The JK Apocalypse Hits: What is YOUR role in Golf ?

[Mike Sweeney]

I love golf.   At the range this weekend, I am pretty sure I was a 2 handicap !

That is the problem with golf in the modern era. Too many white guys love golf and it screws up the economic/political/player models.

If JK (not Jaka) is correct on a different thread, up to 50% of the courses in the USA will close in the next 25 years.

I believe that is not possible for a number of reasons:

• Golf is a land based sport. Sure, 45 miles from Times Square there is value in the real estate, but there is no way to get to 50% or 8000 golf courses with that model.
• Mike Young is smart, but he can't manage 8000 courses in the USA. There will be room for others.  
• My wife MIGHT let me "invest" in a golf course if: a) I get the course for free; b) the Town gives me one season to save/create jobs, before they tax me. This is a very established model that has been established in very remote areas of the USA and Canada.
• The Catholic Church, aka the biggest landlord/real estate owner in the world, ignores golf since Italy/The Vatican has lousy golf.

However, if JK is correct, there will be opportunities for "golf obsessed regular guys" to buy a golf course. The question is:

What role would you play at your golf club?

I will answer after Pat Mucci answers on this thread with a descriptive introduction.  

[Bill_McBride]

I love golf. 

That is the problem with golf in the modern era. Too many white guys love golf and it screws up the economic/political/player models.

If JK (not Jaka) is correct on a different thread, up to 50% of the courses in the USA will close in the next 25 years.

I believe that is not possible for a number of reasons:

• Golf is a land based sport. Sure, 45 miles from Times Square there is value in the real estate, but there is no way to get to 50% or 8000 golf courses with that model.
• Mike Young is smart, but he can't manage 8000 courses in the USA. There will be room for others. 
• My wife MIGHT let me "invest" in a golf course if: a) I get the course for free; b) the Town gives me one season to save/create jobs, before they tax me. This is a very established model that has been established in very remote areas of the USA and Canada.
• The Catholic Church, aka the biggest landlord/real estate owner in the world, ignores golf since Italy/The Vatican has lousy golf.

However, if JK is correct, there will be opportunities for "golf obsessed regular guys" to buy a golf course. The question is:

What role would you play at your golf club?

I will answer after Pat Mucci answers on this thread with a descriptive introduction. 

You think the banks are going to give away those courses to get the crap loans off their books?   You'd still have to come up with funds for maintenance.  There are no free rides. 

My role?    DICTATOR!   

[Mike Sweeney]

You think the banks are going to give away those courses to get the crap loans off their books?   You'd still have to come up with funds for maintenance.  There are no free rides.  

My role?    DICTATOR!  

8000 courses is an APOCALYPSE. The banks are long gone.

Come on, your credit score is what? 760.

You can fund the first 3 months. That is less than your travel budget for the rest of the year!!

[Bill_McBride]

You think the banks are going to give away those courses to get the crap loans off their books?   You'd still have to come up with funds for maintenance.  There are no free rides.  

My role?    DICTATOR!  

8000 courses is an APOCALYPSE. The banks are long gone.

Come on, your credit score is what? 760.

You can fund the first 3 months. That is less than your travel budget for the rest of the year!!

If the banks are gone, who owns them?   I thought it was like musical chairs.......

[Mark Bourgeois]

Main role would be to scour the country for a super. It would have to be someone revolutionary in nature. He will put his career on the line but I will endeavor to take every single arrow, be it to the heart or the back. And when we make it to the other side we will have changed course maintenance as Paton and Low changed architecture.

Yes/no/maybe?

[Mike Sweeney]

If the banks are gone, who owns them?   I thought it was like musical chairs.......

Okay, okay, you have to pay $1.00.

There are deals close to this in Philly and Detroit for inner city housing.

I believe!

[Mike Sweeney]

Main role would be to scour the country for a super. It would have to be someone revolutionary in nature. He will put his career on the line but I will endeavor to take every single arrow, be it to the heart or the back. And when we make it to the other side we will have changed course maintenance as Paton and Low changed architecture.

