"gloomy" report on Euro golf

[Adrian_Stiff]

Bruce - It was for illustrative purpose really, but say a course was really worth £5,000,000 freehold, it would be worth less with constraints and convenants to protect the club, its members. At £1,000,000 the discount might reflect this. a 1/500 share could offer certain extra privileges and it better times either a dividend or subscription reduction.

If you bought all the stock I guess it depends on the term of how the share/note is written, there could be perhaps an over-rider that no stock holder can vote any more than 10% of his hold, but if you got the lot that becomes irrelevant. It would need some carefull thought from the club, but £2000 per member for 1/500th could easily be achieved as many would be multiples. The club may raise less than £1,000,000 if it fails to raise 500 shares, if it sold 150 shares it still raises £300,000 and leaves £700,000 of unissued stock.

In the way our UK clubs are set up there is no real reason not to do this, and the shares could be passed on, so effectively become a valueable transferable instrument. I think the club could still retain its not for profit status as it currently would.

[Niall C]

Adrian

Interesting stuff. CASC is not something I'm aware of and I've not heard of any club doing it. I presume they would have to take something like that to the members for permission and therefore it would become public. Is it something that is done down south a lot ?

I was really coming at it from the planning perspective. Planners and local non golfing nimby's probably wouldn't want to see there precious green space developed even if its owned by someone else. However (this is an idea I promoted on the other thread) if they cited problems of the course not being upto modern playing standards, problems with safety, too small a site, wrong location etc and then throw in some economic arguments a case can be made.

Also how much of the hundred acres do you need get planning on to pay for a new facility elsewhere ? You'll have a much better idea than me but lets say 150 acres at £6K per acre (average Scottish agricultural land value) to buy the land, another £2m to £3m for the golf course (not talking big budget course but you can advise whether thats too light) plus another £1.5m for the clubhouse (doesn't need to be big, just modern and well laid out) gives you a decent facitlity for c.£6m. How far out am I ?

Now, having made the case to the planning authority (and I would advise using Trump's planning consultants/PR team/solicitors) that the club will die a death without getting a new facility and the town/city will lose a valuable resource, that they give planning for housing on say 10 acres with a couple of acres set aside for social housing and perhaps permission for a 60K sqft supermarket on another 8 acres (we can always dream !), the club could afford to give the remainder of the land to the Council to cobble together the remains of the course to make a 9 hole muni with driving range and possibly utilising the existing clubhouse.

The club has a new facility and money in the bank, the Council has a new public facility costing nothing and the nimby's still have their dear green space. Everyone wins !

Niall

[Bruce Katona]

Niall: Now you're thinking like a true real estate developer! In the realk estate business, you always require multiple exit stratagies, and carving up a golf course for development is a viable exit option.

PS: I meant that as a sincere compliment

[Adrian_Stiff]

Niall & Bruce - It is extremely hard to get planning permission for housing in the UK. What seems perfect sense and an everybody wins scenario with local council laws and development is a minefield, you can hustle a £1,000,000 at a potential project employing all sorts of angles and the council can defend their actions at appeal and spend £250..... sometimes one word is enough to defend their case. In principal all development is resisted, the UK is just not like anywhere else.

 Until recently land with the permission to develop into housing was £1,000,000 per acre, I think it may have fallen as much as 50% now (there was a lot of hot air in the price). Agriculutural land has risen three fold, good land from £3,000 to £10,000 and its hard to get anything less than £5,000....bad agriculutural land can be good golf land.

At £5000 per acre it means land prices and a new golf course in the UK becomes a total non starter and quite simply it will be nearly impossible to make the figures work. It is hard to make £250,000 per annum from an 18 hole golf facility, if the land is going to cost £1,000,000 and development cost of the golf course another £1,000,000, you need to produce the clubhouse, green keepers shed, car park, buy the maintenance equipment etc for £500,000.... almost impossible. No Bank will lend you the money with this business plan and anyone with two and half readys wont be investing in golf. It is very gloomy for future UK new courses and the recent completed ones are very likely to meet with disaster unless there has been some friendley quirk in their funding.

