Dana Garmany calls it the “White Space.” The chairman, CEO and founder of Troon uses the term to refer to the number of golf courses in the U.S. that don’t currently use a third-party management company.
The number of U.S. golf facilities working with management companies, like Troon, has gradually increased from 10.6 percent in 2006 to about 16 percent currently. Yet with more than 12,850 facilities still unaffiliated with outside operators, there remains plenty of room, or white space, for growth in professional management services.
“There’s no better time than now to be in the business,” said Garmany. “The third party management portion is growing significantly – we peg it to be about 23 percent of total courses by 2020. There’s a ton of growth out there for everybody, which is a major change. We used to have to sell ourselves, but the concept alone is getting more accepted, so it makes our job a little easier.”
There are 13 management companies in the inaugural NGF GOLF 100, tied for the third-highest representation from any category. Only equipment and the turf & course supply sectors have more Top 100 companies.
(TO SEE MANAGEMENT COMPANIES IN THE NGF GOLF 100, CLICK HERE)
The trend is a positive one. The more golf courses are successful and thriving, the better off the industry is as a whole. Independent course owners and operators often face a tough road because of a lack of buying power and can benefit from the aid management companies provide: better marketing, more resources to run operations, new technologies and economies of scale.
“We’ve had a lot of opportunities recently,” said Steve Skinner, the CEO of KemperSports. “I think a lot of that is driven by the overall challenges in the golf industry in general. More golf course owners are looking for help as their markets get more and more competitive. We see it as a growth opportunity right now.”
According to the NGF Facility Database, there are 231 companies with at least two golf facilities under management. Together, those companies have 2,145 properties under management, but most remain concentrated among the industry’s major players. There are 10 management companies with 40 or more courses in their portfolio, while 76 percent manage fewer than five.
Troon, based in Scottsdale, Arizona, manages almost 140 U.S. facilities (some of which have more than one course), while Kemper is close to 100. Billy Casper Golf and ClubCorp both manage in excess of 100 facilities in the U.S.
“We see new companies a lot, but whether they make it or not is another point,” said Garmany. “Until they get to 20-25 golf courses, it’s a pretty hard slog. But if you do get to that level, you sort of establish that you have enough bulk to have some expertise, and then you can grow to another level.”
No matter their size, every course management company is primarily focused on improving revenue for its clients.
“Ten and 20 years ago we were building so many golf courses that a lot of our business was new builds and branding,” said Skinner. “Today most of our new clients are existing courses (although KemperSports in recent years started working as an operator at new courses at Sand Valley in Wisconsin and Streamsong in Florida). They’re really focused in on improving their operation – how do they increase revenue and drive their bottom line with better performance?”
According to Skinner, the biggest change in the next decade will be how the industry addresses millenials as they enter their max buying power years.
“How do we become less formal and more adaptive to the lifestyle of everyone being connected all the time?” he asks, “With shorter attention spans, it may not always be four-hour, 18 hole rounds of golf. It may be more 9-holes or 12-hole rounds of golf.”
Peter Hill, CEO of Billy Casper Golf, also sees another conversation taking place within the industry.
“We’re in the first inning of a new debate about what’s more important: loyalty or community,” he said.
“For 15 years, it’s been loyalty; American Express, credit card processing companies, Costco, those businesses that have loyalty programs,” Hill adds. “Golf courses offer loyalty programs – you play more golf here, we give you benefits. That’s kind of old paradigm. It’s not wrong, but the new paradigm is community. How do you actually get people to engage with you so that they’re not coming because of the loyalty factor, but they’re coming because of the social engagement factor, the community factor? That’s the new paradigm for execution.”
With over 130 facilities under management, Billy Casper is firmly among the top 1 percent of management companies in the golf industry.
“Everyone has had to look at the value equation,” said Andrew Crosson, executive vice president, New Business Development, for Dallas-based Arcis Golf, which has more than doubled its management roster in the past five years. “How do we continue to have our sport and business evolve, and attract new participants?”
Engaging with private clubs more than a decade ago has proven to be a sea change for Troon.
“That’s where the biggest stress points are and where the biggest changes need to occur,” said Garmany. “It’s not because of the economy, it’s the fact these clubs are not offering younger people what they want. So the more progressive clubs are starting to figure out they need help in trying to figure out how to retool. They can’t afford to have the inefficiencies they have had in the past. Our growth in 2017 has been 75 percent private.”
That’s also the part of the market that will drive future growth, according to Garmany.
“You have one whole sector of the business, private clubs, that never used to be open to third party management, and it is now. You essentially have 4,000 clubs out there that 10 years ago would never have considered bringing in anyone else. Out of that 4,000 we have 100 (worldwide). That’s why I think you will see a much quicker escalation in courses using third-party management companies like ours.”
ClubCorp currently is by far the biggest player in regard to private golf clubs, which account for almost 90 percent of the approximately 160 U.S. facilities (more than 200 courses) it manages and also owns.
Whether dealing with private clubs or public facilities, the ability to offer economies of scale remains a “very important” selling point, says Hill.
“Economies of scale happen on the purchasing side and on the technology side because it’s very data driven,” said Hill. “Technology is enabling not just the large operators, but also the small operators, to understand their businesses better.”
American Golf, GreatLife, OB Sports, Touchstone, Century Golf Partners-Arnold Palmer Golf Management, CourseCo, Marriott and Trump Golf are the other management companies in the NGF GOLF 100. Landscapes Unlimited is best known as one of the biggest golf course construction companies in the game (falling in the Top 100’s miscellaneous category), but continues to grow its management side of the business and now operates or provides agronomy services at more than 50 U.S. courses.
Garmany remains bullish on continued growth for third-party management companies.
“Anyone that is going to hustle and work really hard is going to do terrific,” he says. “If you’re really providing service, have a depth of talent, a real team, and can build an infrastructure, I do think there’s a great way to do well. I think the next five to seven years will be quite fertile for us.”
Tom is an Arizona-based freelance writer and former Senior Editor at GOLF Magazine. He is a frequent contributor to multiple golf publications, including Troon Golf & Travel, The Met Golfer, Golf Monthly UK and the USGA’s website.
- Third-party management companies in golf now operate 16% of the U.S. course supply, up from 10% just ten years ago.
- There are 18 management companies that operate more than 20 golf facilities in the U.S.
- With 13 companies represented in the inaugural NGF Golf 100, course management is tied with apparel and accessories as the third-largest category.
- Almost 13,000 golf courses remain unaffiliated with third-party management companies, presenting a major growth opportunity for the sector.