[Mike_Young]

I just read this article   www.golfbusinesswire.com/releases/118204/

IMHO golf is mom and pop...will always be mom and pop and if we continue to make it a corporate experience it will continue to lose.....it is no different than a neighbor hood bar vs a chain.....I am tired of going to golf conferences and having to listen to so called executives of the multicourse owner companies spout the future of golf when all they are are numbers people with no clue.....just watch...no different than your community bank that gets bought up by the big boys and a few years later the circle turns and everyone wants small banks again......there is a slight possibility that some of the management companies are in the right place with resort golf etc but not for the average golf course.....from what I have seen the service drops, the maintenance level drops and much of the money they save is in the area of personnel .......where in most cases they hire less experience etc....sorry to rant.....Just tired of these guys always speaking for golf....and tired of an Association that was created for single owners catering to the large multi course companies.....
At the end of the day the average American golf course would hope to make a living for its owner and either have an asset he can transfer to his sons and daughters or sell for retirement.....no more no less....there is no room for the profits the numbers guys try to BS Wall St with.....

[Wayne_Kozun]

IMHO golf is mom and pop...will always be mom and pop and if we continue to make it a corporate experience it will continue to lose.

What about member owned clubs?  Isn't that how golf began in North America and is still where the leadership of the game, such as the USGA, comes from?

[Steve_ Shaffer]

We live in the world of big boxes- Home Depot/Lowes has replaced the small hardware store, Toys R Us has replaced the small toy store, Golfsmith/Golf Galaxy has replaced the small golf store, Dick's has replaced the small sporting goods store, etc, etc. That's the way it is. Of course, there is always room for the "mom and pops" of the world.

[RJ_Daley]

Mike, Considering you are a GC architect always in the market to find new clients, I think that is a very courageous and honestly expressed post.  More people ought to speak their minds as such and let the debate go forward.

[Mike_Young]

RJ,
I realize that...but I don't think golf will always be where those guys are around.....Steve mentions the big boxes.....golf don't work that way.....unlees you think it is working that way now.....sorry..
mike

[George Pazin]

Seems like it's tough to be a mom and pop these days, with real estate prices where they are. Seems like there will always be a(n unforunate) drift toward the folks with deep pockets.

Sounds like those speakers at the seminars are just trying to justify big salaries, Mike.

Almost all business starters and owners are dreamers at least to some extent, but golf seems to draw the biggest dreamers of all. (That's not a bad thing.)

[SB]

First, the multi-course owners are only speaking for themselves, but they are a good gauge of what's going on because they see conditions over the whole country.  That's why they get quoted and why people should pay attention.  The comment people should take from the quote is that they are optimistic and looking to buy.  To me, that is a positive development as they feel the industry has turned.  Who else would you look to as a gauge of the industry?

There are two reasons why multi-course owners exist.  First, golf courses in big cities cost a lot of money.  Just throwing out a typical price of a golf course of $6 million means you've got to have at least $2 million in cash.  People with that kind of liquidity generally don't want to stand behind a cash register.  So you pay someone to do it, and if you do it well, you do it again and you're now a multi course owner.  Does that guy lose credibility with you?

Second, multi-course operators are actually quite good at what they do.  You may say "golf don't work that way", but that would be like Yogi Berra's famous "nobody goes there anymore, it's too crowded".   Being a member of a ClubCorp club may not be everyone's cup of tea, but the fact is that they can buy a club and get membership to increase. They must be doing something right.

[RJ_Daley]

But, are the multi-course enterprises driving the golf culture?  The bigger you are, the more marketing and cost cutting and profiteering you need to do inorder to meet your syndicate or shareholder expectations.  Do you lead or follow the pack in your local area?

A mom an pop seem like they used to have more flexibility to maybe take a little less profit to maintain a pride of ownership touch that was appreciated by the community but didn't necessarily maximize their profit.

I fully understand that the modern realities of urban pricing pressures of land costs and everything else for Mom and Pop that works adversely to squeeze them out or price them out of competition.  It is pretty much the same with the chain restaurants.  Mom and Pop have a very tough time competing with Olive Gardens and Applebys.  The very good one family owned places usually have to have higher prices and long time reputations to keep them going.  There are fewer Yogi places where 'no one goes there anymore because it is too crowded'.  

