#5: Brian Ferris
Brian Ferris developed Chestatee, a 600 acre master planned community that includes an 18-hole golf course. We talk about building the course, why he sometimes regrets not using Jack Nicklaus as his designer, and the other ups and downs of the business over the last 20 years. Brian also serves as the co-Chairman of the Pebble Beach Company, and tells the story of how his father got involved at one of golf’s most iconic properties alongside a couple other folks you might have heard of - Arnold Palmer and Clint Eastwood. Brian is a hard charging, high energy guy and you’ll really enjoy hearing his perspectives on the golf business.
Read the interview below or listen on Spotify, Apple, Google, Stitcher or Amazon. Enjoy!
Brian the golfer
Roberto: Brian, thanks for being on the show and we're primarily here to talk about business, but let's establish your golfing credentials. You played in the 2018 US Senior Open. Tell us about the Qualifier for that.
Brian: Well, I'm glad you started with the most embarrassing part of my golf career. And so you already know about it obviously by the smile on your face. So being in no man's land, having just turned 50 and not good enough anymore to play with the young kids, age wise, I qualified to try and qualify for the US Senior Open.
So I said, okay, I'll do that. So it was down that I think, playing Planterra Ridge in Peachtree City. And so I went down. I shot 69 in the morning wave and was, you know, in the clubhouse as the number two guy. And so waited around all day long. And so there's another 68 that comes in, we're playing for three spots.
So two other guys shot a 69. And it was a guy by the name of Brian Tennyson- I don't know if you remember his name. He played on Tour for a little while. And John Smoltz. And I'm like, oh, this'll be fun. So we go to the first playoff hole- go to 18- and we all hit the green in regulation. And John Smoltz and I are in the fairway. And so I hit a seven iron in there to about 10 feet and then Smoltz was the last one to hit and he hits an eight iron or whatever in there to like three feet. We're walking up and I said, Hey, good shot John. He goes, yeah, I'm hoping to end this thing early.
And I said, well, that's not going to happen because I'm making my birdie putt and I don't know about you. And so we get up there, Tennyson misses his putt, but I make mine and then Smoltz makes his. So we both birdied the first hole. So we go to the par five second hole.
We both hit our tee shots and he's much longer than I am, but he's in a better position. We get to the second hole, par five. I'm going to have to lay up with a five iron. He'd not played before at the Golf Club of Georgia. And so we're walking down, he kind of gives me a little ribbing and I give it back to him.
And I said, well, you know, what's gonna happen here, John, is you're gonna try and go for the green. You're going to push your three wood off to the right end of the hazard. I'm gonna lay up with a five iron and I'm going to be a wedge in, I'm going to make my par, you're gonna make bogey, and we can go home.
And he was laughing. He goes, I can't believe you're giving me a hard time. So I hit my five iron right in the middle of the fairway. He goes for the green in two with his three wood. He roasts it out to the right, puts it in the hazard, just like I said, and the only problem was he didn't get up and down, but neither did I. I put it long with a wedge in the back bunker.
So we both have a pillow fight and we both make bogey. So now we go back to 18 again, and this is what makes it even worse. But I rinse one off of the tee on 18. And so now I've got to re-tee because it didn't cross the hazard. And so he pulls his shot into the bunker to the left. And so I'm like, at that point, I figured, well, it's his, but I got to play the hole out.
So I put one in the middle of the fairway, almost in the exact same spot I was earlier. And I walk over to his shot though. Cause he's got to hit first and he's in the bunker and I look at it and I'm like, God, if he tries to go for the green, he may hit the lip of that bunker. And sure enough, he goes for the green, hits the lip of the bunker, spins it forward. He rinses his second shot. So now he's dropping three and he's hitting four on. And so I'm hitting four on as well. And so I hit a seven iron, come up short . He's about three feet from the pin. So I'm like, okay, so I get up there and I've seen this putt once before and I'm like, I'm going to make this putt.
I'm going to just end it right here. I'm going to make this putt. And I take a run at it and I run it by four feet up the hill, leave myself like a four and a half footer downhill. And I'm like, ah, and then of course I have to putt first and I'm still away. And I miss my putt and he makes his, so I lose to a double bogey with a triple bogey.
And what added insult to injury is because it was John Smoltz. The next morning I wake up and I'm just still beside myself, I can't believe I gave away the opportunity to play in the US Senior Open. And I'm beside myself. And all of a sudden my phone starts blowing up because all these people start seeing my name. It was on ESPN, it was on these golf publications and I'm like Dre. So now everybody knows about it. And so I was a little despondent, but after all the qualifying sites were over as you know, they rank them one through, I think there were 20-25 qualifying sites. So they rank them based on strength of field and Atlanta, I think, was ranked number one.
And so about two weeks later after the last qualifying site had ended, I got a phone call. I look at my phone, my phone's buzzing. It says Far Hill, New Jersey, on it. And I'm like, oh my gosh, really? So I answered the phone and they said, Hey, is this Brian Ferris? I said, yes. And they said, Hey, you know what? We just had a withdrawal. So as the first alternate, you get to play in the US Senior Open. So I was like, ah, this is great. So now after that, since I didn't truly qualify- I lost in the playoff- I said, okay, I've got three goals when I get there. So one is don't hit anybody in the gallery with a golf ball. Two is don't finish last and three is, make sure I beat John Smoltz. So, I accomplished all three. It was a great experience though.
Roberto: Nice. Any kind of playoff you can get in with a first-ballot Hall of Famer, not so bad. And then I saw him like a week after he played at the Broadmore in Colorado. I saw him and he still had kind of a look of shock on his face. He was like, it was so brutal out there. I was like, I know the US Open is awesome, but it's also the worst. It's the worst.
Brian: Well, I’ve obviously never played in a US Open before. I don't know if the US Senior Open is equivalent, but at the Broadmore, that rough looked like a US Open course. And from my experience with Pebble and seeing how we set it up at double. I mean, that rough was every bit as deep. And they had two people lined up on the side of every fairway, because if you hit your ball in the rough off the tee, you might never find it without spotters. I mean, it was, it was a great experience and I hope to get another chance of doing it again.
That's why golf is so much fun because you look at a mediocre amateur like myself, and it's still so much fun to be in competitive, play in those types of things, and then when you look at what just happened with Phil Mickelson, and it is still a game that if you're taking care of yourself, you're fortunate enough genetic-wise and you're still in good shape, you can play this game for a long time and still play competitively. I mean, you look at Steve Stricker and you look at Phil Mickelson and that's fantastic. And an inspiration to a lot of guys who still want to play competitively.
Roberto: Yeah. And the key there is competitive, right? You get the reason so many former athletes retire and then play golf is because it's something they can scratch the competitive itch and not tear an ACL playing tennis or whatnot. You know, you can't play basketball and you're 60 years old and not getting hurt a lot at least. So that's why these fancy clubs and Jupiter and Arizona, it's just chock full of former athletes. It's all about getting that [competitive] itch.
Brian: And then the other thing that comes with it, like I always tell people too, what I love about golf is the places it takes you and the people who you meet. It's just, I think it's fantastic. So I love it.
