The Pellucid Perspective - August 2017 - 2

GOLF INDUSTRY
OPERATIONS

Like snowflakes, each golf course is unique
By Stuart Lindsay

put Pellucid's Golf Local Market Analyzer (GLMA) platform to work overtime in July. I ran over 20 data sets in 3 major Midwestern markets. Two projects were related to relatively big municipal golf operations that are wondering what the
future holds, and the third was for a single course owner asking
the same question. We sometimes seem to emphasize the common challenges all courses may share in a given market and the
national issues of declining golf "relevance," but every golf course
really is a unique "snowflake" and should be looked at individually on a number of levels.
In addition to the work above, there was this excerpt from an
article posted by Club & Resort Business on its web site August
17 about Tucson's struggles with municipal golf course management: "It is likely that golf in the current format will continue to
operate with a thin financial margin and make minimum repairs
to keep the courses open. Funding will not be available to make
significant repairs and improvements to keep the courses a quality experience," Ortega (Tucson City Manager) said.
We have seen this question playing out in municipalities
across the US - Baltimore, Chicago, Los Angeles, Denver, Twin
Cities, Atlanta, Detroit and others. In most cases, the issue of
"deferred maintenance" is a consistent theme as golf courses and

go either way. Based on his assessment, he is making a few assumptions:
*
*
*
*
*

His course is good, but not great.
His location is OK
His demographics are currently OK, but might be
changing
He has a decent group of "core" customers
He has competition

Fortunately, most of my friend's assumptions are correct, but
based on our last look at his course in 2008 and our current data,
there are some changes in his demographics. They also plopped
down one of these "feel good" quasi-private/public premium
courses a few years ago which has had an impact on his immediate market. ( Jim Koppenhaver's recent article on the proposed
Tiger Woods Chicago project is a must read available as a single
issue Outside the Ropes at www.pellucidcorp.com). Wayne is
also very correct in realizing he has a very challenging road ahead.
As we dig into the GLMA data for these different projects,
it is interesting to see how much variance there can be, even for
courses that are only 10 - 20 minutes (or miles) apart. In one case,

"We've seen a lot of trends forecasting a dim future for golf.
Basically it's going to be a survival of the fittest and last course
standing syndrome. Basically a third of them will survive
regardless of what happens. There's a third that doesn't have a
chance. But most importantly there is a third that might make it
with some steady progress by adding a few changes annually and a
handful of good people making it happen." -Wayne Yamaguchi
municipalities wrestle with both declining participation and demographic changes.
I also ran across this interesting analysis from a friend of mine
who runs a golf course, Wayne Yamaguchi in Benton Harbor,
MI: "We've seen a lot of trends forecasting a dim future for golf.
Basically it's going to be a survival of the fittest and last course
standing syndrome. Basically a third of them will survive regardless of what happens. There's a third that doesn't have a chance.
But most importantly there is a third that might make it with
some steady progress by adding a few changes annually and a
handful of good people making it happen."
Wayne continued by asking his fellow members of the Old
School, New Tools online Facebook group for any ideas he could
"borrow" because he sees his facility as one of those that could

2 The Pellucid PersPecTive

one course has an Income Index 15 points below average and an
Ethnicity Index 30 points below average and is only 10 minutes
away from another course where Income and Ethnicity are both
above average. In another market, one course has access to 4 times
more population than a course less than 20 miles away - and both
are effectively equi-distant from the city center. Neighborhoods
change and population growth is not uniform.
Also, as we look closer at rounds and revenue data on top of
the GLMA basics, we are paying much more attention to "local"
factors. We know that time is a barrier and the decreased willingness of golfers to travel further only adds to that issue. We are
finding that the 10 and 20 minute (mile) radii are much more indicative of a course's potential for success or merely survival. Paying attention to the demographic projections for future growth is
August 2017

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