[David_Tepper]

"Even 2012 Is Looking Up"

http://online.barrons.com/article/SB50001424052970204555504576075952427829830.html?mod=BOL_twm_col

[mike_malone]

 Not so fast there David.
   Our last recovery in 2002/7 was supported 2/3rds by home equity withdrawals representing a huge dependence on debt versus incomes and the weakest employment growth for a recovery since the GD. We did see a once in a lifetime bubble in financial incomes . Now we have had a sharp but unsustainable bounce in incomes for Wall Street and had government account for a record 20% of consumer spending. The recovery has been subpar relative to the dramatic decline that proceeded it. Robert Shiller recently observed that long term unemployment usually is 1% of the rate; now it is an astounding 4%.

    I believe the next shoe to drop will be the spring decline in housing prices in the suburbs of the major cities. Presently 20% of those with mortgages are under water . If prices drop 10% more that number heads for 50%. To me this is the single most important thing happening in the economy. In 2007 the Fed was totally clueless about housing just as it was imploding.

  It saddens me to hear that Bernanke thinks his QE is working because small cap stocks are rising. When did the stewards of our banking system become speculators?

    GDP could continue up to deceive people into thinking the economy is moving forward but if this happens purely because the government is testing the limits of its borrowing power then God help us. Because according to my study of financial history speculative advances are intoxicating but end in crashes!

[paul cowley]

If you were joining a club today, what would you look for:
Architecturally
Financially
Socially ?

Low debt, which means golf only and no social infrastructure. I am clearly not representative of all golfers, but Newport, Yale, Palmetto, Cape Arundel and Mink Meadows are more my cup of tea. The kids are getting older and we have access to a pool club in Connecticut. After some recent bad experiences with less than truthful modern golf course owners, if I wanted to join a new style club, I would do it through Outpost Club or a similar local society to minimize the risk.

Mink Meadows...now thats a through back from my youth...need to go back. Hope its not too irrigated.

[Jud_T]

Mike,

How's that mattress looking?  Hope you take your money out occasionally and wipe off the cobwebs.  And oh yeah, for that sandwich at the turn circa 2030, remember to hold the mayo!

[Patrick_Mucci]

JME,

Years ago we considered "pooling" on special equipment, like giant leaf blowers/collectors and other equipment.

While the financial concept was sound, "control" and timing of use were the biggest impediments to implementing the concept.

Are there many companies who specialize in renting equipment used on golf courses ?

[Chris Johnston]

JME,

Years ago we considered "pooling" on special equipment, like giant leaf blowers/collectors and other equipment.

While the financial concept was sound, "control" and timing of use were the biggest impediments to implementing the concept.

Are there many companies who specialize in renting equipment used on golf courses ?

Out our way, we make available all of our equipment to our neighbors, including sharing specialized equipment and parts.  We also borrow stuff that others have that we don't.  It just makes sense and I'm surprised more folks don't do this.

Simple economics mandates sharing, being a good neighbor requires it. Part of the new paradigm.

[mike_malone]

 Jud,

    I assume you are an adroit speculator. This is your time. I'm comfortable that the current environment is , however , hostile to investors  and I have felt that way for a decade. So far it has been a helpful point of view that enabled me to avoid the two crashes.
 
   I realize this point of view is in the minority. It has to be because the majority's opinion justifies holding their positions. I wish I didn't believe we were headed for another crash but I would have to deny powerful and obvious information to do that.

   This relates to golf clubs and architecture because both benefit from a speculative environment and suffer in the inevitable retrenchment.

[Greg Tallman]

Getting back on topic, will the current environment foster a "collective" approach to maintainance costs in terms of equipment purchases and sharing ?

Will golf return to a more rugged look, or will the demand for immaculate grooming continue ?

Will it? No chance.

Should it? More say no than say yes.

Heck, I have to defend a course that is nearly perfect in terms of color/firm&fast with our guests. They will point out a little area that is ever so slightly brown (one that i would let go for a few more days before worrying) and scream about getting a refund so I say there is little chance to present a "linksy" look on a "country club" facility for lack of better terminology.

[JMEvensky]

JME,

Years ago we considered "pooling" on special equipment, like giant leaf blowers/collectors and other equipment.

While the financial concept was sound, "control" and timing of use were the biggest impediments to implementing the concept.

Are there many companies who specialize in renting equipment used on golf courses ?

I imagine some densely populated areas for golf courses would have something.I've heard that some South Florida courses use an outside company to aerify greens and fairways.

Funny you mention leaves--that's the one piece of equipment I thought would be a layup.This gigantic "leaf vacuum" cost about $50,000 and none of the 4 clubs talking had one.Still,even though each of us thought the $12,500 apiece was a reasonable expense,the conversation just turned to the scheduling/transport issues rather than the possible upsides.

Sand purchase is my pet peeve.Everybody uses it by the boatload and a huge part of the cost is the shipping around here.So,we all could have gotten higher grade sand at less cost.But,again,the conversation bogged down into trivialities.

[David_Tepper]

"Economists Predict Growth in 2011"

http://online.wsj.com/article/SB10001424052748703727804576011521781546808.html

"Economists Optimistic On Growth"

http://online.wsj.com/article/SB10001424052748704307404576079870784741108.html

[mike_malone]

 I'm glad to see economists are bullish!

[Doug Siebert]

Wouldn't a leaf vacuum be something difficult to share because everyone would want to use it around the same time?  You can adjust the timing of when you aerate, but the leaves fall and blow around at the same time on all courses in the area.

