Update Your Feasibility

BY Michael A Kahn, President, Golfmak, Inc.

I plublished this page originally around 2002. 

IMPORTANCE OF A FEASIBILITY UPDATE

With more than 3,000 new golf courses opening in the USA between 1990 and 2002, the feasibility study that supported a golf course in 1990 is well out of date. That's because many of the factors in a 1990 feasibility study simply do not apply today. One forecasting mistake 'assumed' a continuing annual increase in player growth in the USA. In fact, a National Golf Foundation (NGF) study, "A Strategic Perspective on the Future of Golf", McKinsey and Company, January 30, 1999, indicated that there may be very few more golfers in '99 than '90. Not much has changed between '99 and '02.

DO THE MATH! According to a chart in the NGF article, in 1990 there were 25,000,000 golfers sharing 14,000 golf courses, 1,786 golfers per golf course. By 1999, there were 26,500,000 golfers sharing 16,000 golf courses, 1,656 golfers per golf course - 130 fewer golfers per golf course in ‘99 than in 1990! Later, a chart on page 32 of the article indicates that golf players play about the same number of rounds a year, about 19, as they did in 1990.

We brought things up to date (2002). We estimate there are still not many more golfers than there were in 1990, but we’ve added an average of 500 new courses in each of 1999, 2000 and over 300 in 2001. Let’s estimate that we now have 27,000,000 golfers sharing 17,300 golf courses, 1,561 golfers per golf course. The average course lost another 95 golfers in the past three years – 225 since 1990. At 19 rounds per golfer per year, we've seen average round declines of 4,275 per golf course. At $35,00 average fee per round, that’s a decline of $149,625 per golf course in annual green fees.

Here’s a fact. In the Sarasota, Florida area the fair share of play for the 30 courses serving the immediate area amounted to a profitable 50,000 rounds per 18 holes. Since 1995 the addition of 10 more golf courses has reduced each 18-hole share of ‘available rounds’ to 37,500 – a 12,500, 25% drop in just six years. With average fees at $30.00, we estimate that revenue declines averaged well over $350,000 per golf course.

So, why a new feasibility study?

You need to consider making a dramatic change in the way you do business. The question is: Should you become more strategic and competitive with your pricing policies?

Of course, you need to take a good look at where your course stands in the local golf course hierarchy. You’ve got to know the strength of the market and what your fair share should be. You need to know what the golf 'fraternity' thinks of your course and what they think of your new competition. Are the newer courses better than yours? You may be facing competition with faster greens, wider fairways, nicer cart paths, or more tee boxes. They may be more smartly planned, making them more efficient to operate – and therefore financially more competitive.

You’ve got to know these things!

How far have you dropped down the ladder?

In terms of stature, you may have been the area’s number one golf course in 1989. Look at what happened in Sarasota? Older courses have simply dropped 10 rungs down the ladder since 1995. Has this happened to you/

That's why you need a feasibility update.