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October 2018

Buying Into the Game


By Steve Eubanks

Bill Smith Finds Recession-Proof Niche with Green Fairways

A lot of people take up golf as adults to enhance their business careers. The game is still a big part of client entertainment. Corporate scrambles, the twice-yearly outing, charity events, customers who invite you out for a round or two at some exotic locale: that sort of thing draws a lot of casual golfers into the game.

But very few buy a golf course a year after hitting their first shots. Fewer still end up owning multiple public courses in some of the hottest markets in America. That’s what happened with Bill Smith, a real estate attorney from Chicago who took up the game solely to keep some clients happy.

“I played golf three days in a row with some clients and thought, ‘I’m either going to love this game or hate it,’” Smith said. “After playing three days in a row I joined Riverside Golf Club in Riverside, Illinois. It was one year later that I bought my first golf course.” 

That golf course was Antioch Golf Club, in Antioch, Illinois, north of Chicago.

“In addition to being a real estate attorney, I also did a good bit of real estate investment with some partners,” Smith said. “I have an engineer and a broker and some partners in the business so we bought and sold real estate. As part of that we bought the Antioch Golf Club back in 1998 because it had 200 single-family lots around it. We developed the lots and had this golf course as part of the deal.” 

For three years, while he developed the lots, Smith and his partners let a third-party company operate the course. But Smith was learning the business — the units that drove cash flow, fixed and variable costs, key personnel and what it takes to turn a profit. 

“After that third year, we thought we were smart enough to manage it ourselves,” Smith said.

As a new golf course owner in the heady days of the late ’90s, Smith was content with his one property. Banquets and outings kept the clubhouse hopping and the layout and condition of the golf course kept rounds up.
Then, out of the blue, he ran upon a deal too good to turn down.

“I was lobster fishing at Key West when we rode past the only golf course down there,” he said. “I didn’t even know there was a golf course on Key West. So, we stopped in and checked it out. Turns out it was Rees Jones’ first design after he left his dad and went out on his own. He had personally built the greens by hand. At the time it was owned by CitiCorp, which I knew meant it was for sale. Three months later we were the owners of that course.”

Thus started Green Fairways, the ownership and management company that now has golf courses in Illinois and Florida. 

“Not much later, I bought The Rail (Golf Club) in Springfield (which was the home to the LPGA’s State Farm Classic for 26 years) and Deer Creek Golf Club in University Park (Illinois.) Just like that, we were off and running in the golf business. This was the early 2000s when golf was on its big upswing.” 

What he discovered later, during the Great Recession, is that quality and location make some golf courses impervious to economic fluctuations.   

“For starters, I was able to get Key West at a fairly good price,” Smith said. “I recognized right away that it had a great pedigree being Rees’ first design. And it had been in foreclosure for 10 years so it was a great opportunity to repurpose it and make it a great resort course for the community of Key West. We did that. The good news about that even in the downturn, we still maintained a good business down there.

“There are two types of golf courses. There’s the type where if you raise rates 50 cents you’ll lose a bunch of players. And then there are those where you can raise the rate five bucks and nobody even notices. Key West was the latter.

“You look at the courses in Oregon (Bandon Dunes) and the ones in Wisconsin (Kohler) and places like Pebble Beach, what those people are able to charge is terrific for them and for the business. Key West was great for us because you have a lot of price elasticity because of where it’s located. It’s a great resort town. There are no other golf courses down there.” 

There have been some challenges in Key West. Beyond the general weirdness of the island during things like Hemingway Days, the course has taken a beating from hurricanes George, Wilma and Irma during the two decades Smith has owned it.

“We lost 300 trees during Irma,” he said. “Business was in the tank for a couple of months. We looked at the golf pros and said, ‘Well, you can be laid off now or you can grab a chainsaw and go to golf course maintenance for a few months.’ Everybody went outside. We did the same thing for the girls in the restaurant. We told them they could be laid off or go to work painting the inside of the clubhouse. So they all grabbed a paintbrush and went to work.” 

All the courses are thriving now that the economy has turned. But Smith has no plans to expand his footprint. He owns a marina in Key West and some office buildings and warehouses on the west side of Chicago. But while his cash flow might be a little more predictable in those areas, nobody wants to talk about his low-slung industrial buildings. He has lots of conversations about his golf courses.

“I’m at a good number (of courses),” he said. “We can centralize top management and stay on top of things while still doing business very locally. That’s really all we’re looking for.”  

Steve Eubanks is an Atlanta-based freelance writer and New York Times bestselling author.






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