Golf Course Business Plan Appendecies - Union College 2009

Business Plan Appendecies June 2009

COMPANY CONFIDENTIAL

Prepared by: Kurt Therrien Erich Spikereit Nicole Bisnett William Chronister Union Graduate College

Company Confidential 1 Table of Contents

Business Plan Appendices Appendix A – Committees and Responsibilities…...……………………………………..2 Appendix B – Superintendant Responsibilities.....................................…………………..3 Appendix C – Critical Procedures…………………………………………………….......5 Appendix D – POS System Outline……………………………………………………….6 Appendix E – Maintenance Schedule……………………………………………………..8 Appendix F – People Flow………………………………………………………………..9 Appendix G – Income Statement………………………………………………………...10 Appendix H – Revenue Model…………………………………………………………..11 Appendix I – Cash Flow Model………………………………………………………….12 Appendix J – NPV and IRR……………………………………………………………...13 Appendix K – Balance Sheet…………………………………………………………….14 Appendix L – Timeline…………………………………………………………………..15

Detailed Appendices Appendix M – Overview………………………………………………………………...16 Appendix N – Marketing………………………………………………………………...33 Appendix O – Operations………………………………………………………………..62 Appendix P – Finance…………………………………………………………………..112

Additional Research Appendix Q – Pricing Research………………………………………………………...139 Appendix R – Revenue Sources Research……………………………………………...151 Appendix S – Communications Research………………………………………………163 Appendix T – Driving Range Research………………………………………………...183

Company Confidential 2 Appendix A – Committees and Responsibilities Committee

Pro Shop

Clubhouse Annual Fee Player

Greens

Improvement

Carts

Responsibility Have charge of the Professional Golf shop and PGA Professional under contract and arrange for the purchase of any supplies necessary for operation under the approval of the commission Have charge of the maintenance and operation of the clubhouse under contract and shall arrange for purchase of any supplies necessary for operation and maintenance Develop house rules subject to approval of the commission Responsible for organizing initiatives to increase the number of Annual Fee Players a the golf course Have charge of the golf course, the grounds, equipment pertaining to maintenance and operation of the golf course and grounds, excluding the Pro Shop and Clubhouse Responsible to arrange for purchase of any supplies necessary for operation and maintenance of the golf course as described above Responsible for organizing large projects to improve the beauty and playability of the golf course Formulate plans, including manpower and material cost estimates as well as project impact of current and future playing conditions of the golf course Responsible for the golf cart storage shed waiting list Develops policies and procedures governing storage and use of golf carts on the golf course

Tournament

Responsible for developing five and ten year capital improvement plans for the golf course for approval by the Commission in June, including depreciation and replacement, large landscaping projects such as tee or green replacement, building and parking lot improvements and maintenance Responsible for organizing tournament dates and through Secretary, corresponding to those individuals or organizations which desire to hold tournaments at the golf course Establishes rules, regulations, and fees for holding tournaments, which will require closing course or the tees for a period of time Rules established are passed by majority rule

Rules

Responsible for all rules governing Annual Fee Players, fees, course etiquette, and all other policies used to govern the course including cart storage and use, cart waiting list, locker use and waiting list, course winter activities, use of course by school golf teams, violation of rules, and regulation of practice areas, course closing, starting times, rain checks and refunds Must be comprised of all Commission members

Long Range Planning

Company Confidential 3 Appendix B – Superintendant Responsibilities

Company Confidential 4

Company Confidential 5 Appendix C – Critical Procedures

Company Confidential 6 Appendix D – POS System Outline

Pointof-Sale System “After an extensive search for a POS system that would allow us to book tee times online, we found that having a Web-based system is the best way to go. Having everything stored offsite means that if our computer crashes, we won’t lose any of our information.” —Steve Hammond, PGA Head Professional, City of Austin

“SPS Golf Management Solutions is the most affordable software system on the market and is jam packed with hundreds of different options and reports. Since the software system is Web-based, I can look at all of the data from my home to see how our business is going. I have used many different POS Systems, and this one is the most user friendly for my staff. The SPS GMS system has given us the availability to capture data from every player that golfs at our facility, enabling us to market to them and increase our business.” —Jeff Gandee, PGA Head Professional, Auburn Hills Golf Club

SPS Golf Management Solutions has employed next generation technology and proven system architecture to bring full Point-of-Sale (POS) capability to the web. Our POS system is fully integrated with our reservation tee sheet for a quick and easy check-in process. The POS system also has built in protection that keeps it running even if Internet access is interrupted. The SPS Golf Management Solutions Point-of-Sale system incorporates the following features: •

Reservations are automatically carried over from tee sheet.

•

Employee tracking on all transactions and cashier security levels are available.

•

Inventory items can be added to a sale via keyboard, bar code scanner, or one-touch programmable keypad.

•

Multiple tender types including cash, check, credit card, gift card, club account, and gift certificate.

•

Integrated Gift Card for single or multi-location use.

•

Integrated Gift Certificates track and verify current value at the POS station.

•

Integrated, Web-based (optional) Credit Card processing speeds up the check-in process and provides competitive discount rates.

•

Rain Check processing is tracked from tee sheet and verified at POS

Company Confidential 7 station. •

Demographic tracking for POS purchases.

•

Tracking of Member purchases for targeted marketing ability.

•

Post POS transactional data into Micros Fidelio “OPERA”.

•

Touch screen key pad capability for quick reference items.

Company Confidential 8 Appendix E – Maintenance Schedule Day 1 2 Duties Mow greens(6x week) Mow tees(3x wk) Mow fairways(3x wk) Mow roughs/trim(1x wk) Rake traps(4x wk) Change cups(every other day) Change tee boxes(every other day) Areation Chemical applications Watering Day

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1 2 Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering Day

Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering Day

Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering

Day 1 Holes 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Duties x x x x x x x x x x x x x x x x Mow greens x x x x x x x x x x x x x x x x Mow tees Mow fairways Mow roughs/trim x x x x x x x x x x x x x x x x Rake traps Change cups x x x x x x x x x x x x x x x x Change tee boxes Areation Fall and Spring Chemical applications As necessary x x x x x x x x x x x x x x x x Watering 2 Day Holes 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

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6 Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Duties Mow greens Mow tees x x x x x x x x x x x x x x Mow fairways Mow roughs/trim Rake traps Change cups x x x x x x x x x x x x x x Change tee boxes Areation Fall and Spring Chemical applications As necessary Watering x x x x x x x x x x x x x x

3 Day Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 x x x x x x x x x x

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Company Confidential 9 Appendix F – People Flow

Company Confidential 10 Appendix G – Income Statement

Company Confidential 11 Appendix H – Revenue Model

Company Confidential 12 Appendix I – Cash Flow Model

Company Confidential 13 Appendix J – NPV and IRR

Company Confidential 14 Appendix K – Balance Sheet

Company Confidential 15 Appendix L – Timeline

Company Confidential 16 Appendix M – Business Overview

1.0 Business Overview The City of Amsterdam located in Montgomery County owns and operates an 18hole public golf course for approximately 9 months of the year, which was designed by Robert Trent Jones Sr. In the winter months, when golf cannot be played, the course is often used for cross country skiing, snowshoeing, and sleigh riding by city residents. The course may be played by members or anyone seeking a course with a design which boasts long rolling fairways, challenging greens and years of history at an affordable price. The greens fees, at 25 dollars per day, allow an individual to golf as many holes from sunrise to sunset as they wish. The ability to play as many holes as one can on a golf course designed by Robert Trent Jones Sr. at a reasonable fee is what differentiates Arthur Carter Amsterdam Municipal Golf Course from its competition. Revenues are generated by daily fee golfers, membership fees, facility rental and lease fees from the concession contract operating the clubhouse. As a result of the City ownership, the goals of the course are long term sustainability and value added to the community. The course has many opportunities to better meet these goals by increasing revenue and provide better service to the community through the adjustment of pricing, execution of a strategic marketing plan, and diversification of services. In addition, the course is currently in need of a number of capital improvements including the redesign of cart paths and course drainage upgrades. A timeline for the execution of operational changes and capital improvements will be determined upon further evaluation.

Company Confidential 17

1.1 The Company 1.1.1 Contact Information The Arthur Carter Amsterdam Municipal Golf Course is located at 158 Upper Van Dyke Avenue, Amsterdam, NY 12010 and can be contacted at the following numbers: •

Pro Shop (518) 842-4265

•

Tee Times (518) 842-6480

•

Clubhouse (518) 842-9731

•

http://amsterdammuni.com

1.1.2 The Business The Amsterdam Municipal Golf Course, founded in 1938, provides an 18-hole, par 71; course approximately 6700 yards in length designed by Robert Trent Jones Sr. Robert Trent Jones Sr. has designed or redesigned over 500 golf courses in 40 U.S. states and 35 other countries around the world, however, only one in the Capital Region for over one hundred miles. An individual or group wishing to play Amsterdam Municipal Golf Course has a number of options; they can purchase a year membership, greens fees for a single day, join a golf league, or rent the entire course for a day.

Company Confidential 18 Membership

Fees/Storage

Standard Family

$625 $1,035

Green Fees (before 3pm)

$25

Green Fees (after 3pm)

$17 $30

Junior

$140

Locker Rental (per year)

Senior

$600

Gas Cart Storage (per year)

$335

Senior Family

$985

Elect. Cart Storage (per year)

$365

Senior Limited

$560

1-day course rental

$1,500

Chart 1: Fees

In addition to golf, the facility offers a pro shop which includes golf cart rentals, lessons, and merchandise, as well as a clubhouse, which offers food and banquet services, none of which directly generate revenue for the golf course and could be explored further as will be defined later.

1.1.3 Organizational Overview The course is owned by the City of Amsterdam but is managed by the Golf Commission, a group of six volunteers who manage, maintain, and operate the golf courses and appurtenances. A member is appointed annually by the mayor for a five year term. The Golf Commission is governed by Chapter 28 of the General Code, City of Amsterdam. Our contact, Dave Putnam, sits on the Golf Commission and is our main contact for this project. In addition to the Golf Commission, the course employs a golf course superintendent, six full time grounds keepers, and two temporary summer grounds keepers. The superintendent and grounds keepers are all employed by the City of Amsterdam and are responsible for maintaining the course. Their benefits and salary are

Company Confidential 19 supported by the course during operational months (34 weeks a year) and are picked up by the city during the off season. The City contracts the remaining operations for the course (1) for the operation of the Pro Shop and the golf course which includes the employment of the assistant pro, course ranger and starter and (2) the operation of the clubhouse which includes dining services and maintenance of the clubhouse. It is unclear if contracting the Pro Shop, golf course and club house operations is the most efficient and profitable way to operate. As part of planned benchmarking of other local municipal golf courses the organizational structure and contract terms will be evaluated to determine the method of operation in this area. As a result of being owned by the City of Amsterdam, the course operates on the city’s budget cycle, which runs from July through June. The Golf Commission is given an annual budget to operate and maintain the course. The Controller of the City of Amsterdam tracks all expenditures and revenues generated from the operation of the course and monies are deposited/withdrawn from the city’s general fund. The Golf Commission has little visibility into actual expenditures and revenues for the golf course as will be explored further under the financial section. Furthermore, the use of the cities general fund is inconsistent with the Golf Commissions charter, which states the Controller of the City of Amsterdam shall maintain a separate account of revenues received from the operation of the course.

Company Confidential 20 1.1.4 Current Status Chart 1 below shows the Amsterdam Municipal Golf Course budget and projected revenues for 2008-2009 and 2009-2010. 2008-2009

2009-2010

Personnel Services

$ 238,816

$ 235,610

Equipment

$

$

Contractual Expenses

$ 146,404

$ 156,514

Principal on Indeptedness

$ 67,921

$

67,921

Interest on Indebtedness

$ 19,674

$

19,674

Fringe Benefits

$ 115,112

$ 115,112

Total Budget

$ 587,927

$ 634,831

Total Revenue Projected

$ 553,500

$ 617,450

-

40,000

Chart 1: Annual Budget/Revenue

Chart 2 below shows our estimate of the breakdown of the courses revenue in 2008 based on initial discussions with the Golf Commission. Further research will need to be conducted in this area to determine the actual breakdown of revenue. revenues

5%

Membership fees 20%

league fees 5%

70%

Daily fees lease fees

Chart 2: Estimated Revenue Breakdown

Amsterdam Municipal Golf Course has many areas which need to be evaluated for change to increase revenue, including:

Company Confidential 21 •

Increase in league fee

•

Membership/Resident/Non-Resident pricing

•

Operation of the Pro Shop

•

Operation of the Clubhouse

Company Confidential 22

1.2 The Product 1.2.1 Product Overview From early spring to late fall the Amsterdam Municipal Golf Course provides a quality golfing experience at an affordable price as shown previously. An individual can play the golf course through a variety of different avenues, including: •

Purchase of a year long membership

•

Purchase of green fees at a daily rate

•

Joining a league as an individual The cost for each of these options varies as discussed previously in this report.

The course also offers options for groups of individuals, who wish to play the course, including: •

Family memberships

•

Creating a league as a group

•

Renting the entire course for a day In addition to the revenues generated from the golf options above, the course

generates revenues through contracting out concessions, for which the course is paid a fee for lease of the space. In the winter months, when not operating the facility as a golf course the city allows the community to continue to use the grounds for other recreational activities free of charge such as, snow shoeing, cross country skiing, and sleigh riding.

1.2.2 Current Market

Company Confidential 23 The Amsterdam Municipal Golf Course was unable to provide detailed data on their current customer base. They did however provide their opinion of their current customer base and recent trends. The course currently has approximately 400 members consisting mostly of city residents. The current membership is down from upwards of 700 members in the 1990’s. Contributing to this is an estimated 20-25% decrease in youth membership. As a result of declining membership the Golf Committee has attempted to remove any barriers of entry to individuals who do not live in the City of Amsterdam by standardizing their fees. This is in line with an increasing trend for municipal golf courses countrywide. As such the dramatic increase in daily fee courses over the past 15 to 20 years, versus private membership golf clubs, has made it more difficult for the municipal course to make a profit with this market saturation. In addition, the cost of producing a round of golf at municipal facilities is typically higher than a comparable or better daily fee course. This is due to the high cost of union labor rates and the cumbersome bureaucracy of a municipal government processes with respect to hiring, firing and procurement. While this area contains opportunity for improvement it is outside of the scope of this project due to the Golf Commission’s lack of authority in this area.

1.2.3 Product Differentiation The Amsterdam Municipal Golf Course is able to differentiate themselves in a few different ways, including: •

Course Design: The Robert Trent Jones, Sr. design is a high quality course design, which has been largely unchanged since it was constructed in 1938. It is

Company Confidential 24

•

Affordability: The course offers pricing for league membership and course rental, which are among the lowest in the area, making this course an exceptional value. Promotion of this fact and/or increase rates will be further explored.

