Tiger Woods Economy

The Tiger Woods Economy infographic depicts the sponsorships and financial impact of Tiger Woods on golf such as tournament viewing figures and ticket sales.

Admittedly this was a few years ago but I am awaiting the updated review of the same information.

Golf Consulting: Irish golf industry in deep rough

Author: John Mulligan @ Irish Independent

As Rory McIlroy became the second Northern Ireland golfer in succession to win the US Open last weekend, Taoiseach Enda Kenny said he wanted Tourism Ireland to launch a “massive onslaught” on the American market to lure visitors here.

“I want to see Ireland branded for golfing fans in the US as the home of champions,” he said.

But many golf courses built with attractive tax breaks during the boom are struggling to survive. Some are now controlled by the National Asset Management Agency (NAMA), and market aggressively priced green fees that sustain cashflow but put the squeeze on privately owned courses already battling with the impact of the economic downturn. Between 1990 and 2010, the number of 18-hole golf courses in Ireland exploded from 213 to 352. It has made Ireland one of the most densely populated countries per capita in the world for golf courses. Yet the omens for many aren’t great.

“I’d say about 20 golf courses will probably close over the next few years,” reckons Kevin Markham, a well-known golf enthusiast and author.

Three have closed so far this year — Limerick County; Turvey in Donabate, north Dublin; and Kilkea Castle in Kildare. The price tag of the latter was slashed by receiver Jim Hamilton of BDO earlier this year from €16m to €6m. Among those taking an interest in Ireland’s distressed golf courses is New York businessman Donald Trump, whose son visited Ireland earlier this year to run the rule over some properties. Other clubs that have fallen into the hands of receivers include Citywest in Dublin and the Heritage in Portlaoise.

Aside from the economic woes facing them, Markham claims that many golf courses aren’t even being run properly.

“You’ve got people who are golfers at some clubs and have just worked their way up to running the operation,” Markham claims. “During the good times that was fine, but now they’re not certain how to adapt.”

Even now, he says, many clubs don’t use social networking sites such as Facebook or Twitter which could help them appeal to a younger audience. Among the well-run courses that have had to adjust to the market is Highfield Golf Club in Co Kildare. A former dairy farm, the property has been family owned for nearly 300 years. Nineteen years ago, with farming failing to pay its way, the family made a decision to convert the lands into a golf course and aimed it squarely at the middle market. Avril Duggan, one of the family members who’s involved in the day-to-day running of the club, admits things are tough but says they simply get on with things and try to think laterally to keep the operation on the go.

“You have to be upbeat,” she says. “You can lie down and die or you can do something about it.”

Highfield has had to deal with competition from NAMA-controlled Moyvalley. Designed by Darren Clarke, the course was built by Northern Ireland businessman Alastair Jackson at an estimated cost of €60m. He had lived on the estate for 15 years prior to converting it into a golf course. When it opened in 2006, membership fees were pitched at around €75,000.

Receiver appointed

The annual subscription fee was €3,000. But Moyvalley soon found itself in the rough, and in 2010 Irish Nationwide had a receiver appointed to the development. Today, there’s no joining fee at Moyvalley and the annual subscription fee for full membership is advertised at just €850 for men and €550 for women.

“Courses such as Moyvalley are the biggest threat to us,” says Duggan, adding that Highfield’s own membership levels are down about 30pc since the peak.

“It’s almost like unfair trading. They’re just being run for cashflow. It’s hurting us, but it hurts them, too.”

Costs at Highfield have been “cut to the bone”, according to Duggan, who adds that competition between clubs to attract golfing societies — a significant income stream for most operations — is intense.

“Societies won’t commit to a package any more — now they just pay the green fee and they might or might not have food afterwards.”

Highfield is breaking even, adds Duggan, and offering two memberships for just under €800 — a discount she says has been popular.

