Sometimes the Truth is Shocking to Contemplate

[Ian Andrew]

Tom,

I don’t agree with you. Affordable golf is still quietly being built with less profile than the large budget projects. I do agree with you that attitudes need to change at the higher end to meet the realities of the business.

I spent Tuesday trying to convince a potential new client to build a course that was less than 6,800 yards. Not only would it make a better business model for him, but I was also concerned about the quality of holes and the inherent dangers created by forcing a long course on 160 acres. This wasn’t a question of his finances; it’s just that I’ve built too many (back tee) “thatch plantations” to want to waste an owners money for something that does not get used. I spent time explaining to him that length only served about 1% of the golfing population and that it was time as architects ignored trying to design that for that one percent. We need to build public courses for the average guy, and most of that one percent will still choose to play if the course is great. I also spent a lot of time talking to him about reducing the earthmoving and avoiding containment mounds for better golf – and a cheaper build.

Tom, we're out there, it might have more to do with who you’re building for right now.

[Brian Marion]

How much of the this trend can be attributed to everyone watching PGA Tour golf? They see these courses on television and just can't fathom why their course doesn't look the same. They then push the committee and the staff to maintain or build that level of green or eye candy (waterfalls?). Of course if a new course gets built it must immediately one up the last best area course or risk not attracting players.

How many times have I asked another golfer for a recommendation on a course and I get, "oh, it's plush you'll love it." Nothing is mentioned of the architecture or routing.

Most golfers do not realize that the courses they see on the tube are heavily overseeded and over watered. The course is setup to be visual bling-bling, not real golf.

In truth, every course on in the US must compete with the last course played on Sunday by the pros.

[Mike_Young]

tom,
As Paul says, "I would do 2.5 all day"....
Most of our business is just that....
And it is very frustrating when other sides of the industry such as the GCSAA, USGA and others are making the client feel as though you are not giving him a good product unless his greens are $6 per foot USGA, cart paths 8 wide with turnouts, $800,000 maintenance budget and $750,000 maintenance bldg etc...and I could go on....
Yet if one watches the guys that are actually making money at the golf business and just golf business...they cut all those items.
Funny but just last week a friend of mine that has been the supt or director of maintenance at a large resort on Lake oconee purchased a golf course we had designed and built 15 years ago.....he is going from having several "signature projects" with million dollar maintenance budgets to a course where he will be running the proshop with his wife and handling maintenance with a crew of about 5 on a budget of less than half what he is used to.  He doesn't see a problem now that it is his money.....
So to do this all of the different associations have to get behind it and quit snubbing someone when they build an economically efficient product that doesnt fit all of their specifications.  there are a lot  more hondas out there than mercedes and they both work....
Mike

[paul cowley]

I agree Mike....today's excess is excessive.

Friday I cut 300+ heads from a irrigation plan that were to be used to grow in un-irrigated areas [centipede,  broomsedge, carpetgrass and a few others]....opting instead to drag hoses if its dry and maybe re-seed areas that don't take [ in areas that we want to be thin to begin with, duh ].....grow in will never be the same  .....or be the same as it used to be .

[David_Tepper]

I too decry the overblown budgets and excess that has enveloped the world of golf lately, but has anyone priced tickets to a concert, a big-league sporting event or a all-day ski lift ticket lately?

I just saw that prime seats for Monday/Tuesday night Lyle Lovett concert at the Mountain Home Winery in Saratoga, CA are going for $85 (plus a $9.60 booking charge, referred to as a "convenience fee. Convenient for whom I ask?). Seats for an NBA game anywhere near the floor are probably going for $100 to $500 per game at almost every arena in the US.

A LOT of somebodies have a LOT of money to burn these days and it is being spent in many other places besides initiation and green fees. It would be interesting to know how much of what makes the entertainment/amusement/sporting world go 'round gets written off as a business expense.  I am sure that Jack Welch at General Electric was not the first (and is certainly not the last) corporate-mogul to get the tab on his half-dozen club memberships paid for by his shareholders.    

With fuller disclosure of corporate executive compensation (hopefully) coming soon, maybe the gravy train of corporate perks will get slowed down. Somehow, I doubt it will.

