Great Architecture Alone Cannot Drive Economic Success

[Mike Hendren]

Discuss.

Mike

[Ally Mcintosh]

If I knew what your thread title meant, I might be able to try...

[Chip Gaskins]

I think what Michael is saying is that just because a new course might be off the chart good from a GCA standpoint, it doesn't automatically mean it is going to have a great ROI.

Did you pay too much to build it (debt service is too high)
Does it cost too much to maintain (Op Ex is too high)
etc...

[Ally Mcintosh]

Thanks Mike... Return On Investment I'm guessing... Apologies for my ignorance...

[Adam Clayman]

If you're dumb enough to enter the golf business just for "Economic success" you deserve the outcome.

Great architecture should only be built for those who truly love the game, have gobs of money and can afford to sit out the fickle uneducated masses perception of quality.

[Jim_Kennedy]

"Great architecture should only be built for those who truly love the game, have gobs of money and can afford to sit out the fickle uneducated masses perception of quality."-AClayman

Gee, thanks.   

[Mike Hendren]

Ally,

No apology necessary.  As my dad says "we're all ignorant - just about different things."

FWIW this thread was prompted by the announced closing of Beechtree, which may or may not be "great" architecture.

Mike

[Adam Clayman]

Jim, which subset are you?

[Jim_Kennedy]

Michael,
It doesn't hurt, a place like Sand Hills wouldn't exist without it. Good architecture also seems to be much of what's behind the success of Rustic Canyon. Wintonbury Hills has gained its popularity in large part(MHO) because of the course itself, with location, conditions, price and service as part of the mix.

Conversely, do you remember the Ted Robinson thread wherein Shivas equated 'greatness' with financial success? Think of how many good, average, or just fair courses there are that turn a good buck for their owners.

What drives (and what elements are needed to drive) economic success depends on the 'model'.

[Les Cordes]

coore and crenshaw's clear creek in nevada on the east shore of tahoe may be a case in point...there seem to be an abundance of tahoe area courses......some high end such as martis camp..perhaps lahontan...it will apparently be ready in 2009...with the usual residential development piece.....how many tahoe course can make it with $500k lots and big initiation fees.. les

[Jim_Kennedy]

Adam,
I fall into this category: it's too bad that 'great' architecture remains, to this day, mostly for the entertainment of the wealthy or the connected. Had it been more widely built from it's inception in this country there would have never been the need for anyone to ...."sit out the fickle uneducated masses perception of quality", no one would have needed ...."gobs of money" to enjoy it and the vast majority of it   .."would have been built for those who truly love the game" because the culture of accepting shiny crap would have had less of a chance to establish itself.

[Tom_Doak]

Mike H:  Of course, architecture alone will not drive economic success.  I don't think Beechtree qualifies as "great" but certainly great courses have failed over the years, Lido the first that comes to mind.  The location, the competition, the economy are all factors.

Generally, though, it comes down to markets.  Beechtree would have been doing just fine if Bulle Rock hadn't opened just down the road a year earlier.

What I've learned over the years is that generally, there is room for only one top dog in any given market, and all the other courses are fighting for the scraps.  There is no "upper middle" of the market ... you are either #1 (or #2 if the market is big enough), or you are competing on price along with everybody else.  In my home area, Arcadia Bluffs is consistently drawing 20,000 rounds at $150 per, even in a very bad economic climate, but everybody else is struggling to get 15,000 rounds at less than half the fee.

The thing which keeps us architects busy is that so many developers really believe they will build the #1 course in the market.

[Les Cordes]

tom....in this context...i mentioned in another thread all the tahoe development...martis camp(fazio)...and the upcoming clear  creek...coore/crenshaw..how do you see that playing out...financially..?? how much more room is there for high end/high initiation fee, etc gc residential developments in areas like this..where the season is additionally so truncated..and monthly dues may ultimately reach $700-800 and up...tx...les

[Rich Goodale]

Generally, though, it comes down to markets.  Beechtree would have been doing just fine if Bulle Rock hadn't opened just down the road a year earlier.

Tom

The conventional wisdom in the retail business is that the best place to build a shop is across the street from another one selling the same products.  Why would golf be any different?  Think Kingsbarns.  Think Pacific Dunes?

Rich

[Mark Bourgeois]

Hey (David) Ricardo

In retail, clusters form to minimize search costs.  More generally clustering is driven by opportunities to minimize transaction costs.  I guess driving from one course to another would be an example of that, killing multiple rounds out of one hotel room another.

So, maybe.  But Aberdeen (MD) isn't the sort of place where you spend any amount of time, unless your specialty is turning depleted uranium into something very hard and very painful.