Golf Course Facilities
Dan: Yeah. So Brian, enjoyed hearing the story there and talking about Broadmoor. I, you know, your opinion comes with a lot of weight because you've seen a thing or two in the golf business too. So tell us what made you want to get into the golf business or the golf course business specifically to begin with?
Brian: I don't know. Does anybody sane get into the golf business on purpose? I'm not sure. I got into the golf business by accident. I was doing a development up on Lake Lanier called Chestatee, and it's a 600 acre master plan community. And I was just doing the real estate side of it. And so that encompassed 600 lots. And, you know, the infrastructure- streets, curb, gutter, utilities, all of that. There was a boat marina component to it and the sewer plant. So I was doing that. This was back in 1998-99 when I bought the land.
And this is still on the tail end of- I want to say 1990-91- when the National Golf Foundation came out with a study and they talked about basically golf and looking at the influx of people.
They said that at that point in time, we needed to build a golf course a day to keep up with demand. And that's when that whole golf course/residential mix was popular and was being successful. And so we were on the tail end of it, but it was still going on. And so we had a golf course developer out of Colorado that was supposed to develop the golf course.
And I'm not sure what happened behind the scenes with them, but they backed out of the deal. They lost some earnest money. So that's how I got in the golf business because I was dumb enough to say, well, okay, if I've done this and I've done that, I'm smart enough to know what I don't know. And so when I run into something, I'll ask smart people, but I can build a golf course. I can do this. And so I got into the golf course business and built Chestatee. It's a Dennis Group designed golf course. And Dennis is a local designer. His headquarters were up at Chateau Elan up in Braselton.
And before I picked him, we looked at two other well-known designers, one of them being Nicklaus. And when I look back on it, a couple of things come to mind when I talk about Chestatee- I love Chestatee. And if I could do it all over again, knowing what I know now, I would still do it the same.
I think for the money Dennis Griffiths gave me a great golf course, but it was also under that heading of, be smart enough to know what you don't know. And so never having built a golf course before, what I liked about it was Dennis, his office was 30 minutes away. So whenever there was a problem, whenever an issue, he would be there. He could come out and take a look at it and help us through any issues that we had. So I felt that that was a smart decision. But I do look back on it and say from a real estate perspective, what I might have done better or where a benefit would have been from a bigger name would have been maybe getting Nicklaus to do it.
Cause I think I probably would've sold more real estate in the very beginning. So 6 to one half a dozen of the other, but here we are, you know, 20 years later been in some ups and downs with the golf business as well. I mean, because when Chestatee first opened, the public golf market and we were trying to be private.
And so we had a semi-private membership until our residential component got big enough and when there were enough people that wanted to take it private, we would take it private. And so we lingered in that semi-private area, but at the same time, golf was really booming then.
And just to give some perspective to it, like in 1999-2000, when we first opened, we were doing on the weekends- 200 rounds a day, and we were getting on average about a hundred dollars per round. And that was great. And the golf course was doing alright and, you know, and was making money.
And then a couple of things happened in 2007-2008 when the housing crisis happened- then I'm not going to get the date right. But that's right around when pure capitalism came into play and that's with golf now. And it's a great thing, but I was at the same time a victim of it because here it is where somebody built a better mousetrap.
So with technology and Internet and everything else, golf now comes along and before you had to actually call golf courses or, you know, Hey, do you have a tee time today? And it was all over the place and golfers weren't necessarily doing it. Didn't have all the information at their fingertips. Golfnow comes along and now you've got teeoff.com and a number of other ones where they aggregated all that information to one spot.
So now you have these golfers that at their fingertips can compare prices and can go look at what tee sheets are available and what tee times. And you had a lot of golf courses, I think, that also at that point in time were suffering from being overbuilt. So you had a lot of guys who felt that one of their only ways to try and make it was to drop their prices.
And so the cost of a round of golf dropped precipitously around that time, because now everybody's competing and the winner was the golfer, because now they're getting on the same courses for half the price. And that happened with us at Chestatee where our average yield per round dropped from a little over a hundred dollars per round in 2002, we stayed at right around $50-54 a round for a long time.
So we went through a period of time where we were losing a little bit of money or breaking even, depending on the year and depending on how many rounds that we were doing. And so that changed the landscape tremendously.
Roberto: So tell me, what do you think about the role of a golf course in a real estate development? Do you view it as a stand alone business? Do you view it as an amenity to sell 600 lots as you're building it out? Do you view it differently once it's a mature community? What's your take on, on Chestatee specifically, or just kind of that whole, I would call it that starting with the National Golf Foundation, that nineties-two thousands trend to let's build a community, let's put a golf course in it. How does that all fit together?
Brian: Yeah. So with my limited experience, again, just one golf course, obviously the guys out there that have much more experience. And so, but my viewpoint on it is that in the beginning, it's an amenity but I also looked at it as a long-term asset that it felt like, okay, it could be profitable and over time you run it and it'd be fun.
You're obviously loving golf. So it was kind of fun as well. And then it was an asset that I eventually would sell to the homeowners or to the members. And that's the way I looked at it. So in the beginning, it's an amenity that you want to keep up, that you want to attract people with. But what I found out was in the process and having been through two cycles of ups and downs in the real estate market at Chestatee that only about 30% of the people that are buying in a golf course community play golf on a regular basis. It's not as high as you think. And so we found it's roughly at about 30%. And so it is an amenity and it does attract people, but it's not the only reason why people are going to be there. And in fact, of the people that live on the golf course, I think for a lot of people, it's not because they love golf. It's just because they love the fact that they've got some privacy out their backyard and they don't have a neighbor for maybe a hundred yards on the other side of it and that type of thing, but only about 30% play. And so in the beginning, it turned out to be an amenity. Then in the middle of the development, let's say 2008-09, it was something that was more of a point of frustration because we were losing money.
We're only doing about 19-20,000 rounds a year where we're in no man's land. We’re semi-private, we're not public. And we kind of bounced along. But I had all this real estate to sell and it was still an amenity along with the boat slips in the marina and everything else. For me, at Chestatee, one of the things that I didn't take into consideration in terms of how it would affect the absorption rate and why I am still developing lots at Chestatee was the distance from the airport in Atlanta as well.
And so, as you know, if you're up in Dawsonville in Lake Lanier without traffic, you're an hour plus to the airport. With traffic, you could be two hours to the airport. So that changed a little bit of the dynamics as well. But then fast forward to where we are today, with what we've just gone through. You've seen a huge boom in golf. Chestatee is getting the benefit of it. I also did one thing differently as well- I changed my model and I went a hundred percent public. And I got rid of the semi-private membership aspect of it. Didn't make a whole lot of my members happy, but they were getting the benefit of that.
We've freed up and taken back control of our tee sheet. So where we were last year or at the end of 2019, we did 20,000 rounds, let's say, and we went public in, like, August of 2019. And so we've been doing it for almost two years. And the first year we went public, we did 32,000 rounds and it was absolutely the right thing to do.
It's been a huge success. We're still in that roughly $60 a round range in terms of what we're getting per round, but it's taken something that was sort of a break even, or a loss, and I was doing to protect the real estate side and changed it to an asset that you know is turned around and it's a lot more fun to have now.
Roberto: Very cool.
Dan: So you mentioned some of the differences in terms of what happened now with COVID, et cetera, but fundamentally, how do you think about the core consumer that you're marketing to 20 years ago when you started the project versus who you're trying to sell the lots to now?
