A revelation..golf was never meant to make $$$$$

[Jim_Kennedy]

JC,
I don't think it's the default setting for people whose occupation is their vocation. 


.....or as one of the nuns once told us, "You never need a vacation from your vocation"

[Tom_Doak]

JC:  Maximized profits is not the default setting in THIS forum.  [Or in my career.  Or at Scottish golf clubs.]

Sorry to steer the discussion off topic -- even though this is not really off topic at all.  It is the collision of golf with American business ideals which is the topic at hand.

[Jim_Kennedy]

....and those 'ideals' were not happy with a nice 'small cap' business, they tried to make it all 'large cap'.

Too bad.

[SB]

It's OK to have that opinion, but then everyone who believes that either needs to A) be ready to burn $10,000,000 to build a club, B) pay their pro rata share to join such club, or C) be a leech and suck off the generosity of the guy in A or B.  Since people here seem not to be willing to be A), bitches constantly about the costs of B) , and I hope has enough class to not do C), then the only way any of us get to play golf is to have someone pony up the cash up front and prepare to pay them a return over time.

Therefore, golf has to make money or we would all be bowling.

[JC Jones]

JC:  Maximized profits is not the default setting in THIS forum.  [Or in my career.  Or at Scottish golf clubs.]

Sorry to steer the discussion off topic -- even though this is not really off topic at all.  It is the collision of golf with American business ideals which is the topic at hand.

This is why I said "just about every" forum; I was generalizing.  And I certainly dont mean to discount the great number of people who don't live their life with a singular focus on the financial bottom line.  I commend people like you who do it more for a passion that for maximizing money.  I'm sure you could probably make 10 times as much as you do if you were willing to sell out.  

However, the general decision making rule is maximizing profits.  For every one of you or me there are thousands more whose concerns stop at their own financial self-interest.  Think about it, people invest their money in the very companies they supposedly despise.  Why?  Because they think the stock price will go up and they'll make money.  So, if Wall Street knows that its investors want the biggest returns possible, at all costs, then they are just fulfilling their duty to the shareholders.

[JC Jones]

....and those 'ideals' were not happy with a nice 'small cap' business, they tried to make it all 'large cap'.

Too bad.

You make a good point here.  Going "large cap" and further separating the ownership (shareholders) from the control of the business (directors) has the effect of bureaucracy and nobody has the opportunity to internalize the effects of their decisions.  Without knowledge of these effects, the only remaining value left on which to base a decision is, what makes the most money.

[Jim_Kennedy]

JC,
I believe it's mainly the opposite, most people have no idea where their funds are being invested, causing a big disconnect from the story about company XYZ laying off workers to increase profits and the investor's knowledge of his 'participation' in that decision.


edit: our posts crossed, we now sound like we're on the same page. 

[Michael Huber]

The Golden Age was also a time when golf remained almost an exclusively white and rich man's sport.  Small groups of wealthy men could enjoy their playgrounds and if the operations did not sustain themselves they all chipped in and covered the losses. 

When I think "golf isn't for making money" all I can think about is a bunch of rich dudes in tophats with fancy moustaches sitting around drinking expensive booze and writing big checks to cover a massive defecit.  Is my impression cliche and probably overexaggerated?  Yes. But I still think that the notion that making money isnt what golf is about is a bit misdirected.



In my view, a golf course is a lot like an art gallery.  You aren't going to see a lot of non-artsy fartsy people running art gallerys because its a tough way to make a living.  You need to love art and have a little luck to run a sustainable gallery.  I think golf is no different. 

[JC Jones]

JC,
I believe it's mainly the opposite, most people have no idea where their funds are being invested, causing a big disconnect from the story about company XYZ laying off workers to increase profits and the investor's knowledge of his 'participation' in that decision.


edit: our posts crossed, we now sound like we're on the same page. 

I agree, I think we are.  It is interesting though.  What you mention above has been recently identified as the problem of separation of control from ownership from ownership.  People investing in mutual funds or other intermediaries, which in turn, invest in the corporations.  When people invest in a mutual fund they most often only care about returns.  Therefore the mutual fund only demands from its investments high returns and corporations feel compelled to produce high returns.

I'm with you, going back to smaller businesses could help.  There are some other solutions out there too.  For example, there are many mutual funds in the marketplace now that center their investment philosophy on religious values, environmental values, etc., etc.  Perhaps as people gain more knowledge of these they will invest and that will increase demand on corporations, accordingly.

[Jim_Kennedy]

I wonder how many stockholders in bikemaker "Huffy" realized that even though the company had sales of 584 million and gross profits of 99 million it canned 1,800 workers in favor of moving the company to China, Mexico and Taiwan. They exchanged their overpaid US workers ($11.00 cash/$6.00 in benefits) for underpaid, overworked and abused Chinese ($.33 per hour).

