• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Golfers Direct Business Plan 2003
 

Golfers Direct Business Plan 2003

on

  • 563 views

Authored by Brian Pilsl, this business plan may not look as pretty as some do today, but we were able to raise over $800,000 in stage 1 private equity investment capital. ...

Authored by Brian Pilsl, this business plan may not look as pretty as some do today, but we were able to raise over $800,000 in stage 1 private equity investment capital.
Magazines sell advertising based upon the size and demographic characteristics of their audience. Advertisers place ads hoping to reach consumers who are reading adjacent content pages. A yardage book is an important guide utilized by golfers to improve their game while actually playing golf. A detailed map of each of the 18 holes on the golf course became the content of our “magazine”. By mounting our books in each golf cart, we guaranteed advertisers exclusive and undisturbed access to sizable audience of very affluent consumers, tourists and key executives.

Statistics

Views

Total Views
563
Views on SlideShare
563
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Golfers Direct Business Plan 2003 Golfers Direct Business Plan 2003 Document Transcript

    • Golfers DirectBusiness Plan
    • CONTENTSSection 1: A Brief OverviewSection 2: The Business Plan Background The Advertising Industry Market Segment: Advertising and Golf The Golfers Direct Platform U.S. Market PotentialSection 3: The Marketing Plan Creating Value Acquiring the Real Estate Selling the Golfers Direct Platform Pricing the ProductSection 4: Risk Analysis Competitive Environment Competitive Advantages Multiple Strategy Options Analogous ComparisonsSection 5: Financial Plan Investment Highlights Sources and Uses of Cash Five-Year Growth Assumptions Pro Forma Statements & Notes to Financial InformationSection 6: Operating TimelineSection 7: Exit StrategySection 8: Appendix Management Team & Lease Summary Potential Advertisers & Player Survey Revenue Growth Matrix Golfers Direct Member Course List Golfers Direct Audience Profile & Demographics Golfers Direct Industry Factoids
    • A BRIEF OVERVIEW The Concept: Advertisers spend more than 230 billion dollars annually to extract moneyfrom consumers. Not surprisingly, the most attractive targets are affluent, high spendingconsumers. Golfers are a growing part of this target market as the average golfer has an annualincome exceeding $72,000 with 40% earning over $75,000 and 16.5% earning over $100,000. Golfers Direct has acquired exclusive advertising rights to over 7,600 golfers-onlyadvertising locations. The Company’s Southwest Region marketing platform alone, acombination of print and billboard advertising, currently reaches more than 3,000,000 golfingconsumers – exceeding the combined readership of the top national golf magazines. The opportunity: By providing a new advertising platform, Golfers Direct will provideadvertisers exclusive time in front of a captive audience of golfing consumers while actually onthe golf course. The Golfers Direct platform will initially grow to include over 152,000 displaysseen by the target audience during approximately 100,000,000 annual rounds of golf. At lessthan 30% of full market penetration, Golfers Direct has the potential to become the largest mediaprovider directed at the golfing consumer. A fully developed national program will includeapproximately 6,000 qualified golf courses with 456,000 displays showcased during 300,000,000annual rounds of golf. The Competitive advantage: With its exclusive, no competition locations, Golfers Direct isuniquely positioned to capture substantial revenue market share from major advertisers in searchof affluent consumers. This objective can be accomplished quickly and certainly by providingadvertisers with “must” read locations to highly qualified readers at a fraction of the cost chargedby mass media providers, where “must” read or guaranteed exposure is at best a hope andcertainly not an expectation. Multiple options: Golfers Direct is in a position to either market its advertising platform ona wholesale basis to other media location providers (become a site provider), compete directlyfor advertisers, outsource marketing or establish strategic alliances to execute combinations ofstrategies. The Product: Golfers Direct holds more than 7,600 golf cart leases on more than onehundred golf courses throughout Arizona, California, Hawaii and Nevada. The Company willinstall and maintain custom yardage “books” in the golf carts of our participating golf courses (asdepicted on the following page). These are twenty-page, double-sided layouts with one sidedisplaying a map of each golf hole, and the other a national advertiser, full-page ad. The benefits: For the golfer, these guides offer valuable layouts of each hole, which increases the pace andquality of his golfing experience. For golf course management, the Golfers Direct platform provides guaranteed monthlyrevenue (lease payments) and a no-cost way to market their amenities to players while on thecourse (each course is given 2 complimentary ads in between holes 9 & 10).
    • For national advertisers, Golfers Direct offers highly effective “golfers eyes only” adimpressions at cost efficient rates up to 90% below golf oriented print media. Investment highlights: With a base capitalization of $800,000, the company willgenerate a net operating profit of $1,898,438 by the end of the second year from advertising salesrevenue of over $5,000,000. Expansion will increase net revenues to over $39,000,000 by thefifth year of operations. At the end of the 5th year, operating profit will be over 48% withconsiderably greater returns on disposition. Increasing golf course memberships and advertisingrates will provide revenues in excess of $100 million. Golfers Direct is a low risk, high yield opportunity in a high growth, long establishedindustry. The Golfers Direct Marketing Platform: Millions of golfers reading an advertisers message while they are golfing
    • THE BUSINESS PLANBackground Advertisers: American business spends more than 230 billion dollars annually advertisingtheir products and services. Almost uniformly, advertisers compete for the attention of affluent,high spending consumers. And advertisers love golfers (whether or not they love golf) becausegolfers practically define the affluent consumer: On average, a golfer is 40 years old, welleducated, often a key decision maker, enjoys a high income and spends freely- in the advertisingworld, a “prize catch.” In their push to reach the golfing public in 2001, advertisers spent over $345 million withthe top 5 national golf magazines alone ($737 million total) and spent an additional $400 millionto endorse professional golfers. Advertising spending by companies outside golf, to reachgolfers, has increased by more than 200% since 1996. The Golfers Direct advertising platform isuniquely positioned to capture a Golfers attention. In fact, a golfer can’t avoid reading theadvertisers message. This exclusive medium also provides advertisers guaranteed time in front oftheir target audience for a fraction of what a national golf magazine costs (where they can onlyhope to be seen). With its exclusive “billboards” which offer higher quality impressions at 10 or15% the cost of other media, Golfers Direct will capture a substantial portion of advertisingbudgets already dedicated to reach golfers (in other words, affluent consumers and key businessdecision makers). Reach: Golfers Direct has leased 7,600 exclusive advertising locations offering access toa golfing audience of over 3,000,000 individual golfers playing over 5,000,000 annual rounds ofgolf. With current invitations to include an additional 11,400 locations, the Company can quicklyincrease its audience reach to 7,600,000 highly sought after golfing consumers. Following initialstart up, the company will be able to rapidly expand to 500 member courses to include 38,000locations, reaching a nationwide audience in excess of 19,000,000, which will at that point easilymake Golfers Direct the largest US media provider directly reaching the golfing consumer.Following a 5-year growth plan, our national program will include 2,000 qualified golf coursemembers with 152,000 displays showcased during 100 million annual rounds of golf. The World of Golf Courses: There are approximately 12,000 full sized, 18-hole golfcourses in the US, and an additional 5,000 courses offering 9-holes. Outside the US, there areapproximately 15,000 more golf courses. Offering a lower cost way to practice, there are 2,400freestanding driving ranges in the US. Driven heavily by planned community developments, over the past six years the nation’ssupply of golf courses has actually grown more quickly (2.1%) than the number of golfers(1.3%), suggesting that supply of “tee-times” may be outpacing demand. More slot timesavailable than golfers is good for golfers, and good for Golfers Direct, as Golf course managerssearch for additional sources of income.
