2004: Business - Meadowbrook seeks PGA Tour properties

For more than a year, Meadowbrook Golf has been striving to add high-end properties to bolster its course portfolio.

With a deal now in the works with the PGA Tour, the company may be on the verge of meeting that goal, Golfweek has learned.

The two parties confirmed that they are in negotiations, which, if successful, would allow Meadowbrook to acquire several courses from the Tournament Players Club – a network of 28 properties, 23 of which are owned and/or operated by the PGA Tour.

Meadowbrook’s Medallion Golf, a new division created in December to manage high-end facilities, is slated to operate the targeted courses, but the tracks would remain part of the TPC chain.

In a written statement, Ron Jackson, Meadowbrook’s president and CEO, said: “Medallion Golf has been in discussion with the PGA Tour...Medallion is looking to enhance their portfolio with distinct championship properties and has had similar discussions with owners of other courses as well.”

Meadowbrook, based near Orlando, Fla., and one of the nation’s largest course operators, is seeking as many as five TPC properties in a deal worth as much as $40 million, according to several sources familiar with the negotiations.

Sources said the proposed deal would include TPC at Eagle Trace and TPC at Heron Bay in Coral Springs, Fla., TPC of Tampa Bay in Lutz, Fla., TPC of Myrtle Beach (S.C.), and TPC of Virginia Beach. TPC of Tampa Bay is the site of the Champions Tour Outback Steakhouse Pro-Am, which was held last month; the TPC of Virginia Beach is home to the Nationwide Tour’s VB Open. The Virginia Beach course, a Pete Dye and Curtis Strange design that opened less than two years ago, is one of the newest members of the TPC Network.

“We are in discussions regarding a long-term strategic alliance with Medallion...a joint venture that is majority owned by a multibillion-dollar real estate investment firm,” said Bob Combs, the PGA Tour’s senior vice president of public relations and communications, in a written statement. “This exciting new opportunity would involve several of our clubs and support the value of the TPC brand. These clubs would benefit through additional investments while continuing their affiliation with the TPC Network.

“Beyond that, it would not be appropriate to discuss any details, as these discussions are ongoing.”

The Tour provided no explanation for the possible sale of its courses, but its most recent consolidated financial statements show the TPC Network in 2002 generated $10.5 million in “net revenues,” which the Tour defines as revenues minus expenses. That figure was down 13.4 percent from $12.1 million in 2001.

Despite such a decline, the Tour stated in its 2002-03 annual report that its TPC courses remained “economically sound in 2002 despite turbulent business conditions for golf club owners and operators throughout the industry.”

The Tour expects its network to expand to 30 facilities later this year when TPC of Louisiana in New Orleans and TPC at Craig Ranch in Dallas are scheduled to open. Five of the network’s existing courses are operated separately by Tour licensees, including TPC Four Seasons Resort Las Colinas, site of the EDS Byron Nelson Championship.

From 1982 – when the flagship TPC at Sawgrass in Ponte Vedra Beach, Fla., became the permanent home of The Players Championship – through 2002, the network has played host to 205 tournaments, according to the Tour.

Brady Boyd, director of golf at TPC of Tampa Bay, said he didn’t think the TPC courses were put up for sale, saying that the Meadowbrook overtures were unsolicited.

“Meadowbrook seemed to express serious interest and (the Tour) has a responsibility to look at offers and take them to the board,” he said.

In September 2002, Meadowbrook announced the formation of its Honors Fund LLC, a planned $150 million fund dedicated to making “equity and debt investments in assets, portfolios, joint ventures and operating companies in the course industry.”

The company and its financial partner, Apollo Real Estate, kicked in $25 million to capitalize the fund initially. In December, Meadowbrook officials announced they had raised an additional $50 million.

Said Jackson at the time: “We have already developed some very promising partnerships with high-quality, well-known and respected golf brands, locally, regionally and nationally, that will provide us with the opportunity to both acquire and manage some of the best golf courses in the country.”

Some of the Tour’s TPC courses could be next.

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