I wonder if these same stockholders might have had some second thoughts about the cost of making more money if they knew that the last 850 U.S. workers at the last U.S. Huffy plant had the ignominious job of covering over an American flag sticker (that was on bikes which were made in China and imported here) with a new sticker representing the globe?

Gag 

[Garland Bayley]

So how do you reconcile that with the need for the mom and pops to make enough profit to survive and put a little back into the business and put a little into a retirement account?

Bill,

I guess I don't understand the question. If it were a non-profit club, it would "put a little back into the business". I.e., consulting architect, ongoing maintenance such as rebuilding greens, etc. And, mom and pop would be employees with a salary, and if not a 401k, at least an IRA. Or, the analog for independent contractors.

[Norbert P]

           

     
            "Re: A revelation..golf was never meant to make $$$$$"


Apparently, neither was I.

[Wayne_Kozun]

What a revelation given that the original golf courses in Scotland were built on common land that was for all to use and many of them are still owned and operated by these municipalities.  When golf spread around the world it was primarily at member owned clubs for, as has been said, rich white guys.

Mom and Pop owned golf courses came late to the game and, while they may introduce many people to the game, they are not generally well represented in the best courses of the world, nor do they spawn 100+ page threads on GCA.

[Joe Hancock]

....nor do they spawn 100+ page threads on GCA.

I'm trying to think of a worse criteria for ranking the value of golf courses. I don't know that I'll come up with anything.

 

[Wayne_Kozun]

I'm trying to think of a worse criteria for ranking the value of golf courses. I don't know that I'll come up with anything.

Well a course must insipre extreme passion to get to that - which you don't see from Bumcrack Golf Course in Truth or Dare, NM run by Ma & Pa Kettle.

[Mike_Young]

I don't know anything about Wall St models and how they got us where we are but I do know this....
People used to look at stocks for dividends....and expect the dividends to provide income when the time came.....AND then we started looking at growth stocks and what mattered was showing growth each quarter so companies would become larger, larger and acquire in order to attain growth....where would it stop?....I mean look at a Ping, a family owned company that produces a good product for a profit..or look at Taylormade..owned by Solomon and constantly acquiring in order to satisfy stockholders before customers.....That's what I see happening with golf....management companies were running around saying they had 300 million to purchase golf courses....when what they really had was a line of credit from a Wal St bank where they had convinced the banker they could show a 20 percent return on all these cvourses they would acquire....go back and look...it was all smoke and mirrors and not once did it pan out.....from the first Golf REIT until now.....BUT those little mom and pops that are out there keeping  quiet...doing their thing...providing a service for a small local contingent in towns across America are still there.....
I was told the sotry of a small family owned local grocer who had provided a very nice living for his family for two generations....he sends his grandson to college and he comes back with the business degree and says lets build three more stores....then his son goes Ivy League MBA and convinces dad they need to do an IPO......and then a year later all is over.....THAT is what I am trying to say about golf not being meant to make $$$$$$.....it will never work for big business.....JMO

[paul cowley]

More to the point.

Love Golf Design recently renovated the Brunswick CC...a Late 30's original Ross design that had been neglected for decades.

It had a declining membership, but not a ton of debt...60's block club house, but with a good grill and drinks, rarely used ball room, but a good place for older members to play cards.

We did the renovation gratis....construction costs of  1.5 M....new grass, irrigation, cart paths etc....and it is really good because we were able to locate the original greens under the often 18" of topdressing that occurred over the years. It was reopened for play last year.

New Board, membership drive to almost 600 members.

I offered to re design the existing Club House for free....probable costs of 1M plus, using local contractors, many of them members.

They opted instead to go with a bigger out of town Arch/Design Build firm, and built a Clubhouse of 5M or so, with a pool complex to come in the next phase.

Currently, because of our declining economy, we also have a declining membership, and 5 or 6 M of debt....and lenders who are asking for major monthly repayments....which probably can't be supported.

I really miss the old clubhouse.

And low debt load.

....and probably money in the bank.

[Tom_Doak]

Paul:

That is a sad story.  Do you mind if I use the example in the book I'm working on?

You should never do a job gratis without putting a bunch of conditions in your contract, so they don't turn around and waste the money you saved them (and much more!) on something else.  They might balk, but in the case you cited, telling them not to build a $5 million clubhouse would have been a bigger public service than doing the golf course for nothing.

Come to think of it, that's the one thing I forgot to put in my contract for Common Ground.  They intend to operate out of a tempo clubhouse for years until they save up enough to build something else, but I'd better double-check on them.

[Ben Sims]

I agree with Wayne's submission above.

I like the idea of "mom and pop", but the municipal idea gets a few more points in my book.  Could one of our resident developers or architects fill me in on an extremely rough pricing model for a course that?

