2004 -- The Golf Course Shakeout ???

[Scott_Burroughs]

The Barefoot quartet are all $150 in spring.

[Jfaspen]

I would be curious to know if there is another resort anywhere with as many different rate seasons, and consequently, different greens fees as is the case at Myrtle.  Nobody should draw the conclusion from this thread that the average greens fee in MB is anything like $100!  In July, you can play every day for a week for $250 total, without a golf package.  You can bring that down more still by just using newspaper coupons and so forth.

Just a little research will help too.. Although Legends is posted at 100$+, I am getting on in May for $45 in the afternoon (special).  
www.mbn.com is a good place to start, you can get tee times on river club, willowbrook, long bay, ect for $45 or 50.  

It also helps if you know someone down there as well.  Places like TPC, Caldonia and True Blue can be played for $50 or less if you play with a member or someone who lives on the property.

Jeff

[WilliamWang]

Bulle Rock has a new ownership group and they are trying out different promotions in order to keep their established greens fee of $145.  

I believe it's been reported in the Baltimore Sun that Manekin has an agreement in place to develop 1500 homes on Bulle Rock property.

[Michael Whitaker]

Tom and RJ,

There is a window in the Spring in which all the Myrtle Beach area courses jack up their rates. This runs from mid-March to just before Memorial Day. For example, the "rack rates" for the Barefoot Courses are $140... The Legends Courses (including Heathland) are $115... Caledonia $159... Dunes $165... World Tour $170... Tidewater $152... TPC $165. But, those prices are a bit deceiving. Every course is associated with others in some type of group marketing plan that can bring the cost down to a more reasonable figure.

We have a group who regularly visit the "Grand Strand" in the shoulder season between spring and summer. We never average more than $100 a day for golf, cart, accommodation, range balls, and breakfast... and, we only stay in excellent condos and play the top of the line courses. It's one hell of a deal. It's the folks who are frozen-in at home and are looking for some relief (especially the Canadians) who pay those high springtime prices.

As for Ocean Harbour and Marsh Harbour... both properties are owned by LaDane Williamson. Ocean Harbour was closed under speculation that it would be converted into residential or vacation homesites. Williamson took control of Marsh Harbor when a 23-year-old lease agreement with the Legends Group expired on March 1, 2003. Williamson and the Legends Group could not reach an agreement on a lease extension so the Legends Group closed the course in December 2002. Word has it that Marsh Harbour WILL reopen at some date.

From the Myrtle Beach Sun News:

LaDane Williamson, owner of both Marsh Harbour and Ocean Harbour, says there are no plans yet to reopen Ocean Harbour, but she intends to reopen Marsh Harbour by the spring of 2005.

Williamson said a number of people in the golf business have looked at the facility and offered suggestions, and she's prepared to invest the significant funds necessary to make the needed improvements.

Extensive renovations planned include the redoing of all the greens, though the type of grass hasn't been selected, as well as work on drainage, sprinklers, bunkers and tee boxes. The plan also calls for a new practice green, larger parking area, and substantial cart path, bridge and clubhouse repairs.

"There are several things that need to be done to bring it into an operational condition," Williamson said. "The whole property needs uplifting. It's a nice golf course, and we need to get it back to the same level it was when it began."

Williamson took over management of Marsh Harbour, situated near the banks of the Intracoastal Waterway in Calabash, N.C., after Larry Young closed the course three months before the end of a long lease agreement. Williamson says she'll hire people in January to help run the golf management division of her business. She said she sold her interest in The Pearl to her mother a year ago, but remains one of two trustees of Angels Trace, along with her brother, DeCarol. The facility is owned by their children.

[Matt_Ward]

The issue for many golf facilities is that too many of them actually believe they are the "best" and therefore they truly believe they are "entitled" to charge top dollar. New Jersey is the 8th most expensive place to play golf in the USA (NGF statistics) and a number of these facilities here in the Garden State need to stop smelling glue and get a bit more realistic with their pricing options -- even with a state that has the first or second highest per capita income.

There are simply too many courses that have come on board that need to work in concert with other facilities and have multi-tier price points. They also need to charge nine-hole rates during off peak times and fully encourage juniors to play which very few do -- contrary to all the talk that the market is important.

