So I'm thinking about buying a country club...

[Charlie Goerges]

Dave,

Coke machines have card swipers, so driving range ball dispensers could to (if they don't already).

[Scott Witter]

Peter:

This is an interesting investment given the times, but it seems you and you gang are doing your homework.  I think Mike H. has some good advice as well as Mike Y.  Best of luck!

OT:  I think the obvious solicitation to Peter is best left out of the discussion, they really have no place on this board, but if you just can't control yourself why not send and IM instead, JMO.  We all could use a few more projects, but this ISN'T the time or place.

[Ulrich Mayring]

If you actually manage to buy a number of courses in the same region, then why not consider mutual membership? Join one course, play all of them.

We have a guy here, who did just that. He started with one course and now has nine, all within an hour's drive, if you live right in the middle of the cluster. He is selling memberships like crazy and everyone pays the same fixed monthly fee (no joining fee, but you have to give 12 months notice, if you want to leave).

Some of the clubs he bought were struggling for years and couldn't find members, mostly because the courses were nothing special. The moment he bought them they were booked out, even before he came in with investments. It's all in the deal that you can play different courses with just one membership, that is extremely attractive to golfers here.

Ulrich

[A.G._Crockett]

I've been thinking about buying a driving range.  Instinctively, I like the odds better.   Does anybody know what happens to driving range revenue during downswings in the economy?  I could see them being like movie theatres and actually doing well.  Thoughts?

By coincidence, yesterday I ran into a buddy who co-owns and operates a range here in Atlanta; he was giving a playing lesson at my club.  He said that their business in Dec. and Jan. has been off 50% from the same period a year ago.

I realize this is not a reliable statistical sample, but they are the only public range within 15 miles, in a very affluent area, do Ping and HenryGriffiths clubfitting, and have a pro shop and two of the best PGA instructors in the southeast.

[Mike_Young]

   My club's secound owner is in bankruptcy. There are plenty of lots for sale. The course is a Jay Morrish design. The next exit a new VW plant is being built.

  The course could use a charismatic leader. It has great potential.

  Anthony



   

Anthony,
Just think what a charismatic leader could do for a club if they had charasmatic members.....do you have any members that fit that bill?
Jim jones

[Peter Wagner]

If you actually manage to buy a number of courses in the same region, then why not consider mutual membership? Join one course, play all of them.

We have a guy here, who did just that. He started with one course and now has nine, all within an hour's drive, if you live right in the middle of the cluster. He is selling memberships like crazy and everyone pays the same fixed monthly fee (no joining fee, but you have to give 12 months notice, if you want to leave).

Some of the clubs he bought were struggling for years and couldn't find members, mostly because the courses were nothing special. The moment he bought them they were booked out, even before he came in with investments. It's all in the deal that you can play different courses with just one membership, that is extremely attractive to golfers here.

Ulrich

Ulrich,

You must live in New Jersey.  I know the group that you are referring to and I'm glad to hear that plan is working.  There are many synergies to clumping several courses within a reasonable area.  Centralized buying, centralized accounting, some management overlap, etc all help to relieve some cost burden for each course.  Then there are the marketing benefits that you illustrated.  That's all good.

[J_ Crisham]

I think I'm proving precisely how little time I've been spending at driving ranges for the last decade or so, aren't I?   

Playing at the Jans makes one such a fine player that a driving range is probably a waste of time.            Jack

[George Pazin]

1.) The chance to get rid of this outdated 80% equity and 4 to 1 sales ratio business model.  This has been the default business model in American clubs and it just doesn't work.  The old model doesn't work in a good economy and it sure doesn't work now.

Can anyone translate that into terms a poor engineer who never took a B-school course might understand?

One of the other geeks can correct me, but I believe Peter is saying the standard model is to purchase a course with 20% cash down as equity, the rest financed with debt, and the standard price is 4 x the annual sales revenue for the course. And he is saying that model does not work - they're overpaying in price and there's too much debt, so the interest costs are overwhelming what could be a successful course.

Of course, I don't play a banker in real life, nor on tv.... Fifteen years of printing t shirts has wiped out most of my banking memories (thankfully).

[JMorgan]

Pick a club with a time-proof design, be generous with your guest plays, and sell lots of merchandise. 

