The Day the Verizon Heritage Didn’t Disappear
Author: Paul deVere
“Basically it came down to a phone call,” said Mike Stevens. In this case, the “it” was the future of the Heritage. It was 1986. Stevens, now president of the Champions Tour, was tournament director of the Heritage. In question was whether there would be a 1987 tournament at Harbour Town. Or whether there would be a Heritage ever again.
Due to an extraordinary effort by a small group of very committed people, the tournament was saved. In fact, that year the tournament thrived because of a very committed island. According to Angus Cotton, one of that small group, “What really saved us in those dark days was the townspeople coming forth and buying tickets. After the first of the year, sales just skyrocketed from the town. All the citizens (of Hilton Head) came to the plate. They knew the tournament was in danger…”
But by April 16, the Heritage was both reshaped and reborn. It continues to be voted a player favorite on the Tour. It went on to become an economic powerhouse (about $85 million in sales in the Hilton Head Island area) and a powerful boon to charities (since 1987, close to $18.5 million has been donated) because of the creation of the Heritage Classic Foundation, created then. In 1987, the tens of thousands of people at the tournament (and the millions watching on television) had no inkling of the drama that played out over the prior 18 months.
Why the Heritage almost went away was summed up in a March 15, 1987 story by Albert Scardino in The New York Times. The headline read, “A Gust of Bankruptcy and Scandal Rattles Elegant Hilton Head Island.” The article began, “Last year  was a bad one for this elegantly casual oceanfront retirement and vacation town. First came the bumper stickers: ‘Honk If Bobby Owes You,’ a reference to E. R. Ginn III, then president of Ginn Holdings Corporation, the failing company that owned three of the largest developments on the island and eight of Hilton Head’s 20 golf courses, dozens of tennis courts and a marina.
“Next, the checks bounced for the prize money in the annual PGA Seniors golf tournament. Hilton Head’s only radio station began to carry bulletins announcing when employees for the island’s largest company could safely cash their paychecks.
“Then, a wave of bankruptcies washed over the island.”
The article ran over five pages.
How it all started
In the waning months of 1985, E.R. “Bobby” Ginn’s company was having cash flow problems. His leveraged buyout of Sea Pines Company, quickly followed by a buyout of the Hilton Head Company, began falling apart. When Ginn Holdings’ loans came due in February, 1986, the savings and loan he borrowed money from for the buyout failed. The Federal regulators said the failure was due, in large part, because of the loans to Ginn Holdings. The lawsuits had already begun.
To raise money, Ginn sold his company to Rolyat Holdings Corporation of Florida, which was run by lawyer Luke Taylor (“Rolyat” is Taylor spelled backwards—that should have sent up a red flag) which was financed by Philip Schwab who owned Cuyahoga Wrecking Company out of Great Neck, NY. The PGA Tour Seniors event mentioned in the Times article—when the checks bounced—was dubbed the Cuyahoga Seniors.
“Cuyahoga Wrecking,” Foundation Trustee Angus Cotton would later say, “kind of appropriate.”
By April, Ginn was out and in court. That summer, over a dozen lawsuits were filed by former and current owners of the renamed Hilton Head Holdings. New management was brought in by Taylor and Schwab. It was said they carried briefcases filled with cash to close deals. They also were accompanied by armed bodyguards. As the Times’ Scardino wrote, “The tone at local business meetings changed abruptly.” Taylor would be remembered for, among other things, removing the alligator sculpture from the Plantation Club in Sea Pines and bringing it down to his Florida home.
By November, the house of cards that made up Hilton Head Holdings was crashing down and going into bankruptcy. Islander, John Curry, who had worked as an executive vice president at Sea Pines before starting his own resort management company, was tapped by Federal District Judge, Sol Blatt, to be bankruptcy trustee. Former South Carolina Governor, John West, was named Curry’s attorney for the bankruptcy. As property owners in Sea Pines, both Blatt and West admitted their great love of the island.
Through all this, tournament director, Mike Stevens, and his new assistant, Steve Wilmot, were trying to put together the 1987 Heritage and get a title sponsor. (Wilmot became the tournament director in 1997 when Stevens took a job with the PGA Tour.) Before the bankruptcy, Stevens had an agreement with the upstart telecommunications company, MCI.
The phone call
It was a conference call. On Steven’s “team” were Joe Fraser, Jr. who developed Sea Pines with brother Charles; Angus Cotton, general manager of the Marriott Hotel; Judge Blatt, Governor West, and Curry. They were listening to Deane Beman, then PGA Tour Commissioner, who was not pleased. He had reason not to be after the Cuyahoga Seniors tournament. He also saw opportunity and Beman, an extremely talented and forceful commissioner, was pushing the envelope.
“In reality, he wanted to buy the golf course (Harbour Town). He wanted to make it a TPC (Tournament Players Club),” recalled attorney Simon Fraser, now chairman of the Heritage Classic Foundation. However, the extremely talented and forceful John Curry, whose job as trustee was to sell Sea Pines, was determined not to sell the community’s “crown jewel,” which was all that Beman wanted.
“We’re on the call and Dean’s lobbying pretty hard to get (Harbour Town). There comes this point where I sensed Dean was getting a little frustrated with the way things were going. But John was holding the line,” Mike Stevens said.
