Erik Allen lives in Playa del Rey in Los Angeles but just signed up as a member of the Dove Canyon Golf Club in South Orange County. He concedes driving 70 miles over four freeways and one toll road seems like a long way to go to play a round of golf. In fact, because of the distance and commute time, he figures he will only make the trek twice a month.
But while Allen enjoys playing the 18-hole Jack Nicklaus-designed golf course, the real reason he joined Dove Canyon is its new owner. Pacific Links International, which bought the golf course in April, owns or has affiliations and reciprocal agreements with more than 80 other courses in the U.S. and around the world.
Dove Canyon Golf Club
Opened: August 1992
Course designer: Jack Nicklaus
Course: 18 holes, 6,902 yards, par 71
Total club members (golf and social): 785
Membership fee: $13,500 for golf; $6,500 for a national membership for those 75 or more miles away
History: Developed by Garth Chambers. Sold in 1992 to Japanese noodle-maker Sanyo Foods Corp. of America. Sold in April to Canadian-owned Pacific Links International.
“For me it was their national club access,” said Allen, who works for an Asian financial institution and travels often to meet with clients. “They have a lot of private clubs and global country clubs.”
Pacific Links touts its golf club memberships as a value proposition. The Canadian-owned firm’s plan is to own a cluster of golf courses in strategically-targeted locations and then allow its members to use any of them as well as company-owned properties outside their region. The company also plans to partner with hotels to provide discounts and other incentives for its traveling members.
Owned by a rich Chinese entrepreneur, Pacific Links also seeks to attract some of the legions of big-spending Chinese golfers who are looking for new destinations.
Dove Canyon is the centerpiece for the company’s planned expansion into Southern California. The company previously established clusters of courses in Hawaii and Las Vegas. It also owns the Pete Dye Golf Club in West Virginia and is developing a course called The 27 Club in Tianjin, China.
In addition, Pacific Links has agreements providing members with reciprocal access to 23 clubs in the PGA Tour’s TPC Network and more than a dozen clubs in the Heritage Golf Group in the U.S., as well as to select locations in Asia, Australia and Canada.
Pacific Links’ entry into Orange County marks the latest twist for the Dove Canyon course. It previously was owned by Japanese noodle-maker Sanyo Foods Corp. of America, which bought it in 1992 from Dove Canyon developer Garth Chambers.
Harry Turner said other golf companies have a business model similar to Pacific Links, but he thinks his firm’s approach is unique.
“What we offer is the ability for a member to access another Pacific Links club in their immediate area,” said Harry Turner, Pacific Links regional vice president. “Many of the other companies only allow access for clubs outside their immediate area. This is usually 75 miles or more.”
A GOLF CHALLENGE
Pacific Links’ plan is ambitious at a time of major transition for golf. Since the recession, the industry has struggled to attract cash-strapped consumers. Golf also must compete for customers whose time is limited, making a leisurely round of golf a luxury. The combination has taken its toll:
After the industry went through rapid expansion in the 1990s and early 2000s, more than 800 U.S. golf courses closed between 2004 and 2009, according to the research firm IBISWorld.
National Golf Foundation figures show total rounds played nationwide plunged from 489.1 million in 2008 to 463 million in 2011, before bouncing back to 489.4 million in 2012.
For the first six months of this year, rounds played were down 9.9 percent nationwide, according to PGA PerformanceTrak. In California, play was down 1.9 percent in June vs. the same month a year earlier.
“Courses in marginal areas or not good areas have gone by the wayside,” said Ken Arimitsu, the broker at PM Realty Group who handled the Dove Canyon deal and Pacific Links’ two purchases in Las Vegas.
Sales of courses are beginning to pick up, Arimitsu said, noting he had made about a dozen deals so far this year compared to five or six a year or two ago. IBISWorld says the wave of course closures has ended and the industry is beginning to grow again, with 157 facilities expected to open this year.
EAST MEETS WEST
Pacific Links’ Turner says the bad times for the industry were an opportunity for his company, which was started in 2009 during the recession.
“We think it is very difficult for the one-off golf courses to compete in this golf environment right now,” he said. “For companies like ours that have buying strength, it does make it easier.”
Pacific Links has the advantage of a deep-pockets owner – Du Sha, an economist who built Home World Group, a supermarket and do-it-yourself retail chain in China. Du ranked No. 231 on a Forbes 2012 list of 400 richest Chinese with a fortune of $665 million. Turner said Du is taking a long-term view for growing the company, making strategic purchases in prime locations.
The company started by looking for locations that Chinese golfers would want to visit. Pacific Links bought five courses in Hawaii, one of the first U.S. destinations Chinese visit. They added two courses in Las Vegas, the second favorite U.S. stopping-off spot for Chinese, before casting their eye on Southern California.
During a recent golf-cart tour of the Dove Canyon course, Turner noted there is a long-standing relationship between the golfers in Orange County, who often visit Las Vegas, and Pacific Links’ Nevada members, who prefer the cooler climate of Southern California during hot desert summers.
“You could go to Orange County and find more of my members there than in Las Vegas,” he said. Last week, 16 Las Vegas members were planning to visit Dove Canyon.
Pacific Links has big plans for the Dove Canyon club. Turner said the 20-year-old course is in need of some basic maintenance. That includes spiffing up the course’s bunkers, which are showing wear and tear, and replacing the outdated irrigation system. Some landscaping needs to be trimmed or replaced.
Turner said he is bringing back Nicklaus, who hasn’t seen the course since it opened, to recommend improvements. Pacific Links plans to invest at least $6.2 million in upgrades over the next five years.
The company’s plans are attracting attention. After years of little change in total membership, club officials said they have signed up 97 new members since May.
Longtime members seem happy with the changes, too. John Kosmenko joined the club seven years ago when he retired from Cisco Systems Inc. and bought a house on the first hole. He said the opportunity to use other courses is a nice extra – he and his wife have played at Pacific Links’ SouthShore course in Las Vegas and occasionally go to Hawaii.
But mostly, he’s just happy with the course and the company’s plans to improve it.
“The golf is a challenge,” Kosmenko said.