[Peter Wagner]

1.) The chance to get rid of this outdated 80% equity and 4 to 1 sales ratio business model.  This has been the default business model in American clubs and it just doesn't work.  The old model doesn't work in a good economy and it sure doesn't work now.

Can anyone translate that into terms a poor engineer who never took a B-school course might understand?

One of the other geeks can correct me, but I believe Peter is saying the standard model is to purchase a course with 20% cash down as equity, the rest financed with debt, and the standard price is 4 x the annual sales revenue for the course. And he is saying that model does not work - they're overpaying in price and there's too much debt, so the interest costs are overwhelming what could be a successful course.

Of course, I don't play a banker in real life, nor on tv.... Fifteen years of printing t shirts has wiped out most of my banking memories (thankfully).

George,
Sorry I didn't write that very clearly.  No I am referring to the old membership model where the member has 80% equity in their membership.  I paid $25k to join and when I leave the club writes me a check for $20K and keeps the rest as a transfer fee.  This is usually coupled with a 4 new membership sales for every old member leaving while a club is in the startup / growth phase.

I believe this membership model to be completely outdated and wrong for both the member and especially for the club's long term financial viability.

I like non-equity models better.

Sorry for the poor writing skills!

[Mark Smolens]

Good point.  So don't take cash.  Eveybody's got plastic anyway.  Hasn't anybody invented a ball dispenser that works on a credit card swipe like a gas pump?  If not, somebody should.

There's a place out in Wood Dale, Top Golf, that does something like that.  it's the one that has a chip in each ball that tells you how far it flew in the air (if you get it in one of the big targets out on the range.

[C. Squier]

Good point.  So don't take cash.  Eveybody's got plastic anyway.  Hasn't anybody invented a ball dispenser that works on a credit card swipe like a gas pump?  If not, somebody should.

There's a place out in Wood Dale, Top Golf, that does something like that.  it's the one that has a chip in each ball that tells you how far it flew in the air (if you get it in one of the big targets out on the range.

I'd pay good money to see a GCA outing at Top Golf.  I think heads would literally explode at the thought of hitting golf balls fitted w/ RFID chips into a giant dartboard.  The universe would implode if someone brought their hickories to that place.  It's on the verge of sacrilege.

[Rich Goodale]

If you actually manage to buy a number of courses in the same region, then why not consider mutual membership? Join one course, play all of them.

We have a guy here, who did just that. He started with one course and now has nine, all within an hour's drive, if you live right in the middle of the cluster. He is selling memberships like crazy and everyone pays the same fixed monthly fee (no joining fee, but you have to give 12 months notice, if you want to leave).

Some of the clubs he bought were struggling for years and couldn't find members, mostly because the courses were nothing special. The moment he bought them they were booked out, even before he came in with investments. It's all in the deal that you can play different courses with just one membership, that is extremely attractive to golfers here.

Ulrich

This is interesting, Ulrich.

Here in Scotland (see the thread on the recent Times article on British golf), similar schemes are in place, although on a co-operative rather than corporate basis.  Effectively, if you belong to one of the clubs in the co-operative you can play the others (with some restirctions) at member's guest greens fees (i.e. 5-15 pounds).  In other consortia, visitors can also get reduced rate packages, in the hopes of promoting some sort of Myrtle Beach type of "destination golf."

While both are admirable ideas, from what I can see on the ground they are faltering through a lack of promotion and execution.  I attribute this to an ambivalence as to what do the clubs really want.  Are they cooperating just to bring in a few more shekels during slow tee time periods, or are they really building a cooperative entity (i.e. a group of clubs which together will constitute a "mega-club", which could be something greater than the sum of its parts?  I suspect the former, but it is early days still.

As a member of a club involved in these nascent ideas, I notice two intriguing trends.  Firstly, ALL clubs in my area are hurting, except possibly one, which has the best (but just a Doak 5) course and the best catchment area.  But, not necessarily for long--my club, which had a 6-year waiting list just a few years ago is now scrambling for new members--how long will the last of the Mohicans survive in the old model of exclusiviity and privacy?  Secondly, this scrambling has led to "clubs" which have had to scrap any "mission statements" to become effectively places wher anybody who can pay can play.  This is great, IMHO, but what it does is create tremendous challenges to clubs to justify their existence as "clubs."  If your ethos was based on the ability to blackball anybody and damn anything else (such as course quality, appropriate facilities, respect for the game of golf, etc.) you are now screwed, as the new members you are having to solicit are sorely testing any and all elements of that ethos.  But....

