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HomeMy WebLinkAbout1989-01-23 Nicklaus keeps building on reputation (Palm Beach Post)Am.* 536 BUSINESS LEADER. OF THE YEAR building on :reputation THE PALM BEACH. POST JANUARY 23, 1989 ,,$-g 0 VILLAGE OF NORTH PALM BEACH HISTORIAN Plum 13,H Po�r aJArv. 19oq Pi By KEVIN MILLER Palm Beach Post Staff Writer Every company watches the bottom line. Down is bad, up is good. That's the easy part. But for Golden Bear Interna- tional, there is a more ephemeral aspect to the balance sheet. Moni- tored every bit as closely as profit and loss are public opinions and perceptions about the company's single greatest asset — founder Jack Nicklaus — and his reputation for integrity. There are surveys and market studies. There are live -audience fo- cus groups, all geared toward un- derstanding what the public thinks about Nicklaus. So what if he's a great golfer -- is he a good guy, honest? And if he's honest, does that make you any more likely to buy a golf bag or a home from him? "Consistently through the years, the qualities of personal in- tegrity, believability, honesty, have always come through tremendous- ly high in our research," said Rich- ard Bellinger, chief operating offi- cer for the North Palm Beach - based company. Those intangibles have built Golden Bear International into a multimillion -dollar business exten- sion of the legendary golfer, who last week was honored as The Palm Beach Post's Business Lead- er of the Year. The award has been given annually since 1978 to those whose business success and com- mitment to community or charita- ble causes can serve as examples to others. 20 major golf titles A charmed golf career — 20 major championship titles in 27 years, including a record six Mas- ters victories — provided Nicklaus with fame and fortune, twin fuels with which to build his business. From his sixth -floor office at Golden Bear Plaza on U.S. 1, Nick- laus runs an international enter- prise that generates products and services worth $350 million to $400 million a year. The ventures range from golf course design to real estate development to managing the Jack Nicklaus and Golden Bea/ - trademarks on clothing and sport- ing goods. In addition, Nicklaus is a 20 percent owner of the MacGregor Golf Co., whose management re- ports to Golden Bear, and his best- selling Golf My Way video spawned Jack Nicklaus Produc- tions, a video company directed by former ABC sports producer Terry Jastrow. Golden Bear employs 72, about 40 of whom work in North Palm Beach. It has international offices in Monte Carlo, where its European operations are based, and is looking for office space in Hong Kong or Japan to take advantage of golf's enormous popularity in the Orient. At an awards ceremony in New York last year, Nicklaus was named Golfer of the Century by `Golf' magazine. VILLAGE OF NORTH PALM BEAU. HISTORIAN P �, a) co 0 ('3 co co co z a) a) co c a) 5 d (1) (f) (i) a) c co 7/5 -= 4-, a) .5 cr) ci) ▪ co V2 co o 4— 'OD 0 tin co ▪ E tin 4.- 7:3 a) c 0 cu AT A GLANCE President and CEO: Jack Nicklaus Chief Operating Officer: Richard Bellinger Headquarters: North Palm Beach Core Businesses: Jack Nicklaus Golf Services designs, builds and maintains golf courses; Jack Nicklaus Marketing Services product endorsements and other corporate relationships; Nicklaus/ Sierra Development Corp. develops luxury residential real estate around Nicklaus -designed golf courses; Jack Nicklaus Productions sports videos; -MacGregor Golf Co. golf clubs, equipment Employees: 72, including about 40 at Golden Bear Plaza Financial: Golden Bear, a Subchapter-S corporation, does not release financial data. Nicklaus' products and services produce about $350 million to $400 million in annual sales, Bellinger says, but only a portion of that translates into revenue (royalties, fees, etc.) for Golden Bear. VILLAGE OF NORTH PALM BEACH _, -IJSTORIAN PHOTOS COURTESY OF GOLDEN BEAR INTERNATIONAL Nicklaus and his wife, Barbara, have five children (clockwise from center): youngest son, Michael; Jack Jr.; Steve; Gary; and Nan. sao About 60 percent of its business is overseas. For Nicklaus, a Lost Tree Vil- lage resident who turned 49 Satur- day, the key has been concentrating on the areas he knows best. "The majority of my business activities go around golf course design," said Nicklaus, whose $1 million -plus design fees are two and three times those of his com- petitors. "That's because I happen to enjoy that — I enjoy painting that picture and I think the future of my business largely revolves in that area." It wasn't too long ago that Gold- en Bear's future was much less certain. Projects turned sour In the mid-1980s, the company found itself unable to meet com- mitments on two luxury residential projects — Bear