2013
CAPSTONE CASE STUDY ACTIVITIES
SPM 2810
The case study you will develop should address the causes of the current imbalances and
formulate a successful financial plan that will do the following with a goal to increase
EBTIDA (earnings before taxes, depreciation, and amortization) by 5% of gross revenue.
This plan will address any opportunities the owner should consider to increase rounds, the
ability to raise prices and trim excess expenses, etc.
A. Create a strategic VISION for the course: Chpt: 1-6
Due: Monday: Second week ______________________
Complete Activity templates 1-3:
Step 1: GLMA.
Step 2: WEATHER
Written analysis. Include a brief description of the course you have are studying.
Identify the facility name, location, management structure, and service level it
currently provides. Use the research the research compiled in Steps 1 and 2 to
identify the current macroeconomics , market potentials, and demographics in
your community. Is the market over or under supplied. In conclusion, discuss the
impact of weather, rounds, and revenue influencing financial potentials at your
club.
Use the questions below to guide your critical thinking.
1. Should your course strive to be a “gold level” instead of a “silver” or visa?
versa. Is there a demand for such decision?
2. If there is a change in this service level what will need to be done to do so in order to
provide balanced service and course conditions that will offer the appropriate value
at the entry level to the game?
3. What should the MISSION be for the facility? What is the purpose of the golf
course?
4. Are there ideas that can set the facility apart from its competition?
B. Develop TACTICAL plans that will provide for the integration of technology that will
enhance the operational efficiency and marketing initiatives. [Chpt. 7 -11]:
Case Study Activities
Due Monday: Third week_______________
Complete Activity 4-6 templates for:
Step: 3: Technology
Step 4: Financials/Yield Mgmt.
Write an analysis of the technology research conducted. Is the technology, as
installed, producing the meaningful information to be able to proactively manage the
golf course? What are the key reports this PGA Director of Golf needs to be able to
properly manage the facility?
What did your research reveal about golf industry benchmarks and yield
management?. Compare your facility with industry benchmarks. Discuss any
suggestions and strategies the owners should consider to enhance revenue
potential.
Use the questions below to guide your research and analysis.
1. Are they using the right software for the facility and is it integrated? Is a
data-base and are customer profiles being collected and utilized?
2. How does the financial performance of the courses compare with comparable courses within
this city and nationally?
3. Based on the performance of the course, what tier should management focus on: platinum,
gold, silver, bronze or steel?
4. What do the five-year projections reflect as to the profitability of the golf course?
5. Is the staffing appropriate and are salary levels for management, pro shop staff,
administration and maintenance in line with industry benchmarks? What are the
appropriate financial benchmarks the facility should set as a target?
C.Provide a comprehensive framework for OPERATIONAL execution: Chpt. 12-18
Due Monday Final Week_______________________
Complete templates:
Step 5: Facilities/Maintenance
Step 6: Management/Marketing
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Case Study Activities
Written analysis: Use the questions below to determine how your facility compares
to similar facilities throughout the country. Assess current internal/operation
processes of the facility. Document any recommendations to improve the
internal/operational processes of the golf facility ( customer management,
marketing management, people/learning, product management). Use the questions
below to guide your critical and creative thinking.
1. What are the appropriate turf and maintenance practices? How many maintenance
hours are required to operate the facility?
2. What recommended equipment levels are needed?
3. Is the maintenance crew properly staffed at appropriate salaries?
4. What resources are needed to maintain the playing conditions to fit within the
courses vision and anticipated service level?
5. How much do they have in deferred capital expenditures?
6. What capital improvements are required? If capital is raised, what should be
prioritized and what is likely to be the return on the investment from increased
rounds or the ability to raise prices?
7. Should the clubhouse and amenities be expended or should some be eliminated? If
built how big? If reduced, how small?
8. How many full time do they have or need? How many part- time do they have or
need?
9. Are there roles volunteers should/ could assume?
10. Does staff need more extensive training?
11. Should there be an increase in membership? Should they allow more outside play?
12. What rates should be implemented? Weekday, weekend, 9 hole, twilight etc.
13. Do they have financial projections? What should the brand image for the golf course
be? Should the logo be changed?
14. Is there a marketing plan and budget and how are they spending the dollars allotted
for marketing?
Step 7: Customer surveys
Step 8: Customer Loyalty
Due: Tuesday Final week___________________________
Written analysis: Explain why surveys are important to the success of operation?
Define several reasons why golf course operators should identify loyal customers
and create customer loyalty programs.
D. Final Presentation, Budget, and Written Plan
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Case Study Activities
A. Final budget showing the comparison of previous year to proposed budget with
increment.
B. Final Written analysis summarizing four key strategic objectives the committee
should consider to support the net growth proposed.
E. GRADING
Grading for project includes classroom work participation, written analysis, final
powerpoint presentation, final budget and strategic plan as follows:
.
Completion of Steps 1-8 in class and written analysis
Powerpoint presentation
Final budget and plan
80 points
10 points
10 points
100
(Grading rubrics for written work, class work, and presentation have been distributed).
**** ANYONE WHO CHOOSES “DISCOUNT”, LOWER RACK RATE OR TO SELL VALUE
PRICED SEASON PASSES RECEIVE AN “F”  *****
SUMMARY OF THE
EIGHT STEPS OF THE GOLF CONVERGENCE WIN FORMULA
GLMA
Are the age, income, ethnicity, and population density
near the university’s courses conducive to golf? Is the
market over- or under-supplied?
2
Weather Impact
Analysis
How many playable days per year are there, and what,
if any, financial impact has weather had on the golf
course the past two years?