In the meantime, in the ego- and status-driven world of golf, it is easier to move the merchandise by charging more, not less.

   

[Don Dinkmeyer]

Tom,

While I'd agree that most course development is for one of the two reasons you gave, there are the exceptions - one of which is sort of in your backyard.

There is a small family-run course in Arcadia, Michigan(Chestnut Hills)which had been 9 holes for years. Two years ago they added a "back nine" and certainly made an improvement. I am sure their budget is a fraction of those numbers cited in this thread.

Is it world class? No
Is it playable? Yes
Is it profitable? No idea - but its definitely just a few years old!

[Tom_Doak]

David T:

I'm not sure your numbers for concerts or NBA games are a comparable spending situation.  Most concerts are "one time" events and that drives up the price considerably.  Many golf courses in recent years have been visualized as attracting "one time" players and that is the problem with their business model.

Mike Young's response is what I was getting at.  There may be a lot of responsible golf architects who are doing projects for reasonable budgets, and it's not surprising that several of them are regulars here.  But when you read those NGF reports the numbers are a lot higher, and not sustainable in my opinion.  And those are the projects which get most of the attention, the sensible projects are often snubbed as substandard.

I guess it is not as dire as I have opined ... as long as there is a steady stream of people willing to shell out $$$ to build a new course and eventually sell it for $ or $$, the golf course business is in fine shape.

[Mike_Young]

I guess it is not as dire as I have opined ... as long as there is a steady stream of people willing to shell out $$$ to build a new course and eventually sell it for $ or $$, the golf course business is in fine shape.

No, I think you are closer to right than wrong on the subject....the reason we never hear of the small projects is also in the $$..they have no ad budget nor do they have the need to promote to anyone outside of about 15 miles radius....

[Peter Pallotta]

I'll take Tom's realization at face value, and say this:

Everything changes. Industries go through ups and downs: new/changing economics, new/changing technologies. Hopefully, the good and talented people survive; with some luck, they usually do.

I knew a film editor who started out when you actually cut film. He did all right for himself. Then video/video editing came along; he was one of the first to jump on board, and he made a fortune. What you could charge in those days for a half hour industrial video and twenty videotape copies/dubs would make you blush. He built a good size company, and hired a lot of other editors. Then computer editing came along, and he wasn't the first to jump on board; he lost everything. He picked himself off the ground, and taught himself this new system. He'd did all right for himself. Now it's changing again: when I first did an hour tv programme with him using computer editing software, we had ten hard drives stacked one on top of another to get enough memory to hold the footage; that same size memory is now inside the laptop I'm writing this on.    

I like relatively inexpensive public golf courses; I'd better, as that is what I play 90% of my golf on. I have to drive further and further from the city to get to those kind of courses (land costs, I suppose). If it's true that the economics of golf course construction no longer work, some of the architects on this board will be the first to know it; some of the golf players on this board will be right behind. Then owners and architects will have to find a different approach, and will have to change their expectations, as will players like me.

Peter

[Patrick_Mucci]

David Tepper,

What difference does it make if the compensation to a corporate executive is paid in cash or in perks ?

The equivalent values are the same.

If anything, Jack Welch might have been underpaid based on what he accomplished at GE.

If an executive's pay is based on performance, what difference does it make with respect to how he's paid ?

Should he not have a company car paid for by the corporation ?  A T&E account ?  A cell phone ?

Pay packages are reported in the proxy statement.

As a shareholder, I'd rather pay for golf club memberships then multi-millions in stock options, ala UHC's McGuire.

[Garland Bayley]

David Tepper,

What difference does it make if the compensation to a corporate executive is paid in cash or in perks ?

The perks don't make the news and don't get as much attention.

If anything, Jack Welch might have been underpaid based on what he accomplished at GE.

And then again given the time period he was there he might have been overpaid for what he accomplished.

[paul cowley]

oh, and those 2.5 millioners probably aren't going to have many bag drops or anybody whose job designation ends in 'boy'.......darn.

[Garland Bayley]

Garland:

Deer Lodge is only big enough to support nine holes for townfolk.  I believe they do have a nine-hole course of very modest means.
...