Brian: Well, COVID had an effect on that as well, because now with telecommuting, because I think as I say it, I think that the corporate world had always toyed with letting people telecommute from home and giving them maybe a better quality of life. But I think that in the back of their minds, whoever's making those decisions, never quite could be comfortable with where people are going to be as productive as they should be, or as we want them to be from home. And then COVID caused the corporate world into a forced experiment, because they had no choice.
And now all of a sudden, you see these corporations realizing, Hey, you know what. There is a hybrid here where we can let people work from home. They can be just as productive. They can get as much done. Their quality of life is better. They're happier employees and it's a win-win for everybody. And so, because of that, for me, and Chestatee, we've just seen a huge boom in sales, in demand and what's happening because now people can have a quality of life that they want, where they can be on the lake. They can have their boat, they can have the golf course. They can have the north Georgia mountains and they can still do their job. And they don't have to go to the airport, you know, two days a week. And they can do a lot more through telecommuting. So it's helped us at Chestatee. That's for sure. Not sure if that answers your question.
Dan: So, what you're saying is, well, I think it does. But to put a finer point on it and not to put you on the spot too much- is going from 20,000 rounds a year to 32,000 rounds a year mean there are a lot of people playing hooky? Is that what you're trying to say?
Brian: No. So for Chestatee, what it was was a function of two things. So one, it was going public. And so when we went through the decision-making and we said, okay, we had a hypothesis about a couple of things. We were able to take back, let's say, roughly six to 7,000 tee times a year that we were eating up through trying to accommodate a membership through trying to accommodate the semi-private aspect of this. They [members] were getting the better tee times on Saturday. Or we were doing men's golf events and it was a tough decision, but I said, Hey, you know, we've got to try something different. We can't keep beating our heads against the wall and losing money.
And we made some assumptions and we didn't know if those assumptions were going to be correct, but we did it. And that also coincided with then six months later in March with COVID. So I'm going to say of the 12,000 rounds increase that we had from 20,000 to 32,000 rounds... I'm going to say about 70% to 75% of that is because we went public and more people had access to Chestatee. Whereas before we didn't have as many tee times on Golf Now, people would go to Golf Now and before they wouldn't think of Chestatee as an option. Now we have more tee times there. They've got the opportunity to book on a Saturday morning, they come up, they have a great experience.
It really is a fun golf course. I mean, I've played a lot of golf. And what I say to myself when I lead Chestatee is what I like about it is I've used every club in my bag. It's a fun golf course in terms of reachable par fives, you know, reasonable par fours, par threes. But anyway, I think people then get exposed to it and they said, Hey, we had a great experience with customer service.
And they come back. I also think about 30% of our rounds were due to people being at home. They had nothing to do. They've got reintroduced to golf. They're spending time with their kids, they're coming out and playing. And so I think that that has been a huge boon to courses all over the country. And I hope that it sticks. I hope that we don't get back into the same situation with golf, which is, the two barriers to playing golf are time and money. And really the biggest one is time, not money. Because it takes a long time to play golf. One of the things I don't know how to solve yet, and we haven't, you know, haven't really sat down and looked at it.
But one of the things that happened in COVID was we gave everybody their own cart. We have a fleet of 80 carts, let's say, at our facility. And we brought in 25-30 more carts so that we could give people their single carts. And we noticed that those first tee times out of the gate, instead of playing in four hours and 15 minutes, they're playing in three hours and 20 minutes, they're playing in three hours and 30 minutes.
And there's some give and take there because you're probably not having as much conversation with your playing partners and the comradery and the fellowship. But it sped up play tremendously because people are going to their ball and they've got their own bag. And so, you know, that's something to look at down the road is how you continue to do that to make golf a faster activity. Because again, I think the amount of time it takes is what turns most people off to it.
Roberto: No doubt. And I think it's really interesting here about going public, because I always think of golf courses and I, when I see new projects, like, you know, Zack Blair's building this tree farm, I just think of it from a utilization standpoint, right? Like you've got this golf course that sets there and it's open every second that the sun is up. And how do you utilize it correctly to maximize revenue? You guys were hosting member events. So you're taking your best weather weekend in April and October. And you're saying, we're going to have the member-guests. We're going to shut the tee sheet down for three days for a member-guest on our best weekend of the year. You release those tee times to the public. You're going to get crazy utilization on those weekends. So I look at Zac Blair's project. I think it's really interesting to follow because he's put it out there with the prospectus and we're going to get to watch this thing happening.
But he's really banking on having an even demand curve throughout the year. It's kind of an out of town model, whereas I think he's going to be super busy in the spring and in the fall. And it's kind of a tough sell to go to South Carolina in August for a golf trip, you know? So how do you fill up that golf course, is really the question I think? And you guys are- it's really interesting here and how you all landed, where you landed.
Brian: Well, it depends, obviously it depends on where you are so many things that are beyond your control. So if you're in South Carolina, yeah. The summers are hotter and you're better times... and you're going to do better in the winter time than we are. Because your winters aren't as cold. So obviously it's very weather dependent. But you look at it and then obviously from a supply and demand standpoint. So now in 2021, even though we're slowly coming out of COVID and people are more comfortable, our first quarter of this year was better than our first quarter last year in terms of number of rounds and revenue.
So now for us, hopefully it's a problem that we continue to have. So now we're going to drive it by supply and demand. So now we can slowly tick up the price because to your point, not only how do you utilize it best, but what is the optimum number of rounds as well, because where you're generating a reasonable return, but you're not wearing out your product. You're not putting too much traffic on the fairways, on the greens. And especially in a place like Georgia where it is tougher to grow grass in June, July, August, and September. And you do have to watch the wear patterns and your greens and that type of thing. And the fewer rounds you put out almost the better that you are. So you've got to balance that.
Roberto: Yeah. Well, Brian, we've known each other a long time. I just got to tell a quick story about owning a golf course, because I mean, owning a golf course is cool, right? Like it's great. It's fun. It would have been 20 years ago. I started working with Jeff Patton who was teaching out of Chestatee at the time. And the driving range at Chestatee is kind of down the hill from the road. And when you own your golf course…
Brian: I think the story you're about to tell was during construction. It was early on.
Roberto: I think it was fully open and used to take your Toyota Land Cruiser, I think. And you used to just hop the curb and you would just pull your Land Cruiser straight onto the driving range. So I'd be down there hitting balls and this forest green Land Cruiser would just be driving over the golf course, like, over to the range. And I was, well, when you own the place, that was awesome. I love that.
Brian: We wanted to make sure that I had carts available for everybody. So I'm just going to the driving range. Yeah. We'll make sure that, you know, using the carts effectively. It's sort of a Dukes of Hazzard thing. You know.
Roberto: Yeah, that's right. More generally we'll close out the golf course facility conversation. From a big picture, where do you see the next 20 years of golf course development? Because I see, as an observer, a lot of renovation, repurposing and then a ton of demand at like the uber high-end. I've heard there are two more discovery land properties under development. But where do you see the next 20 years from a 30,000 foot level?