    • The supply of golf courses in Southwest and West is growing even faster. As of 2001,Arizona had 352 golf courses with an additional 56 under construction or in planning (a 16%increase), California had 1038 golf courses with an additional 168 under construction or inplanning (also 16%) and Nevada, 114 golf courses with an additional 30 under construction or inplanning (a 20% increase). Golf driving ranges have experienced growth as well. The Golfers Direct primary market is comprised of golf courses that use golf carts, areopen to the public, and are open for play year-round. Approximately 8,000 18-hole courses and3,800 9-hole courses meet these criteria.The Advertising Industry Advertising is here to stay. So long as producers of goods and services have products tosell, advertising will be with us. Advertisers spent a total of $231.4 billion in 2001, with $11.1billion spent on print media, and $5.1 billion allocated to outdoor advertising (billboards, busshelters, etc). Combining the best attributes of both print and outdoor advertising, the GolfersDirect advertising platform is extremely well positioned to capture a share of this enormousmarket. Although total advertising expenditures were down slightly in 2001, reflecting the overalleconomy, spending was up by 2.2% through the first three quarters of 2002. In fact, a recentsurvey (adage.com) indicates overall spending increases of 63% are planned in 2003 by the Top100 US Advertisers. Despite the fact that general magazine advertising decreased by 10.3% in 2001, three ofthe top five golf industry magazines experienced significant growth in advertising revenue, andthe top 100 U.S. outdoor advertisers increased expenditures by 20.8%. In 2002 Golf Magazineincreased its total ad pages sold by 3.3% fueling a revenue increase of 14%. In fact advertiserswho target golfers in financial services, real estate, automotive, beer & wine and travelcategories all increased their outdoor advertising spending in 2002, notwithstanding uncertaineconomic conditions. Pricing: The dollar cost per thousand impressions (CPM) is commonly used to measurethe cost efficiency of an advertising purchase. Impressions are the total number of times an ad isseen. Frequency is the number of times a single consumer will theoretically view an advertisersmessage during a certain time period. Impressions are calculated by multiplying the size of theaudience by the frequency. For example, a national golf magazine with a readership (rate base)of 1,000,000 subscribers (magazines have a presumed frequency = 1.0 which means that 1million subscribers provide 1 million total impressions) charges $92,000 per month for a single,four-color, full-page ad (a CPM of $92.00). The high price advertisers are paying to reachgolfers is an important part of the Golfers Direct competitive advantage, which delivers a higherquality ad impression for 10% of the cost of typical golf advertising alternatives. The GolfersDirect advertising platform provides a powerful, direct marketing reach at an enormous discountover competitive media.
    • Market Segment: Advertising and Golf Golfing is big business. The golfer marketplace exceeds $63 billion dollars, with $40billion expended in core industries (facility operations, golf course capital investments, golfersupplies and media, tournaments, charities and associations) and $23.5 billion in enabledindustries (real estate and hospitality/tourism). By way of comparison, the golf industry is largerthan both the amusement/gambling/recreation industry ($56 billion) and the motionpictures/sound recording industries ($58 billion). Golfers are coveted consumers: There are a great number of golfers today. Golfers are agrowing, affluent consumer group that earns, and spends, substantial discretionary income.Currently, 37 million golfers play an average of more than 518.1 million rounds of golf annually.Boosted by popular folk heroes like Tiger Woods and greater access to facilities, golf isincreasingly popular across all segments of the population. According to ESPN, Golf is one ofthe few sports that experienced a positive increase in its fan base during the past 5 years. Demographics tell the story. The average golfer is 40 years of age, college educated andearns an annual income over $72,000; but nearly 40% earn over $75,000 and 16.5% earn over$100,000. Perhaps even more important than outstanding consumer demographics, businessowners and key executives can be reached with a high degree of certainty. Golf is the #1participatory sport among business executives, and 98% of Fortune 500 CEOs picked golf astheir sport of choice (1999 PGA survey). A recent Starwood Hotels survey indicated that 97% ofbusiness executives believe golfing is a good way to establish a close business relationship.Golfers are frequent travelers. Approximately 16 million golf-related trips were taken in 2000with over 10 million trips being golf specific. On average, golfers spend more than $26 billionannually on golf-related travel. Golfers spend freely. Golfing consumers spend more than $6billion annually on golf equipment, apparel and literature, making golf related equipment numberone in the sports equipment industry. The problem: Getting a golfer’s attention. Advertisers compete for golfers attentionprimarily through print (magazines), and secondarily, through radio and television commercialson networks such as the Golf Channel and through advertising during tournament broadcasts.Tournament and tour sponsorships (signage and naming rights) are also used. Each of theseplatforms is expensive, full of inherent distractions and cluttered with direct competitors. The Solution: Golfers Direct. The Golfers Direct advertising platform substantiallyimproves both effectiveness and cost-efficiency over traditional print media that reaches only asmall portion of the golfing public. The unduplicated print audience of the national golfmagazines (those who subscribe to any golf publication) is slightly more than 10% of all golfers(Golf Tips Magazine). In contrast, Golfers Direct can reach ALL golfers, while they are actuallyplaying golf. The Golfers Direct platform offers advertisers access to a pre-qualified targetaudience who pays an average of $900 per year in course fees before they even begin to see theads whereas the average annual subscription price of a golf magazine is under $20!
