WEATHERING THE STORM GOLF COURSE CONSTRUCTION INDUSTRY

Transcription

1 WEATHERING THE STORM GOLF COURSE CONSTRUCTION INDUSTRY Presented by Bill Kubly

2 Perspectives Golf Course Builder s Perspective Golf Course Irrigation Installer s Perspective Golf Course Owner s Perspective

3 What Got Us Here? s New Courses Per Year Until Simple Supply Demand Problem Bubble Burst 3. Too Many High-End Courses Killed Market 4. Too Many Middle-Market Development Courses 5. Too Many High-End Development Courses (Second Home Market) Didn t We See This Coming?

4 Development Courses 1. Owned by Developer A. Courses loosing money loss leaders for home sales B. Smart ones dumped course to a Golf Developer C. OR: sold completed course to a Golf Operator 2. Owned by Golf Developer (Free Land Lot Rebates) A. Money dried up = no loans for golf B. Courses loosing money C. Developments suffer if course goes under

5 Second Home Market 1. Too Many Options in the Market Supply and Demand 2. Market Crash Stops Purchase of These Homes A. Stops the sale of memberships in these markets B. Golf courses memberships aren t full loose money

6 The Rounds of Play Squeeze 1. Rounds of Play Virtually Level A. Many initiatives to increase play 2. Too Many High End Courses Domino Effect A. Due to competition - they lower prices B. Middle market courses must lower their - prices to keep rounds C. Lower end suffers loss of rounds to the high end and middle due to pricing

7 The Late 2008 Crash 1. Good News Golf Was Already in a Major Slowdown A. Adjustments had already been made by most builders and owners 2. New Openings 43 in 2008 A. 60 in 2007 B. 100 in 2006 C. 30 in 2009 D. Less than 25 per year for a few years

8 The Late 2008 Crash 3. Renovation Projects A. Slow down to a 10 year low B. Holding onto cash C. Operations struggling D. Memberships struggling

9 The Late 2008 Crash 4. Irrigation Business A. Similar to renovations a 60-70% reduction in work B. Can put off for a year or two sitting on the sidelines C. Days of select bid list is virtually over D. Cheapest price more important than value DANGEROUS E. A lot of hungry contractors F. Up until late 2008, increased volume in irrigation only 1. Technology, control systems, pump stations and sprinklers 2. Need for reduced water usage Going Green

10 The Late 2008 Crash 5. Housing Comes to a Stop A. All housing project golf course work comes to a stop 6. Many Viable Projects Put on Hold Indefinitely A. Banks pull their commitments B. Venture capital comes to a halt C. Many existing projects can t pay their bills default D. Some viable projects with money stop projects 7. Golf Rounds - FLAT Worry About the Future A. Estimated to be down 10%-15% in 2009

11 Problems Today 1. Banks A. Golf Developers No golf lenders left Interest rates down great thing B. On Contractors Cut off lines of credit tough to get Bad receivables can t pay back loans C. On Existing Golf Course Portfolios Equity calls on loans Calling loans Refinancing Demands Interest floors of loans

12 Problems Today 2. Employment A. Builders Cutting Theirs Staffs Some 90% Cuts B. Glut of Golf Course People Able to Work C. Existing Courses Getting Even Leaner D. Many Builders Will Leave the Industry Have Already E. Employment Outlook Bleak

13 Problems Today 3. Bonding A. Will Become Tougher and Tougher for Contractors to Get B. Reviewing Contractors Financial Strengths Receivables Doubtful Collections Margin Deterioration

14 Problems Today 4. Outlook for New Golf Projects A. NGF Should Get Back to a 0.4% Increase in Facilities 60 per year B. At best Per Year When Dust Settles C. Foreign Work China, Dubai, & Europe D. Closings Will Match or Exceed Openings for Several Years

15 Problems Today 5. Golf Course Owners A. Cost Cutting Measures in Place B. Very Fragmented Industry No Government Intervention C. More Pricing Pressure Due to Need For More Rounds D. Private Clubs Members Dropping Out, Less Dues Revenue

16 Problems Today 6. Outlook for Irrigation & Renovation A. Much Better Outlook than New Golf B. Pent Up demand Once Money Loosens Up C. Need Due to Going Green D. Need Due to Water Conservation E. Need Due to Member Demand for Perfect Conditions F. Keeping Up With the Competition for Members & Rounds

17 The Good News! 1. Many Golf Course Builders will & Have Left the Industry 2. Many Golf Courses will Change Hands Will Need Improvement 3. Great Time to Purchase a Membership 4. Pricing is the Best It Has Been in Years - Commodity prices are down - Contractor s are hungry Competitive - Cost of money is very cheap today

18 The Good News! 5. Delayed Projects Need to be Put Back on the Schedule 6. Competition for Members & Rounds Creates Re-Work 7. Bonding Companies Will Show You Who is Strong 8. The Financial Bad Apples Will Be Gone

19 What Can You Do: Irrigation Industry? 1. Look Closely at What Your Clients Really Need A. Systems more expensive today - Material inflation - Designing to assure operations savings Can be expensive - Everyone wants the bells and whistles - Different grasses with different requirements

20 What Can You Do: Irrigation Industry? B. Value Engineer Your Plans with the GCA Before the First Plan Gets Designed C. Offer Alternatives That Are Less Expensive D. Only Deal With Seasoned Irrigation Contractors E. Involve Your Contractors in Good Early Budgets

21 What Can You Do: Irrigation Industry? 2. MOST IMPORTANTLY A. Tell Your Clients That Now Is A Great Time To Put In Irrigation - Best pricing ever Competition - Commodity prices are mainly down - Prices can only go up B. It is Going to Get Better

22 Thank You! Bill Kubly Landscapes Unlimited, LLC 1201 Aries Drive Lincoln, NE