The Pellucid Perspective - May 2016 - (Page 5)

GOLF COURSE MANAGEMENT Rising tide of third party management good for the industry? Even private clubs coming around on outside management By Jim Dunlap A number of trends have developed in the golf industry in recent years, many of which are problematic for course owners and operators and others who make their livings in the golf business. One of those emerging trends is the increasing number of courses of all types which are opting to bring in professional third party management company operators to run their facilities. Whether that particular trend is a positive, negative or inconsequential sign for the industry is frequently in the eye of the beholder. While exact U.S. golf industry-wide numbers for courses under outside management are difficult to compile, there is no doubt that their number has been increasing in the last decade. Dana Garmany, CEO of global third party management leader Troon Golf, said that Troon's research indicates that as many as 23 percent of all U.S. golf courses are being run by some form of outside professional management, depending upon what qualifies an operator as a "management company," i.e. the number and proximity of courses under one management umbrella. An executive with another leading multi-course operator said that the National Golf Foundation, which restricts that particular information to its Executive Level subscribers, puts the number at 15-16 percent of courses under third party management. In either case, as Garmany said, "The number is way up from the 9 percent or so a few years ago." The reasons why so many facilities are becoming more open to outside management are typically tied to the impact of the so-called Great Recession, declining golf participation, the continuing effects of golf course over-supply stemming from the course building boom of the 1990s and early 2000s, and changing customer demographics that are all combining to make owners wonder if it isn't time to consider making a management change. That shift in thinking is found today across the spectrum of golf facility types, from privately owned daily fees to municipal or publicly owned courses to the most historically outside management-averse category, private clubs. In all likelihood, the most significant percentage of shifts to outside management has come from the private club side of the industry. "By far, the biggest change for us has been in the private club sector," said Troon's Garmany. "We've gone from 10 [private clubs] in 2005 to over 100 now." Steve Skinner, CEO of KemperSports, said that Kemper has experienced 40 percent growth in its private club division in recent years, a figure that matches the company's overall growth in revenues managed over that period. Other large multi-course operators such as Billy Casper Golf, Arcis Golf, Heritage Golf and more have also enhanced their private club management presence. The growth of ClubCorp, "By far, the biggest change for us has been in the private club sector. We've gone from 10 [private clubs] in 2005 to over 100 now." -DANA GARMANY, CEO, TROON which is primarily an owner-operator, has made the company the world's largest private club presence. The appeal of professional management companies varies across facility types, although there are some common denominators. Those include national account buying power for course equipment and supplies, typically more efficient personnel, payroll and benefits administration, established training programs and best operating practices, and in some cases, the ability to offer reciprocal play at other courses in the company's portfolio. Having an experienced management group in place may also earn points with a lender for either a course purchase or an operating capital advance. And, given their size and diversity, many multicourse operators can more effectively identify problem areas in a course or club's operations based on comparative data from other courses they manage. "We have the ability to keystroke an analysis of a course or club's performance," Garmany said. "We can show them 35 properties just like them and demonstrate just where they stack up. In a number of cases, based on what we know the numbers should The Pellucid PersPecTive 5

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

USGA member engagement initiative: A golden opportunity or will the goose get cooked?
Rising tide of third party management good for the industry?
Bogeys become bison, boar and deer at former Ohio course
Path to course performance benchmarking difficult, but not impossible
April golf weather impact; Giving back some of Q1 gains
Motown operators facing uphill but possible climb
From the sublime to the ridiculous

The Pellucid Perspective - May 2016