    • The Golfers Direct Platform Playing a better game: navigation aids. An important part of Golfing culture is thecontinuing effort to improve scores. In addition to conditioning, stance, swing & equipment, themore a golfer knows about pin placement & exact distances the better a game can be executed,and the better the score. The basic golf course “road maps” for better play are:  Pin placement advisory. To mitigate damage to the greens, every golf course rotates the pin (hole) placements on each green, and golfers like to plan their shots relative to these locations. Most golf courses provide a sheet, typically mounted on the golf cart, which shows golfers a diagram of the green, and corresponding pin placements.  Color-coded flags (the bare minimum advisory) tell a golfer whether the hole is near the front, middle or rear of the green.  Generalized course layout map. A generalized layout of the golf course lacking detailed information.  GPS real time position advisor. This device is a small computer screen mounted in the golf cart that provides a running narrative of data based on any location the golf cart happens to be. While this system provides the most data to a golfer, it is expensive, substantially less than 100% reliable, and has enjoyed only limited acceptance to this point.  Printed Yardage Book made from GPS surveyed map of exact locations and distances. A GPS surveyed, detailed map of each of the 18 holes, showing exact distances from tee to green at various angles, and fixed points on the fairway. This detailed navigation map provides practically all of the information a golfer needs, and works every time, without failure. A Captive Audience: Most “navigation aids,” are located and used in the golf cart, and thespace used to display this information represents prime advertising “real estate.” The GolfersDirect point of display is a detailed GPS surveyed golf course map (a score enhancing tool)mounted directly in the golf cart. This display is referenced multiple times on each of the 18holes, as golfers prepare for each upcoming golf shot. Opposite each hole layout page will be a“can’t avoid reading” message in full color from our 18 advertisers.U.S. Market Potential As earlier discussed, the Golfers Direct core market is U.S. public golf courses thatprovide golf carts and offer year-round play. There are 8,061 18-hole public golf courses thatprovide golf carts, and 4,498 are open year-round. There are 3,824 total 9-hole public golfcourses providing golf carts, with 1,561 offering year-round play. Assuming the current prospectto client conversion ratio of 48% (which is conservative), management believes that we canexpand our program to 2,000 golf courses over a 5-year period. Approximately 50,000 golfers annually play golf and use a golf cart at each of our golfcourses. At a frequency of 3.0, 150,000 impressions at each of 2,000 courses would begenerated, totaling over 300 million annual impressions per advertisement. A very low initial
    • CPM rate of $7 will generate approximately $37.8 million in annual revenue. Please referencethe Revenue Growth Matrix in the Appendix Section. With a stabilized net operating margin of48%, the company will realize over $18.5 million in net operating profit. As the Golfers Directplatform “matures” in the industry (with time or a strategic partner), the chart below suggests thepotential for revenue growth based on CPM rates currently charged by similar advertisingproviders: Comparison CPM 100 Courses 250 Courses 500 Courses 2000 Courses Our Initial Rate 6.67 $ 1,800,900 $ 4,502,250 $ 9,004,500 $ 36,018,000 Airport Billboards 15.00 $ 4,050,000 $ 10,125,000 $ 20,250,000 $ 81,000,000 Bathroom Billboards 17.00 $ 4,590,000 $ 11,475,000 $ 22,950,000 $ 91,800,000 Restaurant Menu 32.00 $ 8,640,000 $ 21,600,000 $ 43,200,000 $ 172,800,000 Stadium Signage 67.00 $ 18,090,000 $ 45,225,000 $ 90,450,000 $ 361,800,000 Golf Magazines 77.00 $ 20,790,000 $ 51,975,000 $ 103,950,000 $ 415,800,000 While the advertising industry is generally biased toward the optimistic, it is evident thatthe Golfers Direct advertising platform has considerable income growth potential from CPM rateappreciation alone. In addition, multinational products and services will strongly support aninternational market for the Golfers Direct advertising platform to expand to an even largernumber of golf courses.
    • MARKETING PLAN Creating value: The Golfers Direct advertising platform creates value where there wasnone before. As one observer put it, “In this new marketing world we need to look at one anotherin terms of what we can do and make together, how we can exchange value to createvalue”.(Steven Heyer, Coca Cola Company 2003). Golfers direct will create value for thegolfing consumers using our yardage books, our member golf courses, our advertising clients,and the company’s stakeholders. Two constituencies: The Golfers Direct platform, like outdoor advertising, has two basiccomponents: (1) control of specific advertising display locations, and (2) advertising clients. Acquiring the “real estate”. Our golf course member program is based on a simplenotion: something for nothing. Golf course members receive “found money” in several differentforms. We pay money for unused, non-revenue generating space in a golf cart. The coursesreceive income primarily from a base lease fee, however the program also includes acomplimentary, two-page advertisement on the pages between holes 9 & 10 of each book (tomarket pro shop merchandise, food & beverage sales, golf lessons, resort amenities, business andtournament services). Also included is a free GPS map layout of a member course, which can bea savings of as much as $12,000. Since Golfers Direct will also manage all production andmaintenance, course members are truly getting something for nothing. The Company’s initial golf course marketing phase was targeted to sign up 100 courses.212 courses were contacted, and 102 have become members (a closing ratio of 48%). As a resultof this early “proof of concept” effort, the Company controls over 7,600 exclusive advertisinglocations at 102 golf courses throughout the Southwest, including locations at 6 U.S. Navy golfcourses. The Navy’s legal department (JAG) has approved the Golfers Direct program, and wehave been invited to include an additional 120 military courses in the program uponimplementation of the system for the initial 6 courses. A number of golf course managementcompanies that manage multiple courses have expressed serious interest, also pendingimplementation of our initial program. In a full marketing effort, management estimates that participating golf courses could bebrought in to the program at the rate of 500 per year. With 102 members now on board, the costof acquiring new leases will decrease, as a substantial number of agreements can be completedvia mail, Internet and telephone. Our expansion course acquisitions will focus initially on four geographic regions:Southwest, Mid-South, Southeast and Midwest. These areas represent a high concentration ofgolf courses, and generally year around play opportunity. For our 5-year plan, 125 courses perregion will initially be selected with expansion to a total of 500 courses in each of the SW, MS &SE Regions and a total of 375 courses in the MW Region. A fifth “region” will consist of 125golf courses owned and operated by the U.S. Military to complete a total of 2000 courses.
    • The 102 current course members provide golf carts used on average by 50,000 golfersannually, exposing our ads to over 3,000,000 individual golfers who will play more than 5million rounds of golf. Initial course member growth by the end of year 2 (625 courses; 125 perregion) will increase this reach to over 22 million individual golfers playing over 31 millionannual golf-cart rounds. Planned expansion will develop a portfolio of 2,000 qualified golfcourses with display rights to 152,000 locations, making Golfers Direct by far the largest golfmarketer in the world.