“So Dean goes (I’m paraphrasing a little bit), ‘If you don’t sell me that golf course, I’m not going to give you a contract for the tournament.’ And there was like this silence. All of a sudden, Sol Blatt interrupts, in his really deep southern drawl, he says, ‘Excuse me, Mr. Beman, believe it would be appropriate at this time that I remind you I am a Federal Circuit Judge and your remarks, and I’m sure you didn’t mean them in this context, would be considered extortion in a court of law. Now, Mr Beman, tell us exactly what you mean.’ There was silence on the other end of the phone. I know Dean really well, and I consider him a friend. That’s not really what he meant; he just got caught up in the emotion. It seemed like five minutes. Actually, about 20 seconds goes by and Dean says, ‘That’s not what I meant at all. We’re just passionate about this. It’s such a great golf course, we want to protect it. You’re one of the best events on the tour. We don’t want to see it go away.’ At that point, that’s when conditions were laid out by the PGA Tour as to what we had to do to save it,” Stevens said.
“They got Beaman to say that if you raise a million dollars, we’ll go ahead with the tournament. I had just finished a term as chairman of the Chamber. John (Curry) came to me and said, ‘We’d like you to raise a million dollars.’ Well, I spent one morning getting a $100 here and $500 there. After the morning was over, I was convinced it wasn’t going to work. So I decided I’d have to get $100,000 at a crack. We started off and, luckily, Marriott, my own company, backed me. Once they were in, we were able to get Mainer’s Inn, Intercontinental, Hyatt. They all came to the plate. Once we did that, we got Palmetto Electric, Hargray,” Cotton said. “These were letters for credit,” Cotton added. “Nobody had to write a check.”
“I was chairman of the board of the Atlantic Savings Bank at that time. Jerry Caldwell attended a meeting where business people were supposed to put up or shut up. John Curry was very emphatic about the fact that the tournament was a great asset to business, and he wanted everybody to kick in. We did,” said Deke Deloach, a Trustee Emeritus of the Foundation.
“The résumés of the guys who sat on that first Heritage Classic Foundation board were absolutely unbelievable,” Stevens sad.
Beman sets the bar
The phone conversation with Beman was a little more upbeat, but he set the conditions for the tournament to continue. “What Deane told us was we had to put up enough money to cover the purse as well as enough money to get the golf course in shape. I had to guarantee that MCI would stay on as title sponsor and would pay for the television underpinning that was necessary,” Stevens said. Deloach is a prime example. An agent with the FBI for 28 years, he spent his last five as deputy director. He went from there to be vice president of PepsiCo for 15 years before retiring to Hilton Head. But when compared to the others on the board—Fraser, Curry and Cotton, he said, “I was a freshman compared to them.”
“I called MCI. I asked, ‘If we can raise the money to cover the purse and golf course improvements and the PGA Tour gives us the contract for the tournament, will you stay on as title and pay for television?’ And they said, yes. We’re not leaving you now.
“So I went to John (Curry) and asked, ‘If I can deliver a title sponsor with television money and a PGA Tour tournament agreement, will you continue to give us the golf course and let us play?’ He said yes.
“Then I went to the PGA Tour and said, ‘I’ve got the golf course and I’ve got the title (sponsor), and I’ve got the money,” said Stevens.
So the purse was covered, along with course conditioning. Beman made a third requirement. The tournament, the MCI Heritage, had to be run by a non-profit group. Several tournaments on the Tour did have a charitable arm and Beman wanted there to be more.
On January 12, 1987, the State of South Carolina gave the Heritage Classic Corporation their certificate of incorporation. The names were there: Joseph B Frazer, Jr., Angus Cotton, and Dwight A. Holder, trustees. (A year later, the name was officially changed to the Heritage Classic Foundation.)
“Joe is an incredible visionary,” Cotton said. “It took him about three years (after incorporation) to get it, but a 501 © (3).”
Getting the 501 © (3) designation from the IRS was a huge step for the Foundation. “Collecting money and paying out things. An event like this didn’t fit the pigeon hole of a typical 501 © (3). It was a pretty good coup to get approval,” explained Simon Fraser. With that designation, donations to the Foundation are tax deductible. “I think Beman wanted to use us as an example,” Fraser said.
“I know that people have forgotten the story, and some never knew,” said Steve Wilmot, Verizon Heritage tournament director. “It needs to be told again.”
He reeled off bits and pieces that became part of the Heritage legend. The $1 million letter of credit? Never touched. Mike Stevens dissolved it two years later. While it is now the Verizon Heritage, Wilmot is still working with most of the same people as when it was the MCI Heritage, since it is basically the same company. And an extraordinary side bar to the drama is that trustee Curry sold Sea Pines to Sea Pines’ property owners, and Sea Pines Associates was born.
Looking back at the tournament, and looking back to the beginning of things, Joe Fraser, the creator of the foundation and the man who built the things younger brother Charles dreamed of, who gathered people like Angus Cotton and John Curry around him, said, “It has been very rewarding… to watch something like this and be a part of it.”
Yes, Joe. It is. The island thanks you.