Trump's Economics of Golf
June 12, 2017, 04:03 PM
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From the Wall Street Journal:

He Brought the U.S. Open to a Cow Pasture. All It Cost Was His Fortune.

Bob Lang says he spent $26 million to build Erin Hills, but has little left By Brian Costa

DELAFIELD, Wisc.—Fifteen miles south of Erin Hills, where the U.S. Open begins on Thursday, Bob Lang sits in an office surrounded by mementos from the golf course he built. There are early design drawings, the original clubhouse cornerstone, a framed photo on one wall and, on a recent morning, two enlarged landscape photos spread across the wooden floor.

They are remnants of one the most improbable tales in golf history: How a little-known Wisconsin businessman with only a passing interest in the sport turned a rural cow pasture into the site of America’s national championship.

Not commemorated here is where his pursuit of the U.S. Open has left him: without the golf course, without millions of dollars he poured into it and, at age 72, on a self-described quest for financial solvency.

“I don’t have any money anymore,” he said.

After buying the bulk of the land in 2001, Lang built and operated Erin Hills with a manic zeal that blinded him to the magnitude of his costs, which had two effects. It brought the U.S. Open to Wisconsin for the first time ever. And it put him so deep in debt that he ended up selling his calendar publishing company, his commercial real estate holdings and finally Erin Hills itself in 2009. …

Lang invested $26 million in his course and sold it for $10 million, leaving him broke at age 72. The buyer, Andy Ziegler, generously keeps him on salary as a consultant so he can enjoy a dignified old age.

After buying a two-year option to purchase the property, he attended the 2000 U.S. Open at Pebble Beach and had an audacious thought: Take this course away from the Pacific Ocean and Erin Hills, with its glacial dunes and rolling fields, is a better site for golf. It was the seed for the idea that would consume him.

Okay, but Pebble has ten holes on the rocky Pacific coastline, while Erin Hills is an inland course that happens to have Scottish-style sand dunes left over from the glaciers. Elite tastes in golf course architecture today favor raw-looking Scottish-style linksland courses, but the general golfing public isn’t as convinced that the old tree-lined American courses were so bad.

For example, in 2014 the USGA put on a bizarre U.S. Open at Pinehurst by tearing out sprinklers so that half of the fairways were brown rather than green. As the voice of unrefined common sense, Donald Trump, who has been pursuing a U.S. Open for his best course at Bedminster, NJ, alienated the USGA by tweeting the average golfer’s reaction: green is better than brown for golf courses, so what in the world was the USGA thinking?

Strikingly, a friend of mine, the founder of the market research company in Chicago where I worked for about 15 years, like Lang also built a golf course in exurban Milwaukee’s Kettle Moraine geological area of interesting Ice Age topography. He got started in the mid-1990s, almost a decade before Lang did. And he built houses around the periphery of his course, so he made most of his money off real estate sales, unlike Lang, who bought an entire square mile of land so that he could tear down pre-existing houses on the fringe of his course to improve the isolation of his precious.

And my old boss had his course designed in a less radically Scottish look than Erin Hills, so that his course looks like a cross between a traditional tree-lined American country club course and a treeless billowing Scottish links. Erin Hills is the greater course, but it reflects the elite tastes of 21st Century golf design, which can be offputting to American golfers.

My boss’s course was the first new real estate development course in the greater Milwaukee area to open since the 1970s, so he tapped into some unmet demand, e.g., selling a house on the course to a star Green Bay Packer (not Brett Favre, but a name you’d remember). He opened the course around 1996 when there were still several years to go during the 1990s golf boom, whereas Erin Hills didn’t open until after the collapse of golf as a business around 9/11 caused by Baby Boomers aging out of their Golf Years (golf appeals most to men in their thirties, I would say, not to older men as many assume) and by the oversupply of quality golf courses built in the 1990s by golf-loving businessmen like Lang, my old boss, and Trump.

Nonetheless, my old boss’s road to breakeven was longer than he’d hoped. Like Lang, he sold his course in the recession year of 2009. I presume he did much better than Lang did because his course was a more sensible compromise between greatness and economic prudence.

Nonetheless, this kind of history suggests that Donald Trump isn’t as broke as Hillary repeatedly implied: Trump aggressively bought expensive golf courses in the teeth of the golf recession and has held onto his purchases.

To some extent, this is because Trump smartly targeted places with lots of the One Percent, such as Greater New York, Palm Beach in Florida, Washington DC, Los Angeles, and Dubai, while avoiding Rust Belt states like Wisconsin.

Trump hasn’t gotten a men’s U.S. Open, but he will host the ladies’ U.S. Open at Bedminster in July and in 2022 will get his first men’s major championship, the PGA, at Bedminister.

A big question is whether the Royal & Ancient golf club will choose Trump Turnberry in Scotland to host a future men’s British Open. With the improvements the Trump Organization has paid for over the last couple of years, Turnberry is now by far the most spectacular, indeed Pebble Beach-like, of the limited number of traditional British Open courses. But will the R&A boycott Turnberry because it bears Trump’s name?

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