I have 250 acres in Bulgaria with planning for 600 houses, a town, 18 holes, but I cant find anyone interested to take that on for a few bags of Jelly Beans...it is  very gloomy

[Sean_A]

Adrian is right on the economics of new courses, however, he is wrong about development.  Plenty of developing goes on even now and it will continue so long as Britain is short of housing.  Its an issue of location, location, location.  Planning authorities do want to encourage development, unfortunately, the nice areas are often outside of commercial/housing development zones.  Its a tough question to call because without a doubt Britain is overcrowded to the point where sensible development is an absolute necessity.  Brits complain all the time about planning authorities, but in the main, this area is one of the best services that any government agency provides and many tourists are often amazed at well countryside is protected and the urban sprawl of cities/towns is controlled. 

Ciao   

[Niall C]

Niall: Now you're thinking like a true real estate developer! In the realk estate business, you always require multiple exit stratagies, and carving up a golf course for development is a viable exit option.

PS: I meant that as a sincere compliment

Bruce

I should certainly hope I was thinking like a property developer given I've been in the property business for 25 years ! Having said that, I wasn't proposing a money making scheme as such, more a mechanism that everyone can win.

Adrian

Sean's comments are correct. There are ways and means of getting planning particularly if you are coming at it from the point of view of the club. If you look at it as a mid to long term project then the club could promote the idea with the public authority, look to get a change of designation at the next local plan and take it from there.

The other point is I'm not looking at this as a commercial golf development. I'm looking at it as a means of the club getting a new facility payed for and hopefully have some money left over in the bank. If done well, the new facility, and by that I mean principally the course, will attract new members and the club would be debt free.

I think its a nice idea. I also think the reason why it wouldn't work is that you would need to get all the members on board and that would be like trying to herd a flock of sheep in one direction across an ice rink. Near impossible.

Niall

[Adrian_Stiff]

I will give you good odds I am not wrong. Sean seemed to say I was wrong but then made the points I was saying. I am not sure if you have misread my posts or I have explained it wrong, we were talking about housing on golf courses. So I will repeat it.

It is almost impossible to get housing on a golf course in the UK.

Of course if you look at long term, everything changes.

Green belt rules have gotten much tougher over the last 10 years, I have been involved in appeals and in test cases which have become case law, we took an army into one and got beat by a pea shooter, equally I have won with a pea shooter on my own against a flock of 185, including people top 50 in line for the throne.... dont understimate the power of the pea shooter.

Limited infill is always a possibilty but it depends on the area classification.


Almost any golf course in the UK will trade up theier land for housing, who could turn down £100,000,000 the money can buy a superior site, with great facilities and give back £150,000 per member... it would be like turkeys voting for xmas.

[Adrian_Stiff]

ctd.
A lot of the problems in the UK lie with case law, if you allow something against what the written word says then it allows back doors for exploriation hence much gets resisted if it does not tick every box, its hard for an authority to over-ride non compliance these days. Most things end up at appeal with about a 1 in 3 win in favour of the developer.
With appeals as soon as a new test case breaks ground it skews the whole system, the green belt and SSSI barriers are the hardest in my findings, most other things are achievable with compromise although sometimes a compromise can be so expensive that you cant do it anyway. I had a situation where I could obtain permission for a golf course but could not import any mateuals into a site on anything over a 3 ton truck.

Getting back to housing, the authorities like brown field, they like redevoplment of existing/ run down. There is always this mythical line of okay/no chance. If the no chance is next to the okay then yes its a matter of time.

[Jon Wiggett]

Adrian,

you are correct that it is not easy to get housing on new courses but it is not as hard as you make it out to be. I think you along with many others are making things in the golf industry to be much worse than they really are. There will be some new clubs that work and others that don't but it has always been so even in better times.

If a club offers the right product at the right price and keeps the overheads within the budget then it will be okay.

