The Pellucid Perspective - May 2018 - 14

MARKET FOCUS

anced distribution (i.e. Value golf could run the range of $35$70 depending on the local cost-of-living variances).
During the "go-go" years of supply development (19902000), Detroit was slightly ahead of the "build a course a day"
curve, increasing supply at an annual rate of ~3% (compared
to the (unreasonable) US average of >2%). Working to everso-slightly offset this was fractional average annual population
growth (trailing the national average of ~1%). Using our pre2000 calculation for supply dilution/absorption (supply change
vs. population change), we estimate that the market was at
~24% dilution at the turn of the century vs. the 1990 bench-

mark (double the US average of 11% "overhang"). Since 2000,
the annual rate of supply growth has throttled back significantly
(~0%) while the population growth rate has contracted marginally (contracting fractionally annually). A better available
metric however for supply dilution/absorption in the post-2000
period (because we have semi-accurate facility-reported rounds
figures at state and market level) is comparing supply growth
to the changes in rounds demand. Since 2000, the market has
experienced a slight decline in the annual rounds demand rate
(~1% similar to the national average of -1% annually) so we're
actually showing increased supply dilution of ~16% during the
'00-'13 period. Combining the '90-'00
decade dilution rate and the '00-'13 period results, the average facility in the
market is ~40% worse off than they
were at the '90 benchmark (or higher
supply dilution vs. the national rate
of 33% for that same '90-'13 period).
Given that current "reality," the market
has a considerable uphill battle to either
dramatically reduce supply (i.e. shrink

During the "gogo" years of supply
development (19902000), Detroit was
slightly ahead of
the "build a course
a day" curve,
increasing supply
at an annual rate of
~3% (compared to the
(unreasonable) US
average of >2%).
it by 3-4%+/yr) or find a way to grow
rounds demand annually at 4%+ in order to get out of this challenging oversupply situation.
The average facility has throughput
of roughly 24K rds/yr, slightly lower
than the national average before factoring in climate and daylight influences (but not bad given its latitude
and climate zone). The more accurate
measure is the market's 47% Utilization
Rate which meaningfully lags the Top
25 US Golf Markets' average (56%).
This means that, after factoring in a

14 The Pellucid PersPecTive

May 2018


https://www.kempersports.com

Table of Contents for the Digital Edition of The Pellucid Perspective - May 2018

TOC
NGF 2017 industry report released: facts served “sunnyside up”
Baylands Golf Links a win-win-win proposition times two?
Club manufacturer service frustrates green grass customer
April golf weather impact: A sea of red but March utilization hits 60%
Detroit fortunes looking up; golf market to follow?
It is, after all, all about the money
The Pellucid Perspective - May 2018 - TOC
The Pellucid Perspective - May 2018 - NGF 2017 industry report released: facts served “sunnyside up”
The Pellucid Perspective - May 2018 - 3
The Pellucid Perspective - May 2018 - 4
The Pellucid Perspective - May 2018 - 5
The Pellucid Perspective - May 2018 - Baylands Golf Links a win-win-win proposition times two?
The Pellucid Perspective - May 2018 - 7
The Pellucid Perspective - May 2018 - Club manufacturer service frustrates green grass customer
The Pellucid Perspective - May 2018 - 9
The Pellucid Perspective - May 2018 - April golf weather impact: A sea of red but March utilization hits 60%
The Pellucid Perspective - May 2018 - 11
The Pellucid Perspective - May 2018 - 12
The Pellucid Perspective - May 2018 - Detroit fortunes looking up; golf market to follow?
The Pellucid Perspective - May 2018 - 14
The Pellucid Perspective - May 2018 - 15
The Pellucid Perspective - May 2018 - It is, after all, all about the money
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