If I owned a club in some remote area that was perfect for golf like the sand hills, I don't need a universe of people; I just need a couple hundred who want to be a part of something very cool. Playing golf has never really made any business sense has it?
I've always loved the game, so in that way maybe I have romantic ideas, but I'm very much a pragmatist about how golf courses should be operated, no matter where they are located.
Working at Dismal River has given me the opportunity to see some of the greatest golfing land in the world. Most people will never get it, and would never spend the time getting there or the money to join a club out in the middle of no where. But, if great golf stirs your soul, then sometimes you leave your accountant out of the conversation.
Well said, Don.
As to Lou: You may be correct that it would be crazy to develop a new property in the Sand Hills region today. But, Ballyneal is already there, and the bottom line is that it will thrive when the debt is written down to a small fraction of what's there now. I'm not sure if they have ever operated in the black for a year, but they certainly could, if they didn't have to find some way to pay down the debt. That day will come, it's just a matter of how fast the creditors come to understand it.
Now, Don, are you calling me a bean counter
?
(Ok, I'll fess up, I was a CMA for a few years during my days in the corp. world, but I was primarily a strategy and financial guy.) My point is that clubs of this type, even really, really good ones, have a rather thin market, i.e. there are relatively few people in a sport that's for the most part declining in both participation and, reportedly, intensity (my own term for rounds played by core golfers) who would fork-up relatively big money for even a hugely spiritually satisfying experience. While we have many simpaticos on this site who would on occasion wander to the middle of nowhere (no disrespect to the sand belt area) for golf, I suspect that we're a very unrepresentative sample. It is not just you looking for a "couple hundred", but you, Chris, Dick, and perhaps quite a few others with equal passion.
Concering love and romance, unfortunately, it is not just about operating the course that's the issue here. There are those nasty but necessary capital costs to build and then support the infrastructure as a going concern. Passion does come into play here and I suspect that the type of courses we're talking about require multiple doses of that.
In one of today's papers, George Will quotes Thomas Sowell- "The first lesson of economics is scarcity. There is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics". Whether we are talking about the bigger problems of the U.S. economy or the golf industry, money is scarce and there aren't too many folks who will WILLINGLY fund deficits out of their pocket primarily for the benefit of others. Unfortunately for the industry, unlike Big Brother, golf course owners don't have the power to compel a relative few to dig deeper into their pockets to satisfy the desires of much larger numbers (or the latter to buy memberships and/or pay green fees).
Tom D,
Where did I suggest that someone would be crazy to develop a new property anywhere? What people do with their own money is their business. It would be nuts (and an impossibility) for me to build a new course, but for Don's partner or someone who might otherwise build a $50 Million house, why not?
I fully agree that the capital investments put into Ballyneal are essentially sunk costs. The question is what capital structure can be supported by the property as a golf course vs. the alternative use of the land. Can an operator like Don run the course in a manner that generates sufficient revenues to cover operating expenses and capital improvements? Are there enough "passionate" golfers who will put up the necessary investment and working capital to then acquire the property out of foreclosure?
From the reports of the course from Adam Clayman and others whose opinions I trust, I have no doubt that Ballyneal is a great course. I am very interested in these answers.
Chris J,
Take no offense. Keep posting. I've read nothing unseemly or improper in your comments. I hope your efforts at DR are properly rewarded.