NGCOA conference tackles financing challenge

Golf Course News, Apr 2003 by Saunders, Doug

PALM SPRINGS, Calif. - As more than 600 golf course owners from the United States and Canada gathered for their annual conference and trade here in late February, there was a noticeable air of trepidation among the assembled group. Last years triple whammy of post-9/11 jitters, the oversupply of courses and the challenges of a slumping economy all added to the pressures felt by golf course owners nationwide, and it left many wondering what the future held.

But the gathering of 620 members, up from last year's attendance of 550, carried on with many positive messages as the Solutions Summit strived to tackle tough questions and provide answers that owners could implement this year to improve their bottom line.

The theme of the week at the Wyndam Resort retreat in the California desert was emblazoned everywhere: "On the green is good, in the black is better." The five-day event provided a series of seminars that touched on every aspect of golf operations including financing, golf shop operations, food and beverage management, labor laws and environmental activism.

"I am very pleased with the turnout we have this year, especially considering that attendance at the other two industry trade shows (PGA Merchandise Show and GCSAA Conference and Show) was down. I think that the realization of the importance of cooperation among ail of the golf industry has really come through here this year," NGCOA executive director Mike Hughes said.

That sense of cooperation came through in the opening session, as Phil Tralies, president and CEO of Club Car, stated the simple facts.

"For us to be successful, the golf course owners need to be successful. That is why we are strongly committed to this organization and the goals of increasing the bottom line for everyone," Tralies said.

Two of the more pressing issues for the economics of the game of golf, available financing and the lagging number of rounds played, were dealt with in a very open manner.

It is no secret that many of the major funding sources for the golf industry have dried up in the past year and the remaining sources are taking a much harder look at the economics of golf.

"Golf is a difficult business because there are so many moving parts to it. It is not like building a commercial building and leasing floor space. With so many variables it is clear that golf doesn't provide the profitability of other commercial investments. This has driven out several cash sources," explained Thomas Bruff of KPMG Golf Practice.

But Golf Course News editorial advisory board member Larry Hirsh of Golf Property Analysts made the point that course owners need to look to their local banks for financing. He feels that the older and more established golf operations could be in a significantly better position, as they may not be carrying as heavy of a debt load as the newer golf developments.

"I am not ready to conclude that the `mom and pop' operation will be the significant player in the future but I do think that there is a trend developing that way as management groups struggle to find ways to increase profitability," Hirsh told an economics seminar.

Hirsh noted that there is a different buyer coming into the golf market now, one who has a passion for golf and can accept lower profits to become involved in the game. Many believe the passion for the game is one that needs to be brought back to the forefront of golf.

But the most important issue to be addressed was the slump in rounds played nationwide and how to reverse that trend. The detailed research carried out by Golf 20/20 put things into perspective. Golf is a $62 billion industry that has at its core 10 million best customers (those who play at least 25 rounds or spend $1,000 annually). The survey found another 12 million potential best customers playing golf, and an ESPN.com poll found 45 million people who say they are golfers. So the challenge to the golf industry is how to get this large pool of golfers back to the golf course.

The answers seem to hinge on two points. First, course owners were urged to improve their marketing to the best customer in order to make them loyal customers. Second, is the challenge of bringing new golfers to the game.

An ambitious project, Link Up 2 Golf, created by the PGA of America, will be expanded this summer (see story on page 3), and course owners are being advised how they can help make golf a better experience for the new golfer.

During the problem solvers sessions many explained some of their ideas for encouraging junior golfers through value passes and encouraging afternoon family days to fill afternoon tee times. Some even presented ideas of creating three-hole and six-hole experiences for beginning golfers to get them comfortable in course situations. All these ideas aim to address concerns that golf takes too much time.

Conference attendees were also very positive about the recent announcement that the NGCOA and the GCSAA conferences will merge in 2005. This obvious linking of trade shows will join superintendents with the controllers of the checkbook, which should improve efficiency for both parties.