How big of a risk was Bandon Dunes?

[Jerry Kluger]

I think that we need to incorporate a phrase with which we are all familiar:  How was it as a risk/reward proposition?  The answer would depend upon whether Mr. Keiser had actually formulated a far-reaching business plan which included the possibility of building 4+ courses and the accompanying resort facilities.  If the plan envisioned what is there today then I would say that the risk was not that great considering the incredible financial reward.  On the other hand, I can remember back to when the resort first opened and it was presented as a something which would aid the local economy as well as offer a unique golf experience at a reasonable price. 

[William_G]

When a guy (or family) puts his well-being on the line to start a club or course, that is risk.  Ballyneal comes to mind as a possible example.

Mr. Kaiser took a gamble.  Yes, it was an uncertain and possibly a very "risky" investment.  He stood to lose a few million.  

But, in the grand scheme of life, it was not a "BIG" risk for Mr. Kaiser.

What do you mean why aren't there more doing it?  There are only so many mega-wealthy people interested in golf and many of them have done it...Kohler comes to mind as example (In fact, didn't Kohler do this before Bandon?).

George, it would be a big risk for a person of modest means to attempt something like Bandon, no doubt.

I think very wealthy people often send out a lot of trial balloons (venture capitalists for example).  They just need a few to turn into successes to make it worth it.



Bart

Bart,

You said you read the book Dream Golf, but you forgot that it's Keiser not Kaiser, LOL

Also the question was how big a risk was Bandon Dunes, and in and of itself it was a risk, but not that big to build what we know as Bandon Dunes on the southern Oregon Coast. The risk was minimized because of Howard Mckee and all those involved because they did it right.

The question was not how much of a risk was it to Mr. Keiser, as not much risk for him to do anything. Thanks

[Carl Rogers]

To me the real decison point was building Bandon Trails, a very different site(s) and different course from the first two.  Though it gets kind of a range of reviews here, had it not been an excellent and unique change of golf experience, the resort, meaning food service, lodging, transportation and infrastructure, might have had problems.

[Dan Byrnes]

Seems to me there were 4 different risks involved

1. The financial risk what are the ramifications financially of a total bust.  While not inconsequential and I haven't come across to many wealthy people who want to lose any money whether it matter to thier financial well being or not.

2. The permitting risk.  While there was a plan could he get all the required permits and such to make it happen.

3. Style risk. Doing something so different than everyone else who was building opulent, perfectly mantained courses.  He went a totally different direction than the norm.  Would people embrace that style?

4. Business risk in a remote location would be come and could it provide adequate cash flow so the owner would forever need to personally subsidize its existence.  My experience once again with wealthy folks, they might be fine dumping the money into a risky endeavor but subsidizing the cost of for others to use it continuously over time gets very old. See "Olde Kinderhook golf Club".  It's hard to buy a golf course and shell out say a million a year each year so members who pay 5k or daily fee players paying $150 can complain.

So to answer your question yes there was a lot of risk involved not that it would have ruined him financially if he failed.  Put it this way during times of reasonable bank lending standards I am doubtful any bank would have financed the venture.  Over the past 10 years lending standards were pretty low but I still doubt it would have received bank financing on its own merits.

Dan

[Tom_Doak]

Put it this way during times of reasonable bank lending standards I am doubtful any bank would have financed the venture.

Should we not have learned by now not to judge our decisions by what a bank would have done?

[Dan Byrnes]

Well I agree the banks have not exactly been role models in determining risk, the fact it wouldn't have been bank financed is in indicator of the risk that the project had which is contrary to what many of the posts in is thread have said.

There were lots of risks at Bandon but not a catastrophic financial loss to Mr. Keiser's net worth.

[Kalen Braley]

I'm guessing Mr. Keiser has lost more "paper" money in one day due to stock fluctuations in his portfolio that would probably exceed the entire amount he initially invested in the Bandon project.