Yes/no/maybe?

Risky, but what is your role? Obviously you are not the Super.

[Jonathan Mallard]

You think the banks are going to give away those courses to get the crap loans off their books?   You'd still have to come up with funds for maintenance.  There are no free rides. 

My role?    DICTATOR!   

Stories about banks that own/owned golf courses:

• Bank #1 accepted a $2.75MM bid for a course after a failed auction with a minimum bid of $3.75MM
• Bank #2 owns a course and the 90 some odd lots associated with the development. They are maintaining the course in the hopes of selling the lots. They are carrying the course on their books at $10MM. And hope to sell it and the lots before they are required to write the value down to $1 after 10 years. They have celebrations after each lot is sold. I think they are in year 4 with still about 90 lots and one course to move. The income from the course doesn't cover the maintenance costs.

[Mark Bourgeois]

You mean what is my role after I find this super? I suppose I could quote Earl Weaver on "managing" the 1971 Orioles. ("C'mon Boog. Get a hold of one Frank.")

But okay, if I need another role is will be innovative revenue management.

Closer?

[Chip Gaskins]

My role is to try and teach my kids (daughter 10, son 7) the game and all the great things it offers. 

Unfortunately its a losing cause in Washington DC unless you are a member of private club.  The public golf option isn't really a true option for kids that have much more interesting options, which is the same in most NFL Cities in the country.

I think the faster we all realize Golf is a hobby, a sport, and not a "business" the faster we can flush out the moral hazard folks.

[Mike Sweeney]

Unfortunately its a losing cause in Washington DC unless you are a member of private club.  The public golf option isn't really a true option for kids that have much more interesting options, which is the same in most NFL Cities in the country.

Please note the comment about 45 miles from Times Square Yes, 45 miles from the White House is not the target market for my wife looking at an investment in the 8000 courses in the USA that will fold in the JK Apocalypse !!

But I like the kids mojo!

[John Kirk]

I actually said 30-50% of courses.  Some stats for perspective:

http://www.bloomberg.com/news/2014-01-16/golf-course-closings-outpace-openings-for-eighth-straight-year.html

From the article:

"Of the closings, 66 percent charged less than $40 for greens fees during peak times. The closings decreased the total number of U.S. golf courses to 14,564.5, the Foundation said. Public courses made up 97 percent (151.5) of the closures, with private courses accounting for 4 percent (6). A total of 8.5 public courses opened last year, compared with 5.5 new private courses.

Since 2006, 643 18-hole courses have closed, the organization said. The decline has followed a 40 percent growth from 1986 through 2005, a period with more than 4,500 courses opening, according the foundation data."

In 2013, 14 courses opened and 157 courses closed, for a net course change of -143 courses.

30% of 14,600 would be about 4,380 course closures, or about net -175 courses per year.
50% of 14,600 would be about 7,300 course closures, or about net -292 courses per year.

My role in golf will be to a) find a new enjoyable hobby, and not devote more than 35-40 years to playing golf, or b) to continue playing the great courses I have been so fortunate to play.  The walking is good for me.  There is no way I will invest in golf, unless I get a crazy idea to help fund a new cost efficient golf course here at home in Portland, which is very unlikely.

[Mike Sweeney]

I actually said 30-50% of courses.  Some stats for perspective:

http://www.bloomberg.com/news/2014-01-16/golf-course-closings-outpace-openings-for-eighth-straight-year.html

And I actually quoted you as saying:

up to 50% of the courses in the USA will close in the next 25 years.

The Bloomberg article is about 18 hole golf courses.

Nice try Pat Mucci!! 

Sorry, 9 hole courses not only count, they are preferred in the new economy!

"Full membership at 9 hole Top 25 http://www.birchwoodcc.org + fancy partial membership at Top 100 Yale" = new golf equilibrium, for me.

I believe! 

[Mike_Young]

I

• The Catholic Church, aka the biggest landlord/real estate owner in the world, ignores golf since Italy/The Vatican has lousy golf.