I think that as to the mom and pop question, when most of the open to the public courses were privately run, they were able to guage their prices and service towards a community standard, and had more choice to charge accordingly.  Now, if they compete with the big national multi-course entity in the same local area, they have to 'follow' the widespread national trend set by those across the country intense golf marketting companies rather than set the local trend according to their unique and personally tailored ideas.  

Not gospel, just my impressions...

[Tom_Doak]

Mike:

I could not agree more, but you left out another category of corporate golf ... real estate golf.

I've spent most of the last two weeks looking at potential projects in Mexico and the Caribbean.  A lot of them have been master planned by the same high-powered land planners ... and all of them are sorely handicapped from birth because golf is the third priority in the deal, after resort core location and maximizing real estate value.

[RJ_Daley]

I've spent most of the last two weeks looking at potential projects in Mexico and the Caribbean.

Yikes, that sounds gruelling.  Do you need a man-servant to carry your bags?  I'm available...  

Tom and Mike, obviously you fellows are concerned with the courses to be built in the future, and perhaps in a minor sense, some that need remodelling.

But, how can any mom and pop start with a dream in this modern reality of land costs, labor, and develpmental costs of permitting etc?  You either must have a wad of mad $$$ or long time family owned land as an individual, and have a dream that you can absorb or sacrifice the enormous costs to the diminishment of reasonable profits.  Like someone said above, even a modest 6 million course with no R.E. recovery, and 20% down in cash would be hard pressed to earn the return that same person could likely get if invested safely.  How many local guy dreamers go broke in two to three years?  Only the deep pocket entities can absorb the early lean years.  

It seems to me that the idealistic dreamers of ownership of a local golf course are fleeting and outdated for the most part.  Only corporate, R.E. or resort, or multi-course entities can afford to realistically plan to be operators in the future.  

Mike, If my thoughts are generally on track, do you see this ever changing to another economic reality?

[archie_struthers]

 


Hey guys, thoughtful posts on an interesting subject. From my perspective, the golf business has never been tougher.
Prices for memberships and green fees continue to drop, client demands for service and amenities grown....and the fixed costs... taxes...insurance...litigation ...maintenance only move in one direction...UP!

Mavericks with a lots of money and insights into what makes a place great are few and far between.  The patience needed to give the personal touch on a daily basis usually is lacking in someone who has the cajones and finances to build...buy ...or operate... he or she moves on!

The attention to detail is so important....for instance today it is 90+ and humid here, so the superintendent wants to limit cart traffic in certain areas of the course...however , Wednesday we have an active group of our super seniors...some of our best members included....and they will be at odds with the superintendents wishes because they just can't walk anymore...they just can't

what do you do...you make a command decision...as Leo Fraser used to say and it's more applicable now than ever, we can regrow some grass easier than find new members (golfers)

Now the superintendent is PO'd .....he thinks we don;t care about HIS golf course,,,,boy is he wrong

but that's the way it is, the for profit club is almost an oxymoron anymore, with the exception of the Pebble Baech's of the world....

Mom and pop's can still make it...but in the face of ongoing govenmental and financial pressures....sooner or later, no matter how great their love of the game ... it is destined to become , in the inestimable words of Ricky Watters, SF and Eagle running back ..."for who...for what"

What's left....super rich who enjoy a golf course as their own fiefdom... and member owned non-profits... which the tax and spend government is surely eyeing with ardor..

sadly,

"archie"

[Brent Hutto]

It is still possible to take some family-owned farmland or such and build a course on the cheap with little debt incurred. If the result is at all attractive to the local golfing population it's a practical way to have a course that actually turns a small operating profit and is self-sustaining.

However, I think that possibility is only in fairly remote areas. The latest example I know of is about 75 miles from where I live and basically an hour's drive from any significant population concentration at all. It was built over a period of several years and has been in operation for less than a decade but it seems a reasonable place to play your $30 round of golf and it's my understanding that the family who built it have not lost money on the undertaking. But it seems to be in an area where there are at least a few hundred avid golfers within 50 miles or so and not a lot of options for decent, cheap golf. Plus they already owned the land which was a big factor.

