Tiger Woods’s Golf Course Design Business Is in the Rough

IN late June 2008, a week after he astonished the golf world by winning the United States Open while grimacing in pain on a torn left knee, Tiger Woods traveled to a craggy chunk of land on the Baja Peninsula in Mexico. It was a lunarlike landscape of dirt and rock, with an inactive volcano in the background. For several hours, he hobbled over the terrain, discussing with developers his vision for the golf course he would build there, while waves from the Pacific crashed onto the shoreline below. His knee, said one companion, rattled like tools in a tool box.

Mr. Woods would soon undergo surgery that would shut down his season, but no matter: the Tiger legend was steaming ahead, and the fall from grace that would follow was unthinkable then. His heroic performance in the Open had enhanced his stature as perhaps the greatest player ever. It was his 14th major championship, putting him only four behind Jack Nicklaus’s 18, the singular goal that Mr. Woods had been pursuing since he turned pro in 1996. His earnings from golf and endorsements had made him wealthy beyond imagination.

Now he was turning his attention to a new challenge, his course design business, one that would extend his brand, bring him untold more millions and leave his permanent imprint on the game he seemed to have mastered so easily.

The Baja course, called Punta Brava, was Mr. Woods’s third design. With its breathtaking landscape, it was easy to envision it rivaling Pebble Beach and establishing his legacy as an architect at age 32. At the news conference to unveil the course, in October 2008 at the Hotel Bel Air in Beverly Hills, he looked at ease sitting next to Red McCombs, the billionaire co-founder of Clear Channel Communications, who was one of the investors.

“I can’t wait until we actually start construction, and we get to move some dirt because that’s when I can really get my hands on it and really be out there even more than I am now,” Mr. Woods said at the time.

Now, two and a half years later, no dirt has been moved at Punta Brava and Mr. Woods has not visited in some time. His two other designs, in Dubai and near Asheville, N.C., are also troubled; the Dubai course, according to people familiar with the project, has been shelved permanently. The desert sands have started to reclaim the strips of green from the six holes that have been completed. The Asheville project is searching for new financing, and construction has halted until at least this summer. In the nearly five years since Tiger Woods Design was founded, none of the courses have been completed.

It’s a trajectory that mirrors just about every element of Mr. Woods’s life these days: As he enters the Masters tournament beginning on Thursday, his golf game has fallen apart and he is overhauling his swing for the fourth time in his career. The string of affairs that made him tabloid fodder in 2009 and 2010 cost him his marriage, custody of his two young children and the loss of endorsement deals with Accenture, AT&T and Gatorade.

Brian Tucker, the founder and developer of Punta Brava, said the delay there had nothing to do with Mr. Woods’s personal scandal. His group had to redo the environmental impact study, he said, and groundbreaking is set for later this year. What remains to be seen is how much the developers will use Mr. Woods’s image to sell the course. Mr. Tucker suggested that Punta Brava would be marketed mostly on its exotic locale.

“This project is not about Tiger Woods,” Mr. Tucker said last month, emphasizing that the course is surrounded on three sides by the ocean and has 12 holes requiring a player to hit the ball over water.

Punta Brava’s location allows it to play down Mr. Woods’s involvement, but the two other courses he designed do not have this luxury. His allure as one of the world’s great champions was a crucial pillar of the sales plan.

Bryon Bell, president of Tiger Wood Design, said the firm would not be looking for new partners in Dubai. “As the course designer, it is not our role to secure financing for the projects,” he wrote in an e-mail.

When asked about the Asheville project, he said: “Our role beyond design work can vary depending on the client. Some request additional promotional or marketing opportunities, others just ask for our patience during these economic times.”

For now, the only golf project that Tiger Woods Design has completed is behind Mr. Woods’s newly finished mansion on Jupiter Island, Fla. With four greens, seven sand traps and different cuts of grass, the 3.5-acre pitch-and-putt course would delight any golfer.

While Mr. Woods could surprise the golf world and win this week at the Masters, it will take more than a major championship to rehabilitate his business career. And that raises some questions: What will become of the two remaining courses that bear his name, and can Tiger Woods Design re-emerge as a viable enterprise?

WHEN Tiger Woods started his golf design business in 2006, few doubted that he could deliver a course that everyone would want to play. That confidence didn’t vanish when the global economy began to fracture in 2008. Real estate values — so vital to any golf development — were dropping but were not yet considered at crisis levels. There were signs of a financial reckoning on the horizon, but not in the world inhabited by millionaire investors looking for a spot in golf’s most exclusive clubs. The Tiger market remained bullish.