I read a comment by SI's Alan Shipnuck which he posted in a book of his (The Battle for Augusta National) and he said it succintly & correctly --

"But as a recreational sport, golf is slowly dying. Participation numbers have flat-lined, despite the population growth and the popularity of Woods; numerous courses are in financial distress. If golf is to thrive in this country, it will have to be because of women; presently, they make up only 22 percent of the nation's golfers, and thus as a group they offer the greatest potential for growth."

It's time for golf course groups to literally wake up and smell the coffee -- the industry has simply been making it by depending almost exclusively upon the well-heeled deep-pocket males and that small group will not sustain the vast amount of courses and high price points that are out there.

Too many course groups are in sheer denial and they simply think the pox will only affect the course down the street. That's truly the ostrich approach IMHO.

[Joe Hancock]

You guys are shootin' too high. The problem won't be if upper end courses close. The problem is going to escalate because low fee courses...such as mine...are struggling to maintain a profit margin. As the low fee courses close, there will be a stop to the growth of new golfers, and that affects everyone.

Adam, I wish I could swallow you're theory that passion=survival, but walk a mile in my shoes and then try to convince me. I love the game as much as anyone. I love getting to the course at 6 a.m or earlier, even after doing it for 27+ years.

Joe

[frank_D]

turn the land over to housing and pocket the quick $$ that comes from such a situation....comments from those in other sections of the USA and how they view this topic.

brother Matt

i do NOT believe its geography as much as economics

the financial circumstances of a golf course are summed up best by george carlin - the biggest waste of land besides cemetaries - i am reminded of this by my group every time i suggest we purchase a golf course - fortunately the others in the group (commercial land developers) are more focused than i am in this matter as an investment made regarding emotions is usually the wrong thing to do

on one project my compromise was dividing up a mixed use 220 +/- acres featuring twelve holes of golf - six holes a side -with the remaining land developed with a 115 room hotel / health spa and restaurant - it never got off the ground because the demographics of a nearby property comming online included a Hard Rock Hotel and Seminole Casino - the property had more upside potential, taking no additional risk,  by leaving the property undeveloped and selling it as is - than by taking a risk in the construction and operations of hotel / health spa / restaurant operations adjacent to an oddity of a twelve hole course

daily fees will become obsolete - leaving municipals and private clubs - the math simply doesn't work - and believe me i've looked at almost every way possible - it's like being an unsubsidized farmer - one slow season because of weather - something out of one's control - and you will never catch up if your not a municipal (budgeted / governmental) or private club (membership fees / special assessment)

geographically in florida for example - speak to Chester Stokes in St Augustine in the matter of "The Ponce", Wayne Huiezenga in Ft Lauderdale regarding "Grande Oaks" f/k/a "Rolling Hills" and "The Golf Club of Plantation" or Johnny LaPonzina at "Pembroke Pines" for example - all would probably tell you daily fee is a loosing proposition

forget the NGF. PGA, USGA "growth" statistics and numbers - survival and profitablity are economically more important barometers of fiscal health because without them growth is irrelevant - remember the dot.com bubble? that's all you heard was a firms "growth" potential however the fundamentals are survival and profitability - remember Arthur Andersen? they were growing at twenty percent a year for the seven years prior to their demise

therefore my calculations also indicate that a golf course, unless your supporting a hotel / resort / etc or using it as a "loss leader" in a residential real estate development or "holding" property pending future development - is potentially the investment with all risk and no reward

[Matt_Ward]

frank d:

Interesting comments and I agree with much of it -- however ...

Daily fee courses can survive in certain markets where disposable income is high (Northeast / Silicon Valley) or those coming to a certain locations (Vegas, SoCal, southern Florida in season and in certain key markets like Naples, etc.) where time of year or simply high amount of visitors makes the market fee go up noticeably. I don't easily dismiss geography as readily as you do.