3
Technology
Is the technology, as installed, producing the
meaningful information to be able to proactively
manage the golf course? What are the key reports this
PGA Director of Golf needs to be able to properly
manage the facility?
4
Financial
Benchmarking
How does the financial performance of the courses
compare with comparable courses within this city and
nationally? Based on the performance of the course,
what tier should management focus on: platinum, gold,
silver, bronze or steel? What do the five-year
projections reflect as to the profitability of the golf
1
4
Case Study Activities
course?
Task
Assignment
Key Questions to ask during analysis
5
Architecture,
Agronomy and
Maintenance
Do the architectural changes required on each course
match the vision with the current course layout? If so,
how much capital is required, and what is the likely
ROI from that investment? What is the deferred
capex? Is the maintenance crew sufficiently staffed
at the appropriate salary ranges? What resources
are required to maintain the playing conditions
consistent with the golf course’s defined vision?
6
Operations
What is the appropriate balance of time for the PGA
Director of Golf between business manager and
lesson instructor? What is the ideal compensation
arrangement for that position? To what extent should
volunteers be used, and if so, what should their
remuneration be? Are labor expenditures in line?
What should the ending inventory be for each course,
and how many times should it turn annually? Can a
golf course without a functional clubhouse and a
prohibition on serving alcohol effectively compete?
7
Golfer Preferences
Are the golfers’ playing habits consistent with other
golf courses the university competes against?
8
Customer Loyalty
Are the university’s golfers loyal to the golf course,
and if so, if prices are increased, how much attrition is
likely?
Wk
4
Power Point
Presentation
What is the vision for the golf course, and what is
required to make it profitable on a sustaining basis?
Business/Strategic
Plan
“
Where is the likely source of the investment capital?
If that capital is not available, should the course
close? What actions need to be taken to assure
success?
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Case Study Activities
Activity 1: Document Your Facility’s Organizational
Setup
Directions: Attach to this page a copy of the organization chart for your golf facility. It
should include all levels of staff, including line employees, supervisors, department managers,
general manager (if there is one), and owners or board of directors.
If your organization chart does not go below the manager level, create a new chart and add
these positions to the chart. Make sure that reporting relationships are clear. If not evident on
the chart, indicate who is responsible for different golf functions, including tournaments, golf
cars, teaching, and merchandise sales.
Write
At the top of your organization chart, write in:
• The type of facility (private, daily fee, resort, municipal, etc.)
• The number of rounds played per year
• The total number of people employed by the facility (full-time and part-time)
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Case Study Activities
Activity 2: Write/Revise a Mission Statement
This activity requires you to review or revise a mission statement for your facility. Follow the
directions below and use the worksheet on the next page to complete the assignment. Note that only
the mission statement itself needs to be on the transparency.
Directions: Create a mission statement. Use the following points as a guideline.
1. Fill in the background information on the worksheet.
2. If your facility already has a mission statement, write it on the worksheet.
3. Check to see if the mission statement addresses the four key elements of a good mission
statement described in this lesson: facility image, quality of customer service, profitability,
and employee needs.
4. If any of these elements are missing, revise the mission statement to include them.
4. If your facility does not currently have a mission statement, write one from scratch according
to the guidelines in this lesson, and based on what you know about your facility type and
customers.
5. Enter final mission statements onto your template. .
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Case Study Activities
Activity 2 (Final decision)
Background Information
Name of Facility:
Facility Type:
Number of Holes and Average
Rounds:
Location:
Current customer/member Profile:
Existing Facility Mission Statement
Revised Facility Mission Statement
(or one you create from scratch)
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Case Study Activities
Activity 3: Steps 1 and 2
STEP 1: GLMA: GOLFER LOCAL MARKET ANALYSIS
Helpful Websites: citymelt.com; census.gov; zipcode.com; golflinks.com; golf2020; golfdata.com
SUPPLY
(The number of courses in your market)
10min.
20 min.
30 min.
State
U.S.
Private
Public
Premium
$75 + for
green fee plus
cart
Value
$45 -$70 for
green fee plus
cart
Price
Less than $40
for green fee
plus cart
Supply
Helpful websites: golflinks.com ; golfdata.com; golf20/20.com
To analyze supply, answers are ascertained for the following questions:
1.
2.
3.
4.
Competition: How many courses by type and price are in this market?
What is the potential for annual rounds?
How much are the courses being utilized?
What is your market share?
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Case Study Activities
DEMAND: I.D.E.A. (INCOME, DENSITY, ETHNICITY,AGE)
10 - miles
20 miles
Golfers in local market (Total pop. X .10 )
Round potential by Age
18-29 Avg. rd/year = 18.6
30-39 Avg. rd/year = 18.2
40-49 Avg rd/year = 20.3
50-59 Avg rd/year = 25.9
60-69 A vg rd/year = 40.2
70+ Avg. rd/year = 47.6
Round potential by income
Upper class $75k+ (Tot. x .27) x 15rds
Middle class $35-$74k (Tot. x .43)x 10rds
Working class less $35k (Tot. x .30)x 3.45rds
Round potential by ethnicity
White (Total W. pop x.11) x 2.2rds
Black (Total B. pop. x .05) x 0.7rds
Asian (Total A.pop x .09) x 1.6rds
Hispanic (Tota H.l pop. X .04) x 0.7rds
Number of golfers per 18 holes (# golfers/#
courses)
Public Golf index (# of golfers/#public courses
Demand:
1. Number of golfers: Total population x .10
2. IDEA
a. Age
b. Income
c. Ethnicity (See chart on page 79: participation rate percentage)
d. Population density
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Case Study Activities
Analysis: Supply/Demand
Based on the information presented in this exercise, what are your conclusions regarding:






Is the market over or undersupplied?
