Sometimes the Truth is Shocking to Contemplate

[Matt MacIver]

Recall that Bronner further wanted to boost tourism to his state by buying US Airways out of bankruptcy.  Interesting syngeries and it might look good on paper...but there is NO good long-term business model I've seen yet that makes sense in the airline business...maybe aside from NetJets.  

[Jim Nugent]

Bureaucrats who think they can run national businesses is pretty frightening.  Real glad I'm not part of that retirement plan.

[Adam_F_Collins]

This is an issue which I have been wondering about for a while now. In our region, a round of golf averages at about $50 per round. There are a couple at about $85, and a couple over $150.

I'm not playing golf for $150 a round. Highlands Links is $85 and I'll only play that once or twice per year. To tell you the truth, a poorly-designed course is not worth $50. It's all a question of value to me, as a golfer.

I know a golf course owner here who turned his farm into a course. It sucks from a design perspective. However, at $30 per round, he's making a great profit ( he told me he made "a couple hundred thousand") while the course nearby which is better designed and $57 per round is losing members to him.

What I want to see are more thoughtful designs at the muni level. To me, $30 green fees on a fun golf course should not be a pipe dream, they should be the norm.

[paul cowley]

Adam, I agree that should be the entry standard for the masses....especially if we are going to let newcomers learn the game.
Then they can always trade up as they please.

...on a different note, I don't see anything alarming about courses being bought and built over for new housing developments...I think that is a very healthy sign.
I would only be concerned if these same courses closed and put up a For Sale sign with no takers.

[Kerry Gray]

Maybe it's what the industry needs.
As the population ages more people will be looking to golf in my opinion but very few of them will have deep pockets for the high end private or public courses. Let's say over $40k to join as private or over $100.00 per round public.
My market in Toronto seems oversaturated with the high end public and private. Several of the older high end courses are reducing rates.
Several of the mid to high end private are searching for members.
For myself, this is a great opportunity. I am looking for better golf at a better price and I think as time goes on, my options will increase.
For the architects this may create a different options. Some of these courses are just poor designs and can be greatly improved with the right architect and budget. Some should be plowed under and re-built and that should be easier to get approved by the enviromentalists than a new course. Unfortunately the courses being plowed under are usually replaced with houses. How do we reverse that trend?
Kerry
 

[paul cowley]

Kerry...its my feeling that if a course is overbuilt for its market it will struggle and either be sold for a loss to a new buyer and then reissued back as a course that can achieve a profit OR it can be absorbed back in the market place for another use.

...on the other hand, when a course is bought and then replaced with housing, this indicates a strong growth economy......with a good chance that the course will be replaced farther out or in an area that is not as desirable for housing.....a lot of these NLE courses re appear elsewhere.

[Tom_Doak]

Kerry:

If a course is badly designed from the start (poor routing or bad greens), then no architect is going to come in and fix it for a song ... it will cost a couple of million dollars to fix, and that's $20-30 in green fees on top of whatever it cost to acquire the course to begin with.

[Paul_Turner]

I think this has all been true in the UK for the past 30 years!   (land is limited and v expensive)

Which is why it's either cheap crap thats built or expensive courses that struggle.

[Jerry Kluger]

Allow me to demonstrate how a member can lose money joining a new course.  Say he puts up $50K as an initiation fee which is refundable provided they have a current membership at a specified number and his dues payments are current.  He then moves to another location at a time when they do not have the requisite number of members for him to get his fee refunded to him.  He must now continue to pay dues for a course he no longer plays in order to continue to be eligible to receive a refund of his initiation fee should they ever reach the required number of members.  

Part of the reason why some of the clubs are not as successful as they could be is because of their memberships, such as those where only one person is a member and his or her spouse and children are not members and there is no membership category for a family.  I know of a struggling club which is just as I've described and they refuse to expand the memberships to include families even if the other members of the family are limited in their access to the course.  

[Kerry Gray]

Tom and Paul,
Perhaps a Pine Valley cannot be built over an existing course but many improvements can be made in most cases. Occassionally the troubled courses are bought at distressed prices and reworked. This does not necessarily increase the cost to the golfer. Clublink (not very well) has executed this strategy numerous times here in Canada. They have improved several poor layouts. None are going to ranked in the Top 100 in the world but that is not reasonable.
I am not an architect but I can think of many local courses that could be dramatically improved with some bunker  placement, tree removal and slight re-routing. Perhaps that can cost millions but I believe it will not always be that much. We are looking to improve the course.
Should more of the focus be on redeveloping/reworking existing sites with some postential?
With the current trend in cost and development laws how much land is going to be available to build new courses in 20 years? I am afraid not very much. What happens then?
Kerry.

