Nicklaus Redo of N Palm Beach Muni - Not Working Out

[George_Bahto]

I know for a fact, from a VERY reliable source, that JN spent a lot of time on the course during the design and construction.

I doubt the cost of playing this muni could be raised because of the competition in the area and also the locals have been used to playing the course at very low rates.

Geoff C your correct, "we" would also have made a difficult course.

[Greg Tallman]

The expense side is obviously the problem. Assuming they are hard pressed to average $75 per round from the limited public play that they have it is very difficult to cover the 3.2 million in expenses.  

Memberships generate roughly 1 million (between 1-1.5 depending on the mix) in revenues at current rates and numbers and likely be similar if doubled.

While they have a prime time limit in place for members it does little to free up tee times for the public play that is obviously desired. The limitations, at current member numbers, do little more than allow all members to access the prime tee times in a given week rather than the same people playing all of the time (this is Florida).

500 members and let's assume this means memberships and that half have playing spouses (conservaitve for Fla). That is 750 people who can, and likely do, play 3 times per week. Just during the snowbird season there is your 50,000 rounds and then some.

Say somehow they find room for 15,000 green fee rounds at $75 per... at best they generate roughly 2.5 million in revenues and then scratch out the rest from F&B and golf shop revenues... given the circumstances they would be lcuky to average $10 per player in thes areas combined would be a guess.

The changes:

REDUCE MEMBERSHIP NUMBERS/MAINTAIN REVENUES
Double membership fees and assume total revenues stay the same, cut it down the middle and call it 1.25 million.

ENTICE DAILY FEE PLAY
Make your daily fee slightly more attractive and avg $65 per player at 25,000 rounds and you are 2.9 million

Perhaps you generate another few dollars per round with increased green fee play and this is now $15 per round on average you are at 3.65 in revenues

Cut the expenses by 500 thousand without much effort would be a guess and now you have a nearly million a year in profit.


It must have been known that the typical member would be less than receptive to a more modern, diffcult golf course.It seems to me as though the redesign was the first in an already determined action plan to make the operation of the club a profitable one for the village.  If not they had better get such a plan in place as without tripling the membership fees adn maintaining the current number of members it just does not work and they will have the most expensive $1 design fee in history on their hands.

I believe they know exactly what they are doing and the management company will be used to do the dirty work. Not the first time.

[Patrick_Mucci]

The question remains.

With 70,000 rounds, what were they hoping to accomplish by redesigning the golf course ?

It would seem that it was very successful in its old/original form.

[Greg Tallman]

The question remains.

With 70,000 rounds, what were they hoping to accomplish by redesigning the golf course ?

It would seem that it was very successful in its old/original form.

Busy does not always equal success... depends on their mission statement.

Is it to provide a medium quality, low cost golf experience for village residents while covering costs or to provide a top quality golf experience for village residents while generating revenues for the municipality? (Reference to quality is merely what one would assume the perception or thought process was and not personal opinion)

What were they trying to accomplish? One might assume that the redesign was the first part of a larger plan to move from the medium quality, low cost, no revenue model to the top quality, fair market price, revenue stream model.

One thing is for sure, to be stuck in the middle is the worst place to be... nobody happy and the course losing money.

[Patrick_Mucci]

The question remains.

With 70,000 rounds, what were they hoping to accomplish by redesigning the golf course ?

It would seem that it was very successful in its old/original form.

Busy does not always equal success...


It sure does by market standards.

If they needed more revenue, with 70,000 rounds, a $ 5 increase would generate $ 350,000 and $ 10 would generate
$ 700,000.[/color]

depends on their mission statement.

That's what I can't figure out, and, noone has defined it.[/color]

Is it to provide a medium quality, low cost golf experience for village residents while covering costs or to provide a top quality golf experience for village residents while generating revenues for the municipality? (Reference to quality is merely what one would assume the perception or thought process was and not personal opinion)

At 70,000 rounds it's apparent that it was an attractive golf experience.[/color]

What were they trying to accomplish? One might assume that the redesign was the first part of a larger plan to move from the medium quality, low cost, no revenue model to the top quality, fair market price, revenue stream model.

At 70,000 rounds, all they had to do was implement a minimal increase in fees to generate additional revenue.[/color]

One thing is for sure, to be stuck in the middle is the worst place to be... nobody happy and the course losing money.