I don't doubt that daily fees in other sections of the
country -- particularly Myrtle Beach / Grand Strand are in very demanding times and will see major declines and likely course closures. It's about time that facilities understand their location and realize that the "brand" of course they have is not in the same classification as the place down the street that charges (and gets it) a few more bucks to play. Unfortunately, too much ego is involved in these circumstances and people in a given area need to formulate a plan that makes sense from a business perspective and also from a consumer point of view.

frank -- let's be clear Bandon and Pacific Dunes is in the middle of nowhere and yet does very well $$ wise. Please don't tell me about the hotel there because it's small time when compared to the larger facilities you see elsewhere. In essence -- those two courses make up by being a daily fee. Unique design can thrive but it needs to offer something that you can't get elsewhere. Sameness at top dollar is the ultimate losing proposition.

[Steve_ Shaffer]

Matt
If "unique design" can differentiate a daily fee/resort from the competition, then let's see what happens when Black Mesa builds the second course. Will it become a golfer's pilgrimage place a la Bandon, Monterey Penisula, Pinehurst, World Woods or Scottsdale? Time will tell.

Steve

[Tom_Doak]

How long is the golf season at Black Mesa?

One of the main reasons for the financial success of Bandon Dunes is that it turned out to be a twelve-month golf season.  That was the secret for Myrtle Beach as well.

[Steve_ Shaffer]

Tom
My guess is that prime season at BM is mid-to- late May to October;however,some locals told me that they can golf there virtually year round as the course was only closed about 10 times because of snow. My group made the mistake of going there in late April.We were early. The course was not in good shape and the weather was problematic. I guess BM is as difficult to get to as Bandon. It's a 2 hour drive from the Albuquerque airport.
Steve

[cary lichtenstein]

I see this as a normal imbalance between supply and demand. There has been an excess growth in golf courses in a non growth industry and there is bound to be fallout.

Look at the movie threatre business. Everyone rushed to build stadium type threaters, but no one closed the old type threaters and the number of tickets sold stayed constant. Every major player went bankrupt, got out of all the old leases, and was able to refinance the debt.

Ditto with the office building market of the early 90's, there was not an office building built for 5 years.

This will be a very tough time and only the best, smartest and hardest working survive these type of times. We in southern Florida will continue to see courses built as the baby boomers flock down here and new communities spring up.

We are saturated with private clubs but there will always be room for the exceptional course on the exceptional piece of property.

One of the things that happens in these type of markets, is the banks will refuse to loan most new projects and they will tighten the screws on under performing loans.

Vultures will pick up lots of courses for very cheap prices. Some wil survive as courses, many will be converted to the lands present highest and best use, whatever that may be.

The sooner everyone realizes what is going on is real, the better off they will be so they can make appropriate career and business changes in their lives.

[Don_Mahaffey]

Tom Doak,
I'm not so sure it's the length of the season that is necessary for success as much as the timing of the seasons. An area like the Oregon coast is perfect. A 12-month season with the busy season during the longest daylight of the year, with little to no days lost to weather,  and an off season that doesn't break the bank from a maintenance stand point. Compare that to courses in the sunbelt who have their busy season during the shortest days of the year, while dealing with winter weather, and their most expensive maintenance period during their lowest cash flow months, the summer.

I'd like my chances owning a course in the North that has it's busy period when it's daylight until 10pm and closes in the winter. I've experienced a course in the desert that has to maintain good conditions 12 months a year while giving away golf in the summer during the longest days of the year.  IMHO, the golf business is all about cash flow and a lot of courses in the south become money pits after one bad winter.

BTW, any upcoming projects in the Northwest?

[Joe Hancock]

Don,

All that business sense should not go to waste. Why don't you buy a course in the North? Say, I may have a deal for you. An 18 hole course nicely situated on a beautiful flowing river in Michigan.....

Joe

[Mike Worth]

Somewhat related to this topic is an item from the Sunday Philadelphia Inquirer.  Inniscrone is being taken from Private to "Semi-Private" as it was purchased recently.  They plan on charging $65 per round, according to the newspaper article, then will take the course private again in a few years.  Changes are also planned to several holes.  Annecodotal evidence suggests that new courses in the Philadelphia area have stopped being built as Joe Logan no longer writes about new courses every week, but instead has an "odds and ends" column.