Investors had compelling reasons to hope that Mr. Woods was recession-proof. Dubai had ponied up an estimated $55 million, according to widely circulated reports, for the privilege of owning Mr. Woods’s first-ever course design. The Asheville project, at a gated community called the Cliffs at High Carolina, had reportedly paid him $10 million. The usual fee for course design by a top architect runs $2 million to $3 million.

It didn’t matter that Mr. Woods had never designed a course. Who more than Tiger Woods knew his way around bentgrass and bunkers? With his practical experience, he would learn the details of the business on the job.

And so he set about to do so. “The amount of meetings I’ve been in — people would be shocked,” he said in an interview in 2008. “But that’s how you gain experience, how you can gain knowledge, being in meetings and participating. You learn and grow.”

In the beginning, Mr. Woods was hands-on. To the delight of his backers, he visited the sites often. He reworked the layout of the courses until they met his standards. At Punta Brava, he made 27 routing maps, when most top architects do three or four. At High Carolina, he changed the layout so that that the ninth hole would not be northern-facing and unplayable in the winter.

He also made time for the publicity events that were part of the deal. He traveled to Dubai in December 2006 to announce that his first course design would be built in the desert, surrounded by mansions costing tens of millions of dollars. In 2007, he strolled into a packed room at one of the Cliffs’ other communities, in South Carolina, to unveil his plans for High Carolina, his first course in the United States.

A year later, after his victory at Torrey Pines, he made his trip to Punta Brava to approve the final layout.

Actions like this only burnished his image with investors: he was a great golfer, and also a man of his word. What was selling these projects, of course, was Tiger Woods the champion, not Tiger Woods the course designer. Jack Nicklaus, who has operated a successful design business since 1969, was one of the few who added a sobering voice when asked about Mr. Woods’s precociousness in course design: “Yes, but he hasn’t done any yet,” Mr. Nicklaus said soon after the Cliffs broke ground. “He’s on his third golf-course contract.”

His comment proved prescient, though no one wanted to hear it any more than they wanted to hear that housing prices wouldn’t always go up. Mr. Woods’s aura was evident at the gala in Beverly Hills that officially announced Punta Brava. In a scene more like a film premiere, Mr. Woods met with hundreds of the world’s wealthiest golfers, many of whom had made their money through shrewd business dealings.

“I introduced him to every single person that night, 250 people,” said Brady Oman, who was then part of the development group but has since left. “It went past midnight. He stayed way past the end.”

The prospect of working with Mr. Woods caused even the savviest among them to drop their normal skepticism. At the unveiling of the project in 2008, Red McCombs, the major financial backer of Punta Brava, said that initially, “I wasn’t turned on by the whole thing. Then they said, ‘I think we can get Tiger involved in designing this.’ I said, ‘Forget it, it’s over, I’m in.’ ”

Mr. McCombs, a lifelong real estate investor, added: “It was the idea of Tiger coming in as a partner and designing the course, not just in name but in total involvement in the course. He has such an impeccable background and he added to the property.”

Now, two and a half years later, with the business seemingly stymied, it is hard to sort out all the contributing factors. The economic crisis was certainly one of them. Credit dried up, and real estate prices plunged. It was a bad time for any development, and the golf industry suffered. According to the National Golf Foundation, only 46 new courses opened in the United States in 2010, the fewest in 25 years.

There is evidence, too, that all three developments significantly overestimated the prices they could charge for surrounding real estate, with lavish mansions in Dubai and homes at Punta Brava priced as high as $12 million.

The tarnishing of Mr. Woods’s image has presumably hurt as well. Its impact is harder to quantify, though it probably has been more of a factor for the Cliffs, which based its initial sales pitch as much on Mr. Woods’s personality and reputation as on his athletic accomplishments. Jim Anthony, the project’s founder, does not even play golf. He likes to fish and take long walks with his pedometer ticking off the miles. His vision of the Cliffs was to sell the communities based on a lifestyle of health and wellness and a family-friendly image.

So when the string of affairs that ended Mr. Woods’s marriage was revealed, the Cliffs had to scramble; now, the marketing is affected by the fact that the company doesn’t want to plaster Mr. Woods’s image over all of its promotional materials.

Mr. Anthony said he harbored no animosity toward Mr. Woods. “I don’t know of any of us who hasn’t made a mistake,” he said. “I had some conversations with Tiger when he was here. I think he’s genuinely working hard.”

He said he does not blame Mr. Woods’s travails for the sluggish sales at High Carolina. “I think it’s very minimally Tiger,” he said.

Regardless, Mr. Woods’s work with these projects is largely done. He has been paid the bulk of his contract fees. “Traditionally, a course designer’s job begins and ends with designing a great course,” said Mr. Bell, the head of the company.