If Bandon had failed, I'm also guessing it would have take a much bigger hit to his ego, than his pocketbook.

P.S.  As for affordability/price.....the resort is in fact still viable in the winter time...even if prime time summer play has become out of reach for most of the 99%.

[William_G]

Put it this way during times of reasonable bank lending standards I am doubtful any bank would have financed the venture.

Should we not have learned by now not to judge our decisions by what a bank would have done?

amen to that!!!!!!!!!!

[Jud_T]

Obviously as a business venture on it's own it was quite a risk.  Just because the guy didn't bet the ranch on it doesn't mean that the venture it's ownself wasn't a punt.  By the definition of some, unless he took his entire net worth, went to the casino and put it all on red, nothing he could do besides running into oncoming traffic is a risk.  I don't care how rich you are, dropping a few million bucks on pure speculation without any return is no fun.

[Ted Cahill]

I think the point is missed when we analyze the Bandon Dunes "risk" around Mike Keiser's return on investment.  The far more interesting discussion is the risk MK took in building a walking-only links golf resort in the middle of nowhere, with a reputation for cold, rainy weather .... in the United States in the mid 1990s.  Let us remember (shudder) that the ideal golf resort, at that time, had cacti, palm trees, water hazards everywhere, air conditioned golf carts and frozen towel service.  The fact that MK stared that trend down, went the entire opposite direction (as Kemper Golf begged him not to...) I can't think of a bigger risk.  

I am now interested in witnessing the next evolution in this trend- taking our many mediocre, financially failing, recently built golf courses and re-purposing them into less-maintence intensive, walking option, quicker pace of play facilities that don't make anyone rich, but are financially sustainable.  From what I understand, Commonground in CO has achieved much of this- where will be the next course to make this transition and help fuel this overdue redirection of golf in the United States.  

[Mac Plumart]

Obviously as a business venture on it's own it was quite a risk.  Just because the guy didn't bet the ranch on it doesn't mean that the venture it's ownself wasn't a punt.  By the definition of some, unless he took his entire net worth, went to the casino and put it all on red, nothing he could do besides running into oncoming traffic is a risk.  I don't care how rich you are, dropping a few million bucks on pure speculation without any return is no fun.

Bingo!

Spoken like a true finance expert.   

[Ted Cahill]

I think the point is missed when we analyze the Bandon Dunes "risk" around Mike Keiser's return on investment.  The far more interesting discussion is the risk MK took in building a walking-only links golf resort in the middle of nowhere, with a reputation for cold, rainy weather .... in the United States in the mid 1990s.  Let us remember (shudder) that the ideal golf resort, at that time, had cacti, palm trees, water hazards everywhere, air conditioned golf carts and frozen towel service.  The fact that MK stared that trend down, went the entire opposite direction (as Kemper Golf begged him not to...) I can't think of a bigger risk.  

I am now interested in witnessing the next evolution in this trend- taking our many mediocre, financially failing, recently built golf courses and re-purposing them into less-maintence intensive, walking option, quicker pace of play facilities that don't make anyone rich, but are financially sustainable.  From what I understand, Commonground in CO has achieved much of this- where will be the next course to make this transition and help fuel this overdue redirection of golf in the United States.  

Ted - if you include Canada and Cabot links: I think they have long term plans for more golf courses. Looks like it could be Bandon: 2 - imagine if it was as good. Wow.

Re: your point on "non maintenance intensive courses: do you think the Bandon courses are low maintenance? I don't know but if they are, that is pretty sweet given the phenomenal conditioning of said courses.

Brian- I should be clearer- Bandon is low "pointless maintenance"- they are not watering turf in non playing areas or maintaining flower beds- things many mediocre american courses do. 

I am excited about Cabot and it looks to be Bandon 2.  At this point, there is low to no risk for Keiser to build these courses/destinations.  His instincts at Bandon were rewarded and it is clear there is a market (us!) for these locations.