The Pellucid Perspective - February 2013 - (Page 2)

GOLF COURSE SUPPLY Part-time golf courses: A concept worth trying? By Jim Koppenhaver O ver protests from our Editor-in-Chief, I’m going to float an idea this issue that’s a little bit “out there” as it relates to dealing with the persistent oversupply situation that remains in many US markets. To be clear, I don’t do this out of pure abstract conjecture; it’s in response to the glacial pace of supply absorption in most US markets as courses fail to close or transact at a rapid enough pace to bring any real relief to the “stable” operators. Those of you who know me will realize that there’s usually a method to my madness, so bear with me for the duration of this column and I’ll explain why I think that one short-term solution to dealing with the supply glut in the most underwater markets may be in adopting a “part-time” golf course operating strategy. To set the stage, in addition to the NGF clarion call back in the 1990s to “build a course a day,” another insidious factor was at work; the common belief that a lack of tee times during weekend prime time signaled a need for additional courses. Unfortunately, we learned the hard way that you can’t profitably run a golf course whose sole purpose is satisfying excess weekend demand. The traditional golf course model requires both weekday and weekend rounds and revenue in order to break even. But what if we considered breaking the “traditional model” of operation and finance and considered how some number of golf courses might be able to be run profitably as part-time golf facilities? The genesis of the idea came to me when looking at how the airline industry has dealt with the recession, and the resultant changes in travel behavior (lower frequency, lower fare selections). They very quickly downsized capacity by eliminating routes and reducing the frequency of flights between many of the well-traveled city pairs. The byproduct of decreasing supply was excess equipment that needed to be taken out of service. It was determined that “mothballing” this equipment was the most economical decision. Given that golf doesn’t have major owner/ operators like the Big 4 airlines which can take excess equipment (courses) out of play in select markets and await a return of demand, my thinking turned to ways in which the average operator could “mothball” their equipment to better meet the demand pattern. That’s when I hit on the idea of potentially considering operating some number of golf courses on a weekends-only basis or “part-time.” As Jim Dunlap pointed out to me, “Great theory, but do you realize how many operational obstacles there would be in trying to actually do that?” I hadn’t really thought it through that much but, with his prodding, we went through several of the most obvious. Let me first, however, outline where it would be most applicable and the proposition as I see it: 2 The Pellucid PersPecTive 1. In markets where the supply/demand imbalance is most extreme (i.e. 15% or more oversupplied vs. the 1990 benchmark) and… 2. Those courses which are struggling financially and have already cut costs and deferred maintenance as much as possible and… 3. Where the owner/operator has exhausted all reasonable options of financing or cash infusions to keep the course afloat as a full-time operation and… 4. Where there is no economically viable exit strategy over the 1-2 year horizon 5. The proposition would be to operate the golf course on a Friday-Sunday basis and leave it dormant MondayThursday Listed below are the potential challenges that such an operating model would immediately pose, based on Jim Dunlap and my conjectures: 1. Getting customers aware and comfortable with the fact that the facility would only be open on weekends and reassuring them that the quality of the experience wouldn’t suffer 2. The maintenance issues of the course being used 3 days of the week and then lying dormant for the remaining 4 days 3. The fixed costs which are incurred are now burdening 3 days of revenue vs. 7 days 4. Getting labor which would agree to a 3-day workweek, particularly the maintenance staff (counter staff could potentially be even more geared to Senior citizens who may have more schedule flexibility and not physically wanting to work 7 days/wk) 5. Loss of outings business, leagues, seniors and other play which are the predominate contributors to weekday play I’m sure there are at least a dozen other inhibitors to the execution of such a program but, in concept, you must admit that it’s an option that’s not been considered for struggling courses in tough markets. Let’s take a look at how the above factors might theoretically at least be mitigated for those brave souls who might want to try this to stave off a foreclosure or fire sale of their property in 2013. 1. In today’s age of digital communication (websites, email etc.), I don’t think that conveying to the local golf population the change in the operating days would be that difficult to accomplish. Several email broadcasts in advance to the current customer base would be in order, and local golfer email lists could be rented to spread the February 2013

Table of Contents for the Digital Edition of The Pellucid Perspective - February 2013

The Pellucid Perspective - February 2013
Part-time golf courses: A concept worth trying?
Bankruptcy courts protect course revenues from lenders
Show notes from 35,000 feet
Volunteers may not be free
January golf weather impact: Down...but not unexpected
Golfers not goin’ to Kansas City
Movie time: License required
Concert Golf Partners buys CC at Woodmore in D.C. Area
Bishop’s tenure as PGA President promises deep breaths of fresh air

The Pellucid Perspective - February 2013