The Pellucid Perspective - September 2013 - (Page 5)

GOLF COURSE SUPPLY scenario is some number of distressed facilities being shuttered by the lending institutions and holding the loss on their books but not being exposed to the annual operating losses of the ongoing facility in addition to the decay of the physical plant in trying to operate it under financial duress (AKA sucking the paint off the walls). Given that this hasn’t happened to any meaningful level since 2010 when the financials turned really ugly, I’m not going to bet on this magically appearing. The more likely (and potentially worst-case) scenario in my mind is that a number of golf courses will transact rather than close over the next 2-3 years. What happens here is that the $10M course that’s operating in the market as a Public-Premium facility transacts at $5M, which now means that it can operate profitably (and possibly comfortably) in the Public-Value segment. They won’t be able to maintain it ongoing at the former pristine and penal level of conditioning, but it’s still going to compare very favorably to existing Value courses in the market. The owner/operator of the competing Public-Value facility (who potentially has done things “right” and has been able to survive the repricing of golf over the last 5-7 years) will now be squeezed to either invest in his facility to improve it to the higher benchmark or change his value point (euphemism for pricing or promotion discounting). You can start to see two leveraging effects happening here: 1) Most of the direct competitors to the transacting facility (the PublicPremiums as well as the Values) are going to have to react competitively to the new positioning and value equation and 2) Even the Public-Price courses are likely to get squeezed as some of the PublicValue courses will choose to “play down” in the market by adopting relative pricing and value to the transacting facility. You can see here why I call this the worst-case but more likely scenario. So, without wanting to be the doomsday prophet, my advice to owner/operators is that if you have one or more financiallystruggling courses in your competitive set, I would be working on two strategic plans. The first would be to get actively involved to the extent you can (i.e. #11 at The Glen Club, operated by KemperSports if it’s a public facility) in the discussion and debate around the future and fate of that facility. While it’s never a popular At KemperSports, we have a real passion for what we do. Every day, we help decision among politicians and citizens, people enjoy what we consider to be one of life’s most rewarding endeavors: the game closing courses is often the right answer of golf. With more than 90 facilities under management, our turn-key services range from financially for all concerned. Or, barring program development, toto construction management, to operations. And what really sets develepement, construction management, to operations. And what really sets us the ability to be able to influence that deapart are the partnerships we we enjoy course owners and developers who who our our cision, I’d keep working on strengthenus apart are the partnerships enjoy withwith course owners and developers sharesharepasing your marketing skills and customer sion for for game and who understand our simple management philosophy: run run every passion the the game and who understand our simple management philosophy: every golf contact management. If the competitive course as ifas ifwerewere nextnext ones to play it. we we the the ones to play it. golf course facility transacts and changes the value point, you’re going to need to be able to compete for share-of-golfer on something more than just price point and proximity. It can be done. We’ve proven it with a number of Sharper Edge Marketing clients, but I won’t say that it’s True to the game. been easy or that it’s happened quickly. 500 Skokie Blvd., Suite 444, Northbrook, IL 60062 Therefore, better get started now devel847.850.1818 | www.kempersports.com oping the capability and honing your skills. It’ll either be here shortly or over the next 3-5 years but the one thing of which I am certain is: it will be coming to geography near you. n In Golf, it’s important to choose your partner carefully. 4 The Pellucid PersPecTive September 2013 http://www.kempersports.com/ http://www.kempersports.com/ http://www.pellucidcorp.com

Table of Contents for the Digital Edition of The Pellucid Perspective - September 2013

The Pellucid Perspective - September 2013
Contents
Golf industry supply contraction: Not if but how long?
Water “Whoas”
Pricing and Yield Management Can you discount your way to prosperity?
The Dude and Jeff Spicoli Go Golfing
PGA Junior League Golf takes a step forward in 2013
August golf weather impact: Continuing positive; better late than never
Phoenix courses not desert-ed
Sequoia Golf acquires 3 former Heritage courses in Atlanta market, leases California course
Watershed moments for U.S. golf

The Pellucid Perspective - September 2013