THE BUSINESS of GOLF What Are You Thinking?
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THE BUSINESS OF GOLF What Are You Thinking? A Primer—Third Edition How to Maximize the Financial Return of a Golf Course Written for Golfers, Professional Golf Management Students and Golf Industry Personnel Seeking to Strengthen Their Knowledge By James J. Keegan Managing Principal Golf Convergence, Inc. Copyright © Golf Convergence, Inc., James J. Keegan, Managing Principal, 2010, 2012, 2014 ISBN: 978-0-9846268-9-2 Library of Congress Control Number: 2013953827 All Rights Reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system without written permission from the author, except for the inclusion of brief quotations in a review. Printed in the United States of America. iii Table of Contents ACKNOWLEDGMENTS xi INTRODUCTION 1 Section 1—Strategic Vision 11 CHAPTER 1: What Business Are You In? 13 r "O*OEVTUSZ6OEFS4JFHF .......................................................................... 14 r ĂF&DPOPNJD*NQBDUPG(PMG .................................................................. 15 r *OUFSFTUJOH5JNFT ....................................................................................... 16 r 8FMDPNFUPUIF&OUFSUBJONFOU#VTJOFTT ................................................ 17 r ĂF"TTFNCMZ-JOFPG(PMG ....................................................................... 19 r 8IZ%P(PMGFST$IPPTF0OF$PVSTF0WFS"OPUIFS ......................... 20 r 8IBU"SFUIF#BSSJFSTUP1MBZJOH ........................................................... 21 r 5JNF$VMUVSF$SVODI ................................................................................ 21 r ĂF)BOE%FBMU .......................................................................................... 23 r 4USBUFHJD7JTJPOĂF"JNPG:PVS(PMG0QFSBUJPO ............................. 23 CHAPTER 2: The Macroeconomics of the Golf Business 27 r ĂF$VSSFOU0VUMPPL ................................................................................. 28 r ĂF#VTJOFTTPG(PMG .................................................................................. 30 r 8PSMEXJEF4VQQMZ ...................................................................................... 31 iv r 8PSMEXJEF%FNBOE .................................................................................. 33 r "$MPTFS-PPLBU%FNBOE ........................................................................ 34 r *OUFSQSFUJOHUIF/VNCFST$BVHIUJOUIF %FBUI4QJSBM ................................................................................................ 36 r #FZPOEUIF4PDJFUBM'BDUPST8IZ*T(PMGJO%FDMJOF ....................... 38 r 8IBU*TUIF4PMVUJPO ................................................................................ 41 CHAPTER 3: The Players: Associations and Equipment Manufacturers 43 r :PV/FFEB4DPSFDBSE ................................................................................ 44 r 8IBU*TUIF3PMFPGĂFTF"TTPDJBUJPOT5P&EVDBUF PSUP-FBE .................................................................................................. 45 r ĂF1("T*OēVFODF ................................................................................... 47 r ĂF*NQPSUBODFPG&EVDBUJPOBOE&YQFSJFODF ...................................... 47 r )PXUIF"TTPDJBUJPOT$BO#FUUFS4FSWFUIF#VTJOFTT ........................... 48 r &RVJQNFOU.BOVGBDUVSFST"SF-JNJUJOH /PU&ODPVSBHJOH Participation ............................................................................................... 52 r ĂF)JTUPSJDBM3PMFPG4UBUF(PMG"TTPDJBUJPOT ...................................... 54 CHAPTER 4: Ownership and Governance: A Privilege or Burden? 57 r 1VCMJDBOE1SJWBUF ...................................................................................... 58 r 'PSNTPG.VOJDJQBM(PMG$PVSTF.BOBHFNFOU ..................................... 60 r 8IP)BTUIF$PNQFUJUJWF&DPOPNJD"EWBOUBHF ................................ 62 r %FTQJUF"QQBSFOU"EWBOUBHFT .BOZ.VOJDJQBMJUJFT"SF Losing Money .............................................................................................68 r 8IBU"CPVU1SJWBUF$MVCT ...................................................................... 69 r ĂF1SPQFS(PWFSOBODF ............................................................................ 69 r ĂF$BDPQIPOZPG$IBPT .......................................................................... 69 r ĂF%FMFHBUJPOPG%FDJTJPO.BLJOH ........................................................ 70 r 'PSN1SFEJDUT4VCTUBODF .......................................................................... 71 v CHAPTER 5: The Golfer Local Market Analysis 73 r 6ODPOUSPMMBCMF'BDUPST .............................................................................. 74 r (PMGFS-PDBM.BSLFU"OBMZTJT ................................................................... 