So I received a few calls about the concept of a “match play club” that was discussed here:
http://www.golfclubatlas.com/forum/index.php/topic,50705.0.htmlSee also John's thread for Ballyneal:
http://www.golfclubatlas.com/forum/index.php?PHPSESSID=dmoakt1o83ub4n7q80o387c5e7&topic=50685.0As I was rushed today at work, I said I would post the business model side of a “players club” tonight for discussion on here.
The concept is similar to the Disney Vacation Club (DVC), which is the Disney version of a vacation ownership program. It was created in 1991 by Disney. Unlike a traditional timeshare where owners buy a specific size unit in a set time of year, the DVC works on a point system giving owners the flexibility to travel when they want, as often as they want, for however long they want, and in whatever size unit they choose.
The Sweeney Family are DVC members, so I am pretty familiar with the model. It works very well as you can buy additional points and sell points in a secondary market if you wish.
Points? How do the DVC "points" work?When you buy into the Disney Vacation Club, you purchase a set number of "vacation points." The minimum number of points that may be bought in your initial purchase, if buying through Disney directly, is currently 160 and the maximum is 2000. You only buy these points once -- they are then allocated on a yearly basis until the contract's end. For example, if you buy 250 "vacation points" in your initial purchase, you will receive 250 points each year to "spend" on your vacation accommodations.
When using your DVC points to reserve accommodations, the time of year, the resort chosen and the size of the unit will determine how many points are necessary. A two-bedroom unit uses more points than a one-bedroom unit. Weekday stays use less points than weekend stays. Booking a week in a studio at the Old Key West Resort in July will use more points (109) than booking that same size unit during January (80). Owners are supplied with easy to understand "point charts" and, with a little planning, points can be stretched a long way.
Adapting DVC for GolfAgain, this only works in very niche type of markets and for this discussion, I am using LuLu Country Club in Philadelphia, which seems to be in a limbo type of status. I know nothing about LuLu and these numbers are simply made up. LuLu is used, as it seems like a very good Ross course with some limitations. I played it once in a high school match, and it sounds like a fun match play style course that could be used by a variety of golfers:
• Country club golfers looking for a second golf club at a reasonable price.
• Public golfers who are tired of 5 hour rounds.
• Senior golfers who play during the week and do not want to pay for the cost of an expensive traditional private membership.
• Golfers who want to cut their private course membership cost.
Assumptions:• Purchase price = $3,000,000 – owned by one individual to keep it simple. He will sign for a bank credit line to cover seasonal issues too.
• Annual budget - $1,500,000 – assumes maintenance, clubhouse staff, taxes……
The Model:• The owner would offer 1,500,000 points for sale to be used over a calendar year.
• Let’s assume 10,000 rounds, the average rounds cost 150 points ($150).
• Similar to the DVC model, each tee time would have different point amounts:
* Weekends in the summer = 250 points
* Fridays in May = 150 points
* Sundays in the fall (Eagles games) = 50 points
• Each member has to use 50% of the points themselves.
• Minimum points that can be purchased per year is 2500 points ($2500), there is no maximum.
• If everyone purchased the minimum amount, a full membership would be 600 members.
• Each member agrees that all rounds must be completed in 3:30, and during peak times, match play is the rule of the club for 3:00 rounds.
• Carts are included in the model. Walking, carting are all the same cost, just have to be played in the same time frame.
• Each member must commit to a 4 year commitment (see below).
Now let’s assume the clubs sells out, so from Day 1, the club breaks even from a cash flow operational model.
The Equity:• The owner owns 70% of the club.
• The members own 30% of the club, conditional on the payback of the owner.
• As the members are potential owners of the club, they want the club to make money. Thus, they will help recruit to the club:
• Members;
• Outings, unescorted, and extended guest play at a premium price, and at 10,000 rounds in the above model, we have room.
• Assumption – we get 5000 outside rounds at an average price of $150 and we make a surplus of $750,000 for four years and pay back the owner.
• After four years, the owner gets his capital back, and owns 70%. The members own 30% in proportion to their point ownership.
Just an idea in this next generation of golf……