In Dublin, Ian McGuinness is the managing director of the upmarket Roganstown Hotel and Country Club in Swords. The land on which it was built was also once a farm owned by the family that now operates the premises. McGuinness is also the current head of the Irish Golf Course Owners’ Association. Despite the downturn, McGuinness says the golf side of things has been holding up.

“We’ve lost members and gained some, and we’ve noticed a lot more transient members who move on to other clubs after a year or so,” he explains. The club has about 400 members. At the peak it was able to sell membership for €10,000. Now, it’s just the annual subscription of €1,439 that applies. Its hotel rates are down between 35pc and 40pc, but occupancy has remained stable at around 60pc.

McGuinness says that 18pc of the overall operation’s revenues are derived from the golf course and that Roganstown made a profit last year before whopping depreciation charges and will do so again this year.

“The business washes its face, but revenues are way back compared to what they would have been,” he says. Those revenues, including the hotel operation, are down about 30pc on 2007 levels. McGuinness is also facing stiff competition from other courses, while its green fees are down from between €75 and €90 back in the good days to between €45 and €55 now. McGuinness also doesn’t regret having the Christy O’Connor Jnr-designed golf course as part of the development, saying that without it, the whole operation wouldn’t be viable.

“If it wasn’t for the golf course we wouldn’t survive,” he says. “We get quite a bit of corporate business out of the airport. If we only had the hotel, this would be a ghost town.”

Since December, McGuinness has only been paying interest on the development’s bank loans.

“We’ve been struggling to pay the capital and told the bank that but they don’t seem to want to know,” he says. He’s in the midst of renegotiating facilities. “I’m going to need some loving care from the bank for the next two to three years,” he adds.

Meanwhile, it’s the links courses that are still the ones really managing to turn a profit, according to Pierce Wall. Based in Tralee, Co Kerry, Wall owns tour operator Ireland Golf, which has been on the go for almost 20 years, and says that many of the links courses he’s very familiar with in the south west are profitable.

“The Americans are back and the market is quite good,” he maintains. “2009 and 2010 were terrible, but I’m up 30pc on 2010 numbers and I already have groups booked in for 2012.” Recent groups included one of 20 financiers from Wall Street, London and Paris who deal with distressed funds.

“Golf is a second holiday for most and when things are difficult it’s the one that gets cut. But things have picked up.”

He says that the number of rounds played at Tralee Golf Club was 6,500 in 2009. This year it’s likely to be 10,000 — almost all the extra play is being generated by US visitors. He’s concerned about the strength of the euro versus the dollar, but concedes that for the bulk of the US visitors he deals with, money isn’t the main object.

He also doesn’t think that President Barack Obama’s visit to Ireland has had any impact on the number of golfing tourists.

“The vast majority of American golfers are Republicans,” he jokes. “They are not going to come to Ireland just because Obama was here.” No doubt Enda Kenny doesn’t care less if they’re Republicans or Democrats — just that they come.

For further information, email me via the Contact section.

Golf Consulting: 8 questions to ask…

Created for G3k Consulting.

It’s the dream isn’t it? That one day you will own a golf club, set up exactly how you want it. A space where you and your buddies can get on the course a play a round on any day, at any time. A clubhouse that stocks your favourite tipple and where you can all catch up after a day on your fairways and greens. However, we all know there is more to owning a golf club and I suggest you ask yourself the following eight questions before taking the plunge.

1.  Is this a lifestyle business or a profit making exercise? Or both?

Either way, you have to start putting some numbers down regarding how it will function. Get your head around all the basic functions required for a golf club – design and construction, environment, operations, management, marketing etc. Decide how each will work and project what you expect in return.

2.  Is the site the best land and location you can find?

There is more to a golf development that just quality holes and stunning scenery. You need a market in the area and you need to provide something different to what that market can already access. Spending most of your budget on digging up every inch of the land to create a course may not be fruitful. Think of the bigger picture.

3.  Is the site reliant on real estate?

If it is overly so, then DON`T do it! Seek advice on what is “overly so”.