Yours in scope,

[Mike Hendren]

Tom, thanks for that insightful post. 

Rich,  not sure that your theory of cummulative attraction has merit.   I always prefer that my developer client gets to shut the door behind him - usually through assembling an in-fill site or alternative by negotiating a difficult entitlement process.  The difficulty of procuring and entitling such a site is beyond the capability of the raw amateur and an inherent barrier to entry.  

Mike

[Tom_Doak]

Rich:

I am not sure the comparison with retail shops works well here.

I think part of the point of putting your jewelry store across the street from the competition is so people can window-shop to compare prices and selection ... sadly golfers do not do that as most don't play multiple courses in one day.

"Clustering" does work well for destination resorts with multiple courses in the area, but for daily-fee courses it just adds competition and splits up the market.

[Bob_Huntley]

Tom,

Has a developer ever posited to you that he would like to build a course, basically as  a land bank, outside of a metropolitan area? I think this was a corporate plan of a listed company that built Self-Storage units between Dallas and Fort Worth, having an idea of where the Interstate Hi-Way was to be routed.

Bob

[Rich Goodale]

Hey (David) Ricardo

In retail, clusters form to minimize search costs.  More generally clustering is driven by opportunities to minimize transaction costs.  I guess driving from one course to another would be an example of that, killing multiple rounds out of one hotel room another.

So, maybe.  But Aberdeen (MD) isn't the sort of place where you spend any amount of time, unless your specialty is turning depleted uranium into something very hard and very painful.

Yours in scope,

Mark

When I was across from Aberdeen PG last week, I let my daughter swim in the river.  Should I now expect her to glow in the dark?  If so, that is a result--no more costly expenditures for night lights......

As for clustering theory, that's why Bandon Dunes and Myrtle Beach and East Lothian and St. Andrews work and Sand Hills works only in a very narrow sense.  I wonder.....how's the real estate market in Mullen, NB doing these days.....?

Ciao

Ricardo

[Tom_Doak]

Bob H:  I think Charlotte Golf Links is a land bank ... the actual landowner leased it to the golf developer for a 25-year period, after which the land will be worth much more for housing.  In the meantime, he doesn't pay the taxes on it.

[Mike Hendren]

Tom, you're likely right about Charlotte Golf Links, assuming the land lessee has no extension rights.  Generally I wouldn't finance anything with an  unsubordinated ground lease of less than 40 years with a couple of 20 years extensions. 

I cannot fathom the developer of a course with a total lease term of 25 years making money with no reversionary value available at the end of the holding period. 

[JohnV]

Wynn's new course in Las Vegas would appear to be a land bank.  It was known that it would be torn up in a few years.

I don't think that great architecture can drive economic success without a good marketing plan on top of it.  The word has to get out by means greater than word of mouth.  The average golfer is not smart enough to know great architecture if it bit him in the butt so he needs some marketing or media person to tell him, hence the top 100 lists driving business to the courses.

[rjsimper]

What is an example of a course where great architecture has been the primary factor driving a course's financial success.  The first one that came to mind was the Bandon facility, but I think the ocean has as much to do with it as the exceptional architecture.

I'm not saying there aren't many, I just think that the idea that architecture is a major player in economic success of a public facility is untrue.  Seems that passable architecture, good scenery, potentially pricing, and a solid marketing plan are the recipe for success. 

Wild Horse maybe?  I guess you'd have to see a course's books to know for sure - one could speculate only.

[Chris Cupit]

Architecture has limited appeal to a very small group.

Location and price are most important even for the vast majority of private clubs.  After that, a solid reputation as a course in good condition is also very important.

But it's really all about having a good location and small enough debt so you can keep your fees reasonable.  The low debt is crucial for the obvious reason of simply servicing the debt but little or no debt allows you to respond to price deflation without losing money and falling into the "death spiral".

[Brad Huff]

okay so I'll jump thread because I think I was heading this way anyway in my thread about toughness.   Based on what Chris just said about great architecture appealing to a very small group, let me throw something out.

As a high school physics teacher, I am frustrated more every year as administration (fed, state, local) work more and more towards cookie cutter curriculum.  I KNOW what the art of teaching looks like and feel it being taken away from me.  The question I ask (and I think it fits in this thread) is for the GCAs:

Does this pressure from the money people strip some of what you would call the "art" of what you do?  Maybe an example would be, given your last project, would you have done it differently if the client said, "Here's the land, tell me what it cost and what it looks like when you get finished."?

I've got to think this is true.

Some circular logic to ponder...

There are very few courses whose popularity is based on architecture because the public is mostly ignorant of good architecture.  Developers will sacrifice great architecture to give the public what it thinks they want.  Public plays said courses and remains ignorant of great architecture.