Are we growing the game?

[Don_Mahaffey]

Joe,
Our course will survive because of the market we are in, pure and simple. With 200,000+ people within 25 miles and only 5 public 18 holers, the demographics work in our area. I know your in a much more competitive market. When the higher end courses start feeling the pinch and respopnd by dropping fees then they begin to take some of your market share. Does that statment make sense? Do you see that happening in your area? I certainly saw it happening in AZ.

One area I may have a little disagreement with you is the family owned course and profitability. In today's golf environment, I can't think of a better model then the owner/operator. Being on site each day to watch expenses and assure good customer service is a key component to surviving the lean times, IMO.  

[A_Clay_Man]

Don's original post centers on the business or industry side of golf. What if the business side is to remain stagnent for a very long time? How then would be the best way to "grow the game" during this down period?

I think there's a real void of exactly what we do on here everyday. Minute details of the game could be exposed through a series like a SWWOG, but this time, with an emphasis on the spirit of the game and the art of the architecture.

The game needs to let the essence catch-up to the expansion experienced.

[Lynn_Shackelford]

Jim Kennedy
I am still confused by your theories.  Do you believe the current economy of golf is okay?  Or do you believe it is going through a shaking out period due to so many new courses and it will grow again in the future?  If so how?
Don't statistics show that an equal number of women give up the game as start it?
Why are my rounds down 18%?  Same fees, course is in better shape and no new comparable courses in the area?  Where did they go?  I am perplexed.
Local course here Simi Hills did 104,000 rounds in 2000.  They will do about 84,000 this year.  I can explain most of that to competition in the area like Rustic Canyon.  Rustic probably does 70,000 to 75,000 annually.  At Rustic their rounds are starting to drop, mostly due to small rate increase, but there are other reasons.  I think people are looking to other activities. Society is changing and golf is losing players.  I think Jim you disagree.
As for the PGA, LinkUp2golf was a bust here in Ventura County.  I don't see the USGA doing anything, nor are the manufacturers doing anything that I can see.  Girls golf in high school are started in California, but I never see the girls play after they graduate from high school.  Maybe they will come back to it later in life.  I hope so.

[Jim_Kennedy]

Lynn,
At no time did I state that I feel the current economy of golf is OK. My 'theories' were aimed at disproving the ideas that golf is too hard, too expensive and too time consuming.

You asked: "Do you believe the current economy of golf is okay?  Or do you believe it is going through a shaking out period due to so many new courses and it will grow again in the future?
I think the golf economy is suffering more from overbuilding than lack of players. Remove the courses built in the wrong places over the past 10 years and we wouldn't be having this discussion.
The local course in Simi Hills is a good example, if RC siphoned off 20k of their rounds at ca. $30 per, then SH lost 600k. Bam, healthy golf course bites the dust.
Look at the Myrtle Beach economy. 100 courses hosting 4mil. rounds per year. 10 more courses get built and everybody goes down 10% causing 25 properties to go on the block.

As for rounds played, they are either down, flat, or up in different parts of the country as I believe you probably know. We were lucky, we held to last years numbers but other courses in our area were down 25/35 %, due mainly to a poor spring, lousy summer and miserable fall. April through MemDay was atrocious, then forty-five rain days between Memorial Day and Labor Day leading to one of the coldest and rainiest falls we've ever had. People lose the desire to golf when the season starts so crappy and stays that way.
Who's up in your area, anyone? and if so, why? Is California down in general?  

I don't disagree with you that society may be changing and that golf is losing players, I just think golf will keep attracting more people to it because of what it offers. Lots of women have left the game but they weren't catered to as well in the  past as they will be in the future. Junior programs abound, programs aimed at city kids, minorities, seniors, etc. are increasing all the time. Operators are looking at every possible idea to maintain their revenues. No one who wants to survive can sit on his haunches and watch the herd go by, feeling that enough of them will stop at his spot. People are talking to each other and offering up ways that they have used to increase rounds or increase sales or up margins. Many of these initiatives come from operators and managers and pros who either learn some new strokes or sink slowly out of site.
 
     

[Tim_Weiman]

Jim Kennedy:

Thanks for sticking with the discussion.

I'd like to address your comments about ten new courses being built in Myrtle Beach siphoning volume away from previously exisiting courses.

Presumably the funding for these projects made assumptions about the growth of the game that proved incorrect. Not surprising, I suppose as economic forecasts are often off the mark.

But, I'm wondering if you know how the forecast for growth in golf today (going five years out) compares to the similiar forecast five years ago?

Also, if the industry essentially needs to rely on women and juniors for growth, how much data exists to project growth rates from these segments of the population?

One other issue: you dispute that cost is a barrier to people taking up and sticking with the game. As evidence you cite a large number of courses with green fees below $35. My question is whether you believe courses with green fees ABOVE $35 are destined to struggle? In other words, do you have a break point in mind? Are developers building courses with $50-100 green fees (and higher) being unrealistic?

