The Pellucid Perspective - June 2011 - (Page 13)

MARKET FOCUS San Francisco/ Oakland, CA Core Business Statistical Area (CBSA) he San Francisco/Oakland market is in better health than the majority of US markets currently but, like all markets, it’s not enjoying the success that it once did as evidenced by the Supply Dilution factor. The SF/Oakland CBSA ranks 14th of the Top 25 golf markets in the US by number of golfers. The moderate golfer base of over 300K is served by only 83 18-hole equivalent (EHE) facilities, producing a ratio of just over 3,900 golfers per EHE (double the national average, driven largely by the relatively low supply base for such a densely populated area (see: land premium for explanation)). The supply mix skew vs. the national distribution across Pellucid’s five access/value/usage segments shows overdevelopment in Private at 39% of total supply (This is somewhat mitigated by the lower incidence of Public-Premium, which often serves a similar golfer base). The primary underdeveloped segment is Public-Value, which is usually the majority supply segment but in San Francisco/Oakland represents only roughly 1/4th of supply. In spite of this, San Franciscan environmentalists and various legislators continue to push the idea of closing existing affordable golf like Sharp Park?. Encouragingly, there is a healthy level of Learning & Practice facilities in the Bay City which can serve as “feeder” supply, places for golfers to improve their game (which leads to higher frequency) and is also most likely a marriage of convenience with their smaller footprint in this land-constrained market. The change in supply since 2000 is below the change in demand, resulting in a cumulative dilution for existing facilities of 9%, which is slightly below the national average of 10% (which means the average operator is seeing a decline but not more than the national average which, unfortunately, the banks don’t necessarily monitor or care about). This means that, compared to 2000, the average existing operator has suffered an estimated 9% revenue decline due to supply dilution through some combination of rounds loss and/ or rate erosion. The average facility has throughput of roughly 47,000 rds/yr, well above the national average. The more accurate comparison is that the San Francisco/Oakland market’s 60% utilization outpaces the national average by 7 points, meaning, after factoring out the longer season length and favorable climate, facilities in San Francisco/Oakland are more efficient in generating rounds than the “average” golf facility nationally. On Greens Fee RevpAR (Greens Fee Revenue/Available (Capacity) Rounds), San Fran/Oakland handily beats the national average with a $29 www.PellucidcorP.com T Private PublicPremium PublicValue PublicPrice Learning & Practice Future Facility rate driven primarily by the combination of above average effective greens fee rate and the higher than average utilization rate (of course this is also the land of $400K median home prices and gas approaching $5/gallon). (See Market Focus on page 15) Golfer Base – Est. # of Golfers (Ks) – # of 18 Hole Equivalent Facilities – Golfers per 18-Hole Equiv. Supply Mix – Private – Pub-Prem – Pub-Val – Pub-Price – Learn & Prac Supply/Demand Balance – ‘00-’09 Cume Mkt Supply Dilution (-)/Absorption (+) Level* – Avg Ann Rds Velocity (18-hole Equiv.) Rounds & GF Revenue Health – % Utilization Rate – Avg. Ann. Rev. per Public Regulation EHE ($Ks) – Revenue per Available Round (RevpAR) San Fran/Oak, CA CBSA Tot US Index vs. US 327.2 26,600 83 15,929 3,942 1,774 39% 16% 27% 12% 6% –9% 29% 20% 33% 13% 4% –10% 222 134 80 82 92 150 87 149 46,823 31,512 60% 53% $2,260 $1,137 $29 $16 113 199 181 * Period % Chng in Rds vs. Period % Chng in Supply Above average level vs. US (Index 105+) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) The Pellucid PersPecTive 13 http://WWW.PELLUCIDCORP.COM

Table of Contents for the Digital Edition of The Pellucid Perspective - June 2011

The Pellucid Perspective - June 2011
PGA, USGA Back Adams’ ‘Tee It Forward’ Initiative
The Price Is Right
Acushnet Transaction—Big Deal?
Reality Setting in for Course Buyers, Sellers
May 2011 YtD Weather Impact, Apr 2011 YtD Utilization
San Francisco/Oakland, CA Core Business Statistical Area (CBSA)
The Warrior Way
Comings & Goings
A Step ‘Forward’ for Golf?

The Pellucid Perspective - June 2011