The question remains, what were they trying to accomplish ?[/color]

[Greg Tallman]

The question remains.

With 70,000 rounds, what were they hoping to accomplish by redesigning the golf course ?

It would seem that it was very successful in its old/original form.

Busy does not always equal success...


It sure does by market standards.

If they needed more revenue, with 70,000 rounds, a $ 5 increase would generate $ 350,000 and $ 10 would generate
$ 700,000.[/color]

depends on their mission statement.

That's what I can't figure out, and, noone has defined it.[/color]

Is it to provide a medium quality, low cost golf experience for village residents while covering costs or to provide a top quality golf experience for village residents while generating revenues for the municipality? (Reference to quality is merely what one would assume the perception or thought process was and not personal opinion)

At 70,000 rounds it's apparent that it was an attractive golf experience.[/color]

What were they trying to accomplish? One might assume that the redesign was the first part of a larger plan to move from the medium quality, low cost, no revenue model to the top quality, fair market price, revenue stream model.

At 70,000 rounds, all they had to do was implement a minimal increase in fees to generate additional revenue.[/color]

One thing is for sure, to be stuck in the middle is the worst place to be... nobody happy and the course losing money.

The question remains, what were they trying to accomplish ?[/color]

Patrick,

Not sure but you may be missing the point that the accessibility for greens fee players was limited by the large number of members and thus your proposed fee increases are virtually meaningless... remember any number times 0 = 0.

The structure of the membership is(or has become) the issue. They take up all of the capacity and contribute 35% of the required revenues to cover expenses. Even if you cut expenses to a reasonable amount the membership fees would have to more than double while retaining the current number of members... not going to happen and by the sounds of it... not the diesired result.

They were at 505 members as stated in article. Again assume spouses at 50% and the fact that they have prime time access for 3 rounds per week.

This provides access to 55,000+(750 x75)  single spaces in the high season alone... and forget about prime time... this is more rounds than can be crammed into the short season.  


Success, by market standards, is achieved by volume without regard to bottom line?
This is not a high tech IPO we are discussing... it is a real expenses versus revenue scenario... you know, the real world - not the bizarro world of Wall Street.

Success can only be measured against a predetermined goal or objective, which we do not know and can only guess or assume. I assume it is annual profitability and it appears most believe that this was being achieved prior to the redesign. Given the aforementioned numbers I am skeptical that this is the case as I don't see how the overheads could go up THAT much with the new design.

If in fact they were covering expenses before then I would state simply that any business plan requiring the rounds between 50,000 and 70,000 to maintain profiatbility is a very poor plan.

You say at 70,000 rounds it was an "attractive golf experience"

Do the math... my guess is it was a miserable golf experience at an attractive price. That may not be fair but pencil it out... that is overbooked at best.


 

[John Mayhugh]

Three friends of mine played the course just last week and all loved it.  They started out playing from the back tees and really struggled but found the course far more playable from one set up.  

The greens sound like the biggest issue with the redesign and my friends said that there were some crazy slopes to deal with.  But at the speeds the greens were rolling during their visit, they didn't feel most of the holes were anything excessive. Ran's quote in this weekend's WSJ article on green speeds "once you reach a certain speed, the greens aren't as interesting anymore because it limits the type of places you can put the holes" pretty much summed up their opinion.  

I think there is a place in the game for these types of greens on new (or redesigned) courses, but it might not be a fit with the market of N Palm Beach.  I can't see being critical of the municipality without knowing their goals for the course and redesign.

The only complaint I heard about the course was pace of play.  Maybe NPB can get their players to try out match play and start a trend.

[Patrick_Mucci]

Not sure but you may be missing the point that the accessibility for greens fee players was limited by the large number of members and thus your proposed fee increases are virtually meaningless... remember any number times 0 = 0.

Greg, they're not going to go from 70,000 rounds a year to zero rounds per year because they increase their green fee by $ 5 or $ 10.[/color]

The structure of the membership is(or has become) the issue. They take up all of the capacity and contribute 35% of the required revenues to cover expenses. Even if you cut expenses to a reasonable amount the membership fees would have to more than double while retaining the current number of members... not going to happen and by the sounds of it... not the diesired result.

With rounds down by 20,000, or 28.5 %, they're only losing
$ 200,000.

