Following the latest article published by Sarah Max in the New York Times, it seems that from the other side of the Atlantic, the waters are once again taking their course with respect to the relationship that exists between the real estate market and the golf industry. According to the study of this media giant, “investors are buying golf courses with problems, changing their business structure.” Very good news, although it is clear that it is happening in the United States, a country that has recorded 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 that this is the case. Above all, 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 reputations 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, achieving a total of 109 golf courses in 23 states and Mexico, with a total value of €18.63 last Thursday in its 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 thing in all this analysis is the following: What changes in its structure have they had to make to get to giving positive numbers? I am sure that KSL Partners have not left an investment as risky as accumulating a portfolio of 109 golf courses in the hands of any manager.
From my point of view, the changes they have been forced to make are:
Hiring professional teams to manage your fields.
Generation of value from golf assets.
Autonomous business units under a horizontal structure.
Monitoring of a 5-year “Master Plan”. In the investment and sales sections.
Investment in product quality and service in your facilities.
Disconnection of the real estate product with the golf course.
Generation of traffic and social mass in the fields they manage.
Breakdown and strategic plan of all sales segments of your assets
Brand positioning as a field manager
Marketing plan focused on the Sport & Leisure industry.
In short, something as simple as generating value from the fields without associating it with the massive construction and sale of properties. If we ensure that each element takes on value and economic autonomy, the synergies generated will develop a product with a medium to long-term trajectory.
And what do you think, will this trend reach old Continental Europe? I recommend you read Sarah Max’s article at this link
