The Pellucid Perspective - July 2019 - 8

INDUSTRY TRENDS
& INSIGHTS

guidance figure on per-site annual visitors that Drive Shack is
targeting which means they believe they can either double the
addressable market (possible if they go to completely different
markets like Raleigh) or take significant share from TopGolf
(Orlando model).
Drive Shack's publicly available initial metrics, while recognizing that it's a single location and the disparities to TopGolf
in maturity, sophistication or ancillary revenue streams, seem to
indicate that the path to profitability for golfertainment isn't as
easy or as quick as the media or investors seem to be portraying. I
think it's likely that TopGolf will go to the public markets sometime in the next 1-3 years and then the financials will be much

clearer and the markets will value those results accordingly. Reiterating the summary assessment that Stuart and Lindsay and I
made regarding the rise of golfertainment relative to the industry
that revolves around the sport of golf:
*
*
*

It increases awareness of golf in general, that's never a
bad thing
That awareness likely generates more spectator interest
(fans) than sport interest (players)
Golfertainment creates more capacity for golf demand
on top of an already saturated core industry (i.e. we're
running ~50% Utilization among green grass facilities
and our analysis suggests we're still
5-10% oversupplied vs. the '90 benchmark)
* Golfertainment stakeholders
(TopGolf, Drive Shack etc.) have no
interest (economic or emotional) in
suggesting that their visitors take up
the sport of golf in that it would then
compete for share-of-occasions with
their properties and they're currently
all about total loyalty to the golfertainment format and share dominance
within that space as competitors enter
the market
* In this current reality, golfertainment is likely more cannibalizing than
contributing to growth in the sport
of golf (i.e. among golfers, they're not
increasing their occasions as they add
golfertainment, they're substituting
former green grass rounds for their
added TopGolf/Drive Shack visit and
golfertainment isn't creating enough
new golfers or high enough frequencies
to offset this drain)
Drive Shack is an interesting play
on the "future of golf " given that it's a
company that owns legacy golf courses
(in which it's shrinking its exposure)
as it expands in golfertainment. It will
be interesting to see how this experiment works. I think we'll ultimately
see golfertainment establish its niche
in the larger golf "participants" universe
but I doubt that it will be exponentially
more profitable than green grass golf
operations (their projected 25-30%
profit margin vs. 10-15% for the average course) and I predict it will reach
terminal velocity more quickly and have
fewer viable market participants than all
the current press would suggest. Gentlemen, place your bets.
n

8 The Pellucid PersPecTive

July 2019


https://www.kempersports.com/

The Pellucid Perspective - July 2019

Table of Contents for the Digital Edition of The Pellucid Perspective - July 2019

TOC
Does enjoyment trump time & money?
Golfertainment; Drive Shack vs. TopGolf
“Does my course website need to be secure?”
June: Another underwhelming performance
Weather disappoints, rounds lag disappointment
DC golf like politics, fragile coalitions
Light month as industry hits mid-season
The Pellucid Perspective - July 2019 - TOC
The Pellucid Perspective - July 2019 - Does enjoyment trump time & money?
The Pellucid Perspective - July 2019 - 3
The Pellucid Perspective - July 2019 - 4
The Pellucid Perspective - July 2019 - 5
The Pellucid Perspective - July 2019 - Golfertainment; Drive Shack vs. TopGolf
The Pellucid Perspective - July 2019 - 7
The Pellucid Perspective - July 2019 - 8
The Pellucid Perspective - July 2019 - “Does my course website need to be secure?”
The Pellucid Perspective - July 2019 - June: Another underwhelming performance
The Pellucid Perspective - July 2019 - 11
The Pellucid Perspective - July 2019 - Weather disappoints, rounds lag disappointment
The Pellucid Perspective - July 2019 - 13
The Pellucid Perspective - July 2019 - DC golf like politics, fragile coalitions
The Pellucid Perspective - July 2019 - 15
The Pellucid Perspective - July 2019 - Light month as industry hits mid-season
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