Feature: The Golf Name Game

Bob Morris

07/02/2004

Ty and Lois Stevenson knew exactly what they were looking for when they hopped on a plane to Florida in March to join more than 1,000 potential buyers bidding on 350 homesites at the Reunion Resort & Club, just south of Orlando. Yes, they dreamed about living the golf course life, but there was more to it than that.

Jack Nicklaus’ dramatic Great Waters course at Reynolds Plantation. (Click image to enlarge)

“The golf courses they are building here are big-name—Tom Watson, Jack Nicklaus, Arnold Palmer,” says Ty Stevenson, a businessman from Richmond, Va. “If you are buying a home on a golf course, you want that course to have that big name.”

Great Waters course.  (Click image to enlarge)

The game itself, however, is not the only reason behind the lure of the links. Of the 3,283 golf course communities across the United States, 547 have opened in the past five years, according to the Golf Research Group—accounting for approximately $123 billion in real estate sales. Since 1999, about 639,000 new fairway lots have been created, and home values on those lots have increased from an average of $366,000 to $593,000. And while the average price of a residential home grew by 42 percent, the average price of a golf course community home has increased by 62 percent over the same period. Add a legendary golf course designer to the mix, and the increases just keep increasing.

“The value of signature designers is undeniable,” says Larry Hirsch of Golf Property Analysts, an appraisal firm specializing in golf course communities. “Homes on a course designed by a big-name golf designer appreciate at a rate much higher than those on courses designed by lesser names,” he says. “In fact, they appreciate at a rate that is sometimes as much as 100 percent higher than the no-name courses.”

That would explain why the leading marquee names in the world of golf course design are popping up all over. Jack Nicklaus leads the pack. Since 1998, his design company has built 43 courses. Next in line are Tom Fazio with 36, Arthur Hills with 32 and Arnold Palmer with 26.


Such signature designs come with a price tag, of course. While these master architects are often reluctant to discuss fees, Nicklaus, whose design team has built 271 courses in 27 countries and 35 states, can easily demand $2 million for a “signature” course design. The “signature” design comes with a guarantee that Nicklaus himself will be extensively involved in the project. An “entry-level” Nicklaus team design might cost around $800,000; one with Jack Nicklaus II leading the design, about $1.2 million.
Greg Norman is known to charge in the $1.2 million range for his name to be attached to a golf course. Naturally, real estate developers pass on these design fees via the cost of the homes, club membership fees and greens fees.

Ben Crenshaw and Bill Coore designed the classic course at Cuscowilla Golf Club on Lake Oconee, Ga.  (Click image to enlarge)

But if buyers can afford to invest in a community that boasts a signature-designed golf course, the home’s market value is likely to increase, and increase at a rate much higher than other developments, says Colin Hegarty of Golf Research Group. Hegarty has devised a complex “net present value model” that combines the lifetime income potentials of golf course communities from both the golf and the real estate sides. His figures reveal that for courses by the top architects—Fazio, Nicklaus, Pete Dye, Robert Trent Jones Jr., and Tom Weiskopf—the average net present value of the golf side of the equation is $45 million; the real estate is valued at $147 million. For communities that hinge their names on golf courses designed by architects who are not on the top 10 list, the average values are $20 million and $47 million, respectively. “The top five architects are therefore delivering a value of 225 percent above the average for golf, and 312 percent above the average for real estate,” Hegarty says.

A new Arnold Palmer course at Tesoro, Port St. Lucie, Fla. (Click image to enlarge)

There are naysayers, however, who maintain that marquee names do not guarantee great golf. Serious golfers, they say, are not necessarily drawn to communities because the designers have been among the top money winners in the game.


“If Shaquille O’Neal helped design the Staples Center, would that make it a better place to play basketball? I don’t think so,” says Geoff Shackelford, a golf course design columnist for Golfdom magazine and author of numerous books about the subject, including The Art of Golf Design and The Golden Age of Golf Design. “I just don’t understand the allure that some of these golf course communities have when even the casual observer can tell you that the courses themselves are typically compromised by the needs of the developers to generate quick sales.”

Shackelford, who calls himself “a grump and a purist and a throwback to the classic era of golf course design,” says the pressure to design golf courses that generate high-volume real estate sales often means that excellent designers are overlooked because they will not compromise their design for the marketplace. A case in point, he says, is the team of two-time Masters winner Ben Crenshaw and designer Bill Coore. “They design brilliant courses, but for some reason their courses don’t generate great real estate sales,” Shackelford says. “For instance, at Cuscowilla Golf Club on Lake Oconee, Ga., they designed a course that took into consideration the natural elements of the terrain and came up with a classic design that is unique, that you want to play over and over again. But the real estate sales never hit like they were expected to. Meanwhile, just down the road at Great Waters [at Reynolds Plantation], the Nicklaus course was built with the development in mind—and it went like gangbusters.”

Tom Fazio’s Quarry Course at Black Diamond Ranch, Lecanto, Fla. (Click image to enlarge)

As for what the future holds, some real estate analysts fear that the sagging popularity of golf—a sport that has suffered a six percent decline in players since 1999—combined with an overbuilding of golf course communities might torpedo the value of a golf course home.

Not so, says Hegarty. “First off, 60 percent of the people who live on golf courses don’t play golf,” he says. “Plus, in the years ahead, it will get increasingly difficult to find big tracts of land where a golf course community can be built and where the proper permitting can be obtained. So, in one sense, buying a home on a golf course by a marquee designer is like buying oceanfront property. There may well come a time when they just aren’t making it anymore.” 

Golf Research Group
www.golf-research.com

Golf Property Analysts
www.golfprop.com