Brian: Well, my opinion of the next, you know, 20 years, because obviously if I knew where the next 20 years is going, then I would do something and take advantage of it. But yeah, so the uber high-end, and I think that all that also represents an issue that we all have to deal with in a lot of different industries, because you're having a bifurcation of wealth in the United States and the haves and the have-nots and that's something that you hopefully see that does not continue to separate.
And so therefore yes, you have these high-end projects that if somebody makes the right decisions and puts them in the right location they don’t have any problems. And so people can afford to be there. But you still could only have so many of those in the United States or in the world because people only have so much time.
Again, it becomes time. Cause if you have a lot of those people who are members, they can afford to be there. And so it's supported by the economics of dues or initiation fees or whatever, but how many times do they actually get there? Two, three times a year. Because people are busy,
It'll be interesting to see what happens on the lower end. I still think you're gonna see some contraction. I think you're gonna see a lot of golf courses go away that didn't need to be golf courses in the beginning. And I think that that's a good thing. And then you may see a rebirth of the true municipal golf course.
Like I remember growing up in Northbrook, Illinois, near Chicago, and there was a nine hole golf course, Anetsberger golf course, which was just, you know, just a goat pasture, but it was a fun place to go play. And I still think people are, or some people are, not comfortable going to a golf course because they haven't spent enough time there and they are intimidated by it.
I've always said, I'm going to do this at some point in time, but I think maybe you could take an old golf course that has either gone bankrupt or has been overgrown and no longer a golf course. Try to open it back up so you create a golf course that is open to people and exposes golf to people that want to wear a t-shirt and jean shorts and want to come out and play and give that crowd an avenue to get used to golf and understand what golf is.
Same thing like with what Top Golf is doing. I think what Top Golf has done is great from a golf perspective. They have taken golf and they've taken some of the starch out of the collar and they've introduced it to a broad range of people who have never hit a golf ball before. And I've got other businesses and I've done some company outings there with employees, and they've never played golf before and they love it.
I think that I don't know what the conversion rate would be, but I think that you're introducing a different socioeconomic part of our society to golf. But I think that's a good thing because then you're going to take some people who actually never hit a golf ball before and say, wow, I really liked that. And that was kind of fun. And what would it be like to go out on a real golf course? And so hopefully that converts people to go out to golf and it helps increase the golf population, or at least if nothing else, the number of people who are exiting golf because of age or whatever other reasons, you have an inflow of people who allow us to stay at a static number or slightly increase.
And then I think it'll be interesting to see what happens with par three courses or executive courses, because then that allows people to get out, play golf in a two-hour time span, which they're a one and a half hour time span and still enjoy golf. But it's been around for a long time and I think it'll still be around. But anyway, and I'm not sure if that answered your question.
Dan: It does. And you mentioned the... it's interesting that part of your forecast is the continued contraction in the number of courses. I'm curious, what do you think separates those that will make it through that and be around in 20 years versus those that will shut it down. Are there defining characteristics that you see really making or breaking those courses?
Brian: So simply put, I think it's the same as a lot of businesses or at least looking at it like the restaurant business that I'm in: it's location, it's quality of service, and it's quality of product.
And it's those three things. Because again, you know, for the average golfer and you guys probably noticed, I don’t know off the top of my head, the average golfer is an 18 to 20 handicap player, somewhere in that ballpark, maybe a little higher than that? And what they want to do is they want to go out and they want to enjoy themselves. They want to have a good time.
And part of that is going somewhere where you've got great customer service. Where they walk in and they're treated like they're a member and they're comfortable and they like being there. So that's part of it. It's going to be location-based as well, because again, like we talked about time. So a lot of golf courses, you may have a golf course has got a better, technically a better routing or better green speeds or, or better green complexes. But I think a lot of the people who come play golf at a place like Chestatee, that's not what they're thinking about. They're thinking about service, they're thinking about easy to get there, and from a time perspective. And then if the product- if the course is in reasonable to good shape, I think they're fine with that.
And I think if you offer those things, it's courses that are in the best location that are going to continue to do well. And again, that's because of location. And when they have other options that are more convenient, that's what they're going to take. Now you do have the population, but that's not who I'm catering to. You have the population that are single digit handicappers that are five and better that may say, oh, I don't like that routing because there's too many blind shots or there's too many uphill or downhill. And so, you know, they may go somewhere else and they may make a 15 minute drive, but that's not the majority of our customer base.
Pebble Beach
Roberto: Yeah. That makes sense. Let's switch gears a little bit. Brian, you recently took over as co-chairman of the Pebble Beach Company. I'm going to preface this conversation by saying that is my favorite golf course in the world, but let's go back a little further. Your father was part of the ownership group that came in along with Arnold Palmer, but even more importantly, he was one of Arnold Palmer's best friends. How did that friendship come about? And then how did the Pebble Beach deal come about?
Brian: So back in the day, my father was running United Airlines. So as you know, United Airlines was big in the golf world and they had the Hawaiian Open for years and years and years. And so that's where my father got the first exposure to Mr. Palmer. And they just became fast friends. They had very similar personalities. They just enjoyed being around each other, and had a great time.
The circles that they traveled in ended up putting them together as well, over a short period of time. And so they just became fast friends and they both had a love of golf. They both had a love of aviation. My dad was a pilot as well and flew. And so they just hit it off. They loved being around each other and it was 30 years of great friendship, maybe even longer than that, you know, close to 40 years of great friendship after that. And so then Mr. Palmer asked my dad to get involved at the Senior PGA Tour level and the Senior PGA Tour policy board. And so then my dad took a greater role at the PGA.
And so he was involved with golf in many, many ways for a long, long time. And so that's where he continued to build a number of friendships with Tim Fincham and Dean Beaman and then obviously Arnold and they continue to play golf forever and ever together. That's how they got to know each other.
Roberto: That's awesome.
Brian: And so, yeah, it was just a long, long time friendship. And so back, even back in the day, when Arnold was doing a development called Isleworth down in Orlando, my parents bought a place down there and they've been there ever since, and it's been the winters down there.
My dad and Arnold played golf together every afternoon at the ShootOut at Bay Hill and just enjoyed being around each other. So it was a lot of fun.
Roberto: That's great. And then it was late nineties, early two thousands, when that group bought Pebble Beach Company?
Brian: Yeah. So the brief history behind that is in 1999, the Japanese company had bought and owned Pebble Beach. And at one point in time, and you guys may be a little too young to remember, you may be, or you've read about it, but the Japanese tried to take Pebble Beach private. And they wanted to make it a private golf course and because of the California Coastal Commission, Pebble Beach was to be open and accessible and have public access.
They were never able to get that done. Thank goodness. And so the Japanese owned it and then the company that owned it went bankrupt in Japan. And so they had to sell the asset. And when that happened the architect behind it, or the person that started and got the ball rolling, was Peter Ueberroth. So Peter Ueberroth, who was a really good long-time friend of my father's- they, gosh, met each other way back when, in the day when my dad was in Anchorage, Alaska, opening a hotel for Western International Hotels. And Peter was in the travel business and that's when they met each other and they've had a long, long friendship as well.
And when this came about, if Peter had spent so much time at Pebble Beach and loved the place, my dad spent so much time with him there playing in the AT&T all those years. Peter said, this is a great opportunity. So he put the group together, he came and talked to my father and said, Hey, here's a great opportunity. Here's how it works. I really want you to be involved with it.