[Jim Nugent]

David Tepper, I wonder how many economists who are bullish today, were bearish in 2007 when the financial crisis began?  The answer is either none or almost none.  So even if their logic is sound (which I doubt), they failed a basic requirement of science.  Their predictions did not come true.  Given that, why does anyone listen to what they say now? 


   

[Jud_T]

Stocks, bonds, market psychology and golf memberships will go up and down.  It's simply more fun to spend our meager time here with a glass half-full attitude before we plug in that big sand trap in the sky....

[mike_malone]

 Believing that stocks will do lousy and the economy sucks is not a pessimistic or negative attitude. There are always ways to invest in every environment. Sometimes I think "stocks are the best long term investment" is like a creed. One believes it; states it over and over again regardless of the facts. When there are powerful historical parallels to the contrary that can guide one I see this creed as a classic example of denial.

[JMEvensky]

Wouldn't a leaf vacuum be something difficult to share because everyone would want to use it around the same time?  You can adjust the timing of when you aerate, but the leaves fall and blow around at the same time on all courses in the area.

To the leaf vacuum,not really that difficult.The clubs having the discussion are mostly dealing with pine trees.A couple hours' of "vacuuming" does more good than 10 guys with leaf blowers.Once a week with the vacuum would be a 100x improvement.

Down here,aerification schedules are etched in stone.Virtually every club in town will aerify on the same day(or close to it),barring some outside event being scheduled.

[Jud_T]

Mike,

Betting against the american consumer is a fool's errand.  They will spend until you pry the credit card from their cold dead hands. They may be cold, but they 'aint dead yet...Once everyone repairs their balance sheet, which admittedly may take a while,  everyone will be shocked at the robustness of the economy and how it felt like it came out of nowhere.  People are still quite shell shocked at what happened over the past 4 years and it will color their judgement for a generation.  These folks will miss out on the next business cycle when it kicks in and will be playing only the most affordable golf...

[mike_malone]

 When the consumer had access to credit they could continue to spend. Now a large part of the population is tapped out. Assets to support borrowing are declining ; incomes are on the decline for many as well. Temporarily the government is doing the borrowing to make up the difference. However, the government is fast approaching their limit as well. When the consumer debt to income is 120% I think betting against the consumer is like stealing candy from a baby!

   Borrowing makes sense at the beginning of economic moves when leverage ratios are low but not when it means using your last dollar . Christine Romer's article in the NYTimes this weekend touched on the need for hard choices.

     I expect that clubs aren't any different than the majority; they will continue to think things are going to get better anyday now. It will take a crisis of membership to wake them up to reality.

[Patrick_Mucci]

Wouldn't a leaf vacuum be something difficult to share because everyone would want to use it around the same time?  You can adjust the timing of when you aerate, but the leaves fall and blow around at the same time on all courses in the area.

Doug, it's not a piece of equipment that you'd have to keep for more than a few days, thus, rotating it's use in October/November isn't a problem.

I would imagine, if the problem occured in the spring, you'd see more concern, but, with the golf season winding down in the fall, it's probably viewed as a better rental item.

[Paul Stephenson]

I don't know anyone who objects to Social Security.
I think one of the complaints has to do with the inverted pyramid problem where the burden for funding for more and more people is falling on fewer and fewer people[/color]

That's demographics at work more so than fiscal policy.  Those complainers should go out there and start making babies at greater than replacement levels. 


Paul, that only works if those babies are contributors and not users (;

Touche Pat. 

As to your question I hope it will.  Supers are now being asked for better conditions with fewer dollars.  I can't see them not at least trying something outside the box.

Will depressed real estate prices and economies of scale with respect to F&B and maintenance result in a localized Clubcorp model?  We have Clublink up here in Canada that is always looking for a deal on course acquisitions.

[Craig Sweet]

Pat...we use leaf blowers and vacs. everyday...all day....when the leaves begin to fall. It isnt a piece of equipment we lend out.  Something new for us...we will be leasing our equipment begining this season...5 year lease....vacs. and blowers and possibly aerifiers will not be included in that lease, but the equipment we do lease I doubt we could lend to a neighbor without violating our leasing agreement.

[Patrick_Mucci]

Craig Sweet,

That's interesting that the lease agreement may prevent sub-leasing.

I wonder what it says about borrowing or removal from the premises.

The leaf blower I was referencing is a rather large piece of equipment that vacuums them up, then stores/compacts the leaves.

If you just blow the leaves off the playing surfaces, that night or the next day, chances are that Mother Nature will blow them back onto the playing surfaces.

[Craig Sweet]

Pat...we blow tee thru green with Buffalo blowers and get the leaves out into the rough where we vac. Them up with a variety of different pieces of equipment....this might begin as early as mid Sept. And it continues right into November....any leaves we could not get to in the Fall we blow, rake and vac in the spring...

I'm not certain how the lease works...I was thinking the equipment cant leave the property....I think leasing is going to be a good thing for us....every five years the equipment gets swaped out....the Super can plan around the lease knowing he doesnt have to trade off one piece of equipment for something else in his budget.

[David_Elvins]

I thought this was interesting.

http://www.dailyreckoning.com.au/the-growing-fiscal-disparity-between-insiders-and-outsiders/2011/01/14/

[mike_malone]

 David,

   Stop reading that website; it will turn you into a pessimist.

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