Another depressing golf development article

[Tim Liddy]

Another depressing story about the current state of golf in NY Times.  It is going to be a long 2009.

http://www.nytimes.com/2009/01/09/greathomesanddestinations/09golfhomes.html

[Jeff_Brauer]

From that article:

The National Golf Foundation, a separate industry group, says there are some 16,000 golf courses of every type in the United States, including more than 3,200 that are linked to residential real estate developments. Over 50 residential courses have closed since 2006.

Funny, I would have thought there were more than 3200 and 20% +/- of courses in housing developements.

[Brent Hutto]

So in a 2-3 year period about one-point-something percent of residential golf courses have been lost. What would these people say if a real disaster occurred? That's is just a minor setback to the industry at worst.

[Jeff_Brauer]

Brent,

Its a huge setback to the design and construction industry, I can tell you that. 

How bad is it?  ASGCA is considering replacing our tartan jackets with burlap sacks!

But, I wonder the same thing about the national economy.  Newpapers call a 2% drop in Christmas sales a "disaster."  Even if retail stores run on only 2% margins, it would seem they could hang on until times got better.

But, we did have a post here earlier this week about rail traffic being down about 30% from last year, which indicates maybe they got the decimal wrong on some of that shopping stuff.

[Brent Hutto]

I'm also wondering, like Jeff, what parts of the country account for the 80% of golf courses that are not within housing-developments. In my area they're practically all housing development courses with only a couple of exceptions.

[Ian Andrew]

Jeff,

Historically people cut out travel and vacations first and replace them with smaller purchases for the home like DVD's or TV's - the numbers are right.

[Jim_Kennedy]

Brent,
In Ct. there are over 180 golf courses and I can only think of 4 that have the housing component, and it's similar for states in the N.E.

[Bill_Yates]

The problem may not be a "state of golf" problem at all.  Can you give me one reason to expect that 1,600 families would want to move to Turlock?

[Joel_Stewart]

Doesn't surprise me that The Falls in Las Vegas would be shut down.  Perhaps they could just cut back a little on the water.

[Greg Tallman]

Doesn't surprise me that The Falls in Las Vegas would be shut down.  Perhaps they could just cut back a little on the water.

The woes at Lake Las Vegas preceded the economic crisis... think they went into bakruptcy mid summer if not earlier. At least they had been heading that direction for an extended period.

As Jeff mentions the effect on the design/construction industry is catastrophic. Tough steps being taken by some of the bigger players in the industry but as is always the case those with talent will find a way through this and prosper in the long run.

[John Kirk]

I played there a few years ago, because the course was listed in Golf Digest's top course in California.  I remember sitting at lunch next to a handsome older couple, and as I do, struck up a short conversation.  I sensed the couple the chasing the American dream, and remember the woman saying how much she loved her new golf retreat and community.  Even then, I was thinking how remote and impractical it all was.

The course is OK, just another Doak 5 in a sea of 5s and 6s.  Great California style background of rounded coastal foothills dotted with live and valley oaks.

[Jeff_Stettner]

I think Las Vegas will be a fascinating world of N.L.E's in the not-so-distant future. I am heading there on buisness in two weeks and my rate at the Wynn will be $110. The city is in deep trouble...

[Garland Bayley]

I'm also wondering, like Jeff, what parts of the country account for the 80% of golf courses that are not within housing-developments. In my area they're practically all housing development courses with only a couple of exceptions.

You guys need to get out of the city once in a while. The states with the most golf holes per capita probably have next to none in housing developments. Those states would be states like ND, SD, WY, MT, etc.

[JohnV]

The problem may not be a "state of golf" problem at all.  Can you give me one reason to expect that 1,600 families would want to move to Turlock?

Diablo Grande is not in Turlock.  It is in the foothills on the west side of the valley across from Turlock.  The great dream was that the state was going to build a good road from there over to the south end of San Jose (there is a very twisty windy one from Patterson currently).   Had that been done, the development would have had easy access to Silicon Valley and been successful.  Unfortunately that road is still on the drawing board and given California's budget problems won't be built for a long time.

[Adam Jeselnick]

Successful in what context... even longer commute times for the Silicon Valley workers who could not afford to buy real estate in their hometowns??  That reminds me of the planned developments 45-50 miles west of downtown Phoenix... this model just doesn't make sense now.

[PThomas]

. I am heading there on buisness in two weeks and my rate at the Wynn will be $110. The city is in deep trouble...

wow!  they cant still be charging $500 for that course can they?  wasn't the plan to keep that course open for only abit and then redevelop?

i wonder how bad it will get there and elsewhere...will it get (a lot?) worse?
my heart goes out to those hit so hard by this mess

[Joel_Stewart]

I think Las Vegas will be a fascinating world of N.L.E's in the not-so-distant future. I am heading there on buisness in two weeks and my rate at the Wynn will be $110. The city is in deep trouble...

That has to be a mid week rate from an internet travel company.  I was there over New Years and Wynn and Encore were sold out.

