The Pellucid Perspective - October 2020 - 11
With a correct cost, it is much easier to identify
which programs may be "loss leaders" and make
sure you don't make decisions that will change
your mix - that is what is happening to the
course in our companion piece.
attract enough "non-resident" golfers; but any increase in the
number of "resident" golfers will have a negative, and potentially loss-producing impact. This is the situation faced by the
municipal course in our companion article (Pg 5).
You can substitute your particular variables relating to "season passes", senior rates, league rates, etc. Any combinations
that result in revenue per round for a program that is below your
cost of production sets you up for potential problems. When
we review many operations; the failure to thoroughly analyze
each rate and the mix of rounds at those rates related to the
cost of production is the core issue in determining profitable vs.
unprofitable results.
While the most commonly used metric of Earnings Before
Interest, Taxes, Depreciation and Amortization (EDITDA) is a
good measure for cash flow; equipment needs to be replaced, ir-
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rigation systems wear out, clubhouses need paint and landscape
features need renovation. Using only the operating expenses
used in calculating EBIDTA as a cost of production per round
is a common practice and causes many of the pricing problems
we see every day. It also results in the deferred capital expense
issues because the "true" cost of production is understated.
As you evaluate "pricing" in light of the increased demand
for tee times; we encourage you to accurately calculate your
costs of production. With a correct cost, it is much easier to
identify which programs may be "loss leaders" and make sure
you don't make decisions that will change your mix - that is
what is happening to the course in our companion piece. The
sad part is that they are not alone. With 55% of the courses in
the US selling golf "at or below cost"; there are a lot of courses
that can use some cost accounting work.
n
THE PELLUCID PERSPECTIVE
11
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The Pellucid Perspective - October 2020
Table of Contents for the Digital Edition of The Pellucid Perspective - October 2020
TOC
Pandemic creates an unusual, upward pricing dilemma
How high is up? Based on current information, no one really knows
Are we currently selling golf below cost (yes); why?
September GPH slight down, current dynamics will absorb that
Aug Utilization again up double-digits, weather not a factor in current surge!
Pittsburgh #24 in new ranking, aided by better-than-average supply-demand balance
16 Activities; Transacts & For Sales comprise bulk of activity
The Pellucid Perspective - October 2020 - TOC
The Pellucid Perspective - October 2020 - Pandemic creates an unusual, upward pricing dilemma
The Pellucid Perspective - October 2020 - 3
The Pellucid Perspective - October 2020 - 4
The Pellucid Perspective - October 2020 - 5
The Pellucid Perspective - October 2020 - How high is up? Based on current information, no one really knows
The Pellucid Perspective - October 2020 - 7
The Pellucid Perspective - October 2020 - 8
The Pellucid Perspective - October 2020 - 9
The Pellucid Perspective - October 2020 - Are we currently selling golf below cost (yes); why?
The Pellucid Perspective - October 2020 - 11
The Pellucid Perspective - October 2020 - September GPH slight down, current dynamics will absorb that
The Pellucid Perspective - October 2020 - 13
The Pellucid Perspective - October 2020 - Aug Utilization again up double-digits, weather not a factor in current surge!
The Pellucid Perspective - October 2020 - 15
The Pellucid Perspective - October 2020 - Pittsburgh #24 in new ranking, aided by better-than-average supply-demand balance
The Pellucid Perspective - October 2020 - 17
The Pellucid Perspective - October 2020 - 16 Activities; Transacts & For Sales comprise bulk of activity
The Pellucid Perspective - October 2020 - 19
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