1) Has a private, single enterprise owner, i.e, "Mom & Pop".
2) Already owns the land
3) Builds a single, 18-hole complex with a practice area and...
4) Modest clubhouse and amenities.

I'm hearing a lot about the model, but what does it look like?  I'd still want to know how "Mom & Pop" make enough in profit to pay themselves a good wage. 

I know a few on here have experience with the "municipal" model.  I would think the above example works much better as a municipal project. 

[Rob Rigg]

Rob:

One of the best pieces of advice I've ever heard in the golf business was from Jack May, the founder of Stonewall, to one of my prospective clients.

The client had told Mr. May that they weren't really interested in making money on their project, and he stopped them cold.  He told them never to say that.  If you phrased it that way, you were bound to lose money, and you weren't going to find anybody who wanted to invest with you to make the course happen.

He told them just to say that they were "not trying to make as much money as possible" in the endeavour.  He said that was rare enough that it would get everyone's attention and make their point, without making them seem naive.

Tom,

Yes, a good point. If I actually had the opportunity to do this, I would look for investors who were interested in creating a lean and cost effective business model that would allow for the creation of a golf course with green fees at levels that the "average joe" could afford on a weekly basis. I would target a reasonable ROI for the investment, but nothing crazy. I agree that you need some sort of financial goal not to run a business into the ground very quickly.

I would probably also consider having a local membership option with reduced greens fees but allowing outside visitor play for higher green fees (obviously the course would need to be compelling enough to do this). The clubhouse would be temp until there was enough funding to build a real one (they did this at Aspen Lakes in Sisters) and, ideally, there would also be a short course or pitch and putt created for kids/families to use. One of the things I really enjoyed about summers in Ireland was playing with friends at the local pitch and putt - that's where Irish kids get hooked on the game.

Paul,

Awful to hear about what happened to you and your club. A real shame.

[Mike_Young]

I agree with Wayne's submission above.

I like the idea of "mom and pop", but the municipal idea gets a few more points in my book.  Could one of our resident developers or architects fill me in on an extremely rough pricing model for a course that?

1) Has a private, single enterprise owner, i.e, "Mom & Pop".
2) Already owns the land
3) Builds a single, 18-hole complex with a practice area and...
4) Modest clubhouse and amenities.

I'm hearing a lot about the model, but what does it look like?  I'd still want to know how "Mom & Pop" make enough in profit to pay themselves a good wage. 

I know a few on here have experience with the "municipal" model.  I would think the above example works much better as a municipal project. 

Ben,
First and foremost one must have a market...say at least 25000 rounds needed....
Then figure a minimum of $300,000 debt service or offset to investors etc....
$700,000 for course maintenance/proshop/taxes /insurance
these are minimums in most cases for newly built projects....
which means an AVERAGE round of $50( including comps/discounts/seniors etc) would net you $250,000 before taxes if everything went right.....
MUNICIPAL....some controversy here....it competes with the mom and pop....no taxes....and is usually grateful to just have a $200,000 shortfall.....which means with everything being the same as above....and not having a debt service or a profit line.....they could charge $20 per round at 25,000 rounds....

MY ENTIRE GIST OF THIS THREAD is to show that the golf most of us seek when we travel or seek ideal conditions is subsidized...either by dues/ assessments  or some other means.....

[Ben Sims]

Mike,

Thanks for the reply.  My reason in asking was to test my theory that a "Mom & Pop" version of your Longshadow would be significantly cheaper for the golfer than a "municipal" version.  I think.

Quite honestly, my personal opinion is that if one were to want to get into the golf business, they need to get a great piece of land and a talented architect, throw down some capital on a cabin or two with a decent kitchen and bar.  Couple it with a modest clubhouse, and advertise the hell out of it in Manhattan and L.A.  

 At least a 100 would bite, no?

BTW, check out if what I wrote on your DaVinci thread made sense..

[Joe Hancock]

What's the difference between a municipality paying staff to operate a golf course vs.  mom and pop running themselves for a meager living?

Besides the subsidization part, of course.......

Joe

[Mike_Young]

What's the difference between a municipality paying staff to operate a golf course vs.  mom and pop running themselves for a meager living?

Besides the subsidization part, of course.......

Joe

nothing..both are an expense..but the muni doesn't need to show a profit.....and wouldn't you think the mom and pop wanted a profit....

[Joe Hancock]

What's the difference between a municipality paying staff to operate a golf course vs.  mom and pop running themselves for a meager living?

Besides the subsidization part, of course.......

Joe

nothing..both are an expense..but the muni doesn't need to show a profit.....and wouldn't you think the mom and pop wanted a profit....

After they pay themselves, maybe not....then they pay taxes.