Basically I'm saying that mom-and-pop public golf will never again be as common as it once was and is probably more of an oddity in certain out-of-the-way locations where the confluence of several factors allow it to spring up and flourish in a ecological niche that's outside the mainstream of the golf "industry".

What's the name of that neat little hardpan-ish course in the hills north of Pittsburgh? Stoughton Acres or something like that. I think it's still under 20 bucks on weekdays and IMO is a fine test of golf for anyone with a double-digit handicap. Family run, lean but tolerable maintainence, friendly folks. Hope I get to go there again one day before it becomes a WalMart or a bunch of spec homes...

[Gary Slatter]

I just read this article   www.golfbusinesswire.com/releases/118204/

IMHO golf is mom and pop...will always be mom and pop and if we continue to make it a corporate experience it will continue to lose.....it is no different than a neighbor hood bar vs a chain.....I am tired of going to golf conferences and having to listen to so called executives of the multicourse owner companies spout the future of golf when all they are are numbers people with no clue.....just watch...no different than your community bank that gets bought up by the big boys and a few years later the circle turns and everyone wants small banks again......there is a slight possibility that some of the management companies are in the right place with resort golf etc but not for the average golf course.....from what I have seen the service drops, the maintenance level drops and much of the money they save is in the area of personnel .......where in most cases they hire less experience etc....sorry to rant.....Just tired of these guys always speaking for golf....and tired of an Association that was created for single owners catering to the large multi course companies.....
At the end of the day the average American golf course would hope to make a living for its owner and either have an asset he can transfer to his sons and daughters or sell for retirement.....no more no less....there is no room for the profits the numbers guys try to BS Wall St with.....

Mike, great courageous post!
IMHO    member owned courses      decreasing
           mom and pop courses        decreasing
            total number of rounds      decreasing
           Big Box operations/projects  increasing
 privately owned "private" courses    increasing
  future of the game as we know it    in transition to ?

[Jim_Kennedy]

Mike,
There is one promising way to keep some M&P's in business and out of the hands of mgmt. cos. or developers and that is through the use of conservation easements. This would, at a minimum, relieve the course of its property tax burden and a course that sits on more environmentally sensitive land might even be able to get paid to relinquish the development rights to its new 'partner'.
If a course can meet the established criteria and if the owners are willing to work within certain frameworks then the potential to pass the business on to your family or sell it for its value as a business becomes viable.

[George Pazin]

What's the name of that neat little hardpan-ish course in the hills north of Pittsburgh? Stoughton Acres or something like that. I think it's still under 20 bucks on weekdays and IMO is a fine test of golf for anyone with a double-digit handicap. Family run, lean but tolerable maintainence, friendly folks. Hope I get to go there again one day before it becomes a WalMart or a bunch of spec homes...

It is indeed Stoughton Acres, and we have several courses like that north of the Burgh. Last time I saw SA it was $11 to walk and $18 with cart, for 18 holes. I prefer it to many of our newer daily fees, but that says as much about the daily fees as it does about SA. The folks at SA seem to be in it for the long haul, but once those heirs start seeing dollar signs from the rapidly growing developments in the area....

Archie -

It's not just golf that's a tough business! I think just about every business these days is tough. More government regulation than ever, more competition than ever, fewer barriers to entry into many or most businesses - it's a wonder anyone even tries it anymore. I could have made 100 times what I made the last 13 years if I had stayed a scumbag investment banker (and I use that term lovingly, several of my closest friends are still in that biz). Probably played more golf, too!

[Bill_McBride]

The attention to detail is so important....for instance today it is 90+ and humid here, so the superintendent wants to limit cart traffic in certain areas of the course...however , Wednesday we have an active group of our super seniors...some of our best members included....and they will be at odds with the superintendents wishes because they just can't walk anymore...they just can't

what do you do...you make a command decision...as Leo Fraser used to say and it's more applicable now than ever, we can regrow some grass easier than find new members (golfers)

Now the superintendent is PO'd .....he thinks we don;t care about HIS golf course,,,,boy is he wrong

Archie, doesn't your super have a bunch of stakes and rope?  No reason he can't just steer the carts around isolated wet areas.  That would keep the old guys in their carts, your revenue intact, and his course in good shape.

Good luck!

