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Mike Sweeney

Disney as a model for golf clubs?
« on: January 09, 2012, 08:49:42 PM »
So I received a few calls about the concept of a “match play club” that was discussed here:

http://www.golfclubatlas.com/forum/index.php/topic,50705.0.html

See also John's thread for Ballyneal:

http://www.golfclubatlas.com/forum/index.php?PHPSESSID=dmoakt1o83ub4n7q80o387c5e7&topic=50685.0

As I was rushed today at work, I said I would post the business model side of a “players club” tonight for discussion on here.
The concept is similar to the Disney Vacation Club (DVC), which is the Disney version of a vacation ownership program. It was created in 1991 by Disney. Unlike a traditional timeshare where owners buy a specific size unit in a set time of year, the DVC works on a point system giving owners the flexibility to travel when they want, as often as they want, for however long they want, and in whatever size unit they choose.

The Sweeney Family are DVC members, so I am pretty familiar with the model. It works very well as you can buy additional points and sell points in a secondary market if you wish.

Points? How do the DVC "points" work?

When you buy into the Disney Vacation Club, you purchase a set number of "vacation points." The minimum number of points that may be bought in your initial purchase, if buying through Disney directly, is currently 160 and the maximum is 2000. You only buy these points once -- they are then allocated on a yearly basis until the contract's end. For example, if you buy 250 "vacation points" in your initial purchase, you will receive 250 points each year to "spend" on your vacation accommodations.

When using your DVC points to reserve accommodations, the time of year, the resort chosen and the size of the unit will determine how many points are necessary. A two-bedroom unit uses more points than a one-bedroom unit. Weekday stays use less points than weekend stays. Booking a week in a studio at the Old Key West Resort in July will use more points (109) than booking that same size unit during January (80). Owners are supplied with easy to understand "point charts" and, with a little planning, points can be stretched a long way.

Adapting DVC for Golf

Again, this only works in very niche type of markets and for this discussion, I am using LuLu Country Club in Philadelphia, which seems to be in a limbo type of status. I know nothing about LuLu and these numbers are simply made up. LuLu is used, as it seems like a very good Ross course with some limitations. I played it once in a high school match, and it sounds like a fun match play style course that could be used by a variety of golfers:

•   Country club golfers looking for a second golf club at a reasonable price.
•   Public golfers who are tired of 5 hour rounds.
•   Senior golfers who play during the week and do not want to pay for the cost of an expensive traditional private membership.
•   Golfers who want to cut their private course membership cost.

Assumptions:

•   Purchase price = $3,000,000 – owned by one individual to keep it simple. He will sign for a bank credit line to cover seasonal issues too.
•   Annual budget - $1,500,000 – assumes maintenance, clubhouse staff, taxes……

The Model:

•   The owner would offer 1,500,000 points for sale to be used over a calendar year.
•   Let’s assume 10,000 rounds, the average rounds cost 150 points ($150).
•   Similar to the DVC model, each tee time would have different point amounts:

            *  Weekends in the summer = 250 points
            * Fridays in May = 150 points
            *  Sundays in the fall (Eagles games) = 50 points

•   Each member has to use 50% of the points themselves.
•   Minimum points that can be purchased per year is 2500 points ($2500), there is no maximum.
•   If everyone purchased the minimum amount, a full membership would be 600 members.
•   Each member agrees that all rounds must be completed in 3:30, and during peak times, match play is the rule of the club for 3:00       rounds.
•   Carts are included in the model. Walking, carting are all the same cost, just have to be played in the same time frame.
•   Each member must commit to a 4 year commitment (see below).

Now let’s assume the clubs sells out, so from Day 1, the club breaks even from a cash flow operational model.

The Equity:

•   The owner owns 70% of the club.
•   The members own 30% of the club, conditional on the payback of the owner.
•   As the members are potential owners of the club, they want the club to make money. Thus, they will help recruit to the club:
•   Members;
•   Outings, unescorted, and extended guest play at a premium price, and at 10,000 rounds in the above model, we have room.
•   Assumption – we get 5000 outside rounds at an average price of $150 and we make a surplus of $750,000 for four years and pay back the owner.
•   After four years, the owner gets his capital back, and owns 70%. The members own 30% in proportion to their point ownership.


