After the latest article published by Sarah Max in the New York Times, it seems that on the other side of the Atlantic, things are returning to normal regarding the relationship between the real estate market and the golf industry. According to the study by this media giant, “investors are buying struggling golf courses, changing their business structure.” Very good news, although it is clear that this is happening in the United States, a country that has registered a total of 157 closures and 14 openings of golf courses in 2013, according to the NGF (National Golf Foundation).
Are we facing a turning point? Since almost everything that happens in the North American market is exported to the old continent, I sincerely hope so. Especially in line with Sarah Max’s argument, in which she narrates the bloodthirsty voracity of the financial bulimia of 15 years ago regarding the management of golf assets with real estate interests.
Sarah makes a very interesting reflection in her study. These new investors, with international renown such as “Concert Golf Partners”, “Golf Heritage Group” or “Club Corp Holdings” managed by the private equity firm KSL Partners, have managed to start buying golf courses since 2012, reaching a total of 109 golf courses in 23 states and Mexico, with a total value of 18.63 euros last Thursday in their shares.
The question we ask ourselves is then: does a golf course generate profits? From what we are seeing, the answer is affirmative, but the interesting part of this whole analysis is the following: What changes in their structure have they had to make to achieve positive numbers? I am sure that KSL Partners has not left in the hands of just any manager an investment as risky as accumulating a portfolio of 109 golf courses.
From my point of view, the changes they have been forced to make are:
- Hiring professional teams to manage their courses.
- Generation of value from golf assets.
- Autonomous business units under a horizontal structure.
- Following a 5-year “Master Plan” in the investment and sales sections.
- Investment in product and service quality at their facilities.
- Disconnection of the real estate product from the golf course.
- Generation of traffic and social mass in the courses they manage.
- Breakdown and strategic plan of all sales segments of their assets.
- Brand positioning as a course manager.
- Marketing plan focused on the Sports and Leisure industry.
Ultimately, something as simple as generating value from the course without associating it with the mass construction and sale of properties. If we ensure that each element acquires value and economic autonomy, the generated synergies will develop a product with a medium to long-term trajectory.
And what do you think? Will this trend reach the old continental Europe? I recommend reading the article by Sarah Max at this link.