•

Standardized Pricing: Unlike other municipal courses in the area, Amsterdam Municipal does not increase the price for non-resident. This provides nonresidents greater access to the course and this fact should also be promoted to increase non-resident golfer revenues. However, research may prove a higher fee charged for non-resident should be explored.

Company Confidential 25

1.3 The Business Opportunity, The Market 1.3.1 Potential Customers Amsterdam Municipal Golf Course has room to develop their market in a number of different areas. •

City Residents: As discussed previously the membership at the course has decreased significantly over the past ten years. Population in Montgomery County is also down approximately 2% from 2000 to 2007 to 49,000 according to data estimations from the 2000 census. It is critical for success that the Amsterdam Municipal Golf course look to promote and market to the residents to improve the perception and increase the accessibility of the daily fee golfer, which currently is approximated at about 20% of the golfers at the course.

•

Local Youth: The course does provide some opportunity for local youths including providing the home course for local high school teams and lessons for day campers during the summer; however, there is opportunity for the course to further develop youth and recreational partnerships within the community to develop a younger customer base for years to come. Research has shown that people introduced to golf at a young age play more rounds, spend more time and money, are more likely to stick with it, are more likely to become avid golfers and support the course where they learned. According to the 2002 Golf 20/20 study, there are more than 4 million junior golfers in the US, a portion of which lie in Montgomery county. The study also found that adults 19-34 who were introduced to golf through a structured junior golf program are playing 50% more rounds and spend 70% more on golf than those adults not exposed to golf through

Company Confidential 26 a junior program. In addition, 6 out of 10 children in a structured junior golf program will become avid adult golfers—in other words, life-long customers. Development of a “First Tee” Program to increase younger customers will be evaluated. •

Non-City Residents: Given the affordability of the course and their relatively close proximity to the New York State Thruway the course has the opportunity to grow their customer base outside of Montgomery County.

•

Non-Golfers: The course has the opportunity to partner with local businesses to capitalize on the winter activities, which take place on the course.

•

Golf Tournaments: Amsterdam Municipal has the opportunity to hold Golf Tournaments similar to how the Albany Municipal holds a tournament for the Duramed Futures Tour.

1.3.2 Market Trends and Outlook Golf industry trends show a decline in membership in private and semi-private golf clubs. This is consistent with what has occurred at Amsterdam Municipal. This has resulted in many golf courses diversifying their services in order to provide a greater benefit to their customers. The golf industry has also seen a change in the trajectory from a consistent growth in the number of golf courses nationwide to a decrease in the number of golf course annually. However, the industry is not attributing this to a decrease in the number of golfers but to a change in the attitude of golfers. The change in attitude has resulted in many private and semi-private golf courses diversifying their services to provide a more family friendly environment. Consistent with industry trends,

Company Confidential 27 Amsterdam Municipal Golf Course is considering diversifying their services to provide more organized activities during the winter.

1.3.3 The Competition Amsterdam Municipal faces competition from a number of different sources: (1) golf courses within Montgomery County for residents of the county, and (2) Capital Region golf courses for golfers outside of the county. Within Montgomery County there are three other courses: •

Canajoharie Country Club – Semi-Private

•

Antlers Country Club – Private

•

Rolling Hills Country Club - Private Their closest competition outside of Montgomery County is comprised of other

municipal courses such as: •

Town of Colonie Golf Course

•

Capital Hills – City of Albany

•

Western Turnpike – City Guilderland

•

Schenectady Municipal A cursory review of the membership and greens fee pricing of the above

municipal golf courses shows Amsterdam Municipal to be fairly consistent with other municipal courses. However, a more in depth analysis of the competition will be researched to better understand service comparisons and value added at the Amsterdam Municipal Golf Course.

Company Confidential 28

1.4 Business Model 1.4.1 Revenue Sources The course generates revenue in a handful of different ways through the golf course and clubhouse. Little data has been able to be provided to date, however discussions with the Golf Commission indicate the revenue is broken down as follows: •

Memberships: Largest portion of the revenues

•

Golf Cart Storage: The Golf Pro receives all revenues from the renting of golf carts to individuals. The course receives revenues generated from the storage of golf carts on-site by members.

•

Individual Greens Fees: $25 for the entire day, no hole limit.

•

League Memberships: $10 per individual per year for as many leagues as they desire.

•

1-Day Course Rentals: A flat rate of $1,500 is charged for groups to rent the course for the day. Golf cart rental fees and dinning services are negotiated with the Pro and the Clubhouse manager separately.

•

Concession Lease: The course receives a lease fee for rental of the space for the concessions, and the lessee keeps all proceeds from the sale of goods.

The above will be evaluated for change to increase long term course profitability.

1.4.2 Cost Drivers The categories of Amsterdam Municipal’s major cost drivers are as expected. Additional research will need to be done to conclude if the magnitudes of the expenses are consistent with like golf courses. The cost drivers include:

Company Confidential 29 •

Personnel services including benefits – 60%

•

Debt from previous capital expenditures – 15%

•

Operational expenses – 25%..

The Golf Commission has little control over expenses generated from personnel services and debt form capital expenditures. Therefore, the review performed for the Amsterdam Municipal Golf Course cost drivers for improvement will focus on the operational expenses.

Company Confidential 30

1.5 Financial Goals Since its inception in the late 1930’s, Amsterdam Municipal Golf Course has had limited oversight of the financial transactions of the organization. Since it is a municipality-based organization, the city allocates the golf course an annual budget and tracks all of its expenditures. The fiscal year (FY) for the city runs from July 1 – June 30. In FY 2008, the golf course earned $6,000 in profit. However, the profit generated was then allocated to the city’s general fund so the golf course was not able to reinvest their earnings back into their business. Financially, one of the golf course’s greatest challenges is that they are given a budget by the city, the city tracks their expenditures, and then any profits earned are not necessarily used to make improvements to the golf course. The City of Amsterdam currently provides the golf course with a high-level annual summary of their total budget, expenditures, income and profits, so they have very limited knowledge of the financial health of their organization. As such, one of the most crucial financial goals for Amsterdam Municipal Golf Course is to develop a system of being able to track their finances internally. This will allow them to have a much better idea of what their greatest expenses are, identify where their greatest profit margins lie, and develop realistic budgets. By utilizing this financial data, they can build the leverage required to request the additional funding necessary to make two much-needed capital investments, a new drainage system and cart path estimated at approximately $500,000. Since there was limited financial data available, it is difficult to articulate revenue targets. According to the Golf Commission, the last several years have yielded nearly no profit, with operating costs essentially equaling any revenue generated by the golf course.

Company Confidential 31 While the Golf Commission does not consider the golf course a profit-driven organization, it is vital that they do not fall behind in maintaining a high-quality recreational organization because it adds significant overall value to the city of Amsterdam. Although increasing prices do not fare well with its patrons, it is likely to be a requirement if the golf course wants to remain competitive. By increasing prices, the Golf Commission (with the agreement of the city’s Common Council) will be able to invest in capital improvements, thus adding overall value to the course.

Company Confidential 32

1.6 Strategic Challenges The Amsterdam Municipal Golf Course faces many challenges going forward, including but not limited to: •

Align (increase) pricing to be more consistent with industry competitors

•

Develop and execute a long range plan to maintain and upgrade the course

•

Improve public perception of the course

•

Diversify Course services to better meet the needs of the community

•

Change the organizational structure needed to facilitate sustained improvement

•

Identify a more visible accounting system for the Golf Commission to enable a better budgetary and fiscal planning strategy

To overcome these challenges, the Course must successfully manage public perception of the Course by communicating their intended actions along with the associated risks and mitigating plans and intended benefits to both the Course and the public. This can be done through a marketing/advertising campaign with possible use of surveys given to all revenue generating demographics at the Course. The Course would further understand the customer needs and then be able to focus and prioritize items based on feedback to further generate customer loyalty. Specifics of this plan will be addressed in future deliverables.

Company Confidential 33 Appendix N – Marketing

2.0.0 Organizational Model The Amsterdam Municipal Golf Course has the unique opportunity to differentiate itself from other area municipal courses. A large portion of its customers are members who, as such, play as often as they would like for no cost except their annual membership. As a municipal course, it has limited ability to obtain customers from far away areas. 73% of total members reside in Amsterdam and non-residents travel a weighted-average of 11 miles to the course. 1 However, it does have an opportunity to adjust its revenue model to maximize the profitability of the Course, as the pricing structure of memberships limits profitability. Pricing adjustments can help the Course adjust its player composition to consist of more daily fee players and increase the revenue per round realized. This will help to increase revenues overall and allow for capital expenditures improvements and more efficient planning for the Course.

2.0.1 Value-Add Amsterdam Municipal golf course is the largest asset of Amsterdam and critical to the success of the golf course is the condition of the golf course itself. Course quality and design, maintenance, and speed of play are all areas of value for the golf course. According to a survey completed by more than 1,200 Capital District golfers for Albany,

1

Amsterdam Municipal Golf Course. Membership Records. 2008.

Company Confidential 34 NY Times-Union, quality of conditions ranked highest at 49% saying this was the most important aspect when choosing to golf at a municipal course. 2 The single most important feature of a golf course, and one that differentiates a course from its competitors, is the maintenance and upkeep. Customers come to the golf course to enjoy a golf experience that is challenging and efficient in speed of play. Currently, the Course’s players largely consist of members, which increase the speed of play due to familiarity and experience on the Course. Proposed pricing changes, as outlined in Section 2.3.3, could be a threat to maintaining speed of play, if by bringing in more daily fee players, speed of play is compromised. In addition, customers expect the course conditions to meet their quality expectations. In order to ensure proper maintenance is upheld, understanding the capacity and course utilization is the first step. The golf course is open for reservation of tee times from May 1 through October 1st. Members and daily fee golfers can obtain tee times during these periods. During off peak times prior to May 1 and after October 1, reservations are not taken, but customers can walk on to course during hours of operation, 7am until sunset. According to a study done on the Course’s tee time structure and operational hours, Amsterdam Municipal Golf Course has an approximate reasonable capacity for 48,000 rounds of golf per year It should be noted that members often play rounds prior to course opening and these tee slots were not considered. In addition, according to the New York Weather Almanac, days with precipitation in the Capital Region during peak golf season were approximately 54 of the total 153 days, or 35%. 3 It was therefore assumed, and factored in, that 15% of the time golf could not be played due to weather, as the course may have been

2 3

Albany Times-Union. Pete Dougerty. 2007. Albany, NY Climate. http://www.myforecast.com/bin/climate.m?city=23803&metric=false

Company Confidential 35 operational during much of or part of the 35% of days even though inclement weather may have adversely affected play on the course. In order to maximize the realistic use of the course, a rigorous maintenance program must be followed. Currently the golf course employs six maintenance personnel, who perform the necessary mowing of greens, fairways, and rough. Contracted out are major repairs to tee boxes, greens, and the drainage system. According to the long range planning report completed by the course superintendant, 4 it was recommended that needed repairs be planned for and addressed. These items include expansion of tee boxes, repair of drainage on nine holes, repair of cart paths, and replacement of a mower. Greens were recommended not to change due to the excessive cost to replace and high maintenance cost of faster greens. However, as additional revenue becomes available, the capital expenditures for the greens may be revisited. Appendix 2 shows itemized repairs recommended by the superintendent and suggested timeframes for budgetary purposes. Funds appropriated for these purposes can and should be planned for through a capital budget for the golf course. Additional revenue sources will help offset these costs and will be further explored.

2.0.2 Sources of Revenue The main sources for revenue of the Amsterdam Municipal Golf Course are memberships, greens fees, cart rentals, and locker rentals. A sample year-to-date total for the quarter ending June 30, 2008 can be seen in Appendix 3. A breakdown by percentage of total revenue can be seen in the chart below. 4

James Derrick. 2008.

Company Confidential 36 Sources of Revenue

Locker Rentals, 0.65% Cart Rentals, 13.29%

Memberships, 53.88% Greens Fees, 32.18%

Clearly, memberships currently drive total revenue. However, the number of rounds of golf played per member was quite high, although difficult to measure due to the course’s operational structure and lack of reporting accuracy, it demonstrates lost revenue and lower profit per round. Ultimately, generating higher profit per round should be the goal for the course to help fund its capital expenditures and improve the course for the long term. This will be discussed in detail in Section 2.3.3 on Pricing.

2.0.3 Cost Drivers In prior years, the financial goal of the Course was to breakeven each year. The chart below demonstrates the high cost associated with operating this municipal course. As shown, there is a 17K gap in 2009-2010 for projected profit which is unsustainable in the long run. Therefore, higher revenues must be sought, which the Course cannot achieve in its current price structure. 2008-2009 Personnel Services

$ 238,816

2009-2010 $ 235,610

Company Confidential 37 Equipment

$

-

$

40,000

Contractual Expenses

$ 146,404

$ 156,514

Principal on Indeptedness

$ 67,921

$

67,921

Interest on Indebtedness

$ 19,674

$

19,674

Fringe Benefits

$ 115,112

$ 115,112

Total Budget

$ 587,927

$ 634,831

Total Revenue Projected

$ 553,500

$ 617,450

Other cost drivers include personnel services including benefits, debt from previous capital expenditures, and operational expenses. Due to city restrictions on labor rates and contracting, the Course little control over these costs. Therefore, the Course must find new ways of generating revenue to cover these expenses. This will be discussed in Section 2.3.3 on Pricing.

2.0.4 Current Market Served Currently, 53% of total revenues are derived from memberships and 32% are derived from daily fee players. The Course currently caters mostly to the needs of its members, not the daily fee players. For example, members having the ability to play unlimited holes at no cost (after membership dues) leave few prime tee times for the greens fee payer. This deters the greens fee player from playing Amsterdam Municipal and contributes to lower profit per round. As non-resident members traveled a weighted-average of 11 miles to play the course, its competition is limited. As will be discussed in further detail in Section 2.2.0, there are only 14 courses that reside within either Fulton or Montgomery Counties or are within 15 miles of Amsterdam. 73% of members live in Amsterdam.

Company Confidential 38

2.1.0 Market Analysis 2.1.1 Target Market The Course can reasonably expect to draw consistently from a 15 mile radius. In this radius, the largest municipalities are Amsterdam and Johnstown. These two, along with other smaller municipalities, will be considered the geographic target market for the Course. The target market of the Course consists of core golfers. Core golfers are those age 18+ that golf more than 8 rounds per year. There are 15 million core golfers in the US and 28.7 million golfers total, according to the National Golf Foundation. 5 This translates to 56% of total golfers being considered core golfers. It should be noted that Amsterdam Municipal’s current membership largely consists of core golfers.

2.1.2 Opportunity According to Appendix 4, approximately 9.8% of the US population is considered golfers. Also, 4.9% of the US population is considered core golfers. Using census data for this area, the total population considered to be in the geographic target is 102,915. 6 Therefore, assuming the local geographic target is representative of the US percentage of core golfers, the total market opportunity is 5,043 core golfers in the area. The Course currently has 523 total members. This alone would represent 10% of the target market. The Course also played host to 5,358 rounds of daily fee golf year-todate June 30, 2008. Based on limited details available from Course data, it is difficult to quantify how many daily fee golfers are considered core golfers. However, given the

5

National Golf Foundation. 2007. http://www.worldgolf.com/newswire/browse/9468-NGF-reportsnumber-of-core-golfer-in-US-higher-than-expected. 6 US Census Data. 2000.

