Stealing Rounds and the race to the bottom

[Mike_Young]

The owner of a course we are operating was presented a plan this week from a management company which told him he could expect them to bring him an additional 9000 rounds per year.  Really?
In the present golf environment there are no new rounds.  These companies go after nearby rounds by discounting or other incentives and then once they get them the other course does the same to get them back and you have a race to the bottom. 
If golf is going to make it we need to close about 1500 of these places sooner and not later. 
The funny thing about much of the "stolen round" theory is that often the courses promoting such are taking them from one of their other properties.
Are you guys seeing this?

[jeffwarne]

The owner of a course we are operating was presented a plan this week from a management company which told him he could expect them to bring him an additional 9000 rounds per year.  Really?
In the present golf environment there are no new rounds.  These companies go after nearby rounds by discounting or other incentives and then once they get them the other course does the same to get them back and you have a race to the bottom. 
If golf is going to make it we need to close about 1500 of these places sooner and not later. 
The funny thing about much of the "stolen round" theory is that often the courses promoting such are taking them from one of their other properties.
Are you guys seeing this?

will the additional 9000 rounds cover the cost of the "management" company?

[Gary Slatter]

The 9000 proposed rounds will probably equal the cost of the management company, however when they don't happen the management company will have other reasons or excuses.

[Ben Sims]

Are they serious?  In these difficult times, some people will do and say anything to justify their existence.  I will never--for the life of me--understand why a golf course would need a "management company."

[Mike Benham]

Are they serious?  In these difficult times, some people will do and say anything to justify their existence.  I will never--for the life of me--understand why a golf course would need a "management company."

The golf course doesn't need a management company, the owner needs a management company to run the course for him.

[Ben Sims]

Are they serious?  In these difficult times, some people will do and say anything to justify their existence.  I will never--for the life of me--understand why a golf course would need a "management company."

The golf course doesn't need a management company, the owner needs a management company to run the course for him.

No he doesn't.  He needs to get involved, be a part of his club/course, hire a staff, and manage his staff. 

[Joe_Tucholski]

The owner of a course we are operating was presented a plan this week from a management company which told him he could expect them to bring him an additional 9000 rounds per year.  Really?
In the present golf environment there are no new rounds.  These companies go after nearby rounds by discounting or other incentives and then once they get them the other course does the same to get them back and you have a race to the bottom. 
If golf is going to make it we need to close about 1500 of these places sooner and not later. 
The funny thing about much of the "stolen round" theory is that often the courses promoting such are taking them from one of their other properties.
Are you guys seeing this?

Mike I can't really comment with much authority on your questions because I'm not in the golf course industry.  My immediate thought is I think 9000 rounds is unrealistic in most cases but I would guess there are some situations where a management company could bring in 9000 rounds.  This may sound harsh but to address the race to the bottom I think if a course is in a position where they have to discount in order to stay profitable they are already at/near the bottom.  I do understand that a poor business decision can put a course at the bottom when it wouldn't have been otherwise.  When I think about the courses around me managed by American Golf I don't really think about deep discounts/specials.  I think of a relatively constant low price and an annoying cookie cutter website/reservation process.
 
I was hoping to get some clarification on the difference between a golf course management company and your company that offers golf course operating services?  I mean that as a sincere question.  Is the difference in the specificity of the management company, the quantity of courses that are operated by the company or some other tangible difference, aside from marketing strategies?

No he doesn't.  He needs to get involved, be a part of his club/course, hire a staff, and manage his staff. 

Should a resort like Bandon not exist because the owner has other business ventures to attend to?  I guess my take is the owner or board that chooses to hire a management company can be part of his club/course and has hired a staff and is required to maintain oversight of the management company.  It's up to the owner (or membership if we are talking private) to determine if the management company is in line with their goals and desires. 

Moving away from top level resorts I also think management companies make sense for some local courses.  I'm not involved in the golf course industry but I assume management companies are able to provide economies of scale.  On the private side I think something like Club Corps is an attractive option as you obtain to prospective members.

[Sean_A]

HHHmmm, how do you go about deciding which 1500 courses close for everybody else to stay afloat?  Isn't the point of discounting to ride out hard times in the hope of surviving for a better future?  I don't understand where you are coming from.  Either the course is in hard times or it isn't.  If it is in hard times, discounting is one way to try and stay open.  If the course isn't in hard times why offer discounts? 

In a way I am surprised some of these struggling public courses haven't been taken over and made private by a group of individuals with th eidea of of equal share membership.  Has anybody seen opportunities like this?  I would have thought there are plenty of people who would join a fairly cheap knock out the bullshit golf club run efficiently. 

Ciao

[Mike Sweeney]

Not quite sure how this fits in, but when Disney is exiting the golf business, it says something:

http://www.orlandosentinel.com/the-daily-disney/os-disney-golf-arnold-palmer-20110824,0,1710954.story

__________________

After four decades, Walt Disney World is getting out of the golf business.

The giant resort said Wednesday it has struck a 20-year-deal to turn over its five golf courses to a group headlined by legendary golfer Arnold Palmer. The move pairs Disney World's courses with one of golf's best-recognized brand names while also allowing the resort to step back from a business that has become less attractive amid competition from a glut of new courses built during the housing bubble.

Under the deal, Arnold Palmer Golf Management will take over day-to-day operations of each of Disney World's golf courses: Palm, Magnolia, Lake Buena Vista, Osprey Ridge and Oak Trail. Financial terms weren't disclosed, though the Texas-based Palmer group will make annual lease payments to Disney and split revenue earned from the courses with the resort.

