Stealing Rounds and the race to the bottom

[David Cronheim]

It's a business, a little healthy competition is good, this from someone whose family owns a private golf course. After all, competition helps the consumer.

[Carl Johnson]

  . . . Now nobody goes to public courses because they are too crowded.

  Anthony

Anthony, You should have credited Yogi: "Nobody goes there anymore. It's too crowded."  Or, maybe you thought everyone knew the inspiration.  On the other hand, Yogi is also supposed to have said: "I never said most of the things I said."

[Kalen Braley]

  Its all Tiger's fault. When he was hot everybody wanted to be a golfer. Now nobody goes to public courses because they are too crowded.

  Anthony

I just must be lucky...because they are so not crowded in either Spokane or Salt Lake.  I can get a tee time pretty much whenever I want, even if I only call a couple of days in advance.

[Ben Sims]

Mike

Some Management Companies actually implement education and development programs designed to introduce new golfers to the game.
Some Management Companies actually attract rounds from other golf courses by providing better course conditions.
Some Management Companies actually embrace customer service by greeting their guests, offering good freindly service with a smile.
Some Management Companies reduce operating expenses by passing along discounted purchases to their owners.
Some Management Companies invest heavily into training programs, marketing systems, customer data capture and financial reporting.
Some Management Companies actually "Partner" with their clients and do not try to rip them off.
Some Management Companies charge reasonable fees for their services.

Others do not.

Which are you?

Rob   

Rob,

I just don't see it.  This isn't a Fortune 500 company we're talking about here.  I'm fairly familiar with the "Canongate model" back home in Georgia, and don't see it as a great thing.

I understand the need for consultant work in the field of architecture and maintenance, but in the business management end of golf?  Show me an owner that requires the homogeny of a management service and I'll show you someone without passion and vision.  Someone who probably should have never bought a golf course in the first place. 

Those that have asserted it before are correct.  Being a superintendent or an architect or a professional as a means to make money is fine.  Being in the golf ownership business to make money is futile, IMHO.  Economies of scale work for the things that Wal-mart sells, not what daily fee course X sells.   

[Mike_Young]

Mike

Some Management Companies actually implement education and development programs designed to introduce new golfers to the game.
Some Management Companies actually attract rounds from other golf courses by providing better course conditions.
Some Management Companies actually embrace customer service by greeting their guests, offering good freindly service with a smile.
Some Management Companies reduce operating expenses by passing along discounted purchases to their owners.
Some Management Companies invest heavily into training programs, marketing systems, customer data capture and financial reporting.
Some Management Companies actually "Partner" with their clients and do not try to rip them off.
Some Management Companies charge reasonable fees for their services.

Others do not.

Which are you?

Rob   

None....  

[Mike Nuzzo]

.

[SL_Solow]

Ben;  With all due respect, it is easy from the outside to tell someone who has invested his money and time that he is not supposed to turn a profit.  There aren't that many wealthy hobbyists who are willing to provide public golf in that fashion.  Those who can afford it are more likely to try the private route.  As for muni's, there is increasing pressure to at least break even given the other financial pressures on government.  So putting aside what appears to be extravagant claims made by the company Mike has used as an example, what is the answer?

I suggest it varies on a case by case basis. I accept the proposition that in most markets the number of rounds are static or decreasing although there may be some available from individuals who quit private clubs and are now in the public market. Private clubs face the same issue in many major metropolitan areas where there is an oversupply of clubs.  The trick in either sector may be to survive long enough for some of your competitors to fail, thus bringing supply and demand back into balance.  How one does this depends on your market and whether you have enough capital to outlast the tough times.  In the end, perceived value for the cost of the service will be a determining factor.  Reducing prices will always help provided you can cover your overhead or you have reserves as previously noted.

A professional manager, if it is adept at cost cutting and marketing can make a difference.  surprisingly, course owners may not possess all of the skills needed to compete in a difficult environment.  This is true in many industries.  The trick is to find a manager who really adds value.  It goes well beyond economies of scale.

[Mike Benham]

Show me an owner that requires the homogeny of a management service and I'll show you someone without passion and vision. 
 

Mike Keiser

[Joe_Tucholski]

Show me an owner that requires the homogeny of a management service and I'll show you someone without passion and vision.  
 

Mike Keiser

With Ben writing that again I feel like there is some sort of trap set.  Keiser does utilize the 7th largest golf management company with Kemper Sports right?  Is it something with the word require?  Sure Keiser doesn't require a management company but certainly has chosen to utilize one...with great success.

Also I kind of disagree with the no more rounds statement.  I have classmates who are very casual golfers and will golf when the price is comparable to other forms of entertainment.  For example there was recently a groupon for DeBell golf course in southern CA and a few of my classmates purchased the deal.  They certainly wouldn't have visited another golf course and I consider those new rounds for the course.  I don't think it's good for the course unless those tee times would have gone unused otherwise.  I'm certain these guys won't be repeat customers like the marketing folks would hope.

