What attracts a golfer who lives further than 10 miles from a golf course to that facility?
While this question may seem esoteric, I believe that there exists a negative perception amongst the accomplished and the frequent recreational golfer regarding courses that have a par less than 70, whose yardage is less than 6,000 or have a slope rating less than 120. I ponder whether a golfer, learning of a golf course and deciding whether to play it for the first time, considers these factors.
Personally, I do. When I am secret shopping golf courses in an area as a rater for Golf Magazine or a client, while I visit all facilities in the competitive set, I am likely to play only those that are of a “championship character” or are likely to generate sufficient revenues to be sustainable.
Why is this important?
Based on the JJ Keegan+ Predictive Index, 41.8% of golf courses have less than 1,000 golfers per 18 holes that live within 10 miles of their facility, and 34% of golf courses have residents that spend less than $1,000,000 per 18 holes within 10 miles of their facility. Both of these benchmarks I believe cast a dark shadow over these golf courses in the U.S. as to their long-term economic viability and apply to 80% of the US golf courses. The exceptions to these guidelines would be prominent resort facilities and exclusive private clubs that attract golfers from afar due to the special experience to be enjoyed.
It is my belief that to be financially successful; a golf course should be located in an area where there are more than 2,500 golfers per 18 holes and where residents spend greater than $1.5 million per 18 holes within a ten miles radius of the course. Note that I define financially successful to mean a golf course that is generating positive cash flow sufficient to fund capital improvements for the course, the clubhouse and fully servicing debt, if any.
We currently have a client that has a dilemma. The feasibility study prepared by a national consulting firm projected a $6.5 million renovation would be financially viable in changing the golf course from a slope rating of 116 to 136 on a course whose length from the white tees was 5,645 yards and from the tips at 6,205 yards. They forecast that the prime time green fee could be increased from $32.00 to $59.00.
With six forced carries, 33 deep bunkers, and undulating greens, it is my opinion that the short course with the slope rating is part of the dissuading factors for golfers beyond 10 miles to visit this course. The bet was that the major improvements would attract tourists which has not come to fruition.
While hindsight is invaluable, my task is to find a short-term solution that will fund the long-term debt. That is where the December FLASH POLL that you were so kind to respond to comes into play. I was seeking the input from experienced professionals like yourself.
The results of the survey indicate that there is a slightly negative impression (2.8 on a five-point scale with three being neutral and five very favorable) on a 5,645-yard golf course with a slope rating of 126. While slope rating, in the narrative comments received, was judged as largely irrelevant for many, the short yardage was a concern.
What we also learned from a November study conducted in conjunction with the Clemson University PGA PGM Class studying a potential golf course acquisition in North Carolina, is that golfers are not likely to travel to an area based on the presence of other attractions, i.e., brewery, winery, etc.
We will continue to research the correlation between the demographics within 10-miles of a golf course and its slope rating. I believe, and have seen sufficient corroborating evidence, that a golf course that has a slope rating greater than 130 must either must have favorable demographics (+20% Mosaic Profile with the numbers of golfers exceeding 2,500 per 18 holes) or import golfers from beyond their local market to be financially successful.
Click on the download button to view the December Flash Poll results. Download
Thank you for participating in this survey. The winners of the gift Starbuck cards were: A. Schupak, K. Kline, P. Dye, S. Lapper and T. Bishop.