Disney World to turn golf courses over to Arnold Palmer group

August 24, 2011|By Jason Garcia, Orlando Sentinel

After four decades, Walt Disney World is getting out of the golf business.

The giant resort said Wednesday it has struck a 20-year-deal to turn over its five golf courses to a group headlined by legendary golfer Arnold Palmer. The move pairs Disney World's courses with one of golf's best-recognized brand names while also allowing the resort to step back from a business that has become less attractive amid competition from a glut of new courses built during the housing bubble.

Under the deal, Arnold Palmer Golf Management will take over day-to-day operations of each of Disney World's golf courses: Palm, Magnolia, Lake Buena Vista, Osprey Ridge and Oak Trail. Financial terms weren't disclosed, though the Texas-based Palmer group will make annual lease payments to Disney and split revenue earned from the courses with the resort.

Roughly 330 Disney employees will be affected by the change. Disney said nearly all of the workers will be offered other jobs, at comparable pay, elsewhere in the resort. It expects others will be hired by Arnold Palmer Golf Management.

For Disney, a key attraction is the involvement of Palmer, considered one of the greatest players in the history of professional golf. The resort is banking on the association with Palmer to help set its courses apart in a crowded marketplace and lure more golfers who may have ignored Disney World in the past.

"This deal would not have gotten done if it had not been for Mr. Palmer's engagement and his desire to associate his brand with the Disney brand," said Ken Potrock, senior vice president of Disney Sports Enterprises.

As part of the deal, Palmer will personally oversee a redesign of Disney's Palm course. The renovation isn't likely to be complete until at least 2013.

Representatives for Palmer, who lives in Bay Hill not far from Disney World, said he was unavailable for comment Wednesday. But in a prepared statement issued by Disney, the retired golfer said: "After 40 years as a golf course architect, I'm looking forward to this opportunity to contribute to Disney's rich and storied golf legacy. I've enjoyed a lifetime of memories playing golf and it will be a great reward to pass that on to those who share a passion both for Disney and the game of golf."

But the deal is also designed to get Disney itself out of the golf business, which has become much more challenging in recent years, particularly in Orlando and the rest of Florida. A glut of new courses — many built as part of residential subdivisions that sprouted during the housing boom — has forced operators to slash green fees to lure golfers, eroding profitability.

"There's too many courses and not enough players," said Tom Stine, co-founder of Golf Datatech, a golf-industry research company based in Kissimmee. "It's made the Orlando market very, very competitive from an operator standpoint."

Golf courses are also expensive to run. Stine said annual operating and maintenance costs for a single course can exceed $1 million — and Disney, which has a critically important image to protect, likely spends more than most. "You don't ever see a blade of grass uncut anywhere on the Disney World property," Stine said.

Disney began scaling back its golf operations several years ago when it opted to close a sixth course, Eagle Pines, and use the land for a new subdivision of multimillion-dollar homes. That project, dubbed "Golden Oak," is currently under construction.

Disney also has a deal in place to sell its Osprey Ridge course to Toronto-based Four Seasons Hotels and Resorts, which plans to build one of its luxury hotels at Disney World. That project has been delayed until at least 2014, and Arnold Palmer Golf Management will operate the course until the Four Seasons is built.

The Arnold Palmer group will take over Disney's courses beginning Sept. 25.

Disney said turning to an outside company is as much about drawing traffic as it is about cutting costs.

In addition to being able to market Palmer's involvement, Disney also hopes to tap into a membership organization run by the company dubbed "Palmer Advantage." Members pay $120 a year for access and benefits at an assortment of courses and clubs across the country.

Century Golf Partners, the Addison, Texas, firm that owns Arnold Palmer Golf Management, said Palmer Advantage currently has between 5,000 and 6,000 members. But that number swells to nearly 130,000 if members of the individual clubs within the network are included.

It's a pool of golf enthusiasts that Disney has had difficulty dipping into on its own.

"This allows us to reach people that we haven't been able to reach previously that haven't considered Disney golf as a destination for them," Potrock said. "These are guys that are going to spend not just golf time here, but, because they are going to bring their families, they're going to spend resort time, too."

Orlando Sentinel Articles