Their expenses are 3,600,000.

I'm fairly familiar with green budgets for 18 holes in that part of the country, and I'd be surprised if the old golf course budget was 1,200,000, which would seem to indicate that
$ 2,400,000 is being spent OFF the golf course.

Why redesign the golf course at great expense ?

Rounds now take 4.5 hours versus 4, which means that fewer golfers will get to play on busy days.[/color]

They were at 505 members as stated in article. Again assume spouses at 50% and the fact that they have prime time access for 3 rounds per week.

This provides access to 55,000+(750 x75)  single spaces in the high season alone... and forget about prime time... this is more rounds than can be crammed into the short season.

To assume that every member plays three times a week isn't realistic.  And, it's not realistic to assume that 252 spouses play three times a week, therefore, your example is grossly inaccurate.

The fact is that they previously accomodated 70,000 rounds a year and now they're down to 50,000 and dropping.

It's not a short season, it's a 365 day a year season.  

So, again, why spend the money to redesign a golf course doing 70,000 rounds a year ?

And, where is the other $ 2,400,000 in expenses ?

It would seem that the golf course wasn't the problem.[/color]
 
Success, by market standards, is achieved by volume without regard to bottom line?

The bottom line HAD to be profitable if the loss of 20,000 rounds only causes a $ 200,000 deficit.

But, let's assume that they were losing money for a second.
Why spend millions on the golf course ?
Why make a huge capital investment when it's your operations budget that's losing money ?
How long would it take to recapture your investment ?
And, what about increased maintainance costs ?

If they were losing money on the golf course, which I doubt, simply increasing fees by $ 5 or $ 10 would have solved that problem.[/color]

This is not a high tech IPO we are discussing... it is a real expenses versus revenue scenario... you know, the real world - not the bizarro world of Wall Street.

I'm fairly familiar with operating and capital budgets at golf clubs, and nothing that's been published and nothing that you've posted addresses the issue.

Why did they want to spend millions to redesign a golf course ?

What were they hoping to accomplish ?[/color]

Success can only be measured against a predetermined goal or objective, which we do not know and can only guess or assume. I assume it is annual profitability and it appears most believe that this was being achieved prior to the redesign. Given the aforementioned numbers I am skeptical that this is the case as I don't see how the overheads could go up THAT much with the new design.

If they're only losing $ 200,000 by being down 20,000 rounds, I can't believe they were losing a dime at 70,000 rounds.[/color]

If in fact they were covering expenses before then I would state simply that any business plan requiring the rounds between 50,000 and 70,000 to maintain profiatbility is a very poor plan.

Not at a 365 day a year facility.

Sounds like a cash cow to me.[/color]

You say at 70,000 rounds it was an "attractive golf experience"

Do the math... my guess is it was a miserable golf experience at an attractive price. That may not be fair but pencil it out... that is overbooked at best.

Didn't you read the part about rounds only taking 4 hours with the previous design ?

That sounds like a good experience at a great price to me.[/color]

[Steve_ Shaffer]

I think the Village got exactly what they wanted after JN offered to design the course for $1.

The phone is answered, "Welcome to our Jack Nicklaus Signature Design."

This is only the second JN muni design. I think Breckenridge in CO is the other.

I paid about $95 as a non-resident in January. The yearly membership for residents was very low. Even if they were raised, they would still be reasonable given it's a JN design with no up front non-refundable initiation fees.Reasonable enough to make one consider moving to the Village for the opportunity to join.

[Patrick_Mucci]

Steve,

While JN design fee was $ 1, the construction cost of the redesign had to be substantial.

And, the revenue loss during construction had to be substantial as well

Does anyone have that information ?

[Greg Tallman]

Patrick,

I am not certain why but continue to gloss over what I am sure is the underlying issue... Their is no space for regular rate players during the prime season. Hence your $10 increase does not increase revenues significantly. I doubt that my previous number of 15,000 "public" rounds is a stretch... could be half that.

You are assuming the 20,00 lost rounds were all public green fee play... why?  

Any plan that does not start with addressing the contribution vs. "consumption" of the membership base will fail.

I maintain that any business plan that requires 70,000 rounds per year to be profitable is flawed. Again do the math... Are you going to build a hotel around a business plan that REQUIRES 100% occupancy to become profitable? Why would you do it for a golf course?

