ClubCorp, Inc. History

Address:

3030 LBJ Freeway, Suite 700
Dallas, Texas 75324
U.S.A.

Telephone: (972) 243-6191
Fax: (972) 888-7700

Private Company
Incorporated: 1957 as Country Clubs, Inc.
Employees: 23,000
Sales: $1.02 billion (1999)
NAIC: 71391 Golf Courses and Country Clubs; 71394 Fitness and Recreational Sports Centers

Company Perspectives:

We strive to create an exceptional experience for guests by providing unmatched personal service, a welcoming environment, fine dining, excellent meeting facilities and a myriad of recreation ranging from championship golf and tennis to deep-sea fishing and water sports. Key Dates:

Key Dates:

1957:: Robert H. Dedman, Sr. founds Country Clubs, Inc.
1958:: Country Clubs, Inc. begins constructing its first club--Brookhaven Country Club.
1965:: Company name is changed to Club Corporation of America.
1982:: Club Corporation opens its first foreign property.
1984:: Club Corporation acquires its first resort property, the venerable Pinehurst Resort & Country Club in North Carolina.
1989:: Robert H. Dedman, Jr., is elected Club Corporation's president.
1998:: Company is renamed ClubCorp International, Inc.; ClubCorp forms partnership with Jack Nicklaus.
1999:: Pinehurst Resort & Country Club hosts the prestigious U.S. Open golf tournament; company changes name to ClubCorp, Inc.

Company History:

ClubCorp, Inc. is the world's largest operator of private clubs and resorts. The company owns or manages about 230 country clubs, golf clubs, resorts, city clubs, and athletic clubs. ClubCorp's properties include North Carolina's Pinehurst Resort & Country Club (which hosted the 1999 U.S. Open golf championship) and the Mission Hills Country Club in California. ClubCorp's properties are found throughout the United States, as well as in more than a dozen foreign countries, including Vietnam, England, and Australia. In addition to owning a 25 percent stake in ClubLink Corporation--the largest operator of private clubs in Canada--ClubCorp controls a substantial portion of the PGA European Tour Courses. The company also is allied with famed golfer Jack Nicklaus to design and operate several golf courses. With more than 250,000 members worldwide, ClubCorp is focused on aggressively expanding its holdings; its sales rose an impressive 20 percent in 1999 to reach $1.2 billion.

Humble Beginnings

ClubCorp's founder Robert H. Dedman's personal background was one of poverty. Growing up in rural Arkansas, Dedman's family of six shared a two-room house without electricity. Dedman vowed as a teenager to transcend his circumstances, and he set the lofty of goal of earning $50 million by the time he was 50. In pursuit of success, he left home when he was 14 to live with relatives in Dallas, Texas, so that he could attend a well-regarded public high school. He graduated as his class valedictorian. During a stint in the Navy, he earned degrees in engineering and economics. After leaving the military, he obtained a masters of law degree from Southern Methodist University, whereupon he joined a powerful Dallas law firm. Although he worked closely in this capacity with oil baron H.L. Hunt, Dedman realized that he was still a long way from his childhood goal of tremendous wealth.

While vacationing in southern California in the 1950s, Dedman took note of the publicity surrounding the opening of the Thunderbird County Club in Palm Springs. It was at this time, as Sports Illustrated explained, that he 'struck upon the idea that would rocket him to the kind of wealth even he didn't have the chutzpah to dream of.' Instead of conforming to the typical country club formula of building one golf course and one clubhouse, Dedman conceived of constructing three golf courses around a single clubhouse. In this way, a country club could accommodate more members and thus charge each member less expensive dues. Convinced that by attracting a broader base of clients he could turn a handsome profit, Dedman launched his new company, Country Clubs, Incorporated. Rather than targeting solely the wealthiest one percent of a community's residents as country clubs usually did, Dedman aggressively sold memberships to what he termed the 'top 10 percent.' The fledgling company bought 400 acres of land in the Farmers Branch suburb of Dallas in 1957, and by 1959 Country Clubs, Incorporated announced the opening of its first club--Brookhaven Country Club. The company's next project was to develop property in Tarzana, California to form the Deauville Country Club.

Growth in the 1960s

By 1961, the Wall Street Journal praised Country Clubs, Incorporated for its creative business strategies. In addition to building more than one golf course per facility, Dedman introduced other innovations to the staid world of country clubs. According to the Las Vegas Business Press, Dedman 'turned the management of country clubs into what General Motors did for the automobile industry--he brought in management skill and turned a tidy profit.' Prior to Dedman's entry, most country clubs were typically run as nonprofits by volunteer boards of members. While these members certainly enjoyed their clubs, most had virtually no experience running a complex business. Country Clubs, Incorporated, by contrast, employed management experts, cut expenses, and instituted formal training programs for staff.

