NEW YORK: A post-Covid surge in US golf-club memberships is leading to big deals for private club operators that cater to the affluent, evidenced in Apollo Global Management’s sale last week of the largest private country club operator in North America.
Known for running marquee golf clubs like Firestone Country Club in Akron, Ohio, and TPC Craig Ranch in McKinney, Texas, Invited Clubs announced its sale to KSL Capital Partners, confirming a previous Reuters report about the roughly US$3bil deal, including debt.
“Post Covid, there is obviously just a lot more focus on this fear of missing out or you only live once mentality, the shift of spending money on experiences more than things is never more prevalent than your country club membership for your entire family,” said Daniel Cohen, a partner at Apollo.
Apollo bought Invited nearly a decade ago.
Mergers and acquisitions volume, as measured by the size of the deals, for golf and private membership clubs hit its highest level in at least a decade this year, according to data compiled by Reuters.
Private club memberships can run into the 10s of thousands of US dollars a year, with some charging initiation fees of US$100,000 or more.
Members are not paying those fees for the amenities alone – the privacy and exclusivity are often worth just as much to the ultra-wealthy.
The average networth of Invited’s roughly 140,000 memberships is around US$3mil, according to a source familiar with the company.
Soho House, for instance, went private this year in a US$2.7bil deal by a group including MCR Hotels and Apollo, after struggling to turn a profit and losing an air of exclusivity as a public company that increased memberships significantly and reported quarterly results.
Concert Golf, which operates 39 clubs across the United States, was bought by Bain Capital for more than US$1.3bil, including debt, last year.
KKR is exploring a sale of The Bay Club Company, a chain of West Coast membership clubs with amenities from spa services to golf courses, Reuters reported in May.
Golf was on the decline before the pandemic due to an ageing demographic, but it gained new players who saw it as the perfect socially distanced sport, and those new enthusiasts have stuck with it.
Entertainment chain Topgolf, which was valued at US$1.1bil after Leonard Green & Partners bought a majority stake this year, also helped introduce younger players to the sport.
Players spent 37% more at golf courses last year than they did on average before the pandemic, trailing only the cruise industry and ahead of other leisure activities such as theme parks and boating, according to Bank of America aggregated debit and credit card data.
“The experience economy is alive and well, and we see golf as a key beneficiary of this trend,” said the bank’s report, issued in March.
Apollo’s sale of Invited Clubs, which has over 150 properties, to KSL is the biggest private club deal so far this year.
KSL previously owned the company, formerly known as ClubCorp, from 2006 to 2013, buying it for US$1.8bil before taking it public seven years later.
Apollo took Invited private in 2017 for an enterprise value of US$2.2bil, including debt. Then, the pandemic hit and it had to cancel all weddings and other large events.
Golf club membership revenue tends to be sticky, Cohen said, meaning it provides reliable, recurring income streams that customers rarely cancel.
“A lot of people who belong to country clubs, this is your entire social life,” he added.
Even Invited’s Texas club memberships did not falter when the oil market collapsed in the mid-2010s, as some had feared in light of the state’s poor economic health, he said.
This phenomenon also held true during the pandemic. Invited’s golf memberships grew from 2019 to 2021.
The company also turned some of its tennis courts into pickleball courts and bought hundreds of outdoor heaters in March 2020.
“By the time the fall came, when the virus was obviously still everywhere, the clubs were able to reopen and have a lot of outdoor activity,” Cohen said.
Apollo prepared Invited Clubs for another public listing, Reuters reported in December, but still shopped the asset around.
Invited’s annual operating earnings had more than doubled to over US$350mil, not including divested clubs and businesses, under Apollo’s ownership, the source familiar with the company said. — Reuters