If so, by how much?
Are the age, income, ethnicity, and population density conducive to golf?
Which of the characteristics reflects the greatest strength or weakness in the
market?
Based on the conclusion, what is your preliminary conclusion regarding the
green fees charged versus the customer demographics?
At a first glance, should the course be renovated, closed or carry on as is?
Exercise 2: Weather Playable Days
Websites: climate.com ,
There is a joke in the golf business: When rounds are up, it’s because of management.
When rounds are down, it’s because of weather.
It is important to calculate the number of playable days against gross revenue on an annual
basis to determine if weather is the major contributing factor to a golf course’s revenue
decline or whether management policies and procedures are the culprit.
Weather Trends International was among the first in the golf industry to quantify weather
impact on rounds demand, from the total U.S. market down to the individual facility level.
Tying each of golf’s 16,000 facilities to more than 1,600 local weather stations, the WIA
provides key facility measures on weather variance, including Season Days, Golf Playable
Hours, Equivalent Golf Playable Days, and Park District Rounds in total, by month and by day
of week.
Average Number of Playable Days
Average Playable Days Per Month
Weekend Playable Days
Weekday Playable Days
Yearly Playable Rounds
Days of Rain
Heavy Days of Rain
Step 2: Impact of Weather
(Helpful websites: climate. com; weathersparks.com; weatherbill.com)
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Case Study Activities
Gross Revenue
2011
2010
Variance
(2011 +/-2010)
Playable Days
(2011+/-2010)
Rev/per playable day
(Avg. 2011 +2010)
Lost rev. attributable
to weather
(Playable Days x Rev/per
playable day)
Net decrease of rev.
from attributable
factors
TOTAL
(Repairs, renov., etc)
Lost + decrease
After calculating the impact of playable days, determine the course utilization. Based on
the answer, do you think the rack rates can be raised?
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Case Study Activities
Activity 4: Steps 3- TECHNOLOGY AUDIT
Conduct a Technology Audit of Your Facility
Directions: Use the table below to help you research technology usage at your facility. Indicate
which technology options are currently being used at your facility and which are being contemplated.
Be sure to look at all areas of facility operation, not just the golf operation. Fill in any additional
computer or high technology tools you are using that are not mentioned in the table.
echnology/Computer Application
Not used
Currently used
Contemplated
Used by me
In the Golf Shop
Integrated point-of-sale system
Interactive touch screen merchandise display unit
Customer database with demographics, play
patterns, and merchandise purchases
Electronic data interchange for inventory ordering
In-house video monitor for promotions
Teaching, Tournaments, and Managing
Plan
Tournament software (pairings, scoring, etc.)
Handicapping software
Video/computer technology for teaching
Computerized reservation system
Satellite-based golf car system for distance
measuring and course monitoring
Weather tracking/lightning detection system
Mobile radios, cellular phones, pagers
Public address system
Administration and Business Planning
Spreadsheet software
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Case Study Activities
echnology/Computer Application
Not used
Currently used
Contemplated
Used by me
Customer/member database software
Accounting software
Staff-management software (labor forecasting,
payroll, etc.)
Communications and Marketing
Desktop publishing
Facility email system
Facility web site
Course Maintenance
Computerized irrigation system
Equipment and supplies management software
Software to manage maintenance and operation of
golf car fleet
Other Technology Tools Not Covered Above
SOCIAL MEDIA?
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Case Study Activities
Activity 5: Step 4: Financial Metrics/Benchmarks
Analyze Past Data at XYZ G.C.—Forecast Rounds
and Revenues
Directions: In preparation for planning a new financial forecast for XYZ Golf club look at data
from the past 2-5 years and analyze the trends in rounds and revenues. Use the formulas and
examples provided in this lesson to arrive at your answers. Write your answers onto the worksheet
provided on the next page. As you can see, some of the computations have already been filled in.
Calculate
1. Calculate the percent change for the last 2 years, 2010 through 2012, and fill in the blank
boxes opposite the words “% change from year to year” for:
a)
Total rounds
b)
Tournament rounds
c)
Merchandise revenues
d)
Cost of goods sold
e)
Gross margin
f)
Greens fees
As a reminder, the formula for calculating linear trend is:
Later Year – Previous Year = % Change
Previous Year
2. Calculate the average trend for the 2-5-year period for each of these line items. (You do
this by adding together the percentage change for each year and dividing by 4.) Put these
numbers in the boxes marked “Avg %.”
3. Calculate a forecast for the Year 2014 based on the average percentage change over the
2-5 years. (You do this by multiplying the average percent change by the previous year’s
rounds or revenues and adding that result onto the previous year’s numbers.) Write these
numbers into the forecast column.