Jon

[Adrian_Stiff]

Jon - Easy or Hard or quite easy or quite hard, lets just look at some facts there are 3000 UK golf courses, how many have housing on parts of them that are allied to the golf. If a developer approaches a club with 150 acres an offers a £75,000,000 on an option how many clubs will say NAY. How many developers are willing to cart £100,000 at a planning application. Come on give me some different answers to the ones I know.

There is a long term route but its not the sort of thing to discuss on here, short term routes, I would say none, the only quick ones that happen are the ones where the structure plans change and 'the line' gets shifted. If you are inside the line its bingo. Can the golf club alter the lines? Not unless you can demonstrate a huge benifit to the community, I worked on one project and bringing the Ryder Cup to the area was not considerred enough to even get a hotel.

It is gloomy though its better than it was, I work 365 in golf, membership is the biggest problem for UK clubs and in simple terms the membership costs dont reflect value as there are so many 2-4-1s, online cheap green fee discounts, county cards, cheap away days. As soon as there is NO joining fee you have lost a lot of income, and more important you have lost loyalty.

There will be survival, there will be casulaties, there will be clubs that do well. Its a very hard new market, the UK does not need any new courses unless there is a crazy gap somewhere where clubs are all full. Strangely its not all about right product right price, there lies a problem that the target market already have a membership and whilst the new one might suit one from the 4ball, two others are okay as they are, mates and friends over ride lots of financial computations and its something the accountants dont spot. Long term right product/ right price will win, but theres a lot of quirk in operating golf courses and its one of the reasons 87% fail with the first owner in the UK.

[Tom_Doak]

Why the hell do you WANT housing on golf courses?  That would be the beginning of the end for golf over there. 

Your planning laws in the UK are much more sensible than ours; they stop developers from raping the countryside for profit, 400 acres at a time.  People should live in towns, not suburban sprawl.

[Duncan Cheslett]

The thing is Tom, that many golf clubs that were set up 100 years ago out in the countryside now find themselves surrounded by housing or other development on all sides. While a golf course in the middle of a residential area may well provide an attractive green space for residents to look over, it is for most a 'forbidden' area over which they cannot wander or walk the dog.

In the long term I suspect that the occupation of say 100 acres of green space in the middle of a densely populated area by a private club with less than 400 members could well become socially and economically untenable in many cases. This may well be the only large green space for miles around, and its exclusive use by a private golf club can inevitably breed resentment amongst those living nearby for whom access is barred.


The sale of 30 of those acres for development while the remainder is gifted to the local community for a park or other amenity could well prove an irresistible model for many urban golf clubs. The proceeds would almost certainly cover the costs of aquiring the necessary farmland out of town and building a new course and facilities. Wind forward another 100 years and repeat!
To illustrate that we are currently overburdened with golf courses in the UK here is a Google Earth photo of my local area of south Manchester. The photo is of an area approximately 13 miles by 12 miles and I gave up counting golf courses within it when I got to 56.
That's nearly one for every 3 square miles!



How would you feel as a non-golfing resident of a conurbation such as Greater Manchester when most of the large green space was taken up by private golf courses and access was denied unless you started hitting a ball with a stick and stumped up a large wad of cash? It is very easy to foresee an anti-golf sentiment developing ...

Incidentally, the number of courses with any architectural merit within this area is probably around three.

[Niall C]

There has been a lot of great comment since my last post.

Adrian,

Clearly you have a lot more experience in planning issues which relate to golf development and I tip my hat to you. For a private developer trying to go against the structure plan, its not easy and doesn't take much to get an application knocked back. However the point about my little development model is that I was looking at the club promoting the scheme. If the club promotes the scheme it would have a huge bearing on the application. Particularly as I'm not talking about 100 acres of development but something more modest, say 10 to 15 acres, and also something that created a PUBLIC green space which may very well continue to be used for golf as I suggested.

To prove that this approach can work, if on a more modest scale, a club I belonged to got a new clubhouse and car park in exchange for "selling" a developer the old clubhouse site, the car park and half of the 18th hole. The application could perhaps have been called brown field development in relation to the car park and old clubhouse site but surely not ground for half of the 18th. It got planning permission on the back of it being promoted by the club.

