2005: Business - Ginn takes mulligan in development game

Twenty years ago, as an ambitious developer, barely in his mid-30s, Bobby Ginn acquired two of the premier resorts in golf-rich Hilton Head, S.C., and became the island’s largest employer. But as quickly as he built his fortune, he lost it, unraveled by the Savings & Loan crisis that defined the era.

Few, however, doubted that Ginn was done. They were right.

The deal maker is back, and he’s turning heads in his familiar domain of golf and real estate. In late June, as chief executive and president of Ginn Clubs & Resorts, Ginn committed to sponsoring a new LPGA tournament in Florida and making it one of the tour’s richest events. Two weeks later, he inked a five-year endorsement deal with the tour’s top star, Annika Sorenstam.

Like many developers, Ginn has long used golf to drive home sales, mostly by building and marketing courses as luxury amenities. But his LPGA alliance reflects his evolved business approach, refined by past experiences, good and bad. More than ever, Ginn is demonstrating a broader reliance on the game, focus on the woman buyer and growing belief in spending big on marketing.

Though Ginn wouldn’t disclose financial details, the LPGA agreements add to the $53 million he’s spending this year on promoting his Florida properties alone. (He has several developments in South Carolina and is entering other markets as well.)

With the title sponsorship, Ginn plans to showcase his portfolio of resorts and private clubs, and offer the tournament as bonus entertainment for residents of Reunion Resort & Club. Beginning in 2006, that sprawling, master-planned community near Orlando will play host to the LPGA’s $2.5 million Ginn Clubs & Resorts Open on its Arnold Palmer and Tom Watson courses.

Aggressive marketing is a hallmark of Ginn Clubs, and explains in part how the company attracts visitors to some of the remote sites it chooses for its massive developments. Projects such as Reunion, and Bella Collina – another Central Florida property featuring a Nick Faldo course – have Ginn Clubs on pace this year to post sales of more than $2 billion, doubling its business from 2004.

“Bobby Ginn has a realization that marketing is the engine that drives the train,” says Chris Cain, president of Christopher Communications, an Orlando-based vacation real estate sales company.

But Ginn didn’t always possess such a formula for success. In fact, the LPGA venture marks what Ginn hopes will be a triumphant return to the big stage of professional golf. His debut was problematic.

In the mid-1980s, Ginn became Hilton Head’s resident real estate mogul with acquisitions that included Sea Pines Resort, home of Harbour Town Golf Links and the PGA Tour’s MCI Heritage Classic. But his ascension couldn’t have been timed more poorly. In the midst of the S&L crisis, financial institutions that had loaned money to Ginn called in their notes. He struggled to pay bills, making irate those who believe Ginn had grown too quickly. Ugly bumper stickers emerged: “Honk if Bobby owes you.” Eventually, he was forced to sell his holdings, which then went bankrupt, leaving the residents of Sea Pines to form an association to buy back and rescue their courses.

“I clearly remember the outcome of what happened on Hilton Head,” Ginn says today. “And I’ve made every effort I can make to be sure we’re not vulnerable to that kind of situation again.”

Born of that experience is Ginn’s steadfast focus on cash flow.

“If you don’t have people who are members of the club and paying into the homeowner’s association, the developer is going to continue to subsidize it,” he says. “So we said let’s put more money into marketing, and get enough horsepower behind it, and expand the period of time that the project is in the ownership of the ultimate user. When it’s there, it’s safe.”

That philosophy explains Ginn’s commitment to the LPGA, women and golf.

“Particularly in a resort destination, women are making a substantial percentage of decisions related to both home purchases and vacations,” says Ryan Julison, Ginn’s vice president of communications.

“We want to do whatever we can to reach out to them.”

In fact, Ginn is in negotiations with Sorenstam to build within the Reunion property a fitness-based golf school that would cater to women. He’s also intent on building courses that are challenging yet receptive to women’s play and hosting events that heighten “community pride” among residents and potential home buyers.

“There are so many young, talented players (on the LPGA), and what Annika is doing is fantastic,” Ginn says. “Their enthusiasm spills over to the residents. And it spills over to the television audience.”

While viewership for LPGA events still lags considerably behind other major sports, rising TV ratings have Ginn Clubs executives believing they’ve made a good buy. According to Nielsen Media Research, weekend TV coverage at the U.S. Women’s Open generated an average viewership of 2.7 million during the final round. By comparison, 1.7 million watched the final round in 2004.

“You’ve seen the ratings, you know where this thing is headed,” Julison says. “I think we’re catching this right at the precipice of something huge.”

Ginn says his company has evolved to the point where he says it is “as much of an entertainment company as we are a development company.”

Says Brad Hunter, director of the South Florida region at research company American Metrostudy: “He’s quite an interesting player in the market because (his company is) blazing new trails. They’ve created new, successful communities that were not even envisioned by others.”

Reunion, for instance, which broke ground in 2001, originally was slated as a 25-year project. But sales were brisker than expected, and build-out now is estimated to be complete within five years.

Hunter warns that escalating prices and the huge volume of condominiums and homes being built in Florida could lead to an imbalance of supply and demand, especially if interest rates rise.

But Ginn remains bullish. At Bella Collina, the upscale private club in west Orlando, the company reported it sold 403 homesites in a single day in late April for a total of $320 million.

“We have our antennas up everywhere for any signs of weakening, and we don’t see it,” Ginn says. “If anything, it’s getting stronger.”

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