[Eric Smith]

Ben,

Would you be kind enough to illuminate us as to what the Canongate Model is? It sounds like it might not have worked out for you or others you may know?

[Tom_Doak]

  Being in the golf ownership business to make money is futile, IMHO.   

Ben:

There is a huge difference between making enough at a golf course to pay off the cost of building it -- which few do -- and turning an operating profit.  

It's when you can't turn an operating profit that it's time to close the doors for good.  More and more courses are staring that in the face nowadays, but I think a lot of the reason for it is poor management.  They set a budget for maintenance and staffing that's too high for the amount of revenue they can realistically hope to raise

[Lynn_Shackelford]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

[Ken Moum]

Being a resident of a town where the lowest common denominator in golf offers unlimited golf and fitness at 8 or 10 locations for $348.00 a year. And they have a couple of "Elite" courses that are (I think) $100 a month, whose member also have privileges at the other courses.

They have THOUSANDS of member who joined just for the fitness centers, and their courses are pretty busy all the time.  As you might imagine, they aren't offering CCFAD conditions or services, but their members don't seem to care.

Today, I played a nearby privately-operated mom-and-pop course that charged me $25 for golf and a cart, and it's got some of the best fairways and greens I've played on this summer. It's nothing special from an architecture standpoint, but the people who play there couldn't care less.

They prove that there's another way for the golf industry to go. Forget about trying to be a CCFAD or even a top-tier country club. give golfers reasonable conditions for a bargain price.

There are, IMHO, plenty of golfers out there who will patronize places like these, if the price is low enough.

My home course, the second-tier country club in town is currently being operated by the bank, thanks in large part to the multi-course operator.  Even at $100 a month we can't get enough members to keep the place busy.

Ken

[Ben Sims]

Let me clarify a couple points.

1) Operating profit and investment profit are two separate things.  I think everyone wants to turn a profit for operating the golf course.  But making profits as investors, i.e., to be making money above operating expenses and improvements is a losing battle in golf, IMHO. 

2)  Joe, it's not a trap.  But using Mike Keiser and BDGR as the example and not the outlier is useless and not based in reality.  I was expecting someone to mention Kemper, but, it's not Kemper that makes BDGR profitable. 

Management companies grow because they convince golf courses that they sell a commodity, need to reduce the bottom line, become more homogeneous and likely to attract the middle..  Golf is not a commodity.  Golf needs its base more than ever right now.  New golfers can't afford to be be beginners anymore. 

[Greg Tallman]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

Lynn, Educated guess says Bandon's gross revenues from golf alone would be in the 12.5-15 million range with another 3.5-5 million on hotel revenue.

[Kalen Braley]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

Lynn, Educated guess says Bandon's net revenues from golf alone would be in the 12.5-15 million range with another 3.5-5 million on hotel revenue.

Net Revenue that much?  Surely you must mean Gross Receipts.

[Greg Tallman]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

Lynn, Educated guess says Bandon's net revenues from golf alone would be in the 12.5-15 million range with another 3.5-5 million on hotel revenue.

Net Revenue that much?  Surely you must mean Gross Receipts.

LOL - Yes that is gross revenue estimation. Apologies, reveiwing own budgets and typing about others at the same time does not mix well obviously.

[Kalen Braley]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

Lynn, Educated guess says Bandon's net revenues from golf alone would be in the 12.5-15 million range with another 3.5-5 million on hotel revenue.

Net Revenue that much?  Surely you must mean Gross Receipts.

LOL - Yes that is gross revenue estimation. Apologies, reveiwing own budgets and typing about others at the same time does not mix well obviously.

I was thinking with net revenues like that I need to get in the biz. 

On a side note, I don't know how reliable these things are, but this site project gross receipts a fair bit higher.  Anywhere from $20-50 mill annually.

http://www.manta.com/c/mmdly87/bandon-dunes-golf-resort

50 mill seems pretty darn high....but who knows maybe they are doing that kind of business.

[Greg Tallman]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

Lynn, Educated guess says Bandon's net revenues from golf alone would be in the 12.5-15 million range with another 3.5-5 million on hotel revenue.

Net Revenue that much?  Surely you must mean Gross Receipts.

LOL - Yes that is gross revenue estimation. Apologies, reveiwing own budgets and typing about others at the same time does not mix well obviously.

I was thinking with net revenues like that I need to get in the biz. 

On a side note, I don't know how reliable these things are, but this site project gross receipts a fair bit higher.  Anywhere from $20-50 mill annually.

http://www.manta.com/c/mmdly87/bandon-dunes-golf-resort

50 mill seems pretty darn high....but who knows maybe they are doing that kind of business.