Company Confidential 39 definition of core golfer and the total market opportunity defined above, 5,043 core golfers, we can say that the maximum number of core golfers paying daily fees is 670. This calculates to roughly 12% of the current served market for Amsterdam Municipal, or a range of 10%- 22% of the total market opportunity. Therefore, the remaining 78-90% of the target market, or 3,900-4,500 people, is defined as the current opportunity. The chart below shows a projection of revenues at current pricing, depending on the ability to reach the target market. An effective promotion strategy can be employed, which will be discussed in Section 2.3.4, that will focus on attracting 500 additional people playing an additional 4,000 rounds, which is 10% of current capacity. % of Projected 48,000 revenue (current (course # of people Rounds % of target pricing structure) capacity) 4,500 36,000 100% $ 900,000 94% 4,000 32,000 89% $ 800,000 83% 3,500 28,000 78% $ 700,000 73% 3,000 24,000 67% $ 600,000 63% 2,500 20,000 56% $ 500,000 52% 2,000 16,000 44% $ 400,000 42% 1,500 12,000 33% $ 300,000 31% 1,000 8,000 22% $ 200,000 21% 500 4,000 11% $ 100,000 10% 250 2,000 6% $ 50,000 5% 100 800 2% $ 20,000 2% Chart: Projected revenues

Given the course’s current operating capacity of 43-68% of total capacity, and usable course capacity of 75%, there is the opportunity for the Course to reasonably expand by 7% to 32% of capacity, or 3,360 to 15,360 rounds per year. Assuming these rounds are played by non-members, and based on $25 per round, this translates to possible increased revenue of $84,000 to $384,025 per year.

Company Confidential 40 Further, a high proportion of members are men, as indicated by the chart below, obtained from current membership data. Full Members

Females 9%

Unknown 3%

Males 88%

This proportion should decrease in the coming years as, according to the National Golf Course Owners Association, 67% of new golfers are women. Therefore, the potential for growth in this segment is tremendous. As 9.8% was the assumed proportion of the current population, that proportion is increasing each year as more and more women pursue golf as a recreational sport.

Company Confidential 41

2.2.0 Competitive Analysis Amsterdam Municipal Golf Course has a number of competitors. The chart below shows the seven golf courses either within Fulton-Montgomery Counties or within 15 miles driving distance from Amsterdam. We benchmarked courses that met these criteria due to the Course’s potential to serve Amsterdam Municipal’s target market. Course Canajoharie Pioneer Hills

Weekday 25 20

Weekend 30 25

Length 5,837 5,700

Fox Run Nick Stoner Rolling Hills at Antlers Briar Creek Hales Mills

33 33 35 23 27

36 33 45 26 27

6,400 5,400 6,314 5,667 5,995

Average Average (not including 9 hole courses)

22

25

24

27

Notes Semi-private Semi-private ($450-$800) With cart, Semi-Private ($575-$695) with cart, Par 70 Semi-private ($2,000-$3,200) No Golf Pro

Chart: Local Competition *Carts typically range in price from $12-$16 per person for 18 holes

There are a number of other 9-Hole courses in the target region. However, these were not considered competitors to Amsterdam Municipal as they cater to a different target market, focusing more on beginners than core golfers. The above courses are of comparable quality and target the same market, with the exception of Rolling Hills at Antlers. They serve a market of customers seeking a private club. Pioneer Hills, Nick Stoner, and Briar Creek are of comparable quality, but the length of these courses detracts from the challenge and quality of play. Their clubhouses are also similar to Amsterdam Municipal in that they are suitable gathering places, but are unlikely suitable venues for more formal events such as a wedding. Fox Run and Briar Creek are generally regarded as not having quality matching Amsterdam Municipal.

Company Confidential 42 Overall, the closest competition in terms of offerings consists of Canajoharie and Pioneer Hills.

2.2 1 Strengths Currently, the strength of the course is its pricing strategy. Their membership plans offer a tremendous value to avid golfers, non-resident fees are lower, and daily fees do not limit golfers to a number of rounds. However, attractive pricing does not ensure customer loyalty. Making an adjustment to pricing strategy, as outlined in Section 2.3.3, will allow the Course to become more profitable. This profitability will in turn change the Course’s strength to be the quality of the Course. Superior maintenance of the Course will help to develop customer loyalty and ensure the long-term success of the Course.

2.2 2 Weaknesses League pricing, as outlined in Section 2.3.3, is a drain on profitability per round. While more leagues may be attracted to the Course because of the pricing, as this volume increases, there is further pressure on profitability and generates lower revenues per round played. Other courses, while their pricing may not be as attractive, realize a higher per round revenues as compared to Amsterdam Municipal Golf Course. This will be further explored in the operations deliverable As a municipal course, Amsterdam Municipal faces higher operating costs as compared to their competition. Labor rates for city employees or contractors are higher for Amsterdam Municipal, as it must pay a prevailing wage. These higher operating costs make it more difficult for the Course to plan for capital improvements, as shown.

Company Confidential 43

2.2.3 Opportunities This pricing strategy also represents a tremendous opportunity. If the Course utilizes the pricing strategy proposed in Section 2.3.3, it will become more profitable. This profitability will increase the viability of projects related to capital improvements. The condition of the course, which has been noted to be a major driver of course preference, would improve greatly. Communicating these improvements to non-member golfers in the target region, as outlined in Section 2.3.4, would further increase revenue and contribute to the long-term success of the Course.

2.2.4 Threats The current state of the economy has put a pinch on consumer spending. According to the National Golf Foundation, golfer confidence, as measured by attitudes and perceptions about the effects of the economic recession, have declined. “When it comes to general finances, 2/3 of the nation’s 15.7 million adult core golfers are feeling the economic strain and are reigning in their spending. As such, approximately 30-40% are playing fewer rounds of golf.” 7 Therefore, discretionary spending, which includes spending on recreational activities such as golf, has decreased as well. This could potentially threaten the future growth of the course. With discretionary spending on golf slowing, there is an opportunity to gain additional golfers who no longer golf at country clubs or other private courses because of the high membership fees associated with each. However, such venues typically offer social benefits in addition to the recreational benefit of golf. Therefore, it is unreasonable 7

National Golf Foundation. “Golfer Confidence Declining.” www.ngf.org.

Company Confidential 44 that a large number of former country club and private course would leave their current venues for Amsterdam Municipal. It is more likely that Amsterdam Municipal would lose golfers due to the recession than gain members from other venues. Another threat to Amsterdam Municipal is the political nature of the Course operations. Political officials appoint the Golf Commission and if those political officials are voted out of office, it could lead to turnover in the management of Amsterdam Municipal. Management turnover would lead to a discontinuity in operations that could have a negative effect on the Course’s customer base.

Company Confidential 45

2.3.0 Marketing Strategy The current marketing strategy caters mainly to the interests of members. This is due to the political nature of managing the Municipal Golf Course. Managing the Course as a business and planning for the future by investing in potential customers in addition to desires of existing customers, is key to enhancing the future value of the Course.

2.3.1 Product The Course offers memberships, daily greens fees, and event pricing. In addition, several leagues play weekly. The Course also has special pricing available to senior citizens, juniors, and families. Further strengthening of its core competency is required before expanding into other activities. Expansion into winter activities will be reviewed in additional research.

2.3.2 Place The Course is located in Amsterdam, NY. Demographic information regarding the geographic target was discussed in Section 2.1.

2.3.3 Price Amsterdam Municipal’s current pricing, shown in the table below, is set such that the revenue generated from a round of golf on average will be between $10.03 and $13.05 in 2009 depending on the average number of rounds per member used. This could range between 40-52 rounds per member, but is not tracked by the Course. In 2008, Amsterdam Municipal generated $458,733 in total revenue from green fees and

Company Confidential 46 membership fees. Given the total number of rounds played, between 27,500-34,000 rounds, this calculates to be 38-50% of the standard greens fee. According to the National Golf Foundation, a golf course should strive to generate revenue per round equal to 70-75% of the standard greens fee. Pricing for Amsterdam Municipal is shown in Table 1.

Amsterdam

Greens Fee* 25

Outing 1500

League Rates Member Non-Member 0 25

Standard Membership** 625

Table #1: Current Pricing *Includes both Weekdays and Weekends, all greens fees are for 18 holes **Members play between 40-52 rounds per year on average

As mentioned, pricing should be adjusted to attract golfers from the target market and to generate more revenue per round to support capital improvements. In addition to the local courses reviewed in Section 2.2.0 on Competition, local municipal courses were also reviewed to help establish pricing benchmarks. Table #2 below shows the green fees for local municipal courses.

Course Capital Hills Schenectady Western Turnpike Town of Colonie Amsterdam Average (Not including Amsterdam) Table #2: Municipal Green Fee Prices

Weekday Resident Non-Resident 17 28 18 24 22 29 21 26 25 25 20

27

Resident 17 20 22 22 25

Weekend Non-Resident 28 26 32 28 25

20

29

Amsterdam currently charges a non-member $25 for a day pass at the course, which allows the golfer to play as many holes as they desire in a given day. In fiscal year 2008, 7,400 rounds were played by non-members that paid a green fee to play Amsterdam Municipal. This represents between 22-26% of the total estimated rounds played at the course. Of the 7,400 rounds by non-members, 1,140 were played by non-

Company Confidential 47 residents. It is reasonable to assume that a significant portion of non-member rounds played by non-residents were from the target market of core golfers in Amsterdam. Changing the Amsterdam Municipal Golf Course pricing as shown below in Table #3 is recommended. The recommended pricing changes will make the structure of Amsterdam’s pricing more consistent with its competition, including both local municipal and public courses. The changes will also result in an increase in revenue generated by daily green fees of 7%, from $118,804 to $126,546, based on the same number of rounds played. Weekday Resident Non-resident 24 28 Amsterdam (Recommended) 20 27 Average (Municipal) 24 24 Average (Public) Table #3: Recommended Green Fee Prices

Weekend Resident Non-resident 26 31 21 29 28 28

For group outings, shown in Table #4, Amsterdam Municipal charges a flat rate in place of a per person rate, which is unlike other Municipal Courses. In 2008, Amsterdam generated $10,100 in revenue from outings and expect to generate $12,000 in 2009. Course Capital Hills Schenectady Western Turnpike Town of Colonie Amsterdam

Outings 48 w/cart 41 w/cart and gift certificate 47 w/cart 41 w/cart 1500

Average (Not including Amsterdam) Tablet #4: Municipal Outing and Membership Prices

44

We recommend changing outing pricing to a per person price of $31 and $36 plus cart for residents and non-residents respectively. This will begin to start generating more revenue per outing starting at 49 participants.

Company Confidential 48 The Amsterdam Municipal Golf Course currently charges $10 per league member to reserve the league tee-times for the season. Green Fees for playing in a league are covered under the membership fee and non-members pay the twilight price of $17. Amsterdam currently has 8 leagues with a total of 252 members of which the majority are Amsterdam Municipal members.

Course Capital Hills Schenectady Western Turnpike Town of Colonie Amsterdam Average (Not including Amsterdam) Table #5 Municipal League Rates

League Rates Resident Non Resident 13 18 17 17 16 16 15 20 0 25 15

18

It is recommended to require Amsterdam Municipal members to pay Green Fees for participating in a league. The Green Fee should be set at $15 per round; this is consistent with leagues at other local municipal courses. The change will also result in an increase in total revenue of 14%, from $458,733 to $521,983 based on the same number league members. Table 6 below shows membership rates for competing courses. Course Standard Membership Capital Hills 300 +10 per Round Western Turnpike 885 Canajoharie 750 Pioneer Hills 1050 Amsterdam 625 Table #6: Local Semi-private Membership prices

Amsterdam is currently priced significantly below that of other semi-private courses in the area. It is recommended changing the membership pricing structure to a structure similar to that of Capital Hills in Albany. Pricing should be as follows in Table #7:

Company Confidential 49 Type Membership Green Fee Standard 350 15 Senior 336 13 Senior limited 315 13 Family 595 15 Senior Family 560 13 Junior 87.5 7 Table #7:Recommended membership pricing

This pricing structure will more evenly distribute the cost of operating and maintaining the course to the members who play the course more frequently. Additionally, the changes will result in an increase in revenue of 19% to 32%, from 458,733 to $534,666-$591,811 depending on the number of rounds per member estimated, holding total membership constant. The above recommendations are estimated to result in a total increase in revenue of 35-48% from $458,733 to a range of $606,922 to $664,067. Additionally, revenue can be further increased through increasing Amsterdam Municipal’s share of their target market. Revenues of $100,000 or more can be generated based on total course capacity of ~48,000 rounds per year, current usage of 43-68%, and the size of the target market as discussed in Section 2.1.2. Further detail will be presented in a price sensitivity analysis, to be discussed in subsequent components of the business plan.

2.3.4 Promotion It is reasonable to assume that the majority of Amsterdam Municipal’s target market is aware of the presence of golf course due to the relatively small geographic area which they live in and the amount of golf they play. Therefore, it is recommended that Amsterdam Municipal’s promotional activities be designed to bring people to the course that do not play Amsterdam Municipal already in order to expose them to the quality of

Company Confidential 50 the course. This can be done while generating revenue from these golfers through promoting and holding Outings and Leagues. Many social clubs or businesses hold Outings or run leagues as a social activity for their members, customers, or employees. A representative list of companies within Amsterdam has been included in Appendix 5. Amsterdam Municipal currently has 8 leagues with a total membership of 252 players of which, four are sponsored by local businesses. Additionally, Amsterdam Municipal currently has 8 outings planned for the 2009 season. However, the course has sufficient capacity to support more leagues and outings. Amsterdam Municipal can support between 520 and 720 league members per year depending on league tee time intervals of 10 minutes or 7 minutes, respectively. Amsterdam is currently utilizing approximately 30-50% of this capacity. Using the pricing strategy recommended above, an individual league member will generate $240 in revenue a year from playing in a league. Therefore, Amsterdam has the potential to generate additional revenue by increasing league membership from $64,320 - $112,320. It is more difficult to quantify the capacity of outings a course can support per year. A shotgun start outing will essentially shutdown the course for the period of time required to clear the course of golfers plus the time it will require for the outing to play the course. As a result to many Shotgun start outings will result in the loss of members due to the lack of ability to play the course during these outings. Therefore, the number of Shotgun start outings should be limited. An Outing depending on the size and composition, number of residents and non-residents, can generate $1,500-$5,100. The cost to run a Shotgun start outing not including promotions is on the order of $2,000.

