[gentle music] - Hello, I'm Nido Qubein.

Welcome to Side By Side.

My guest today has built an entrepreneurial empire in the business of recreation and leisure.

We're talking about the game of golf and the beauty of giving back with Mr. John McConnell.

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You make it feel like home.

Ashley HomeStore.

This is home.

- [Narrator] The Budd Group is a company of everyday leaders making a difference by providing facility solutions through customized janitorial landscape an d maintenance services.

- [Narrator] Coca-Cola Co nsolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teams.

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[upbeat rock music] [cheerful music] - John, I'm dying to ask you this question.

You know, most people begin their success in life because they've done something great.

They're being acknowledged for it, but not you, you were fired.

And that was the beginning of your success story.

- That's correct.

I was not fired because I was not talented in my field of sales.

I was fired because I really didn't believe in the strategic vision our company was headed into.

And I made a point of telling management that very explicitly and they decided I was no longer needed, that my viewpoint was not valued.

So from that point in time, I made a personal decision that I would never put the future of my career in the hands of anyone else other than myself.

- Hmm, so they told you, "Thank you very much, John.

Now you can go home.

Don't come back tomorrow."

And you went home and you decided to do what?

- To start my own company because I realized that the market that we had been working in, which was physician automation systems, had a future.

And that I knew some talented people that I'd worked with in the past, called them up and said, "Hey, I wanna form this company.

Why don't you come to work with us and become a shareholder?"

and they did.

- And you founded two software companies?

- Correct, we founded one and we actually acquired a second small company later in my career.

- And what did these companies do?

- Our first company focused on selling back office systems, administrative systems to physicians.

And we actually ended up becoming the largest company in the nation doing that.

And then our second company, we focused on selling electronic medical records to physicians and hospitals.

And that was an area that I had been very keenly interested in for many years but the timing was never appropriate for doctors to eliminate their medical charts or their paper charts.

You know, they just hadn't gotten to that point of that concept being adaptable.

And then the second company, timing was perfect for that.

- Mm hmm.

You went from software to golf, beginning in 2003 buying golf courses.

I think it was Raleigh Country Club was the first one?

How does one go from software to owning golf courses?

- It's not planned.

The thing that, I've always been enamored with golf.

I started playing when I was about 13 or 14 years old.

And the thing I liked about the sport was you had no one else to blame.

You know, it's you hit the ball, you get the result of your, of your talent and there's no one else to blame.

So I really enjoy that as a independent type person.

And then Raleigh Country Club, I was actually the CEO of a company, A4L Systems, and the local story was this membership had borrowed $6 million and they did not have the ability to pay it back.

And I'd played this course, I was not a member, but I'd played the course.

It was Donald Ross' last design.

And I truly thought it was one of the best golf courses I'd ever played.

And long story short, there was a development group, a developer group that purchased the note from the bank waiting on the club to default.

And therefore they would end up with the property of which they had no interest in golf.

- Mm hmm.

But, so I came in and bought the golf course with the membership's blessing and three or four years later, I sold a software company and started focusing on golf acquisitions.

- And now you have 14 that you own and you have two more under management, is that right?

- That's correct.

- And they're all in the Southeast?

- Correct.

- How does one manage a golf course?

I'm not sure I understand what is it you exactly do?

- You start with a lot of capital and- - Capital to own the brick and mortar and the - - To make the investment to, most of the courses that I've acquired were in, I would call it not great financial situations.

And as you have to appreciate the industry in general has been in a decline for many years.

- Why is that, John?

- There was an over supply of golf courses versus on the number of players - - I see.

- to support those courses.

- I mean, there are places like Myrtle Beach, South Carolina that has, what 100 golf courses?

- I think at one time they were up to approximately 130.

They were down in the maybe mid-eighties.

- I see.

- But a lot of those courses have been turned into condos and other real estate projects.

- Mm hmm.

- So the land is very valuable, - Mm hmm.

- But so our courses tended to have needed capital investment and I call it more of a strategic vision of what this place can be.

- Mm hmm.

- And our concept was we will have properties in a geographical, geographic footprint of which one member is a member at all.

So if you join one course, - I see.

- then you have access and have privileges at all of our properties within our network.

- Is that true today?

- Yes.

So that's one of our competitive advantages.

The other competitive advantage we offer versus a member-owned club is that we have no assessments.

So any capital improvements we make such as Raleigh Country Club last year, about $6 million in renovation, the members paid no additional money for that improvement.

- I see.

- Mm hmm.

And likewise, the members don't own any stock in the country club.

- They own none of the club.

- Yeah.

- They gave that up, their equity or their ownership, or whatever, whenever we purchased, these properties - When you bought it.

- And John, you say, you say, it's a question of supply and demand, but is it more than that?

Is it management?

Is it vision?