Tom,

With my comment about "municipal Bandon model", I was trying in my typically pithy way to suggest a municipally owned resort course. Each time I have played Old Works, I have paid under $40 for 18. I have yet to meet a local person playing the course. However, it is my understanding that the construction cost for Old Works was paid for by the superfund. Therefore, I wonder if the city of Deer Lodge could do economic developement by creating a "sister" course to Old Works and make a go of it. Or would the construction cost doom it from the beginning?

Bandon couldn't have been much bigger than Deer Lodge when the Bandon resort was created. Deer Lodge has the advantage of being on the Interstate Hiway. The nearby airport in Butte probably is at least equivalent to what North Bend had when Bandon started.

[rgkeller]

Tom Doak,

Will escalating costs cause Country Clubs to transition into Golf Clubs ?

There's not a golf club I know of that makes a profit or breaks even in the kitchen or food service department.

Will this constant drain cause clubs to close dining facilities and turn away from the social country club toward the golf club with limited social and dining activites ?

I can't see how clubs can sustain themselves as full service Country Clubs, especially as more and more clubs are short members and potential members.

More likely the clubs sell off the land for expensive housing and keep the pool, tennis courts and dining facilities for the clubbing set.

[Don_Mahaffey]

From the supt. side, some of the craziness I see:
Requiring USGA spec greens when non-spec materials are available at a fraction of the cost. It's just a greens system for growing grass...one size doesn't fit all.

Irrigation costs have spiraled into the truly absurd, mainly IMO, because everyone has to have the latest, greatest system.

Maintenance equipment is very expensive, yet many upscale course need to have a spare mower incase the spare mower goes down. And the most absurd trend is the 3 year true lease with a new fleet coming in every 3rd year. Equipment will last a lot longer than 3 years...but why bother if you can just get new. Do a search sometime for used equipment, it's everywhere and a lot of it is very good at pennies on the dollar compared to new.  

High dollar bunker sand shipped in from God knows where. Do courses in AZ really need bunker sand from Ohio?

Of course most of this happens because everyone involved is mainly interested in covering their own asses and when something fails you can't point the finger at me if I specified all the right materials.

[paul cowley]

Patrick when you say "I can't see how clubs can sustain themselves as full service Country Clubs, especially as more and more clubs are short members and potential members.", ....I agree, and if they can't survive, well....

Clubs come together for a mutual purpose and when that purpose no longer works I guess they have to punt or whatever......short of a government bailout .

[paul cowley]

Good post Don.

[John Kirk]

That rant is not even remotely coherent.

Sorry, Jin...it's not a very well organized post.  I'll stick with my general argument, though. The U.S. economy looks pretty healthy today, and there are more wealthy people than ever before.  Without rehashing the details, I'm pessimistic about the country's future economic prospects.  More great golf courses are built during economic boom cycles.  More golf courses go out of business when the economy takes a prolonged downturn.

There, a little more coherent.  Do you disagree with any of that?  

[Gordon Oneil]

Jim Kim,
Don't know ya, but know I'd love ya.
In other news, after all these years it seems that G.W. Bush is responsible for the disappearance of Jimmy Hoffa.

[Gordon Oneil]

Jin,
My apologies for the misspelling of your name.

[John Kirk]

Gordon,

Let's not sidetrack this fine thread into a political discussion.  It's my fault for referencing the Bush administration to my pessimistic view of the economy.  I know it's much more complicated than that, and I removed the reference in my second attempt at a coherent contribution to the thread.  Only time will tell what will happen, and in the meantime I'm making the most of it.

Yet another JK

[A_Clay_Man]

Adapt or perish, just like the game teaches us.

 New Golf still provides great economic benefits to communities as they try to improve their quality of life for residents.

In Dr. Klein's talk, "Golf-Great game, lousy business" he points the finger at those old NGF numbers from the early eighties as a major culprit in the current market saturation. What sticks out, is the resurgance after 911. That downturn shoulda made alot of people think about the economics of expensive golf. Yet they continue to be built.

Tom, eludes to the egos that are creating these potentially unprofitable ventures, and I suspect these costs, Tom considers too high, are just drops in the bucket to the really big dogs. Nuzzo's project is a prime example. The principle seems like your typical prudent Texas land owner/rancher/oilman and is well aware of the yearly costs to maintain. In his world, he can easily justify them, without renumeration for along time, or, at least until it's time to adapt.

