average person is going to play (their home course) most of the time, and then they go get their buddies together and say let’s go play Old North State one day or let’s go play Sedgefield after the tournament or before the tournament,” McConnell said.
“If their course has shut down, that’s where it becomes very helpful. If we do a bunker project at Wakefield Plantation (near Raleigh), you can go to Treyburn. That’s where you get the benefit of the model more than anywhere else.”
At a place such as Old North State Club, which borders a beautiful lake, McConnell noticed the club was hosting an inordinate number of weddings this summer. The revenue is beneficial, but most of the members are at the club on weekends and – without a ballroom in the clubhouse – weddings begin to inconvenience the regulars, so McConnell has decided to scale back.
He’s not big on outings at his clubs, either. He will agree to a few of them but said he charges double what other clubs might to keep the number of outings to a minimum, in large part not to overwork his staff.
“In Raleigh, we only do two or three outings a year, and when we do, those are for special situations. It’s not what you want to be in. You want to be in the dues business,” McConnell said.
Like others, McConnell is hopeful the growth golf experienced through the pandemic will continue. The willingness of more companies to allow employees to work from home helps. At some of his clubs, McConnell has established office-type spaces for people to work.
Increased initiation fees are also likely to keep people involved. It’s one thing, McConnell said, to walk away from a $3,000 initiation fee. It’s harder to walk away from a $25,000 initiation fee.
“What we’ve done is established waiting with certain places, because I’m not in this thing to reward a bunch of investors,” McConnell said. “If I were running ClubCorp, I wouldn’t have waiting lists. I’d have a thousand people.
“I will look at how many rounds we play and you get to a certain number and I’m going to cut it off, because you don’t want people to feel like it’s a factory.”
That’s not the McConnell Golf way.