Company Confidential 51 This is based on the potential loss in revenue generated from members and non-members who would typically be playing the course instead of the outing participants. This is a rough estimate of cost and further analysis will conducted as part of the price sensitivity analysis. This will be provided as part of future components of the business plan to establish the number of participants required for a Shotgun start outing to be beneficial to the Course. However, in addition to the increased revenue per round an Outing provides, it also gives the Course the opportunity to display the desirable qualities of the course to golfers who do not typically play the course. Amsterdam should work with local businesses and social clubs to generate more leagues and outings at the course. This can be done by working through their current membership to help organize leagues and outings within their companies and clubs. In addition, the outings should be advertised at the course via postings and fliers at the cashier and on the front page of the Web Site. Amsterdam could also offer incentives including the following for Leagues: •

Wave the League Tee Time reservation fee

•

Discount on League Green Fees

•

Discount on Cart Rentals

•

Discounted non-league rounds

•

Discounted advertising at the Course for local businesses

Amsterdam could also offer following incentives for Outings: •

Gift cards or merchandise from the Pro Shop

•

Discount on the Outing pricing

•

Discounted advertising at the Course for local businesses

Company Confidential 52 Amsterdam should also hold a series of outings at the course, which they would promote and organize themselves. Three outings over the course of the season can be held consisting of spring, summer, and fall outings. The outings should be structured as follows: •

Players divided into three flights, A, B, and C, depending on skill level with the A flight being the most skilled players

•

Points awarded based on which a player finishes within his/her flight

•

Points for each flight are added at the end of the last outing to determine the winner

•

Winner of the A flight would receive a free membership to Amsterdam Municipal

•

Winner of the B flight would receive a discount 30% discount to the Amsterdam Municipal Golf membership

•

Winner of the C flight would receive a free 18 hole golf lesson from the Amsterdam Municipal Pro

Amsterdam Municipal has begun to survey its players on the desirability of a Montgomery County Tournament. While the responses to the Survey have been limited, a total of 28 responses to date, 82% of the respondents would be in favor of the tournament. The Course currently does not use any metrics to keep track of the success or failure of any advertising campaign. In order to maximize the benefits of any marketing program employed by the Course, metrics must be used to understand the impact. A accurate baseline of the number of golfers playing Amsterdam Municipal and the rounds

Company Confidential 53 they play must first be obtained. Reporting accuracy as well as additional metrics to track course performance, in several functional areas will be provided in further detail in future components of the business plan. Amsterdam Municipal currently runs one promotional print advertisement in the Amsterdam Recorder and is considering another promotional television advertisement through Time-Warner Cable. Both are general advertisements and are not promoting any special event or price. They focus on the overall benefits derived from playing the Course. Focused advertising will ultimately be more effective as it informs potential customers of a particular benefit, not to simply inform the audience of the Course’s existence. The advertisement in the Recorder, Amsterdam’s largest newspaper, runs weekly and costs the Course $75 each week. At such a low cost, the advertisement only needs to persuade three more people each week at $25 each, the daily fee. This advertisement seems effective because 73% of members are Amsterdam residents and the non-residents only travel an average of 11 miles to the Course. The proposed advertisement with Time-Warner Cable is much more expensive than the newspaper. The Course already has the commercial made, as it paid approximately $1,000 to produce it last year, according to a member of the Course’s Golf Commission. It can be assumed that the commercial has a useful life of 5 years before it becomes obsolete and ineffective. In addition, the Course must pay for new voice-over for the commercial at a one-time cost of $75, as the original voice-over contains a promotional discount that will not be offered this year.

Company Confidential 54 The pricing structure for the Amsterdam-Schenectady Time-Warner zone is as follows: Time-Warner Media Sales Cost Structure Network The Golf Channel

ESPN

ESPN 2

CNN

Cable News 9

Time 6am-12am 4pm-7pm 6pm-12am 6am-12am 6am-10am 4pm-7pm 6pm-12am 6am-12am 6am-10am 4pm-7pm 6pm-12am 6am-12am 6am-10am 4pm-7pm 6pm-12am 5am-1am

Cost per 30 seconds $ 3 $ 3 $ 6 $ 33 $ 23 $ 38 $ 66 $ 5 $ 4 $ 6 $ 11 $ 13 $ 10 $ 14 $ 26 $ 8

The Course is currently considering a promotional package that, for $640, would run a 30 second commercial 20 times per week on Cable News 9. However, this will not be effective use of advertising dollars, as Cable News 9 viewers do not sufficiently target the demographic the Course serves: core golfers residing within 15 miles of Amsterdam. The Course should focus more on the potential market for its services, promoting special events and tournaments, rather than telling its existing market that they exist. Advertising events rather than the Course will generate more revenue under the recommended pricing structure and continue to promote the Course’s attributes. The initial marketing campaign should focus on developing more leagues and outing customers and should transition to more communication of the course improvements, which have been completed over time. With a focus on changing pricing and brining in more league and outing revenue, the Course can make current needed

Company Confidential 55 improvements by generating more profit per round played. Then, once these improvements are made, begin an advertising campaign that focuses on the remodeling effort the Course can be undertaken.

Company Confidential 56

2.4.0 Investment 2.4.1 Budget The Course should spend a total of $1,000 per year on the following recommended advertisements: •

Web Site – Information on establishing leagues and outings at the course should be included on the web site. In addition, information on the series of tournaments recommended should be included on the home page with links to the rules, benefits, and how to join. These changes should be executed as part of the Cities initiative to revamp the Courses web site and therefore the costs to do so will be included with the overall web site changes.

•

News Paper adds – News Paper adds should be placed for leagues, outings, and the series of tournaments starting late January early February to get people started on thinking about golfing and to give them enough time to put together their league or outing. These ads should run bi-weekly through June. The total cost to do so will be ~$825.

•

Fliers – Fliers should be provided at the course to advertise the series of tournaments and given to members to hand out. A quantity of 1,000 fliers can be purchased for ~$40 and an order or two should be sufficient. These fliers can be handed out at the course and distributed throughout the target market.

2.4.3 Critical Success Factors The major critical success factor to the proposed changes is price elasticity. As there are few competitors in the Amsterdam area, and the competitors that do exist offer

Company Confidential 57 lower-quality courses at comparable prices, pricing should be relatively inelastic. That is, the proposed changes should not have a dramatic impact on demand. Because of the regional lack of niche competitors, demand is predicted to be relatively inelastic. A number of assumptions are made throughout the marketing plan that could affect the outcome of any projections that have been made. It is assumed that the Course can draw customers from a 15 mile radius of Amsterdam. This assumption results from having non-resident membership traveling an average of 11 miles to the Course. Based on this data, it is assumed that 15 miles is the maximum radius it can consistently draw core golfers from. Next, it is assumed that the total population within a 15 mile radius of Amsterdam is 102,915. This is based on 2000 Census data and could have changed since then. In addition, not all small towns were incorporated into this number. Given the possibility of population change in the region and the fact that the number used for population does not encompass all towns in the region, this number may not be entirely accurate, but is the best reasonable assumption available. Further, it is assumed that the Amsterdam area is reasonably representative of the US population. It is assumed that national averages of the golfing population can be applied to this region with accuracy. It is possible that the golfing demographic of this region differs from that of the US population as a whole.

Company Confidential 58

2.5.0 Conclusion In its current state, the Amsterdam Municipal Golf Course is a drain on taxpayer dollars. By using these recommendations to make the course more profitable, the Course will not only reduce the amount it would draw from its general fund, but will increase the value of Amsterdam’s greatest asset. Making the Course more profitable, by adjusting its target market, pricing strategy, and promotional strategy will allow the Course to fund its operations and effectively plan for both needed and future capital improvements.

Company Confidential 59

2.6.0 Appendix 2.6.1 Appendix 1 - Capacity peak off peak off peak May 1-Oct1 Mar-April Oct-nov 6 2 2 153 60 60 660 540 480 10 10 10 3.5 3.5 3.5 66 54 48

months Days time in day(min) tee interval(min) Group size(avg) tee slots per day Capacity 15% days due to weather Total capacity

35343 30041.55 48248.55

11340 9639

10080 8568

Table 1 Golf capacity at Amsterdam Muni

2.6.2 Appendix 2 –Maintenance and Repairs

Tee boxes Greens Sprinkler heads Controllers Drainage Mower Paths Total

Totals $ 90,000.00 $ 30,000.00 $ 70,000.00 $ 52,000.00 $ 180,000.00 $ 25,000.00 $ 250,000.00 $ 697,000.00

Yearly Every other Total time Cycle budget yr Budget to cpl(yrs) 1/yr $ 5,000.00 $ 5,000.00 18 1 every other yr $30,000.00 36 50/yr $10,000.00 $10,000.00 7 1 /yr $ 4,000.00 $ 4,000.00 13 9 holes @1/yr $20,000.00 $20,000.00 9 1 time $ 5,000.00 $ 5,000.00 5 10%/yr $25,000.00 $25,000.00 10 $69,000.00 $99,000.00

2.6.3 Appendix 3 – Year-to-Date Revenues – June 30, 2008 Through June 30, 2008 Memberships Rate Users Regular $ 625 217 Senior $ 600 121 Senior Limited $ 560 13 Family $ 1,035 25 Senior Family $ 985 18 Junior $ 140 114 Jr. Golf Benefit, Gift Certtifricates, Gift Certrificates @ City Hall

Highlighted area denotes inaccuracy in reporting Total $ 135,625 $ 72,600 $ 7,280 $ 25,875 $ 17,730 $ 15,960 $

11,570

Company Confidential 60 Total Memberships

$

Greens Fees Daily Resident Daily Non-Resident Weekend/Holiday Resident Weekend/Holiday Non-Resident After 3pm Tournament Golf Books $25 Greens Fee $19 Special League Fees

Rate $ $ $ $ $

21 26 23 28 17

$ $

25 19

Users 23 270 270 870 2,253

1,672

Total $ 483 $ 7,070 $ 6,210 $ 22,596 $ 38,301 $ 10,100 $ 3,062 $ 41,910 $ 38,931 $ 2,530 $

Total Greens Fees Carts Gas Electric Drive on Monthly Drive on Daily Storage $335 Gas $365 Electric Miscellaneous

Rate $ $ $ $ $ $ $

260 290 40 12 50 335 365

Users 39.9 1.5 7.3 0 137 142 12.3

Total Carts Rate $

Users 30

171,193

Total $ 10,375 $ 435 $ 290 $ $ 6,850 $ 47,580 $ 4,476 $ 690 $

Lockers Regular

286,640

70,705

Total $ 3,450

Total Lockers

$

3,450

Total YTD

$

531,988

2.6.4 Appendix4– Target Market Calculation US pop golfers in us % of US pop Johnstown pop Amsterdam pop total pop est 10% golfers in area

307,212,123 29500000 9.60% 8446 17572 26018 2601.8

Company Confidential 61 2.6.5 Appendix 5 - List of Companies in Amsterdam 21st Century Fitness Century Club Colombian Social Club Inc. Curves Fitness Center Elks Lodge No. 101 Herk’s Tavern Irish American Club Masonic Temple Minnitti’s Grill Parillo’s Armory Grill Polish National Alliance Inc. Schott’s Tavern Skiba’s Tavern Slick’s St Agnello Club St Michael’s Club Tony’s Taver

Company Confidential 62 Appendix O – Operations

3.0.0 Introduction A solid operations plan and strategy is critical to success for every business, the Arthur Carter Amsterdam Municipal Golf Course is no exception. These plans should include roles and responsibilities of all personnel, documented processes for all critical functions, and a short and long term plan for success. The foundation of the business is the personnel, and skills needed to perform the day-to-day operations of the golf course. This operations plan will go through some of the roles and responsibilities of key personnel, critical processes and utilization of plant and equipment, and will recommend changes for short and long-term success.

Company Confidential 63

3.1.0 Operational Overview 3.1.1 Golf Commission According to Chapter 28 of General Code E-Code a six member commission, one of whom is a non-voting Alderman, is to be created that is responsible for the management, operation and maintenance of the golf course. 8 The other five members are not city employees or city officials, and serve for five years in a staggered fashion, such that every year a member of the commissions term is up. The Golf Commission consists of officers of which a Chairman, Vice Chairman and Secretary, serve one-year terms not to exceed three consecutive terms. Each officer is nominated and voted on via sealed ballot. Also included in the charter is a Treasurer, which is currently an open position. The other members of the Golf Commission are not officers, but serve as committee heads, which will further explained. All procedures are introduced by a member of the Golf Commission, are voted on and passed by simple majority. A top-level review of operational responsibilities is shown in Table 1. Excerpts of further detail obtained from The Constitution of the Arthur Carter Amsterdam Municipal Golf Commission, dated April 5, 2004, will be provided in Appendix 1. As shown most of the employees are involved in many of the operational responsibilities, which makes it difficult to understand specific responsibilities under each function. Also of note, no one individual is responsible for course operations and performance.

Function Golf Commission Committee Members 8

Purchasing X

Operations X

Quality Control X

X

X

X

General Code E-Code; Chapter 28 section 1; City of Amsterdam, NY

Marketing and Sales X

Service X

Company Confidential 64 Pro Shop

X

Concessions City Comptroller Superintendant

X

X

X

X X X X X X X Table 1: Top Level roles and responsibilities by function

X X X

3.1.2 Committees As mentioned the Golf Commission is responsible for the operation and maintenance of the golf course. In this capacity, according to Article VI of the aforementioned constitution, the commission shall create the below standing committees. An example of the Pro Shop Committee is shown that highlights the general nature of the responsibilities. Other committees that are required to be created are as follows: Clubhouse, Annual Fee Player, Greens, Improvement, Carts, Long Range Planning, Tournament and Rules. Current documented responsibilities of each are highlighted in Appendix 2. It is noted each Committee is head by one member of the Golf Commission and each are subject to the direction and control of the Golf Commission. Pro Shop •

Have charge of the Professional Golf Shop and PGA Professional under contract and arrange for the purchase of any supplies necessary for operation under the approval of the commission.

It is clear each committee is focused upon some very important variables of the golf course such as growth, planning, procedures and rules, and purchasing for various portions of the golf operations, however it is necessary for the course to track successes and failures and or performance in these areas to ensure improvement moving forward. In addition, many of the duties described are very general in nature, so specific responsibilities should be defined for each member of each committee such that

Company Confidential 65 measurements can be developed for baselines and performance tracking can take place. Some recommended options will be provided in Section 3.7.5.5 to ensure performance is tracked for improvement reasons and appropriate resources and or corrective actions can be put in place when improvement is not noted or performance is below requirements.