And the first time my dad said, You're crazy. And Peter came back to him a day later and said, no, Dick, this is really, yeah. And my dad said, okay, I'm on board. And so away they went and they talked about it and they felt like it would be a great group to put together. Peter had a great long time friendship with Clint Eastwood. So Peter got Clint Eastwood to come in on the deal and be part of the original ownership group. And my dad got Arnold Palmer and talked to Mr. Palmer about it and got him to come in as a part of the ownership group as well. So the four of them are the group that went to the Japanese. There were other companies bidding on the asset and they put together their bid and went and gave their presentation. The Japanese, with some other relationships that Peter had, felt like this would be the best group to sell the asset to. It wasn't the highest bid, but they felt that this would be the best group to sell the asset to because they would take the best care of this treasure from a land perspective and from a golf perspective going forward. And so that's how it came about. And so 1999 is when they consummated the deal and they bought the Pebble Beach Corporation.
And, and that's the way we look at it today. And that is to be a steward of this unbelievable piece of property and to make sure that we continue to improve it every year and to make sure that it's available for generations to come. And that it's always a public golf course and that no one person has control of that asset. And that's the way it's set up now.
Roberto: That's really cool. So you mentioned Peter Ueberroth kind of drove the bus, your dad was involved. They were co-chairmen of the Board for 20 years. And recently you and Heidi Ueberroth have taken over those roles, which I think is really fascinating. You're both served on the Board for 10 years and are now taking over for your fathers. Tell me a little bit about Heidi's experience, you know, such a long track record in sports and the business of sports. What's her role now? Because I view Pebble Beach, partly as an entertainment company: you've got the US Opens. You've got the ATT. You've got the Concours d'Elegance. How's that partnership? And I think it's gotta be really fascinating what she brings to the table.
Brian: Yeah. So it's really an interesting dynamic in terms of the way it worked out, because the relationship that my father and Peter had for years and years and years is that my dad is an operations guy, you know, a hotel guy, an operations guy, and loves to roll his sleeves up and get into things. And how do we make things work better, how are we more efficient? How do we do things better from a P&L standpoint and that type of thing. And Peter was always more of a big picture/marketer/relationship guy.
And so the way they referred to each other was, yeah, Dick was Mr. Inside and Pete was Mr. Outside, because Dick was more operations hands-on and on-property, and Peter was more marketing, bigger picture, and looking at those types of things. And the funny thing is, I went down my career path, not knowing that Pebble Beach was going to happen. And so I was in the hotel/restaurant business, and now golf business before they did this deal. And so for me, it was sort of a no brainer to be involved and to be put on the Board. And the funny thing is, I'm kind of like my dad in a way where I love operations and the blocking and tackling of business, building a business and dealing with employees and guests and that type of thing. And P&Ls and building the bottom line.
And then Heidi, her career, she was with the NBA. And if she hears us, I apologize if I don't get it right, Heidi, but I think 17 or 18 years. And she was in the marketing side of things dealing with the NBA in all of their international marketing rights and opening China. She did a fantastic job, is a very smart woman, and has a lot of knowledge in the sports business and in the marketing world and outside of Pebble Beach and looking at the big picture.
So here we are 20 years later. And then for Heidi and I are 10 years into it, and then we're taking over and I'm very similar to my father and she's very similar to her father. So we compliment each other very well, just like Peter and Dick did, because we don't necessarily have the same skillset. And we love doing different things that compliment each other. So it works out really, really well.
Then the other thing you said is an entertainment company. I understand why you say that. I don't look at it as an entertainment company, still looking at the hospitality Corp company. You know, the Pebble Beach organization encompasses, I think, roughly 6,000 acres of the Del Monte Forest. And in that 6,000 acres, what we purchased was 17 Mile Drive. So we maintain 17 Mile Drive, which people can come in and pay (to drive it) and tourists drive through the forest.
We have four golf courses, so you've got Pebble Beach Golf Links. You've got Spyglass Hill Golf Course. We've got The Links at Spanish Bay and then you've got Del Monte Golf Course. And Roberto, you might've played Del Monte, I don't know. But yeah, so it's up by the airport and I believe it's the oldest operating golf course west of the Mississippi. And so that's the fourth golf course. Then we've got The Lodge at Pebble Beach, The Inn at Spanish Bay, and the Casa Palmero and then the spa and the beach club. And so those were the basic assets that were part of the purchase. And so we really are a hospitality company, but we do some neat things as well.
Like you said, the Concours d'Elegance car show is fantastic. And then you've got the food and wine festival as well. And then obviously the golf events that we have every year with the Pure Insurance First Tee Open, which is a great Champions Tour event, and obviously the AT&T, and then we've had a few US Opens along the way as well.
Roberto: That's great. I also heard a rumor that there was a water treatment plant for desalination, you guys own that too? That's in Monterey or is that not right?
Brian: Well, so yeah, we built- there's a big aspect to water because that's one of the most important things on the peninsula and in terms of being able to water the golf courses. So it has to do with a small desalination plant, but also a big reservoir that we built and how we use the water amongst the golf courses on the peninsula. So you've got Cyprus and Monterey peninsula and the two courses there and then our four courses. And so we all have a deal with where we share water and it comes from the same source.
Roberto: That's cool.
Brian: Yeah. But it's one of the biggest things that we look at in terms of how can we use less water? How can we be more efficient with it? Because it's a resource that is very precious out there on the peninsula.
Roberto: Yeah. That's cool.
Dan: So, where do you see the Pebble Beach Company going from here? Is it mostly a continuation of the vision that your father and Heidi's father put in place? Or are you looking to add sort of a new direction on top of what they had laid out?
Brian: So not a new direction. I mean, we're going to continue on. Like I said, we are stewards of this unbelievable property and that's truly the way we look at it. So our job is to continue to keep it where it is and make it better if we can and where we can from a golf perspective, from a lodging perspective, and from being a good partner in the community and the things that we do with the Pebble Beach Foundation: charitable events, continuing to do things with AT&T.
So there's a very good roadmap that we have, and we're not going to deviate from that too much. It's still about golf. It's still about the engine that drives the machine is Pebble Beach. As you know, unbelievable golf course. The history, the six US Opens, and we're going to have a seventh US Open. We're about to host the Women's US Open, which is fantastic.
Just had a US Am there. And so with all that history and with what it is, our job is to continue to make it better. And so you look at where Pebble Beach was 20 years ago when Dick and Pete and Arnold and Clint purchased it. And you look at where it is today. It is light years ahead of where it was in terms of the facility- just the golf course is better. It’s in better shape. All the golf courses are in better shape. We've put, in that timeframe, over $500 million back into the facility. A lot of it which you will never see just because it's infrastructure, but making a financial commitment to make sure that Pebble Beach continues to get better every year. So that Pebble is set up to be successful for the next, you know, hundred years. So we look at it as our job, that's our roadmap. And then along the way to do some fun things as well. And so- Roberto's seen this over the years and Dan, you may have as well- the driving range, the practice facility that we put in, where it was before and what it was was not commensurate with Pebble Beach and the experience that you got.