4.  Have you got your costs and concept right?

Everything should be double checked with business advisers. Create three scenarios – blue sky, doomsday and the realistic/middle of the road scenario.  If the business can survive the doomsday then you are a step closer to owning a golf club.

5.  Is the designer the right one for the product you need to create?

Whether you go down the route of getting a big name on board or specific consultants, it has to fit your target market. A feasibility study should tell you whether your design is going to work or not. You might get a course with great holes designed by the likes of Monty but if it does not fit the surroundings then it will be money wasted.

6. Is the construction team the right one for the project?

There are many specialist golf construction companies out there so select the one that fits the product you want to create. If you are refurbishing an existing course then make sure disruption is minimal. Construction is not an area that you want to overlook then spend more money (and disruption) further down the line fixing.

7.  What do customers want?

Get together some focus groups, tell them your concept and ask them if they think it will work. Even if you think it’s obvious that it will work, ask the punters. Make sure you ask a group of people who will tell you the truth! This feedback is vital and should be consulted in the planning stages.

8.  Is there a realistic plan in place with contingencies?

All sorts of weird and wonderful situations can occur during the development. What if you discover an archaeological find during the dig? Or an exceptional weather system causes delay? Check your contingency plan with advisers and make sure it is viable.

For further information email me via the Contact section.

Golf Consulting: Why are so many golf clubs failing?

Created for G3k Consulting.

Discussions at the PGA show in Orlando earlier in the year and at the recent KPMG conference in Dubai inevitably turned to the failing of many golf clubs in the US and it was suggested that the closure rate is estimated to be quite high. Which begs the question, why?

One thing to note – as a percentage of golf courses in the traditional golfing countries such as the US Britain and Canada, the rate is not that high in relation the closure of businesses in many other sectors. However, the sport is undoubtedly facing a very challenging period.

Loughe Erne - Recently went into administration

I would suggest the reasons for the failure of golf clubs are as varied as the courses themselves and one must take each on its merits. However, there are is a key reason why so many of them fail. Naivety.

Many owners of golf clubs begin with a passion for the game and the project, which is great! However, like many people who buy soccer clubs or hockey teams they do so following a successful career in business and forget that they USED to go to the golf club to relax and have fun. NOW they have to apply the business principles they used to LEAVE BEHIND at the golf club gate!

They forget one of the basic principles of business – customer experience. Every angle has to be covered to ensure that the customer experience is perfect from the first contact to the service they receive on the day at reception, in the shop, on the course and in the bar. There is more to the golf experience than the beautiful views and quality of the holes.

That does not mean to say that running the golf club cannot be fun. It will be if the same principles of business are applied to providing a great service to the people who play at the club as successful business managers apply elsewhere.

For further information email me via the Contact section.

Golf Consulting: How to create a successful golf club

Created for G3k Consulting.

You have incredible views, excellent quality holes and the best location but if you don’t get the business basics right then a pretty setting will not be enough for your club to survive in this market. What more can you do to make your golf club one of the best? Here are my top six tips for success.

1. People. Whether it’s on the green, in the bar or locker room, in the professional shop or the meet and greet staff. They all have a part to play. Provide the platform for people to create that great experience and how they need to relate to YOUR customer/member. People who have a great attitude and are passionate about making every players` experience a fantastic one will ensure your club is a success.

2. Professionals. As great as Augusta National is we can`t all have an Augusta. However, if that is your goal then get one of the great professionals on board and have him design your course. You’ll need to be quick to get the best (I’ll leave you to decide whether that is Jack, Tiger or A N Other!). You’ll need to pay to ensure he works with no more than a handful of courses worldwide but that will ensure that your course
is one of the few he is associated with.

3. Events. Tournaments are big business. If you’ve gone down the route of the design by a big pro then it shouldn’t be hard to get him and his mates along to play. Just be aware that you may become too big for the amateur golfers so do the numbers and make sure they work.

