How Many Golf Courses Will Get Plowed Under?

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At the recent Golf Inc. Conference, industry leaders projected that as many as 1,000 golf courses could be plowed under over the next ten years, helping bring golf’s supply-demand ratio into balance. But others pointed out that it may not be that easy. Many of the owners who want to convert their courses into residential or other uses are running into huge roadblocks from upset residents and city governments. It seems changing the use of a golf course is no easy task. What does that mean for the number of course closures over the next year?

And should the industry really rely on closures to help improve business for other courses?  

At the conference, we discussed the need to increase play among core golfers and generate interest among new players — by making the golfing experience a memorable event for them. 

Comments

Let's start a new critical issue: What's happened to Golf Inc. magazine? I am a long time reader of your publication and have always appreciated the quality of the information and the writing. But something has changed recently and Golf Inc. magazine has regressed substantially from its journalistic level of quality. Take, for instance, the article “Villains, heroes, and dirty little secrets” by J.J. Keegan in the Spring 2010 issue. For starters, it seems Standard Written English has been abandoned at Golf Inc. A quick count found at least 10 grammar and punctuation errors, an indication that editing might have been cut from the budget. Most egregious is the line, “While Golf Channel email software is difficult to use and is subject to valid criticism for not creating a true yield management tool…” Any good editor would have identified the subject of the sentence (as written) is “software” (with email as an adjective) not “Golf Channel”, and might have asked the writer how an email software program and a yield management tool are related (they aren’t, which makes this sentence so bad). More importantly, Golf Inc. seems to have accepted tabloid-style reporting onto its pages. I don’t recall ever seeing the words “It is rumored…” in previous publications. Mr. Keegan uses this term in reference to Fore! Reservations possibly receiving some type of payment from Golf Channel (it should be Golf Channel Solutions). He states later in the same paragraph that other software providers have not demanded the same. Did Mr. Keegan do any fact checking on this? What if any or all of the others he listed received some sort of payment as well? Is there an underlying reason he was singling out Fore! Reservations? Any way one looks at it, this is bad reporting. Mr. Keegan also states that Golf Channel invested over $75 million “in the belief that this system will benefit the industry.” Are you kidding me? If Mr. Keegan thinks Golf Channel purchased both GolfNow and Last Minute Tee Times for strictly altruistic reasons, maybe he should go back and review the economic text book he used to establish other parts of his argument that reference capitalism. Golf Channel spent $75 million because they (as part of the corporate giant Comcast) feel they can make many times that in revenue and profit. Pure and simple. Oh, and the Greg Norman/Cybex article? Obviously, Golf Inc. no longer maintains enough integrity to properly label the article as an "advertorial." News? Journalism? Or anything for a buck? In future editions I hope to see better grammar, better writing, and better fact-based reporting not paid for by an advertiser. That will make me feel better about maintaining my Golf Inc. magazine subscription.

Anyone else sick of reading posts about hybrid golf courses??
JackC's picture

To Harvey Silverman, With this issue of Golf Inc. we premiered six opinion/analysis columns. They are written in first person and represent the views of the author. JJ Keegan's article is one of these. It is a departure from the traditional news story, but is not designed to replace it, but to compliment the news. As for the story fitness, this was my decision to run the story and was not based on their advertising in the magazine. We had a chance to have an interview with Greg Norman and we felt it would make a good story about an important trend in the U.S. You may have a valid point with my grammar skills, but not with my integrity. -Jack Crittenden

It is not just a supply and demand issue. There are two major reasons a number of these courses are going into a death spiral. One is that they cannot compete in the market and their costs are greater than their revenue. A second reason, although not as publicized, is the capital stack, (how the debt is structured). With either too much leverage or banks that will not roll over debt that is maturing, (along with values dropping); there are few if any alternatives but to go into default. Not that the course isn’t profitable. There are courses that are meeting all expenses and debt payments, but they cannot find “take-out” debt from any lender that approximates the LTV needed to extinguish the existing debt. If there are any opportunity funds in the market, you could make a killing lending in the golf air-space. You could charge usurious fees and very high interest rates because there are only two alternatives, pay your rate or lose the property, if the lender won’t roll over the maturity. There could be huge profit in a mortgage pool with the current values and at lower leverage; the risks would be minimal but the returns magnificent for someone with vision, risk tolerance and expertise. So, as we look at courses closing, we need to be cognizant that there are healthy courses closing that lack either capital to self-refinance or lender alternatives to take out existing maturing financing and that is just a shame. Steven Ekovich, Director of the National Golf & Resort Group of Marcus & Millichap www.nationalgolfgroup.com

Is this the same J.J. Keegan who is CEO of Fairway Systems...a competing software/tee time management system to FORE Reservations? EDITOR'S NOTE: Mr. Keegan sold Fairway Systems several years ago.

First, I say plow under EVERY municipally owned and operated course........... unless they are made to play on the same financial field as the rest of us........ pay property tax and repay the debt or turn them into parks........(you'd save money... and a lot of it in most cases). Second, plow under every course built by a developer as an amenity to a planned unit development, in which the developer KNEW the golf course couldn't be supported from jump street. The developer was savvy, the lenders idiotic and the residents........... well......... the residents should take a hard lesson in due diligence.

There will be at least 1000 courses currently in business that will close over the next few years.The pace of closures is hard to judge. I predicted 500 in 2009, but clearly overshot the mark. I still have to have someone tell me what the real number was. As was indicated in one of the previous comments, some of the courses that should go out of business are still going because their lenders are keeping them open trying to avoid taking a loss. I was told recently, by a reputable source, that Textron Financial owns somewhere between 32 and 35 courses to which they previously loaned money. Of course, the other side of this issue is making sure that the industry does its job developing new players and retaining current ones. By and large, to date, the industry has not done a good job in this area. Our family foundation has just recently funded a NGCOA study directed at women and families which really shows the disconnect between women and the industry. We plan to launch a website very soon which will both give the industry very specific ideas on how to improve in this area while also promoting comment from current and potential customers. This is a huge economic opportunity, but the industry will have to begin to think quite differently in order to take advantage of it. I have some real background in this area as I owned a course between 1996 and 2005 where we increased women's play from 15 to 35% and juniors from 1.5 to 7.5% Arthur Little

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