3.1.3 Superintendant & Maintenance In addition to the Golf Commission and the committees noted, the golf course also employs a golf course superintendent and six groundskeepers: a mechanic, a foreman, three medium equipment operators, and one seasonal worker. Local municipal golf course maintenance crew sizes were benchmarked and found to range from 5 to 18 full-time and seasonal employees. Amsterdam Municipal is on the low end of this range. The superintendent and grounds keepers are all employed by the City of Amsterdam and are responsible for the maintenance and upkeep of the course. Their benefits and salary are supported by the golf course during operational months and is picked up by the city during the off-season. The superintendant manages all maintenance and grounds keeping activities performed at the golf course. This is a critical function as the grounds are one of the most important attributes of the golf course as noted by a survey of 1,200 capital district golfers performed by the Albany Times Union. The survey concluded 49% of respondents voted Quality/Conditions as most important when choosing a public course to play. 9 In addition, a survey given at Amsterdam Municipal showed that course

9

Albany Times-Union. April 11, 2008, Pete Dougerty. Golf Guide

Company Confidential 66 condition was the most important feature at a golf course with 58% of respondents rating this highest. Details of this survey can be seen in Appendix 3. Given this, in addition to the technical nature of many of the aspects of maintenance and groundskeeping, it is critical the job responsibilities be outlined and adhered to. The responsibilities for the superintendant are shown in Appendix 4. It is also noted that the superintendent is a member of the Golf Course Superintendents Association of America (GCSAA). While this is not a requirement, it has been deemed an excellent qualification and should be required, given the available resources, best practice sharing though seminars, and extreme technical nature of this role. Two cashiers are also on staff at Amsterdam Municipal Golf course. In addition to tending the cash register, the role of the cashier is to take reservations via phone or walkon golfers.

3.1.4 Golf Pro & Concessions Amsterdam Municipal also provides a Golf Professional who is responsible to operate and maintain the Pro Shop and golf cart operations. The Pro must also provide lessons for all patrons as required by contract and must employ an Assistant Pro, a Starter, and a Ranger to aide in Pro Shop operations and golf course throughput. As previously noted, the Golf Pro receives a salary of $18,250 per year through 2012, and keeps all proceeds from golf cart rentals, merchandise sales and lesson fees. Concessions are also provided though contract by Amsterdam Municipal Golf Course. Food and beverage is supplied by the concessionaire in the clubhouse as well as through beverage cart sales, for which the Golf course receives a lease fee of $29,500 per

Company Confidential 67 year until 2009. The golf course receives this added value of convenience for their customers but does not generate revenue on proceeds from food and beverage sales. Strong partnerships with the Concessionaire and Golf Pro is critical to ensuring a good golf experience to all customers as they add value to overall operations and provide necessary amenities which keep customers returning to Amsterdam Municipal Golf Course. Given this, their contracts should require processes and procedures be developed to ensure repeatable results and performance metrics should be developed to validate performance is maintained at a level acceptable to the Golf Commission. Recommendations for these metrics and documented procedures will be provided in section 3.7.5.5 and Appendix 8.

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3.2.0 Organizational Reporting Structure Amsterdam Municipal Golf Course is essentially managed by committee, such that all decisions flow through the Golf Commission, who vote on and approve each decision. Certain items, such as capital expenditures must flow through the Comptroller and or the Mayors office for approval. An unofficial top-level organizational chart is provided in Diagram 1.

Diagram 1: Top level Organization chart

As shown, the Charter 28 states it is the responsibility of the Golf Commission to operate and maintain the golf course. Given the above organizational reporting structure it is currently difficult to determine reporting relationship between the greenskeeper (Superintendent), Golf Pro and Golf Commission as it is noted in the above diagram, which illustrates reporting structure into the Amsterdam Mayor. In addition, the Concessionaire is not listed in the organizational hierarchy and it is recommended to be, such that all employees understand reporting relationship. Organizational structures for

Company Confidential 69 other local municipal golf courses were also benchmarked. The structures range from those very similar to Amsterdam Municipal to those having one individual responsible for all course operations including maintenance, course play, Pro Shop operations, etc. Recommendations for improvement of the operational reporting structure will be outlined in section 3.7.5.3.

Company Confidential 70

3.3.0 Hiring All above paid personnel went through the hiring process for the City of Amsterdam. As noted, the Golf Commission is appointed by the Mayor, is approved by the City Common Council and serves terms indicated above. The maintenance staff is a unionized workforce employed by City Department of Public Works, but report into the superintendent for day-to-day responsibilities. The cashier is also employed by the City of Amsterdam. It is noted that qualification of these employees in addition to the Golf Commission are currently not documented, or were not available for review. While many of the employees are very knowledgeable, it is recommended that qualifications of these employees be defined for future hiring of replacements. In addition, training programs for employees should be developed to ensure each employee and or member of the Golf Commission, maintains their qualified status. Recommendations for implementation and or qualification will be provided in section 3.7.5.1.

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3.4.0 Facilities & Capital Equipment •

Golf Course: Clearly the most important feature of the golf course are the grounds. Quality of the course as noted through a rigorous maintenance and upkeep program is of critical importance and will be discussed in section XXX. The golf course generated revenues of $577, 309 in 2008.

•

Clubhouse: Provides a meeting place for all customers to convene before or after golf, which contains many amenities such as food, beverage, and lockers for members, restrooms and a television for all patrons. The clubhouse generates revenues of $29,500 per year.

•

Pro Shop: Shop contains a variety of golf merchandise for purchase and houses the cashier for payment of greens fees. The Pro Shop generates expenses of $18,250 a year.

•

Cart Storage: Warehouse facility for storage of approximately 208 carts. Cart storage generates revenues of approximately $70,000 per year.

•

Major Equipment: The golf course owns a variety of maintenance equipment such as mowers, aerators and trimmers, which cost the City approximately $250,000 total to purchase over approximately 20 years.

Company Confidential 72

3.5.0 Value Added Processes 3.5.1 Maintenance and Upkeep As noted, maintenance and upkeep of the course are critical components to the appearance and playability of the golf course. A quality maintenance operation ensures current members, daily fee golfers and new customers enjoy their experience and keep coming back to Amsterdam Municipal. This all starts with the customers first impression of the course. Opinions are solidified during their first round of play, enjoying the lush, green course as it was intended. Maintenance and upkeep of the course includes responsibilities listed in the superintendent job description found in Appendix 4. Much of the groundskeeping duties must be worked around golfers playing the course. This would include mowing, aerating, watering, fertilizing and chemical application during off-peak golfing hours so as not to interfere with a players round. Many of these activities are dependant on the weather and are subject to change with poor weather conditions. However, a detailed schedule should be used to understand all duties and when they are performed, such that labor can be scheduled appropriately which would minimally intrude on paying golfers activities. Recommendations for an example maintenance schedule are provided in section 3.7.2.1, and Appendix 5.

3.5.2 Speed of Play The superintendent responsible for maintenance must understand flow of golfers on the course, such that peak times can be worked around for the maintenance schedule. It is therefore critical for the speed of play to be understood. According to a recent study, time to complete 18 holes at Amsterdam Municipal takes approximately 3 hours and 55

Company Confidential 73 minutes, 2:03 on the front 9 holes and 1:52 on the back 9 holes. Speed of play is another critical feature highlighted by an Albany Times Union study of capital district golfers, which ranked sixth in importance for choosing a municipal course 10 and tied for second at 17% or respondents noting this was important feature when surveyed at Amsterdam Municipal.

3.5.3 Capacity Planning Critical to speed of play, is overall capacity planning and course utilization. Total capacity at Amsterdam Municipal is difficult to calculate due to many variables, such as weather, number of days open, operational hours and tee time interval. However, an analysis was completed with varying different parameters to better understand total golf capacity, Appendix 6 shows these details. Total golf capacity will range between 78,000 and 27,000 rounds per year, however for these purposes realistic total capacity given this region, is roughly 48,000-50,000 rounds per year. Maximizing the amount of golfers in a given day, while keeping speed of play to the required 4-hour time is a balance, and the goal is to clearly maximize utilization. The average number of rounds played at local municipal courses per 18 holes is approximately 35,000 per year equating to 70-73% utilization. Moreover, the more utilized the course the more maintenance practices are critical to ensure the quality of the course meets the expectations of all customers. In order to better understand total capacity and overall utilization data accuracy is critical. Therefore employing the use of a Point of Sale system (POS), will lay the foundation for metric development such that capacity calculations and several other performance metrics can be generated. 10

Albany Times-Union. April 11, 2008, Pete Dougerty. Golf Guide

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3.6.0 Scalability Tee times are a limited commodity and as such must be maximized for profitability. As noted, a maximum capacity of rounds that can be played are contingent on many factors and at above calculated capacity of 48,000 rounds. Table 2 below shows possible revenue scenarios using current pricing structure of $25 per round daily fee. Using the goal of net rate per round of 70-75% of daily fee according to the National Golf Foundation, the table shows items in bold that are likely scenarios. This would include rounds played during season from May 1 to September 30 and preseason rounds in April as well as post-season rounds in October and November. Recommendation on increasing utilization will be highlighted in section 3.7.1 and will include daily measurements of rounds played versus total rounds available, such that better planning and/or opportunity exists to identify these voids in reservations to address possible selling down round fees to fill the course. Profitability metrics will also be discussed to maintain acceptable revenue per rounds played. % Utilization 65% Daily Fee 70% Daily Fee 75% Daily Fee 80% Daily Fee 780,000 840,000 900,000 960,000 100% 702,000 864,000 90% 756,000 810,000 624,000 768,000 80% 672,000 720,000 546,000 588,000 630,000 672,000 70% 468,000 504,000 540,000 576,000 60% 390,000 420,000 450,000 480,000 50% 312,000 336,000 360,000 384,000 40% 234,000 252,000 270,000 288,000 30% 156,000 168,000 180,000 192,000 20% 78,000 84,000 90,000 96,000 10% Table 2: Utilization using 48,000 round capacity with varying net rate pre round

Company Confidential 75

3.7.0 Recommendations According to an article found on the National Golf Foundation, “it is a lot more difficult to drive revenue if you are just a golf course” 11 when speaking about additional revenue streams such as concessions, and Pro Shop operations. “Every activity feeds off the others” and for Amsterdam Municipal, current revenue streams consist of approximately 86% of daily greens fees and membership fees. Therefore, it is critical for operational efficiency to ensure profitability is maximized.

3.7.1 Capacity Planning & Utilization 3.7.1.1 POS system: Critical to the operational success of Amsterdam Municipal Golf Course is an understanding of operational capacity, customer buying habits, and trends at the course. Operational efficiency is contingent on data accuracy and baseline metrics, which could be determined with the use of a Point of Sale (POS) system. SPS Golf Management Solutions provides a web-based POS system that will help to streamline tee time reservations, track buying habits and employee activity, and obtain information regarding registered consumers. The course currently lacks a sufficient POS system. All reservations and transactions are tracked manually without the use of any electronic system. This allows for discrepancies between reported activity and actual activity. This also makes it very difficult to obtain any accurate information regarding customer buying habits or course operations. The use of SPS’ software package will help to keep track of activity so that

11

NGF article, Amplify your revenues, NGF.com

Company Confidential 76 these metrics may be used to establish baseline metrics and project future operational needs. The POS system offered by SPS, outlined in Appendix 9, will be effective in tracking the course’s operations. Part of the POS system focuses on the ability of the customer to reserve tee times online in real time. This streamlines tee time reservations because the customer no longer needs to speak with the cashier in order to sign up for a tee time. Additionally, reservations could also be made outside of regular operational hours. This aspect of the POS system makes the experience of registering for a tee time more streamlined and user friendly. In order to use the POS system, golfers must register for its use, providing personal information such as address and date of birth in exchange for a username and password that can then be used to reserve tee times. This allows the course to store this information and use it to establish its customer base demographic, which is very useful when determining how to cater to customer needs or market the course. Obtaining this information also allows the course to use this information for direct marketing campaigns. It could share information regarding the course with members and daily fee golfers and keep these customers coming back to play additional rounds of golf. In addition to tracking customer behavior, the POS system could be used to track employee productivity and establish controls over tee time reservations. This feature would enable course management to make sure the cashier is productive and not giving preferential treatment to any particular customer, ensuring that the course will maintain a positive image for both members and daily fee players alike.

Company Confidential 77 While the course currently lacks a sufficient POS system, the one purchased from SPS will be suitable for operations, as well as cost-effective. The course paid a one-time fee of $1,500 for the software, and must pay a maintenance fee of $119 in months of operation. In addition, the course had to purchase a computer, receipt printer, Internet connection, and Microsoft Office in order to operate the equipment. Also, course employees responsible for operating the software must receive 2 days of online training before “go-live.” While this cost is not insignificant, the benefits provided by the software far outweigh the costs. Once this POS system is implemented, the course will be able to obtain sufficient metrics to help plan and streamline its operations. 3.7.1.2 Metrics: Metrics associating operational efficiently such as daily utilization (tee times booked/available tee times), net rate per round, or more detailed such as rounds player per hour per day would be beneficial for performance. A typical day in season will allow for 280, 18-hole equivalent rounds to be played per day based on 10-minute tee time intervals and operating hours from 6:00am to 4:30pm. After 4:30pm, it was determined that additional 9-hole rounds could be played. Therefore, ideally 280 rounds would be sold for the day, however recognizing the deficiencies to this on a daily basis, and over longer periods of time, would allow for selling down rounds, or offering a discount to golfers to fill open capacity, or allow for better planning during slower times if trends are noted for an overall improvement in yield management. This could also allow for tournaments or leagues to be booked during these times, which will help keep utilization metrics at an acceptable level. Results of these metrics can be posted or published to help solicit additional ideas to maximize utilization. Further, tying in financial performance can be obtained by generating a Revenue per Round metric, or Net

Company Confidential 78 Rate per Round metric that would evaluate revenues per round on a daily or longer term basis. As noted, net rate per round metrics for well-run golf facilities are approximately 70-75% of the daily fee rate. 12 3.7.2 Maintenance As noted previously, maintenance is a critical feature of a course and directly related to playability and condition or quality of the course. Inefficiencies in operation add to lower profitability, which in turn force municipal golf courses to lean out operations, and result in deferred maintenance of capital improvements, ultimately resulting in a deteriorating product further lowering revenues and market share. Scheduling of maintenance will tie into peak hours of operations and must be scheduled accordingly to ensure speed of play. In addition, maintenance is always changing and is contingent on many factors including weather, which is difficult to predict. Agronomy is a specific science that ties all features of golf course care that are very technical in nature and therefore specific recommendations on qualification of the superintendent are provided under section 3.7.5.1. 3.7.2.1 Scheduling: Scheduling of maintenance on various holes by various duties should be mapped out on a daily and weekly basis such that the Golf Commission understands the scheduling requirements to ensure minimal conflicts with paying customers. A typical example schedule is mapped out in table below, details are provided in Appendix 5. It would be further necessary to evaluate times of day each hole is addressed for each duty if possible and a time study be completed on each duty for more efficient scheduling as well as labor utilization rates for productivity and or staffing requirements. The current maintenance staff is a unionized labor force and enforcing a 12

http://golfbusiness.com/pageview.asp?doc=944&m=11&y=2003; By the Numbers, Ryan Cook

Company Confidential 79 schedule and or completing a time study on the necessary tasks, may prove to be challenging, however, enforcement of the schedule based on expected times will increase the course’s operational efficiency. If issues are noted, it would be critical to obtain support from union leadership, citing benefits to the community overall. Day

1 Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Duties Mow greens(6x week) x x x x x x x x x x x x x Mow tees(3x wk) x x x x x x x x x x x x x Mow fairways(3x wk) Mow roughs/trim(1x wk) Rake traps(4x wk) x x x x x x x x x x x x x Change cups(every other day) x x x x x x x Change tee boxes(every other day) x x x x x x x x x x x x x Areation Fall and Spring Chemical applications As necessary Watering x x x x x x x x x x x x x Table 3: Typical example of daily schedule

x x

x x

x x

x x

x x

x x x x

x

x x x x

x x

x

x

x

x

x

x

3.7.2.2 Metrics: Several metrics can be used to evaluate performance for the overall maintenance of the course and are tied in with expenditures. For example greens expense per maintainable acre can be better understood. Baselines should be recorded at current levels. A review of cash flow statements to determine overall maintenance expenditures was approximately $85,764. Amsterdam Municipal Golf Course has 104 maintainable acres, so the baseline cost per maintainable acre is approximately $825. 3.7.2.3 Surveys: An overall increase in course quality via a rigorous maintenance and upkeep program will certainly show in survey results. In addition, tying the survey into the use of maintenance metrics will help define the value of improvements made. A survey was conducted at Amsterdam Municipal, which showed 34% of respondents stated the condition of the greens were below average. Similarly, conditions of rough was average and condition of cart paths was poor, at 44% and 50% respectively.

