The Pellucid Perspective - July 2018 - 2

GOLF COURSE
REDEVELOPMET

Golf course resurrection: Go big
or go home in Salt Lake City UT
By Jim Koppenhaver

A

s all of us in the golf operations sector are acutely aware,
there is considerable change happening as it relates to
the inventory of supply nationally and within major US
markets. A new section in this month's Perspective titled Golf
Landscape Changes provides a tabular summary of these events
as compiled from the various industry daily newsletters as well
as public domain sources (munis etc.). This table is by no means
comprehensive or exhaustive but it should be of interest/value
to our readers in that it compiles the daily trickle of events over
the past 30 days into one table as well as provides some helpful classifications (open/close/transact/redevelop etc.) and facts
(location, facility type etc.) in one view to look for trends and
patterns.
In the course of compiling this month's inaugural table of
comings, goings and repurposings, I came across what looks like
one of the more ambitious redevelopments that I've seen in recent
years playing out in the Salt Lake City, UT market. As reported
in the 7/1/18 edition of Club & Resort Business by Joe Barks,
here's a quick summary of the background and the "fluid" plans
to bring Wingpointe GC back to life following its demise in November '15:
*
*
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Novel proposal using a support structure called a "community initiative" which would be a public-private joint
venture
Financing would be private vs. public, course operation
would be private vs. municipal (it was previously run as a
municipal course)
Labor would be public (prison inmates courtesy of state
government, new prison)
Designation of the course as a First Tee facility (and accompanying subsidy)
Use by the University of Utah college team (and likely
guaranteed usage fees)
Renovation of the Arthur Hills design with the goal of
attracting a permanent Web.com Tour event

That's quite a "wish list" for resurrecting a previously non-performing golf asset, hence the "go big" aspect of my title. On the
surface, this thing has more moving parts and required coordination of effort than the ill-fated Golf 20/20 initiative but I love the
creativity and recognition that if they don't make major changes
to both the revenue and expense lines, they're not going to get a
different (successful) result. Let's take a look at what has to "go
right" for this to become a reality within their stated timeframe of
a 2020 re-christening of the golf facility.
They're proposing to set up the corporate structure of this
under an organization listed as Wingpointe Community Initia-

2 The Pellucid PersPecTive

tive, Inc. (WCI). As reported in the Deseret News (that's not
a typo, it really is Deseret...), the three organizers of WCI are
Dave Owen, the owner of Owen Communications, Chris Kirk,
a commercial real estate broker for Colliers International and local businessman Dave Shipley. The property is adjacent to the
SLC International Airport and part of the vision is to tie the golf
course redevelopment into the major airport renovation project
slated and moving toward approvals. In my opinion, by tying
their anchor to a "bigger ship" they're intelligently playing the
"civic pride" and "politically-connected" cards to improve their
odds of getting various constituents and elected officials onboard
before one gets to the necessary changes to topline revenue and
the cost structure leading to profitability this time around. On
the other hand, they're likely going to incur a significant reclamation/renovation cost (estimated by one knowledgeable source as
likely to be in the $5-$8M range, wow!) by whatever architect
is chosen to get the property back in condition and whatever
improvements are desired which will need to be baked into the
amortization schedule and financial return calculations.
On the revenue line, it appears that they're setting up some
(likely small) guaranteed revenue streams through the University
and First Tee affiliations. As a general rule though, the First Tee
is more economically helpful in the early stages of plan/build and
less beneficial as an ongoing revenue stream while the University
program should be "annuity revenue" in usage fees and perhaps
naming rights etc. I'm guessing there will also be a certain number
of rounds projected for tourist/transient play due to association
with the airport (quick 9 during longer layovers?) and marketing
that I'm sure will be incorporated in the renovated airport facility. There's also discussion of a state-of-the-art practice facility
incorporated in the rejuvenation which should be incremental to
the revenue line relative to the legacy facility which failed. There
are also plans for either corporate or small business sponsorships
of various aspects of the course (sponsor-a-hole, practice facility
sponsor etc.) which would be revenue additive and potentially
annuity revenue as well.
On the expense side, the privately-run structure will likely significantly decrease the labor cost and whatever prison labor in the
horticultural program can be arranged would decrease this large
expense line even more. The private financing structure may or
may not be advantageous to the previous municipal financing but
it is likely that there will be more "creative financing" aspects to
this private-public joint venture that would buy the facility more
time or give it more flexibility in payments if needed to succeed.
As I read through the vision and components however, there
are several yellow flags to note. In the various news reports on
the process and the political figures weighing in, not one of them
speaks of the "need" for a golf course or the economics that will
July 2018

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

TOC
Golf course resurrection: Go big or go home in Salt Lake City UT
We’re missing the boat on Match Play
Golf’s landscape changes
June golf weather impact: Winning streak stops at 1
Pittsburgh, steely in its resolve to climb the top 25
The Pellucid Perspective - July 2018 - TOC
The Pellucid Perspective - July 2018 - Golf course resurrection: Go big or go home in Salt Lake City UT
The Pellucid Perspective - July 2018 - 3
The Pellucid Perspective - July 2018 - 4
The Pellucid Perspective - July 2018 - We’re missing the boat on Match Play
The Pellucid Perspective - July 2018 - Golf’s landscape changes
The Pellucid Perspective - July 2018 - June golf weather impact: Winning streak stops at 1
The Pellucid Perspective - July 2018 - 8
The Pellucid Perspective - July 2018 - 9
The Pellucid Perspective - July 2018 - Pittsburgh, steely in its resolve to climb the top 25
The Pellucid Perspective - July 2018 - 11
The Pellucid Perspective - July 2018 - 12
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