A number of golf industry observers have predicted for some time that the worldwide economic tsunami would leave a deposit of consolidation plays in its wake. Many speculated that would involve some of the larger and better heeled ownership and management companies swallowing up all or parts of the course portfolios of more financially strapped groups. Thus far, that has not been the case.
What did happen, in the space of a week in mid-October, was one consolidation and one divorce, both of which are more complicated than they might seem at first glance. And, no, the “divorce” reference is not a reference to Greg Norman and Chris Evert, although Mr. Norman is definitely a key player in the consolidation side of the ledger.
The events in question are the withdrawal of the Club Managers Association of America (CMAA) from the Golf Industry Show following February’s gathering in San Diego, and the purchase of the only two major players in the cart-mounted GPS industry, GPS Industries and ProLink Systems, out of bankruptcy reorganization and merger into one new entity by the Falconhead Capital, LLC private equity firm.
The CMAA, which announced in a letter to its members in mid-October that it was withdrawing from the partnership with the Golf Course Superintendents Association of America and the National Golf Course Owners Association for Golf Industry Show sponsorship following the 2010 show, gave two reasons for the decision.
Organization leaders said there had been some dissatisfaction among its members and vendor supporters that the presence of the superintendents and owners had “diluted the focus of the show away from a private club’s full range of needs.” They also said the GCSAA’s decision to cancel the scheduled 2012 industry show in New Orleans and move it to Las Vegas was taken unilaterally (or bilaterally, since NGCOA apparently went along with it), and would create financial hardship for CMAA’s membership due to cancellation penalties with New Orleans convention and hotel facilities.
Several things are relatively clear in this “divorce.” For one, CMAA was never entirely happy with the three-pronged partnership, in part because their membership consists primarily of private clubs, many of which are not even involved in golf. They signed on because they saw the economic writing on the wall and felt that all three major groups would benefit from combining forces and drawing one large crowd, rather than each bearing the cost of putting on its own annual show.
Two, the superintendent and owner groups were less than thrilled with the turnout, cost and their membership’s reviews of this year’s event in New Orleans, and with a struggling Las Vegas rolling out a red – and inexpensive – carpet, it made financial and popular opinion sense to say, “Au revoir, N’Awleans” and “Hello Vegas, Baby!” for 2012.
The former partners have said they would continue to work together in the future for the good of the industry. That would be nice, regardless of which industry associations or governing bodies we’re talking about.
Without belaboring the consolidation/separation theme, it is hard for industry veterans to imagine stranger bedfellows than GPS Industries and ProLink Systems, the two major survivors of a decade-long battle for survival among cart-mounted GPS system companies. The Hatfields and the McCoys were bosom buddies compared to those two, or at least their leadership. As recently as a couple of months ago, they were locked into a major lawsuit, with GPSI claiming that ProLink had infringed upon its patents and ProLink equally vehemently denying the claim.
Then both companies filed for Chapter 11 bankruptcy protection. In stepped Falconhead Capital, purchasing both out of bankruptcy and merging them into one company called GPSI Holdings, LLC. What does Greg Norman have to do with that, you ask? Well, Mr. Norman and his Great White Shark Enterprises company had ponied up $3 million several years ago, characterized by GPSI as an investment but described in SEC filings as a loan secured by GPSI’s valuable patents, and the canny Greg also happens to be a member of the Falconhead advisory board.
So, adding to his long list of financial interests, Norman now has an interest in what is the undisputed number one player in the cart-mounted GPS field worldwide, with systems in place at nearly 1,000 courses. Times have been tough for GPS companies, obviously, due to tight golf course and advertiser budgets, but if there is food in golf’s GPS pond to be had, one would think the biggest Shark would be the one to get it.
