2009-04-17 Golf Course Market Review


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Presented to the Lake County Forest
Preserve District Board of Commissioners Committee of the Whole meeting, March 17, 2009, by ERA | AECOM.

For more information about the Fort Sheridan master planning process, please visit http://LCFPD.org/fort_sheridan_golf

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2009-04-17 Golf Course Market Review

  1. 1. Presentation Fort Sheridan Golf Course Market Review Presented to: The Lake County Forest Preserve District Presented by: ERA|AECOM March 17, 2009
  2. 2. Approach <ul><li>Map LCFPD golf rounds by zip code </li></ul><ul><ul><li>Understand geographic distribution of play </li></ul></ul><ul><li>Review ThunderHawk financial performance </li></ul><ul><ul><li>Rounds, revenue, and expenses </li></ul></ul><ul><ul><li>Understand implications </li></ul></ul><ul><li>Confirm golf inventories within 25 miles </li></ul><ul><li>Refine financial analysis for the proposed Fort Sheridan golf program </li></ul><ul><li>Understand golf market demand and supply implications for 2014 </li></ul>
  3. 3. Geography of Rounds: Brae Loch
  4. 4. Rounds: Countryside
  5. 5. Rounds: ThunderHawk
  6. 6. High End Golf Opportunity
  7. 7. Geographic Realities <ul><li>ThunderHawk and Ft. Sheridan share the North Shore high-end market </li></ul><ul><ul><li>17% of play originates from zip codes around Fort Sheridan </li></ul></ul><ul><ul><li>8% of play originates from Winnetka, Wilmette, Kenilworth </li></ul></ul><ul><li>Limited penetration in Southern WI </li></ul><ul><li>Significant private competition </li></ul>
  8. 8. Public / Private Golf Supply
  9. 9. Supply / Demand Implications <ul><li>Private Market Reality </li></ul><ul><ul><li>16 18-hole primary market courses </li></ul></ul><ul><ul><li>Courses are losing members – driving a modest shift toward public play </li></ul></ul><ul><ul><li>Courses are starting to lower prices </li></ul></ul><ul><li>Public / Daily Fee Market Reality </li></ul><ul><ul><li>7 18-hole courses in the primary market </li></ul></ul><ul><ul><li>Discounting is impacting profitability </li></ul></ul><ul><ul><li>Since 2000: 3 18-hole courses closed </li></ul></ul><ul><li>2014: Additional golf would be risky </li></ul>
  10. 10. Ft. Sheridan Financial Planning <ul><li>Effective greens fees </li></ul><ul><ul><li>Seasonality / discounting / weather </li></ul></ul><ul><li>Cart utilization rates </li></ul><ul><li>Food & beverage sales </li></ul><ul><li>Pro shop merchandise sales </li></ul><ul><li>Implications for Fort Sheridan: </li></ul><ul><ul><li>No driving range / No banquet facility </li></ul></ul>
  11. 11. Perspective – ThunderHawk - 08 <ul><li>Average green fee of $46.88 per round </li></ul><ul><li>50% of rounds drive 35% of revenue </li></ul><ul><ul><li>Impact of discounting / specials </li></ul></ul><ul><li>Peak $69 green fee drives 33% of revenue on 23% of rounds – July and August </li></ul><ul><li>Cart utilization is high >90% </li></ul><ul><ul><li>Additional $13 per round, on average </li></ul></ul><ul><li>Pro shop merchandise sales: $5 / round </li></ul><ul><li>Food & beverage sales: $10 / round </li></ul>
  12. 12. Fort Sheridan Concept <ul><li>Stabilized year rounds: 25,000 </li></ul><ul><li>Prime season weekend rate: $102 </li></ul><ul><ul><li>Includes cart </li></ul></ul><ul><ul><li>Thunderhawk:$84 w/cart </li></ul></ul><ul><li>No driving range income </li></ul><ul><li>Estimated sales for F&B & pro shop </li></ul><ul><li>F&B assumes small meetings, outings and tournaments – No banquets </li></ul>
  13. 13. Business Plan Approach <ul><li>Assumes LCFPD operation </li></ul><ul><li>High-end courses are more expensive to operate: </li></ul><ul><ul><li>Player expectations / client service </li></ul></ul><ul><ul><li>Maintenance / mowing </li></ul></ul><ul><ul><li>Larger marketing budget </li></ul></ul><ul><ul><li>ERA: 25% above ThunderHawk </li></ul></ul><ul><li>Replacement reserves </li></ul><ul><li>Grow-in / startup costs need to be accommodated </li></ul>
  14. 14. Financial Implications <ul><li>Effective Gross Revenue: $2.3 million </li></ul><ul><li>Operating expenses: $1.5 million </li></ul><ul><li>Income before debt: $800,000 </li></ul><ul><li>Supportable debt service: </li></ul><ul><ul><li>20 Years @ 5%:$10 million </li></ul></ul><ul><li>Supportable project budget: $12 Million </li></ul><ul><li>30-Year financing is possible </li></ul><ul><ul><li>Would require general fund guarantee </li></ul></ul>
  15. 15. Implications - 2014 <ul><li>Public market should stabilize </li></ul><ul><ul><li>Begin to see revenue growth </li></ul></ul><ul><ul><li>The private market will remain highly competitive </li></ul></ul><ul><li>If Fort Sheridan opened in 2014 </li></ul><ul><ul><li>$12 million project budget is insufficient </li></ul></ul><ul><li>A significant impact on ThunderHawk </li></ul><ul><ul><li>15% market shift toward Ft. Sheridan </li></ul></ul>