Perhaps my assumption that the vast majority of the members are of retirement age is incorrect but to assume that the retirement crowd does indeed play 3 times per week on average is not far off I promise you. You may want to spend a little more time around low cost, retirement golf in Florida before calling something grossly inaccurate.

As you illustrate the expense side is puzzling at best and 1.2 million would seem more than fair for course maintenance.

Your primary question, and a fair one at that, is why redesign the course whether it was making money or losing money.

1. Politics - Photo ops, Saving the village $2.5 million on his design fee, Upgrading assets...

2. Someone looked at a course filled beyond capacity and not making money (one scenario) and said... What can we do to change this?
   -Can't raise the membership fees without a reason
   -Can't generate more public revenue with 500+ members
   -What to do, What to do?

Put 1 and 2 together and I believe you have your answer. Was it the best solution? Perhaps not but it was a seemingly good fit and perhaps, as I suggeted earlier, the first step of an plan to reduce members, increase public revenues and create a revenue stream for the community.

I am giving them the benefit of the doubt that they had thought this through and were willing to take a few years to fully implement their plan, whether such a phased introduction is correct or not.

You say that at 70,000 rounds it "sounds like a cash cow"... What is there to suggest that it was ever that? POTENTIAL cash cow for certain... with the correct business plan, which is obviously not in place(yet).  

As for the 4 hour round on the previous design... I see your point... wow, their three flag marshalling system must work awfully well.

At any rate debating back and forth without having all the requisite information is... well... par for the course.  

 
 

[Steve_ Shaffer]

Regardless of the business plan, if there ever was one, the Village jumped at the opportunity for a JN design.

Here is a press release from cybergolf.com when construction started:

Nicklaus Redesign of North Palm Beach CC

Hundreds of residents, community leaders, and North Palm Beach's own Jack Nicklaus gathered Wednesday for a ground-breaking ceremony to commence the renovation and redesign of the 50-year-old North Palm Beach Country Club. Nicklaus, who lives in North Palm Beach, is overseeing the work. The remodeled Jack Nicklaus Signature Golf Course should be open by year's end.

The work includes a new irrigation system, a re-grassing of all playing surfaces, new greens and improved fairway drainage that will result in a Jack Nicklaus Signature Golf Course. Most of the project should be completed by mid-August, with a re-opening of the course scheduled in November.

Nicklaus has lived in North Palm Beach for parts of five decades. "We're delighted and excited about what is happening to our facility," said Village Mayor David Norris. "To have golf's greatest player and the world's leading golf course designer overseeing the renovation and redesign of our golf course is special in and by itself, but the fact Jack donated his design services to the project, demonstrates the kind of man and resident we have all respected for so many years. This is a great day in the history of and for the future of the Village of North Palm Beach."

Although Nicklaus has designed close to 250 golf courses around the world, and his Nicklaus Design has almost 300 courses open for play in 28 countries and 37 states, having the opportunity to put his name on a course just minutes down the street from the home he has lived in since 1970 was significant to the Golden Bear.

"I have lived in North Palm Beach for close to 40 years, and this gesture was a means for me to give back to the community that has meant a great deal to my family and me," Nicklaus said. "It is my hope that we will create a very playable golf course that is aesthetically pleasing and stands as a showcase piece for North Palm Beach, and something of which all residents and golfers can be proud. This community has embraced our family for so long, and I am delighted to be involved."

North Palm Beach Country Club will represent only the second municipal golf course designed by Nicklaus. The first was Breckenridge Golf Club in Colorado, which opened over 20 years ago and is one of the state's most successful public-access courses. Breckenridge now features 27 holes of Jack Nicklaus Signature Golf – with the third nine built in 2001 to accommodate demand.

The Village of North Palm Beach Country Club is hoping for similar success with its Jack Nicklaus Signature Golf Course, and local officials have one supporter in Colorado. "Having been with the course since it opened in 1985, in my professional opinion, I can say that the Nicklaus name and design features have greatly contributed to the success of the Breckenridge Golf Club," said Breckenridge golf pro Erroll Miller.

[Patrick_Mucci]

I am not certain why but continue to gloss over what I am sure is the underlying issue... Their is no space for regular rate players during the prime season.