Is it leadership that causes clubs to succeed or not to succeed?

I mean, some do exceptionally well.

Yes?

- Some, 5% Of the clubs in this nation do extremely well.

The other 95% - Five percent?

- Five percent I would consider are solid financial footing every year.

Don't have to worry about their future.

- So Pebble Beach would fit into that category?

- Certainly Pebble Beach.

- Yes okay.

- Carolina Country Club in Raleigh is a, another example, big waiting list, big initiation fee to join.

- Mm hmm.

- But those are far and few between.

- Mm hmm.

What is, what is the secret for those that succeed?

And that are, are on a very good footing.

- They probably have a good leadership and they're in, I call it perfect environments, high net worth individuals surrounding these clubs, old established neighborhoods.

Those tend to be the ones that can survive the economic downturns that this industry - Mm hmm.

- has always faced.

- Aquila, Harlow and Charlotte?

- Correct.

- That, that type of club.

And, and so you, you bought these clubs and you bought one at a time and you somehow thought to yourself, "I can turn them around.

I can make the return investment here worthwhile."

What made you think so, and what did you do to make them survive today?

- I think the first thing I realized when I bought Raleigh Country Club is you can never make any significant money owning just one club - Mm hmm - because efficiencies of scale, - It's efficiency, scale management, talent and one of the real advantages we offer when we acquire a club is we can reduce the back office cost.

- Mm hmm.

Same thing I did in software.

- Yes.

And the other thing I realized very quickly is the country club business was woefully backward in its automation.

- Mm hmm.

- So we went out and actually bought a software company to not only automate our organization, but we also sold to other entities or other clubs.

- Mm hmm.

An opportunity that you found - Right.

- So automation is, has been a big key for us to reduce costs.

- Mm hmm.

When you bought the first club in Raleigh, North Carolina, where you criticized by members, by media, or did they see you as the savior?

- Well, I think I was viewed as a savior.

However, one of my best friends gave me some great sage advice on the front end.

He says, "You know John, country clubs are the first people to know that the recession is coming.

And they're the last people to know the recession is over."

- Mm hmm.

- And that is very true because it is a discretionary product that we offer, a membership.

- They'll drop out a membership.

They don't pay the fees.

They don't go out to eat, et cetera.

- Right?

It's not like a in software.

We had them locked in for a number of years.

- Mm hmm.

- We knew they couldn't just eliminate that product.

- Mm hmm.

Whereas in golf, this industry, country clubs, I can drop a membership today.

- Mm hmm.

- So our focus is having to make sure that they get value every day they step on property.

- Mm hmm.

How do banks look at financing the purchase of golf clubs?

- I would say historically, they did financing because many of the members were good customers of that bank.

- Mm hmm.

- In today's world banks hardly ever want to touch a golf course - Really?

- Really?

- for financing.

- So you have to create private capital to make it work?

- Most of our competitors are private.

Are, I call it private equity firms, that have started to recognize the value of clubs and golf courses.

- Mm hmm.

- And they're now providing the capital for most of these other businesses.

- Mm hmm.

- You have any idea how many golf clubs are in the United States of America?

- I think they're over 5,000.

I'm not sure, but I believe that's a number that comes.

- And I'm sure you know the number of members that you have in the 14 clubs that you own, the two that you manage.

What would be the total number of members?

- We're at approximately 7,500 families.

- Yes, families.

Mm hmm.

- So that will be, you know, probably three times that for actual people - Mm hmm.

- using the club.

- So you have a very colorful background.

I mean, you were in a company, you didn't like the strategic direction.

You, you, you know, they've decided, you've decided I'm going to move on and do my own thing.

You started a company, you bought another company, you ran them successfully.

Then you use some of the knowledge in that company vis-a-vis software in the application and the management of your golf clubs.

You start with one.

Now you have 14.

You've been an entrepreneur.

What is your view of risk management?

How does, how does John McConnell manage risks?

- Well, I've got two principles that have driven me in my career.

And my first sales job was with a computer company, a large company, and the sales manager one day says, "You know John, people talk about security.

Let me tell you what security is.

Security is being a good sales guy, because you can get a job tomorrow."

- Mm hmm.

- And the funny thing about it is when I got fired that day within 48 hours, I had two job offers.

- Mm hmm.

- So he was right.

- Mm hmm.

I could always provide for my family.

- Mm hmm.

Risk management, I view it as "What is the worst thing that can happen to this company?"

So that's how I manage risk.

- Mm hmm.

And can I deal with it?

- And how I plan around that?

- Yes, yes.

That's pretty much the principle I follow.

What's the best thing that can happen.

What's the most likely thing to happen.

What's the worst thing that can happen?

How can we deal with that, should it ever come to be.

Have you had a golf club that was, and you don't have to name it, but a golf club that you acquired and then it either failed or it, it missed the mark remarkably?

