No one’s apprentice when it comes to negotiating a deal, Donald Trump has built a fence around a recalcitrant private property owner’s land in Scotland -– and sent him the bill for half its cost.  The stuntman, who recently left the U.S. political stage after his ill-conceived positioning as the birther of a nation, remains front and center in Scotland, where he is building a $1.5 billion golf resort over the objections of the local governing body and most of the local citizenry.

        Here is the outline of the project’s history.  Trump decided in the mid-2000s to build Trump International Golf Links – Scotland, a resort

adjacent to protected dunesland in Aberdeenshire, on the country’s northeast coast.  The local council, given the land’s designation as a “site of special scientific interest,” rejected Trump’s application.  A reported eight species of rare birds use the seaside location.  Under normal circumstances, the council’s decision would have been the end of it, but Donald Trump does not react well to rejection.  Scotland’s national legislature took up the Donald’s case and overrode the local objections, calling the project “a matter of national significance.”  In the process, the local council head was sacked for not seeing the benefits to the local economy (never mind that the majority of local citizens do not see the benefits either, according to local polls).  Trump began construction of the golf course in 2009, tearing down, local environmentalists say, some of the very sand formations that he himself had dubbed loudly as The Great Dunes of Scotland.

        Since the view to the sea from the future hotel was not to be entirely unimpeded, Trump also began buying additional land adjacent to the original site.  A few pesky landowners had not recognized the compelling reasons to abandon the homes they had lived in for the last few decades.  They decided not to sell. Trump first tried communicating with them in his own inimitable style, labeling the property of one “disgusting” and “a disgrace” which only served to harden the resolve of that landowner and make him something of a local hero.  Not one to shrink from a fight, especially against those with less resources than his own and no official political backing, Trump instructed his work crews to erect tall trees and fencing around the homes of some of the transgressors; to one of them, David Milne, he sent a bill for half the cost of the fence, $4,600.  You can read a story about that fence, with photos, by clicking here. 

        The story almost certainly will progress about as you would expect.

The Trump operation will “starve” the landowners in court costs they cannot afford to pay.  If that doesn’t work, the Scottish legislature could authorize the properties be taken by the Scottish version of eminent domain, known locally as a “compulsory purchase order.”  Although Trump announced recently he would not seek the CPOs and, instead, would build his resort and golf course around the “disgusting” home sites, it is hard to imagine him asking his future hotel guests to shell out hundreds of dollars a night to look down upon rusting backhoes and collapsing sheds.

        In following this story, we can’t help being reminded of the wonderful 1983 movie “Local Hero,” which starred Burt Lancaster as a rapacious oil billionaire named Felix Happer, who tries to buy a Scottish seaside town and its surrounding land as the base of his company’s drilling operations.  The movie has a happy ending, with an accommodation that settles everything satisfactorily, especially Happer’s ego.  But that was fiction, and Felix Happer is no Donald Trump.

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        Despite the controversy, the linksland near Aberdeen is spectacularly well suited to a golf course, and the respected designer, Martin Hawtree, is likely to design a world class layout.  A number of "YouTube" reports about the project are available; this one includes some nice shots of the dunes (click here to view).  It portrays Trump much less favorably than the landowners who are not likely to forgive him his trespasses.

        We tend to forget that there was a recession in the early 1990s, when people stopped buying new homes and gave up their golf club memberships as anxiety about the economy rose in tandem with corporate layoff rates and job security fears.  Sound familiar?  We forget as well that, back then, some pundits preached a scenario for the golf industry that mimics the doom and gloom we hear today.  But in any crisis, the shrewdest businesspeople always see opportunity where others smell fear.  In the 1990s, ClubCorp followed this model and, today, it is the second largest operator in the business (after Troon Golf) and can boast an all-encompassing roster of 130 golf courses.  That gives ClubCorp tremendous leverage in offering its members nationwide significant options for playing a wide variety of layouts.

        The Golf and Country Club division of Toll Brothers may be the latest bad economy’s example of a golf course operator with a gutsy strategy.  Despite the lingering effects of the recession on homebuilding and golf course operations, the nationwide builder announced late last year that it was expanding its customary emphasis on buying and operating country clubs only inside the gates of Toll Brothers built golf communities.  With confidence borne of two decades running a handful of those well-regarded community golf clubs, and with a mandate from the Toll family to expand its golf portfolio, Toll Golf is unabashedly in the market for bargain-priced clubs.

The first hole at Toll's Dominion Valley golf course features a dogleg right, a rolling fairway and a well-protected green, enough to get the attention of even the most casual golfer from the gitgo.  

Photo by L. J. Gavrich

 

       “Opportunities to own and manage country clubs in non-Toll communities that are facing financial trouble continuously present themselves,” Toll Golf President Dave Richey said last September in announcing the company’s more aggressive stance.  Although Toll Brothers communities surround a total of 22 golf courses, Toll Golf only owns and manages 11 of them; the rest were either turned over to members earlier or were developed by companies not affiliated with Toll.