Why does that preclude raising rates for the others ?[/color]

Hence your $10 increase does not increase revenues significantly. I doubt that my previous number of 15,000 "public" rounds is a stretch... could be half that.

That's $ 150,000 which practically offsets the projected loss.
A loss that's attributed in part to higher maintainance costs.
[/color]

You are assuming the 20,00 lost rounds were all public green fee play... why?  

Because it's prudent to assume so.
Why would those benefiting from the bargain abandon the golf course in droves ?[/color]

Any plan that does not start with addressing the contribution vs. "consumption" of the membership base will fail.

Perhaps you've never heard of the expression, "If it ain't broke, don't fix it"[/color]

I maintain that any business plan that requires 70,000 rounds per year to be profitable is flawed.

Why do you assume that 70,000 rounds are required in order to attain profitability ?

And, why do you ignore the $ 3,600,000 in expenses, which is outrageous.

If the 70,000 rounds generate anything near $ 3,600,000 then the problem isn't on the revenue side, it's on the expense side.

A muni golf course in that area should require no more than 1,400,000, which is high, especially if they're not paying real estate taxes.[/color]

Again do the math... Are you going to build a hotel around a business plan that REQUIRES 100% occupancy to become profitable? Why would you do it for a golf course?

You assumption and analogy are flawed and ignore the expense side of the equation.[/color]

Perhaps my assumption that the vast majority of the members are of retirement age is incorrect but to assume that the retirement crowd does indeed play 3 times per week on average is not far off I promise you. You may want to spend a little more time around low cost, retirement golf in Florida before calling something grossly inaccurate.

I"ve reasonably familiar with golf in Florida, from resort, to residential to private to public to retirement golf.

The problem isn't on the revenue side.[/color]

As you illustrate the expense side is puzzling at best and 1.2 million would seem more than fair for course maintenance.


Agreed.

Now add to that the cost of the new irrigation system at
$ 1,000,000+ and the other capital expenditures associated with the construction of the redesign, which probably totals in excess of $ 2,000,000, and you have to ask yourself, where did they project recapturing those expenditures if they priced their product so close to the bone ?[/color]
 
Your primary question, and a fair one at that, is why redesign the course whether it was making money or losing money.


But, it's more than just the profit or loss of the previous operation, how did they think they were going to recapture the capital expenditures on the redesign ?[/color]

1. Politics - Photo ops, Saving the village $2.5 million on his design fee, Upgrading assets...

I'd agree with politics, the "groupie" mentality and keeping up with the "image"[/color]

2. Someone looked at a course filled beyond capacity and not making money (one scenario) and said... What can we do to change this?

At what cost ? and how would they possibly recapture their investment ?[/color]

   -Can't raise the membership fees without a reason
   -Can't generate more public revenue with 500+ members
   -What to do, What to do?

Put 1 and 2 together and I believe you have your answer.


Yes, but it totally ignores the substantial capital expenditures and how they'd ever be recaptured, and, it ignores the loss of revenues during the time the golf course was down.[/color]


Was it the best solution?
Perhaps not but it was a seemingly good fit and perhaps, as I suggeted earlier, the first step of an plan to reduce members, increase public revenues and create a revenue stream for the community.

The primary way you reduce members would be by increasing the fees.   And, before you create a positive revenue stream you have to account for and repay your rather substantial capital expenditures [/color]

I am giving them the benefit of the doubt that they had thought this through and were willing to take a few years to fully implement their plan, whether such a phased introduction is correct or not.

I don't give them the benefit of the doubt because it's easy to spend other peoples money.

If it was their own money, I'll guarantee that they would have evaluated the project more carefully before they spent millions to upgrade a facility that attracted 70,000 rounds per year, interpupted their revenue stream, and gambled that the new facility would continue to attract golfers in adequate numbers.

One of the problems that renovated restaurants face is their loss of their clientele during the renovation.  Diners simply go elsewhere, get into the habit of going elsewhere, and rarely return in the previous numbers once the restaurant reopens.

Perhaps that's what's happened in NPB  

I'd like to see the evaluation of the $ 3,600,000 in expenses.

That's one of the most puzzling parts of the mystery to me.[/color]


You say that at 70,000 rounds it "sounds like a cash cow"... What is there to suggest that it was ever that?