    • Selling the Golfers Direct Platform Comparative advantages. Initial marketing efforts will be focused on advertisers thatnow spend more than $737 million dollars in total golf industry magazine advertising. Thecomparative advantages Golfers direct offers over magazine advertising are striking: Advantages The Golfers Direct platform provides advertisers:  Break through the clutter: Our ads are adjacent to the information golfers will use, ensuring maximum message exposure.  Extended message exposure: Golfers on the golf course cannot turn the channel or run to the fridge when our client’s message is displayed. In fact, each of our ads receives 3 quality impressions over a 15-minute period while the golfer plays each hole.  Receptive marketing environment: Conversation among golfers, while in the golf cart, can generate valuable word-of-mouth advertising (“I really like my Lexus”)  Point of purchase influence: Many products advertised can be on sale at the golf course- “I think I’ll try a Corona at the 19th green” or “You would have made that birdie put using the new Odyssey White Hot 2 Ball Putter.”  A Pre-qualified target audience. Each golfer has paid an average of $40 just to play the course (once). Result: golfers actually pay to read an advertisers message.  Direct Contact: Only golfers, in the golf cart, actually playing golf, get to read the advertisers message.  Exclusivity: With only 18 advertising pages per region, Golfers Direct can offer category exclusives to advertisers.  Cost-Efficiency: Golfers Direct offers a larger target audience and higher quality exposure all at approximately 10% of the cost of the national golf magazines. Disadvantages a golf magazine advertiser faces:  The message is buried inside volumes of pages (120 on average).  A Multiplicity of ads competing for attention in each edition.  Organic distractions that pull readers away from an ad.  The possibility (probability) that golfers will not even see the ad  Many direct competitors competing for attention in the same issue.  Readership uncertainty: who is really reading ad (in the dentist’s office)  High cost: a four-color, full-page ad will cost over $1,000,000 to run in only 12 monthly issues. As outlined earlier, one of the distinct advantages of the Golfers Direct platform is directmessaging. A golfer may be ambivalent about a beverage choice, but the Budweiser ad staringhim in the face as the beverage cart approaches can resolve the uncertainty. This is also anexcellent method to drive direct response since all golfers will have a pencil and paper (score
    • card) and many will have a mobile phone. As well, ads can generate conversations betweengolfers in each cart (how do you like your Rolex?), which can build enthusiasm and developreferral sales. Pricing the product. As discussed earlier, advertising prices are typically based on a rateper 1,000 impressions (CPM). Frequency is the number of times a specific ad is seen, by oneperson, over the course of a specified time period (each round of golf). Over 5 million annualgolf rounds are played on our existing 102 member Golf Courses. The average golf score is 100,and about 46% of these are putts. For the remaining 54 strokes, golfers will reference ouryardage books to determine yardage in order to select the appropriate golf club. Since our yardage books are referenced 54 times over 18 holes or 3 times per hole, eachindividual ad has a frequency of 3.0 during every round of golf. Therefore, 5 million rounds ofgolf generate 15 million annual impressions (1.25 million per month) per ad at a frequency of3.0. Golf Digest Magazine currently charges $126,000 per month for a full-page ad thatgenerates 1.5 million monthly impressions. According to Adage.com, in 2001 the Top 100Domestic Advertisers spent an average of over $75 million each on magazine and outdooradvertising alone, with full advertising budgets averaging over $800 million. Golf magazinesaverage 105 pages of ads per issue to accommodate the efforts of advertisers to reach golfingconsumers. To achieve its projected revenue within 5 years, Golfers Direct will need to captureless than 1% of the Top 100 advertising budgets. However, as a new company marketing a new platform, Golfers Direct will preliminarilyprice its advertising venues at a very aggressive rate of approximately $6.67 CPM ($100k per adper year). By way of comparison, below is a sampling of various media rates targeting affluentconsumers:  Golf Industry Magazines – $77.00 CPM (avg for Golf Digest, Golf, Golf Tips)  Tucson Lifestyle Magazine (targets affluent readers) - $23.50 CPM  4’ x 28’ Billboards at ASU Sun Devil Stadium (Viacom) - $67.00 CPM  20” x 28” Billboards in the bathrooms of America West Arena $16.67 CPM  Pinpoint Golf Marketing Billboards at driving ranges - $9.00 CPM  Clear Channel Airport Displays $14.80  Cheesecake Factory Menu - $32.00 (ads on the pages opposite the menu pages) Comparison: For the same reach (arguably better) Golfers Direct annual pricing will be$100,000, for what Golf Industry magazines price at over $1 million. Golfers Direct can offeradvertisers substantially better quality impressions for less than 10% of the cost. Once thecompany has attracted a stabilized base of advertisers and begins expansion, rates will beincreased to levels better reflecting the true quality of the Golfers Direct advertising platform.
    • RISK ANALYSISThe Competitive Environment Traditional advertising media: Primary competition comes from traditional advertisingoutlets such as television, radio and print. The company believes the most vulnerable of thesemedia are national golf and travel industry magazines, such as Golf Magazine, Golf DigestMagazine, Golf Tips Magazine, Southwest Airline’s Spirit Magazine and more. Thesepublications attract more than $737 million annually from golfer-oriented advertisers. While inthe past Golfer publications attracted primarily Golf related product advertisers, the advertisermix in recent years is expanding to include more general products and services lines such asfinancial services, automobiles, jewelry and travel. This expanding base is good news for thehighly cost effective Golfers Direct advertising platform. GPS electronic display systems: Approximately 500 high-end courses have installed aGPS computer mapping service. This system provides a small screen monitor in each golf cartand an interactive graphic hole-layout is displayed to “navigate” each hole. GPS systems areexpensive- as much as $200,000- and reviews regarding quality and service have been mixed.To offset high costs, GPS manufacturers are offering advertising-capable systems that canprovide an (theoretically) opportunity to recapture the investment through the sale ofadvertisements displayed on the GPS computer screens inside each golf cart. Our experienceindicates many high-end courses that invest money in this amenity are not disposed to localadvertiser messages “flashing” across their screens. This fact coupled with the high initial costhas lead to a relatively slow acceptance of GPS systems. The largest provider of GPS sold only 9new systems in 2002, despite a very extensive effort. Neither GPS manufacturers nor individual golf courses can provide regional or nationalreach to attract high-end advertisers. Moreover, golf course managers generally have neither theexperience nor desire to sell advertising. In fact, these GPS realities offer an opportunity forGolfers Direct to acquire marketing rights on GPS courses by integrating existing nationaladvertisers with the GPS platform. One golf management company has already requested thatGolfers Direct market four GPS courses in Tucson, Arizona. Custom yardage publishers: Custom yardage book publishers contract with individualgolf courses to produce printed GPS course layout books to be sold to golfers prior to play. Thisservice is expensive ($12,000) and the cost is rarely recovered by selling the books. Thisprogram poses no threat to the Golfers Direct platform, since the golf course member receivesthe same quality layout at no cost, and actually gets paid. While it is possible these companiesmay change their business model, yardage book producers are typically niche publishingcompanies who earn the majority of their income from printing the actual books, and not sellingadvertising.
