The Pellucid Perspective - January 2016 - (Page 2)

Golf industry score sheet 2015 industry tale of the tape: What will the numbers tell us? By Jim Koppenhaver W ith the 2015 season now officially behind us, I'm in the midst of compiling the figures and creating the storyline for the quantitative performance of the industry in preparation for the 13th annual State of the Industry discussion for the upcoming PGA Show in Orlando. While I'm not going to give away the storyline (we want you to register to either attend or watch the live webcast; click here to learn how), I thought I would provide a preview of what the various measures will tell us across the key indicators that we track with either December's results in (weather) or with enough months' history that December won't make any material difference (rounds, revenue, equipment sales). Starting with the most important variable, revenue (last I checked nobody took rounds to the bank), it appears that we'll finish '15 in the black on both the Total Facility Revenue and, to a lesser extent, the Golf Fee Revenue line according to the PGA's November PerformanceTrak figures. It appears that Total Revenue Rate will advance slightly but Golf Fee Revenue Rate will decline modestly. What's driving that is we're seeing the Total Revenue growth being driven more by the ancillary departments of Food & Beverage and Merchandise, which would mean that in 2015 we convinced more golfers to "linger longer" and drop more money off-course than previous years. I'm personally suspicious of that reality given the work we do with our client courses, particularly in F&B, but being analysts we're inclined to trust figures vs. intuition until those figures are proven wrong. Moving next to rounds demand, we'll finish '15 in positive territory, which will break a two-year "losing streak" for the industry at the national level and takes us back to '12 when we had abnormally favorable weather which drove our last gain. Following that theme, you'll see in the Weather Impact and Bythe-Numbers sections of this issue that we once again saw that pattern in '15 as we had very favorable weather vs. '14 and just a barnburner of a 4th quarter up in the northern geographies, many of which didn't close their doors/courses until mid-December this past year. In the midst of this good news, we're obligated to point out that Utilization for the year in '15 will be off slightly, meaning the lift we got in rounds can be completely attributed to weather at the national level. (Several markets did achieve Utilization gains, however, and we'll highlight those in the State of the Industry presentation. The other good news is that several of them are in the top 5 of our Top 25 Markets Scorecard Ranking). Turning to Supply levels and the ongoing absorption challenge from the "Build a Course a Day" era facilitated so ably by our friends in Jupiter, FL, we will see a slight acceleration in the take-out rate vs. recent years, but we continue to track against a stabilization target for supply/demand balance sometime after 2020. It's somewhat ironic that the initial Golf 20/20 conference was setting that year as a major milestone for doubling participation to 55M golfers and rounds demand to 1B annually and it turns out that the most likely benchmark for that date target will be the industry clawing its way back to the supply/demand balance of 1990. Sometimes you just can't make this stuff up... Turning to the topic of the golf consumer base ("it's all about that base, 'bout that base, no TV....), our information shows that for the most recent year tracked ('14, the golf consumer surveys are fielded in the 1st quarter of the following year so we're just now fielding the results for '15), we once again saw meaningful erosion in the consumer base. Not surprisingly, we differ from the industry associations' assessment of the health of the golfer base as NGF asserts that participation has "stabilized around 25M annual participants for the past 3 years." While on that topic, we'll also take a look in the State of the Industry at how the projections of the PGA's Golf 2.0, the NGF and Pellucid fared as each of us gazed into our crystal balls back in 2010 and attempted to forecast where the golfer base would be by 2020. Spoiler alert, it's one that the PGA and NGF likely don't want to be reminded of, plotting the '14 count of golfers vs. the interim 2014 golfer base targets for each prognosticator. We'll outline a theme in this year's assessment of the consumer base of "Close the back door, energize the core," outlining why reten- starting with the most important variable, revenue (last i checked nobody took rounds to the bank), it appears that we'll finish '15 in the black on both the total facility revenue and, to a lesser extent, the Golf fee revenue line according to the PGA's november Performancetrak figures. 2 The Pellucid PersPecTive January 2016

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2016

2015 industry tale of the tape: What will the numbers tell us?
Uneven lies in search of a level playing field
Courses denied tax deduction for conservation easements
One-year anniversary of revolutionary course management technology product
December golf weather impact: Near-record for much of Northern US!
Chicago: Bull-ish on supply, Bear-ish on demand
Braving the third party tee time wilderness

The Pellucid Perspective - January 2016