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Joe_Tucholski

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The new golf digest top 100 rankings are out.  I haven't seen a thread on the topic, unlike the regular ones from years past discussing how one course dropped 10 spots, another rose 20 and how the new course on the list will drop in a couple of years.

I can't help but look over the list with interest.

There are only 15 courses on the list where you can walk up, and with enough money play.  This year public courses seemed to drop (only a few had modest increases in rankings).  Not too long ago Pebble topped the list, it's now #12.

Bethpage is the outlier in the public group as municipally owned and the relatively modest peak rate of $160.  Shadow Creek is the most expensive at $1000 (they don't actually publish the rate and I didn't call).

The average peak rate for the 15 public courses on the list was $480 (not including any mandatory fees at a few, like hotel stays, carts or caddies).

Is it really expensive to operate great golf courses in the US or is the price just a reflection of the market and the fact that there are enough people willing to spend a lot of money on high end golf? 

Is there a course on the list that has a significantly lower operating costs than the others?

Thomas Dai

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Re: Is it really expensive to operate a great course in the US?
« Reply #1 on: May 10, 2023, 02:02:10 PM »
Is it really expensive to operate great golf courses in the US.... 
Is there a course on the list that has a significantly lower operating costs than the others?
Fascinating question. Hope to read some insightful replies.
atb

Matt Schoolfield

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Re: Is it really expensive to operate a great course in the US?
« Reply #2 on: May 10, 2023, 02:10:02 PM »
High-ranking courses are Veblen goods. The high price is part of the marketing.
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Edward Glidewell

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Re: Is it really expensive to operate a great course in the US?
« Reply #3 on: May 10, 2023, 02:17:17 PM »
Is it even 15 courses? I haven't gone through the list, but my guess is some of those actually require you to stay on-site at the resort to play (i.e. the general public can't just call for a tee time). I'm almost positive Pinehurst #2 does, and isn't that the rule at Pebble Beach now too? Or can you still potentially get on there if there's a random opening?
« Last Edit: May 10, 2023, 02:53:23 PM by Edward Glidewell »

Charlie Goerges

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Re: Is it really expensive to operate a great course in the US?
« Reply #4 on: May 10, 2023, 02:34:25 PM »
You know how work expands to fit the time available? I wonder if budget expands to fit the ranking?



Severally on the occasion of everything that thou doest, pause and ask thyself, if death is a dreadful thing because it deprives thee of this. - Marcus Aurelius

Joe_Tucholski

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Re: Is it really expensive to operate a great course in the US?
« Reply #5 on: May 10, 2023, 02:46:05 PM »
High-ranking courses are Veblen goods. The high price is part of the marketing.


So you think if these courses charged less, demand to play them would decrease?

Matt Schoolfield

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Re: Is it really expensive to operate a great course in the US?
« Reply #6 on: May 10, 2023, 02:57:51 PM »
So you think if these courses charged less, demand to play them would decrease?


They would move down on the revenue curve, yes (there is always 100% demand somewhere on the demand curve). The idea is that luxury items’ value, in part, depends on extremely limited access. Extreme price is a powerful signaling mechanism for luxury because it inherently limits access.
« Last Edit: May 10, 2023, 05:15:12 PM by Matt Schoolfield »
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Joe_Tucholski

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Re: Is it really expensive to operate a great course in the US?
« Reply #7 on: May 10, 2023, 03:00:35 PM »
Is it even 15 courses? I haven't gone through the list, but my guess is some of those actually require you to stay on-site at the resort to play. I'm almost positive Pinehurst #2 does, and isn't that the rule at Pebble Beach now too? Or can you still potentially get on there if there's a random opening?


The 15 are:
Pebble Beach, Pacific Dunes, Kiawah Ocean, Whistling Straits, Shadow Creek, Pinehurst #2, Bethpage Black, Bandon Dunes, Sawgrass, Erin Hills, Bandon Trails, Old Mac, Arcadia Bluffs and Pasatiempo.