I would be sirprised. I used the following assumptions for a quick guestimation:

Annual Rounds - 90-100,000
ADR - 135-150

Total Rooms 75 (wild guess)
Occupancy - 70%
ADR - $200-250

[Greg Tallman]

Some interesting, though not intelligent, comments here.

I will add these and let you decide if they contribute to the discussion.

1.  Most golf courses lose money.
2.  Management companies are growing in numbers.  If they are so bad why are they growing?
3.  Does anyone have any idea how much Bandon makes annually?  It is a lot $0,000,000
4.  If management companies are so bad, why do hotel owners employ them to run hotels and motels?
5.  I will agree that there are some management companies who know less than they should, but isn't that true of every industry?

Lynn, Educated guess says Bandon's net revenues from golf alone would be in the 12.5-15 million range with another 3.5-5 million on hotel revenue.

Net Revenue that much?  Surely you must mean Gross Receipts.

LOL - Yes that is gross revenue estimation. Apologies, reveiwing own budgets and typing about others at the same time does not mix well obviously.

I was thinking with net revenues like that I need to get in the biz. 



On a side note, I don't know how reliable these things are, but this site project gross receipts a fair bit higher.  Anywhere from $20-50 mill annually.

http://www.manta.com/c/mmdly87/bandon-dunes-golf-resort

50 mill seems pretty darn high....but who knows maybe they are doing that kind of business.

If they are showing 50 million in revenues I believe the boys at Enron would be jealous. I would say absolute max of 35 and that would include all revenues; golf, merch, hotel, f&b

[Don_Mahaffey]

 What courses need to be profitable is good demographics, a reasonable amount of competition, a course with good greens that is fun to play plus clean and tidy all the time, and personable folks who are doing the  interacting with golfers.

Whether that comes from a management company or staff hired by ownership is really irrelevant.

But, no management company is going to overcome my first two points. If the demographics are lousy and there are too many courses in your vicinity, your in trouble and a management company is probably only adding to your nut.

What a lot of management companies have trouble with, IMO, is my last point, finding personable people to interact with customers. This is one area where a dedicated owner, or dedicated professional staff member hired by the owner can make a huge difference. There is nothing like an owner or GM who gets involved in the community, and knows his customers by name. It’s really not that hard of a model, but too many people think they can just hire that done and it isn't that easy.

[Mike_Young]

I think rob W and Lynn S have some legitimate points in arguing management companies.  But I don't think they can be argued for more than about 5% of the courses that exist in the U.S.  Plenty of Muni courses and some resort courses need management companies for golf just like they do for hotels.
But so many other courses just can't justify such.  I look at all these numbers that are put out by the various "golf number gathering agencies" and you realize that they see golf as a commodity just as Ben S mentions.  The backbone of golf in the States is the small local course with good conditions , owned and operated by the same family offering a deal that fits the local economy.  
One reason management companies gained ground recently and in the past few years was the "new owners" that did not ask for these courses but repossessed them.  And then you have the owners who were using golf as an amenity and they hired a company because they felt they "could lose them less money " than they themselves could.  
When you go into a town and look for a good restaurant or bar, do you go to Chili's, Appleby's, Outback or do you find a no name local hangout?  People treat their golf the same way.  And since the Chili's, Appleby's, Outbacks have plenty of business it stands to reason there are plenty of golfers to fil that type of golf also.
But when it all filters out over 90% of the golf courses in this country will be owner operated without management companies and in many cases without PGA pros.  And some of the best ones will be operated by owners who were good golf superintendents.  

[Lynn_Shackelford]

I don't know what it is now, but the net from operations annually at one time at Bandon was around $7 million.  Could be better or worse, addition of Old McDonald helps, but the business is down everywhere.

Mike
I search out Waffle House.

[Kris Shreiner]

Don,

You nailed it in spades! The reality is ..a lot of folks who own courses or are in the game...shouldn't be in their position. You need a number of ingredients working together to succeed, but for goodness sake, gets some warm, genuine passion on your staff. We all know when a facility is getting it right...you can see and feel it.

I will say that from my view the game can be grown...gradually. The initiatives de jour troted out regularly are not going to do it. When common sense "playing from the proper tee" is transformed into a "Tee it Forward" fluff mantra...we know things are off the track!

The golf experience comes in many shapes and forms. So long as it's enjoyable and worthwhile for those that choose to partake, with friendly, competent folks providing the product, the game will sort itself out just fine, as it has for centuries. What is certainly NOT needed is the corporate golf lockstep to 9,000 yd play. That... WILL kill the game as we know it. Where does it stop? Next thing you know there will be a three-stage golf ball to compliment the long putter needed for 20,000 sq. ft greens.

The shake-out will continue until morale improves.

Cheers,
Kris