Just an idea in this next generation of golf……

Brett_Morrissy

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #1 on: January 09, 2012, 09:36:05 PM »
Interesting concept Mike :)

What happens to the $750k in the following years after year 4?

I don't know the area, but 250 points/bucks sounds like a lot for a quick round of golf in Summer? If this was the most popular time to play golf, Five weekends in Summer(playing both Sat and Sunday ) and my $2500 is gone?

Sorry to be picking the eyes out of the idea, as it sure seems to have merit. Although, unlike prime real estate accommodation at a theme park, prime golf, like my local club at this time of year, some members are playing almost every day over a two week stretch!
@theflatsticker

Jason Connor

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #2 on: January 09, 2012, 09:37:16 PM »
Creative, Mike.  I like the effort.

I guess, however, that I don't understand what makes this setup a 'Match play' club.  

It seems the membership is agreeing to fast rounds, presumably by focusing on match play, but I don't quite see how the cost structure incentivizes this.

Likewise it seems this model could be used for a regular club (stroke play/match player/whatever).  It basically just prohibits some members from playing too much golf. (those old retired guys at our clubs whole pay $12 a round because they play 36 every day!)

(And I never understood timeshares or DVC -- it seems like buying more points is the same as just paying more for a bigger hotel room, or for going at peak times, or for going to a more desirable place.  The whole points things just seems like a complicating middle man.  Knowing nothing about it; they seem make money because people buys things they never use; we are far less likely to rent hotel rooms we don't use).

We discovered that in good company there is no such thing as a bad golf course.  - James Dodson

Brett_Morrissy

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #3 on: January 09, 2012, 09:51:02 PM »
Jason,
Although Mike mentioned Matchplay discussions as the reason for the thread, I didn't read it as a Matchplay courses, but rather a potential solution for the future of struggling golf courses.
« Last Edit: January 09, 2012, 09:58:52 PM by Brett Morrissy »
@theflatsticker

Mike Sweeney

Re: Disney as a model for golf clubs?
« Reply #4 on: January 09, 2012, 09:56:40 PM »
What happens to the $750k in the following years after year 4?

The 70% owner and 30% membership can re-invest or pay a dividend to themselves.


I don't know the area, but 250 points/bucks sounds like a lot for a quick round of golf in Summer? If this was the most popular time to play golf, Five weekends in Summer(playing both Sat and Sunday ) and my $2500 is gone?

Yep. Right now we use our Disney VC over the holidays for 9-10 days as we are a kids dominated family at this stage of life. When the kids get older, my wife and I can use them for something like 6 weeks in a single in September (quiet season), or sell the points.

Sorry to be picking the eyes out of the idea, as it sure seems to have merit. Although, unlike prime real estate accommodation at a theme park, prime golf, like my local club at this time of year, some members are playing almost every day over a two week stretch!

This is not for golfers who have unlimited time. There are probably 5+ private clubs in the LuLu area that are not at capacity. Those members should join one of those clubs.

Mike Sweeney

Re: Disney as a model for golf clubs?
« Reply #5 on: January 09, 2012, 10:06:14 PM »
I guess, however, that I don't understand what makes this setup a 'Match play' club.  

This could be my very biased opinion, however I got two calls from VERY good players that love this style of play. Let's call it a marketing angle.

It seems the membership is agreeing to fast rounds, presumably by focusing on match play, but I don't quite see how the cost structure incentivizes this.

Fast play allows a model an entry fee of $2500. If all were at the minimum, that is 600 members and we need to get them around.


Likewise it seems this model could be used for a regular club (stroke play/match player/whatever).  It basically just prohibits some members from playing too much golf. (those old retired guys at our clubs whole pay $12 a round because they play 36 every day!)

Agreed, and as I mentioned earlier, this model eliminates the $12 per round guy. As John Kavanaugh often says, someone is subsidizing someone's round, and this cuts those guys out.

