Minnesota Golfer - Fall 2012 - 12

(ask the expert
)
Discarding Discounts
Golf course manager Troy Nygaard warns against using group
discounts to attract new golfers
Interview by Joseph Oberle
T
roy Nygaard has been a golf course manager at
Three Rivers Park District for 16 years and is the
executive director of the First Tee program there. He
has seen the ups and downs of the golf industry and doesn't
believe that discounting green fees is the long-term solution
for success. He discussed his thoughts recently with Minnesota
Golfer.
Q What goes into the cost of a round of golf?
A There are probably six main areas: salary of employees; the
debt service or mortgage on your course; utilities and contractual
services; commodities-materials that are used and must
be replaced (such as fertilizer, seeds, topdressing, sand); fees
such as bank fees and for Internet service, etc.; and advertising.
Those are the categories we breakdown as expenses that
green fees must cover.
Q How does that match up with revenue sources?
A If you have a million dollar budget (which is a pretty good
number for a standard 18-hole course), and if you get 25,000
rounds, you need to get $40 per person to break even. So if
you charge $40 per round you are doing fine. If you charge
$30 a round, then you need to have people take carts and buy
food and merchandise.
Q What determines a green fee?
A It is more determined by what your competitors are doing.
You try to stay close to your competitors, realizing that you
don't want a price solely based on what they are (charging).
You have to be comparable. Pricing is really a balancing
act. You want to charge a fair price to your customers, but
you need to make enough to stay open and pay the bills.
Right now you see a lot of courses doing these desperation
discounts to try to keep open, but it's not working because
they're not bringing in enough dollars per golfer.
Q What is the thought behind discounting?
A I think it is like anything else-it's different so everyone gives
it a try. And they think, " Hey, I can sell 1,000 rounds of golf. My
regular price is $40, and I can sell it on Groupon.com for $20.
I get $10 of that, so I am going to get an immediate check for
$10,000 to pay some bills. " But now they're getting $10 per
golfer, so in the long run, how is that helping-especially when
golfers will think that their course is now worth $20?
Troy
Nygaard
Q Why is discounting not a good idea?
A It's a bad business strategy for courses. A good strategy is
to give deals or discounts to people who keep coming back.
You want to reward loyal customers and keep them coming
back. I've heard a lot of courses are not getting the return
visits from people (who use Groupon).
Q What will happen with discounting?
A Ultimately, I believe discounting won't work, the courses
won't do it, and it will go away pretty quickly. Golf is similar to
the restaurant industry or hotel industry, where you have very
loyal customers who come to you because of the upkeep of
your facility, the customer service and so forth-and those are
the customers who you want. I don't know that you necessarily
want the customer who is only going to come out if you have
a coupon.
Q What's the formula for success?
A The formula is simple, and I think we're executing it real
well. You are going to see (the results) in a few years: It's junior
golf programs like the First Tee and the MGA Junior Golf
and Junior PGA programs. Getting kids involved in golf and
keeping them in golf.
The physical costs (of the game) stay the same, so the
best-case scenario is to bring in more people to keep the costs
down. Growing the game of golf is the way to save the game
of golf.
10
MINNESOTAGOLFER Fall 2012
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Minnesota Golfer - Fall 2012

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