Company Confidential 80 Additional survey results as shown in Appendix 3. Further surveys can be completed that can tie into overall operating performance as well. The National Golf Foundation (NGF) provides a fee service that can develop surveys and report results on customer satisfaction and loyalty drivers. According to an article by the NGF, surveys bring out deficiencies that can be acted upon for improvement. One example of this was noted on surveys received by a particular subscriber stating course condition was an area critical to driving customer loyalty and also stated an improvement in course conditions was needed. This operator increased their maintenance costs and operational payroll by 35%, to make necessary improvements. Results found on a survey conducted the following year showed in increase in positive customer feedback. There was also significant improvement in the bottom line: a 23% increase in revenue, 14% increase in rounds and 8% increase in revenue per round year-over-year. 13

3.7.3 Speed of Play 3.7.3.1 Ranger: As noted, the Ranger is supplied by the Golf Pro but when questioned, it was reported that the Ranger typically is only provided for golf tournaments or specific peak times on the golf course. To ensure speed of play is maintained for operational efficiency, the Ranger must be available to support golf operation efficiency, which is required by contract. Currently, members play most of the rounds at Amsterdam Municipal, which keeps speed of play moving efficiently due to experience and familiarity with the course. However, marketing plans for bringing in additional daily fee golfers may slow down play. In addition, poor operational efficiency and/or maintenance intrusiveness may contribute to an even slower speed of play. It is 13

www.NGF.com, Operators Find Success Using NGF's Golfer Survey Program.

Company Confidential 81 recommended that the Golf Pro contract be further enforced and require a Ranger be on course during regular golfing hours to ensure that speed of play keep moving forward. When the changes above are implemented, there will be additional need to maximize speed of play for overall efficiency. 3.7.3.2 Time Clocks: Time clocks placed every other hole on the golf course may also help drive speed of play. Noting tee time of groups teeing off at the first hole and setting each subsequent clock back the time it takes to golf to the next hole with a clock, such that every time you pass a clock on a tee box it should show the time you teed off. This will help golfers know how they are doing for speed of play according to the calculated hole times previously discussed. The Ranger can also check tee off times recorded on receipts and compare to clocks on the holes to help narrow down what group on the course is slowing up play. This should be a minimal cost for 9 battery-operated clocks plus the installation at the holes.

3.7.4 Golf Professional Services There are a number of areas where the Amsterdam Municipal can improve operations and either reduce costs or generate additional revenue when coupled with the use of the POS system. These changes can either be made when the current contract has ended in 2012, or the current contract can be amended. As discussed previously the Amsterdam Municipal Golf Course currently employs two seasonal cashiers who are responsible for taking tee times and selling Green Fee passes at the course to non-members. However, all golf cart sales are made in a different location at the Pro Shop. See Appendix 10 for a more detailed description of

Company Confidential 82 this process. The course can streamline this process by conducting the sales of greens fees, golf cart rentals, and merchandise in the Pro Shop under the cognizance of the Golf Pro. This will allow the course to eliminate the salaries of the two seasonal cashiers who make between $8.50 and $10.50 an hour. This will save the Course approximately $40,000 annually in salary and benefits. 3.7.4.1 Cart Management Amsterdam Municipal can also generate more revenue by taking over the management of the golf carts rentals and eliminating annual storage and use fees. Currently, an Amsterdam Municipal member can purchase a golf cart and store it at the course for a annual fee of $335 for a gas-powered cart or $365 for an electric-powered cart. The revenue generated from the yearly fees goes to the course and totaled $70,705 in 2008. Amsterdam also rents carts on a daily basis at the price of $8 and $12 to members and non-members respectively. The revenue generated from the daily golf cart rental goes to the Golf Pro. The potential increase in revenue generated by taking over the management of the golf course is dependent on how many rounds per year at the course and the percentage of those rounds with golf carts. Table 4 below shows two possible scenarios.

Total Rounds

Percentage w/Cart

Revenue from Rentals

40000

80%

$280,000

28000

50%

$126,000

Table 4: Potential Golf Cart Rental Revenue

Company Confidential 83 We also need to consider investment, maintenance, and utility costs as well as an adjustment to the Golf Pro’s yearly salary to make up for the loss of profits from the golf carts. Amsterdam Municipal currently has approximately 210 golf carts stored at the facility. However, 190 are owned by members and 20 are owned by the Golf Pro. After eliminating the annual storage fee Amsterdam can attempt to purchase the number of golf carts needed from either the Golf Pro or the members. Additional golf carts may be leased in the event additional carts are needed to support golf tournaments at a cost of $36 each per day or annually for $1,000 per cart. A used electric golf cart typically costs from $2,500 to $5,000 depending on condition. An initial investment will need to be made in purchasing golf carts. Maintenance costs for the 20 carts owned by the Amsterdam Municipal Golf Pro average $3,500 annually and may occasionally spike to $8,000-$10,000. Amsterdam currently pays for the electricity to power the carts. Actual costs were unable to be obtained but total electrical costs for the Course were ~$10,000 in 2008. The average salary for a Golf Pro at a daily fee golf course nation wide ranges from $40,000 to $62,000. An adjustment to the Golf Pro’s salary will need to be made to compensate for the loss of cart rental profits. For this assessment we assume an increase in salary to $51,000. Amsterdam can expect an increase in expenses of approximately $50,000 annually plus the investment cost to purchase golf carts and additional revenue between $126,000 and $280,000, using current pricing. If the change is not made until the current contract runs out, Amsterdam Municipal Golf Course can begin to charge a nominal fee per golf cart per round. If the

Company Confidential 84 course were to charge a fee of $2 per round, an additional $50,000-$80,000 can be generated depending on how many rounds of golf each member plays a season.

3.7.5 Personnel 3.7.5.1 Qualifications Currently, it is uncertain if the Golf Commissions and subsequent committee members are qualified to operate and maintain a golf course. However, it is certain that each brings professional experience, knowledge of the City of Amsterdam and knowledge of Amsterdam Municipal Golf Course. It is recommended the Golf Commission have or obtain the qualifications listed below in Table 4, which will ultimately help guide the golf course in the future. The superintendant is a technical position requiring extensive knowledge in turf management and recommended qualification are highlighted below.

Operating knowledge of a golf course such as short-term plans and day-today activities through program supervisors including the selection, training, appraisal, and supervision of permanent staff and seasonal workers.

Golf Commission Committee Heads

Short and long term planning ability for revenue building, capital expenditures and expansion, individual and tournament play, golf instruction, course maintenance and improvements, and operations of a golf shop and a snack bar. Knowledge of PGA rules and regulations Independent entrepreneurial business leadership skills Extensive public contact in dealing with the public, private groups, businesses, special interest group within Town government, golf associations and other course directors, and the surrounding communities in the promotion, development, and maintenance of the course, program, and services require tact and diplomacy. Marketing and promotional skills for development of business strategy Expense and revenue management skills

Superintendant

Considerable knowledge of the principles of course design, course management and maintenance, including course landscaping and turf management

Company Confidential 85 Extensive knowledge of equipment use in course landscaping and turf management Ability to develop and adhere to schedules and assign labor Short and long term planning ability for capital expenditures on course maintenance and improvements, Knowledge of finance and ability to budget effectively Member of the Golf Course Superintendants Association of America Table 4: Recommended Qualifications

The skills are essential to the operation and maintenance of a golf course, and likely difficult to obtain without considerable experience in the golf course industry. Therefore it is recommended the golf course hire a General Manager to take over many of the duties as described above and utilize the golf commission as resources for implementation of items, knowledge of the membership and as a liaison to City leadership. 3.7.5.2 Golf General Manager: Hiring a General Manager (GM) to help guide Amsterdam Municipal Golf Course into the future will help drive overall operational efficiency. Utilizing a GM will help tie all aspects of golf operations and help identify short and long-term plans. After a period of approximately three years, the golf GM position should be evaluated against performance to the timeline provided in section 3.8.0 based on a sample job description has been provided in Appendix 7. Currently, the reporting structure is ineffective and identified responsibilities are lacking to ensure the golf course is operated as efficiently as possible to maximize revenues. Many if not all, of the Golf Commission have other daily responsibilities outside operating and maintaining the Amsterdam Municipal Golf Course and to ensure necessary processes and controls are put in place to operate efficiently it is necessary this be a full-time position. The GM can focus on top-level strategy on golf operations, such as utilization, tournaments, league play, marketing and promotion of the golf course to help generate the additional revenues to pay for the role. The GM will also help guide the committees

Company Confidential 86 in the right direction for improvement of the course and allow for better budgeting short and long term for capital improvements. The GM will help establish a baseline for many of the aforementioned metrics with use of the recommended POS system, such that measureable results can be verified and improved upon moving forward. Daily, weekly, monthly and seasonal reports can be run by the GM to help focus resources and assignment of responsibilities as necessary. In addition, he/she will ensure the necessary infrastructure is in place to ensure operational and financial efficiency, as well as appropriate training for Golf Commission and committee members to ultimately take over these responsibilities upon contract end. A topical review of salaries for golf General Mangers at Daily fee courses is shown in the below graphs.

Diagram 2: Median Salary of Golf GM; www.payscale.com; www.salary.com

The hiring of a GM and the subsequent increase in salary expense will be made achievable as a result of the pricing and operational recommendations, which will either increase course profits and/or reduce course expenses. 3.7.5.3 Organizational Structure: It is recommended the organizational structure change to what has been highlighted below, such that all employees and contract personnel understand the hierarchy. The Golf Commission will directly report to the Mayor and the Common Council with a dotted line report into the Golf GM. The entire

Company Confidential 87 staff will report into the Golf GM, with the Golf Commission having the staff be dotted line report to them, ensuring work direction ability. The Golf GM and the Golf Commission are on equal ground, however, all decisions from the Golf GM must be approved though the Golf Commission, and as such will act similarly to a Board of Directors.

Diagram 3: New reporting structure

3.7.5.4 Documentation & Training: It is necessary to document all critical procedures and train employees to those procedures to obtain superior and repeatable results. A review of critical procedures was completed and recommendations for needed documentation are included in Appendix 8. All employees can be identified on this matrix and may be trained on procedures according to responsibility. The GM can help with identifying additional critical processes as well as documenting the appropriate protocols for each procedure. Summer interns can be employed to help with writing procedures under the guidance of the GM. Many interns are available at minimal or no cost, as many school programs will offer credit for business internships.

Company Confidential 88 Training procedures must be developed to ensure all employees get appropriately trained on required processes, such that standardization of duties is achieved, and desired and repeatable results are obtained. Once training is documented necessary performance standards can be developed and communicated to all personnel. 3.7.5.5 Metrics: Measuring performance is essential to overall improvement of operations. Some critical parameters have been indentified in Table 5 below along with suggested goals from industry standards where available. Upon installation of the POS system, such that data is more accurate, baselines can be taken, evaluated for acceptability and compared to industry standards. Once these metrics are established and variables that affect these metrics are better understood, improvement initiatives can be developed to address deficiencies where necessary. A complete understanding of performance will more readily be understood when comparing to industry standard. Benchmarking similar courses around the country is recommended and can be achieved through many services available, one of which is www.golfdatatech.com. Reports are quite expensive and are snapshots in time of various aspects of the golf industry. Another service, which is recommended to subscribe to is a service called Performance Track. This is a service developed by PGA America in cooperation with National Golf Course Owners of America (NGCOA). 14 “The PGA of America’s complimentary research service to support PGA Professionals and their employers, will team with the NGCOA’s Financial Benchmark Program, which surveys and reports on key operational metrics by local market.” 15 Using this free service will allow a good benchmark comparison on an ongoing basis.

14 15

http://www.pgalinks.com/index.cfm?ctc=1778 http://www.ngcoa.org/pageview.asp?doc=1595

Company Confidential 89

Area Benchmark 16 Yield Management Course utilization(rounds played/rounds available) Revenue per available tee time Net rate per round 70-75% fee Net rate per day per hour Greens fee as % of gross revenue Membership revenue as % total gross revenue Carts revenue as % of total revenue Expense Management Maintenance(expense per maintainable acre) $2,500 to $12,000 Marketing expense % of gross revenue 2-5% Admin costs as% of gross revenue Pro & Concessions Merchandise cost of sales Percentage 60-75% Merchandise revenue per round Food and beverage revenue per round Food and beverage cost of sales Percentage 30-35% Table5: Recommended metrics to track

For overall profitability it is critical to focus on expense management, revenue management, marketing management, and drive overall efficiency in operations through use of metrics. Relating various expenses broken down by department, then relating this information with the number of rounds played, gives a good comparison for the contribution of each with respect to overall operations. Customer feed back can also be measured and compared to revenues to track overall performance though the voice of the customer.

16

http://golfbusiness.com

Company Confidential 90

3.8.0 Budget and Timeline A timeline of major events is shown in Appendix 11, beginning in fiscal year 2008-2009 and lasting through fiscal year 2011-2012, the latest date of a currently scheduled capital improvement project. The major events are broken down into 5 categories, as follows: personnel, documentation, metrics, capital improvements and maintenance scheduling. There are also costs associated with each of the events with subtotals at each category and a grand total of all events listed. Some categories had no costs associated with them because they involved documentation tasks that are assigned to current employees within their current scope of work. The most expensive category was capital improvements, costing $540,000 over 4 fiscal years and including major improvements to the course itself and facilities on the property. The grand total of all events listed is $623,864, over 4 fiscal years.

