Apollo Bets on Golf Revival With ClubCorp Buy

The PE powerhouse will pay $1.1 billion for ClubCorp's golf, country, and sports clubs, which serve 430,000 members.
Matthew HellerJuly 10, 2017
Apollo Bets on Golf Revival With ClubCorp Buy

Private equity powerhouse Apollo Global Management is taking a swing at golf by acquiring ClubCorp, one of the country’s largest operators of golf and country clubs, for $1.1 billion.

ClubCorp had been seeking a buyer amid slowing membership growth. The golf club business as a whole has slumped as the sport has lost appeal among many millenials but according to the National Golf Federation, the number of first-time players rose to 2.5 million last year, a new record high and a 60% improvement on 2011.

Apollo “is betting on the favorite sport of President Donald Trump actually hacking its way out of the bunker it’s been in for the last decade,” Fortune said.

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The PE firm said it will pay $17.12 per share in cash for ClubCorp, a 30.7% premium over the undisturbed closing price on Friday. On news of the deal, the stock rose 30.5% to $17.10 in trading Monday.

ClubCorp has “built a best-in-class member-centric business that delivers exceptional experiences,” David Sambur, senior partner at Apollo, said in a news release. “We plan to leverage Apollo’s resources and expertise while working with ClubCorp’s dedicated team to continue to grow the business and provide the highest level of service and club offerings to members.”

Founded in 1957, ClubCorp owns or operates more than 200 golf, country and sports clubs, serving 430,000 members. Amid the industry downturn, it has pursued a strategy of boosting golf club memberships through promotions, refurbishments, and acquisitions, buying dozens of courses in the past three years.

The company has raised revenue by one-third over the past four years, turning a $41 million loss in 2013 into a modest profit of $3.6 million last year, but its strategy has proved costly.

“Over the last decade, it’s spent $690 million (most of it borrowed) to … broaden [its clubs’] appeal and make customers more loyal — for instance, by adding things like splash pads and water slides to their pool areas to make them more family-friendly,” Fortune noted.

In October, the Dallas-based company said it would miss its 2016 revenue and earnings guidance, driving investors to dump shares.