....there is hope in that what seems to be happening is a bifurcation in which clubs are having to cater to two extremes of golfer.  Firstly, the serious one, who loves the game and is indifferent to the amenities.  Secondly, the casual one who loves the amenities but is indifferent to or ignorant of the game.  For both to exist, you need to both create "clubs with clubs" and "mega-clubs" which also cater to each.  Those looking to play the game can hook up with like-mided souls at other clubs in the consortium, and those looking for amenities, crazy golf, etc. can have a choice of venues at which to play and reciprocate.

These thoughts are all just a work in progress, but I think they may contain at least one way to salvage the future of the game.

Rich

[John Moore II]

I've been thinking about buying a driving range.  Instinctively, I like the odds better.   Does anybody know what happens to driving range revenue during downswings in the economy?  I could see them being like movie theatres and actually doing well.  Thoughts?

I can agree with what someone else said, my company reported their worst November and December on record. January is looking the same. That being said, we are not looking to close the doors.

Good point.  So don't take cash.  Eveybody's got plastic anyway.  Hasn't anybody invented a ball dispenser that works on a credit card swipe like a gas pump?  If not, somebody should.

Yes, these exist, totally automated. However, they are exceptionally expensive. A manual ball dispenser (no tokens, etc, just gravity fed and user controled {read: prone to ball 'theft}) costs about $2500. A token dispenser costs roughly $3500. A totally automated unit capable of taking credit or debit cards costs roughly $13,500, plus the additional phone/data lines necessary to hook up the card reader and other electronic stuff. (I'm recalling those numbers off the top of my head, my computer connection is too slow to pull up the EasyPicker website catalog) So, in many ways, the cost-benefit of buying the machine with the card reader just isn't there. You still have to have hired help on-site, so there is no cut in expenses in that regard. I could be wrong (my boss could be wrong as well, he just bought a new dispenser and opted for the regular token machine rather than the high-tech machine) but I'm just not sure it would bring in the additional $10k needed to pay for itself in short enough a period to make it valueable. Thats why 100% automated machines are rare.

[Ulrich Mayring]

Peter,

I'm not in New Jersey, so I don't know about the group you mentioned. I'm based in Germany. The deal of the "Golf Absolute" Group here is: you pay 160 Euro / month (about $215) and can play for free on more than 150 holes (most of the courses have 27 holes). Plus they all have practice areas (one facility even indoors for winter practice) and generally there are 9 short holes for beginners as well. There is no joining fee, but 12 months notice for leaving, so the business model is: make it as easy as possible to join and as hard as possible to leave

There is no equity, of course: you own nothing, all you get is the right to play. The green fees are very high and there are no members' guest rates. They really want you to be a member and make all your friends and family join as well.

None of the traditional and prestigious clubs here in the region invest more in their courses than this group. The scheme must work somehow, although I have no inside knowledge if the books are actually balanced. However, they're in business for about 15 years now.

What I don't get is why other courses don't try to compete with Golf Absolute by organizing reciprocal play. How many times am I going to play another course really? If you get 5 clubs together and everyone gives five free rounds to the members of the other four, then that would be 20 rounds per year on other courses. That would attract golfers and it surely wouldn't hurt any of the clubs.

Ulrich

[Sean_A]

From my perspective, none of the companies I have seen running these multi-club schemes own compelling courses.  So playing one is much like playing another - not a terribly high incentive to join imo. 

The one arrangement I saw which intrigues me is between Westward Ho! and Saunton.  A member of Westward Ho! can pay a certain amount a year (not cheap) for reciprocal rights to Saunton.  I think this scheme can work really well for clubs of some stature - it helps relieve the problem many links clubs suffer in these sorts of times - the fact that their catchment area is only half that of an inland club. 

Ciao

[Anthony Gray]

   My club's secound owner is in bankruptcy. There are plenty of lots for sale. The course is a Jay Morrish design. The next exit a new VW plant is being built.

  The course could use a charismatic leader. It has great potential.

  Anthony



   

Anthony,
Just think what a charismatic leader could do for a club if they had charasmatic members.....do you have any members that fit that bill?
Jim jones

  Mike,

   Not Jones. The other charismatic Jim......................................DONNAN.