Company Confidential 91

3.9.0 Conclusion Operational excellence should be an overall goal for Amsterdam Municipal Golf Course as there are many opportunities for improvement in operations. Operational efficiency through use of defined processes, procedures, responsibilities, training and metrics will enable the golf course to increase revenues and decrease expenses. Employing the use of a POS system to generate accurate data, hiring a full time GM dedicated to streamline day-to-day operations and changing the reporting structure such that one person is responsible for overall success of the golf course, will help drive accountability, improve efficiency, increase golf course utilization and increase profitability for long term success and future capital expenditure improvements. Ultimately this will take dedication, teamwork, and focus on the customer such that the condition of the course improves year over year, which will keep paying customers coming back to enjoy their golf experience and will increase the value of one of the largest assets of the City of Amsterdam.

Company Confidential 92

3.10.0 Appendix Appendix 1: Golf Commission Officers and Responsibility Officer

Chairman

Vice Chairman

Secretary

Treasurer

Responsibility Presides over the commission during monthly meetings Ensures proper vouchers or claims are submitted and approved by 4/5th of the commission, subject to audit by the Common Council of the City of Amsterdam Consent and approval is noted on all appropriations for operational function prior to any commitment made Controls tie braking vote for rules or resolutions in case of a tie Votes on amendments to Constitution Performs all duties of the Chairman in the absence of the Chairman Keeps all minutes of all commission meetings and issues notices of meetings Responsible for all correspondence to membership “Annual fee Players” of the golf course including notification of censure, suspension, and expulsions, as well as informing of events and policy decisions of the commission Promotes to surrounding communities the contributions and benefits of the golf course Maintains a list of Annual fee Players Votes of amendments to Constitution Shall track all funds and accounts pertaining to the golf course consistent with the City Controller Prepares and distributes annual financial report Prepares annual budget two months in advance of the date required by the Common Council of the City of Amsterdam

Company Confidential 93 Appendix 2: Committees and Responsibility Committee

Pro Shop

Clubhouse Annual Fee Player

Greens

Improvement

Carts

Responsibility Have charge of the Professional Golf shop and PGA Professional under contract and arrange for the purchase of any supplies necessary for operation under the approval of the commission Have charge of the maintenance and operation of the clubhouse under contract and shall arrange for purchase of any supplies necessary for operation and maintenance Develop house rules subject to approval of the commission Responsible for organizing initiatives to increase the number of Annual Fee Players a the golf course Have charge of the golf course, the grounds, equipment pertaining to maintenance and operation of the golf course and grounds, excluding the Pro Shop and Clubhouse Responsible to arrange for purchase of any supplies necessary for operation and maintenance of the golf course as described above Responsible for organizing large projects to improve the beauty and playability of the golf course Formulate plans, including manpower and material cost estimates as well as project impact of current and future playing conditions of the golf course Responsible for the golf cart storage shed waiting list Develops policies and procedures governing storage and use of golf carts on the golf course

Tournament

Responsible for developing five and ten year capital improvement plans for the golf course for approval by the Commission in June, including depreciation and replacement, large landscaping projects such as tee or green replacement, building and parking lot improvements and maintenance Responsible for organizing tournament dates and through Secretary, corresponding to those individuals or organizations which desire to hold tournaments at the golf course Establishes rules, regulations, and fees for holding tournaments, which will require closing course or the tees for a period of time Rules established are passed by majority rule

Rules

Responsible for all rules governing Annual Fee Players, fees, course etiquette, and all other policies used to govern the course including cart storage and use, cart waiting list, locker use and waiting list, course winter activities, use of course by school golf teams, violation of rules, and regulation of practice areas, course closing, starting times, rain checks and refunds Must be comprised of all Commission members

Long Range Planning

Company Confidential 94 Appendix 3 Golf Survey

AMSTERDAM MUNICIPAL GOLF COURSE SURVEY Please take a minute to take this anonymous survey. Information obtained from this survey will be used to improve your golf experience here at Amsterdam Municipal Golf course. Thank you for your participation. Sex M F Age How far did you travel (in miles) to come here today? Are you a member? Type of member? Are you in a golf league? If so how many?

<17 55-64

18-24 >65

25-34

35-44

45-54

<5 >25

6-10

11-15

16-20

21-25

Std

Y N Family Junior Senior Senior family Senior Limited

Y

N

How many rounds do you play monthly?

1-2

3-4

5-8

9-12

>13+

How many rounds do you play monthly at Amsterdam Municipal?

1-2

3-4

5-8

9-12

>13+

Please circle 1 Poor

Below Above average Average average Excellent

What is your overall opinion of Amsterdam Municipal golf course?

1

2

3

4

5

Rate the following attributes of the golf course:

1

2

3

4

5

Condition of greens

1

2

3

4

5

Condition of rough

1

2

3

4

5

Condition of cart paths

1

2

3

4

5

Condition of carts

1

2

3

4

5

Condition of clubhouse

1

2

3

4

5

Drainage

1

2

3

4

5

Merchandise offerings in Pro shop

1

2

3

4

5

Wait time on course

1

2

3

4

5

Ease of reservations

1

2

3

4

5

Tee time availability

1

2

3

4

5

Course fee

1

2

3

4

5

Challenging course

1

2

3

4

5

Membership price

1

2

3

4

5

Overall value 1 2 3 4 Rank items below in order of importance to you (1-5) NOTE: 1 is most important; use # 1-5 only once Challenging course

5

Condition of course Tee time availability Low cost of golf Speed of play Miscellaneous questions: What is your average golf score?

<=70

75

85

95

>=100

How much do you spend on food/beverage during round at the course?

<$5

$6-10

$11-19 $20-30

$30+

How much do you spend in the pro shop on average per round?

<$5

$6-10

$11-19 $20-30

$30+

Why do you choose to play golf at Amsterdam Municipal? ___________________________________________________________________________________________

Company Confidential 95

Sex

Membership

Non 16%

F 16%

Member

M

Non

F Member 84%

M 84%

Age

Rounds Played per month Rounds played per month

40.0% 34.2%

35.0%

45.0% 39.5% 40.0%

28.9%

30.0%

34.2% 35.0%

25.0%

30.0%

20.0%

Age

15.8%

25.0%

21.1%

20.0%

13.2%

15.0%

15.0% 7.9%

10.0%

10.0%

5.0%

5.3%

5.0% 0.0%

0.0%

0.0% 0.0%

0.0% <17

18-24

25-34

35-44

45-54

55-64

1-2

>65

Travel distance

3-4

5-8

9-12

>13+

Rounds Played per month @ Amsterdam Muni Rounds played per month

60.0% 52.6% 35.0%

31.6%

50.0% 28.9%

30.0% 40.0%

28.9%

25.0%

30.0%

Travel distance

20.0% 15.0%

20.0% 13.2%

15.8% 10.0%

10.5%

7.9%

10.0% 2.6%

2.6%

2.6%

0.0%

2.6%

5.0% 0.0%

<5

6-10

11-15

16-20

21-25

>25

NR

1-2

3-4

5-8

9-12

>13+

Company Confidential 96

Overall opinion 60.0%

Condition of greens 40.0%

54.3%

34.2% 35.0%

50.0%

31.6%

30.0% 40.0%

25.0%

21.1%

28.6%

30.0%

Overall opinion

20.0% 15.0%

20.0% 11.4% 5.7%

10.0%

Condition of greens 13.2%

10.0%

8.6%

5.0%

0.0% 0.0%

0.0%

0.0%

Excellent

NR

0.0% Poor

Below avg

Avg

Above Avg

Excellent

NR

Poor

Below avg

Above Avg

Condition of cart paths

Condition of rough 50.0%

Avg

60.0%

44.4%

50.0%

45.0% 50.0%

40.0% 35.0%

36.8%

40.0%

30.0%

25.0% 22.2%

25.0%

Condition of rough

30.0%

Condition of cart paths

20.0% 20.0%

15.0% 8.3% 5.6%

5.0%

10.0%

5.3%

5.3%

0.0%

2.6%

0.0%

0.0%

0.0% Poor

Below avg

Avg

Above Avg

Excellent

Poor

NR

Below avg

Condition of carts 50.0%

Avg

Above Excellent Avg

45.0%

45.7%

45.0%

41.7%

40.0% 37.1%

40.0%

NR

Condition of Clubhouse

36.1%

35.0%

35.0%

30.0%

30.0%

25.0%

25.0%

Condition of carts

20.0%

Condition of clubhouse 20.0% 15.0%

15.0%

11.4%

11.1% 8.3%

10.0%

5.6%

8.6%

10.0%

5.0%

5.7%

5.0%

R N

Av g

g

Ex ce lle nt

NR

e

Excellent

Av g

Above Avg

av

Avg

Be lo w

Below avg

Po or

0.0%

0.0% 0.0% Poor

2.8%

Ab ov

10.0%

Company Confidential 97 Pro shop merchandise offereings

Drainage 40.0%

50.0%

36.8%

44.4% 45.0% 38.9%

40.0%

30.0%

35.0%

25.0%

30.0%

Merchandise offerings in Pro shop

20.0%

25.0%

Drainage 15.0%

20.0%

10.5%

10.5% 7.9%

10.0%

15.0%

11.1% 5.0%

10.0%

5.6% 2.8%

0.0%

Above Avg Excellent

NR

R N

Av g

Av g Ex ce lle nt

Avg

e

Below avg

Ab ov

Poor

Be lo w

0.0%

g

0.0% av

2.8%

Po or

5.0%

34.2%

35.0%

Wait time of course

Ease of reservations

60.0%

40.0% 50.0%

36.8%

35.0%

50.0%

30.0% 40.0%

23.7%

25.0% 30.0%

Wait time on course 19.4%

10.0%

Ease of reservations

15.0%

16.7%

20.0%

18.4%

20.0%

10.5%

10.5%

10.0%

8.3% 5.6%

5.6%

Excellent

NR

5.0% 0.0%

0.0%

0.0% Poor

Below avg

Avg

Above Avg

Poor

Below avg

Tee time availability 35.0%

Avg

Above Avg

Excellent

NR

Course fee 37.8%

40.0%

32.4% 29.7%

30.0%

35.0%

25.0%

30.0%

32.4% 29.7%

21.6% 25.0%

20.0% Tee time availability 13.5%

15.0%

20.0%

Course fee

15.0% 10.0% 10.0% 5.0%

2.7%

2.7%

0.0% Poor

Below avg

Avg

Above Avg

Excellent

NR

5.0%

2.7% 0.0%

0.0%

Poor

Below avg

0.0% Avg

Above Avg Excellent

NR

Company Confidential 98

Overall value 50.0%

Average golf score 70.0%

44.7%

60.5%

45.0%

60.0%

40.0% 31.6%

35.0% 30.0%

50.0%

23.7%

25.0%

Overall value

20.0%

40.0% Average golf score 30.0% 21.1%

15.0% 20.0%

10.0% 5.0%

0.0%

0.0%

Poor

Below avg

0.0%

10.0%

NR

0.0%

0.0% Avg

Above Avg

Excellent

7.9%

7.9%

95

>=100

2.6%

<=70

75

85

Spend in Pro Shop

Spend on Food or Beverage 70.0%

35.0%

31.4% 60.0%

28.6%

30.0%

58.8%

25.7% 50.0%

25.0%

40.0%

20.0%

Avg Spend-Pro

Avg Spend F&B 30.0%

15.0%

11.4%

20.6% 20.0%

10.0%

11.8% 10.0%

2.9%

5.0%

2.9%

5.9%

0.0%

0.0% <$5

$6-10

$11-19

$20-30

<$5

$30+

% of respondents voted most important feature at golf course

$6-10

$11-19

58.8%

$30+

% of respondents voted least important feature at golf course 45.0%

70.0%

$20-30

41.2%

40.0%

60.0%

35.0% 29.4%

50.0% % respondents

30.0%

40.0%

25.0%

30.0%

20.0% 17.6%

20.0%

17.6%

15.0% 10.0%

5.9%

10.0%

% respondents

11.8%

11.8%

5.9%

5.0%

0.0%

0.0%

0.0% Challenging Condition of Tee time Low cost of course course availability golf

Speed of play

Challenging Condition of Tee time Low cost of course course availability golf

Speed of play

Company Confidential 99 Appendix 4: Superintendant Job Description

Company Confidential 100

Company Confidential 101 Appendix 5: Maintenance Schedule

Day 1 2 Duties Mow greens(6x week) Mow tees(3x wk) Mow fairways(3x wk) Mow roughs/trim(1x wk) Rake traps(4x wk) Change cups(every other day) Change tee boxes(every other day) Areation Chemical applications Watering Day

x x x x

x x x x

x x

1 2 Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering Day

Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering Day

Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering

1 Day Holes 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Duties x x x x x x x x x x x x x x x x Mow greens x x x x x x x x x x x x x x x x Mow tees Mow fairways Mow roughs/trim x x x x x x x x x x x x x x x x Rake traps Change cups x x x x x x x x x x x x x x x x Change tee boxes Fall and Spring Areation As necessary Chemical applications x x x x x x x x x x x x x x x x Watering 2 Holes Day 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

x x x x x x x x x x

x

x

x

x

x

x

x

x

x x x x x x x x x x

x

x

x

x

x

x

x

x

x x x x x x x x x x

x

x

x

x

x

x

x

x

Fall and Spring As necessary x x x x x x x x x x x x x x

x

x

x

x

x x x x x x x x x x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x x x x x x x x x x x x x x Fall and Spring As necessary x x x x x x x x x x x x x x

x

x

x

x

x

x

x

x

4 Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

x x x x x x x x x x x x x x x x x x x x

x x

x x

x x

x x

x x

x x

x x

x x

x x x x x x x x x x

x

x

x

x

x

x

x

x

Fall and Spring As necessary x x x x x x x x x x x x x x

x

x

x

x

x x x x x x x x x x

x

x

x

x

x

x

x

x

x x x x x x x x x x x x x x x x x x x x

x x

x x

x x

x x

x x

x x

x x

x x

x x x x x x x x x x x x x x Fall and Spring As necessary x x x x x x x x x x x x x x

x

x

x

x

x

x

x

x

6 Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Duties Mow greens Mow tees x x x x x x x x x x x x x x Mow fairways Mow roughs/trim Rake traps Change cups x x x x x x x x x x x x x x Change tee boxes Fall and Spring Areation As necessary Chemical applications Watering x x x x x x x x x x x x x x

3 Holes Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 x x x x x x x x x x

5 Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Duties Mow greens Mow tees Mow fairways Mow roughs/trim Rake traps Change cups Change tee boxes Areation Chemical applications Watering

x

x

x

x

x

x

x

x

x

x

x

x

7 Holes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 x x x x x x x x x x

x

x

x

x

x

x

x

x

x x x x x x x x x x

x

x

x

x

x

x

x

x

x x x x x x x x x x

x

x

x

x

x

x

x

x

x x x x x x x x x x x x x x Fall and Spring As necessary x x x x x x x x x x x x x x

x

x

x

x

x

x

x

x

Company Confidential 102 Appendix 6: GC Capacity

Peak May 1-Oct1 Months Days Time in day(min) (11hrs) Tee interval(min) Group size(avg) Tee slots per day Weather Capacity Total Capacity with weather adj

