Rounds, revenue totals down again in August

There wasn’t a lot of good news in August rounds and revenue numbers for U.S. golf course owners and operators. But given the nation’s current economic climate, the numbers are better than might be expected.
Total rounds for the month were down 1.0 percent, according to the National Golf Rounds Played Report. And median revenues in August showed a 7.8 percent decline from the same month in 2008, as reported to the PGA of America through its PerformanceTrak data collection program.
Private club rounds showed the biggest drop in August, falling 2.4 percent. Public course play dropped just 0.6 percent.
For the first eight months of the year, rounds totals were virtually identical to those in 2008, the report indicated.
The biggest drops in the PerformanceTrak median revenue numbers for August were in food & beverage and merchandise. Per facility, F&B fell 11.1 percent and merchandise revenue was down 11.2 percent. Median golf fee revenue dropped 5.7 percent.
Overall, median gross revenue per facility for the year so far is down 5.8 percent from 2008.
Here are the rounds totals for selected metropolitan areas.
                                                August                         YTD
Washington-Baltimore               -3.0%                        - 2.3%
Orlando                                   -17.9%                       - 4.0%           
Atlanta                                    - 0.4%                        - 6.7%
Myrtle Beach                            - 2.2%                        - 5.8%
New York City                           - 9.2%                        - 4.2%
Boston                                        0.0%                        - 2.8%
Chicago                                     - 5.6%                        - 0.8%
Detroit                                       - 9.1%                       - 3.8%
St. Louis                                    +4.5%                       +7.5%
Dallas/Ft. Worth                        +3.3%                        +2.3%
Los Angeles                                 0.0%                        - 1.0%
San Diego                                 - 4.2%                        +0.9%
Phoenix                                    - 2.8%                        - 2.5%
Las Vegas                                 +10.3%                      +1.5%
Seattle                                      + 2.7%                       -1.5%                                                                                                                                  



As golf course brokers transacting business around the country, we are underwriting assets for golf owners, REO departments for lenders, golf management companies and lenders contemplating lending on certain assets. With the number of P&Ls we have viewed to date through October, we too have seen that both rounds and revenue are down as espoused in the report, but that is only ½ the story. The dirty little secret is EBITDA is down significantly more than can be accounted for in a reduction in rounds, a reduction in greens fees by owners trying to increase their rounds, a reduction in F&B spending, expenses haven’t gone down. They have done just the opposite. None of the P&Ls we have seen to date, year over year, have had their taxes lowered or insurance lowered. Salaries aren’t going down, seed costs, fertilizer costs, water, utilities, etc. all have gone up. The end result is when an owner comes to us and says, "My value may only be off 5-10% since my rounds are off that much"; they don’t realize the impact on the EBITDA is much more significant. Add to that the lack of financing and the buyer’s perceived risk driving yield requirements up, golf course values are down significantly. The silver lining is that we do see professionally run properties that are off very little in rounds and have maintained their revenue. There are areas of the country that are still very strong when it comes to that core golfer who has decided the hell with the recession, this is a necessary expenditure. The well managed, well marketed, great customer service courses are experiencing a modicum of pain, but not near as much as others with poor management, little to no marketing, absentee owners and poor customer service. We are working with some excellent management companies that have made a tremendous difference. One management company has increased the EBITDA on an extrapolated based through the end of the year by $1,000 a day, or a net to the owner of $350,000. Attention to detail, personal accountability, cost control, driving revenue and partnering with employees can make a difference. When we market a golf course for sale, we look at what a course should be able to generate in EBITDA, though increasing revenue or reducing expenses and build a credible strategy and business plan of how to get there. We believe this is one of the best times we will ever see in the market for opportunities to buy courses at prices below historical pricing, for management to differentiate themselves, for the professional golf owners to outshine their competitors and for professional golf course brokers to distance themselves from the pack. Steve Ekovich VP, Director of the National Golf & Resort Group Marcus & Millichap Real Estate Investment Services

I used to play 40 rounds of golf a year. Last year I played twice. I think the Golf Industry is pretty much on a downward death spiral. Kids want to surf the net, middle aged are working their asses off to put something away for retirement, and retired people ran out of money. It is what it is as Tiger Woods would say.

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