Jack Nicklaus, 59 years old and four months removed from hip replacement surgery, is attempting perhaps his greatest comeback.
Not so much on the links, where his 100 tournament victories have secured him a place in golf history, but repairing a large part of his business empire.
Golden Bear Golf, which was supposed to be his chance to double his $300 million fortune when he took it public in 1996, has instead lost $75 million in value the past two years and is now so far off course that some think it may not survive.
Even executives, in a recent government filing, say stemming the flow of red ink is not assured.
Nicklaus, who has been involved in the design of 190 golf courses over his illustrious career, and today earns a cool $1 million for every course he helps design, managed to lose $34 million in the past 24 months on his company’s course design unit, Paragon Construction.
He shut the operation last year.
Another $14 million was lost on Golden Bear golf practice centers, the company said in the recent filing, before they were sold off last summer.
What’s left of the publicly-traded empire is his Nicklaus Flick golf schools and his good name, which still draws some endorsement cash. But even that is slipping. Tiger Woods and David Duval have captured the imagination of a new generation of golfers.
So as Nicklaus tees it up at the Memorial Tournament he will host this week in Dublin, Ohio, rivals Woods and Duval may be the least of his problems.
While he still has his fans, investors in his business are not happy.
The stock of Golden Bear Golf, which has a two-year high of about 14, closed last week at 15/16. Nicklaus, as well as those irate investors, are hoping his return to the links brings him back into the headlines and back into the society’s consciousness.
That will go a long way to attracting people to the 21 Nicklaus and Golden Bear golf centers and to the Nicklaus Flick Golf Schools, which will go a long way to reversing years of red ink.
The company hasn’t earned a profit since going public and sales sank to an anemic $11.4 million last year, off two-thirds from 1997.
How Nicklaus came to this point in his career, where instead of slowing down and enjoying his status as legend he must still hustle, is interesting.
In the mid-1990s, Nicklaus, already rich beyond his widest dreams, saw dozens of friends and colleagues strike it rich in the bull market.
There was the Shark, Greg Norman, pocketing $40 million from his shares of Cobra. On the West Coast, Callaway Golf’s IPO left many with eight-digit net worths. Nicklaus wanted in.
So he split his business empire into two, putting Paragon, his golf course design business, his golf school and his golf practice centers into a public offering at $16 a share.
It sank like a Titleist in a water hazard.
Paragon couldn’t complete its work on time and last summer, Nicklaus, his hip aching, still had to work every day touring more than four dozen courses he was contractually mandated to have a hand in designing.
Faced with the delay, developers sued Nicklaus’ company. Eventually, Golden Bear was forced to pay $785,000 to one developer and $500,000 to another to get out of the deals, Golden Bear Golf revealed in the recent filing.
In fact, the company was so strapped for funds that Nicklaus had to pony up $2.4 million to make the payments, the filing reported. That’s millions more he stands to lose if Golden Bear fails.
In an effort to keep angry stockholders at bay, and perhaps to mend his wounded reputation in the business world, Nicklaus decided last year to suspend his $125,000 salary. He is still working for free.
Nicklaus even tried in 1997 to grow Golden Bear Golf by starting Ticketmaster Golf, an operation which would guarantee tee times for golfers on courses from coast to coast.
But despite investing $450,000 and lots of time, Ticketmaster Golf was closed last year.
Nicklaus refused requests to be interviewed on his plans to turn the ailing company around.
The dramatic fall to earth of Nicklaus’ sky high dreams proves again the Wall Street axiom that when it comes to investors and sports, it’s much better to simply cheer from the sidelines than invest in their future.
Nicklaus, the Boston Celtics and the Cleveland Indians have each given fans a lot to cheer about but have left investors’ wallets’ a lot lighter, analysts noted.