[Steve_ Shaffer]

Nothing like Florida golf in the summer:

http://everythinggolf.blogs.heraldtribune.com/11599/sarasota-golf-prices-still-at-rock-bottom-lowest-ever/

[BCrosby]

It's about demand. When demand turns negative, golf courses built on projections that demand will grow forever are now upside down. The weeding out process will happen. The only issue is who will survive.

I think I know the course Mike is talking about. An operator promising 9,000 new rounds pretty much discredits himself. You should thank him from making a proposal and show him the door. 

Bob

[Mike_Young]

[

 
I was hoping to get some clarification on the difference between a golf course management company and your company that offers golf course operating services?  I mean that as a sincere question.  Is the difference in the specificity of the management company, the quantity of courses that are operated by the company or some other tangible difference, aside from marketing strategies?




[/quote]

Joe,
A few years ago when I saw that REALISTICALLY Golf course design was a dying business I started to pursue operating projects for various banks etc that would be taking some of these things back while also trying to be able to take advantage of a good deal here and there for purchase.  BUT I don't call myself a management company.  We jusr call ourselves a golf company.  I don't like management companies for the most part.  You always see a website with a list of CEO's, CFO's, COO's and about ten other executive positions but golf is not meant for all of that.  We just position ourselves to attack the issues from the side we know and not the "more rounds" side. 


I don't think some understand what I am saying regarding rounds.  THERE ARE NO MORE ROUNDS.  It's one pie and too many people to eat from it.  We all have to face it, private clubs, public courses, municipal courses, architects builders, golf pros, club managers, supts.  Everyone has to figure it out for themselves.  IMHO there will not be 50 architects needed in the entire business and most of it will be a hype business.  The regional and local archies will become a combo design build unit and no one on thissite will ever discuss their projects or even know their names.

[Anthony Gray]

  HMS

[Carl Nichols]

Mike-
There may be no more rounds, and perhaps this Management Company is full of s**t about what they're promising, but surely it's appropriate for courses to try to "steal" rounds from other courses by lowering prices, right?  That's garden-variety competition.

[Bruce Katona]

Stealing rounds by discounting prices is a death spiral.  The way to compete is to find the correct price point for the facility, provide a good exprience with playing conditions equal to the cost charged and the market will respond. 

[Phil McDade]

Stealing rounds by discounting prices is a death spiral.  The way to compete is to find the correct price point for the facility, provide a good exprience with playing conditions equal to the cost charged and the market will respond. 

Wal-Mart "stole" retailing from Sears by lowering prices; worked for them.

[Jim_Kennedy]

Mike,

It seems possible for a management company (or anyone else who tries to improve play) to generate 36 new rounds/day in a 250 day season, which gets to the 9,000 number, without discounting the standard fee.

[Jud_T]

Mike,

There may not be more rounds, but perhaps there is more market share.  If word get around that you're providing a great product at a good price you may be able to take rounds from other publics in the area and perhaps gain some guys who have left private clubs as it becomes more difficult to justify the extra 5-10k/year expense, especially if you're providing a great product at good value in comparison.

[Anthony Gray]

  Its all Tiger's fault. When he was hot everybody wanted to be a golfer. Now nobody goes to public courses because they are too crowded.

  Anthony

[George Pazin]

This happens in every industry that isn't growing - and in today's economy, that's most of them. There's no easy answers, certainly little or nothing a management company is going to fix, unless you know you are not a particularly strong businessman running your own course.

If your course is indeed better, more enjoyable, whatever, periodic discounting could bring in new customers that will become repeat customers. If you're just relying on the $$$, however, you are in for a rough ride.

[Mike_Young]

Mike,

It seems possible for a management company (or anyone else who tries to improve play) to generate 36 new rounds/day in a 250 day season, which gets to the 9,000 number, without discounting the standard fee.

JIM,
Sure it's possible.  And it is very feasible when you have contracts for about 10 other courses in the area.  Just take 900 from each of them.
BUT what I am trying to say is that rounds is not the answer anymore.  Quality playing experience at a fair price.  You don't have to be the cheapest. 

[Phil McDade]

BUT what I am trying to say is that rounds is not the answer anymore.  Quality playing experience at a fair price.  You don't have to be the cheapest. 

"Quality" and "fair" -- two words that we all can agree on as to their meaning.

[Bill Seitz]

In a way I am surprised some of these struggling public courses haven't been taken over and made private by a group of individuals with th eidea of of equal share membership.  Has anybody seen opportunities like this?  I would have thought there are plenty of people who would join a fairly cheap knock out the bullshit golf club run efficiently. 

Ciao

I don't think it's always that easy.  I worked at a nine hole facility in Southern California for a number of years that was owned by LA County, but operated by a management company (the company ran two nine hole courses).  I'm not sure what legal entanglements would be involved, but if the County were to get out of the golf business at those courses, it would mean disposing of the property, and in those neighborhoods, even in this economy, they could probably get a lot more money from private developers who would use the property for something other than golf (e.g., housing developments).  A non-municipal owner of a public access golf course probably faces the same pressures, albeit without having to deal with voters.

[Greg Tallman]

It's not much fun trying to figure it out while staying above the fray in Cabo these days.

Tough times for sure and no light at the end of the tunnel. That said going the discount route would only ensure one's demise.

[Rob_Waldron]

Mike

Some Management Companies actually implement education and development programs designed to introduce new golfers to the game.
Some Management Companies actually attract rounds from other golf courses by providing better course conditions.
Some Management Companies actually embrace customer service by greeting their guests, offering good freindly service with a smile.
Some Management Companies reduce operating expenses by passing along discounted purchases to their owners.
Some Management Companies invest heavily into training programs, marketing systems, customer data capture and financial reporting.
Some Management Companies actually "Partner" with their clients and do not try to rip them off.
Some Management Companies charge reasonable fees for their services.

Others do not.

Which are you?

Rob