Closer to the South Jersey Shore, the conventional wisdom is the Atlantic City area is overbuilt and some places may close.  The fly in the soup, so to speak, is the new municipal course McCullough's Irish Links, so named for the life-time mayor of Egg Harbor Twp, Sonny McCullough.   McCullough's had an operating loss of $17K last year but get this -- paid no debt service because of the way the debt payments are structured.    Starting this year, debt payments of $750K will have to be made -- taxpayers are bracing   But the shore area was saturated with golf to begin with, and didn't need a low-end course built, with apparently 2-3 more on the way.

[Steve_ Shaffer]

SS1
Your "anecdotal evidence" about new courses not being built in the Philadelphia area is off-base. Makefield Highlands in Bucks County is about to open as is The Vineyards ouside of Atlantic City. Lederach and Ravens Claw in Montgomery County are under construction. On the private side, French Creek in Chester County and Rivercrest in Montgomery County just opened. If you include Delaware in this area, White Clay Creek may be open now. There will be plenty of courses for Joe Logan to review. By the way, he's on TV now on one of the golf shows on comcastsportsnet. He just did a "review" of Bulle Rock.
Some courses have closed or will be closing- Bensalem and Upper Perk. Others are hanging in there. I  agree that Emerald Links is in trouble with debt service and probably shouldn't have been built.

[Daryl "Turboe" Boe]

I am surprised by all these prices being quoted.  I wonder if there arent better deals to be had in MB regardless of the time of year if you are playing on one of the many golf packages.

I play a couple times per year down there with large groups, and while it is more during the off season I guess, the base package prices for lower end courses is ridiculously cheap for the room, breakfast, and golf.  Now that is based on lower end courses, but we often upgrade and pay some kind of surcharge, but it is nothing exhorbitant.

When you call and ask for their rate they give you the "rack" rate.  Anyone who has stayed in many hotels knows you never pay the "rack" rate if you are smart.  Sometimes I have found in MB that you need to ask if they are running any kinds of specials.  I have been surprised to find how early "twilight" rates can start if they think you are actually shopping around the price.

[Mike Worth]

Steve Shaffer.

Well, when was the last time Joe Logan wrote an article on a new course?  Been quite some time.  I also heard a rumor, probably not that good a source (my barber shop), that the Renault Course was delayed opening until next year (05).  

Also not discussed in this thread, but somewhat relavant, is the trend of taking public courses "private".  In the philly area, Pine Hill is a good example, as is Greate Bay at the shore.  Some rumors also have Twisted Dune going private.  This trend is not in response to some great demand for private courses, but is rather a scheme to raise cash in order to pay down debt.  I suspect the next step for these courses that go from public to private is to either be sold at a huge loss or close.  

Joe Logan once told me that he isn't permitted to review private courses for his column, only public courses - French Creek is open already and is private, isn't it?

Finally, there are persistent rumors of a big name public course down at the shore being sold off for housing, i'm sure others have heard it out here too.  

[Steve_ Shaffer]

SS1
If Joe Logan is not permitted to review private courses, then why did he publish a review of Manufacturers last year or the year before? He did write about the public Riverwinds after it opened.
In any event, "going private" is a trend,no doubt, to raise money and buy down debt. You forgot to mention Hartfeld. I just played Pine Hill and they seem to be off to a decent start. It may take them 3 more years to sell out IMO. I can't see Twisted Dune going private unless a new clubhouse is built.
Yes, the big name public course at the shore is for sale or at least the developable parcels in and around the course are.
How are things at Hidden Creek?
Steve

[frank_D]

(a) Daily fee courses can survive in certain markets where disposable income is high.......(b) Bandon and Pacific Dunes is in the middle of nowhere and yet does very well $$ wise.....those two courses make up by being a daily fee.

brother Matt

(a) one other ingredient to high disposable income seems to be the availability of leisure time - my northern friends living in westchester NY and greenwich CT belong to all the private clubs - but every one of them never play often because of time constraints - i have played rounds where they invited me to play but they themselves had to run after playing a few holes