[Don_Mahaffey]

Tim,
I've seen so many pro formas prepared by golf industry experts that were so grossly exaggerated that I have very little faith in any numbers that are not generated by course owners themselves. I don't know if the Golf Course Owners Association have conducted any surveys that would answer your questions, but I will check.

The best numbers that show the state of the industry is the number of courses for sale and the prices they are selling for.

[RJ_Daley]

I submit that if you don't start any of your projections with a conservative and realistic projection of the number of rounds you can expect/hope to do, all the rest is a waste of time.  From my limitted experience, I haven't found a failed course development yet that had any realistic future projections of rounds per year/month.  They all over reached.  Why is that?  I'd think they would have those projection formulas down to a science by now, if you know your demographics and competition.

[Lynn_Shackelford]

Jim K.
Thanks for the clarification.  I think we are in agreement on most issues.  I suppose there is nothing wrong with competition and those in golf having to work a bit to draw customers.  I certainly agree that some in the industry and financial world were sucked in by phoney pro formas in the 1990's.  High end publics that work are rare and usually confined to a specific kind of location.
As far as the game being difficult, it is a frustrating game, and that for me is its appeal.  But I don't believe everyone finds it appealing.  Therefore I think it will always be restricted in its appeal in the USA.  In Scotland or Ireland, where grass grows naturally and long days in the summer are appealing after their harsh winters, inexpensive courses abound and the game can and is enjoyed by many.  Furthermore the Scots and Irish don't fret as much over their scores.  Or as Bernard Darwin said "card and pencil golf."
But as the speed of our world increases, and golf takes longer to play, I feel it is a problem.  I told  Griffith Park pro Tom Barber that when I was a kid in the 60's I would pay the twilight rate at Griffith Park, starting at 4 and almost get in 18 holes.  He laughed and said not anymore!  Rounds there take 5 1/2 to 6 on weekends.  So things have changed.  I don't think for the better.  And I am depressed about the lack of exercise from most taking carts.  There is an 18 hole par 3 course in Escondido, 50% of the players ride in carts.  I guess my point is I don't like the direction in which golf is headed.
Fortunately there are a few designers out there who understand the game, but we need more.

[Buck Wolter]

I ran across this recently on Forbes' web site, I'll just put the intro and the link here but this woman has some good credentials and makes the case that golf courses being built today are simply too hard for the average player and are forcing people out of the game. Some great market research for Golf Course or Range owners in this as well.

I grew up playing 2 muni's one being a par 3 -- about $5 for 9 holes in the early 80's. Had it not been for an affordable and relatively forgiving place to get introduced to the game I'm sure I would never have gotten more serious about it later in life. Had I grown up where I live now that wouldn't have been possible. Given the amount of my current GDP that goes to golf it was good investment by the golf 'industry.


Start of article:
If you've ever wanted to slam your golf bag into the trunk of your car and speed out of the clubhouse parking lot in a rage at your dismal, #@*&%!# performance, this interview may help you relax. Your high score is not entirely your fault. For the past eight years, Barbara Hanley has taught a seminar on golf course development at Harvard Design School. One of the nation's premier golf course appraisers and president of Golf & Land Economics in Westport Point, Massachusetts (barbarahanley@cs.com), Hanley has long studied how people who play golf match the golf courses they play. She recently spoke with FYI's executive editor, Patrick Cooke.

http://www.forbes.com/fyi/2003/1110/045_print.html

[Don_Mahaffey]

RJ,
You can get the demographics off the web and a competitive analysis can be done by anyone with a little golf knowledge in a day or two. So why do projections continue to overstate what can be done? I think everyone thinks its in everyone's best interest to get the deal done. The initiator needs capitol from lenders or investors and he needs good numbers to get the $$$. The "expert" who prepares the numbers needs to get the deal done so it can go on his resume to show he's someone who gets things done. When the whole thing goes south, it's because management didn't know what they were doing.

[RJ_Daley]

Don I like that last post.  We can see that the over enthusiastic initiator (dreamer/developer) will over estimate, due to the human nature trait of potentially kidding ourselves to succeed.  We can understand that the expert consultant has a reputation to build that he can craft the proformas that can pass muster to entice not so smart investors, loan officers of banks, or capital formation entities.  But the link in the chain that I can't figure out, is why people who have been around the industry for a decade or two, like those loan officers, or the capital formation entities, sector investors and the like CONTINUE to get taken in by the bloated and fantasy numbers.  Don't these end of the money train investors and loan officers, and venture capitalists ever read things like National Golf Properties 10Ks and don't they look deeper into the circumstances of all the bankruptcy auctions of courses going on all the time?  