We redid that practice facility a few years ago. Most recently we took the old Peter Hay par three golf course, and we redesigned it with TGR designs and Tiger Woods. And it's now called The Hay and we just opened that up and it is a home run and it's just another amenity and another thing that's open to the public and people can come and take advantage of. And so it was a great thing for the resort, a great thing for the community. That's been fantastic.
And then there's going to be some other opportunities down the road. We've got the opportunity to build another hotel at some point in time, if we feel it necessary or if we feel that it makes sense. So we've got the permits to do that. We've purchased some land adjoining Pebble Beach. Some homes that came for sale. And so we did a product on the first fairway. We've got two cottages and some additional rooms. So we've got some golf cottages on the first fairway that we built a few years back. Yeah, they're fantastic. The Palmer and the Eastwood cottages.
One of the great things that we did as well with all the people that come there every year and have never seen Pebble Beach and are not familiar with it- we did a Visitor Center. And so we took some old retail space and we redesigned it because we have buses of tourists and people that come in and out of Pebble Beach all day long every day. And we've got this unbelievable Visitor Center. So the next time you're there, it's one of these things where, Roberto, you've been there a lot of times and you may not do it because you say, oh, it’s a Visitor Center, I've been here lots of times. I understand, but it really is done very, very well. You walk in there, it gives you the layout of Pebble Beach. It talks about the history of it, and it's really educational, so we've done a great job with that.
And so there's been a lot of opportunity and I think there will continue to be a lot of opportunities to improve it.
Roberto: I've been to that Visitor Center, I think it was the 2019 Pebble Beach AT&T. It coincided with a Chinese New Year. And you guys are absolutely right, it was one bus after another full of tourists. And like you said, it's really cool; it's really well done. I mean, super first-class and I kind of walked around, took five minutes to walk around and buy a couple of souvenirs to bring home.
But that was a super idea. I would have never thought of doing that, but it gives everyone who visits a feeling like they were at Pebble Beach, even if you didn't play golf or didn't have a beer in the Taproom, you still feel like you were really on property, which is really well done.
Brian: Yeah, and they get to walk down and they go down to 18 and they can hang out, take pictures, and then they can walk out on the golf course, because it is a public facility. And so you've got people that walk around and go all the way down to 10 and look out over the beach at Carmel and yeah, it's fantastic. It is awesome.
Tap-ins
Roberto: Well, Brian, you survived the very difficult questions on The Course Record Show. We're going to close with a lightning round, just so you know, the first answer that comes to your head. Dan's going to lead the charge on some golf related questions and then we'll kind of flip roles and I'll ask some business questions.
Brian: Okay. Take it easy on me. I don't think well on my feet.
Roberto: So the section called Tappin's, it's the easy part. Tappin's. Come on.
Dan: Let’s jump right in: favorite golf course?
Brian: I just would have to say, and it's, I'm very fortunate to be a part of it, but Pine Valley.
Dan: That's a good one. Did you ever play with Arnold Palmer in the ShootOut at Bay Hill?
Brian: I was very fortunate enough to play with Mr.Palmer a number of times and just a quick memory. One memory that I had is- so they play in the ShootOut every day and then in the locker room afterwards, they play cards. They would play Hearts a lot of times. And I remember this one time we went out and teed off and it was my dad, and it was Mr. Palmer. Couple other guys in the group. And some of the very first hole, Mr. Palmer has a wedge in on number one. He was a little bit older, so he didn't hit it as far so he had to wedge in on number one and, knocks it in the hole and everybody is you know, hoot and hollering and, he goes, why are you guys so surprised? He goes, that's what I was aiming at. I’m aiming at the hole. And so he knocks it in and then he made another eagle in the round and then comes in and he's feeling good. And he's like, well, good, then we'll play some cards. And he sits down and he plays one hand of Hearts. And the very first hand he shoots the moon, which is a difficult thing to do at Hearts.
And that's just sort of Arnold Palmer. Like those things happen to him anyway. So I was fortunate enough to play with him a lot. It was great. Great memories.
Dan: Favorite AT&T Pebble Beach Pro-Am partner?
Brian: Sam Saunders, Arnold's grandson. He and I played together for five years and was just very fun, relaxing. We always have a great time and tell a lot of jokes and have a lot of fun.
Roberto: He's a good man.
Dan: Favorite hole at Pebble?
Brian: Gosh, great question. I guess I'd have to go number eight. I just love that second shot. I just love that second shot. It is fantastic. You know, obviously the tee shot’s not the most difficult, but you're trying to get as close to the edge as you can. At first mortal golfers, we don't have a rescue club in, we've got maybe a seven iron or a six iron, and and just watching the ball hanging in the, I just love it. Second shot. Right? Love number eight.
Dan: If you could build a new golf course anywhere in the world, where would it be?
Brian: I'd redo Spanish Bay.
Dan: Wow. Tell us more. What would you redo?
Brian: I just think it's a great piece of property. And I would love to be able to work with the Coastal Commission and take better advantage of the land right there. They're not making any more land along the coast. And so, I think that's a great opportunity there.
Dan: Best spot for a fan at the AT&T ProAm?
Brian: Well, the way the grand stands were set up, I like 17 on the grand stands. Because you can watch people play 17 and then hit their tee shots on 18 and then from that same spot, you can see whether they decided to go for it or if they decided to lay up. Cause I still think 18 is a great hole as well for as short as it is.
And Roberto knows this when you look at the stats on 18. You know, guys can get there in two, but I want to say, and I'll misquote it a little bit, but I want to say the guys that go for it in two- only like 30% make birdie and there's another 30% that make “other.” And so it really is, even though it's a short for you guys on Tour who hit it so long, it's a short finishing hole. I think it's a great finishing hole. So, yeah, you can see tee shots in 17 and then you can watch him play 18 from the top of the bleachers in between those two holes.
Roberto: I agree with that.
Dan: Cart or caddie?
Brian: Caddie, of course. Carry your own bag if you can.
Roberto: Or Land Cruiser.
Brian: Or Land Cruiser, just to warm up, just to get you to the practice facility.
Dan: Land Cruiser with a fore caddie!
Brian: I still think if you can...and I love facilities that can offer this in terms of being able to carry your own bag and walk. I think that's great. I think you know, as we all know, four hours on the golf course, there's not a whole lot of exercise, so I'd encourage anybody that can to carry your bag and get a little bit exercise if you're out there. But if not, definitely take a caddy.
Roberto: I'm a member of a golf course where they charge you to walk. It's a private club and it's like, it defeats the entire model of a private club, right? It's like eight bucks. It's not the money. It's just like, if you join a club, you can put your bag on your shoulder and you can go play and it doesn't cost you anything. That's what private club golf was built on. It drives me nuts.
Brian: I am a hundred percent with you. I mean, you should be able to just throw your bag on the shoulder and go play golf. And that's the way you should do it, or fine, you know, having a caddie. And as far as caddies go, I love to see clubs that encourage young kids to get into caddying as a way to make money.
I did it when I was in Chicago. I remember caddying at Skokie Country Club. As soon as I was old enough to caddy at Skokie Country Club. And I love seeing programs that have high school kids and the lessons that they learn. I think it is a great thing. So, but yes, clubs that- I belong to one as well- that there's a constant argument as to whether people should be allowed to walk or even for goodness sakes, have a trolley to carry, you know, to put their bag on.