One other point is your facts that there are too many courses for the number of golfers. As Duncan points out, many of these courses are poor. They may have served a purpose but diminishing memberships suggest they are now failing to do so. To go back to my point about the club moving to a new course, its the better course which will attract members. Thats where I see a possible opportunity for those in the golf design/construction side. Someone just needs to be proactive with promoting the idea to clubs. Probably easier said than done mind you.

Niall

[Adrian_Stiff]

Niall - I think your idea is good, it makes sense BUT..... have you ever tried to deal with planning authorities.... it is a nightmare. I used to get planning for people for £5000, perhaps as far back as 2000. If you were coming to me now wanting the same I would say its £50,000 and I would be honest and say it might be twice that and we lose. The amount of studies required that are 99% tripe are beyond belief.

I dont know about the site/ golf club you mention, but was it inside the line or outside the line. You can litereally build an ugly warehouse one side of the line and on the other you cant put an umbrella up. Our planning laws are very archaic and planning officers are programmed to say no.

A few posts back I did say you could get limited infill (and thats in the green belt). I dont think 'a golf club' getting behind a scheme carries any nice weight, if your disabled, ride a push bike and wear sandals you might have a chance.

[Jon Wiggett]

Adrian,

I do not think we are so far apart in our opinions. I used the planning example to show the tendency for people to exaggerate. There is a difference between 'almost impossible' and quite difficult but my main point was not about housing. As TD says why the hell would you want to have houses on a course?

My main point was about clubs marketing them selves correctly and funnily enough you prove the point of the problem. If clubs keep on banging on about memberships as you do then many might be doomed. It is clear that there are too many club membership places available. IMHO, many clubs will need to look at lower costs, smaller memberships and shorter seasons if they are to keep afloat. Otherwise they need to accept that many players do not want to be club members at any particular club and go down the multi club membership with other clubs or visitor players as the priority.

Jon

[Niall C]

Niall - I think your idea is good, it makes sense BUT..... have you ever tried to deal with planning authorities.... it is a nightmare. I used to get planning for people for £5000, perhaps as far back as 2000. If you were coming to me now wanting the same I would say its £50,000 and I would be honest and say it might be twice that and we lose. The amount of studies required that are 99% tripe are beyond belief.

I dont know about the site/ golf club you mention, but was it inside the line or outside the line. You can litereally build an ugly warehouse one side of the line and on the other you cant put an umbrella up. Our planning laws are very archaic and planning officers are programmed to say no.

A few posts back I did say you could get limited infill (and thats in the green belt). I dont think 'a golf club' getting behind a scheme carries any nice weight, if your disabled, ride a push bike and wear sandals you might have a chance.

Adrian

Absolutely right. The amount of info that is asked for nowadays is frightening and as for SEPA, or whatever you have down south, their default position is to object simply because they don't have the resources to properly process applications. Throw into the mix local politicians sitting on planning committees and the application can quickly become a popularity contest. That's why I think that having the club behind the application makes a lot of sense.

Jon,

I'm not sure that multi club membership would help. You would still have the same level of overheads but with reduced income from subs assuming that there was some sort of discount for multi club membership.

Niall

[Adrian_Stiff]

Nial - I think the opposite is more likely to be true, heres my reasoning. Planning authorities are made up by naturally cautious people, people who have decided to work for a body that gives good pensions, long holidays, financial stability....these people can take two weeks before they decide whether to buy a can of coke. They very often have very strong political views and often they are centered on green issues and socialism. Golf smells of wealthand successfull people and I think they dont like that smell.

[Niall C]

Adrian,

Let me say right from the outset that I've never been involved in a golf development so haven't seen first hand the hoops that you have to jump through. That said I have worked in the commercial property as an agent, in a property company and a developer both as an agent and as an employee for something like 25 years and only recently have I started working with a local authority (not by choice !) although not on the planning side.