Pizza Hut can pretty much tell you how many pies and what kind of pies they are going to sell if they invest in a new facility in a new or old neighborhood, even with all the Dominos and Uno's and the plethora of competition out there.  They can tell you pretty close what the average check is going to be for that neighborhood.  They can tell you how many will likely eat in the restaurant and how many will order delivery.  If they can do that, along with so many other buttoned down businesses that needs to sell something to the public, why can't the golf course development and management industry have better projetions and place the capital more effectively to where the market is at, or develop new customers and markets?

[Jim_Kennedy]

Tim,
I don't know the forecast for going ahead and as Don Mahaffey also pointed out, how good are they anyway?

MB is a tourist area so projections there are based on the present and future number of visitors to the region. Throw a wrench into the publics ability, or desire, to travel and you've got problems.

I think women represent 17% of all players with males somewhere around 51%. This is a potential market of nearly 9 mil. new players.  

I have no break point in mind, as you noted my contention was that much golf exists under $35. Any course, even one under $35, will struggle if it's not properly placed or perceived as a good value. If I opened a course in Rye, NY, and it had a $50 fee I would be swamped. Same course and fee in Copake, NY, I would die.

[A_Clay_Man]

Dick- In response to what you just asked Don, it reminds me of my trading floor days around 1987. There was whole generation of market participants who had NEVER seen a down day. Now, I mean a real down day. The kind eventually experienced in October of that year. Somehow I think the analogy is relavent to the golf industry.

And I just hate using that term 'golf industry'. Hate is a word I sparingly use. But, the massive growth, especially from '91 to '01 of courses that were built for the wrong reasons is primary to many of these issues.

The golf industry should be case specific, unless you own something other than a course.

 

[George Pazin]

I submit that if you don't start any of your projections with a conservative and realistic projection of the number of rounds you can expect/hope to do, all the rest is a waste of time.  From my limitted experience, I haven't found a failed course development yet that had any realistic future projections of rounds per year/month.  They all over reached.  Why is that?  I'd think they would have those projection formulas down to a science by now, if you know your demographics and competition.

Dick -

This isn't limited to the golf industry. I'd guess the majority of startups fail because people have pie in the sky fantasies about how easy it's going to be to make tons of cash. What I wonder about is why the banks & investors fund them. In the case of banks, I tend to think it's because you're playing with other people's money. With private investors, well, I guess you just have to find the right dreamers. I can tell you honestly that if I knew 10 years ago how hard I was going to have to work to make what I've made with my biz, I doubt I'd do it again.

Re: golf difficulty - I think what Jim's saying is that, while it may be difficult to become very good at golf, it's not difficult to get good enough to catch the bug. I think I'm living proof of that.

I've been thinking for the last couple years that growth pretty much had to come at the middle and lower end of the income bracket, since I think the upper end is pretty well maxed out, but I think Jim is right about women & juniors. When I find the person who's willing to swap me his driving range for my t shirt business, I think I'll put together some ladies night promotions!

P.S. If women are 17% and men are 51%, who's the other 32%?

[Tim_Weiman]

Adam,

I enjoy your reference to traders who have never seen a down day. It reminds me of the young energy (electricity) trader who actually thought he was so brilliant he manipulated California into paying higher prices. He deserves to be assigned to a structurally long market and see how he enjoys giving the stuff away.

But, we should probably take that one offline.


Jim Kennedy:

There is no question about regional factors being very important in determining the price breakpoint. I don't know how representative the Cleveland/Northeast Ohio market is, but it does appear to be a case of a market that avoided overbuilding CCFADs. Why?

First, the market is fairly well supplied with private clubs, most of which date back to the 1920/1930s.

Second, Cleveland has a nice metroparks system of pretty good golf courses, including Manakiki (Ross) and Sleepy Hollow (Thompson).

Third, the market is very well supplied with "Mom and Pops", decent golf courses built in the post war period that you can play for $25 or less.

In my view, the Mom and Pops have kept the CCFADs at bay. People here simply have no reason to pay $100 to play a round of golf. There are scores of courses you can enjoy for far less.

FYI, recently one operator did build a CCFAD (Boulder Creek) with the idea that $50-60 was affordable and an attractive alternative to either the low end private clubs and/or the Mom and Pops that don't offer "great" golf. Honestly, I have my doubts how well the operator will do once the novelty wears off.

Anyway, you've touched again on the potential market for women. What, in your view, needs to be done to attract women? What are the implications for course design?

Goerge Pazin:

Since I caught he bug when I was about two years old, I can hardly argue against your point!

But, honestly I do think many people give up golf because they find it too frustrating. From a design point of view, I think we need more golf courses like I've heard Rustic Canyon described. People are never going to be able to hit straight tee shots and they hate looking for and losing golf balls. Didn't Mackenzie tell us that 80 years ago?

[G_Tiska]

No.... rounds take to long to play 5.5 to 6 hours? WHY??
any to many high price clubs!!!!!