'It's Time to Buy Gold'
Kyle Phillips is the creator of Kingsbarns, The Grove and many of the world's finest golf courses in 20 countries. Writing here for GBD, he believes the golf development industry has only itself to blame for many of the current ills, but feels with the right development model, the golf business can still succeed in a challenging environment.While historians will describe autumn 2008 as the beginning of the current economic crisis, they will only be describing the moment in time when we realized that we were sick. The virus was in our system long before. Sure, we were warned by a brave few that we were on the brink, but we did not want to believe them. Only after several "too big to fail" companies failed, and the markets tumbled, did we realize we had all caught the flu.
The golf industry is not immune either. Alarming numbers of "too big to fail" residential golf communities are on the ropes, being taken over by banks, or being ploughed under. In Dubai, not even the marketing brand of Tiger Woods has been enough to make the development sell.
But the problems we face today within the real estate development sector of the golf industry did not begin recently. This virus has been building up in our golf industry bloodstream for over four decades. It was in this period that golf started to become more incorporated in residential communities. Often the developers did not play or understand much about the game, but they did know that with a golf course, they could sell real estate for a premium. Unknowingly at the time, the real estate development industry began redefining the 'essentials' of the modern championship course for the golf industry.
No expenses were spared. Golf was sold with housing and memberships marketed like they were selling new cars. Impressive marketing firms were hired and glossy brochures were sent across their region. They proudly proclaimed that their golf course development was especially worthy to play, not only because they were par 72 and really long, but they had a state-of-the-art irrigation system, full length concrete cart paths, a waterfall behind the 18th green, a celebrity designer, and most importantly, they had built the biggest, most expensive clubhouse on the planet.
The Americans were particularly good at developing and refining this golf development 'success formula' to incorporate home sites around every fairway. Golf community master plans were judged on the basis of which land planner could get the most linear frontage of houses around the golf course. First they sprung up one by one, then two by two, and finally the 'formula' spread like McDonald's fast food across the globe, to places like Spain, Dubai, China and Mexico. We were even silly enough to pay steak prices for their hamburgers.
Tens of thousands attended countless conferences and seminars to learn how they too could incorporate the magic golf formula into their real estate development. The crowd would go wild at the proclamation that "golf does not make money, so damn the golf and build the houses".
And damn the golf they did, with the most 'successful' followers now bleeding at rates exceeding 50,000 Euros per month.
The magic formula gave golf no chance to be profitable. But when the question was raised, we were told that this was not a flaw in the formula, because the members would buy or be obligated to take over the golf clubs once all of the houses were sold. And besides, the members would never know just how much subsidy the course had been given through the sale of real estate until after they owned it for a year or two, or that the whole product they had bought into was nothing more than 'fools gold'.
While I have been known to enjoy a 'Big Mac' now and then, I could not imagine eating them every meal. But today the residential golf market is choking on Big Macs and the magic formula has been exposed for what it was all along, a recipe for failure. The marketing was great, but the substance was just not there. We were able to live in denial of this hollow reality, just as long as we never ventured out beyond the land of fast food golf.
However, every time we enjoyed a fine dining experience at a links course or one of the older classic courses from the last century, it became increasingly difficult to return to our Faux Golf and Country Club. No matter how determined we were to suppress the facts and embrace the magic formula, our hearts knew all along that these fine courses with their classic architecture, many designed by those who grew up playing on 'the links' of the British Isles, were still the gold standard in golf.
But times of crisis can also be of great benefit. It can cause us to stop, analyze and redirect our priorities. It can cause us to gain perspective of what is important and get back to the basics. Friends and family once again take their rightful place over personal wealth accumulation.
It is time for golf course developers to get back to basics and begin investing wisely again in golf. However, not all followed along with the sheep. There are those developers who jumped ship years before this recent crisis and invested successfully in golfing gold. Those golf course developers sought out hands-on designers who were capable of designing courses for the modern game, with architecture that evoked in our soul the elements associated with the traditional golf courses that we love. They developed and tested their business model to see that both the construction costs and the on-going operation costs would not place a burden on the ability of the course to operate profitably.
A primary objective of any new golf development should be to establish the name of their golf course as a 'brand' name that is known for quality within the world of golf. Golfers travel across the globe to old and new golf venues such as Pebble Beach, Turnberry, Pine Valley and Kingsbarns, first and foremost for the golf experience. I know this may not be in my best interest, but if the best thing you have to talk about is who designed your golf course, then you probably haven't created a special golf experience. While it is true that a golf course designer who has a track record of success can add credibility during the construction and growing in period, but once open, it is the quality of the architecture of the golf course that will differentiate the product. This is a fact seldom understood in emerging golf markets and with golf developers who have a nominal understanding of the origins of the game. They build course after course, each time hiring people famous as players, rather than famous as designers (they can be the same), spending more than enough money along the way, only to later wonder why the world of golf does not consider their course as a 'must play'.
The current model of the golf residential community development has lost the plot. This model fosters ‘cookie-cutter’ course designs that consume too much land to be affordable to maintain and uses too much water to sustain. It incorporates long walks between holes that ruin the rhythm of the game and forces us to play on riding carts. With out-of-bounds and mitigation areas galore, rounds can take six hours to complete.
The gold standard in golf is more than shooting a score; it is a sport, which has certain social elements that are an essential part of the sport’s pleasure. It is walking shoulder to shoulder with friends and family; youngsters learning the etiquette of the game while caddying; firm, fast playing conditions played over tawny, low fertility, rumpled ground; where shot making opportunities are more valued than the length of the course.
For future golf communities to succeed, new ‘golf parks’ must be designed to give life to the social fabric of the game, giving the sport of golf a chance to grow and flourish. When the game of golf is a success, then the business of golf can also succeed. Courses will need to be designed with an emphasis on its architecture, with the feeling and passion for golf, rather than in technician’s terms of length and linear meters of home sites.
There are very few of us, in the golf course design business, who have focused our careers on designing golf places based on this gold standard model; where the norm has been working with smaller budgets and achieving better results.
The industry buzz from America of golf “going green”, is only news in America. In Europe, we have been “going green” for decades. The architecture of the courses we have been designing in Europe allows for excellent playing conditions with firmer, faster surfaces (less water), low fertility maintenance programmes (less fertilizer), and thus less maintenance cost (less mowing). It is these types of courses that can become the ‘must play’ courses and will remain sustainable in tough economic times.
In this evolutionary process, certain species will become extinct and others will adapt and live to the benefit of the total population. It is not a time of despair, but a time of correction for all sectors of business. We now have the opportunity for the golf industry to actively redirect the priorities for future golf course developments back towards the origins of the game. It’s time to invest ourselves fully in sustainable golf course developments. It’s time to buy gold.
Kyle Phillips
Featured in Golf Business Digest
August/September 2009
Labels: Kyle Phillips
posted by Kellie McCoy @ 12:13 PM
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