Golf Club Atlas
GolfClubAtlas.com => Golf Course Architecture Discussion Group => Topic started by: Anthony Gray on December 17, 2011, 09:18:15 AM
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?
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Read the book...
...it's called Dream Golf...
...by Stephen Goodwin
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Zero risk...what was going to happen? Kaiser might have stood to lose 0.5% of his net worth. I think he would have been just fine if it nuked.
Bart
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Zero risk?!?!?!
Spoken like a doctor ;D
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Really, read the book...respectfully, Bart and Brian aren't near the bullseye.
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Ronald:
I have read the book. I liked the book. It is inspiring.
Yes, there was a chance that the whole project might not have been approved and in that sense it was uncertain. But, I don't think it was "risky". Risky implies there would have been serious consequences to failure. Were there?
Bart
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Read the book...
...it's called Dream Golf...Done
...by Stephen Goodwin
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Anthony - This reminds me of when I was in first year philosophy class, and the professor said something wildly philosophical, and I said "But that's just speculation". And he looked at me long and hard, and then said "Just Speculation?" And then he went to the blackboard and slowly wrote out and he said it again: "JUST SPECULATION?"
When I read the thread title, I thought: "A risk? A RISK?".
I don't know what to make of that. What kind of "risk" does a multi-millionaire take when he is following/creating a dream?
Peter
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Massive risk. Bandon breaks the mould. I think the greatest thing he did was keep building courses, if you have three then destination golf makes sense.
Its a great book and a must for every GCAerr.
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I think you have to assess "the risk" on at least two levels.
As a risk to Mr. Keiser's financial well being, buying the Bandon Dunes property and attempting to develop the first golf course there was not a great or even significant risk.
But, as Adrian Stiff has pointed out, the type of golf resort Mr. Keiser envisioned for Bandon Dunes (firm & fast links-y golf in a remote location, walking only, modest accommodations) was a big risk at the time, when the vast majority of golf resorts were lush and plush. Hiring then unknown David Kidd to design the first course was also a risk of sorts, as most other golf resorts were hiring the "big name" GCA's to generate publicity and visibility for their projects.
As I understand it, Mr. Keiser mitigated the risk by moving slowly, acquiring more property over time, developing one golf course at a time and building out the lodging facilities as demand expanded.
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I think David summed it up best...clearly two types of risk going on here.
Risk to Mr. Keiser's pocketbook - minimal
Risk as a successful project for what they were trying to do - pretty sizeable.
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It was a rich man's folly if it failed. If he built it and nobody came, he might have kept it as a private club with jet owners and corporate chieftains littering the roster. That probably would have saved Mike $5 million or so, and he wouldn't have felt the hit except in emotional terms. In the grand scheme of things it was not the biggest risk for him financially but there are precious few men in this country with his combination of golf knowledge, brains, cash and balls who could have pulled it off like he did.
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Again, I just don't agree that there was any real risk. The result of building this type of golf resort was uncertain.
Risk: noun "A situation involving exposure to danger".
What was the danger of trying this type of golf resort for Mr. Kaiser? No danger; even total failure had no significant consequences for Mr. Kaiser.
I had a friend recently who said this: "The really wealthy are really different".... Ponder that for a minute.
Perhaps this is just semantics, but there really is no risk to a 10 or 20 million dollar project for a guy that is worth a $1B...there is no danger.
Bart
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Bart -
At the "risk" ;) of having this thread degenerate into a debate of semantics, my Webster's New Ideal Dictionary also defines risk as "1) a possibility of loss or injury, 2) the chance of loss or the perils to a person or thing that is insured." All risks do not have to be dangerous.
P.S. Wasn't it F. Scott Fitzgerald (in The Great Gatsby) who wrote, "the rich are different from you and me?"
DT
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Bandon wasn't the starting place. The Dunes Club was. It was a small scale experiment that showed what could be done and what the reaction of golfers might be. Without the Dunes club experience, would their have been a Bandon?