As far as the golf course, I didn't play but walked out back and as of January 1st in looked like Augusta in April, perfectly green and firm.  The entire 18th hole has a row of flowers running along the right side of the fairway.  Wynns budget for flowers must exceed $1 million per month and when you walk around both of the hotels you'll see what I mean.

The only thing I thought was interesting was Wynn finally bowed to some pressure and replaced quite a bit of real grass around the resort with a hgh quality artifical grass which looks pretty good. 

[Bill_Yates]

John,
My sarcastic point was that a business plan that includes 1,600 houses has to include a compelling reason to move there and, not be based on the "dream" that the State will provide a multi-million dollar highway to enable the potential buyers to actually get there.  It's failure is no reflection on the attractiveness of the game of golf, it's a problem based on bad business decisions.

[Jeff_Stettner]

I think Las Vegas will be a fascinating world of N.L.E's in the not-so-distant future. I am heading there on buisness in two weeks and my rate at the Wynn will be $110. The city is in deep trouble...

That has to be a mid week rate from an internet travel company.  I was there over New Years and Wynn and Encore were sold out.

As far as the golf course, I didn't play but walked out back and as of January 1st in looked like Augusta in April, perfectly green and firm.  The entire 18th hole has a row of flowers running along the right side of the fairway.  Wynns budget for flowers must exceed $1 million per month and when you walk around both of the hotels you'll see what I mean.

The only thing I thought was interesting was Wynn finally bowed to some pressure and replaced quite a bit of real grass around the resort with a hgh quality artifical grass which looks pretty good. 

Weekday and weekend. Discount site, yes, but any hotel search engine is coming up with $170. Either way, it's dirt cheap and this is in January (not the middle of summer).

[Steve_ Shaffer]

How about Coyote Springs north of Las Vegas? Why was it built in the first place?

As Pogo said,  “We have met the enemy and he is us.”

[mike_beene]

What is the definition of a housing component?Do Pebble Beach,Pasatiempo and Pinehurst #2 have housing components?Is it true that holes 4 and 5 at P#2 were built to help sell homesites? Once a real estate course always a real estate course? Not that there is anything wrong with that.There is the more extreme housing course that I think "we know it when we see it"

[Adam Jeselnick]

What is the definition of a housing component?Do Pebble Beach,Pasatiempo and Pinehurst #2 have housing components?Is it true that holes 4 and 5 at P#2 were built to help sell homesites? Once a real estate course always a real estate course? Not that there is anything wrong with that.There is the more extreme housing course that I think "we know it when we see it"

Mike,
That is a great question.  I was actually thinking about this when I played at Troon North last week.  Not completely dissimilar from PB and P#2--both of which I had the great privilege of playing in 2008--Troon was developed first as a golf course but with plans in place for future housing development.  Any course that is affected by a residential component--whether in the routing and design phase, or later through the visual impact on views and setting--could legimately be called a "real estate course."  However, I think that this assesment may be misleading given the capacity of some courses to eclipse their surroundings, whether through great design or other redeeming qualities.

In some cases, it could even be said that homes--or any other buildings--surrounding a golf course contribute to the design and virtue of the layout.  Can anyone imagine playing #18 at Pebble Beach without homes and the Lodge providing a backdrop?  What about the 18th at North Berwick or TOC? 

To me, a "real estate course" is one that is designed and built for the sole purpose of enhancing a housing development, and where the course is a lower priority than maximizing lot values and quantity of homes.  On the other hand, the development plan at Tiger's latest announced project, at Punta Brava, was apparently modified due to his on-site input regarding an area that was slated for homesites, but will now be part of the golf course. 

Many great courses, I believe, would not / could not have been built without the finanical support of a housing or resort component... although more often in recent years, golf courses have suffered as a result of being subject to the demands of the money-driven real estate developers.  It will be interesting to see how this push-pull dynamic between course design quality and short-term real estate ROI plays out given the current market...
-AJ

[Forrest Richardson]

The depressing part is that decision makers;

(1) Spent too much to begin with

(2) Created the wrong product (high end, perhaps, instead of main-stream)

(3) Looked at golf financing as if they were buying a big yacht — and, did so with other people's money.


I am not saying that all courses created in the past decade and a half were all wrong. That is not the case. But, we are seeing a fallout from bad decisions, egos and a host of financial missteps that could have easily been avoided if they had just hired Tim, Jeff, Ian or me.   

[W.H. Cosgrove]

So in a 2-3 year period about one-point-something percent of residential golf courses have been lost. What would these people say if a real disaster occurred? That's is just a minor setback to the industry at worst.

Reminds me of the old economic saying....."a recession is when your neighbor loses their house, a depression is when you lose your house."

What we don't yet know is how many courses are on the very brink of oblivion.  I can name a couple in my area that are simply hanging on. 

We haven't seen a year end financial breakdown for Chambers Bay, but winter rates are $49 for locals.  It takes a lot of full price rounds to get the annual average to the $100 per round estimated to break even. 

And after the excess capacity in the system is absorbed, how long will it be for our friends in the design/build business to recoup the losses from these slow times.  Brent, I have to believe that the tide is still going out on this one.  It could be a very tough summer in the northern climes.

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