(Advancing the game) State of golf consulting

Why was the country’s golf course inventory so overbuilt coming out of the 1990s when more than 500 new golf courses were opening each year?

One of the better examples of this problem occurred in 1999. With 96 courses already operating in Myrtle Beach, S.C., and about 20 of them facing forced sale, 24 new courses opened during the next two years. Needless to say, that’s not a healthy image for golf.

Following 9/11 and the ensuing recession, less than 200 golf courses opened annually throughout 2003. This wasn’t an example of planned moderation or forced discipline, rather, it was a matter of economic reality.

As the national economy continues to recover, is there a danger that the golf course development community will return to building more new golf courses than the country (region by region) can sustain? Absolutely – because interest rates remain low and the lack of planning discipline that existed throughout the 1990s still remains.

How might the golf course development community address this persistent problem? Because the golf industry is generally insensitive to the issue, and therefore, doing little about it, there’s little hope for better feasibility-analysis work in golf in the near future. Furthermore, who would do this industrywide self-analysis?

Currently, the primary concern with facility development in golf is that there are too few experienced gatekeepers, i.e., qualified feasibility analysts. Accordingly, there are basic problems with the feasibility work in golf.

The first problem is that too few of today’s feasibility consultants say “no” to a client developer. A feasibility analyst needs to know more to tell a client developer “why not” to develop a golf course than the consultant needs to know to support a development project. Too many marginal golf course development projects pass feasibility muster that shouldn’t.

The next problem with feasibility work is that because today’s computer word processing and graphic software programs can make even the weakest feasibility commentary look highly professional and quite credible, again, too many marginal golf course development projects pass feasibility muster that shouldn’t.

Finally, and importantly, how often is today’s feasibility work objectively critiqued? Infrequently, if ever, primarily because there’s little inclination to do so and because there are few qualified to do so. Those few who are qualified to critique are given the opportunity rarely.

This means the main body of today’s consultants are denied the fundamental opportunity to learn from their mistakes and past work. The result is that the quality of today’s feasibility work in golf is stagnant and isn’t evolving at an appropriate pace commensurate with the industry’s needs.

Further evidence that golf feasibility work is frequently missing its mark is how often golf course developers turn to real-estate appraisers for feasibility analysis. Talk about mixing apples and oranges! Appraisal work looks back in time for consensus opinion, while feasibility work should look ahead.

What should be done?
The only effective control that will allow golf to gage the rate of future course development more accurately is more mature, accurate and credible feasibility work.

While this is an attainable goal, it’s a standard that golf isn’t close to realizing yet – not because the quality of feasibility analysis has lessened during recent years, rather, because it hasn’t yet evolved to its necessary quality level. How can golf best advance the quality of its industrywide feasibility work?

By first understanding that comprehensive feasibility work consists of three basic elements: market, economic and site analysis, each of which is distinct from the other and with each requiring different disciplines and bodies of knowledge.

Today’s feasibility community focuses reasonably well on the market analysis phase, but has less than an adequate feel for economic and site analyses, which too often results in today’s feasibility work being one-dimensional and, therefore, misguided.

For example, too few feasibility analysts understand that it’s almost impossible to buy pricey land and pay to construct a $7.5- to $9-million golf course without this combination resulting in a highly counterproductive “high debt-high fee-low rounds” scenario.

The window of opportunity for each golf course development project to find the appropriate balance point between fee levels and annual rounds totals is often quite narrow. Only qualified feasibility analysts will be able to produce consistently credible results within this tight fiscal environment.

Next, by establishing an appropriate classroom and Internet-based workshop curriculum that would identify each of the three feasibility components, a curriculum would be test driven by a national certification program with a report review capability for those aspiring to become professionally-licensed golf feasibility analysts.

Like with so many apparent opportunities in golf today, the question must be asked: “What golf organizations are best qualified to implement the suggested feasibility workshop programming?” Where will the necessary leadership be found? There might be two organizations that would qualify and have an interest in this assignment.

First, the National Golf Foundation should because well-defined feasibility programming would correlate closely with and support NGF’s always aggressive efforts to develop meaningful database information throughout golf.

Another candidate might be the First Tee program because it raises large sums of money for ongoing golf facility development throughout the country successfully and, accordingly, should want better up-front assurance (protection) that its development projects will succeed.

Presumably, the organization(s) undertaking this assignment would be subsidized by the balance of the golf industry, and/or via federal and/or golf industry grants. The money is there.

Can golf expect to earn the respect it seeks as a sound investment environment with a stalled feasibility program? The answer is obvious. GCN

Jim McLoughlin is the founder of TMG Golf (www.TMGgolfcouncel.com), a golf course development and consulting firm and is a former executive director of the GCSAA. He can be reached at golfguide@adelphia.net. His previous columns can be found on www.golfcoursenews.com.