Years ago when I inquired about playing Shadow Creek there was a requirement to stay at an MGM property to play so think they started the trend (likely many exceptions).  Pinehurst has implemented a resort guest or guest of a local member requirement for #2.  Pebble still lists a non resort guest rate.

I focused on the public courses because information on costs is available.  I assume the average member at most of the private courses on the list pay a similar cost per round (especially if initiation fees are included).  In theory for the typical private club fees cover costs.

Jim_Coleman

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Re: Is it really expensive to operate a great course in the US?
« Reply #8 on: May 10, 2023, 03:09:49 PM »
   These courses are in business to make money. I suspect all of them are doing very well in that regard. Tee times are probably quite difficult to get. They are not charging a lot of money. They are charging the correct amount of money.

Sean_A

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Re: Is it really expensive to operate a great course in the US?
« Reply #9 on: May 10, 2023, 03:10:26 PM »
It's come to the point where its worth while to pursue access to privates rather than play top publics. When we consider the private-public dynamic...the above statement is crazy.

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Kalen Braley

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Re: Is it really expensive to operate a great course in the US?
« Reply #10 on: May 10, 2023, 03:20:35 PM »
High-ranking courses are Veblen goods. The high price is part of the marketing.

So you think if these courses charged less, demand to play them would decrease?

Joe I would agree.  The term doesn't fit here because Veblen Goods are those where demand increases as price increases.

Pebble and other top end resorts are better characterized by Supply sided behavior like shortages or scarcity, where demand outpaces supply.  They only have so many times on the sheet to sell....

In that context I'm not surprised developers like Mike K just keep building more and more publicly accessible high end resorts.

Matt Schoolfield

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Re: Is it really expensive to operate a great course in the US?
« Reply #11 on: May 10, 2023, 04:09:50 PM »
The term doesn't fit here because Veblen Goods are those where demand increases as price increases.

Pebble and other top end resorts are better characterized by Supply sided behavior like shortages or scarcity, where demand outpaces supply.  They only have so many times on the sheet to sell....

Please humor me while I again try to argue that these do qualify. We say that top-end resorts have limited supply. I would say most of them don't. Bear with me...

Suppose I operated a competitive humdrum golf course where the cost of a round of golf was somewhere at par with the other courses in the area (let's say it costs $60/round). If this is the case, I could make a carbon copy of the course, and effectively double my revenue (adjusted for the slight decrease in demand as I increase supply). In a place where demand is moving by supply, if simply increase supply (opening an identical copy of the course), I will capture more market share.

Now why don't we see golf course developers rushing to increase the "supply" of a Chicago GC, or even existing publicly accessible courses like Shadow Creek, or Pinehurst #2? -- I will fully admit that some courses like Augusta, Pebble, or Pasatiempo are complicated by topography -- It's because people don't want to pay that much money to play a copy of Pinehurst #2, even if it is effectively the same course, they want to play the Pinehurst #2.

This is the same reason why companies don't pump out replicas of Birkin bags (they do, it's just not highly profitable). This is why developers aren't manufacturing copies of Amen Corner (they are, they're just not highly profitable). People don't want the good for the practicality of the good, they want the good for the authenticity and status of the good. This is why I argue that these are in fact Veblen goods.
« Last Edit: May 10, 2023, 04:20:16 PM by Matt Schoolfield »
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Tim_Weiman

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Re: Is it really expensive to operate a great course in the US?
« Reply #12 on: May 10, 2023, 04:44:19 PM »
So you think if these courses charged less, demand to play them would decrease?


They would move down on the revenue curve, yes (there is always 100% demand somewhere on the demand curve). The idea is that luxury items’ value, in part, depends on extremely limited access. Extreme price is a powerful signaling mechanism for luxury because it inherently limits access.


I hope this would be fairly well understood concept in a room where folks frequently name drop courses exactly because access is extremely limited.
Matt,


I have participated on this site since it’s inception. If you count the TraditionalGolf.com days, even before.


