The Golden Bear goes from retirement to real estate

In last month's British Open, Jack Nicklaus, inarguably the greatest golfer in the history of the game, played the final tournament of his storied career on the fabled St. Andrews golf course in Scotland. Nicklaus, who failed to make the cut, crossed the Swilken bridge to the 18th green, turned to the crowd, rested his hand on his knee and waved goodbye, before sinking a 15-foot putt for birdie. It was an emotional moment for the Golden Bear, his family, the British Open crowd and millions of golf fans around the world. But they can all rest easy knowing that the 65-year old winner of 18 major championships has a life as a real estate investor ahead of him.

Two days before the start of the British Open, Guggenheim Partners, the $100 billion investment management firm, announced the formation of Guggenheim Nicklaus Partners (GNP), a new venture between the Chicago-based firm and Nicklaus Investments, the real estate investment arm of the golf course design business owned by Nicklaus and his family, Nicklaus Design. GNP will finance and develop residential real estate communities centered around Jack Nicklaus-designed courses. The new group reportedly plans to invest approximately $600 million in 10 to 15 projects per year. Debt financing will be provided by Royal Bank of Scotland (RBS), for whom Nicklaus has been a spokesman for the past several years. RBS has co-financed several projects that Nicklaus Design currently has in development.

Off the golf course, Nicklaus has already made a name for himself as one of the industry's most prolific course designers. Nicklaus Design has 280 courses open for play and more than 50 projects under construction in 28 countries around the world. In addition to Jack and his four sons, other designers employed by the firm include professional golfers Ernie Els, Ian Baker-Finch, Hal Sutton and Sergio Garcia. Nicklaus Design estimates that it designs one in five courses worldwide. Some of the most notable courses that have been developed by the firm include Muirfield Village in Dublin, Ohio; Cabo del Sol in Cabo san Lucas, Mexico; and Harbour Town in Hilton Head, South Carolina, all of which were ranked by Golf Magazine as one of the top 100 golf courses in the world.

GNP will reportedly hold majority stakes in the golf developments, partnering with developers to construct the courses and residential communities, the development partners will also hold a minority stake in the projects. Nicklaus Design notes that “real estate on Nicklaus courses outperforms similar property developed by competitors.” The firm is hoping to take advantage of demographic trends and an aging baby boomer population that it anticipates will increasingly seek to live in communities clustered around high-end golf courses.

Despite spending most of his life on the golf course, Nicklaus is no stranger to the world of high finance. In the 1980s, he was the highest paid member of Team Nabisco, the group of athletes – including Monday Night Football commentator Frank Gifford, Yankees baseball player Don Mattingly and former football great OJ Simpson in his pre-murder trial days – that were kept on the payroll of RJR Nabisco by its chief executive officer, Ross Johnson, as a way to woo clients and sell more Oreos. Though Nicklaus himself reportedly earned $1 million a year, the 1990 account of the RJR takeover Barbarians at the Gate noted that The Golden Bear was “notoriously difficult” and “growled at doing more than half a dozen appearances a year.” Of course, the Team Nabisco boondoggle came to an end when KKR seized control of RJR in a $31 billion leveraged buyout in 1989.

It's almost certain that Nicklaus was able to get by without the money. In fact, during the British Open, RBS printed £2 million worth of commemorative £5 notes bearing the golfer's image. It was the first time a living person outside of the British Royal family had been pictured on a Scottish bank note.