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10 | OPERATIONAL FOCUS

The Challenges of New Golf Development

By Jeff Blunden

JBAS is an independent advisory company offering dedicated, professional advice to the golf and leisure industries. Over the past seven years Jeff Blunden, the Principal of JBAS, has provided specialised advisory services to over 75 different projects in the Australasian region.

Over the past ten years near 50 golf courses have been developed and opened around Australia with approximately three quarters of these courses being part of a residential and/ or resort development. As at January 2010, 27 of these courses were ranked in the country’s top 100. Many of these courses were conceived in strong economic times, with bullish projections for the performance of both the residential and golfing components.

Jeff Blunden

jeff@jbadvisory.com.au

Established in mid 2009, Golf Research Australia has been created to provide a modern, specialised market research service and portal to the Australian golf industry.

The services offered focus on the industry’s interaction with the golf consumer and utilise the newly developed Committed Golf Research Panel. Typical areas of research include retail equipment sales, consumer brand perception and usage studies, participation trends, travel, and motivations for play.

http://www.jbadvisory.com.au/golfResearch/golfResearch.mhtml

The motivation for this article stems from the publicity the industry has received from the financial struggles and closures (and re-openings) reported by a number of new courses only opened within the past ten years - St Andrews Beach, Kennedy Bay and The Cut in WA as three examples. From where I sit, such publicity doesn’t do the industry any good at all. Be it from a funding perspective (bankers remember failures), or from a potential new member perspective at another course with a similar membership structure (news about members getting burned with no recourse travels fast) or from a club perspective, who are possibly considering a merger with a new development, a discussion about “bankability” with potentially already resistant members is a diffcult one to have! Simply put, development failures that make the headlines are not good for the industry.

The unfortunate reality being experienced at many of the courses built in the past ten years is that there is still a decent degree of financial pain being felt and there could well be more negative news on the 2010 horizon. As we begin a new decade I therefore thought that I would share with you the mistakes made and being made at some of these courses, what has been learned from these developments and what

is now required for new golf and residential developments to be financially successful in this market, hoping to keep golf, at least in course development terms, out of the headlines.

Will another 50 courses be built over the next ten year period? At the risk of upsetting our course architects, I think not, but I am sure they, like their US brethren who have also experienced a dramatic slow-down in work, accept that a healthy industry, with good news surrounding new developments is what we’d like to be seeing. If you read on however you can decide for yourself as the challenges in doing so are outlined.

The reason for building – $$$$ from real estate.

As identified above, of the last 50 or so courses built, less than 25% (only 11) of these courses were “golf only.” A few of these were due to club relocations, some were club course extensions. Only a handful were genuine, new to market stand alone public access golf courses. The politics of club relocations unfortunately ensures that they take far longer than first envisaged (if at all) meaning that the actual timeline from concept, to proposal, to construction and physical relocation can be a very long one - just ask the Sunshine, Croydon, Waverley and Eastern Golf Clubs.

On the standalone side, there has been one obvious success in this market, that being Barnbougle Dunes. It too however was far from a certain winner in its early days and was a pure cash investment. I was fortunate to see the original proposal and marketing scheme behind the development and said to the young entrepreneur trying to bring the course to reality at the time, your approach can only be - simply build it and hope they will come (and they thankfully did). It was just not possible to do any type of research work that would

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