Masters champion Billy Casper famously said: "Golf puts a man's character on the anvil and his richest qualities—patience, poise, restraint—to the flame."
This might also be said of Augusta National Golf Club's slow and measured acquisition of property just outside its storied green gates.
For the past 15 years, Augusta National has been buying property—house by house, lot by lot—in the neighborhoods directly to the north, east and west of the 365-acre club. According to Golf Digest's analysis of sales records from 1999 through early 2014, limited-liability companies associated with the club have paid roughly $55 million and acquired about 100 acres.
True to form, Augusta National has been discreet about its acquisitions and tight-lipped about its master plan. It does say, however, that the club's legacy is to make improvements every year.
"If this were any other golf club, clearly this would be an expansion," says Jeff Woolson, managing director of the golf and resort division for CBRE, a global real-estate firm. Under the typical business model, he says, the development plan might include luxury lodging, high-priced homes and other revenue-generating amenities.
Of course, Augusta National is anything but typical. "This is the most profitable and the most liquid club on the planet," says Peter Nanula, chairman of Concert Golf Partners, a private equity firm that buys and operates golf properties. The Masters Tournament, which the club has hosted since 1934, is said to bring in hundreds of millions of annual revenue from television, ticket sales and licensed goods.
"They have a lot of revenue coming in for a club with very deep-pocketed members," Nanula says. "They don't need a dime of anybody's money, and they aren't trying to create wealth and divvy it up."
With money as no object, then, what does Augusta National have planned?
Golf Digest posed this question to locals and golf-industry experts, and heard a similar refrain: "It wouldn't shock me that they're buying property simply to create a buffer," says John Evans, a senior appraisal specialist at GE Capital Real Estate.
Yet, recent expansions and improvements suggest there might be more to Augusta National's plan than adding parking and fortifying the club's boundary. "What makes the National the National is the mystique," says one Augusta real-estate agent who asked to not be named. "They want to circle their wagons so those on the outside are truly on the outside. They don't like the riffraff. Pretty soon it's going to be members, their guests and corporate sponsors, with all their housing and food needs taken care of inside those gates."
Augusta National's improvements over the past several years give some credence to this theory of a self-contained campus. Though the land acquisitions began under former chairman Hootie Johnson, the plan has begun to take shape in the past several years under current chairman Billy Payne.
In 2010, the club opened a world-class practice area on what had been a gravel parking lot. Patrons were directed to a pastoral parking area on a huge swath of land the club had acquired in the Berckmans neighborhood to its west. (Relocating the media center, now bordered by the first hole and the lucrative merchandise area, also would open up valuable real estate.)
William Hatcher was one of the holdouts in the
Berckmans Road parking lot before selling his
home in 2013.
Photo: J.D. Cuban
Although Masters parking in the Berckmans lot is free, the land cost the club more than $40 million and drove up the value of the houses—most of them modest and built in the 1950s—to many times their market value. Augusta National, or its representatives, began talking with homeowners in the late 1990s. Locals say Augusta National did everything above board, never pressuring owners to sell. Early in the process, says one source, the club agreed to let owners stay in the property rent-free—in some cases until death. By some accounts the club also offered Masters badges in exchange for sellers' discretion.
In time, the houses came down, leaving room to hold 8,500 vehicles. "They have bought the bulk, if not all of those homes," says Lili Youngblood, past president of the Greater Augusta Association of Realtors. "It's just green space."
Though there was some grumbling from homeowners over the years, most were happy to sell. Understandably. The median sale price in Augusta was recently less than $100,000, with nicer homes near Augusta National selling for a median of about $180,000. Houses located on or near what is now Augusta National's main parking lot sold for a median of $1 million. In early 2013, for example, a 1,200-square-foot home with three bedrooms and one bathroom sold for $1.2 million. Around the same time William Hatcher—a homeowner who in 2010 told Golf Digest he wasn't interested in selling despite being one of the few houses still standing in his old neighborhood—sold his three-bedroom house for $960,000; he paid $25,500 for the house in 1973, according to property records.
THE $8.3 MILLION LOT
The club also has been buying up property along Washington Road, the commercial thoroughfare that abuts the club, as well as in the Vineland neighborhood to the east. In early February, the club paid $8.3 million for a 9.8-acre apartment complex just off Washington Road. This acquisition fueled speculation, but Augusta National says the area will be used for parking for tournament support personnel beginning this year. Various LLCs connected to the club have bought commercial property along this busy strip, in some cases relocating businesses to other parts of town.
Displaced business owners haven't made a big fuss. In theory, relocating to another part of town could hurt sales. But with more services available on the grounds, it's already hard to compete.
Despite Augusta National's efforts to keep the sales under wraps, speculators have trickled in over the years. In most cases, the club was already one step ahead of them, Youngblood says. The community, for its part, hasn't put up much of a fight. "Most people who live here love the National. It does nothing but benefit the community," she says. "We don't like the traffic for one week out of the year, but we know to stay away."
Ah, traffic. Those who followed Augusta National's assembly of land marveled at the trouble and cost for a parking lot. In late 2013, it became clear that there's more to it. Now the club is eager to improve the traffic flow in and out of the area. Late last year, Augusta National said it would give the city of Augusta an interest-free loan to expedite the widening and realignment of Berckmans Road, which runs north and south, along the club's original property line. Augusta National will prefund the $20 million project, which will ultimately be paid for by a 1 percent regional sales tax, says Steven Cassell, a traffic engineer for the city of Augusta. Under the new plan, which is scheduled to be completed by the 2016 Masters, the intersection of Berckmans and Washington will be moved about a third of a mile west. It will also improve the grade of Berckmans Road near Augusta National, which could allow for pedestrian underpasses between parking and the club.
Many observers wonder if there will be more to this plan, namely housing for players, members and VIPs to augment the limited housing. As an alternative, visitors rent private homes, stay in nearby communities or pay a steep premium for local hotels.
Housing seems like a natural progression, say industry observers, even if it's used but one week a year. If the success of the new hospitality facility is any indication, it pencils out. Last year's Masters marked the debut of Berckmans Place, a 90,000-square-foot luxury hospitality area near the fifth hole The facility is open to select badge holders, who have access to a private entrance, four restaurants and replicas of three putting greens.
What will Augusta National look like from the inside 10 years from now? As one local observer says, "We probably won't get to see."
WHERE AUGUSTA NATIONAL IS SPENDING MILLIONS TO EXPAND ITS FOOTPRINT
Changes at Augusta National:
1. PARKING More than $40 million was spent to purchase homes to expand a parking lot. Berckmans Road will be re-routed west of the lot. Sections of the existing road will be improved, which could allow for pedestrian underpasses.
2. HOSPITALITY An area near the fifth hole was turned into luxury hospitality, including replicas of the greens at holes 7, 14 and 16.
3. PRACTICE The old gravel parking lot is now a practice facility.
4-5. THE FUTURE Land north of busy Washington Road and east of the club has been purchased, perhaps with an eye toward accommodating "on-campus" tournament housing.
Sarah Max is a financial writer who is a regular contributor to Barron's, Entrepreneur and The New York Times.