What ClubCorp's IPO Says About The Golf Industry

Brendan Mohler analyzes ClubCorp's decision to go public to raise $300 million to reduce debts and the rough going to date despite the company having a model that might help keep the country club sustainable.

While the details of ClubCorp's debt are somewhat vague (though a portion probably results from the overall stagnancy of the golf industry), one thing is for sure: ClubCorp needed to raise at least $160 million in net proceeds in order to pay a bond redemption. The initial price range for a share of ClubCorp ($16-$18) did not spark the demand expected, so the company was forced to sell more shares at a lower price ($14) in order to acquire the capital needed.
 
ClubCorp has a lot of assets, but the company has not shown significant profit growth, and thus its stock is not an enticing buy. According to Francis Gaskins, Director of Research for Equities.com, ClubCorp's top-line revenue has only grown four to five percent in the last few years, which is more of an indicator of increased prices rather than the type of growth that excites investors.