Here's my take for what its worth. The officials take there job seriously and try deal with applications by merit and how they conform to the planning guidelines. Where things get tricky is that applications of a certain size eg. a golf course development, inevitably get caught up in the public gaze and by their nature become political. I don't think there are many politicians who when writing out their agenda would have a section dealing with golf course development but when the public groups such as Community Forums or Community Councils make there thoughts known, these guys listen, and these guys also sit on the Committees that vote through planning applications.

The problem for a golf course developer, or indeed any developer, is that the word "developer" is like "estate agent", "solicitor", "lawyer" or "accountant", it has a bad rep with sections of the community, even conservative types. For some reason people don't like other people making a profit out of redeveloping there surrounding environment regardless of whether they have proprietary rights to it or not.

That's why if you have the club, which may have been embedded into the local community for decades, promoting the application its got a better chance. If its seen to be done for the benefit of the club rather than some money grabbing developer then that's more acceptable. If the public go with that so will the politicians, end of.

Niall

[Michael Latham]

Niall,
I have been a golf club proprietor for nearly 40 years. The Club, founded in 1903, is located 17 miles from the centre of London and situate within the Metropolitan Green Belt.
In the last 40 years I have made repeated representation to the local planning authority both informally and in application. These representations were on behalf of The Club and in respect of adjoining land that I have been fortunate enough to have had Mr Doak walk with me with a view to building a new course. In all this time, in respect of all these representations, from toilet facilities to bedrooms, from cover for a driving range to a staff dining and washroom facility, I have never once been successful. If I were to summarise, only, from my own first hand experience I would do so as follows:
a) Golf is a form of permitted development within the green belt provided that a "need",  can be demonstrated, this "need" may not necesssarily extend to the hard buildings that traditionally accompany the course.The presumption is that the extension, the new course and the toilets are not necessary unless the applicant can demonstrate an overwhelming need. My local council sees it's primary responsibility as being the defence of the green belt and thus even for permitted development the first reaction is refusal. The commercial merits of the proposal are largely irrelevant to the process unless they touch upon need. Thus if one wants to tweak the business model by, for example, attracting more children to take up the game but by so proposing The Club would need  separate built facilities, then it falls to The Club to demonstrate an overwhelming "need". This is practically impossible, there are other alternative Clubs and little or no evidence of the horrors of deprivation visited on children who are not currently visiting golf clubs or learning to play the game. Do I begin to provide a little insight into how the system is currently stacked at least in the Green belt? The idea that one might hive off the odd five acres for houses is in my locale, hilarious and unlikely to fare better by the nature of the applicant.
b) Planning policy in the UK and in my area is governed by the Local Plan a five to ten year summary of land use and general intention within the area.It pays some service to macro policy in the wider context of the economy but in essence it is a parochial view of a small land area. Thus new roads, capital works to serve regional need as opposed to local issues are all the prerogative of regional planning authorities. Even housing need handed down from on high will be tossed and traded by local planners as a local hot potato. The system encourages a local reactionary and narrow minded approach to local manifestation of what might be severe national need. Similarly depending on where the Council is, there are widely differing views between Councils on their need to foster growth, commercial development and employment within the Local Plan. Locally my Council  regards all of these as dirty words. "There is full employment in the south east" ,why should we regard the development of a new factory or office block or new affordable housing as anything other than a threat to these green hills when there are lots of suitable places around the M25. Planners here presume NO to development, the burden of application falls on the applicant and the rules are stacked in favour of doing nothing. Needless to say and I am stopping here I have a dim view of the efficacy of our planning process.

[Niall C]

Michael

Many thanks for taking the time to give me the benefit of your first hand experience, and welcome to the site BTW.

Clearly there are different planning needs round the country and I dare say that the demands on land use around London is going to be a damn sight more acute than even Edinburgh or Glasgow. I also note that you are a golf course proprietor and by that I take it you own the golf course privately ? If I'm correct in that then I think there is a big difference between that and a members owned club, at least in the eyes of the local authority/public. Members owned clubs in a lot of places are seen as being a community asset whereas a privately owned club is a commercial concern. I'm not saying that would have made a difference in your case but in a lot of cases I think it might.