During that entire time I can’t remember ever feeling that someone was name dropping. What would be the point? Who would be impressed?
Tim Weiman

Charlie Goerges

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Re: Is it really expensive to operate a great course in the US?
« Reply #13 on: May 10, 2023, 05:03:34 PM »
I am still curious about the original question and if so, to what extent. If it is a luxury good, there has to be some sort of upper end to the cost right?
Severally on the occasion of everything that thou doest, pause and ask thyself, if death is a dreadful thing because it deprives thee of this. - Marcus Aurelius

Matt Schoolfield

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Re: Is it really expensive to operate a great course in the US?
« Reply #14 on: May 10, 2023, 05:14:48 PM »
I can’t remember ever feeling that someone was name dropping.
I was specifically referring to instances like this that I think are just done for humor's sake:

   The sausage sandwich at Sunningdale Old didn’t disappoint. Nor the green Gatorade and grape at Pine Valley. Just a little name dropping.

I do think you're right in pointing out that my statement there isn't helpful for the discussion. I will go back and edit/remove it. It's my bad; a bit of flip humor that clearly landed wrong.
« Last Edit: May 10, 2023, 05:17:36 PM by Matt Schoolfield »
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Wayne_Kozun

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Re: Is it really expensive to operate a great course in the US?
« Reply #15 on: May 10, 2023, 06:30:48 PM »
I am still curious about the original question and if so, to what extent. If it is a luxury good, there has to be some sort of upper end to the cost right?
There is an upper end, but it appears to be very high, well over $500/round.  Golfers tend to be wealthy and are willing to pay top dollar to play a course perceived as world class.  There is just a ton of demand.  And in many instances you are paying a lot of money to travel to these courses and stay in a luxury hotel.

But many "experiences" are now so much more expensive than they used to be.  Try buying tickets to the Bruce Springsteen tour for this summer.  They sell out immediately and on the secondary market you will pay over $500 for a half decent ticket.

And look at guest fees in the UK.  https://www.ukgolfguy.com/golf-blog/2023-green-fees

Joe Hancock

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Re: Is it really expensive to operate a great course in the US?
« Reply #16 on: May 10, 2023, 06:48:17 PM »
I think the situation says more about todays golfer than it does about the operating expenses needed.
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Charlie Goerges

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Re: Is it really expensive to operate a great course in the US?
« Reply #17 on: May 10, 2023, 07:23:50 PM »
Are Shadow Creek’s maintenance costs much higher than some other course where I’m paying say, $125?
Severally on the occasion of everything that thou doest, pause and ask thyself, if death is a dreadful thing because it deprives thee of this. - Marcus Aurelius

Daryl David

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Re: Is it really expensive to operate a great course in the US?
« Reply #18 on: May 10, 2023, 07:31:28 PM »
I think the situation says more about todays golfer than it does about the operating expenses needed.


+1

David_Tepper

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Re: Is it really expensive to operate a great course in the US?
« Reply #19 on: May 10, 2023, 10:00:03 PM »
"There is an upper end, but it appears to be very high, well over $500/round.  Golfers tend to be wealthy and are willing to pay top dollar to play a course perceived as world class.  There is just a ton of demand."

Wayne K. is right about this. No doubt the top high-end course have higher overhead expenses than a typical local/regional course, but I doubt the expenses are greater by a factor of 3 or 4 times.

After all, does it cost 10 times as much to produce a $500 bottle of wine as it does to produce a $50 bottle?   
 

Tom_Doak

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Re: Is it really expensive to operate a great course in the US?
« Reply #20 on: May 10, 2023, 10:50:32 PM »
Are Shadow Creek’s maintenance costs much higher than some other course where I’m paying say, $125?


No, but they don't do nearly as many rounds as those courses -- maybe somewhere between 1/4 and 1/10 as many -- so that somewhat justifies the higher price per round.

