Not long after buying the NFL’s Carolina Panthers in 2018, billionaire David Tepper made another purchase in the Charlotte, North Carolina, area when he bought an 18-hole golf course.
The reason Tepper bought Waterford Golf Club for $2.3 million at the beginning of 2020 was to strengthen ties between the Panthers and the community of Rock Hill, South Carolina, where the course is located, according to the National Golf Foundation.
After all, Tepper had big plans for Rock Hill. In July 2020, construction started on an $800 million headquarters and practice facility for the Panthers football team on a 243-acre site in Rock Hill about 4 miles away from the golf course.
But in April this year, almost two years after the groundbreaking, Tepper pulled the plug on the Panthers’ construction project, saying Rock Hill failed to meet its financial obligations for the development. Then, on June 1, an affiliate of the Panthers called GT Real Estate Holdings that was created to manage the development of the site filed for Chapter 11 bankruptcy protection.
One of the first actions taken in bankruptcy proceedings was to put the Waterford golf course to use, at least financially. GT Real Estate named Waterford Golf Club as collateral for $7.2 million in loans to help the company continue to operate during the bankruptcy.
GT Real Estate obtained the loans from another entity controlled by Tepper named DT Sports Holding. Some creditors complained that the source of the loans made it an insider arrangement and all the different corporate entities were intended only to protect Tepper and his businesses.
Tepper, whom Forbes ranks as the eighth-richest owner of a sports team in the world, made his fortune at hedge fund Appaloosa Management, where he was known for his expertise in distressed debt.
Ryan Anderson, a spokesman for GT Real Estate, declined to comment.
Proposed Settlement
In its bankruptcy filings, GT Real Estate said it has 100% ownership of Waterford Golf Club, which it valued at about $2.8 million. GT Real Estate is proposing a settlement plan that includes it paying up to $80.5 million to end the bankruptcy case. A hearing on the proposal is scheduled for Sept. 20. Through the proposed bankruptcy plan, the golf course's ownership would be transferred to DT Sports Holding.
Waterford, which opened in 1997, was designed by Hale Irwin, one of the most successful golfers in history. Irwin won three U.S. Open titles during his career and overall won a total of 83 tournaments.
Irwin’s involvement, along with the continued demand for golf courses by investors, housing developers and golf course management companies, made it a smart move by Tepper to use the golf course as an asset in bankruptcy, said Frank Jermusek, managing director of SVN Northco Real Estate Services in Minneapolis, who is not involved with the bankruptcy case.
Waterford’s location in Rock Hill could also add leverage for Tepper. While Rock Hill appears to have lost the Panthers’ multimillion-dollar headquarters, Tepper might be able to use the city’s location in the fast-growing Charlotte metropolitan area to his advantage.
“Golf courses in urban areas are hard to come by,” Jermusek said.
GT Real Estate has not indicated in court filings whether it plans to redevelop the course into housing or something other than a golf course. At the time of the Panthers' purchase of the course, Mark Hart, chief operating officer of Tepper Sports and Entertainment, only said the course would be used to build a link between Rock Hill and the team. Hart did suggest the Panthers might upgrade the course or add a branding aspect related to the NFL team.
"Anything that we do, we’re going to try to improve it over its current state," Hart told the Rock Hill Herald in 2020.
"It’s already a great asset," Hart said. "It’s a great course. It’s a great layout. But perhaps if we can do something in conjunction with the development on the [new headquarters] site and make it something that’s got a Panthers brand or something that’s even better for the community, I think that’s something we’re going to look forward to trying."
'Significant Value'
It’s not unusual for a golf course to be used as collateral in a loan, whether it involves bankruptcy or not, Jermusek said. A golf course is an asset that provides value in a number of ways.
“If it has additional land around the course, that could be used for housing development,” said Jermusek, who has represented buyers and sellers of golf courses. “Then there’s the golf business itself,” he said. “And you can also host events there. It all has significant value.”
Sometimes developers see other potential in the site, said Allen DePuy, a vice president with Colliers International's golf and leisure properties group.
"In many cases the value of the dirt has more value than the operating business it sits upon," DePuy said.
The market for trading golf courses is very active, according to Golf Datatech, an industry data provider. The number of rounds played nationally in June rose 2.7% compared to the same month last year. That’s partly because the game gained popularity during the pandemic.
“People wanted to be outdoors and be in nature,” Jermusek said.
So far in 2022, the number of rounds played is 5.7% below 2021, largely because of bad weather, Golf Datatech said. But more people are discovering the game. The number of golf newcomers rose from 3 million in 2020 to 3.2 million in 2021, according to the National Golf Foundation.
The rise in popularity has helped the market for golf course sales. At least 140 U.S. golf courses were sold over the past 12 months, according to CoStar research. That’s up from about 100 courses sold in the same period a year earlier.
The transactions spanned a wide range of sale prices.
The city of Boca Raton, Florida, in November sold its municipal golf course at 20530 Golf Course Road for $65.8 million. The buyer, GL Homes, is building the Lotus Palm luxury housing development on the site.
On the other end of the spectrum, golf course management company Acumen Golf in April sold Hanover Golf Club in Ashland, Virginia, for $1.4 million to a group led by local investor Dale Foley. Hanover opened in 1953.
Chris Charnas, founder of golf course brokerage Links Capital Advisors, told CoStar News in May that 2022 is shaping up to be a strong year for golf course sales.
“There are a lot of investors who are members of clubs and they can see how good things are,” Charnas said. “They used to be able to play whenever they wanted, and now they can barely get a tee time.”