Mike,

Don't tell the Jemseks about the Catholic church not likng golf..I think they own the land on several of their Chicago courses.

_________________________

Reading JK's comments...don't ever trust the NGF numbers.....as an example....the count they have for public vs. private closings is inaccurate since so many private courses go public for a year or two before they are foreclosed.....all of this talk of the under $40 guys being a higher risk can sometimes be misleading.  $40 and no debt can do a much better job than $100 and 4 million of debt....remember the small courses in this country are not out there supporting NGF and the other organizations and therefore are not hyped as the answer....just today a guy reminded me that some of the organic remedies which can be tested and have god results for greens etc cannot be touted by the universities because the very chemical companies that support their research don't want such....

In the past few years we have acted as receiver and manager for several courses the banks foreclosed or took over.  All were over 5 million dollar deals and the most one sold for was 700,000.  One was under $150,000.  So there will continue to be deals out there.  I find it funny when some of these guys think these things are deals at 1.5 to 2 mill...

At the end of the day this entire golf business is as individual as their are courses.  Everyone does it differently and the various associations etc relalize many of these places have no plans to add dollars to their coffers.

[Tom_Doak]

My role would be to pick a few of the better pieces of land and turn them into a more valuable golf course.

[John Kirk]

Mike Young says:

Reading JK's comments...don't ever trust the NGF numbers.....as an example....the count they have for public vs. private closings is inaccurate since so many private courses go public for a year or two before they are foreclosed.....all of this talk of the under $40 guys being a higher risk can sometimes be misleading.  $40 and no debt can do a much better job than $100 and 4 million of debt....remember the small courses in this country are not out there supporting NGF and the other organizations and therefore are not hyped as the answer....just today a guy reminded me that some of the organic remedies which can be tested and have god results for greens etc cannot be touted by the universities because the very chemical companies that support their research don't want such....

Hi Mike,

The better links are in my initial post (reply #149 I think) on the Millenials thread.  That talks about median net worth and Millenial unemployment.  I went looking for a general analysis of how many golf courses were currently closing.  I will also mention that the price of most assets, such as stocks, bonds and real estate, are quite high right now.  Assets are highly valued as if we are experiencing prosperous times.

The bolded portion of Mike's comment is highlighted as a prime example of modern bullshit.  We recently passed peak bullshit, and the bullshit we will experience in the golf industry will decline moving forward.

[Mike_Young]

Mike Young says:

Reading JK's comments...don't ever trust the NGF numbers.....as an example....the count they have for public vs. private closings is inaccurate since so many private courses go public for a year or two before they are foreclosed.....all of this talk of the under $40 guys being a higher risk can sometimes be misleading.  $40 and no debt can do a much better job than $100 and 4 million of debt....remember the small courses in this country are not out there supporting NGF and the other organizations and therefore are not hyped as the answer....just today a guy reminded me that some of the organic remedies which can be tested and have god results for greens etc cannot be touted by the universities because the very chemical companies that support their research don't want such....

Hi Mike,

The better links are in my initial post (reply #149 I think) on the Millenials thread.  That talks about median net worth and Millenial unemployment.  I went looking for a general analysis of how many golf courses were currently closing.  I will also mention that the price of most assets, such as stocks, bonds and real estate, are quite high right now.  Assets are highly valued as if we are experiencing prosperous times.

The bolded portion of Mike's comment is highlighted as a prime example of modern bullshit.  We recently passed peak bullshit, and the bullshit we will experience in the golf industry will decline moving forward.

OK...I read #149 and agree for the most part....as you say the BS decline has begun....Dick's Sporting Goods firing the PGA affiliated was an example....the large turf distributors setting up refurbished and used equipment divisions as a major profit center is another...the next is going to be when the golf courses are considered agriculture when it comes to chemicals.  For those not familair with the last comment....take a herbicide as an example...a farmer might pay the distributor $10 per gallon and a golf course would pay $100 for the same gallon with a different name due to regulations....pure BS...