(b) i don't know the details - financial or demographic - but would you consider those two course the exception OR is there some factor(s) thing they do right which accounts for their success - being in the middle of nowhere can be fatal as only the converted will continually make the trek


i see daily fee being used more to "save" a private club - but the infrastructure therefore already exists - from dwindling membership and the cachet of being able to play a course previously off limits as private and therefore can charge a "premium" - over $50 - which according to NGF is the number most consider the price they would pay to play frequently

also let's step back a minute and ask is golf for the masses ?
will it go wide like Wal-Mart golf ? or will the sport / game go the way of curling limited to a certain special market of fanatical followers ? i always was puzzled by the marketing connection of spectator interest to participation " i watch on TV therefore i should also play " - to me there is no connection to how many watch and the potential to stimulate participation to PLAY - same as hockey or basketball - however the TV coverage does directly relate to marketing products (sneakers, shirts, cars, etc)

today the economics seem to me to be against continuing on the current path of building new - unless something else is connected to the financial reason for a golf course

i always though OLD golf sites should qualify as do brick and morter structures - for a chance to be certified historic for federal tax purposes - and therefore give a financial incentive to "preserve" rather than "develop"

[Matt_Ward]

Steve S said:

"Matt, If  "unique design" can differentiate a daily fee/resort from the competition, then let's see what happens when Black Mesa builds the second course. Will it become a golfer's pilgrimage place a la Bandon, Monterey Penisula, Pinehurst, World Woods or Scottsdale? Time will tell."

Steve:

The answer to your question is a simple one -- Black Mesa will thrive for one key reason -- the promiximity to Santa Fe -- a world class destination that has brought people to that area of the country LONG before golf was ever an item of discussion.

The key thing to also realize is that Santa Fe ALREADY has a solid supply of people who are well traveled and extremely knowledgable about entertainment options whether it be in the arts or literature.

Adding Black Mesa to the quality mix already there only adds to the cultural diversification that clearly exists now.

Provided the second course is equal or greater than that of the first I would think the opportunity for success is certainly possible especially when you compare the collective offerings of Santa Fe to other areas of the country where golf IS the priority and the cultural underpinnings rests with how big the local Taco Bell and K-Mart are.

frank d:

You underestimate the demographic and geographic evidence I presented. There are pockets where daily fees can thrive provided they are marketed correctly, have a product people want and brand their facilities with an eye for growth.

Eric Bergstol's Empire Golf in the greater NY metro area understands that principle and is filling in a key gap for those who are tired of the hob-knob BS that often comes with a new membership at a private club in the area.

The same thing is happening with other companies like RDC -- located in Jersey -- which is doing a comparable situation with facilities like Forsgate and Bergen Hills, to name just two.

The issue brother Frank is that too many people believed "another" upscale daily fee in areas already congested and COMPLETELY dependent upon outside golf traffic visiting them would be OK from a business perspective. That has not been the case -- particularly when all you get with the golf side is another plain vanilla and chocolate design that varies little, if at all, from the bulk of the fast-food junk that preceded it.

Quality design that is unique and above and beyond what came before it can surivive and even thrive. The die-hard golf crowd will travel to places of uniqueness (e.g. Bandon and Pacific Dunea) but if you think giving them a massage and a bigger lunch bag with goodies is all it takes then they will be in for a rude awakening given the travels I have made in the USA these past number of years.

SS1:

The problem with Atlantic City is that the model for visitors is still related to day trippers and the like. It is not Las Vegas whereby people will spend a week or more at the location and be prepared to play a wide swath of different courses.

I also have an issue with the branding of courses there in which all of them had this glue-sniffing misconception that they could charge $100 or more no matter the quality of design. There might be 2-3 courses available to the public that can charge those types of fees but the bulk of them are simply in la-la land with their overall thinking and positioning.

The reason people don't like McCullough's is that the private daily fee owners don't want to see taxpayer courses undermine their own position. They are interested in their botton line -- well, guess what -- so are consumers. They don't simply want to play another version of the boring one-dimensional South Jersey course carved from pinelands with an obligatory water hazard thrown in here and there and then pay a huge tariff for such a ho-hum layout.

There is quality design in South Jersey but it's extremely limited and more towards the private side than the public.