[Greg Tallman]

Mike:

I could not agree more, but you left out another category of corporate golf ... real estate golf.

I've spent most of the last two weeks looking at potential projects in Mexico and the Caribbean.  A lot of them have been master planned by the same high-powered land planners ... and all of them are sorely handicapped from birth because golf is the third priority in the deal, after resort core location and maximizing real estate value.

Tom,

What locations (general, if that helps) were you looking at in each area noted?

[Chris Cupit]

It is a tougher and tougher market for mom and pops.  My take on this issue comes from a fairly unique perspective:

I am a second generation owner/operator having "inherited" a club from my golf pro father who started it 34 years ago.

I did spend a little over a year working for ClubCorp and went throught he complete Club Manager program to become "certified" to run one of their clubs.

I have been/am a member of a couple of golf clubs and know what it's like to pay dues and an initiation fee.

I still think over 80% of all clubs are privately held--either equity owned by the membership or privately owned.  Large ClubCorps or American Golf or Sequoyah Golf or Heritage really don't own that many courses.....yet.

As a NGCOA member I too am frustrated that they tend to look out for the multi course guys, but the ony real benefit I see is the (sometimes) enhanced buying power of being a member with certain vendors.  Some of the meetings are good,too.  As a m&p I really want the NGCOA to work on an industry wide "pool" of health insurance for clubs but that seems a long way off.

ANyway, my very biased opinion is that mutli course operators are often not golf people but rather very smart investors who are only interested in building a group of clubs to be bought out at the next high demand point in the market.  And that is fine.  In the meantime they must (and usually do) manage/run a good product.

They are able to attract a lot of investment dollars to purchase stressed clubs during down times and as soon as the portfolio looks good IT WILL BE FOR SALE.  A benefit for many golfers is that some mom and pops are not well run and deserve to be run out of business and managed more professionally, but as soon as the right price  comes along the investors are out of there with no concern for the members.

I do find very large operators and courses truly "soul less" and I am convinced a well run stand alone will have infinitely more charm and character than a well run McGolfcourse.

Ultimately the market will decide--right now at the very high end and the entry level end there are opportunites to do OK in the business.  The clubs that are in for tough times are those in the middle so to speak--nice, decent IDs at one time but that never "made it" to elite status  in the market.  They are seeing huge deflation in fees and are going to get crushed.

[Craig Sweet]

Here in Montana there's been some big name architects building courses, but they are nothing the average Montana golfer can walk on and play...and for my money, it's crap like that that is killing the game.

[Mike_Young]

The way I see the basic multi owner course and why it doesn't work.

FIRST...let's agree that in the free enterprise system people expect a return on investment and on some of the post you mention that only the BIG BOYS have the money.  It used to be one would see a press release where someone had 300 million to spend on courses....well most of that was where some MBA with Wall St connections wrote a glowing proforma and promised a 20 percent return to the shareholders....FACT we all can find money like that if we can convince someone there is a 20 percent return.....

Many of these guys that claim to know the business are just working for RE development companies amking sure golf doesn't lose anymore that it has to....

THE MYTH OF ECONOMIES OF SCALE.....BS.... any independent owner worth his salt can get a better deal than these .......ex Yamaha carts used to have a deal with NGCOA whereby every cart an owner purchased/leased they would receive a 25 or 50 dollar rebate(for got exact amount) plua NGCOA got something for making the deal.....one could always get a better deal with one of the other cart companies so no one won.....

EMPLOYEES..in most cases lower cost employees are used in order to justify the cost of another management level...

MAINTENANCE-  same as above....design features are lost many times due to cost savings...

I am amazed how the golf industry seems to listen to these guys whether it be a turf distributor wanting a national contract or a conference listening to a roundtable......

THE BUSINESS IS ALL A JUMBLE OF NUMBERS.....

AND you guys mention six million dollar courses...tHese mom and pop guys are getting it done for less .......THE REASON YOU NEVER HEAR FROM THEM IS BECAUSE THEY DONT ADVERTISE AND THEY ARE LOCAL CLIENTELE......

I am sure there are exceptions to this but in most cases it is just musical chairs with the investors losing and taking the loss and the next group stepping up.....