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Case Study Activities
Worksheet example for Activity 5
Format Category
2009
2010
2010
2011
2012
Forecast
2014
Total rounds of golf
23,020
% change from year to year
Tournament rounds
4,120
$84,010
$63,848
% change from year to year
4%
1,598
1,200
$86,530
Avg %
950
-25%
$90,857
$94,491
Avg %
$96,380
$67,493
$20,162
$19,037
$76,320
$82,207
$81,923
$660,020
6%
$
Avg %
$14,537
$12,284
$14,457
-6%
$621,540
$
Avg %
6%
% change from year to year
Greens fees
3,050
26,250
3%
% change from year to year
Gross margin
26,763
-26%
% change from year to year
Cost of goods sold
25,734
5%
% change from year to year
Merchandise revenues
24,221
$
Avg %
$707,595
$737,585
4%
$722,610
$
Avg %
THIS IS AN EXAMPLE
IF YOU DON’T HAVE EXACT NUMBERS, USE PGA
CONSOLIDATED NUMBERS TO ASSIT YOU TO
COMPLETE THE TEMPLATE ON THE NEXT PAGE
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Case Study Activities
Format Category
2009
2010
2010
2011
2012
Forecast
2014
Total rounds of golf
% change from year to year
Tournament rounds
% change from year to year
Merchandise revenues
% change from year to year
Cost of goods sold
% change from year to year
Gross margin
% change from year to year
Greens fees
% change from year to year
Expenses—The Burden of Labor Lifted
Examining expenses in detail can be exhausting, but it can definitely be rewarding.
Labor costs are one of the major operational expenses. Closely evaluating these
expenses is a must. The second step in such an examination is to prepare an
accurate labor forecast.
How much labor is required by position for every day within the year is a viable
benchmarking, budgeting, and financial modeling tool. The information gathered
should simplify the need to juggle employees who work full-time or part-time, by day
or by week or by season, based on rounds and daylight hours.
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Case Study Activities
The key to efficient utilization of labor, according to Stuart Hayden, a leading
industry expert, is to ensure that work flow is properly designed and that clear task
management is supported by effective labor scheduling, monitoring, and scheduling
adjustments.
Effective labor management includes the following:






Assessment of golf operation in the aggregate
Workflow analysis of each position
Daily schedule development
Consolidation of schedules to reconcile to budget
Development of administrative reports to monitor and manage.
Training specific to the duties of each staff person.
The detailed labor schedules created in the work-flow design process are required to
compensate for the loss of institutional knowledge when there is management
turnover.
With the work-flow process created and labor schedules prepared, a course
manager needs to then consider the following:
1.
Each department head should prepare the labor schedule seven days
in advance. Adjustments should be made to reflect the demand from
the previous week, any special events in the coming week, and the
number of rounds on the tee sheet. Based upon this “task” outlook,
staff should be scheduled to complete the projected tasks for that day.
The general manager should review these schedules each week.
2.
Employees should be assigned specific jobs for the day (from each
employee’s specific job task list) and allocated enough time to
complete the tasks. Opening duties for the outside services staff, such
as washing golf carts and picking up the driving range, are examples of
timed tasks. Jobs where specific timed service tasks are not as
structured, such as answering phones in the shop, should be staffed
based upon the current day’s demand.
Presented below is an example of a labor schedule:
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Case Study Activities
Work flow Scheduling
©2009, Golf Convergence, Inc
.
This schedule is made with the help of a software program that takes into
account opening times, sunrise and sunset, facility utilization, and minimum
service requirements. It is prepared weekly for the major departments at a
golf course: outside services, pro shop, restaurant/snack bar, and catering.
This program is so dynamic that the schedules for the entire year can be
printed in advance to develop annual labor budgets.
3.
It is important to minimize the number of people on salary or
guaranteed full-time 40-hour employment because the fixed costs of
these employees makes it impossible to cut labor costs when the
business is slow.
4.
In seasonal markets demand is predictably slower in the off season,
and this is when staffing should be at a minimum.
5.
The challenge is managing labor as a variable cost when there are
periods of low demand or when weather (rain, snow, heat, cold) reduce
play. Fewer staff members are required for fewer rounds.
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Case Study Activities
The most important thing department heads and general managers can do is
compare each department’s schedule (which was built based upon historical
and forecasted demand, projected weather, and planned events) against the
actual hours worked on a daily basis.
Monitoring labor hours worked compared to those scheduled on a daily basis
gives the manager the information needed to coach staff on the need to work
according to the schedule. Below is a guideline for you to use for your
analysis.
20
Case Study Activities
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Case Study Activities
Activity 6: Step 4 continued (Pricing)
The Value Gap
By examining all of the components of a golf experience, a golf course manager can
calculate the value of the experience, compare that to the rate charged, build a
marketing campaign based on its unique value, and stimulate revenue. Recall that
value = experience – price.
For purposes of stimulating creative thought on alternative methods, a potential
model for establishing green fees would comprise six variables: slope rating
(difficulty and shot values), strategy, conditioning, playing texture variety, ambience,
and customer amenities. Each of these components and their effect on the proper
price for the green fee is discussed next.
1.
Slope Rating: The greater the slope rating, the greater the challenge,
and the greater the diversity of golf shots provided, the higher the
green fees should be. To play a flat municipal golf course short in
length with nominal hazards is a completely different experience than a
championship bunker-strewn, lake-filled, tree-lined golf course.
While a debate on shot values is subjective, a quantitative way to
measure shot values might be on the course’s slope. Hence the
premium charged by difficult courses like the Stadium Course at TPC
would be justified.
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Case Study Activities
The green fees could be set based on the following:
Slope from Middle Tee
Under 113
Base Green Fee
$ 20
114–120
35
121–130
50
131–140
75
Over 140
100
2. Strategy: What is better—the 120-yard par 3 strewn with bunkers, the island
green, the dual fairway hole that provides both a safe and a hazardous route, or
the well-designed dogleg left that places the hazards on the left? The answer is
all of the above. Hit the precise shot, and you are rewarded. Take the first safe
route, and the second shot becomes more of a challenge. Risk for reward—the
essence of the game. You might consider adjusting your green fees for the
following:
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Case Study Activities
Strategy
Adjustment
to Green Fee
Vast majority of holes are straight; course is flat; few trees, bunkers,
–10
dunes, and water hazards; and options to play hole are well-defined,
providing few options. No requirement to position shots. No risk/reward
options.