Otherwise, get involved with sponsors/corporates who may be interested in hosting events at the club. Make use of your contacts.

4. Customers. Be realistic about who your customer is and what he/she NEEDS to feel they are getting value for money from that membership or greens fee.

5. Business Plan. Start your business plan with that in mind and build a solid plan with a focus group of prospective members. This should be a mixture of solid devotees, who have the club at heart, and people who will tell you it as it is. Get them to provide you with a sense check and be realistic about revenue both directly from the core activity of the club and ancillary income streams such as real estate etc.

6. Contingency. What if you don`t quite scale the heights of a certain club in Georgia? Is there sufficient contingency in there?

If you get all of these right from the start or at the start of the rebirth you will succeed. There are too many “golf nuts” out there looking for a great golf experience to fail but you need to get the basics right as there is too much competition for that person`s dollar/pound/euro/yen!!

For further information email me via the Contact section.

Golf 3000: US Masters Betting Tips

Author: Bruce Robertson @ Selectabet
 
It’s one of the most eagerly anticipated events of the sporting calendar, the 2011 Augusta Masters gets underway on Thursday and our golf expert Bruce Robertson marks our card on who good be sporting the green jacket at the end of this weekend. 
 
Venue: Augusta National
Par: 72
Field: 99
Weather: Good

The first Major of the year is upon us and it is the only major played on the same, picturesque, course in Georgia every year. Experience is important this week as course management is crucial. No ‘rookie’ has won in the last 32 years.

The rough has been grown and the fairways narrowed over the last few years and the key is positioning the golf ball. The strategy is to know when to attack a flag and give yourself birdie opportunities, or simply just play for a par.

The greens will be very fast and tricky so playing shots below the hole to leave an uphill putt, can be very advantageous.

Phil and Tiger are the market leaders, with lefty all the rage after winning in Houston last week. I give Mickelson a big, big chance this week but the odds are too short for me, and he has the added pressure of trying to win back to back Masters and back to back on The PGA Tour

No.1  Nick Watney  18/1 (Totesport)

He has won for us already this year and I am sticking with him this week. His form is excellent, with top 15 finishes in his last five events, including that win. This has been partly due to the success of working with his new coach, Butch Harmon. His Masters record is very good also, 11th on his debut in 2008 and 7th last year when he finished with a stunning 65. He is ranked top of the all round stats on The PGA Tour this year and must have a great chance this week

No. 2 Hunter Mahan 30/1 (Blue Sq)

Hunter has become a very consistent player and after missing the cut here in 2008. He bounced back with two top ten finishes in 2010 and last year. Warmed up well in Houston last week when he was 3 shots off the pace going into the final round but faded as Lefty pulled away from the pack. He has five top tens this year and is ranked sixth all round on The PGA Tour.

No.3 Luke Donald  28/1 (Betfred, Paddy Power)

Has really come of age since being the lynch pin of The European Ryder Cup team success. He has already won The WGC World Matchplay this year, where his golf was superb. He is probably the most accurate player on Tour which should give him plenty of birdie opportunities. He has two top ten finishes at Augusta but is a much better player now. He is shorter than most but so were recent winners Zach Johnson and Mike Weir.

No. 4 Justin Rose 35/1 (Paddy Power)

Another one to feature in my columns and this may well be his time for a Major. No stranger to The Masters leader board as he has led after every round, but it is round 4 that matters and I think he will be there on Sunday. He may also still have a point to prove in the first Major since being left out of The Ryder Cup team. He has adapted well to The PGA Tour and has the ability to win majors, starting this week.

Other longer priced players I like are KJ Choi and Rory Sabbatini

Whatever happens, it is simply the greatest golf tournament to watch on television. Stunning scenery, quality golf and plenty of drama is guaranteed. Let’s hope we have a winner to top off a fantastic week ahead.

Who are your betting on?