- We've purchased three of our 14 that have missed the mark, - Mm hmm.

- but they also provide value to the other portfolio because it is a very good golf course in an area that I think will grow over time, but probably underperformed and they were in trouble when we bought them.

- Mm hmm.

And we haven't really been able to turn them around successfully.

- I see.

- So the performa didn't work exactly as you had hoped?

- No.

And I've had others that have greatly exceeded my expectations.

- Mm hmm.

At what point do you decide, "I'm done with that one" and how does one get undone with one?

You just sell it to another company or you shut it down or?

- Well, the advantage or disadvantage that I have is that we are a family-owned business.

The other two companies that I founded and acquired, we had outside investors.

- Mm hmm.

- So I felt like I had a sincere, you know, goal, responsibility - responsibility to make sure that we built those companies and made maximized shareholder value, dah, dah, dah, dah, dah.

Whereas in this company, I've taken a much longer term vision.

- Mm hmm.

- So I'm really not worried as much about how much money we make, but what is the value we're building for the future.

- Mm hmm.

And hopefully this will be a second, third, fourth generation business if, if I can do things successfully.

- Mm hmm.

What is, what are the one or two most common complaints that members at golf clubs send your way or send your management's way?

Is it food?

Is it, is it, you know, service?

What is it?

- The rough is too high.

Because one of the things at McConnell Golf is we challenge our players, you know, we want championship courses on a daily basis.

- I see.

- Oftentimes, members don't appreciate that.

You know, they want zero rough.

- Yes.

- The other most common denominator is, you know, food quality.

- Mm hmm.

And I would say that's pretty typical to, you know, most retail type environments in our hospitality industry.

- Mm hmm.

Mm hmm.

And what is the renewal percentage of membership?

- Our renewal, renewable membership is at 92% per year.

- Wow!

- That's pretty impressive.

Is it not?

- Versus the industry?

It is impressive.

- But what is the, what is the national average?

- Somewhere between 85 and 90.

- I see.

- I think is a typical number.

- So you beat that?

- We beat that.

- Yeah.

- But you know, it's a, it's an exciting industry, even though it's pretty mundane - Mm hmm.

because the things that you can do ahead of your competition, like we put in electric charging stations - Mm hmm.

back before, you know, even when they only maybe had a hundred Teslas in North Carolina or the Southeast.

And so we we'd been on top of the trends in the, not only in the golf industry, but in the business industry.

- Mm hmm.

- So because of all your entrepreneurial energies and successes, the North Carolina Entrepreneurial Hall of Fame inducted you as a distinguished member.

Do you remember that night and what you said in response?

- I remember that night very vividly because I was the third and I could count many others that deserved that honor ahead of me, but fortunately I got that recognition.

And I think when I moved to North Carolina, there was no venture capital.

Our first company that we established, we went down and got a bank loan for $25,000.

And my partner, one of my partners and myself, along with our wives went down and signed over the deed of trust or our homes to guarantee that $25,000 loan.

- Mm hmm.

- In today's world, a kid can come out of MBA school with a business plan, you know, in the Southeast or the nation and if it looks good on paper might get a 10 million valuation.

- Mm hmm.

Things are really different.

- Yes, they're very, very different.

- So I was a, I call it at the beginning of where entrepreneur, entrepreneurs were recognized as being leaders in business.

- Mm hmm.

- Because when I came out of college, you know, you worked for a big company, that was your career path.

- Yes.

Mm hmm.

So I'm curious, that night, when you were inducted in the Hall of Fame, was the manager who fired you in the audience?

- No.

- He was not invited, was he?

- No.

He probably has looked back and decided that might've been the biggest, the worst, - Mistake - worst mistake financially that he ever made.

- Yeah, yeah.

Life is like that John, sometimes it's like that.

I know you have a program called, "Footprints on the Green".

What is that?

And why do you have it?

- Well in each community we go into, we want to give back.

And a lot of times country clubs have been, and, and its members and their members, have been very focused on charities and doing things for the community.

- Mm hmm.

- So we wanted to foster those programs and we established a corporate initiative to identify different charities each year that we're going to fund and sponsor and really put our resources behind.

This year our big charity was the, "Folds of Honor", which is a military-based type charity that helps gives scholarships to kids of the military and first responders, et cetera.

Our golf initiative at every club we had, we played rounds of golf or holes of golf and then the members would contribute so much for each hole.

- Mm hmm.

We raised over $300,000.

By far their biggest gift in that charity's history.

- Wow.

Wow.

John, how does it feel to have a PGA tournament played on one of your courses?

- I guess it's kinda like a kid in the candy shop.

You know, you see all these big time, you know, athletes and stars on TV and you're rubbing elbows with them.

