New Courses. Take Your Players!
This is one of my original articles published in '99.
UNFORTUNATELY NOTHING HAS CHANGED!
"NEW GOLF COURSES DON'T CREATE NEW GOLFERS - THEY TAKE GOLFERS FROM OTHER GOLF COURSES - YOURS!" Mike Kahn
NEW GOLF COURSES DILUTE THE MARKET
If a neighborhood of 10 golf courses share 1/2 million rounds a year, each one's share would be 50,000 rounds. If 2 new courses are added to the neighborhood in one year (that's what happened in Sarasota, Florida) the share per course drops by 8,300 rounds to 41,600 - a *17% immediate reduction in play! Now you can see how tenuous a low DSR can be. Think of it. Unless new golf courses somehow import their own 50,000 rounds to the neighborhood, where do they get their play?
We're not talking rocket science here!
By the way. A 17% drop in revenue and there goes your 1.25 DSR. The bank will call in your loan.
*The 17% (more or less) reduction in play occurred in the Sarasota golf neighborhood in 1998. Totally predictable - as each new golf course opened within the 30-minute drive-time area - every existing golf course was forced to reduce daily fees, advertise more, etc., in an attempt to keep up to their previous play levels. Remember, their budgets are based on their long term pro formas (the ones they presented to their lenders) - all showing annual increases in round demand. Meanwhile, not a single person in the Sarasota neighborhood lifted a finger to create new golfers, or bring more golfers into the neighborhood. Simple mathematics governed each course's share of play - which became a smaller piece of the pie.
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