In the meantime, there have not been any new projects announced by Tiger Woods Design. “We are evaluating opportunities from all over the world,” Mr. Bell said. “We’re staying focused on our original mission of finding great sites, great partners, and creating spectacular designs. I’m very confident about our future.”

FOR the investors who backed Tiger Woods’s designs, time is running short, or has run out altogether. The Dubai project appears all but dead. Mr. Woods’s Web site says completion of the course is pending and that he might revive it. But an official at Golf in Dubai, which promotes the sport in the emirate said the project was “as good as dead and buried.” He said the chief executive had left and that the second in command was back in Canada.

“Basically it was an exorbitant project,” said the official, speaking on the condition of anonymity to avoid contradicting his organization’s role. “The $100 million mansions were too expensive even during the years of real estate boom in Dubai.”

Punta Brava, the hardest-to-reach of Mr. Woods’s courses, is the one in the best financial position. It, too, started with grand plans of 8,000-square-foot mansions and a gigantic clubhouse.

But as the economy cratered, the developers found themselves battling local groups over the environmental impact study it had submitted. Even after they redid the study, they faced hurdles to getting the proper permits to build along the Pacific.

Mr. Tucker, the founder, said this delay, however frustrating, turned out to be a blessing. He was able to go back to prospective buyers who had toured the site and ask if they were still interested.

“We said, ‘Let’s talk about prices.’ Before, we were looking at the $3 million-$12 million ranges; now based on all of this we’re looking at $800,000 to $3.9 million,” he said. “We took advantage of a difficult, stressful, frustrating situation that allowed us to refine the land plan for Punta Brava and give not what the market wants but what our people want.”

The project has also benefited from financial backing from Mr. McCombs and Ruben Gonzalez Pena, a businessman in the Baja area, so it has not had to rely on bank financing. They have also appealed to a crowd of wealthy golf purists who have access to the private jets they will need to land at the local airport. (The club provides members helicopter transportation from the airport to their homes — that is, if they don’t have their own helicopter.)

AS for the Cliffs, it seems to be caught between success and failure. It seemed to be the safest choice — a string of seven golf communities with a proven record of success. But its ability to pay for the course, and its constant operation, was contingent on the ability to sell homes.

After the groundbreaking in November 2008, with Mr. Woods attending in specially designed Nike clothing, the Cliffs said that it had sold 40 lots at High Carolina, starting at $500,000. That number has not changed since then.

After struggling through 2009, the Cliffs realized that it needed financial help. It borrowed $64 million from a group of residents in April 2010, and, in January this year, a Dallas-based property developer made an investment to help restructure its debt. Mr. Anthony said that this helped reduce the debt burden by $50 million, and that he continues to work with other lenders.

“We make no bones about it: cash flow is still tough,” he said. “We feel fortunate that our property owners are supporting us.”

Don Tucker, a lawyer who serves on the advisory board for the group that lent the club $64 million, said his group had recommended that work be halted on the Tiger Woods course — and that other improvements at the Cliffs be postponed — so it could first finish the development’s seventh course, one designed by Gary Player.

But this has created a chicken-or-egg scenario: Mr. Woods’s course can’t be completed until more homes are sold, but buyers won’t commit until the course is finished.

“That’s the conundrum for every golf course designer,” Mr. Tucker said.

Mr. Anthony, who began his career as a telephone lineman, remains optimistic. He noted that Southwest Airlines is going to start flying into Asheville, which he hopes will help with sales.

In many ways, living on a Tiger Woods course was always based more on allure than financial calculation — the seductive combination of natural beauty, exclusivity and Mr. Woods’s platinum image. “I want to get to know them, and they should get to know me,” Mr. Woods said in the 2008 interview, of the people he would work with. “It’s not just going out there and designing golf courses. I consider it a partnership. We’re in this together through thick and thin.”

While Mr. Woods’s early forays into course design have stumbled — and have definitely come at great cost to the projects’ financial backers — no one is accusing him of doing his job poorly or failing to keep his commitments. Like his golf game, the business is simply stuck, beyond even his power to lift it up, bend it to his will and defy natural forces the way so many of his superhuman golf shots did when he sent them soaring.

Still, it seems likely that Mr. Woods will get the opportunity to build other courses in the future. At some point, his personal scandal will have faded, the real estate market may pick up and he could even start winning golf tournaments again.

Until then, Mr. Woods at least has the practice course in his backyard. That is more than his partners can say.  

Tiger Woods’s Golf Course Design Business Is in the Rough – NYTimes.com

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