    • Competitive Advantages The Cost Advantage: The Golfers Direct Platform provides the most cost effective wayto reach the golfing consumer: 10 times less expensive than the most popular media. Comparison Category Golfers Direct SW Region Golf Magazine Golf Digest Magazine Golf Tips Magazine Monthly Impressions 1,250,000 1,405,020 1,563,476 263,219 Monthly Ad Rate $8,334 $111,180 $126,930 $19,065 CPM $6.67 $79 $81 $72 Price/Issue or Price of Play $30 - $175 $1.33 $1.24 $1.71 Total Pages 40 197 234 96 Total Ad Pages 18 101 105 37 Golf Industry Ads 56 40 36 Non Golf Industry Ads 45 65 1 The Message quality: Golfers Direct provides national advertisers an unprecedentedopportunity to market their products and services directly to millions of golfing consumers whilethey are actually playing golf. For a fraction of the typical advertising investment, advertiserswill be able to ensure their full-page ad is seen by their target audience for an extended period oftime, free from the distractions and clutter associated with national golf magazines, billboards,radio and television. Our yardage books provide the information golfing consumers need and usewhile they are enjoying a five-hour round of golf. Each advertisers message is in plain,unavoidable view for an average minimum of 15 minutes. The depth and scope of reach: The Golfers Direct Platform will currently reach over3,000,000 golfers per year, playing 5,000,000 annual rounds of golf, which generates 15,000,000total annual impressions in the SW Region alone. These 1,250,000 regional monthlyimpressions are highly competitive with national golf industry magazines. Once we beginexpansion, Golfers Direct will quickly grow to become the leading media company targetinggolfing consumers.Multiple Strategy Options First to Market. The Golfers Direct advertising platform is unique in the nation. Thereare no other yardage book programs that provide golf courses a guaranteed monthly leasepayment, and there are no on-course programs that offer advertising opportunities on a regionaland national basis. The initial, “proof of concept” effort on the “real estate” side has beensuccessful. Offering member golf courses a guaranteed monthly lease payment, free yardagebooks and free advertising space, management was able to contract a major portion of the SWRegion in a short period of time, converting 48% of its prospects to customers. The companyhas already achieved enough critical mass (market reach) to attract initial major advertisers andbuild out the program at a measured pace and the program can now be expanded quickly to otherregions.
    • There is the obvious possibility that other organizations will enter this market. The bestdefense in this case will be a good offense: as first mover, Golfers Direct will be in a position todominate this market quickly. Sell services to the Competition: Two major golf industry magazines currently claim tobe the major golf media provider. Golf Digest Magazine is owned by the Golf Digest Companiesand has spawned several spin-off magazines such as Golf for Women, Golf World and GolfWorld Business, all in an attempt to reach more of the golfing population. Golf DigestCompanies also sells advertising in The Annual Golf Digest Buyers Guide (golf equipment) andGolf Digest’s Annual Top 100 Places to Play. Golf Magazine is owned by AOL Time Warnerand also publishes several golf industry magazines including the Official Publications for thePGA, LPGA and Champions Tours. Each magazine also sells advertising on their websites totry to reach more golfers. Both magazines claim in one way or another that their media properties reach moregolfers than any other golf media company. Golfers Direct obviously could offer each of thesemedia companies a very large audience- even larger than their existing reach- comprised only ofgolfers. In addition, the major out-of-home media conglomerates, Clear Channel Outdoor,Viacom Outdoor, Lamar Outdoor Advertising, and regional out-of-home providers such asFreedom Communications can be “wholesale” customers, whether or not they are competitors. In addition, small niche marketers like PinPoint Golf Marketing, which focus primarilyon driving range advertising, can be either prospective customers or strategic partners. Join forces with the competition: Golfers Direct is uniquely positioned to select verydifferent operating modalities. Given an appropriate strategic alliance (such as a large marketingorganization), Golfers Direct would be able to concentrate on golf course member acquisitions,while generating revenue from the “real estate” through revenue sharing, contract lease, contractmarketing or other arrangement. Alternatively, management is well qualified to assume the fullscope of marketing and operating responsibilities, while scaling growth consistent with morelimited resources. A barrier to entry: Controlling The Real Estate. Site-specific advertising, likebillboards, substantially reduces competition in general, and eliminates competition on coursesthat are members of the Golfers Direct program. Golfers Direct has the opportunity to assembleapproximately 2000 golf courses within a period of five years.
    • Analogous Comparisons While no two companies or circumstances are exactly the same, the following examplesillustrate the potential of the Golfers Direct Concept: Score Media: (www.scoremedia.net) sells billboard-advertising displays in thebathrooms of 20 NBA/NHL arenas across the country. This firm was founded in 1993 and offersadvertisers a way to reach a captive, sports enthusiast consumer without distraction. Score Mediastarted operations by leasing the wall space in the TD Waterhouse Center, home to the NBA’sOrlando Magic. Over an eight-year period, the company expanded to secure advertising rights in20 arenas, generating approximately $5 – $8 million in annual revenue with approximately 45%net margin. Although figures were not released, it is estimated the firm sold in the range of 10 xearnings. The message: if bathroom advertising venues can attract national advertisers, abeautiful, outdoor, golf course venue should create a stampede. Outdoor Systems: Founded in 1980 as an outdoor billboard company, Outdoor Systemsgrew through a string of acquisitions to over 237,000 out-of-home media displays, to become thelargest outdoor advertising company in the country. In addition to traditional billboards,Outdoor Systems owns bus shelter displays, displays inside major shopping malls and displayson the sides of mass transit vehicles. In 1998, with revenues of $705 million, the company wasacquired by Viacom for $8.7 billion. PinPoint Golf Marketing: Founded in 1995, Pinpoint Golf Marketing has emerged as anational leader in golf venue marketing. PinPoint provides billboard displays at over 600 drivingranges and golf practice facilities across the nation. In addition to practice facility advertisingand marketing programs, Pinpoint Golf offers Golf Cart Wrap Advertising at premiere golfcourses. With a CPM of $9.00, PinPoint can name many regional and national advertisers asclients such as America West Airlines, Bank of America, Buick, Citibank Visa, Honda, NewYork Life, Sony, Sprint and more. Clear Channel Airports: Clear Channel Airports is a division of Clear Channel Outdoor,one of the largest providers of outdoor advertising in the US. Offering hundreds of billboardlocations inside each of 17 of the busiest airports, including the top 4 transfer hubs, in the US,Clear Channel Airports provides advertisers a medium to target affluent consumers and businessexecutives and can list many regional and national advertisers as clients such as AT&T, Siemens,Apple, Balance Bar, Merrill Lynch, Cadillac, American Express, and many, many more. ClearChannel Airports currently charges a CPM of approximately $42.00 to have full displaycoverage of available airports. Buzz Marketing: The innovative marketing and media company reaches more peopleevery week than Time magazine with ads on the back of paper fortunes in Fortune Cookies.Buzz Marketing owns the exclusive advertising rights to more than 7 million cookies a week andhas relationships with fortune cookie manufacturers covering 30 states. Buzz currently charges aCPM of $8 - $13 and controls 25% of the Chinese restaurants across the country.