A few doglegs with modest bunkering and trees, some rolling terrain,
–5
green complexes are uniform throughout the course. One or two
risk/reward options.
Terrain, bunkers, water hazards, trees, and green complexes provide
0
typical golf experience.
One-third of golf holes provide a unique golf experience requiring
+5
thought to successfully navigate risk/reward.
Up to two-thirds of golf holes provide a challenging experience where
+10
placement of the drive and the second shot has a significant impact on
the ability to score well.
The par 3, 4, and 5 holes have varying length, i.e., par 3s of 120, 150,
+20>
180, and 210 yards. Course may have dual fairways, bunkering that
pinches the fairway, streams crossing the fairway and/or the green,
narrow green openings, green side bunkers of varying depth, and
heavily contoured putting surfaces.
3. Conditioning: Well-manicured golf courses should charge a premium. The
investment made in maintaining a course ranges from $200,000 to over $2
million, and the conditioning is rated by golfers as one of the two most important
criteria.
The following chart suggests adjustments that could be made to the green
fees based on the current course condition:
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Case Study Activities
Condition
Adjustment to Green Fee
Poor, requiring winter rules to be played
–10
Greens aerated during past two weeks
–10
Standard, greens stimped at 8 to 9
Good, one cut of rough, single mowing
0
+10
pairing on fairway and greens
Excellent, two cuts of rough, cross cut
+20
fairway, green stimped at 9 to 10
Tour quality, greens stimped at over 11
+30</TB>
4. Playing texture variety: For the golf devotee, nothing is prettier than a golf
course that has well-manicured bentgrass tees, fairways and greens that have
been cross cut, Kentucky blue grass rough with two cuts, and bunkers lined with
rye for stability and fescue and Scottish broom for appearance. Conversely, a
course that is poa annua or Bermuda grass looks less defined.
Grasses
One strain
Two strains
Adjustment to Green Fee
–10
0
Three to four strains
+10
Four or more strains in which bent, blue,
+20
fescue, and Scottish broom are used
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Case Study Activities
5. Ambience: In the mountains, along a river, by an ocean, spectacular vistas, a
well-known architect, a fabulous clubhouse, an extensive practice facility—all
would command a premium that should be added to the green fee.
Ambience
Adjustment to Green Fee
Unique tee markers
+5
Flower garden at entrance
+5
Flower garden at three or multiple
+10
locations on course
Extensive practice facility with unlimited
+20
practice privileges for registered golfer
Top 10 architect
+25
11th–50th ranked architect
+10
River or ocean comes into play on holes.
+10
For each such hole
Theme to course: Tour 18, Cowboy’s Club,
+10
etc.
Conducted LPGA or Senior PGA event
+10
Conducted PGA Tour event
+20
Conducted USGA national championship
+20
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Case Study Activities
6. Customer Service Amenities. While every golfer is looking for “something
free,” amenities provided could be packaged into the basic green fees.
We have observed over 100 different amenities disbursed at golf
courses, starting at the bag drop area, locker room, first tee, the cart,
pro shop, on the course, and in the cart return area. These range from
engraved bag tags, bottled water and suntan lotion, to certificates of
accomplishment for besting par on a signature hole. The creativity of
golf course managers in making the customer’s experience special has
been noteworthy. We have even witnessed free food on the course,
for example, fish tacos at Cabo del Sol or chocolate chip cookies at
Hualai. For a complete list go to www.golfconvergence.com .
The green fees could be increased based on the number of amenities
provided the golfer based on the following chart:
Amenities Provided
Adjustment to Green Fee
0–2
0
3–5
2
6–10
5
11–20
10
21–40
20
Over 50
50
Note: 0–2 would likely represent tees and ball markers in the pro shop.
The alternatives to merely setting green fees based on competitive rates focus on
the concept that, all things being equal, golfers pay for the value of the product
received, just as they pay for any other commodity.
Thus, each facility should ask,
“What would be the perfect round at our facility?”
“How do we consistently deliver that experience?”
“How can we exceed expectations?”
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Case Study Activities
Class Exercise – Green Fee Rates
Exercise 1: Determine your green fee and compare to courses thirty miles
around.
Using data as a reference point in combination with the information in the case study
and the potential model containing six steps described above, develop what you
believe are the correct green fees for 2011. Please provide a brief justification for all
rates suggested.
Now we know our VALUE + EXPERIENCE -PRICE
Based on the information presented within the case, create a list of revenue
enhancements and expense adjustments you would recommend quantifying the
financial impact. By adjusting rates and examining expenses closely, you should be
able to identify $100,000 in operational recommendations.
1.
2.
3.
4.
5.
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
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Case Study Activities
Activity 7: Assess Effects of Inside and Outside
Factors on the XYZ Forecast
Forecasts based on past trends assume that things will continue much the same as they have in the
past. Conditions seldom remain the same, or management may not want them to remain the same. In
this activity, you must describe how certain inside and outside factors would lead you, to revise the
trend-forecasted numbers for the forecast you just created in Activity 5.
On the next page, indicate how you would revise several key line items in the trend-forecasted
numbers, and describe the factors or observations on which you based your revised numbers.