And it's like, you guys are missing the point: let people go out and enjoy the golf course. But anyway, the Chardonnay politics, as I say, of private golf courses.
Roberto: Yes. All right. My section is called Buy or Sell. So we'll just do a couple here. Buy or sell- Tesla stock?
Brian: As if you look at it as a car company or a technology company. So if it's a technology company, I would buy it. But as a car company, I would sell it.
Roberto: All right. Putting courses at golf resorts- buy or sell?
Brian: Buy.
Roberto: Tokyo Olympics, 2021- buy or sell?
Brian: Sell. I hate it, but sell.
Roberto: Fast casual restaurants or sit-down restaurants?
Brian: Ah, interesting. Sit-down restaurants. I'm getting out of the fast casual segment of the world.
Roberto: Nice. Nice. Well, Brian, thanks a million for joining us. This has been a really interesting conversation about your experiences in the golf world. I'm sure people really enjoy listening to you.
Brian: I appreciate you guys having me on. Like I said, I appreciate you also lowering your standards, for allowing a break from the smartest people in the golf industry. And that I did listen to your last podcast, Roberto, and I just want you to know that I look at you as somebody more than an 180 mile per hour ball speed. You're more to me than that.
Roberto: I’m just a piece of meat to Harry.
Brian: No, it's been great. And I wish you guys all the luck. I will continue to update my Spotify podcast and look for your latest podcast. I think it's great.
Takeaways
Dan: All right, Roberto. Great conversation with Brian Ferris. Lots of takeaway from this episode, so why don't we jump right in? I'll start with some reflections. I'm curious to get yours as well. The first thing that jumps out to me from Brian is the challenges he seems to have. I was fascinated by his story and the challenges that he's taken on for himself and succeeded.
I mean, the guy is in the golf course business, in the restaurant business. These are notoriously tough as nails with margins that are just so, so mean. But yet he's succeeded really, really well. And that really strikes me with people: when the going gets tough, they get tougher.
I know where it comes from. I guess it's his dad who was the CEO of United Airlines, another brutal business. That really jumps out to me. How about you?
Roberto: Yeah, definitely. And he's a golfer, right? I mean, he's obviously a good player and played in the US Senior Open. And if your favorite hobby is a game that's impossibly difficult, you probably don't mind a challenge on the business front, right?
Dan: No question.
Roberto: Okay. Yeah, let's just do something that I think is really interesting, not just in the golf world, but like it's a general, kind of engineering problem is utilization. So how do you fill up a golf course? How do you price different tee times, and hearing how they went from a semi-private model to a public model, and then how golf now brought transparency to their tee sheet and the pricing?
It reminded me a lot of what Nick Kononas is doing with Tock. So Nick is the guy who co-founded Alinea with Grant Achatz, that restaurant in Chicago, and he's built out this restaurant reservation system that basically says we should have the diners put a little bit of skin in the game. So they take like a $5 deposit and they sell a Wednesday, 5:30 PM table for a couple of hundred dollars. This is an all-inclusive dining model. And then a Friday at eight o'clock could be five or $600 and just being open and transparent. And I think I listened to an interview where he said that the first tables that sell are the peak, the top price. Because people are like, it's my birthday- I'm having dinner Friday, 8 o’clock.
And the bottom prices where it's like, wow, I can get in the door at a discounted price, give me five o'clock on a Tuesday. And I think golf now kind of did that, maybe in a little bit less sophisticated way. But it's definitely a problem that golf courses are facing. COVID- golf booned so much. Gosh, my buddies have just been complaining my ear off about their tee sheet and getting on the tee sheet and the system their club is using. So have you seen any of that?.
Dan: See it at times. I know some clubs here in the area before had no tee times whatsoever and had to go to tee time with COVID. And now the membership’s really divided in terms of like, do we stay with tee times? Or go back to no tee times? Could we make it automatic or do you have to call in to book? It's been a hot topic around here from some of my buddies too.
Roberto: Yeah. Don't you think it's not that complicated of a problem when you think about it from kind of a math standpoint? Or you could give this as a case study to a bunch of college senior design guys. You're just trying to fill up a golf course that has 18 holes in a certain way, and try to maximize revenue and minimize a bunch of bottlenecks. Like it's really not that complicated, but for years and years, like you said, it was maybe a piece of paper in the pro shop or there were no tee times. So I think it's not that hard of a problem to solve. It's probably just more grabbing the membership and pulling them along.
Dan: Yeah, I think that's right. I mean, I think on the surface, the GolfNow.com problem is an operations problem. But there were some secondary perhaps unintended consequences there that are all about a positioning problem for clubs.
And here's what I mean by that. Your point is very true. Like how do you smooth out demand so you're not packed at 8:00 AM, but dead at noon. Right? And that's very true. So you can get people through and price discriminate as a way to do it. But what Brian describes too, is the race to the bottom that it created, right?
Golf courses all of a sudden were competing against one another on price, or much more vigorously than they were before. But that's something that was difficult for the clubs and made their viability a challenge regardless of utilization. So that was a secondary wave that was very brutal. Now the winner is the golfer, as Brian referenced. But it's tough if you’re in Brian's position with a course like Chestatee. How do you make that work and balance the need to utilize also, try to keep the place and the lights on with prices having to drop so low?
Roberto: Yeah. And it's, you're selling air, right? The golf course is there either way. It's like selling radio advertisements. It's probably a little more complicated model than I was giving it credit for, you know, two minutes ago. So you're selling a tee time for 60 bucks. Well, if it's nine o'clock in the morning and that tee time at noon is empty, why not put it on Golf Now.com for $20, or it's going to go to waste. The greens have been mowed and the golf course is setting there. So flip that around. All of a sudden, if you're the consumer, you're like, oh my gosh, I'm just going to wait until this thing goes on clearance. I know I'm playing Thursday. I'll get online. I'll see what's on clearance because the tee times will be open. And so it's a bit of a conundrum, you know?
Dan: Yeah, that whole train, the consumer-to-wait-for-clearance. That's a tough one, right? Like that's what drove JC Penny down into the ground. So it's a really tough balance between selling the tee time, but also setting expectations around what's the right price to pay long-term? So I appreciate the challenge that's in there and it's a tough balance to strike.
Roberto: Yeah, no doubt. The other thing that I thought that jumped off the page to me was Brian's take on bifurcation of wealth in the US and how that manifests itself in the golf business.
So, you know, my background in golf is I've been able to play-I get a little bit of exposure to- these uber high-end projects. And it's just crazy to me that they just keep coming. Right? I mentioned that there are a couple more discovery properties coming. And he said something that I've always thought about. Yes, those clubs could be financially viable because there's a lot of capital in this world right now. And you can afford a big initiation fee and a big monthly fee and the club can work. But if it's empty, it's not that fun. And you can stack all the money in the world up, but you only have so much time.
And his mentality as a hospitality guy and an experience guy and a customer service guy. You know, I had never really thought about it that clearly. And I thought that was really cool how he went right there. Like, Hey, great, it might work, but what's the experience? What do you think?
Dan: Isn’t it funny how the optimal experience, if you ask the golfer, is typically like, Hey, I want to be out on the course and not see anyone outside of my foursome. Right?
Roberto: Yep. A hundred percent.