    • FINANCIAL PLAN Investment highlights: With a base capitalization of $800,000, the company willgenerate a net operating profit of $1,898,438 by the end of the second year. Expansion over 5years will increase the number of member golf courses to 2000, increasing net revenues to $ 5.3million by the second year of operations (500 courses), and $39.4 million by the fifth year ofoperations. An aggressive expansion plan could increase memberships to 3000 – 5000 courses,with potential income well in excess of $100 million. By the end of the 5th year, operating profitwill be 48%. Total return on investment will be several hundred percent. Capital Requirement: The Company will require $800,000 in additional capital tocomplete development of its advertising platform and firm up advertising accounts. Sources & Uses of Cash (specific use detailed in financial plan) Year 1 Year 2 Year 3 Year 4 Year 5 Sources of Cash Beginning Cash Balance $ 800,000 $ 490,698 $ 1,003,278 $ 4,592,277 $ 9,691,483 Ad Sales Revenue $ 600,000 $ 5,309,504 $ 14,105,608 $25,702,754 $39,483,960 Uses of Cash Sales & Marketing Expenses $ 200,000 $ 935,306 $ 2,216,242 $ 3,953,013 $ 6,027,394 Golf Course Leases $ 250,000 $ 1,750,000 $ 4,687,500 $ 8,750,000 $ 12,500,000 G & A Expenses $ 257,984 $ 725,760 $ 1,245,292 $ 1,521,292 $ 1,760,692 Fixed Asset Purchases $ 239,400 $ 957,600 $ 1,197,000 $ 1,197,000 $ 1,197,000 Surplus / Reserves $ 490,698 $ 1,003,278 $ 4,592,277 $ 9,691,483 $ 21,180,617 Five-year growth assumptions: Golfers Direct owns rights to over 7,600 displays on 102golf courses across Arizona, California, Hawaii and Nevada. The company plans to install itsdisplays in the Southwest Region in two groups. The first will consist of 100 courses to becompleted by December 2003. The second group of 25 courses will be installed by September2004 as part of an expansion plan to have our program in place at 500 courses throughout theSouthern portion of the United States the end of Year 2. Over a 5-year period Golfers Direct willlook to contract a total of 2,000 courses nationwide. Using a conservative annual CPM rate increase of 10%, advertising sales revenue isdetailed below: Total Number of Courses Impressions Total Annual Total Year CPM SW MS SE MIL MW Per Ad Ads Price per Ad Revenue 1 100 0 0 0 0 $ 6.67 15,000,000 18 $100,050 $1,800,900 2 125 125 125 125 0 $ 7.34 75,000,000 18 $550,275 $9,904,950 3 250 250 250 125 125 $ 8.07 150,000,000 18 $1,210,605 $21,790,890 4 375 375 375 125 250 $ 8.88 225,000,000 18 $1,997,498 $35,954,969 5 500 500 500 125 375 $ 9.77 300,000,000 18 $2,929,664 $52,733,954Note: The table above is based upon a full 18 advertisers during annual advertising terms, not operational years.
    • [INSERT FINANCIAL PLAN WORKSHEETS HERE]Notes to financial information 1. Revenue assumptions. The company will begin ad placements in January 2004 for theSW Region, pending completion of the display build out. Clients will be billed in two, equalinstallments with the first due at time of ad placement and the second due at the beginning of thesixth month of the annual agreement. We will begin ad sales at an initial CPM of $6.67. Basedupon an advertising sales force of 3, we will sell 12 of our 18 full-page ads to generate $600,000sales revenue for Year 1. We will sell the remaining 6 ad pages to be installed in Month 15. Asthe number of courses is expanded, an average of 16 of the 18 available ad pages will be sold perregion. In 2004, Golfers Direct will begin expansion to 3 additional geographic regions (MS, SE,MW) and a 5th “region” to include 125 U.S. Military golf courses. At the end of Year 5, we willhave a portfolio of 500 courses in each of the SW, MS & SE Regions as well as 125 courses inthe MIL Region and 375 courses in the MW Region. Please reference the Business PlanTimeline to view our expansion schedule. Throughout expansion, Golfers Direct will also increase the minimum CPM at an annualrate of 10% to adjust rates to be more in line with market value. Our minimum CPM rates willbe as follows: Ad Term Year 1 = $6.67; Year 2 = $7.34; Year 3 = $8.07; Year 4 = $8.88 andYear 5 = $9.77. As the number of courses increase, the number of annual impressions increases toproduce annual revenue as follows: Operations Year 1 = $600,000; Year 2 = $5,309,504; Year 3= $14,105,608; Year 4 = $25,702,754 and Year 5 = $39,483,960. 2. Sales & Marketing Expense Assumptions. We will spend $1,500 per month in travelto acquire additional Member Golf Courses and after Month 9, an additional $1,000 per month inorder to maintain our client base. We will also spend $1,000 per month to acquire additionaladvertising clients and $1000 per month from Months 9-12 and $2,000 per month thereafter inorder to maintain our current advertisers and ensure renewals. Management will need to update our current website at a cost of $5,000 and also createmarketing materials and brochures at an initial cost of $15,000 in Month 1. Golfers Direct willalso incur printing fees of $10,000 every six months to reprint marketing materials and $14.40per golf course client every six months to reprint individual yardage book advertising pages. We have also budgeted a 15% commission for an independent sales staff along with abonus payment of $500 per original SW Region golf course client to extend our leaseagreements. 3. Golf Course Lease Expense Assumptions. Monthly lease payments are $625.00 percourse. We will delay lease payments until ad pages are placed in the books. Please referencethe Business Plan Timeline for schedule detail. 4. G & A Expense Assumptions. Each of two Managing Members will earn a monthlyfee of $2,000 from Month 1-8, then $5,000 per month ongoing from Month 9. Regional
    • Managers will be responsible for the acquisition of new member courses, maintenance ofmember course relationships, supervision of the Regional Maintenance Assistant, andmaintenance of all equipment for their region. Each Regional Manager will earn $5,000 permonth (including expenses) and each Regional Maintenance Assistant will earn $1,500 permonth. MS, SE and MIL Regional Managers and Assistants will begin in Month 10 and the MWRegional Manager and Assistant will begin in Month 22. Golfers Direct will hire an OperationsManager to oversee all Regional Managers, course mapping and the production and installationof new equipment and will earn $5,417 per month (including expenses) ongoing from Month 10.The company will hire a Director of Advertising to be responsible for the coordination andcreation of all advertising page printing (course ads & client advertisements) at a cost of $5417per month (including expenses) beginning in Month 10. An administrative assistant will be hiredat a cost of $3,792 per month (including expenses) ongoing from Month 24. From Month 1 – 23, the Company will occupy an executive suite office and pay acombined rent and utilities of $1,000 per month including the services of a receptionist andadministrative assistant. Local management and staff will move into a headquarters office inMonth 24 at a budgeted cost of $3,000 ($750 per person x 4 people) per month ongoing and willincur phone, fax & Internet charges of $100 per month from Month 1-23 and $1,840 per month(to include Regional Manager home offices) ongoing from Month 24 along with miscellaneousbusiness expenses (supplies) at a cost of $100 per month from Month 1-23 and $500 per monthongoing from Month 24. The company will need to maintain liability insurance and use the services of aprofessional attorney and accountant from time to time estimated as $1,500 per month. 5. Fixed Asset Purchases. In order to produce the yardage book information, we mustfirst acquire aerial photography of each golf course to produce detailed yardage maps andgraphics as a playing guide for each course. Mapping is budgeted at $1,250 per golf course. Wewill produce 100 Yardage/Advertising Books per Member Golf Course at a rate of $6.24 eachand will also need to produce 100 attachment arms, to display our books in each golf cart, percourse at a rate of $5.20 each. Please reference the Business Plan Timeline for schedule detail. Note: all fixed assets are depreciated over a 5-year period.