[RJ_Daley]

Chris Cupit, to me, your comments sound like the modus of "Flip This House" only these guys flip courses.  If you are correct about buying stressed courses in down economic times or mismanaged courses, then buffing them up for the sole purpose to flip them for a profit, I must ask... Who is then buying them all buffed up, puffed up, priced up and passing it on to the local golfer?  Is this how greens fees and expectations went over the top?

[George Pazin]

Mike -

The one reason why I could see it work is the person in charge. In theory, if you're a good enough business owner/operator, you should be able to train someone to run the business for you, and then move along to the next course, and simply manage the managers.

Just don't ask me to do it, I have a hard enough time trying to train people to print t shirts.

The counter argument would be that golf courses are probably more of an owner-involved situation. I think that's closer to the point you're making, which I agree with in many ways.

As for the cost, wouldn't that depend mostly on the land acquisition costs? You can probably build a course much cheaper than many architects are these days, but if you're anywhere near a major metropolitan area, the land costs are just prohibitive. Add in all the enviro/government bureaucracy stuff, and you've added some pretty signficant costs, I'd think.

Chris Cupit, to me, your comments sound like the modus of "Flip This House" only these guys flip courses.  If you are correct about buying stressed courses in down economic times or mismanaged courses, then buffing them up for the sole purpose to flip them for a profit, I must ask... Who is then buying them all buffed up, puffed up, priced up and passing it on to the local golfer?  Is this how greens fees and expectations went over the top?

Someone once said there's a sucker born every minute.

In reality, if you were a flipper, you'd likely be better off flipping to housing developers.

[Mike_Young]

Mike -

The one reason why I could see it work is the person in charge. In theory, if you're a good enough business owner/operator, you should be able to train someone to run the business for you, and then move along to the next course, and simply manage the managers.

Just don't ask me to do it, I have a hard enough time trying to train people to print t shirts.

The counter argument would be that golf courses are probably more of an owner-involved situation. I think that's closer to the point you're making, which I agree with in many ways.

As for the cost, wouldn't that depend mostly on the land acquisition costs? You can probably build a course much cheaper than many architects are these days, but if you're anywhere near a major metropolitan area, the land costs are just prohibitive. Add in all the enviro/government bureaucracy stuff, and you've added some pretty signficant costs, I'd think.

Chris Cupit, to me, your comments sound like the modus of "Flip This House" only these guys flip courses.  If you are correct about buying stressed courses in down economic times or mismanaged courses, then buffing them up for the sole purpose to flip them for a profit, I must ask... Who is then buying them all buffed up, puffed up, priced up and passing it on to the local golfer?  Is this how greens fees and expectations went over the top?

Someone once said there's a sucker born every minute.

In reality, if you were a flipper, you'd likely be better off flipping to housing developers.

George,
Land cost is not a problem.....I have two right now where the developer will give the land and 1.5 mill if someone does the course...all they want is housing.....no one pays for land and in most cases can demand more than just the land.....
Mike

[Brent Hutto]

Mike,

Am I understanding your last post correctly? You're describing housing developers who want a Golf Course as an Amenity for their housing units so they basically want to partially subsidize its construction so someone can afford to make an operating profit by running the course. Is that it?

If so, it would argue that any "mom" or "pop" who wanted to be in the golf-course operation business could probably do so by finding such a developer. Or is it really that difficult to break even operating a housing-development course even if you can potentially build it for "just" a million bucks or so over the developer's subsidy?

[Eric_Terhorst]

IMHO golf is mom and pop...will always be mom and pop and if we continue to make it a corporate experience it will continue to lose.....

Is Mike Keiser a multi-course owner or a Mom & Pop?

From my admittedly ill-informed viewpoint, it seems that the experience of Mr. Keiser and Bandon Dunes has nothing to do with Mom & Pop and yet is a model for future golf investors.  He appears to have good taste and golf sense AND a need to get a decent return on capital.

There is always going to be a spectrum of market participants, as in any business.  You can choose to work with real estate developers in the Caribbean or not--I imagine that may limit your income...but only you can decide if that's OK.

We the consuming public will also decide if we want to buy in to mega-developments in Los Cabos.  What's wrong with having variety in the marketplace?  

The suggestion it is killing the game is a bit shrill IMO.

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