Use the XYZ Golf Club examples below and our text to help your critical thinking and analysis
For example from XYZ Golf Club on the number of rounds:
Trend-forecasted number: 27,037 (up 3% over 2013)
My revised forecast: 28,350 (up 8% over 2013)
Factors/observations on which my forecast is based:
Our main competitor in the area does 45,000 rounds a year, and the industry average for daily fee
facilities in our region is 52,500 rounds. In the last few years, XYZ Golf club hasn’t done much
marketing or public relations. With more effort in that area, I think rounds could go up more than
the historical trend. .
Worksheet Example for Activity 7
Directions: Revise the following keyline items and write your observations.
1. Rounds
Trend-forecasted number: 27,037 (up 3% over 2012)
My revised forecast: (up _% over 2012)
Factors/observations on which my forecast is based:
2. Tournament Rounds
Trend-forecasted number: 665 (down 30% over 2012)
My revised forecast: (up/down _% over 2012)
Factors/observations on which my forecast is based:
3. Merchandise Revenues
Trend-forecasted number: $99,753 (up 3.5% over 2012)
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Case Study Activities
My revised forecast: (up _% over 2012)
Factors/observations on which my forecast is based:
4. Cost of Goods Sold
Trend-forecasted number: $87,658 (up 7% over 2012)
My revised forecast: (up/down _% over 2012)
Factors/observations on which my forecast is based:
5. Greens Fee Revenues
Trend-forecasted number: $755,127 (up 4.5% over 2012)
My revised forecast: (up _% over 2012)
Factors/observations on which my forecast is based:
30
Case Study Activities
Worksheet for Activity 6
Directions: Revise the following key line items and write your observations.
1. Rounds
Trend-forecasted number: ___________ (up 3% over_______
)
My revised forecast: (up _% over _______ )
Factors/observations on which my forecast is based:
2. Tournament Rounds
Trend-forecasted number: __________(down 30% over ________)
My revised forecast: (up/down _% over ________)
Factors/observations on which my forecast is based:
3. Merchandise Revenues
Trend-forecasted number: $_______________(up ______% over ________)
My revised forecast: (up _% over _________)
Factors/observations on which my forecast is based:
4. Cost of Goods Sold
Trend-forecasted number: $______________ (up ___% over _________)
My revised forecast: (up/down _% over _________)
Factors/observations on which my forecast is based:
5. Greens Fee Revenues
Trend-forecasted number: $________________(up ______% over _________)
My revised forecast: (up _% over ________)
Factors/observations on which my forecast is based:
31
Case Study Activities
Activity 7:
STEP 5: Golf Course/ Playing Field
Architecture, Agronomy and Maintenance
Maintaining the Playing Field
A golf course can be divided into greens, tees and fairway, rough, water features,
and sand bunkers, with an emphasis in these areas as follows:
Putting Green, Tees, and Fairway










Soil structure
Turf types
Water quality
Fertilizer, fungicide, and insecticide program
Topdressing methods and sand quality
Mowing operations and machine adjustment
Putting surface preparation
 Rolling
 Mowing
 Verticutting
Aeration method and frequency
Irrigation practices
Tree maintenance
Sand Bunkers





Sand quality and depth
Shape and Depth
Grass edges
Method of maintenance
Drainage
While hole locations are obviously an emphasis for the greens and marker locations
for the tees, the list represents the critical areas of maintaining the playing field.
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Case Study Activities
Costs to maintain a course vary widely, with labor being a significant component.
Capital improvements can cost a fortune, and maintaining an equipment fleet is
expensive.
Maintenance: A Wide Range of Costs
An average 18-hole golf course covers 150 acres, of which only 100 acres are
maintained Turf grass, and includes the following:
Turf grass
Acreage
%
Rough
51
34.0
Fairways
30
20.0
Driving Range/Practice Areas
7
4.7
Greens
3
1.3
Tees
3
1.3
Clubhouse House
3
1.3
Nurseries
1
.7
100
63.3
Non-Turf grass landscape
24
16.0
Water
11
7.3
Building
6
4.0
Bunkers
4.5
2.9
Parking Lots
4.5
2.9
50
33.1
Total
Non-Turf
grass
Note: In published report, averages were utilized which don’t necessarily summarize to the
total.
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Case Study Activities
The quality of the playing field can be reduced to four principal elements:
(1) labor, the largest expense; (2) water, fertilizer, chemicals, and utilities; (3) capital
improvements; and (4) equipment required to maintain the facility.
The cost of maintaining an 18-hole golf course can range from $200,000 to more
than $2.5 million. The National Golf Foundation reported the following total
maintenance costs in a report titled, “Operating and Financial Performance Profiles
of 18-hole Golf Facilities in the U.S.
Description
Public Mid-Range Frostbelt
Annual Maintenance Costs
$ 377,160
Public Mid-Range Sunbelt
540,660
Public Premium Frostbelt
555,460
Public Premium Sunbelt
825,640
Private Mid-Range U.S.
611,240
Private Premium U.S.
1,412,720
Are these annual maintenance numbers accurate? The GCSAA reports that the
average annual maintenance costs for U.S. courses, including labor and water, are
$690,206, $769,426, and $806,206, for public, municipal, and private courses,
respectively. How accurate these averages are is unknown, because accumulating
accurate data within the golf industry remains a challenge.
Interestingly, 28% of private premium U.S. golf courses spend in excess of
$1,500,000 per year for maintenance. The largest factor impacting the cost of
maintenance is labor.