I'll be most interested to see how Pete Dye fares with his new effort in Ocean County which I believe will be open to the public. Ditto with Renault Winery when it comes on line.

If AC wants to thrive as a golf destination it needs to give some sort of meaningful value to its consumers. The "me-tooism" that has developed over the last few years in which courses that come on line think they can easily charge top dollar for mundane layouts is over IMHO.

[Mike Hendren]

Some observations:

It's the economy, stupid(s).  Why do you think there have been six consecutive quarters of negative aborption in the nation's office market?

Jobs drive demand.  Capital drives supply.  There remains too much money chasing too few deals - including golf courses.

In the history of the world, there has never been a feasibility study done for a fee that concluded the project was just not feasible.

Our society has evolved into one dominated by consumerism - at the expense of leisure.  All these time-savings devices we're purchased are consuming our time - the Luddites have it right.

There is a primal desire among men to develop golf courses.  I have been searching for Biblical support of this theory without success.  

Most people work for a living, rendering 5/7ths of supply functionally obsolete.

It's not the second owner that makes money, it's the third.

A white hot residential market fueled by low interest rates and the perception that the housing appreciation is more dependable than the stock and bond markets dictates that the highest and best use for large tracts of attractive land is subdivision development.  

Operating leverage for a golf course is high.  There are few variable expenses.

Outside of the entitlement process there are few barriers to entry and golf course development is a low overhead business.

Like all other income producing property types, we currently have a demand problem - not the supply problem that cast a pall from 1988 to 1993.

Mike

[frank_D]

Quality design that is unique and above and beyond what came before it can surivive and even thrive.

brother Matt

i was of the same opinion for the longest time as well but i now question this logic myself

like food at a restaurant quality is expensive which to me equates to private + upscale + limited

additionally unique and above and beyond means to me artistic + subjective + accepted timely + ellusive

this was the basis for my idea of a twelve hole course (two sixes a side) primarily for the attention grabbing value of it AND a time saving element (the guaranteed maximum THREE hour round) - [most golfer quit playing because of the time it takes to play (NGF)]

the bottom line however was potentially more effected by factors like the weather than any other single item - i could more reliable control quality, unique, above and beyond - but i cannot control weather and this doesn't even touch on other alternative uses for a 220 +/- acres property

so survive yeah i guess - but to thrive well i only see a "lucky" few that will be the exception - however OVER TIME even these will succumb to market forces

[Matt_Ward]

frank d:

Quality design can be achieved without gorging the price for people to play. Black Mesa is just one example -- I could list others throughout the nation.

The key here is in getting the diehard golfer psyched to play and return to those unique places. Does anyone believe that Bandon and Pacific Dunes is really successful without enticing die hard players to go there and return. It's not Joe Sixpack who wants his big gulp drink at the turn and dodger dog that's for sure.

The problem is that overkilling the public with the same tired old formula of empty designs with their formulaic ponds iin front of elevated par-3 type holes simply puts people to zzzzzzzzz!

Brother frank -- the issue for many people who jumped into the golf course business is that they believed if they simply opened a formulistic design (even those by TF and others) and had some flight attendant serving refreshments along with some high school kid greeting you when you arrived would make up the difference. The reality is that the core issue has been and still is the quality of the experience from the GOLF side of the equation. You can't lure people back over and over again when the result is a "McDonaldization" of what makes the core golf experience so special and enriching IMHO.

[A_Clay_Man]

Unlevel playing fields, are IMHO, a big issue. Muni's that can waste more money, than an entrepenauer can generate, makes survival, for the risk taker, challengeing.
Why doesn't the ASGCA, GCSAA, PGA of America, the PGA Tour and all the other periphrial industries do whatever is needed to put GOLF in a special category? Similar to the tax free lifestyle of the poor and religious, golf NEEDS protection. Joe Peschi put it best when he said he couldn't write-off his membership but every nut-case actor who sees a shrink 3 times a week is deductable. His golf relieves the need for therapy and I even heard there are some people who treat golf as their religion. So why not have "special" status.

Hell, you could legislate standardized maintenace and make everybody happy.