Global Edition

 

Municipal courses losing share

8.45am 10th August 2001 - Management Topics

Municipal golf courses (which make up 10% of all UK courses) have been hit hard in recent years by the boom in proprietary course construction. A total of 598 courses have been built in the last 10 years and over 95% of them have come from the proprietary sector.

The obvious and natural consequence of all this development is that the average number of annual rounds played on municipal courses has fallen by nearly 50% in the last 11 years. However, the number of rounds played over private and proprietary courses has only tailed off slightly. In essence, most of the new proprietary courses have taken trade away from the municipal courses.

These are the findings of a new 82-page report published by the Golf Research Group, entitled “The 2001 UK Municipal Golf Report – A Benchmark for Best Value.” The report examines the recent performance of municipal golf courses in the wider UK golf market. It also provides benchmarking data so municipal authorities can compare the performance of courses under their jurisdiction with regional and national averages to assist them in compiling their Best Value Reviews.

Despite the increased competition, green fee prices have risen by 10.7% per annum at municipal courses over the last 5 years. Correspondingly, proprietary prices have only risen by 5.6%. This shows that municipal authorities have been slow to react to the changing market forces of supply and demand. In practice they tend to raise prices by a fixed amount year on year rather than focusing on what the market can actually bear.

Historically, municipal golf used to be subsidised by the local taxpayer. Today, policy dictates that municipal courses are forced to exist in the real golf world. Finding it harder to compete and harder to justify their in-house worsening performance, authorities are looking more and more to the private management sector to get the “best value” out of their courses. This is particularly so where capital improvements are needed to the course or clubhouse, as by and large the public funds simply are not there. The private sector therefore carries out the necessary improvements in exchange for a reduced rent. Busy municipal courses in heavily populated areas typically produce an annual turnover of £750,000 and a net profit of £200,000. These courses are being leased out for 25 years at an annual rent to the council of around £100,000 or more.

Over 35 courses have now been fully leased out to the private sector and many more authorities are considering this option as part of their Best Value Reviews. The leading chains have also entered the market, quietly picking up the better municipal performers and adding them to their portfolios. Golf Course Management leads the way with 5 municipal courses, followed by American Golf Corporation, Jack Barker Group and Greene King with 2 each. All claim to have many more deals in the pipeline.

Golf Research Group www.golf-research.com Tel: 01305 768114

       

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