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24 - Apr 2016


Golf Course Trades The State of Golf Development in the U.S. by Jeff Shelley

Golf, like all sports, is subject to ebbs and fl ows. We 14-handicappers know the drill: following a birdie or an even rarer eagle is a bogey or a dreaded “other.” Over 18 holes our scorecards look like an exotic overseas’ phone number.

The same wild cycle applies to golf development, particularly in the U.S. During the 1990s’ heydays, an average of 500 new domestic courses opened per year, raising the total of American facilities from 5,000 in the 1950s to 15,000. After a peak of 16,052, the “market correction” reduced that number to 14,437 18-hole “equivalent” courses by the end of 2014, according to the National Golf Foundation.

“We built way too many courses in the 1990s,” said Arizona-based architect John Fought. “It’s also important to note that a lot of the courses built during that period were associated with residential projects. Many of these courses were poorly designed and were ultimately doomed for failure. The better courses that were designed have been popular and very well received. But I do not think we will see many courses (new) being built for many years, unless they are foreign projects.”

The 2000s brought about a big change from the “build-it-and-they-will-come” trend as golf course developers over-speculated on the amount of golf courses the American market could handle. For one, the expected increased interest by Baby Boomers didn’t materialize for various reasons (playing 18 holes takes too much time, the game is too expensive and too diffi cult, etc.). For another, the anticipated real estate component linked to many new golf developments never panned out (a 2010 study by Cornell University found that less than 40 percent of people who

Mark Miller bought fairway-side homes ever play golf).

Notes Mark Miller, a Colorado-based architect: “The consensus by most in the industry is that golf will probably never experience a boom like we had in the ‘80s and ‘90s, and new golf courses are few and far between in comparison. Most new courses seem to be destination golf resorts, or private courses, built on spectacular sites. The days of golf being tied like an ‘anchor’

to a residential community for real-estate speculation seem to be over, although I will never say never. Did that over-development add to the slow down of the industry? I believe it did.”

Development was particularly hard hit by the 2001 recession (compounded by another in 2007), when people had less disposable income and resorted to cheaper non-golf pastimes. With this economic pinch leading to decreased annual rounds, many golf courses saw shrinking revenue and, as a result, owner/developers had less money to pay maintenance staffs and other personnel.

One of the biggest problems during the salad days of American course construction was a push to build beautiful (read expensive-to-build and costly-to-maintain) courses that were not environmentally sensitive and built in the wrong places. Adding fuel to this combustible situation

was an urge to have new layouts designed by “superstar” architects and appear on the “best- new” course lists created by national magazines for PR purposes, making them incompatible for average hackers.

In terms of money, the math was pretty simple then (and is now). In very basic terms, if a new course cost a $10 million to fi nance (including designer and construction fees), the play rate would have to be $100 to match the capitalization rate (rate of return on investment). That number was simply not going to be met in a shrinking market and with cheaper options at existing, easier-to-play facilities available and a diminishing number of “avid” golfers (those who play more than 25 times a year according to the Golf Course Owners Association), an important group that fell from a high of 6.9 million to 4.6 million between 2000 and 2005.

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