Dan: Right. But then when you use the grill, I want the place to be buzzing and I want it to be fun and I want to have drinks and I want to talk about my round and the putts I missed or whatever. Those two don't reconcile super well. So that always fascinates me- how can you have it both ways? And just a funny comment about the golfer psyche in that sense.
Roberto: Yeah, it totally is. And you absolutely nailed it. I don't want to wait. I want to play fast. I don't want to deal with people on the golf course. But you nailed it, you know, it's you want to vibe when you get in. So, and hey, maybe that circles back to the previous conversation-the key is to be busy, but move people through the golf course.
So how do you do that? How do you get people around but you're just not going to have people on property at these really high end top dollar places, because if you've got a big bank account and six memberships, and your customer at one of these clubs all have six memberships, just the limitations of time mean that there will never be more than 10 or 20 people on property at one time.
Or maybe there's just one weekend, or a couple of weekends a year, but you know, a place that's dead is just not that appealing. So anyway, it was pretty interesting. Obviously he's not dealing with the lower end of that spread at Chestatee, not on the low end. Do you know, you obviously have disposable income if you're going to play golf at Chestatee, but I definitely would not want to be in the middle, right?
Dan: Yeah. That middle ground is tricky. Right? That semi-private model that Brian moved away from. That really seems challenging because even if you get the utilization, and people are there, the connective tissue isn't there, right? You've got this first class and second class citizen type thing going. The grill is not going to be a buzz even if the course is full. That's not going to make people that happy. Empty is bad too. So that's a nice edge you're trying to strike to make that model work. And that's- having spoken to Brian, I am out on the semi-private model.
Roberto: No doubt, because the only private members you're going to get are the guys who play 22 rounds a month, and then they're paying essentially 10 bucks a round. I wonder what the numbers show. I remember being a kid in Atlanta with a lot of residential developments, I grew up in the suburbs. And there were a lot of semi-private clubs. I wonder what the trend lines look as far as private vs semi-private vs public.
Dan: Yeah. my gut says down.
Roberto: You would have to think.
Dan: So speaking of the suburban model that you talked about growing up with. That's another thing that even for the private suburban courses, that's going to be a challenge for them too, right? I mean, there’s not too much land available in the suburbs any more. So all the golf course boom from the sixties to nineties, it seems to have largely saturated that. But the model that seems to thrive for any kind of new development seems to be this remote either club or remote resorts model. I think of Bandon, Sand Valley, or even a place like Ballyneal, that Doak’s course in remote Colorado.
Roberto: Streamsong.
Dan: Streamsong. I mean, you threw out Zac Blair in our interview. It's an interesting bet, right? Because you got to say, Hey, my offering has to be good enough to get people to want to come here. That's the obvious one. But now, thinking where we are here in mid 2020-21, you've got a bank that people are going to want to travel and come to your course. And I'm sure travel will come back in some way, shape or form. Everyone's dying to get their vacation back in. So what does the next six months look like for those kinds of environments? What do you think?
Roberto: Yeah, I think the demand is pent up with people not traveling for a while. A lot of those, like you said, are strictly golf destinations. So your target customer is your golf trip, your buddies trip, maybe some corporate golf, but they seem to be booming. And I would say that also ties into the local club model.
So take my brother for example, he's 29. And then I have a friend who caddied for me a couple of weeks ago who is also in his twenties. So they're not going to join a club locally. They’re working a lot, they're young, too big ticket to join a club. They might move. There are some good options if you're going to play two to four times a month. But they've really said, Hey, I'm going to take a couple of trips a year. I'm going to get my golf in a four-day fix. So these buddies of mine, they were going to Prairie Club, which is in Nebraska. And they said, look, we can go there for three days for 800 bucks. It's a good deal. Like, I can budget that in. And if I do one or two of those a year, it just totally scratches the itch.
So it's all kind of interrelated where people have X amount of dollars and X amount of time to play golf. And where are they going to do that? So it's such a shifting landscape.
Dan: Yeah, the time's a big one, right? Job, the kids, spouse- that's always going to be the most straining piece to make work out.
Roberto: Yeah, let's talk about Pebble. I mean, my favorite place. Really cool to hear how I'm sure those guys are turning a nice ROI on their purchase of the Pebble Beach Company. But also very evident that they are stewards of the place and are really, really passionate about taking care of it for the long term, which was cool to hear.
Dan: So I've heard you wax poetic about Pebble in the past. And, you know, I've seen it on TV a million times. But I've never stepped foot or had a golf shot on the property. So I'm sure there's a lot more folks like me who have the same curiosity- what makes it so special to you? Right? Because I know you're a huge fan. You've played all over the place. What jumps out top of mind that makes it definitely different?
Roberto: Well, I think the land, the geography, & the weather are very different from what most people in the United States experience. So if you're from the Pacific Northwest or maybe that kind of northern part of California, it might not be that special. But for most people rolling into Pebble and it's 65 degrees and a little foggy...the coastline is just gorgeous.
And then just the golf course fan- the cliffs, the way the golf course to me, the rhythm of it is incredible. You start with a couple of inland holes, you work your way down the coast, you come back up away from the water, and then you finish on 18. Like the biggest finish in golf in my opinion. And there's just nothing like that that I've played that compares.
And, the service is off the charts. The whole- even if you don't play, if you just go drive 17 Mile Drive, which like Brian mentioned, I think for $15 or something, you can come in the gates and go drive. You can see like six of the holes on Cypress Point, just driving down 17 Mile Drive. There's just nothing like being on that, being on the Monterey Peninsula and being on that coast.
So again, obviously biased. I could go on and on, but there's something really, really special about it.
Dan: That's pretty cool. Yeah. The stewardship of the place really jumps out in particular, the whole co-chair CEO model that Heidi Ueberroth and Brian have taken on. I've always been fascinated by that. I just, as a student of business, I mean, I think it's worked well for a lot of companies. It's also not worked well for a lot of companies, and it's tricky, right? It's very hard to make decisions whenever there's an impasse, when you have two folks at the very top, without a clear hierarchy to arbitrate.
So I've always been fascinated by that, and Brian and Heidi seem to make it work, right? Brian's an operator. Heidi seems to be sort of a big picture/marketer/strategy type from what he described. So that's a good, complementary skillset. But I think because of that, they probably don't necessarily see things the same way and that's gotta be tricky sometimes. So I'm always curious in general for Pebble and other companies that have employed this, how that works.
Roberto: Yeah. Right. And they’re co-chairman/chairwoman. But there's obviously a CEO. So it's a non-executive Chair role. So yeah, it is. It's interesting, but I think the thing working in their favor has to be the long term involvement. So they've both been pretty close to it for 22 years now through their families. They've seen a lot, like the runway was pretty long to get them where they are.
So I think the culture has been marinating for a long time, which is, would probably be the bull case for that, for their tenure. Right?
Dan: Yeah. I agree. Yeah.
Roberto: Well, it was really cool. I'd love to follow up with Brian to see what he's up to. I feel like it's going to be interesting. It's going to be hard-charging. I really enjoyed chatting with him. We need to get on the golf course with him soon.
Dan: Likewise. Yeah. Well, good stuff, Roberto. And thanks again to Brian for the time. That was a lot of fun.
Roberto: Yep. I really enjoyed it. Catch us next time on The Course Record Show.