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Case Study Activities
Following are the median labor and staffing costs for the operation of the various
types of golf courses:
Description
Annual Labor
Full-Time
Part-
Costs
Staff
Time
Staff
All Facility Types
$306,446
8
6
Private
409,043
11
6
Daily Fee/Semi-Private
227,819
6
6
Municipal/Military/University
270,000
5
6
Resort
391,000
14
5
How many hours are required to maintain a golf course? Four hundred hours per
week. The tasks involved administration, bunkers, cart paths, the course (irrigation,
trimming, overseeding and topdressing, fungicides, herbicides, and insecticides),
cutting (greens, 30” collars, tees, fairway, first-cut, roughs, native areas, aprons,
driving range) greens (pins, ball marks, topdressing, rolling, brushing), maintenance
(soil testing aerification, fertilization), ponds, the maintenance facility (cleaning,
maintenance gardens), tees (markers, overseeding, topdressing), and trees
(trimming).
With 12,796 man hours estimated to maintain a golf course for 32 weeks, the
allocation of full- versus part-time workers is an art that can save significant capital,
especially considering the differing benefits required for full-time rather than parttime employees. However, full-time workers, who cost more, often have a better
understanding of the course’s agronomic tendencies and take greater pride in
ensuring optimum playing conditions.
The Natural Replacement Cycle
Since a golf course is a living organism, creating a capital budget and providing an
annual reserve to replace the vital components is prudent.
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Case Study Activities
Unfortunately, as golf courses begin losing money in a competitive market, the first
cuts are always made by deferring capital expenditures. While understandable
because of the large investment, these cuts are often made without the continuing
recognition that the condition of the golf course remains the number 1 requirement of
golfers.
The Golf Course Superintendents Association of America estimates that the amount
of capital improvements required as part of a golf course’s natural replacement cycle
is $2,200,086, and that a prudent golf course should create an annual capital
improvements allowance of $97,335.
Following are the estimated life spans of the various components of a golf course, as
estimated by the GCSAA and Golf Course Builders Association of America:
Description
Greens
Minimum
Maximum
Estimated
Annual
Cost to
Capital
Replace
Reserve
30
657,761
21,925
5
7
44,800
6,400
Irrigation Heads
10
30
114,000
3,800
Irrigation Control
10
15
121,000
8,067
PVC Pipe
10
30
309,600
10,320
Pump Station
15
20
97,790
4,890
5
10
93,350
9,335
15
30
146,685
4,890
5
10
37,680
3,768
Cart Paths
Asphalt
Cart Paths
Concrete
Practice Range Tees
Years
15
Bunker Sand
Irrigation System
Years
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Case Study Activities
Tees
15
20
150,720
7,536
Corrugated Pipe
15
30
398,180
13,273
Bunker Drainage Pipes
5
10
65,000
6,500
Mulch
1
3
1,200
400
Grass
Varies
Varies
2,237,766
101,104
Total Deferred Capital
Note: The Description and Years Minimum/Maximum provided by Golf Course Builders. Estimated
cost to replace and annual capital reserve prepared by Golf Convergence.
Very few golf courses budget for capital improvements. Most courses incorrectly wait
until the capital project is mandated and then often borrow to fund the costs.
The Equipment
Most golf courses operate with a potpourri of equipment. Surprisingly,
heretofore, there has been no standardization of the ideal equipment
standards and the investment mandated by a golf course.
Looking for a standard equipment list for your 18-hole golf course? Keep in mind
that a “standard” equipment list is as challenging to define as a “standard” golf
course.
With these considerations taken into account, the following list may be used as a
minimum guideline, or starting point, for reviewing equipment inventory.
37
Case Study Activities
Pieces of Equipment
Department
Total Cost
17
Greens
87,500
2
Tees
24,000
4
Fairways
70,000
6
Rough
6
Transportation Vehicles
5
Tractors and Trucks
12
Sprayers and Spreaders
50,800
9
Utility Equipment
56,000
14
Tools and Small Equipment
Total
112,000
25,000
117,000
850
543,150
Note: A detailed list of each piece of equipment suggested by the CGSAA can be downloaded at
www.golfconvergence.com.
38
Case Study Activities
Class Exercise
Exercise 1
Calculate the maintenance labor hours to maintain each golf course. Compare the
labor hours required vs. maintenance labor hours actually expended to determine if
there is a favorable/unfavorable labor variance and if so, how much.
Exercise 2
Calculate the recommended list of equipment required for the Earth Golf Course
against what is desirable, and determine how much should be in the sinking fund for
equipment replacement.
Exercise 3
Calculate the cost of any capital improvements you would suggest for your course?
39
Case Study Activities
Become Familiar with the Budget Process
What line items are included on a budget? The monitoring and reporting intervals are important.
What particular performance measurements are tracked?
Even if the facility is not willing to share the actual numbers with you. Ask them to help you provide
answers to the questions below.
Answer
1. How many revenue and expense items are tracked in the budget
2. Who is involved in formulating the budget projections?
List
3. What are two key performance ratios or indicators that the facility tracks?


Answer
4. How often is the budget reviewed? By whom?
5. Are any numbers tracked more frequently than monthly? Which ones? How often are they
tracked?
6. Is there a cash flow budget as well as an operating budget?
Yes
No
7. Is there a capital budget?
Yes
No
8. If possible, ask to see a copy (past or current) of an operating budget, cash flow budget, and
capital budget.
40
Case Study Activities
Activity 8:
Step 6: Marketing/Management
Create a Marketing Plan to target your Core
Customers
5% of gross revenues should be total marketing budget $________________________
50-60%:
$________________
Advertising: Awareness and recall
10%: $
$ ________________
Public Relations: Focus on disinterested third parties
30% - 40%:
$ ________________
Promotion: Used to stimulate play on a specific day!