You know their kids, you know, their, you know, a lot of personal things about them after you get the, to know these players, but you know, there's, I think 45, maybe PGA events in each year, and here in Sedgefield and Greensboro, North Carolina, we host one.

And so we're, that's a unique position to have as a, as a golf entity.

- Mm hmm.

How do you feel really when you are there and the tournament is going on and you see all these people, thousands of people, and you say, "This is, this is one of my clubs over here."

- Well, it gives you a sense of pride of what your, your team has done.

And when I really sense how good we are is I go to the back of the building, and we've got 12 corporate chefs out there that come together for this event, and they're preparing food for the players, for the hospitality events, and they're working as teams and I'm going, "I cannot believe we do this, - Mm hmm.

- that we have this type of organization that can produce this type of, you know, event, and have it go on a flawlessly throughout the, you know, throughout that week."

So as a company, it gives all of us a sense of pride.

As a owner, I feel like I'm privileged to have been part of this and I've give back many days, thanks to the Sedgefield Members for believing in McConnell Golf, and turning over this historic property to, to our company.

- Mm hmm.

When you're, when you're, whether it's a search field or somewhere else, when you're playing the course or you're out there for some social function, do you, do you catch yourself looking around continually to see what has to be done?

How it has to be improved?

And if so, what do you do with it afterwards?

- Well, that's a great question.

And I will go back to my background.

As a kid, I grew up on a farm.

And every Sunday morning, my dad would get in his old pickup truck and go out and drive along the farm and just look and view and see what we're going to do the next week.

And every time I'm on a golf course or in a club, I see things that need to be improved.

- Mm hmm.

- So I've got a notebook that I carry with me and I've jot down items that we should look at this, fix this, send it out to the management teams.

And, you know, I feel like I'm the eyes in the sky.

As the - What do they call that?

The the designated shopper or I forgot what that - Secret, - secret shopper.

- Yes.

- I'm the secret shopper.

- Yes, yes.

- And so when I'm on property, everyone knows that I'm there to look at what they're doing and what can be done better.

- You inspect what you expect.

- Correct.

- Your wife is a dental, dentist.

- Correct.

- Does she work on your teeth?

- Yes she does.

- Does she charge you.

- I feel like that she gets paid handsomely for her work, but she's very talented and you know, it's, it's great to have a dentist in the family cause her attention to detail is extremely valued and she's actually done some design for our clubs because of her knowing about colors and just how things come together.

So I give her applaud it's for, for helping me as well.

- Yes.

So John McConnell, you've done some amazing things in your life and you've grown because of it.

You've helped so many other people along that pathway.

What's next for you?

What is it that you want to do that you haven't done?

You want to jump out of an airplane.

Do you wanna - What do you want to do?

- That's a great question.

And probably I'll figure that out the day it appears to me because my life - Yes.

- has never been planned.

- Yes.

- I mean, I was in the computer business for 35 years.

The only course I dropped at Virginia Tech was computer programming and who would have thought that that would be my ultimate, you know, business career.

- Mm hmm.

- So I don't know what's next.

I know that I want to maintain great health, be a leader for the company, encourage others to realize the dreams that they probably haven't anticipated that they could have attained and just watch the family grow and hopefully take over the business someday.

- Mm hmm.

Life is filled with serendipities if you're open to them and the opportunities can come your way provided you're competent and confident as you've suggested in your own, in your own, your own career.

But are you going to buy more country clubs?

Are you trying to make this thing larger company?

- We don't have a strategic goal to have a certain number because our, you know, our focus is not to package these clubs up and rebrand them and sell them to the highest bidder.

- Mm hmm.

- So we, we basically today are growing as the opportunities come to us.

- Mm hmm.

- And last year we added two clubs, one in Wilmington, one in Virginia that are awesome properties.

And as we run into those type opportunities, we will move, - Mm hmm.

- but there's no plan to have 50 at a certain time.

You know, maybe one goal for my long-term thought was I want to be a 100 million dollar company and you know, we're well on our way, we're, we're close to that goal.

So, but that's probably the only goal I ever set for myself in the golf industry.

- Mm hmm.

Well you've had a very colorful life and I honor you for it.

And I double honor you for the fact that you care about the communities, that you're trying to do good work wherever you're located.

I thank you for being with us today on Side by Side.

And I wish for you the very best, John.

- [Narrator] Funding for A Side By Side with Nido Qubein is made possible by - [Narrator] Here's to those that rise and shine to friendly faces, doing more than their part.

And to those who still enjoy the little things.

You make it feel like home.

Ashley HomeStore.

This is home.

- [Narrator] The Budd Group is a company of everyday leaders making a difference by providing facility solutions through customized janitorial, landscape and maintenance services.

- [Narrator] Coca-Cola Consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teams.

We are Coca-Cola Consolidated, your local bottler.