[paul cowley]

Kerry..the idea of distressed properties being bought, reworked and re issued is all too common and part of what I was suggesting previously.....and there are quite a few development/management companies out there that do just that.
I am not as pessimistic on the 'golf and the environment' issues....I think we have seen the worst and actually are starting to see a more rational approach concerning golf from many of the environmental groups and agencies....probably because of the factual evidence that has come to light that confirms that golf is not the bad guy it had been portrayed but really an asset in terms of its relation to the community and the developed environment as a whole.

...or maybe its just as Mike Young has voiced that golf uses five times less pesticide than a corn or cotton crop...which is fact, as opposed to the old hype of golf being green toxic wastelands or some such blather.....and I think there will be plenty of land availiable for golf in future years.

[Paul Payne]

OK,

I've been keeping up with this thread over the last few days, and there has been some very interesting conversation surrounding the cost of golf.

At this point I do have to refer back to Mr. Doaks original post because in all of this nobody has stated the obvious;

Tom;

You are home having dinner with your wife, having an engaging conversation about the state of the golf course building industry??

My hats off to you, and even more, here's to your wife.

 


 

[John Goodman]

Mike:

That might be true, but wasn't this whole project an investment of state retirement funds?  Wouldn't they have to show a reasonable rate of return - something more direct than an improvement in the businesses in the surrounding area(s)?

Andy

I find it pretty unsettling to learn a state retirement plan is investing in golf courses.  Talk about speculative.  If the courses go NLE, as many seem to be doing, the retirement plan takes a huge loss.  

Bronner's actually done pretty well with the Trail for the state; he's very highly thought of here, especially by state employees.  (The pension fund has gone from 25% funded and $500M when he started managing it to close to $30B and over 90% funded, I believe.)  As I said in an earlier post, it's difficult to know which of the Trail courses are making money on the golf alone and which aren't, but some clearly are; I understand that the Opelika/Auburn courses get around 80,000 rounds a year (over the two courses combined), and I believe the Birmingham and Montgomery courses get comparable or greater play.  Some of the counties in which sites were built have reported 100% or greater increases in receipts in state lodgings tax since the Trail sites opened.  Again, you can't put a definite dollar figure on the Trail's impact, but tourism-related spending in the state has gone from about $1.5B/year when they opened to around $8B/year now.  Mississippi, Tennesee and Virginia have to a greater or lesser degree tried to follow the model.

The Trail overall ain't no model of GCA, and I can't defend Bronner's buying a 40% interest in U.S. Air, but I think the Trail was a great economic move for the state.

[Tom_Doak]

Paul P:  My wife puts up with a lot.

But, we were having dinner down at Lost Dunes when something she said gave me the realization that's the subject of this thread.  I even wrote a note so I'd remember.

[Mike_Young]

I know a golf course owner here who turned his farm into a course. It sucks from a design perspective. However, at $30 per round, he's making a great profit ( he told me he made "a couple hundred thousand") while the course nearby which is better designed and $57 per round is losing members to him.

What I want to see are more thoughtful designs at the muni level. To me, $30 green fees on a fun golf course should not be a pipe dream, they should be the norm.

Adam,
OK...an architecutre website with 1500 people in the world that discuss the virtues of golf architecture.....and a market of 24million golfers in the US that mainly want 6000 yards with good greens....souunds like your farmer buddy knows more about the golf market than his $57 neighbor...AND I bet he did not hire a management company.....

[Paul Payne]

Tom,

I guess everything in context eh?

[Anthony Butler]

Adam,
OK...an architecutre website with 1500 people in the world that discuss the virtues of golf architecture.....and a market of 24million golfers in the US that mainly want 6000 yards with good greens....souunds like your farmer buddy knows more about the golf market than his $57 neighbor...AND I bet he did not hire a management company.....

I am sure there is a web site where people discuss the finer points of a Charlie Trotter restaurant versus a Marco Pierre White establishment. Meanwhile the sign under the Golden Arches says 50 billion served.

Fortunately for Tom Doak the economy continues to create enough people who are in the former category, and willing to pay a premium for his considerable expertise. He's also smart enough to know it ain't getting any easier.

[Tim MacEachern]

I must say that I agree that golf is an expensive game for most people, and the situation keeps getting worse.  There are still deals around in smaller centers though.  

My course costs $2000 a year in dues (including taxes).  To me, that's $10 a day over our late-April to mid-November golf season.  Whether I play or not, it's $10.  Even if I play twice.  But many people around here still consider that (the $2000) an exorbitant amount.  This, they tell me while sipping on their twice-a-day $5 cappuccinos.

