When Apollo Global Management acquired ClubCorp in 2017, paying $2.2 billion, half of that total being debt, one investment firm described the heavily leveraged, 60-year “world leader in private clubs” this way:
As ClubCorp has grown, golf has shrunk. Golf participation, golf rounds played, and sales of golf equipment have all trended down over the past decade, while the age of the average golfer has trended up. Though these demographic pressures strain the entire industry, ClubCorp suffers further from the nature of its competition: not-for-profit, member-owned clubs that strive not to maximize the bottom line but simply to provide a good experience. … Our model values ClubCorp equity at just $2.75 per share, 80% lower than the current price. … To those who are long shares: Fore!
Fast forward to 2023.
ClubCorp, with its 200 clubs, 161 of them golf, and 400,000-plus members, has emerged from the COVID boom with refurbished facilities, 23 new “stadium” clubs tied to universities, tons of pickleball courts, live music, executive chefs and ambitious plans for more fixing-up. After taking ClubCorp private following the acquisition in 2017, Apollo is now considering an IPO with a projected value of $4.5 billion, a quadrupling of the evaluation tied to the IPO in 2013 by then owner KSL.
Fore, indeed.
This anticipated “profit,” of course, has yet to happen. The IPO is still being considered, but uncertain market conditions have created a pause in many IPO plans, ClubCorp’s among them.
If and when an offering happens, the company will live or die on the extensive changes CEO David Pillsbury and his team have made to the face of the company founded by Robert Dedman in 1957 as an alternative to snooty private clubs.
The face – and the name.
Last year, exactly as IPO plans were first discussed, Apollo changed ClubCorp’s name to Invited, arguing that members these days don’t like being reminded that their club is owned by a corporation.
“Not everybody loved it,” Pillsbury said, “but it was simple for me. When Bob Dedman founded ClubCorp, it was disruptive. He said it didn’t matter where you came from, what race you were, what you did for a living. I thought, what would Bob Dedman say? And I think he’d say that’s a better brand than ClubCorp.”
There is a new emphasis on, and expertise in, hospitality. In 2020, Pillsbury hired as COO Robert Morse, the former president of hospitality for Caesars Entertainment and before that COO of Intercontinental Hotels Group. Morse was tasked with transforming “the member experience,” of Invited clubs, an impressive portfolio that includes Firestone in Ohio and Indian Wells in California.
“The old ClubCorp was about volume, volume, volume,” Morse said. “It could get to a point at a club where it was tough to get a tee time. We had one club with 46 membership types. You have to simplify.”
Upgrades were needed. “As we’d say in the hotel business, ‘You need to vacuum those carpets once in a while,’” Morse said.
And add pickleball. One of the Invited clubs, Brookhaven Country Club in suburban Dallas, Texas, will host the Pickleball National Championships in November.
During the past seven years, Pillsbury’s team not only has spruced up neglected properties, some with major upgrades to courses and restaurants, but also better positioned clubs within their markets and added programming. Invited’s Active Member Management Program uses an algorithm to manage member involvement.
“We create a care group, members who we identify as at the risk of leaving. The golf pros call them, invite them to the club, and play nine holes with them,” Pillsbury said. “We’ve been able to drop the defection rate from 15 percent to 3 percent. It’s amazingly effective. But it’s been hard as hell to do it. It’s not something staff members have traditionally done.”
Invited also acquired controlling interest in BigShots, a competitor to Topgolf, as a “frictionless” port of entry to the sport and, presumably, to Invited clubs. Texan Jordan Spieth has joined as an investor and strategic partner.
Invited is taking on about five properties a year for upgrading. Where that’s been done, the difference is striking. At Las Colinas, in Irving, Texas, now in the fourth year of a five-year contract to host the Invited Celebrity Classic on the PGA Tour Champions, a $6 million upgrade to the course in 2020 and a $2 million re-do of the range was big.
“We woke up a sleepy club,” said GM Robby Peters, who points to new decor, echoing the property’s ranching and rodeo past. “It’s really Texas. It’s really very different from Dallas Country Club.”
The Hills Country Club in Austin may represent the most striking renovation. The Hills includes four courses – one by Jack Nicklaus, one by Nicklaus Design and two others – in addition to racquet courts, a fitness facility and, of late, a kids water park and an Olympic pool. On Friday and Saturday nights, there’s live music.
Hills GM John Woodeshick said that after the refurbishment of the courses that began in 2019, and other facilities, initiation fees have risen from $40,000 to $75,000.
“There’s no reason for a member to have to join a spin place, a fitness place or a yoga studio. We have the best spin, the best hot yoga, hands on, and we provide a better experience using them,” Woodeschick said.
The Hills restaurants are all different and all themed, including The Hills Signature Chophouse.
“We used to have chop house food in a club setting,” Woodeshick said. “Now it looks like a real chop house.”
The club has 3,300 members, including 900 tennis players, 700 Signature golf members, who play the Nicklaus courses, and 745 Classic golf members who play the other two courses. The Jack Nicklaus course has been lengthened to 7,100 yards and restored, with short tees added. (Tom Kite oversaw a redesign of the driving range.) There’s been new emphasis on juniors.
“Junior programs are key,” Woodeshick said. “If the juniors are involved, the family stays.”
Change involves resistance and sometimes suspicion, especially when a private equity firm such as Apollo is involved. And, of course, rising member costs are always a concern.
“Any time the consumer sees a price change, there is going to be pushback,” Woodeshick said. “But the pushback is smaller than other members saying, ‘This is what I wanted the club to be.’ ”
Retention, then, is critical.
At the Trophy Club in Trophy Club, Texas, occasionally you’ll see a female beginner in a black tee that reads “Bad Mom.” Two years ago, Amy Hinson, the member experience manager and a mom herself, wanted to help the wives of golfers and the mothers of juniors, non-golfers, or “bad” golfers, feel more comfortable at the club. She and director of instruction Ryan Hitt launched a low-stress initiation program that now includes about 100 members. Bad Mom clinics involve instruction, off-course orientation, golf … or whatever. “Some go to the golf course, but a lot just head to the pub,” Hitt said. “We figure if the moms are happy, everybody’s happy.”
Now there’s an algorithm.