(And I never understood timeshares or DVC -- it seems like buying more points is the same as just paying more for a bigger hotel room, or for going at peak times, or for going to a more desirable place.  The whole points things just seems like a complicating middle man.  Knowing nothing about it; they seem make money because people buys things they never use; we are far less likely to rent hotel rooms we don't use).

That is the traditional time share model. The DVC model also includes "banking" points from year to year. I did not include that in the golf version to keep things simple. As my wife loves Disney more than the kids, we never have to worry about banking points.  ;)

Mark Chaplin

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #6 on: January 11, 2012, 04:26:38 AM »
Several UK clubs have similar schemes including UK top 100 Goodwood.

Basically those who play at the busiest times and the most pay more. It's great for the occasional player who doesnt want to sponsor the 5 times a week seniors.
Cave Nil Vino

Mike Sweeney

Re: Disney as a model for golf clubs?
« Reply #7 on: January 11, 2012, 06:58:35 AM »
Several UK clubs have similar schemes including UK top 100 Goodwood.

Basically those who play at the busiest times and the most pay more. It's great for the occasional player who doesnt want to sponsor the 5 times a week seniors.

Thanks Mark. Here it is:

http://www.goodwood.co.uk/golf-at-goodwood/membership/membership.aspx


With Membership starting from just £395 you will receive the following benefits:

    Exclusive Members only Downs Course – ranked in Golf World top 100 courses
    Best of both worlds – choose between two very different and unique Championship courses
    Use your Credits to invite up to seven guests to play either course
    Up to six weeks tee time booking
    Use of two driving ranges with Callaway golf balls and both grass and mat hitting areas
    Luxurious locker rooms, with Italian marble showers and Walnut lockers
    18th Centenary, Grade I listed Georgian Clubhouse, The Kennels
    Two complimentary tickets to the Festival of Speed
    A range of discounts across Goodwood’s restaurants and venues

How it works

Pay an annual subscription and choose a Credit bundle that suits your lifestyle.

Book a tee time in one of the three categories - Peak, Popular and Peaceful - each category represents a different Credit cost. If you run out of Credits you can simply top up with any of the Credit bundles and any remaining Credits will roll over to the following membership year*.

* Annual subscription and entry level Credit bundle will be required.

If unlimited golf is more suited to you, please call our Membership Executive to discuss our Braid Membership on 01243 755 132

______________________________

Has Melvyn seen these!!

Jason Topp

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #8 on: January 11, 2012, 04:04:15 PM »
I like the idea but think the place would need to differentiate itself from the public course experience in order to justify the higher cost. 

Country clubs do that with pace of play, conditioning and the "club" atmosphere of the place which for me means you show up unnanounced and can round up a fun group by simply hanging around, hitting balls and seeing who shows up. 

Your model would cover the first two benefits of a country club but probably would not provide the third benefit because the people you play with in such situations are usually the $12 a day guys.

I think it would work best in locations where private clubs are struggling but public courses are filled to the brink so that one has difficulty getting tee times, plays five hour rounds and experiences crappy conditions.  I would be very interested in such a club if I were moving to New York, L.A. or San Francisco.



 

Mark Johnson

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #9 on: January 15, 2012, 07:18:42 PM »
I love the work that went into this idea.   I think that it does have merit, but maybe not with the target demographic you mentioned.

I am not sure that this model


A few places where I think that this might work.

-- Arizona, Florida and other areas inhabited by 4-month a year snowbirds

-- Areas where people typically have second homes (e.g.  Lake Geneva for Chicagoans and Brainerd for Minnesotas)

-- Resort areas, popular vacation spots (Hilton Head)


In this scenario, for people who are looking for an alternative to public golf, this could work, as long as (to Jason's point) this club has something that SIGNIFICANTLY improves upon the competing public courses.   (I do believe pace of play could be one of those differentiators)

If this were to be tried with a mainly local membership, i think the pricing scheme would have to be significantly altered-- weekend golf would need to be 500-750 points.  Otherwise, you will end up with 600 members who all want to play at the same time.   While we love to complain about the $12 golfers, in my experience, they usually arent playing at peak times any more than a majority of the membership.


thanks for sharing an innovative idea Mike

John_Cullum

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #10 on: January 16, 2012, 10:22:59 AM »
How many points does it cost to go hang out in the grill room, or use the driving range.