Creek in Murieta, Calif., and St. Andrews in Hastings - on -Hudson, N.Y. Though Bellinger said commit- ments eventually were met in those two projects, the situation ap- peared to threaten the very thing on which Nicklaus had built his business — personal integrity. According to J. Robert Sierra, Nicklaus' current partner in real estate construction, Nicklaus made himself vulnerable in those situa- tions by being a minority partner with little control — something Sierra characterized as investing "to be polite." When things soured, Sierra said, investors turned to Nicklaus for answers, even though he hadn't created the situation in the first place. "We've gotten a lot better at saying no," Sierra said. In September 1985, Nicklaus took bold steps to get his company back on track. He parted — ami- ably, Bellinger says — with long- time business partner Charles Per- ry, who had led Golden Bear into a number of business relationships that had growth potential but little to do with the areas in which Nick- laus was most comfortable. Nicklaus says he and Perry simply "went in different direc- tions." "He wanted to expand, and I didn't," Nicklaus said. "I just want- ed to get back into the basics and I just wanted to get back into doing things that I knew more about — and if I was to expand something, expand the things that I really had control of." Nicklaus formed an executive committee to counsel him on tech- nical areas of the business. The committee was made up of Bel- linger, then the chief financial offi- cer; George Chane, a friend and retired manufacturing executive Nicklaus had hired to help manage the MacGregor Golf Co.; Tom Pe- tersen, a longtime associate with a background in banking; and David Sherman, an attorney for Nicklaus. "Jack knew he did not have the expertise himself — the business acumen from a technical stand- point — to run it on his own, so he needed to surround himself with people who knew his business and who he had confidence in," Bel- linger said. With Sherman's guidance, the company eventually worked itself out of dozens of business arrange- ments — e v tr y'thing from oil and gas inves9.11iti.ts to real estate spec- ulation — that had little to do with the company's new and narrower focus. "We had over 70 companies here that just had to be eliminated, liquidated, terminated, bought into, bought out of — whatever we had to do to get this on a more stream- lined, organized manner," Bel- linger said. For Nicklaus, the moves have paid off. "The difference between our balance sheet now and three years ago is night and day," he said. Still develops real estate Golden Bear still develops real estate, but with much tighter con- trol over the projects it undertak( Nicklaus/Sierra Development Cr managed by Sierra from his Tampa headquarters, develops secured communities around a Nicklaus - designed golf course and sticks to the sale of home sites. The homes, built by other companies, usually sell for upward of $500,000. The developments include sold - out Wynstone near Chicago and VILLAGE OF NORTH PALM BEACH HISTORIAN PAL.rY) 2#ic 11 R:14� JMnr, z3, )4184 The Nicklauses savor Jack's victory in the 1962 U.S. Open. CAREER HiGHLIGHTS Jack Nicklaus facts and figures, 1962 through 1988 Career Finishes: Official tour victories: 71; 2nd place or ties: 58; 3rd place or ties: 36 Career Tour Average: 70.78 strokes per round Career Official Tour Earnings: $5,005,826. Was top money winner eight times: 1976, 1975, 1973, 1972, 1971, 1967, 1965, 1964. Major Championship Titles: 20 Masters 6; PGA Champion- ship 5, United States Open 4; British Open 3; U.S. Amateur 2 International and Other Victories: British Open 3; Australian pen 6; World Series of Golf 5; Ryder Cup, 5 wins and one tie Holes in One: 12 The Loxahatchee Club's golf course was designed by Nicklaus, one of his five in Palm Beach County. P5 53b design division is top dollar producer Country Club of the South in Atlan- ta, which broke ground in 1985 and has sold half of its 670 home sites. A development in the Weston com- munity near Fort Lauderdale should open sometime next year. Sierra said he and Nicklaus now do conservative sales projections that : look at longer -than -normal time frames and build in contingen- cy dollars for problems that may arise. "We b. lug in investors who un- derstand that and ' are willing to ride out the storms," Sierra said. Nicklaus says he is content to leave "nuts and bolts" technical management of real estate and other activities to his management team but Bellinger said there is no mistaking who's the boss at Golden Bear International. ""Jack calls all the shots," said Bellinger, who talks to Nicklaus every day, even when Nicklaus is touring. "We make recommenda- tions and sometimes he . accepts them and sometimes he doesn't, but ultimately he makes every impor- tant decision in this business." Tim Hislop, the Golden Bear vice president who Jack Nicklaus Marketing Services, said Nicklaus is emphatic about the type of companies he will be associ- ated wit h. "He wouldn't represent a prod- uct he wouldn't use or couldn't see himself using in some way," Hislop said. "The quality is key — we've got to represent quality companies and quality products." •� . •. S^O,�•< '� 6. J .'4' .F -� JZ%Jl'vy'Y%+.