The company broadened its horizons even further in 1966 when it opened The Lancers Club--its first city club&mdashõp the LTV Tower in downtown Dallas. Unlike suburban country clubs, where golf was the central activity, city clubs offered fine dining in a sophisticated urban setting where members could entertain friends, family, and business associates. To signify that it no longer focused exclusively on developing country clubs, the company changed its name to the Club Corporation of America.

Rapid Expansion: 1970-90

The young company continued to grow in the 1970s, as it acquired or built country, city, and athletic clubs throughout the United States. In 1975 alone, Club Corporation bought 13 clubs, bringing its total to 49. Of these, the Inverrary Country Club in Fort Lauderdale, Florida was the most important. 'That told the world we arrived,' Dedman explained later to Sports Illustrated, since the club was the site of a Professional Golfers' Association (PGA) Tour event. As a further incentive to prospective members, Club Corporation offered reciprocal privileges at its many clubs. In 1976, the company launched Club Corporation Realty to develop residential communities around country clubs. By 1980, the company owned and operated some 87 country and city clubs, offered club management consulting services, and had seven land development projects under way.

Club Corporation's expansion continued in the early 1980s. In 1981, the company purchased the Firestone Country Club in Akron, Ohio, which added another prestigious golf course to Club Corporation's collection. Built in 1929, Firestone hosted the World Golf Championship NEC Invitational. In 1983, Club Corporation entered into the international arena when it opened its first club outside the United States--Banker's Club in Taipei, Taiwan. By 1983, Club Corporation owned or managed more than 100 clubs.

In 1984, Club Corporation expanded its operations yet again with the purchase of the venerable Pinehurst Resort & Country Club in the Village of Pinehurst, North Carolina. As Club Corporation's first resort property, Pinehurst brought the company new challenges and opportunities. Founded in 1895 by the Tufts family, Pinehurst had achieved the distinction of being 'one of the South's greatest resort properties,' according to the Dallas Morning News. By the 1970s, though, Pinehurst had fallen on hard times. After the resort was sold by the Tufts family in 1970, it changed hands several times. The various real estate developers and banks who subsequently operated the resort paid little attention to its care and maintenance. In fact, shortly after Club Corporation bought the resort for $15 million, a staff member fell through the rotted out kitchen floor into the basement.

Club Corporation pledged to revitalize Pinehurst. 'We had to fix and rebuild everything,' a company spokesperson later told the Dallas Morning News. Over the next 15 years, Club Corporation invested approximately $100 million in Pinehurst, constructing two new golf courses at the resort and restoring the historical Carolina Hotel. After acquiring Pinehurst, Club Corporation launched a new subsidiary--ClubResorts--specifically to manage destination golf and conference resorts.

Club Corporation's rapid growth was spurred by a variety of factors. Perhaps the most significant of these was the fragmentation of the overall golf market. Unlike the hotel industry, which had undergone considerable consolidation and branding, the vast majority of private golf courses and clubs were individually owned and operated. (By as late as 1995, only about 20 companies were involved in golf club management, according to Forbes.) In this fragmented environment, an efficient and organized operation like Club Corporation was able to distinguish itself easily. The company was well equipped to provide the infrastructure to run clubs profitably and could exploit its size to purchase goods in bulk--ranging from turf equipment to food products--at considerable discounts. Moreover, Club Corporation could reduce labor costs by instituting efficiency techniques. As Business Week noted, for example, Club Corporation knew 'how many worker-hours [were] needed to prepare and serve a given number of meals.'

Club Corporation's success also was due in part to the soaring popularity of golf. According to Business Week, golf's growth 'creat[ed] strong demand for new courses and for skilled club management.' The number of rounds of golf played in the United States rose 67 percent from 1983 to 1985, and by 1991, new golf courses were opening at a rate of more than one per week.

During the late 1980s, Club Corporation continued to extend its reach, adding clubs in Asia, Australia, and Europe. In 1986, Club Corporation acquired a majority interest in Silband Sports Corp., which was then the second largest manager of public courses. 'We are now trying to cover the full gamut of the business, from public courses to the fanciest resort,' Dedman told Business Week. To ensure that his company continued to operate efficiently, Dedman led Club Corporation through a major restructuring in 1986. Club Corporation was reorganized as a holding company--named Club Corporation International--with ten independent subsidiaries. 'These different businesses have different characteristics, different marketing requirements and management skills that are necessary to fully apply those opportunities,' a company spokesperson explained to the Dallas Morning News. In 1988, Club Corporation branched into the financial side of the business with its acquisition of Franklin Federal Bancorp, one of the largest savings and loan thrifts in Texas. (Franklin Federal was sold to Norwest in 1996.)

Club Corporation also continued to develop its network of exclusive private clubs during this period. In 1985, the company opened the Center Club in Costa Mesa, California and purchased two Michigan resorts--Shanty Creek and Schuss Mountain. The following year, Club Corporation launched the Columbia Tower Club in downtown Seattle, and in 1988 opened the City Club of San Francisco, located in the Stock Exchange Tower. To better communicate with its far-flung members, Club Corporation also began publishing Private Clubs, a magazine targeting an affluent audience.

