The Pellucid Perspective - April 2020 - 11

INDUSTRY
IMPACTS

all hell broke loose. Following his lead, I went back and did
similar math as the above but applied it to the way it will impact
their year, generally with an Apr-Oct season. (See Figure 4 on
Page 9)
Unlike the national picture, the northern courses may likely
lose 100% of their Q2 rounds and revenue if government restrictions persist until 6/30. Looking at the rounds distribution
across the year, based on work we've done with northern courses
over the years where we have access to their monthly rounds and
revenue contribution, Q2 historically is ~40% of their year/season which means COVID could cost them 11.7K of their average 30K annual rounds (ouch). Like the national picture, we're
forecasting that H2 weather favorability
will offer a "dividend" of ~1.3K rounds
in offset against the COVID dent but
still resulting in a projected net rounds
loss for the year of ~10K. Like the national picture, the silver lining is that,
for northern courses, their rounds distribution H2 vs. H1 is 60%/40% with
GPH in a similar range.
One other encouraging observation
from studying the GBS GIR dailies,
and factoring in weather impact for key
markets, is that the percent decline in
rounds correlates pretty strongly with
the reduction in courses open which
means that golfer behavior isn't changing, it's more driven by accessibility
(and weather, we still see the rounds
number jump in Chicago for example
when the daily GPH exceeds 6 and fall
when it is <4). That would suggest that
demand will rebound relatively quickly
and to pre-restriction levels. I prefer
this approach of measuring the rebound
scenario to the NGF's "golf itch index"
although it is clever and catchy (kind of
like a good show tune). All that said,
I'm afraid that for a number of courses
which were operating on the edge, particularly those in the northern geographies, absorbing a 10% rounds loss and
having to span that revenue gap is going to be a bridge too far. As colleague
Stuart Lindsay mentions in an adjoining article, much like restaurants, dry
cleaners, car repair shops, salons/barber
shops and all those other essential small
business service industries, there will be
far fewer open when the restrictions are
lifted than before (likely some of your
"favorites", sorry). Some number of the
courses may try to leg it out until the
end of the year but, unless they can find
some magic, non-standard source of
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capital to get to October, they will find it financially impossible.
While we didn't see it coming, this could be the sudden, singular event that takes 5-10% of the supply out of commission
and returns us to equilibrium sooner than our last SoI horizon
of 7 years at current attrition rates. The good news coming out
of that would be, for the surviving courses, a much healthier
market environment for '21 and beyond and save them the potential cash drain of the interim seven years we had been telling
them to gird themselves for. Like golf where "every shot makes
someone happy," there will be golf owner/operator winners and
losers from this pandemic. Good luck in successfully crossing
n
the chasm, see you on the other side.

The Pellucid Perspective

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The Pellucid Perspective - April 2020

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