I suppose this all leads back to what I use to harp on here. Building golf courses should be looked on as a passion for the sport, and not the bottomline.

[Doug Siebert]

While I agree with Tom's assessment about new course construction being endangered by HAVING to be a part of an elitist club or a housing development, there is another factor to consider.

Since around 1970 when "ecology" was a new buzzword and the environmental movement began in earnest, regulations have become strict and onerous for all development, and not just for golf.  I believe that we should be protecting our environment and that development should strive to protect it whenever and wherever possible.  Our precious resources have a right to be protected.

Yet, with the current state of local, state and federal statutes designed to protect our resources, the added costs to a project have to be considered as one of the primary poisoners if you will, of reasonably-priced development.

Marc Haring asks Tom if he has an answer to his hypothesis, and I must admit I don't have much of one for this addendum to it.  At its core, we may be looking at a reinvention of an entire industry, much like the Detroit of the 1960's model had to give way to the automotive practices of Japan to compete in that marketplace.  Perhaps government regs may be the very thing to become a catalyst for simpler and more humble construction and maintenance.

In essence, it may take a series of far-sighted golf developers and management companies to use existing rules to actually aid in this movement.  In other words, it may be better to join than to fight, thereby enabling the most vociferous opponents of golf projects to come aboard to welcome a more honest, simple and, well, Scottish way of viewing golf courses.

Neal,

I'm curious, can you point to some figures from a project or two to support your claim that it is environmental regulations that are responsible?  I really can't see how that could be more than a few percent of the total project cost in the vast majority of cases -- outside seaside properties that receive special scutiny these days to their the relative lack of undisturbed coastal areas left.  I'm sure the vast majority of the cost is stuff like the increased land (longer courses, wider playing corridors) and the ever increasing standards of maintenance and frills like maintenance sheds that cost more than the clubhouse should.

I'm sure there are some cases where land is purchased and then plans are put on hold for years due to court fights over environmental matters, but it can be argued that's the fault of the guy who wrote the check for the land failing at due diligence.  Perhaps in some cases more land has to be purchased because some of it is unusable (wetlands or whatever) but that's not a problem unique to golf, as it would be the same if the land was used for residential or commercial development.

Modern maintenance practices on golf courses are a disgrace environmentally, there is way too much water being used and way too many chemicals, and the equipment pollutes much worse than modern road going vehicles do.  If golf wants to be looked on as more of a friend to the environment it ought to take a leadership role in changing these things.  There's no reason why all the fancy maintenance equipment couldn't include catalytic converters and use more efficient engines, but everyone is more concerned with how low it can mow the grass.  These problems aren't unique to golf, of course, as suburban homeowners in many areas feel it is necessary to install sprinkler systems and constantly dump fertilizer and pesticides in per acre quantities larger than golf courses use to keep their lawn thick and green.  All so they can mow it more often, with mowers that send out more pollution in an hour than their modern SUV puts out burning an entire tank of gas!

[Marc Haring]

There is a competitor of my facility that is a company and therefore has to publish it’s accounts which are downloadable. I checked them out a few months ago and they made £500K two years ago and £760K last financial year. It is a 27 hole facility that has a modest clubhouse is a fun course with some good holes, nothing pretentious and it charges about £25.00 a round with a £750 annual sub. It was paid for very cheaply by getting a local archy in, realistic equipment and maintenance and using the site as landfill for a couple of years before the course was constructed. This is a very common practice over here. It’s a competitive market out there but there are ways of making it work.

[Jim Nugent]

I have long been amazed at what Americans pay for the priveledge of private golf even at established course without hefty land prices.    

I find paying $120 a game at your club astonishing and I know there are plenty of guys out there who pay much more per game.  It dawns on me while doing these numbers that it isn't surprising that there are so many public courses out there targeting the $100-$150 per round price range.  

Ciao

Sean

Sean, it didn't used to be that way, not even in the 1980's, I think.  The past few decades or so, both golf and the U.S. economy have enjoyed a huge boom period.  

Every boom comes to an end.  This one is no different.  I think golf construction will take a big hit.  Also, we'll see a huge number of NLE's.  In fact, hasn't that already started?