41
Case Study Activities
Step 6 (continued):
A. Home TEAM:
Using the charts in Chpt: 14 (Page 222) Assess how your facility stands against
industry average.
Write your analysis here:
Bag Drop
Starter
Ranger
Pro shop Staff
Director of Golf
Asst. Professionals
Tournament Director
Director of Instruction
Teaching staff
Food and Beverage: Clubhouse
Food and Beverage: On course
Reservations
Merchandiser
Superintendent
Grounds Crew
Mechanic
TOTAL STAFF
42
Case Study Activities
B. 13 Steps of the Operation
Use the grids in Chapter 14 to assess each area
STEP
SUGGESTION
What Motivated one to play
Reservation process
Directions
Club Entrance
Clubhouse
Proshop
Carts
Range
Starter
Course
Bathrooms
Finish Line
Dining/Chow time
43
Case Study Activities
Activity 9: Step 7: Customer Survey (Chpt. 15)
Please create a customer survey. Example questions include:
1)
2)
3)
4)
5)
6)
7)
What is your gender?
What is your age group?
What is your household income range?
What is your race/ethnicity
How many times do you play golf each year?
How many holes do you usually play?
What are the primary barriers that prevent you from playing golf more
often? (Choose up to two answers.)
8) How many different golf courses did you play in 2012?
9) What factors are important to you in selecting one course over another
(Select only one response per line.)
10) What is a good value for a golf experience (18 holes of golf, excluding
cart)?
11) Do you make tee time reservations on the Internet?
12) To get special prices, do you…
44
Case Study Activities
Activity 10: Step 8: Customer Loyalty
Create ten original customer loyalty ideas /programs for your
facility.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
45
Case Study Activities
Activity: Conduct a SWOT Analysis
Directions: Fill the worksheets using the following as a guideline.
Part 1: XYZ Golf Club Case Study
1. Look at each area of the golf operation. Identify the strengths and weaknesses you see within
the facility and the opportunities and threats from outside.
2. Use the worksheet on the next page to record your comments. When doing your analysis, you
might think about staffing, job responsibilities, total number of rounds, breakdown of rounds,
revenues in each area, the facility’s market, customers, and competition, the operational
procedures, or any other topic covered in the lessons.
Note if the facility has many more weaknesses than strengths or visa versa. This should be
reflected in your SWOT analysis.
3. Record as many strengths, weaknesses, opportunities, and threats as you can identify.
4. Asterisk priorities. When you have completed your list of strengths, weaknesses, opportunities,
and threats, put an asterisk by the items you consider the most important—issues you would be
likely to focus on when improving xyz golf club’s performance.
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Case Study Activities
SWOT Analysis for xyz club
Strengths








Weaknesses








47
Case Study Activities
SWOT Analysis for xyz c.c
Opportunities








Threats








48
Case Study Activities
Directions: Fill out the worksheet using the following as a guideline. As a companion piece to this
activity, look at the strengths and weaknesses of your own facility.
Part 2: Comparison with Your Own Facility
1. Record what you consider your own facility’s four biggest strengths
2. Identify two areas where further improvements could be made to strengthen your facility’s
position in the market or improve revenues, profits, or customer service
3. In looking at weaknesses, describe one weakness that was previously identified. What did the
facility do to improve the situation? Did it work?
49
Case Study Activities
Your Facility's Strengths and Weaknesses
Biggest Strengths




Potential Weaknesses or Threats


One Past Weakness/Threat and its Remedy


Past Weaknesses/Threats



Remedy/Results



50
Case Study Activities
Activity: Identify Strategic Objectives
[Financial/Customer/Operational/People]
Directions: Fill out the worksheets using the following as a guideline.
Part1 : XYY Golf Club Case Study
In this activity, you will identify at least three potential business objectives for the facility (things you
would like to see the facility accomplish ), and some strategies (objectives, goals, and actions) for
accomplishing them (how you would do it).
Objectives [Financial, Customer, Internal/Operational/ and People/Learning] Long term broad
statements. The objectives you decide on might relate to financial , customers service, increased
rounds, staff development, technology acquisition, course design improvement, or any other issue you
think might improve success of the course.
After defining your key objectives. Write goals required to support those objectives. Goals are
•
Specific, in terms of what you intend to accomplish by a certain date
•
Measurable, with specific numbers, percentages, dollar figures, or service goals attached
•
Attainable
•
Realistic and achievable based on your SWOT analysis and your assessment of the
potential market
•
Time specific
[Goals to achieve your objectives might include higher prices, more targeted promotion, expansion of
the golf shop, additional staff or additional staff training, community outreach, etc.]
51
Case Study Activities
XYZ Golf Club Strategic Objectives and Goals
Objective 1:
Goals to accomplish this:
Objective 2:
Goals to accomplish this:
Objective 3:
Goals to accomplish this:
52
Case Study Activities
XYZ Golf Club Strategic Objectives and Goals
Objective 4:
Goals to accomplishing this:
Objective 5:
Goals to accomplishing this:
Objective 6:
Goals to accomplishing this:
FINAL BUDGET (Handout)
POWERPOINT PRESENTATION
References
PGAlinks (2012). Business and Planning Operations. Retrieved from www.pgalinks.com
Keegan, J. (2011). Business of Golf: What are we thinking? Colorado Springs, CO; Golf
Convergence
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