In 1989, Dedman's son, Robert H. Dedman, Jr., was elected president of Club Corporation. Although the senior Dedman remained active in plotting the company's strategic course, Robert Dedman, Jr. took increasing responsibility for managing day-to-day business. By the end of the year, Club Corporation ran about 200 clubs worldwide, 53 of which were country clubs.

New Development in the 1990s

The 1990s brought further changes to Club Corporation. In 1991, the company launched Pinehurst Championship Management (PCM), a sports marketing division, which marketed and operated major championship golf events at Club Corporation properties. PCM's initial goal was to bring championship golf tournaments back to the Pinehurst Resort.

The company also added important new properties in the 1990s. For example, in January 1990, Club Corporation acquired the 650-acre Shangri-La Resort in Oklahoma. This luxury golf club and resort had been built in the early 1960s, but had fallen into disrepair. Club Corporation pledged to devote more than $7 million to renovating Shangri-La. In 1993, Club Corporation assumed the management and co-ownership of another resort, The Homestead in Hot Spring, Virginia. Once again, the company planned a comprehensive restoration of the resort, which had been founded in 1766.

Club Corporation also purchased a number of country clubs during this period. In 1993, the company bought the Mission Hills Country Club in Palm Springs, California. Mission Hills, which was home to the LPGA Nabisco Championships, featured a course designed by golf legend Arnold Palmer and was a highly regarded gold club. The following year, Club Corporation acquired the Indian Wells Country Club in Indian Wells, California, which hosted the Bob Hope Chrysler Classic golf championship. The Gainey Ranch Golf Club in Scottsdale, Arizona became the next Club Corporation acquisition in 1995.

Club Corporation continued its expansion into international markets during this period as well. In 1994, the company launched its first enterprise in China, with the opening of the Capital Club in Beijing, and took over management of the Hanoi Club in Vietnam in April 1996. This latter acquisition 'not only shows our long-term commitment, but also presents us and our reputation to Vietnam for the first time,' the younger Dedman told the Vietnam Investment Review. In 1997, Club Corporation made its first move into the United Kingdom with its purchase of the Drift Golf Club in Surrey, England. Club Corporation also launched the Tower Club in Singapore in 1997. The company's international clubs were intended not only to appeal to U.S. business travelers abroad, but also to the local elite.

The company's growth proceeded at an even more rapid clip in the final two years of the century. After rechristening itself ClubCorp International, Inc. in 1998, the company forged a partnership with famous golfer Jack Nicklaus's Golden Bear International to develop at least three dozen signature Jack Nicklaus golf courses. Also that year, ClubCorp acquired a 20 percent stake in ClubLink Corporation, Canada's largest golf club management company, as well as a 22.9 percent share in the PGA European Tour Courses.

These maneuvers were part of an overall strategy shift spearheaded by Robert H. Dedman, Jr., who assumed the position of CEO in 1998. For most of its history, ClubCorp strove to maintain a low profile, fearing that 'a chain of golf facilities would conjure up the image of McDonald's,' which would not be good for its upscale image, according to the Dallas Morning News. However, in 1998, ClubCorp sought more exposure in an effort to capitalize on its brand image. 'Prestige names are worth a lot of money,' the Dallas Morning News observed, adding 'ClubCorp sees the advantage of making its name mean something in the marketplace.'

ClubCorp's move into the spotlight culminated in 1999, when the company's Pinehurst Resort hosted the U.S. Open Golf Championship. In addition to cultivating an elite image, the U.S. Open received more than 28 hours of television coverage, providing ClubCorp with considerable exposure. To signify its new direction, the company once again changed its name&mdashø ClubCorp, Inc.

The company continued to add to its roster of clubs in 1999, purchasing 22 properties from Meditrust Companies' Cobblestone Golf for $393 million (marking the largest transaction in the industry's history). In October 1999, ClubCorp entered into an agreement with the Cypress Group, a New York-based investment firm, to finance further expansion. Under the terms of the deal, Cypress would invest up to $300 million in ClubCorp and two Cypress representatives gained seats on the ClubCorp board.

ClubCorp's future prospects were bright. Golf's popularity soared, as aging baby boomers pursued the game for leisure and business people came to view it as an essential networking tool. Moreover, the success of young golfers such as Tiger Woods boosted golf's image. By the close of the century, ClubCorp operated more than 230 private clubs and had assets greater than $1.4 billion and revenue of $851 million. Further expansion was likely. As Robert H. Dedman asserted to Sports Illustrated, 'We will never stop acquiring. In this business you acquire or perish.'

Principal Subsidiaries: ClubCorp USA, Inc.; ClubCorp Resorts, Inc.; ClubCorp Realty, Inc.; ClubCorp International, Inc.; ClubCorp Publications, Inc.

Principal Competitors: American Golf Corporation; National Golf Properties, Inc.

ClubCorp, Inc. History

Company Perspectives:

Key Dates:

Company History:

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