    • OPERATING TIME LINE Chicken or egg. Management has already contracted with 102 golf course members, andthis experience suggests expansion of course members will be rapid. The other side of themarketing equation, advertiser revenue, requires different considerations. A number of nationaladvertisers have expressed serious interest in the Golfers Direct platform, and proposals areunder consideration. Despite this interest, major advertisers have been resistant to commitcontracts prior to completing the installation of our platform. While some annual contracts canbe achieved, to secure the full compliment of advertisers, it is probable golf course mapping andyardage book installation must be underway. Additional capital investment will enable management to order the remaining GPSsurveys, installation hardware and layout books. Concurrently, with assurance that the platformwill be “built” advertising will be contracted for delivery in January 2004.
    • EXIT STRATEGY The company will generate substantial positive cash flow in early operations, and theincome potential exceeds $100 million. The Advertising and Media industry is robust andacquisitive, with 24 major magazine properties sold in 2002. The out-of-home advertisingindustry is also experiencing consolidation. Clear Channel, Viacom and Lamar each provideadvertising displays located on traditional billboards, bus shelter displays, inside shopping malls,on benches, on the side of mass transit vehicles and various other displays such as wall murals.Each of these companies is a subsidiary of a major media conglomerate that offers cross-platform advertising opportunities (radio, TV, newspaper, etc) to its clients, and all are activelysearching for new ways to target specific consumer groups with out-of-home displays. LamarOutdoor, Clear Channel Outdoor and Viacom Outdoor have continued their growth strategies byacquiring available outdoor billboard locations. Major media conglomerates are actively purchasing smaller regional and area outdoordisplay providers in an effort to offer a variety of cross-platform advertising opportunities totheir clients, which is precisely what the addition of the unique, high-end platform Golfers Directoffers. Management estimates that “critical mass” as an attractive acquisition will be achievedwith as few as approximately 500 regionally distributed golf courses under contract. A 5-yearprogram to include 2,000 courses, 152,000 advertising sites and annual revenue over $39 millionwill make Golfers Direct even more attractive, and certainly more valuable. While corporate valuation based on income multiples can only be approximated, researchindicates Billboard advertising companies typically sell at multiples in the neighborhood of 6-8times net earnings or 2.5 times revenues, depending on the quality of display locations andincome stability. Publicly held companies that sell advertising are currently trading at an averageof 20-25 times earnings (average P/E ratio of 23.02).
    • POTENTIAL ADVERTISERS & PLAYERS SURVEYPotential AdvertisersGolfers Direct will target certain industries that have saturated golf magazines with full-pageprint ads. Generally these are:Golf Equipment Shoes ApparelBeer Liquor SodaResorts / Hotels Pharmaceutical CasinosAirlines Domestic Autos Import AutosWireless Phone Service Internet Service Providers BankingInternet Commerce Financial Advisors MortgageOnline Casinos Insurance Online TravelRestaurants Consumer Electronics Golf SchoolsPlayers SurveyGolfers Direct visited courses throughout the SW Region and polled golfers at our Member Golf Courses.Below are some of the questions we asked and the results: 1. How many times do you play this course per year? 1 – 5: 58% 6 – 10: 28% 11+: 14% 2. Do you usually purchase a yardage book? Yes: 21% No: 79% 3. Would you use a yardage book if it were displayed in your golf cart? Yes: 92% No: 8% 4. Suppose, in order to provide this service to you at no cost, the books were supplemented by regional and national sponsors. How would you feel? Positive / Neutral: 91% Negative: 9%
    • GOLFERS DIRECT MEMBER COURSE LIST Member Course City State Alhambra Golf Course Alhambra CA Admiral Baker Navy Golf Course San Diego CA Aguila GC Phoenix AZ Apache Creek GC Apache Junction AZ Apache Wells GC Mesa AZ Augusta Ranch Mesa AZ Azusa Greens CC Azusa CA Bartley Cavanaugh GC Sacramento CA Bing Maloney GC Sacramento CA Black Mountain Golf Club Henderson NV Bridges Golf Club San Ramon CA Calimesa Country Club Clalimesa CA Camarillo Springs Camarillo CA Casablanca Resort & Casino Mesquite NV Cave Creek GC Phoenix AZ Coldwater GC Avondale AZ Cottonwood Rancho San Diego El Cajon CA Country Meadows GC Peoria AZ Cresta Verde GC Corona CA Cypress Golf Course Los Alamitos CA De Bell Golf Course Burbank CA Desert Canyon GC Fountain Hills AZ Desert Sands Golf Course Mesa AZ Desert Willow Golf Course Henderson NV Diamond Valley GC Hemet CA Dove Valley Ranch GC Cave Creek AZ Dry Creek Ranch Galt CA Eagle Crest Golf Course Las Vegas NV El Prado Chino CA El Rancho Verde GC Rialto CA El Rio Golf Course Tucson AZ El Toro Golf Course Irvine CA Encanto GC Phoenix AZ Five Hundred Club Glendale AZ Fred Enke Golf Course Tucson AZ General Old GC Riverside CA Grand Valley GC Eloy AZ Greenfield Lakes Mesa AZ Haggin Oaks GC Sacramento CA Highland Falls at Sun City Las Vegas NV Hillcrest GC Sun City West AZ Indian Hills Golf Club Riverside CA Jurupa Hills CC Riverside CA Kona Country Club Kailua-Kona HI Koolau Golf Club Kaneohe HI Las Colinas GC Queen Creek AZ Las Positas GC Livermore CA Links at Riverlakes GC Bakersfield CA