`•Y'.�`J o-. '' T, ° fic,>S � o '• �.. "a: .fi °�.:�: s,�ar. °;..�:-r...w - ¢- .. Ky �Z' �.ce: �"r. i:� oit4:c•gS'�t.'Cc=:z�"-.-�'�!ccx ay.�''v'.c'.Y'.S',R�9.n�?„3s:➢.Y�i�'.Y�•.:i'$.o�CS?o..s•�'a°"i�'?.���<°� �.,.. .C�"F,"� ' •o.y, lam' � vY.��'4�"CQi •C O J PHOTO COURTESY OF GOLDEN BEAR INTERNATIONAL Although his prize money from tour events has dwindled, the Golden Bear still feels the competitive desire that made him a champion athlete, associates say. JANUARY 23, 1989 BUSINESS LEADER OF THE YEAR VILLAGE OF NORTH PALM BEACH HISTORIAN PALA" 6eH Psr Jxtt. z3 ) q 91' Pb Long-term endorsements In addition to product relation- ships, such as clothing made by HartMarx, Nicklaus does corpo- rate endorsements for Lincoln- Mercury, Unisys, Uniden, RJR Na- bisco, Manville -Owens and Great Golf Resorts of the World. An important factor in choosing the deals is the time span of the agreement. "Jack doesn't do one-shot Hislop said, adding that the average relationship last 10 years. "We're interested in long-term re- lationships." Nicklaus' managers are also clear as to what belongs to Nick- laus and what belongs to Golden Bear: "Our mentality here is that it's all Jack's — it all goes .into his pocket, regardless of what division is producing the revenue," Bel- linger said. Golden Bear is a Subchapter-S corporation, which provides tax benefits for small private compa- nies that are generally closely held within families. Golden Bear doesn't disclose its financial data and Bellinger and Nicklaus deny reports that have pegged revenues at $98 million. "But it's obviously in the tens of millions," Bellinger said. "I have no complaints," Nick- laus said. "I certainly do very well, but our business is certainly no- where near the magnitude people say it is." Only a portion of the $400 mil- lion or so in annual sales of Nick- laus -related products and services actually translates into Golden Bear revenue, Bellinger said; that usually comes in the form of fees and royalties paid by the compa- nies that use the Nicklaus or Gold- en Bear name. Bellinger says the biggest dol- lar producer is neither marketing nor real estate, but rather the de- sign of golf courses. There are 58 Nicklaus -designed courses open, 16 under construction and 34 under contract. They are found in 18 countries and 26 states and are opening at the rate of 10 a year. Nicklaus has done five courses in Palm Beach County, and recent- ly signed to redesign the Champion- ship course at PGA National. Though Nicklaus has more than $ 5 million in official career tour earnings and was the PGA's top annual money winner eight times, that money has never been a major factor for Golden Bear Internation- al. Nicklaus' reduced playing schedule and a back injury last year have made the winnings negli- ble - just $28,845 from nine tour events in 1988. "Hell, I haven't made a living from golf in 15 years," Nicklaus said. The big money might not be there anymore, but Nicklaus' com- petitive desire still burns strong, associates say. "He wants to play but he wants to play well — that's the thing," said Larry O'Brien, Nicklaus' long- time spokesman and friend. "He doesn't want to be in the position where the back injury makes him a 76 or a 77 — he wants to be in contention." Bellinger said that Nicklaus "understands that if he were to retire from golf tomorrow, he could double the size of the business the day after." "But Jack is also a competitor — a man who is the greatest golfer in the world," Bellinger said. "Those competitive fires, you just don't turn them out." Golfer of the Century Last year Golf magazine named Nicklaus "Golfer of the Century," based on polls of golf writers and professionals. Perhaps his most spectacular achievement came in 1986, when he won the prestigious Masters championship for a record sixth time. That win also aided Nicklaus' business activities. Nicklaus won the tournament using an unusual,. large putter he helped design for MacGregor. Until that time, MacGregor didn't have much of a reputation as a putter company, selling only about 5,000 in 1985. After Nicklaus won the Mas- ters, Bellinger said, annual sales zoomed to 145,000 units of . Nick- laus' large -response putter, and 20,000 to 30,000 for the rest of MacGregor's putter line. The Masters win also attracted interest in