Fueling a Refortified Industry:

 As seen in Golf Business July/August 2022 

The Flow of Private Capital Throughout Golf’s Most Prominent Businesses

By Scott Kauffman:

Powerful private capital is getting pumped into the golf business like never before. 

And we’re not talking about $25 million paydays on the LIV Golf circuit or nine-figure contracts reportedly offered to Phil Mickelson and Dustin Johnson to join the new pro series supported by Saudi Arabia’s oil-rich sovereign wealth fund.

Other compelling high-level capital investments recently flowing into the business, albeit in a much quieter fashion, are numerous large private equity groups or institutional-type investors putting their capital behind some of the industry’s biggest course owners and operators.

In the last few months, for instance, Northbrook, Ill.-based KemperSports, a self-funded family-owned company for more than four decades, received an infusion of capital from several outside investors. Terms of the deal were not disclosed but one of the new partners is Reston, Va.-based LNC Partners, a private equity group with an estimated $500 million in committed capital under management.

Meanwhile, Concert Golf Partners chairman/chief executive officer Peter Nanula and co-founder Susan Dunnavant are poised for greater growth after announcing Clearlake Capital Group L.P, a $72 billion firm based in Santa Monica, Calif., became a strategic new partner in late April. According to Clearlake co-founder/managing partner Jose E. Feliciano and Clearlake partner/managing director Arta Tabaee, the Concert Golf leadership and team have “built a differentiated foundation in the private golf club ecosystem and have positioned the company by offering a personalized membership experience.”

Like so many others seeking alpha in the revitalized golf industry, the Clearlake principals said the firm’s investment in Concert Golf “highlights our thesis around tailwinds in the golf and broader leisure markets, and we look forward to partnering with Concert Golf to leverage our O.P.S. (Operations/People/Strategy) framework to enhance and add to the offerings of this exciting (golf) platform."

To be sure, perhaps the biggest deal that closed within the last eight months was the “significant strategic investment” TPG Capital teed up for Troon. TPG Capital, the private equity platform of $120 billion global alternative asset firm TPG, was joined in the transaction by pro golfer Rory McIlroy’s private Symphony Ventures investment fund, and Troon’s existing major private equity investor Leonard Green & Partners. 

The privately held parties did not disclose terms of the deal but Leonard Green did note it will “retain a significant investment in the business.” 

Other than that, two things are clear about this blockbuster Troon transaction: The rejuvenated golf industry appears to be on solid financial footing for the near future, and Troon, the world’s largest golf and golf-related hospitality management company with 665-plus 18-hole course equivalents at 680 locations worldwide, remains one of the most dynamic and valuable golf and leisure companies in the business.

Of course, this isn’t the first time so-called ‘smart money’ saw investment value in golf course assets. Five years ago, publicly traded Wall Street juggernaut Apollo Global Management LLC acquired publicly traded ClubCorp (renamed Invited last April) in a $1.1 billion all-cash deal. 

Now, the private equity powerhouse, with approximately $498 billion of assets under management worldwide, is exploring an initial public offering for Dallas-based Invited with a valuation reported to be worth $4.5 billion for more than 430,000 members at 200 private golf and country clubs, resorts and athletic clubs. 

As for Troon, the TPG Capital partnership was actually the third time in seven years that Troon’s growing brand was the target of high-profile private equity investors. For instance, nearly 10 years after Troon Golf founder/executive chairman Dana Garmany started the Scottsdale, Ariz.-based company, Whitehall Street Real Estate Limited Partnership XI, an affiliate of Goldman Sachs, came knocking on Troon’s desert doorsteps and acquired approximately one-third of the privately held company in a May 1999 deal that also included a sizable investment by Starwood Capital.

“Through its impressive scale and operating expertise, Troon has developed a trusted brand that delivers differentiated value to its clients, creating superior experiences for golfers everywhere,” TPG Capital partner Paul Hackwell said at the time of the transaction. “We are excited to be partnering with this great group of investors, operators, and experts to help Troon reach its next level.”  

Fellow TPG Capital co-managing partner Jeff Rhodes, echoing his associate’s Troon comments and the sentiment felt by other savvy investors about the post-Covid golf conditions, said: “Troon is providing the gold standard for upscale golf experiences and is recognized by golfers and clubs alike for its high-quality courses and leading management solutions. The company is well-positioned to expand its market leadership within the industry, at a time when both new and long-time golfers are spending more time on the course.”

Nanula, who first made a golf name for himself when he acquired a controlling interest in Arnold Palmer Golf Management Co., in late 1993, and turned it into one of the larger U.S. course operators over the next seven years, is back rolling up another impressive portfolio of golf assets at Concert Golf. Ten years after acquiring high-end Heathrow Country Club near Orlando, Concert Golf now oversees 25 private golf and country clubs and sees more growth for his company and others backed by this growing wave of private equity.

“When you look at the companies evolving in this industry, I think there are now at least a few like ours that are institutionally backable, you might call it,” Nanula says. “It never really used to be that way. ClubCorp was kind of the only name that could’ve been described that way. … So those investors of these companies, like ours and Troon, will continue to grow. 

“But the larger question is what happens to the rest of the industry when we have a downturn? Or hit a recession and we don’t have Covid to make everyone run out to play extra rounds of golf or join clubs in excess kinds of numbers? When we had our last recession, and we didn’t have Covid-type tailwinds behind golf, we saw some challenges for some of these clubs. Hopefully people get their house in order, learned their lessons and make the necessary adjustments.”