Newfoundland’s Humber Valley Resort – the award-winning Doug Carrick course near Deer Lake – needs to lower its green fees and increase the number of rounds played in order to survive.
Well I say, ‘duh.’ Isn’t that true of every golf course?
That’s the main focus from a report issued by Global Golf Advisors, an Ontario consultancy run by “king of aces,” Stephen Johnston.
As most G4G readers know, Humber Valley is a great golf course. One of the best in the country. But there was never an appropriate business model to support it. After a number of financial hiccups, the course was placed into receivership earlier this year and is now soliciting offers for its assets, which includes the Strawberry Hill resort facility, the course and clubhouse.
I’ve never spent much time with one of these reports, but I find it intriguing to see a) how much it relies on the RCGA’s largely discredited golf participation study and b) how much of the information seems like common sense if you’ve been involved in the golf industry in any way.
The key, according to GGA, is to cut the rates, involve more locals and, well, pray that it all comes together. The market won’t tolerate $100 green fees, something that should have been self-evident to the previous owners. So GGA suggests a $50 fee and $100 for tourists. Frankly, that’s still cheap for a course of this quality – which I’d suggest is in the Top 10 in Canada.
The conclusion by GGA is this:
The key to improving operations at the Humber Valley River golf course relates to increasing the number of rounds played. Given the historically low number of rounds played there is significant room for improvement. The two main recommendations for increasing rounds played are to decrease the green fee rate charged to market appropriate levels and to improve marketing initiatives to tourists. Humber Valley Resort golf course has tremendous potential to be marketed as a golf holiday destination. The golf course should be the key amenity for the area and therefore and with the proposed new pricing should offer value for money to patrons.
And if this happens, what is the bottom line, according to Global Golf – a net cash flow!
The estimated maintainable cash flow based on the opportunity projections and assumptions is $410,000 before annual capital maintenance of $59,000, resulting in a net cash flow potential of $351,000 per annum.
What Global Golf doesn’t say – and what is really the main question – is how do you put a valuation on the facility? The golf course is great, but in a remote area with almost no local support and hasn’t been properly marketed to a wider audience. Marketing it outside of the province would take some cash – and there’s little for that in the budget outlined by Global Golf. Is the golf course and clubhouse – which surely cost millions to build – worth anything? Is the starting price actually zero, just to find someone willing to take a risk on the course? Is there really anyone other than the government of the province who can make this work?
A bestselling author and award-winning columnist, Robert Thompson has been writing about business and sports, and particularly golf, for almost two decades. His reporting and commentary on golf has appeared in 
time to start practicising my Newfie accent so I can get half price golf on a great course -Lawrd Tunderin’!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
RT….You should do an column on the so called king of aces. Stephen Johnston, by my last count, advertised himself as having achieved 50 holes in one. By PGA tour standards, I think a touring pro gets a hole in one every 3000 holes. If we apply this standard, that would mean that the so called king of aces would have to play 150,000 holes of golf. (ie. 3000X50) to achieve 50 aces, on average. That would mean that he would have to play roughly 8000 rounds of golf. Let’s suppose he plays 100 rounds of golf per year. It would take this guy 80 years to play 8000 rounds of golf, so that he could have 50 aces. In other words, I don’t believe this so called king of aces. The above analysis indicates that Stephen is a playing at PGA standards. That is being generous. The average low handicapper gets a hole in one every 10,000 holes. If we apply the same logic, as I did above, it would would be highly highly improbable that he could achieve 50 aces, unless he played the same par three over and over again. In that case, his so called record is bogus and phony. Our readers would love to hear how this guy achieves the statistical impossibility. I just don’t believe him. Maybe he can write to you and indicate how he achieves the impossible.
Dear King: I wonder about this as well. Doesn’t seem reasonable to me — nor to anyone I’ve mentioned it to. I think it hurts Johnston’s credibility.
By the way, nice to see you posting under another name and not simply calling me a slob, as you do in most of your other comments as YI. A little less venom in this one.
Hey…weird things happen!
Why would he lie about this and if you were going to lie wouldn’t you say “I have made 20″ ….fifty!! Really…
Look at it from the other angle…Ben Hogan only had two.aces..maybe skill doesn’t have that much to do with it..