    • Member Course City State Lone Tree GC Antioch CA Los Angeles Royal Vista Walnut CA Los Prados Golf Course Las Vegas NV Manteca Park GC Manteca CA Marshall Canyon GC LaVerne CA Maryvale GC Phoenix AZ McCormick Ranch GC Scottsdale AZ Menifee Lakes CC Menifee CA Mile Square Golf Club Fountain Valley CA Moreno Valley Ranch GC Moreno Valley CA Naval Station GC San Diego CA North Island Navy GC San Diego CA Oakmont Golf Club Santa Rosa CA Painted Mountain GC Mesa AZ Palm Valley Golf Club Good Year AZ Palm Valley Golf Course Las Vegas NV Palo Alto GC Palo Alto CA Papago GC Phoenix AZ Point Magu Navy Golf Course Point Magu CA Poplar Creek San Mateo CA Port Hueneme Navy GC Port Hueneme CA Randolph Golf Complex Tucson AZ Rhodes Ranch CC Las Vegas NV Riverview Golf Course Santa Ana CA San Bernardino GC San Bernardino CA San Jose Municipal San Jose CA San Juan Hills CC SJ Capsitrano CA San Juan Oaks Hollister CA San Pedro GC Benson AZ Sandalwood Golf Course Wailuku HI Santa Rita GC Corona AZ Santa Teresa San Jose CA Sea N Air Navy GC San Diego CA Seal Beach Navy GC Cypress CA Seven Hills Golf Club Helmet CA Shorecliffs Golf Club San Clemente CA Siena Golf Club Las Vegas NV Silverbell Golf Course Tucson AZ Soboba Springs Golf Course San Jacinto CA Sunol Valley Sunol CA Toka Sticks Mesa AZ Torres Blancas Green Valley AZ Volcano Golf and CC HVNP HI Waikele Golf Club Waipahu HI Wailua Golf Club Lihue HI Western Skies GC Gilbert AZ Westridge Golf Club La Habra CA Wildhawk Golf Course Sacramento CANote: Some courses have 36 holes and are counted as 2 courses. Totals: AZ = 33, CA = 60, HI = 7, NV = 10
    • GOLFERS DIRECT AUDIENCE PROFILE AND DEMOGRAPHICSTotal Golfers Direct SW Region Audience  3,000,000 individual affluent consumers and key executives  5 million annual rounds played / 15 million annual impressions  The average price is $40 for a round of golf at our participating courses / top price is $175Golfers are Successful  College Education: 82.1% are college educated  Graduate Degrees: over 30% of golfers hold graduate degrees  Average Income: is $72,000 / Nearly 40% earn over $75,000 / 16.5% earn over $100,000Golfers are Affluent Consumers  Autos: own or lease 2.5 vehicles per household / 60% purchased a new vehicle in the past year  Home Owners: 80% own at least one real estate property / 20% own two or more  Internet: 60% own a home computer / 90% use a computer at work / 87% use the internet  Electronics: 93% own high-end electronics  Cellular Phone: 79% use a cellular phone  Beverages: 90% drink beverages while playing / 48% drink beer / 49% soda, juice, sports drinks  Credit Cards: 53% carry Visa Gold/Platinum / 43% carry MasterCard G/P / 11% carry Amex G/P  Investments: 66% invest in mutual funds / 59% in stocks / 28% in bonds / 63% enrolled in 401kGolfers are Avid Travelers  Total Travel: 11.5 million golfers spent $124 billion on all travel-related expenses in 2001  Expenditures: spent $26.1 billion on golf travel / 75% towards hotel, transportation, food & bev  Average Spending: average golf travel spending for 2001 was $2,270 per golfer  Business Travel: 3.2 million business travelers played golf on their trip in 2001  Vacations: 51% play golf on vacation / 45% of golf trips include air travelGolfers are Key Executives  Fortune 500: 96% of all Fortune 500 CEOs list golf as their sport of choice and encourage top management to use the game to build business relationships
    •  Professional: 55% of golfers hold professional or managerial positions  Executives: 97% say golfing with a business associate is a good way to establish a close relationship / 92% say its a good way to make new business contacts / 43% say some of their biggest deals have been done on the golf course.Sources: National Golf Foundation, PGA, USGA, Starwood Hotels & ResortsGOLFERS DIRECT INDUSTRY FACTOIDS Advertisers spend over $230 billion annually to extract money from consumers In 2001, advertisers spent $345 million with the top 5 national golf magazines ($737 million total) and an additional $400 million to endorse professional golfers In 2001, advertisers spent a total of $11.1 billion in print media and $5.1 billion in outdoor advertising; the Top 100 Outdoor Advertisers increased spending by 20.8% In 2001, the Top 100 Domestic Advertisers spent an average of $75 million each in magazine and outdoor advertising, spending an average of $800 million on all advertising In 2001, 3 of the top 5 golf magazines experienced significant growth in advertising revenue highlighted by an increase of Golf Digest advertising revenue of 14% The advertising industry is robust and acquisitive; 24 major magazine properties were sold in 2002 and the top 3 outdoor advertising companies continue to expand The unduplicated print audience of the national golf magazines represent 10% of all golfers The average annual subscription price of a national golf magazine is under $20 while the average golfer spends $900 on green fees to play our Member Courses Frequency is the number of times a certain advertisement has a chance of being seen, by one viewer, over a certain time period (in our case, a round of golf) Impressions defines the total number of views seen throughout the entire advertising agreement (month, year, etc); Impressions = Frequency x Number of Viewers (audience size) CPM is a way to compare the efficiency of similar advertising opportunities; measures the Cost per Thousand Impressions; CPM = Price of Ad/Audience Size x 1000 Over the past 6 years, the nation’s supply of golf courses has outgrown (2.1%) the number of golfers (1.3%) There are approximately 12,000 full-sized, 18-hole golf courses in the U.S. and an additional 5,000 courses offering 9 holes. There are also approximately 15,000 courses outside the U.S. and 2,400 domestic free-standing driving ranges. Approximately 500 courses use GPS Computer Displays in their golf carts Approximately 8,000 public 18-hole courses and 3,800 public 9-hole courses use golf carts and are open for year-round play Currently 37.1 million golfers play an average of 518.1 million annual rounds of golf The compound annual growth rate of golfers is 2.6% since 1987 The average golfers plays 22 rounds per year; 24% of rounds are played at the same course
    •  Over the past 5 years, golf is one of the few sports that increased its fan base (ESPN) Golfers Direct has leased 7,600 exclusive advertising locations offering access to over 3,000,000 individual golfers playing in excess of 5,000,000 annual rounds of golf at 102 golf courses throughout AZ, CA, HI & NV (50,000 annual golfers per course use a golf cart) The average golf score is 100 (54 strokes + 46 putts) over a 4 ½ hour round of golf, giving each full-page ad a frequency of 3.0 (54 strokes/18 holes = 3 strokes per hole or 3 yardage book views per ad) over a 15 minute time period (4 ½ hours/18 holes = 15 min per hole) Arizona & California are 2 of the top 5 travel destination states for golf The total Golf Industry exceeds $63 billion ($40 billion in core industries, $23.5 billion in enabled industries); Golf exceeds the Amusement/Gambling/Recreation ($56 billion) and Motion Pictures/Sound Recording ($58 billion) industries