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Thursday, November 13, 2014

Would You Play Faster for a Million Dollars?

USGA Pace of Play Symposium
There's more than just the golfer's sanity at stake in speeding up the game, according to two experts who spoke today at the USGA Pace of Play Symposium.  For course owners (public and private), there could literally be millions of dollars riding on how fast the typical foursome completes its round.  The analysis was presented by Stephen Johnson and Henry DeLozier of Global Golf Advisors.

The value isn't just in the additional golf revenue that can be generated if more players can get on and off the course more quickly, it's really how the value of the property is affected by a multiple of that revenue.  Underlying it all, of course, is the fact that when a course acquires a reputation for slow play, it becomes less attractive for both daily fee players and/or prospective members.  Less demand equals less revenue, not something the flat-lining golf industry needs right now.

What's the value of 1,000 more $100 rounds over the course of a season for a daily-fee operator?  $100,000, right?  Wrong!  It's actually closer to $1,000,000 because the value of the asset--the golf business of the course--is about ten times the cash flow.  The owner will make $100,000 more now, plus $1,000,000 when and if he sells.

That's also not counting, by the way, the ancillary revenue spent by golfers who spend less time on the golf course and more time in the bar and restaurant afterwards. Who wants to hang out and celebrate after standing around for five hours on the course?

Or what about a real estate developer that invests $10 million in a new course with the expectation of selling $40 in homes around it?  If the course develops a reputation for five-hour rounds, how will that affect his home/membership sales figures?  Not positively, that's for sure.

There's no question that pace of play affects both the capacity of the course to handle more players and the rates they are willing to pay.  The economic impact of faster golf makes it a no-brainer for course operators to get on the pace of play bandwagon.

Among many other books, Dave Donelson is the author of Weird Golf: 18 tales of fantastic, horrific, scientifically impossible, and morally reprehensible golf

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