Can I go out late in the afternoon and play a 6 hole match for a discounted rate?
"We finally beat Medicare. "

Mike Sweeney

Re: Disney as a model for golf clubs?
« Reply #11 on: January 16, 2012, 05:54:50 PM »
How many points does it cost to go hang out in the grill room, or use the driving range.

Similar to Disney, once you get on the property most everything is included. At Disney, this would be pools, at the golf club, it would included range and grill room. Range could get tricky, if it is a big membership.

Can I go out late in the afternoon and play a 6 hole match for a discounted rate?

As an owner of the club, we are hoping you understand that there are no discounted rates to be fair to the other owners. 9 hole rates would be part of the package.

Bill_McBride

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #12 on: January 16, 2012, 07:22:41 PM »
How many points does it cost to go hang out in the grill room, or use the driving range.

Can I go out late in the afternoon and play a 6 hole match for a discounted rate?

One of the best things about belonging to a smaller club is going there at lunch to hit balls and chip and putt for a while.  And yes, hang out with the usual suspects in the men's grill.

Mike Sweeney

Re: Disney as a model for golf clubs?
« Reply #13 on: January 17, 2012, 06:42:56 AM »
How many points does it cost to go hang out in the grill room, or use the driving range.

Can I go out late in the afternoon and play a 6 hole match for a discounted rate?

One of the best things about belonging to a smaller club is going there at lunch to hit balls and chip and putt for a while.  And yes, hang out with the usual suspects in the men's grill.

Bill,

Here is a different view:



Hard to argue with that, although I have never particularly liked playing alone and love the competitiveness of a four ball, foursomes or singles match (as long as I get my strokes!).  I too have grown bored with the dogfights at my home course and blame it on the fun of playing in GCA events.

I have a bunch of friends at Pensacola Country Club who play there 3-4-5x a week, always with the same 20 guys, always in a dogfight where it's your foursome or fivesome against two or three others, two or three best balls matching the scorecards.  You never know what the other teams are doing (other than their body language out on the course).  Or how long the putts are being conceded that day.  Yawn.  ZZZZZZZZZZZ.

The purpose of this model is partially to avoid the old school club where 20-40 guys rule the club. As you can imagine with this being a Disney copycat, this makes things more equitable for all members.

Again there are 4-5 traditional clubs in the area that are looking for members and can provide a traditional club atmosphere. Same as a time share, you get parts of owning a home without the cost of full home ownership with this Disney model of club ownership.
« Last Edit: January 17, 2012, 06:46:45 AM by Mike Sweeney »

Steve_ Shaffer

  • Karma: +0/-0
Re: Disney as a model for golf clubs?
« Reply #14 on: January 17, 2012, 07:04:02 PM »
Mike,

Now that LuLu is on the market again and not in foreclosure, how about getting some monied golfers together and putting your plan to work.

Here's a comment from someone on Joe Logan's recent article that I posted on the LuLu thread:

 
Such a wonderful little Ross golf course. A true gem and pleasure to play. Hopefully, that place can survive as a golf course and LuLu can enjoy its 100th birthday & beyond. LuLu is a textbook case in how terrible boards can destroy a private club. It is a shame to see the sheer stupidity of boards at LuLu over the past few years and the shortsightedness of their decision making. It is now water under the bridge at "The Lu", but a lesson for other private clubs in how NOT to run a private club. The only hope the place has now is to knock down that old clubhouse and build a small, modern building to serve as combo pro shop, bar area and tiny day locker room. Run the place as a pure golf club with cheap dues and high volume...a la Sandy Run. Good luck to the folks at LuLu. Such a wonderful place. It deserves to carry on as a golf course to be enjoyed by local golfers, who appreciate an old, Donald Ross gem.
"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

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