[John Kirk]

Thanks, Mike.  Of course, I'm speaking from a theoretical standpoint, saying I believe the current golf environment can no longer tolerate inefficiencies like those you mention.  But I'm making an educated guess, whereas you are actually in the field working to eliminate waste.  So I appreciate your last post.

[Tom Bacsanyi]

I've been scouring the want ads and Careerbuilder for a position listing of "Supreme and Benevolent Dictator of a Golf Course" but alas to no avail.  I guess there's only one Mike Keiser.

[Mike_Young]

John,
Here's some food for thought.  While I don't think we will lose 50% of the golf courses in the future, I do think we might lose that many clubhouses via conversions to other uses or elimination. 

[Mike Sweeney]

I've been scouring the want ads and Careerbuilder for a position listing of "Supreme and Benevolent Dictator of a Golf Course" but alas to no avail.  I guess there's only one Mike Keiser.

One of my first jobs in life was as the cart kid at Avalon Golf Club. Bob Hendricks was the Owner, Golf Pro, Architect, Grass Cutter, Founder, Check Writer, and late night Bar Tender (his house was next to the first tee).

At Bandon's pricing levels, they have room hand waiving guys like Mike Keiser. Pretty sure the only way for golf to fight off JK's predictions is through the Bob Hendricks/Mike Young model....

Waiting for Pat Mucci to respond..... 

[Adam Clayman]

My role would be to pick a few of the better pieces of land and turn them into a more valuable golf course.

This is what Cog Hill should have done when they made their most recent Renovation to #4. There's Great ground on that massive property that could've made for a couple of great journeys. 

Sweens- The best owners I've seen, beginning in the early-mid 80's, don't have one role. They have every roll.

As a tie-in, My first exposure was Joe Jemseck, the owner at Cog Hill. He owned two other public courses around Chicago's burbs. The first time I laid eyes on the man he was picking up cigarette butts in the parking lot, by hand, one at a time. The second time I saw him was on the turn, that very day, as he took my lunch order. He was no spring chicken, back then, but, He was amazing.

Today, I witness a retired owner, still have to deal with the myriad of little things that need to be done.

 

Fear and greed motivate

[Dave Doxey]

Unfortunately its a losing cause in Washington DC unless you are a member of private club.  The public golf option isn't really a true option for kids that have much more interesting options, which is the same in most NFL Cities in the country.

Please note the comment about 45 miles from Times Square Yes, 45 miles from the White House is not the target market for my wife looking at an investment in the 8000 courses in the USA that will fold in the JK Apocalypse !!

But I like the kids mojo!

Interesting that you mention 45 miles from the White House.

Beacon Hill Golf Course (about 45 miles from the White House) was transferred from the lienholder to the local homeowners association for $1.   Although the 27 hole Johnny Miller designed course reportedly cost over $20M to build, it’s not clear that the homeowners association can break even if they decide to operate it.  The land is zoned so as to have no value as home sites or commercial development, so public space or a golf course are about the only options.  And this is in an area of the country where greens fees and memberships are among the highest in the nation.

This says a lot about the economics of the business.

I put together numbers for a business plan to buy another DC area course that could be had for about $1M in a bankruptcy auction.  The preliminary numbers showed that there was no way to come even close to break even.  That course is now abandoned and overgrown.

To realize a dream of owning a golf course would require very careful selection to find one with a chance of survival.  I’m sure that opportunities exist, but I imagine that experienced investors and operating companies are sifting through courses for sale and picking up the best. (Perhaps some folks on this forum)

[Michael Whitaker]

My role in golf?

Supreme Consumer.

I'm Mike Kiser's poster boy for the "Retail Golfer."

Like the sentiment expressed on Bob Huntley's "final game" thread, I'll be at it until I hit "the last shot of the last round on the last day."

[David Ober]

Tournament Coordinator.

I've always wanted to do this as my actual job. In real life, I'm not a very detail oriented person, but when it comes to golf, I am always trying to get everything right. I would love the opportunity to let my love of golf come through in setting up tournaments that would please others.