Golden Bear activities, Bellinger said, and that created other business opportunities. Nicklaus makes it clear that his business, as well as his golf career, exist to lay the groundwork for his family's future. He and his wife, the former Barbara Bash, have four sons any; ane daughter, To that end, both he and his managers frequently use phrases such as "minimize risk" and "limit our exposure." As part of the 1985 restructuring, for instance, the company began lowering its debt and took a tough attitude toward acquiring any more. "Jack's made it no secret that .. , he would like to see this busi- ness go on for many, many years beyond his lifetime for his family's benefit, and we're working dili- gently to foster it in that direction," Bellinger said. e /15 ae Sons Jack Jr., Steve anti Gary are becoming involved in various aspects of the business, and Jack Jr. now has his own golf course design contracts in England, Spain and Ohio. Daughter Nan is an inte- rior designer in Atlanta, and the youngest son, Michael, is a ninth - grader at the Benjamin School in Palm Beach Gardens. Nicklaus points to golf course design as one area that has a strong future for his family. "It's an area we can develop for my kids as they come along — so to use their own expression, they don't have to step in Dad's footsteps," Nicklaus said. "Frankly, I get a big kick out of doing something that's going to be here long beyond my golf game and my lifetime. I do get a kick out of that; it's a legacy that I leave." Nicklaus' concern for his family also shows in the type of activities he is involved with outside the business. Nicklaus and his wife are supporters of the Benjamin School, which all five Nicklaus children have attended. Barbara Nicklaus is on the private school's board of directors and Jack is president of the Benjamin School Foundation. Rod Kehl, the school's head- master, said, "There's no doubt in my mind that Jack and Barbara have been our biggest supporters." In addition to contributions to- ward things such as the school's gymnasium and playing fields, the couple is very generous with their time, Kehl said. "Jack does a very successful golf tournament for us in the fall," Kehl said. "We do close to $50,000 in that tournament and it's always sold out immediately." In addition, Barbara Nicklaus opens their home each year for a kickoff fund-raiser that Kehl said is the school's best -attended event of the year. Nicklaus said their supportis just a way to show their gratitude - as parents. "Our kids have all gone there, and I'm thankful for the education they got, and I like to help them with other kids," Nicklaus said. "They provide a lot of scholarships for kids in there, and they provide the opportunity for people of not necessarily my financial means to go in there and give their kids a good education." VILLAGE OF NORTH PALM BEACH HIST0RlAN Pi)" £3E1CH Post J,9rv. i9ftg P 7 Charities -benefit In addition to school activities, Nicklaus is national chairman of the Junior Golf Foundation and has established an endowment fund and scholarship programs to aid young golfers. He also conducts golf tournaments to aid causes such as a childrens' hospital in his native Columbus, Ohio. Nicklaus is honorary chairman of the Palm Beach County Chapter of the March of Dimes. He has served as a spokesman or contributor for the American Cancer Society, the Leukemia Soci- ety of America, the Multiple Scle- rosis Society, the National Associa- tion for Disabled Athletes, No Greater Love (for children of killed or missing servicemen), the Special Olympics, the Boy Scouts of Ameri- ca, the U.S. Olympic ski team and the Easter Seal Society. He also has worked with a number of conserva- tion and environmental protection agencies. "I don't have any real crusades or causes — the things that interest us are the things that have passed through our lives, that we feel are important," Nicklaus said. One thing he's trying to do, Nicklaus said, is demonstrate that Florida and Palm Beach County are good places to live and do business. Bellinger admits that the na- ture of Golden Bear's activities would make it more logical to be near the major markets of New York, Chicago or Los Angeles, but says Nicklaus' commitment to South Florida is strong. "I just think South Florida through the years has been an area that has breeded mediocrity," Nicklaus said. "Because of our way of living and the retired people down here, it's not been a place for a young guy to come to earn a living. "I've tried to get involved where I feel more and more people can come down here to earn a living . . . not coming to Florida just to live the life that's here," he said, "but to work and try to build something." • VILLAGE OF NORTH PALM BEACH HISTORIAN PAavi fO.AW (4)s-r 1A4u. 2,3 , )91q pg)