74 Supply ....................................................................................................... 75 Demand ................................................................................................... 76 Age ............................................................................................................ 77 Income .....................................................................................................78 Ethnicity ................................................................................................... 78 r 1VUUJOH*U"MM5PHFUIFS .............................................................................. 79 r 4VQQMZ1MBZBCMF%BZT ................................................................................ 80 r 1PTJUJPOJOH:PVS(PMG$PVSTFGPSUIF-PDBM.BSLFU ............................ 83 CHAPTER 6: The Strategic Planning Summary 85 r ĂF7BMVF$SFBUFE ...................................................................................... 86 r 7JTJPOBOE.JTTJPO4UBUFNFOUT ................................................................ 88 r (PBMTBOE0CKFDUJWFT ................................................................................. 92 Section 2—Tactical Planning 95 CHAPTER 7: Technology—The Foundation 97 r $PSF'VOEBNFOUBMT ................................................................................... 98 r ĂF$IBMMFOHFT"SF.BOZ ......................................................................... 99 r *NQFEJOH:PVSTFMG8IJMF#FJOH*NQBMFE ............................................. 101 r ĂF*EFBM%BUB'MPX ................................................................................. 103 r 4FMFDUJOHUIF3JHIU4ZTUFN...................................................................... 106 r 3FRVFTUGPS1SPQPTBM ............................................................................... 106 r 0O-JOF8FC#BTFE%FNPOTUSBUJPOT ................................................... 108 r 0O4JUF1SFTFOUBUJPOT ............................................................................. 108 r ĂF'VUVSFPG5FDIOPMPHZ)PMET$IBOHF ............................................. 109 vi CHAPTER 8: The Key Financial Metrics 113 r ĂF(FOFSBMMZ"DDFQUFE(PBMQPTUT ....................................................... 114 r %FĐOJUJPOT ................................................................................................ 116 r #FODINBSLJOHBOE%BUB3FQPTJUPSJFT .................................................. 118 r ĂF,FZ/VNCFST .................................................................................... 121 r $VTUPNFS"OBMZTJT ................................................................................... 122 Report 1: Customer Distribution ......................................................... 122 Report 2: Customer Demographics ....................................................... 123 Report 3: Customer Retention ............................................................... 123 Report 4: Customer Spending by Class ................................................. 124 Report 5: Customer Spending by Individual ......................................... 124 Report 6: Zip Code Analysis .................................................................. 125 r 'BDJMJUZ"OBMZTJT ...................................................................................... 125 Report 7: Merchandise Sales by Vendor ................................................125 Report 8: Reservations by Booking Method ..........................................125 Report 9: Reservations by Day of Week ................................................ 126 Report 10: Revenue Benchmarks ...........................................................126 Report 11: Revenue per Available Tee Time ......................................... 126 Report 12: Revenue by Department ......................................................127 Report 13: Revenue per Hour ................................................................127 Report 14: Rounds per Revenue Margin ...............................................128 Report 15: Course Utilization................................................................ 129 r ĂF#PUUPN-JOF ...................................................................................... 130 CHAPTER 9: Financial Modeling 133 r -PTUJOUIF%FUBJMT .................................................................................... 134 r 'JOBODJBM"OBMZTJT8IFSF)BWF:PV#FFO ....................................... 136 r 'JOBODJBM.PEFMJOH8IFSF"SF:PV(PJOH ..................................... 139 r &YQFOTFTĂF#VSEFOPG-BCPS-JĔFE ................................................ 142 r *NQSFTTJWF3FTVMUT&NFSHFGSPN*OTQJSFE"OBMZTJT ...........................