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I guess it depends on how you define risk; however, I am unaware of ANY golf developer in history who was really risking his personal safety to develop a course, so I think we could dismiss that definition.
Mike told me that when he bought the land he figured he had only a 1 in 3 chance of getting the permits to build a golf resort there. That's certainly a calculated risk; though, presumably, he could have sold the land later for something similar to what he paid for it, had the permits not worked out.
After that, I think David Tepper has it right ... he increased his investment systematically, as the success of the place grew. If you'd have told Mike in the year 2000 [while we were building Pacific Dunes] how much he would have invested in the resort by today, he would have laughed at you. Or shuddered!
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In terms of golf, what project in the United States was a bigger risk in the last 50 years?
I cannot understand anyone claiming that it was not a big risk. It was an untested model in the middle of nowhere without a real estate development attached to it and without a private membership helping to bankroll the project - and it costed him millions of dollars.
I wonder if the same people that say it was not a risk are the same people that won't take a $20 nassau with automatic 2 down presses on the first tee ::)
Just because he is wealthy, does not mean it wasn't a risk.
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Bandon wasn't the starting place. The Dunes Club was. It was a small scale experiment that showed what could be done and what the reaction of golfers might be. Without the Dunes club experience, would their have been a Bandon?
I disagree.
The Dunes Club was:
1) Never meant to be public
2) Much, much smaller scale in terms of property
3) Not even half as remote as Bandon.
And I wouldn't be surprised if the environmental restrictions were far more doable/easy at The Dunes club over Bandon which is right on the coast.
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Dunes Club was not close to the risk.
He bought the property to avoid development near his lake house. He owned the land when he decided to build a 9 hole course on it. It was a much smaller scale. And most of all, I don't think he built the Dunes Club as an investment. I think it was more of a personal project to him.
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As an aside, anyone who takes the $3MM clubhouse figure from the other thread at face value needs to visit the clubhouse at the Dunes Club...
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It's always easy to look at a wealthy person and think there is no risk to how he chooses to invest his money. I don't think this comes close to understanding the mindset and mental and emotional health of the investment process, imho. In fact, I'd go so far as to say it's this misunderstanding the fuels much of the misplaced anger and frustration of the Occupier types.
Think about it this way: If it wasn't that big of a risk, how come more aren't out doing it? And succeeding at it?
The other guy's life is always easier....
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Seems to me that this entire thread hinges upon how one defines the word "risk".
Those arguing that this was, indeed, a high risk venture are looking at it from the perspective of probability of successful outcome.
Those arguing that this was not a high risk venture are looking at if from the perspective of impact of failure.
Kind of reminds me of the brouhaha we all enjoyed some time ago around the definition of the word "is". : )
Why aren't more out there doing it? Passion vs. logic. When money is on the line, logic usually wins. But not always. And in this particular case we are all very fortunate that it didn't.
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Brian, that was fantastic...nothing makes me laugh more than a guy taking my own stance and making fun of it...keeps me humble...
Bart, I'm glad you learned to read...seriously though, I realize that my comment was snarky, so apologies.
Actually, I don't know if there was a risk involved...I was trying to drum up sales for the book, as it is a must-read for our brain trust.
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It's always easy to look at a wealthy person and think there is no risk to how he chooses to invest his money. I don't think this comes close to understanding the mindset and mental and emotional health of the investment process, imho. In fact, I'd go so far as to say it's this misunderstanding the fuels much of the misplaced anger and frustration of the Occupier types.
Think about it this way: If it wasn't that big of a risk, how come more aren't out doing it? And succeeding at it?
The other guy's life is always easier....
A lot of good points--each of which I agree with.
I guess the answer to the original question is that it was a big enough risk that nobody else tried to do it before Mike Keiser.
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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
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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.
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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
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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.
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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
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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?
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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.
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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%.
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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!!!!!!!!!!
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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.
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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.
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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. 8)
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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.