Tom_Doak

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Re: Is it really expensive to operate a great course in the US?
« Reply #21 on: May 10, 2023, 10:56:58 PM »
"There is an upper end, but it appears to be very high, well over $500/round.  Golfers tend to be wealthy and are willing to pay top dollar to play a course perceived as world class.  There is just a ton of demand."

Wayne K. is right about this. No doubt the top high-end course have higher overhead expenses than a typical local/regional course, but I doubt the expenses are greater by a factor of 3 or 4 times.

After all, does it cost 10 times as much to produce a $500 bottle of wine as it does to produce a $50 bottle?


This is the correct response.  High end courses generally have higher maintenance budgets, because their customers' expectations are higher, but it probably isn't triple the other good courses in the area.  However, the payroll inside the clubhouse might be 3x or 4x, and that's a factor, too.  You pay for "service".


Many of these courses have bumped the rates up considerably when they get to a higher status in the rankings, so in that respect it is very much like a luxury good.  And that's the chicken, the egg of higher prices generally follows status, instead of being the leading edge.


Note to Sean A:  the member guest rate at these famous courses is getting pretty high nowadays, too, precisely because they look at Pebble Beach and Pinehurst and say, why don't we charge that, too?  Memberships are divided on whether they'd rather be able to bring guests at a reduced rate and pay more dues, or gouge for guests and pay lower dues.

Richard Hetzel

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Re: Is it really expensive to operate a great course in the US?
« Reply #22 on: May 11, 2023, 03:38:55 PM »
The term doesn't fit here because Veblen Goods are those where demand increases as price increases.

Pebble and other top end resorts are better characterized by Supply sided behavior like shortages or scarcity, where demand outpaces supply.  They only have so many times on the sheet to sell....

Please humor me while I again try to argue that these do qualify. We say that top-end resorts have limited supply. I would say most of them don't. Bear with me...

Suppose I operated a competitive humdrum golf course where the cost of a round of golf was somewhere at par with the other courses in the area (let's say it costs $60/round). If this is the case, I could make a carbon copy of the course, and effectively double my revenue (adjusted for the slight decrease in demand as I increase supply). In a place where demand is moving by supply, if simply increase supply (opening an identical copy of the course), I will capture more market share.

Now why don't we see golf course developers rushing to increase the "supply" of a Chicago GC, or even existing publicly accessible courses like Shadow Creek, or Pinehurst #2? -- I will fully admit that some courses like Augusta, Pebble, or Pasatiempo are complicated by topography -- It's because people don't want to pay that much money to play a copy of Pinehurst #2, even if it is effectively the same course, they want to play the Pinehurst #2.

This is the same reason why companies don't pump out replicas of Birkin bags (they do, it's just not highly profitable). This is why developers aren't manufacturing copies of Amen Corner (they are, they're just not highly profitable). People don't want the good for the practicality of the good, they want the good for the authenticity and status of the good. This is why I argue that these are in fact Veblen goods.



I agree, but Gucci actually made MORE money selling all the cheap knock-offs of his own expensive goods out the back door.


I bet if someone was able to actually copy Augusta National (with the terrain) to say 90% of the real thing, if it was in the right spot, it would do very well and possibly even command high greens fees.
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Anthony_Nysse

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Re: Is it really expensive to operate a great course in the US?
« Reply #23 on: May 11, 2023, 05:45:49 PM »
Are Shadow Creek’s maintenance costs much higher than some other course where I’m paying say, $125?


Yes.
Anthony J. Nysse
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Michael Dugger

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Re: Is it really expensive to operate a great course in the US?
« Reply #24 on: May 11, 2023, 05:59:21 PM »

After all, does it cost 10 times as much to produce a $500 bottle of wine as it does to produce a $50 bottle?


It certainly can if you were to consider the cost of purchasing grapes from esteemed vineyards in say Grand Cru Burgundy.
What does it matter if the poor player can putt all the way from tee to green, provided that he has to zigzag so frequently that he takes six or seven putts to reach it?     --Alistair Mackenzie--

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