Another difference to the development model I was promoting was that, if I read your post right, was that you were looking to add another course and retain your existing course. Again not saying for one second that would have made a difference in your case.

Niall

[Adrian_Stiff]

Niall - 99% of the time it is about lines. Left of the line YES, right of the line NO. You can be Jack the Ripper and get a yes and Florence Nightingale and get the no. Niceness plays no part.

If a council gives a yes against policy it becomes ammunition for others in that same band.... If I give you something and not someone else you can sue me for acting unfairly..it is that principle. It is case law implication of over-riding a policy that is the stumbling block and common sense procedures just cant be implemented.

I met with someone today and Churston GC came up. That is all within the right lines and whilst 100 people might object, almost all will foul their objections by going off topic or quoting aspects that cant be taken into consideration.

[Niall C]

Adrian,

I think were getting close to having kicked this one to death a couple of times and then been guilty of reviving it. I acknowledge you and Michaels first hand experience in relation to golf development which I don't have, having said that, Trump getting planning at Balmedie isn't going to lead to a rush of similar applications siting his development as an example IMHO, not that I think his way of doing things is one that I would want to follow.

Setting aside the planning issues for one moment, and I appreciate that planning is fundamental, replacing old courses with new has to be the way forward for the golf design/construction sector I would have thought. Or should I say replacing existing not so good courses with better new ones. Once you reach saturation level on pure numbers, you have to create demand by building better. Thats why we're not still driving around in Model T Ford's, its evolution.

Niall

[Adrian_Stiff]

Niall - Firstly it is fairly easy to get planning in the UK for a golf course, I reckon my success rate is/was better than 50%, probably its getting harder and most definitely it is getting harder to vastly change a sites appearence, so if you think that you cant remove hedges and perhaps cant put bunkers in or elevate tees it can mean that yes you can have a golf course but its gonna be shite, so a permission becomes meaningless.

Location is important as a UK rule if you draw a 20 minute time circle around your new course and can count 30,000 people inside your circle it works. You need to draw other golf course's circles as well and count the % of their ingrees into your circle.... dont be suprised if you have a minus figure! But dont build it unless you get to 30,000. There are not many left now.

Relocating a club costs about the figures you outlined for a real good course, the range with land purchase is probably £3M to £6M, the old redundant course is not worth so much though, you probably would get permission for change of use of the clubhouse into residential, 10,000 sq ft of clubhouse might relate to 6 new properties, converting greenkeeping buildings might be harder for residential but not impossible, but I think there is a deficit of at least a £1M. So for a move you do really need some planning on the course to balance the books, which as you say we have discussed enough! (but nicely)

If you are relocating a golf club to new ground not all members will like it, here are some obstacles:
 a 4 mile shift further away from a member's home  will put most UKerrs off (distance to drive is very important in the UK) they will perhaps join a closer club.
not all members seek length or an upgrade, they desire a game of golf with their friends.
a new course takes time to be good an older member may not see a 5 or 10 year plan as suitable for him.

Not all sites are so precious and some sites can produce wonderfull golf courses, great natural sites that are great for golf do exist though almost all have protections and are no-no's. There is one truly fantastic site suitable to stage an Open Championship and that site is about two miles west of Southerndown in South Wales, the infrastructure and population collection within 150 minutes is amazing, hotels etc tick the box too. Could be great for Wales.

[Jon Wiggett]

Niall,

which membership would you prefer a membership allowing you to play one course or one that allows you to play 5 courses for the same money? The problem is that many people these days do not want to be tied down to one club. Indeed, the whole belonging to a club is not a fashionable as it once was. Multi club memberships mean same splitting the membership with other courses but you might find acquiring new members more interesting.

Jon

[Tiger_Bernhardt]

I am one of the first to blast the upper crust UK and Irish courses for significant over charging their unaccompied guest play. However we here in the US are learning from them and jumping on the program with far to many courses charging 150 to 500 dollars for guest play.