        Toll Golf has many clubs choose among, given the current tumult in the golf course industry; one of its earliest acquisitions was quite a coup, a highly rated Tom Fazio course at Hasentree, a community north of Raleigh, NC, whose bankruptcy opened the door for a bargain-basement purchase by Toll Brothers (hundreds of undeveloped lots were included).  Last year, Toll Golf also picked up Parkland, a Greg Norman designed golf course in a Florida community, after Toll Brothers bought the land and the club.

Members of Hasentree and its Tom Fazio golf course (above) gain full privileges at the nearby Brier's Creek club (Arnold Palmer) for just $100 additional per month.  Walking is permitted at Hasentree at all times.

Photo courtesy of Toll Golf and Country Club Division.

        There is nothing coy about the Toll Golf strategy.  First, the more courses Toll can make available to its existing golf members, the more valuable the memberships will be.  Potential members will notice the extra-course options as well, and the bet is they should be more willing to pay initiation fees that begin at $5,500 at Dominion Valley Club in Virginia and reach $102,000 at Frenchman’s Reserve, the Toll golf community in Palm Beach Gardens, FL.  I visited Dominion Valley and played the Palmer course there; you can read my review by clicking here.

        The second reality that gives Toll confidence in its strategy is, well,

its confidence in its operational model; Toll Golf Senior Vice President Mitchell Laskowitz says his organization has picked up a number of underperforming golf clubs in the past and turned them around.  Laskowitz worked for ClubCorp for a number of years.  Third, although Toll Golf and the Toll real estate side of the house are “totally separate,” according to Laskowitz, the golf side understands it can help sell property by offering a comprehensive roster of efficiently run country club amenities.  Toll appears to understand that homebuyers are looking to get more for less from their memberships than in prior years, and more golf for the same fee appeals to those buyers who have the resources for a country club membership.

        And finally, some sale prices for nice golf clubs that have hit the financial skids are just too tough to pass up.  Mitchell Laskowitz says that, although all current Toll golf clubs are private, Toll Golf is looking as well at semi-private courses that are sharply priced.  And, he says, “we would even consider re-selling it [at a profit] after we turn it around,” rather than keeping it in the Toll portfolio.

        Toll Brothers purchased Hasentree for a reported $23 million, a deep discount to the $40 million SunTrust bank had loaned the original developers.  A little over a half-hour drive from Raleigh, Hasentree is defined by Toll as a “lifestyle” community, which means most of what a family needs in the way of recreation and other activities is inside the gates.  After Toll Brothers bought the 800-acre community, they reduced prices on new homes to match market realities.  Home packages once priced at $1 million and higher now start in the mid hundreds of thousands.  The initiation fee at the Hasentree Country Club is today a relatively modest $10,000, down from a high of $30,000 before Toll took over.

Toll Brothers was able to purchase Hasentree, near Raleigh, for pennies on the dollar.  The majestic clubhouse as well as a well-reviewed Tom Fazio golf course was there waiting.   

Photo courtesy of Toll Golf and Country Club Division.

 

        With the acquisition of Hasentree, Toll Golf has added an extra benefit for its members at its nearby Brier Creek golf community, a combined membership for the two clubs. For $100 extra in dues each month (for a total of $485), members of either club can add full privileges at the other.  This echoes a trend we are seeing throughout the southeastern U.S.; multi-course privileges are becoming one of the few ways to attract a dwindling number of members willing to pony up hundreds of dollars each month.

        Toll Golf is just one of many such organizations offering these multi-course membership plans regionally and nationally.  Besides the aforementioned ClubCorp, McConnell Golf Group in recent years has purchased seven highly rated private clubs in the Carolinas, charging anywhere from $10,000 to $26,000 in joining fees.  The portfolio includes two Donald Ross designed courses, Raleigh Country Club and Sedgefield in Greensboro, the latter McConnell’s most recent purchase.  In the Atlanta area, Canongate Golf offers its members an opportunity to join one of its 23 clubs and have privileges at some or most of the rest (depending on the level of membership purchased).  Of course, we have written much about The Cliffs Communities in the Carolinas where a $100,000 initiation fee will buy a property owner access to a half dozen excellent golf courses within about an hour of each other, with two more promised -– a Gary Player layout that could open later this year, and the much talked about Tiger Woods routing at High Carolina.  When the Tiger Woods course will be ready for play is anyone’s guess as The Cliffs sorts out its financial difficulties.  Who knows?

        Perhaps at some point, Toll Golf or another golf course operator will add Tiger Woods’ first U.S. design to their own portfolios.

         If you would like more information about Toll Brothers communities and its rapidly evolving golf program, please contact me.

In addition to Hasentree, Toll Brothers also purchased Parkland Golf Club in Florida, including its Arnold Palmer designed golf course.   

Photo courtesy of Toll Brothers Golf and Country Club Division.