[Jim Thompson]

I said it three years ago and I'll say it again;  the only reason people pay what they do to build a course is because they can, NOT because they have to.  It amazes me what folks are paying and the profit they are willing to line everyone elses pockets with in the process.  The profit taking occurs on every stage of a project and so many are involved that it has become normal practice.  The current golf industry correction will be the only way to get it all back to some level of fair compensation.

Cheers!

JT

[Peter Pallotta]

JT's post above reminds me of something an old film producer in Hollywood said, sometime in the early seventies. He'd just made a pretty good picture for about a million dollars (at a time when the costs of making quality pictures was inching up to around 4-5 million). Someone asked him why there weren't more million dollar pictures being made, and he said "'Cause you can't steal a million dollars from a million dollar picture".

More seriously, my experience is the same as Kerry's; yes, Toronto has an abundance of high end public courses - some are well designed. Those are my choices. It makes it difficult to play as often as I'd like. I'm assuming I'm not alone in that.

If I were an architect, I too would want to work on the best pieces of land (for golf) as I could.  I understand that. But, how many of these great pieces of land are left in North America? I mean, Bandon and Sand Hills are obviously wonderful, and there'll always be enough people willing and able to trek out there to make them viable businesses. But in the major urban areas across North America, is there any of this 'great land' left? And if so, wouldn't it be so expensive as to make anything but a very exclusive private or very high end public course impossible?

Might not everyone (in major urban areas) have to change their expectations a little? I mean, perhaps Tom D. might have to start working (and hopefully working magic) on rather banal pieces of land, and maybe I'll have to start expecting to pay more even for courses built on such land.

Peter

[Eric Smith]

Bump.

A good topic by Mr. Doak and quite a few architects on this site posted responses. I'm wondering how much things have changed since May '06.

I just think it's time we seriously re-think the average project.  We should be building $2.5 million courses, not $5 million courses.  A $5 million course plus grow in plus maintenance building plus clubhouse equals an $80 green fee, and most courses are not getting that $80 green fee.

Tom:

I'll assume you are referring to Renaissance Golf Design as "we", in reference to building $2.5 million courses.  Or maybe you're not.  

If so, just curious, are there any of these type builds in the works by your team?

Maybe a 6200 yard course you've mentioned before as a goal, (see Carthage Club THREAD ) could fit this type budget?

Eric

[Tom_Doak]

Eric:

I meant "everybody in the golf business, including us" in the "we" referenced above.

We do have one such project in the works -- our redesign for the Colorado Golf Association.  It's a $3.5 million project, because you need a lot of irrigation for a golf course in Denver; it would be a $2.5 million project in a less dry climate.

I think Old Macdonald will be about a $4 million construction budget -- quite a bit more than Pacific Dunes.  But I'm not too worried whether that one will pay for itself.

Wicked Pony in Oregon is another story.  If it weren't being paid for by a housing development, you just wouldn't build a golf course on top of volcanic rock, period.

[Mike_Young]

I think TD's prediction is on track.  US  golf construction has got a problem.....International is going strong right now BUT they have no players just building an amenity whether for housing or hotels.
THE BIGGEST PROBLEM FOR U.S. GOLF.....IMHO....is that the unknowing boards at many older "no debt" clubs are being convinced they need to spend more than the cost of new construction to remodel or restore their existing clubs when it could be done for much much less.  The industry promotes this knowing they don't have new business.  Some old clubs will get in serious financial trouble with this scenario.

[Peter Nomm]

Correct me if I am wrong but all the statistics I have read lately indicate that the baby-boomers are just beginning to get to the retirement age.  An issue we face at our club is that we have very few younger members, mostly for the time value they have to put towards a private club (just as Shivas described).  90% of our members are retired and their family is out of the house.  These folks need something to do and therefore can justify paying more for the experience they want - and they do it 3 or 4 times a week.  I will tell you, in the fall, when the weather is less than ideal, I have these guys driving to the golf shop just to get out of the house!

I realize I am an eternal optimist, but it seems to me the future is not that bad.  I think you will see older, not very good golf courses being sold off for other purposes (ie. housing) as is beginning to happen here in WI.  And I would also bet you will continue to find that person with deep-pockets that wants to build something simply because he can.  

If these statistics are correct, then I believe the future to be OK.  The dynamic may change (maybe more private than daily-fee developments) but the need for golf will remain.

[BCrosby]

We don't need proof by anecdote that golf is in decline. Rounds per year have been flat for several years. Not a good sign with a growing, wealthier population base.

My guess is that this has little to do with gca. Or even the cost of gca. There are big, tectonic life-style changes going on with young families. Those are the people not signing on to the game. They may never sign on. And it's not because they think the game is too expensive.

I wish I had some clever suggestions about reversing those trends. I don't.

Bob