People get lucky
Hey, I won the lottery twice.
Of course skill has something to do with it. That is precisely why tour pros have a higher probability of scoring a hole in one than a mid to high handicap player.
In 1999, Golf Digest reported, “One insurance company puts a PGA Tour pro’s chances at 1 in 3,756 and an amateur’s at 1 in 12,750.” This is based on science and statistics and it proves that skill has everything to do with it. It is silly to thing that by some absolutely random occurance a guy can score 50 holes in one. It isn’t possible, unless something else is going on like hitting 50 balls on every par three or just playing par 3 holes and hitting thousands of balls at every hole so that one drops. If that is what is going on then it is believable, but then the record doesn’t mean anything.
Wonder what GGA charged the receiver for that shoddy advise? Who would ever travel to Newfoundland for a vacation centred on golf? The provincial government has a wonderful ad campaign on now, showing the beauty of the Rock, it communities and it’s natural topography.
Lastly, not sure I get the #’s – $59K annual capital maintenance – is that the maintenance budget for the year or a reference to their spend on capital improvements? Surely it can’t be the first, as it wouldn’t even cover a few staff.
What are you smoking…
Great stats….interesting stuff….still doesn’t beat the old
“things happen”"
Did you ever think he includes mini putt???
Henry, the 59K is the capital equipment for the course. I have seen this a couple of times with Johnston. The inventory must be around 1/2 mil. but at 10% is very light. Mind you on a 10 years deprec schedule not bad. Should be more like 20%.
The 59K is probably the $ amount set aside for improvements each year to the entire facility. Equipment repair costs would have their own line item
Thanks George & Numbers Guy. I get it now. I’ve seen some of the report and it shows that golf demand exceeds supply in that area of the Rock and the assumption is that by cutting the green fee in half, they will fill the place with some segmented marketing. GGA could be right if their assumptions are correct, but I just don’t see this area as a competitive fly-in golf destination vs. all the competition out there. I’ve not been, so I can’t comment on whether the resort’s other qualities make it worth the trip, but I think that would be a critical factor in its success.
NGF+KPMG+GGS=0
Why not a real expert, like Sam Young or Dalton Hicks?
As a past employee of a golf facility who’s upper level management utilized the services of GGA, it does not surprise me that they produce such a simple formula as the answer for a profitable operation.
Such is the life of a consultant….produce recommendations and carry not accountability for their accuracy (if followed) down the line.
It’s really too bad that they appear to have the market of consulting within the golf industry cornered. I would have to agree with Mr. Slatter that experts who have lived & worked in the trenches are the one’s who’s opinions should be sought.
BTW…good luck with $59K of ACM
One major project that pops up unexpectedly will eat that up in a heartbeat !
I just like to leave my sympathy, and give my congratulations to this blog, which is one of the best I’ver read.
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Humber Valley Golf Course maybe sold:
From:
http://garykelly.ca/blog/2009/09/09/humber-valley-golf-course-sold/
“Oke said the year started off a little slow because everyone didn’t know the golf course was open. When the word got out that the golf course was open, the golfers started flowing in.
Oke said there were more golfers on the course this year then the previous five years.
Oke also said that the Humber Valley Resort has had more then 8,000 tourists visit the area so far this year. Most of the tourists were coming from Alberta, Ontario and the east coast of the province. The response from the visitors was “overwhelming.â€Â
Did The River Course Make Money
Earlier in the year, it was reported that Oke put $300,000 of his own money into the River Course to get it going.
In the interview yesterday morning, Oke said the venture was “in the black†so far this year. He wasn’t quite sure exactly how much money he would make this year but Oke seemed very grateful that things went well this year.
Rumors About The Sale Of The Golf Course
There are lots of rumors floating about town regarding the sale of the golf course at the Humber Valley Resort.
Oke said some of the rumors were probably true but he wouldn’t provide any additional information at this time.
I spoke with a couple of people in Corner Brook yesterday and the consensus seem to suggest the River Course has been sold to a group of three business people with strong connections to the Corner Brook area.
Apparently the small details need to be worked out.
Lets hope the deal can be struck.”