   Anthony

[George Pazin]

1.) The chance to get rid of this outdated 80% equity and 4 to 1 sales ratio business model.  This has been the default business model in American clubs and it just doesn't work.  The old model doesn't work in a good economy and it sure doesn't work now.

Can anyone translate that into terms a poor engineer who never took a B-school course might understand?

One of the other geeks can correct me, but I believe Peter is saying the standard model is to purchase a course with 20% cash down as equity, the rest financed with debt, and the standard price is 4 x the annual sales revenue for the course. And he is saying that model does not work - they're overpaying in price and there's too much debt, so the interest costs are overwhelming what could be a successful course.

Of course, I don't play a banker in real life, nor on tv.... Fifteen years of printing t shirts has wiped out most of my banking memories (thankfully).

George,
Sorry I didn't write that very clearly.  No I am referring to the old membership model where the member has 80% equity in their membership.  I paid $25k to join and when I leave the club writes me a check for $20K and keeps the rest as a transfer fee.  This is usually coupled with a 4 new membership sales for every old member leaving while a club is in the startup / growth phase.

I believe this membership model to be completely outdated and wrong for both the member and especially for the club's long term financial viability.

I like non-equity models better.

Sorry for the poor writing skills!

So the only thing I misunderstood was... everything.

[JMEvensky]

Assuming the decision is numbers-driven,how much will the design of the golf courses matter?

Do you believe that memberships can be sold on the basis of course architecture?

JM,

In the context of this business opportunity, design matters a lot because:
1.) it gives the owner flexibility down the road,
2.) it might give you a competitive advantage in the local market,
3.) you might be able to draw from a larger audience as a destination course.

Those are just the first thoughts to come to mind.

On the other hand, look at Balboa Park Muni in Encino, California.  A nothing track but surrounded by about 6 million people means that every tee time is booked 7 days a week.  That would be tough to pass on if it were available (** which it is not **).

Good design is very important.

Thanks for the response.I guess I was just trying to figure out where you think the greater opportunities will be.

Seems like there will be opportunities on both ends of the spectrum-the higher-end club with some architectural whistles and bells along with the lower end no-frills courses.

BTW-if nobody mentioned it before,nice TV face time on the Tiger Woods tournament.

[Jerry Kluger]

I was wondering if municipal courses run by a state or local government might be a wise investment today.  Many of the municipalities see them as money losers and I have to believe that a large part of that is the high cost of government employees. Muni courses are often in very desirable locations where the cost of land would be too high for a private investor to build a course, but the municipality still wants the green space and might accept a low price or a percentage of receipts. 

[Forrest Richardson]

Peter — We have a large dBase of clubs for sale because a good friend of mine is a broker of golf properties. Also, like other golf architects, I hear about pending sales and troubled courses. Contact me if you wish. I can give you some names of people you may wish to speak with.

[Bruce Katona]

The multi-course concept works in metropolitan areas where critical population mass exists...you do get some cross-over play from one facility to another, but where the savings come in are in the centralized operations of multiple facilites being run from one location for all of the clubs...decreases G&A costs.

[Richard Hetzel]

When I played Kittanning CC in Western Pa back in October I saw that many of these older, smaller country clubs and 9 holes privates are struggling quite a bit. Kittanningg CC is a golf ONLY club and they belong to an eleven golf course consortium, and after you join one of the clubs, you can access any of the other 10 clubs once per month for a cart fee only. That is a VERY nice deal if you feel like switching it up a bit.

Me thinks many more privates are going to start this type of consortium. You even see upscale publics marketing themselves for golf get-a-ways IN STATE.

Creativity will be the key to surviving the next few years.

[Tony_Muldoon]

From my perspective, none of the companies I have seen running these multi-club schemes own compelling courses.  So playing one is much like playing another - not a terribly high incentive to join imo. 

The one arrangement I saw which intrigues me is between Westward Ho! and Saunton.  A member of Westward Ho! can pay a certain amount a year (not cheap) for reciprocal rights to Saunton.  I think this scheme can work really well for clubs of some stature - it helps relieve the problem many links clubs suffer in these sorts of times - the fact that their catchment area is only half that of an inland club. 

Ciao

I think Alwoodley, Ganton and Lindrick have a deal where its free to play the others on a reciprocal basis.  Nice for the members but I'd bet all of them would still have waiting lists without.