The Pellucid Perspective - August 2014 - (Page 17)

tracking (rather than population growth, which tends to always increase, just at different rates). Since 2000, rounds demand in the market has declined ~1% annually. Combining that demand decline with the modest supply increase translates to a supply dilution level for the decade of -11% (below the national average). Putting together the 1990-2000 decade (-11%) and the 2000-2011 period decline (-11%), the average facility in Cleveland has suffered a 24% reduction (not a math error, it's in the decimal precision in the component numbers) in revenue, driven by some combination of rounds or rate decay when compared to the 1990 baseline (chosen semi-arbitrarily by Pellucid as a period of economic health for the majority of US golf facilities). The big challenge in Cleveland (similar to many other Top 25 markets due to the fact that supply growth is already about nil and their population isn't growing) will be figuring out a way to stimulate rounds demand. That said, rounds demand growth could come from either new golfers or an increase in frequency from the existing golfers (see the August issue of Outside the Ropes for an in-depth treatment of this topic and how the short-term stabilization of the industry at large and many key markets may hang on figuring this out). The average facility has throughput of roughly 25K rds/yr, slightly below the national average before factoring in climate and daylight influences. The more accurate measure is the market's healthy 50% utilization rate, which is nicely above the national average. This means that, after neutralizing the weather impact of a less-than-12 month season, the market's average golf "factory" runs at a higher throughput vs. the average US (FootGolf continues from page 8) and etiquette. Players are expected to understand and play by rules set forth by their American FootGolf League, which is part of the Federation of International FootGolf. Coming very soon is a FootGolf player rating system (read: handicaps), modeled after golf's but without some of the byzantine rules associated with it, such as peer review. A FootGolf Pro-Am tour is being organized now. Roberto cites the substantial number of ex-pro and college soccer players pining for a way to use their skills in a competitive format. FootGolf can fill that desire and the Balistrinis think a business can emerge as sponsors sign on (adidas already has), along with a possible media partner (Golf Channel? ESPN? Back 9 Network? Everyone's looking for content). Can your course accommodate a FootGolf course? Not all can. Additionally, the Balistrinis have been counseled about not following the NGF's failed "build a course a day" strategy. They hope for 500 U.S. courses planted in locations easy for players to find and frequent. Their selection and certification criteria is well thought out - they've said "no" a number of times. A fully committed buy-in by management and ownership is required. In fact, in more than one instance a new job title has been created at a FootGolf facility, "FootGolf Manager." (I was thinking "Head Toe"). Check out their beautiful new website at course. On the revenue productivity side, the market generates roughly $0.8M per public regulation-length EHE, which is slightly below the Top 25 Markets average. After factoring that for weather influence, the market's Greens Fee Revenue per Available Round (RevpAR = Greens Fee Revenue/Available (Capacity) Rounds) registers at $15, slightly above the Top 25 Markets' average of $14. In summary, as a market Cleveland is on par or better than the majority of key benchmark values while also suffering from some of the same malaise affecting most other markets. On the positive side, they're not overbuilt on Public-Premium golf (which is good considering the predominately blue-collar population base of "working folks") and their factories are generating a reasonable amount of rounds within their weather-constrained season. On the flip side, it appears that there's a glut of courses in the Public-Value segment which is likely leading to significant discounting, and the relative lack of Public-Price golf may be a barrier to easily expanding the golfer base. The supply "overhang" from the 1990s doesn't appear to be overwhelming but, unless they figure out how to light a fire under golfers to increase their frequency, growth and/or real profit will likely be elusive. Population growth is what it is so, were I a local Cleveland golf operator, I'd be figuring out creative ways to connect with the existing population because they're not coming "ten-on-a-mule" to Lake Erie's southern shores. All in all, not a bad golf market if, like in many others, you have money, patience and basic skills and a desire to practice fundamental facility marketing. No problem. n You'll find a map and list of courses already hosting FootGolf, and a video and information about the game, and a lot more. So what's the vote, fad or phenomenon? For now it's the latter. Time will tell if it becomes the former. But I'm hanging on to the website URL I bought last year after first speaking with Roberto and Laura: n (Golf Publications continues from page 9) of cases, he was right at the time, or was proven correct when the accuracy of his analyses became too obvious to ignore or sweep under the rug. Again, good information, even if it's not what you were hoping to hear, enables good businesspeople to make the best of a less than ideal situation going forward. We are hoping to upgrade our online presence in the near future to better serve and inform our readership. To date, we have benefitted tremendously from the support of forward-thinking companies such as our current sponsors, Troon Golf, KemperSports, Bayer CropScience and EZLinks, all recognized industry thought leaders, as well as others along the way including Club Car, GolfSwitch, Sequoia Golf, 1-2-1 Marketing and even one of our most frequent foils, GolfNow. We are very grateful to all for helping us muddle through for our first five years, and invite others to join us for the next five. n The Pellucid PersPecTive 17

Table of Contents for the Digital Edition of The Pellucid Perspective - August 2014

Dick’s golf dilemma: Industry barometer or self-inflicted wound?
Where have all the handicaps gone?
FootGolf – fad or phenomenon
Five years and counting
Court supervision ordered for Spokane CC
Cincinnati muni courses win round 2 of complaint opposing tax-exempt status
July golf weather impact: Up (marginally), winning streak extends to 5
Development restraint keeps Cleveland afloat
Dick’s Sporting Goods lays off 500 PGA professional staffers
America’s laziest sport’? We beg to differ

The Pellucid Perspective - August 2014