Simple, they were making a profit with $ 3,600,000 of expenses.  I'd call that a cash cow.  If expenses were
$ 2,000,000, which is $ 800,000 higher than you suggested, they'd still make a profit of $ 1,600,000.[/color]

POTENTIAL cash cow for certain... with the correct business plan, which is obviously not in place(yet).  

I think they had more than adequate revenues, what they should have addressed is the expense side of the ledger.[/color]

As for the 4 hour round on the previous design... I see your point... wow, their three flag marshalling system must work awfully well.

It seemed like a good system.
Low cost, high volume and quick rounds in sunny weather.

It doesn't sound like it was "broke", so why fix it ?[/color]

At any rate debating back and forth without having all the requisite information is... well... par for the course.  

True.

Getting a breakdown of the expenses would help clarify matters.[/color]

[Patrick_Mucci]

Steve Shaffer,

Has Breckenridge hit 70,000 rounds per year yet ?

[Alex_Wyatt]

I thought this was an architecture site.  Anyway, the architecture here is quite disappointing.  The course has scrubby bunkers, so, perhaps one's hopes rise thinking this might be "new thinking" from the Nicklaus crew. Alas, the greens are mostly unputtable. Just stupid. The three locals I played with were all very fine players and were unanimous that the greens should be rebuilt.

[Greg Tallman]

Patrick,

We agree that the expense side is a problem but I doubt you can run the entire operation for 1.4 million while producing a quality product.

Another question and going back to the "attractive experience" commnets... How many shotgun starts do you think were included in those 70,000 rounds?

I am familiar with some of the busiest facilities around and that 70,000 number is truly extraordinary. Pebble, which does not close for maintenance and has less weather issues than south Florida might play 65,000 and that is with extended sunlight during their high season versus the low season in Palm Beach.

As for your "ain't broke don't fix it" comment... they chose to break and I was under the impression that we were discussing how to fix it. Obviously any plan that requires 3 million+ in capital investment and then turns a profitable business into a loser is not good. Had the proper plan been in place, and acted upon aggressively, I don't believe the redesign was a major mistake. They could have recovered the capital expenses within the acceptable 5 years with the right plan.

So I think we both agree is that the expense side being out of wack likely precipitated a change that was believed to be an upgrade. That is they looked at the wrong side of the ledger and decided that in order to generate more revenue they had to "do something".

Outside management is the only answer at this point... and never, never trying to reach 70,000 rounds again.  

[Steve_ Shaffer]

The problem seems to be more than the JN redo or lack of a business plan. See this comment on Craig Dolch's blog:

By Tom Brown

July 7, 2007 11:22 AM | Link to this

The old NP was boring and certain resident members basically ran the place. My buddies and I were finally able to play NP a couple of months ago. Paid our own way at $110 a pop. Loved the new course. Surprising to find nothing much else changed other than new asphalt prkg and Nicklaus pics hanging in the lounge. Same staff and it appeared they ran out of money to invest in the overall club.

Don’t know why bag boy, starter and waitress seemed unhappy and no smile(though work for NP “Owners” in a “hospitality” business) rangers were unwilling and uninterested in keeping ALL groups on maximum time pace allowed(especially older players). Not run very well or organized. Slow food service. An outdated clubhouse, pro shop and amenities did not enhance an experience expected for a $110++ fee or yearly membership charged.

We have not returned to NPB every week this summer because of our past mediocre experience and rates were still higher than other courses (Nicklaus designed included)in surrounding area. Those are generally well run and we enjoy not only the courses, but the club staff and facility experience each offers for our money. I know of many other players that won’t return to NP, whether a Nicklaus course or not. NPBCC was full of politics, mismanagement and false promises before and is an over hyped golf club experience now.

Poor experiences travel fast in hospitality business and can hurt the bottom line fast, especially in PBC. I’m sure politics and latest management excuses for not delivering pleasant experiences and budget / profit promises would not have been tolerated and likely fired by now if NPBCC was not owned by the people of North Palm Beach. As most residents do not seem to patronize and support what they own, maybe they should have instead sold it to a developer to put reality behind them, find more excuses and something else to complain about. Hope this helps the owners.

[Michael Christensen]

sounds to me if they run off these older members of the village, they are in BIG trouble.....if the outside play doesn't come back after one or two rounds because of lack of service, the village may take a beating on this