Off peak Mar-April Months Days Time in day(min) (9hrs) Tee interval(min) Group size(avg) Tee slots per day Weather Capacity Total Capacity with weather adj

Off peak Oct-Nov Months Days Time in day(min) (8hrs) Tee interval(min) Group size(avg) Tee slots per day Weather Capacity Total Capacity with weather adj

Tee Time interval Change 6 153 660 7 4 94 0.15 57703 49047

6 153 660 10 4 66 0.15 40392 34333

6 153 660 12 4 55 0.15 33660 28611

Tee Time interval Change with group change 6 153 660 15 4 44 0.15 26928 22889

Tee Time interval Change @ (9hrs/day) 2 60 540 7 4 77 0.15 18514 15737

2 60 540 10 4 54 0.15 12960 11016

2 60 540 12 4 45 0.15 10800 9180

2 60 540 15 4 36 0.15 8640 7344

Tee Time interval Change @ (9hrs/day) 2 60 480 7 4 69 0.15 16457 13989

Total annual capacity Min max difference

78773

Average total capacity of all

48000

2 60 480 10 4 48 0.15 11520 9792 55141

2 60 480 12 4 40 0.15 9600 8160 45951

2 60 480 15 4 32 0.15 7680 6528 36761

used for capacity

6 153 660 7 3 94 0.15 43277 36786

6 153 660 10 3 66 0.15 30294 25750

6 153 660 12 3 55 0.15 25245 21458

6 153 660 15 3 44 0.15 20196 17167

Days open due to weather 6 153 660 7 4 94 0.10 57703 51933

Tee Time interval Change with group change 2 60 540 7 3 77 0.15 13886 11803

2 60 540 10 3 54 0.15 9720 8262

2 60 540 12 3 45 0.15 8100 6885

2 60 540 15 3 36 0.15 6480 5508

59080

2 60 480 10 3 48 0.15 8640 7344 41356

2 60 480 12 3 40 0.15 7200 6120 34463

2 60 480 15 3 32 0.15 5760 4896 27571

6 153 660 12 4 55 0.20 33660 26928

6 153 660 15 4 44 0.25 26928 20196

Days open due to weather 2 60 540 7 4 77 0.10 18514 16663

Tee Time interval Change with group change 2 60 480 7 3 69 0.15 12343 10491

6 153 660 10 4 66 0.15 40392 34333

2 60 540 10 4 54 0.15 12960 11016

2 60 540 12 4 45 0.20 10800 8640

2 60 540 15 4 36 0.25 8640 6480

Days open due to weather 2 60 480 7 4 69 0.10 16457 14811 83407

2 60 480 10 4 48 0.15 11520 9792 55141

2 60 480 12 4 40 0.20 9600 7680 43248

2 60 480 15 4 32 0.25 7680 5760 32436

Company Confidential 103 Appendix 7: Sample GM Job Description Minimum Qualifications: • Bachelor’s Degree in Business Administration or related field, five years of progressively responsible experience in golf course management, including an apprenticeship with a PGA golf course; three years of management and supervisory experience. • Must possess and maintain PGA Class A certification. • Must possess and maintain Golf Instructor certification. • Successful completion of the pre-employment physical exam prior to commencing work. • Successful completion of thorough background investigation. • Must possess, or ability to obtain within first six months of employment and maintain First Aid, CPR, and AED certifications. Knowledge, Skills, and Abilities: • Knowledge of applicable federal and state laws, regulations, and requirements. • Knowledge of golf course construction, maintenance, and operations. • Knowledge of irrigation systems. • Knowledge of the game of golf. • Knowledge of fertilizers, pesticides, and insect/disease control. • Knowledge of budgeting, cost estimating, and fiscal management principles and procedures. • Knowledge of the principles and practices of management. • Skill in organizing resources and establishing priorities. • Skill in preparing, reviewing, and analyzing operational and financial reports. • Skill in analyzing problems, projecting consequences, identifying solutions, and implementing recommendations. • Strong interpersonal and communication skills and the ability to work effectively with a wide range of constituencies in a diverse community. • Skill in operating business computers and office machines, including in a Windows environment, specifically Word, Excel, Access, and presentation software (such as PowerPoint). • Skill in examining and re-engineering operations and procedures, formulating policy, and developing and implementing new strategies and procedures. • Skill in budget preparation and fiscal management. • Skill in analyzing problems, projecting consequences, identifying solutions, and implementing recommendations. • Employee development and performance management skills. • Ability to supervise and train employees, to include organizing, prioritizing, and scheduling work assignments. • Ability to plan, organize, coordinate, and facilitate major golf tournament events. • Ability to plan, organize, and implement promotional programs and events. • Ability to foster a cooperative work environment. • Ability to function as a coach. • Ability to communicate effectively, both verbally and in writing. • Ability to develop and maintain recordkeeping systems and procedures. • Ability to establish and maintain professional relationships with individuals of varying social and cultural backgrounds and with co-workers at all levels. • Ability to maintain confidentiality. • Ability to prepare reports; to edit, organize and present clearly and concisely, oral

Company Confidential 104 and written reports of findings and recommendations. • Ability to be persuasive and tactful in controversial situations. Position Summary: Under limited supervision of the Mayor, oversees the management of all aspects of the golf courses, to include course operations, golf concessions, turf and equipment maintenance, and retail facilities. Maintains confidentiality of all privileged information. Essential Duties & Responsibilities: The general level and nature of this position are described in the headings below. This is not an all- inclusive list of all responsibilities, duties, and skills required of personnel in this classification. • Establishes, implements, and communicates goals, objectives, policies and procedures in accordance with strategic plan. • Directs and oversees all aspects of the operation of the golf course, to include all pro shop operations, course supervision, course maintenance, course marketing, and customer relations. • Establishes and implements short- and long-range organizational goals, objectives, strategic plans, policies, and operating procedures; monitors and evaluates programmatic and operational effectiveness, and effects changes required for improvement. • Interacts with staff, community members, and visitors to the golf courses to ensure customer satisfaction. • Oversees the supervision of personnel, which includes participating in recruiting, selecting, orienting, training, coaching, counseling, disciplining, work allocation, and problem resolution; evaluates performance and makes recommendations for personnel actions; motivates employees to achieve peak productivity and performance. • Plans, organizes, and oversees the operation, maintenance, and security of the golf course, including facilities, equipment, and supplies; arranges and/or procures maintenance, repair, and security services. • Provides professional advice and service to clients of the course; acts as a professional resource, as required, in the technical aspect of the game. • Develops annual operating budgets and provides fiscal direction to the golf course. • Ensures that all operations are carried out in accordance with federal, state, and local retail, food services, and associated regulations, guidelines, and standards; ensures that golf activities are in compliance with policy provisions and PGA regulations. • Represents the organization at various community and/or business meetings; promotes existing and new programs and/or policies. • Plans, develops, and implements strategies for generating resources and/or revenues for the golf course. • Oversees the coordination and organization of special promotional activities such as local and regional golf tournaments. • Develops and implements marketing strategies; selects and provides local group lessons; implements tournament programs; arranges publicity and media coverage. • Establishes and maintains professional relationships with state, regional, and national golf organizations. • Maintains professional growth and development through seminars, workshops, and professional affiliations.

Company Confidential 105 • May lead private or group golf lessons. • Monitors and enforces safety rules and regulations, and proper use of safety equipment. • Maintains confidentiality of all privileged information. • Contributes to a team effort and accomplishes related results as required. • Performs other duties as required. Physical Demands: While performing the duties of this job, the employee regularly is required to sit and stand; have manual and finger dexterity; stoop, and talk or hear. The employee is frequently required to walk, and climb stairs. The employee is occasionally required to crawl, reach above shoulder level, crouch, kneel, balance, push/pull, and carry. The employee must occasionally lift and/or move up to 50 pounds.

Work Environment: Work is performed in an office setting with a moderate noise level and in outside environments with moderate exposure to unusual elements, such as extreme temperatures, dirt, dust, fumes, smoke, unpleasant odors, and/or loud noises. Work environment involves some exposure to hazards or physical risks, and requires following basic safety precautions. Work may be stressful at times. Evening, holiday and weekend work may be required. Travel, attendance at various meetings and work outside of normal business hours may be required.

Company Confidential 106 Appendix 8: Documents and Critical Procedures

Company Confidential 107 Appendix 9: Point of Sale System Overview

Pointof-Sale System “After an extensive search for a POS system that would allow us to book tee times online, we found that having a Web-based system is the best way to go. Having everything stored offsite means that if our computer crashes, we won’t lose any of our information.” —Steve Hammond, PGA Head Professional, City of Austin

“SPS Golf Management Solutions is the most affordable software system on the market and is jam packed with hundreds of different options and reports. Since the software system is Web-based, I can look at all of the data from my home to see how our business is going. I have used many different POS Systems, and this one is the most user friendly for my staff. The SPS GMS system has given us the availability to capture data from every player that golfs at our facility, enabling us to market to them and increase our business.” —Jeff Gandee, PGA Head Professional, Auburn Hills Golf Club

SPS Golf Management Solutions has employed next generation technology and proven system architecture to bring full Point-of-Sale (POS) capability to the web. Our POS system is fully integrated with our reservation tee sheet for a quick and easy check-in process. The POS system also has built in protection that keeps it running even if Internet access is interrupted. The SPS Golf Management Solutions Point-of-Sale system incorporates the following features: •

Reservations are automatically carried over from tee sheet.

•

Employee tracking on all transactions and cashier security levels are available.

•

Inventory items can be added to a sale via keyboard, bar code scanner, or one-touch programmable keypad.

•

Multiple tender types including cash, check, credit card, gift card, club account, and gift certificate.

•

Integrated Gift Card for single or multi-location use.

•

Integrated Gift Certificates track and verify current value at the POS station.

•

Integrated, Web-based (optional) Credit Card processing speeds up the check-in process and provides competitive discount rates.

•

Rain Check processing is tracked from tee sheet and verified at POS

Company Confidential 108 station. •

Demographic tracking for POS purchases.

•

Tracking of Member purchases for targeted marketing ability.

•

Post POS transactional data into Micros Fidelio “OPERA”.

•

Touch screen key pad capability for quick reference items.

Company Confidential 109 Appendix 10: People Flow

Company Confidential 110 Appendix 11: Timeline Of Major Events

Company Confidential 111 Appendix 11: Continued

Company Confidential 112 Appendix P – Finance

4.0.0 Introduction Well-planned and managed finances are the cornerstone of every successful business. Amsterdam Municipal Golf Course currently faces a difficult financial situation in that their revenues are steadily declining due to shrinking membership and there are several capital improvements that are needed in order to maintain the course’s quality. The following recommendations have been made and are intended to maximize revenues and control costs for the golf course. ƒ

ƒ

ƒ ƒ

ƒ ƒ ƒ

Modify Pricing Structure ƒ Resident Rates ƒ Membership Rate Structure ƒ League Rate Structure ƒ Outing Rates Promotions ƒ Tournaments ƒ Local Businesses and Social Groups ƒ Media advertising (television, radio, newspaper) ƒ Website Upgrade Capacity Planning & Utilization ƒ Point of Sale (POS) System ƒ Metrics Maintenance ƒ Scheduling ƒ Metrics ƒ Surveys Speed of Play ƒ Ranger ƒ Time Clocks Golf Professional ƒ Cart Rental Management Personnel ƒ Qualifications ƒ Golf General Manager ƒ Organizational Structure ƒ Documentation & Staff Training ƒ Metrics

Company Confidential 113 The recommendations listed will maximize revenue and control costs for the golf course, but they will also provide a basis for being able to grow the golf course into a self-sustaining municipal entity. The recommendations will yield adequate returns such that the required capital improvements will be achieved without as much need for municipal bonds. The most important financial goals for Amsterdam Municipal Golf Course are as follows: ƒ

Maintain/grow current membership

ƒ

Increase course utilization to at least 75% of total capacity

ƒ

Earn revenues sufficient enough to subsidize at least half the funding necessary for capital improvement projects beginning in fiscal year 2012

Company Confidential 114

4.1.0 Revenue Model 4.1.1

Revenue Generation The most significant recommendation in Amsterdam Municipal Golf Course’s

ability to start earning greater revenues is a change in the current pricing structure for both members and daily fee golfers. The inherent problem the golf course faces with its existing pricing structure is members pay a low one-time membership fee and can golf as many times during the season as they want. Essentially, this structure expedites the wear and tear of the golf course, with no additional revenues to help maintain and repair it. The high quality and reasonable price of this course is superior to its public and municipal competitors, and without a fundamental change in its revenue structure, this reign will not continue. The proposed pricing structure will support the wear and tear of every round of golf so that the maintenance staff will be able to keep the quality of the course at its peak. Another pricing change which will increase revenues with little impact on members is the implementation of weekly league fees for members, increasing the number of tournaments hosted by Amsterdam Municipal Golf Course and taking over the golf cart rentals from the Golf Pro (beginning in FY13 when his current contract expires). Pessimistic Scenario Fiscal Year Rounds Revenue 2009-2010 28,000 $521,868 2010-2011 28,000 $792,461 2011-2012 28,000 $796,519 2012-2013 28,000 $903,524 2013-2014 28,000 $913,569 Table 1: Revenue Model Scenarios

Most Likely Scenario Rounds Revenue 35,000 $603,173 35,500 $944,310 36,000 $961,738 36,500 $1,273,056 37,000 $1,303,570

Optimistic Scenario Rounds Revenue 40,000 $665,162 40,000 $1,046,525 40,000 $1,056,477 40,000 $1,434,889 40,000 $1,460,561

Table 1 above shows three revenue models (pessimistic, most likely, and optimistic), which were developed based on the proposed pricing structure changes, and an estimated

Company Confidential 115 number of members and rounds of golf played annually. The most likely scenario, highlighted in yellow assumes the current membership remains constant at 525 members and rounds of golf played will remain constant (assuming the high end of 2008 estimate of rounds played) at 35,000 for the first year, and increase by 500 rounds annually in each subsequent year. The most likely scenario represents 73-78% of the total capacity of the golf course. This growth is based on improved marketing strategies highlighted in Section 2.3.4, Promotion in the Marketing Plan. Such strategies include: ƒ

Seeking out local businesses and social clubs to host summer golf leagues and outings and giving promotional incentives to encourage participation,

ƒ

Hosting more tournaments for businesses, women and top golfers in the county, and

ƒ

Advertising locally via cable television, newspaper and radio.

The pessimistic scenario assumes that membership will drop about 5% to 500 members as a result of the pricing changes. The number of rounds played is assumed to remain constant for all years at 28,000 based on the low end of the 2008 estimated rounds of golf. The pessimistic scenario represents 58% of the total capacity of the golf course. The optimistic scenario assumes that membership will increase approximately 5% to 550 members. The number of rounds played is assumed to grow to 40,000 which is 83% of capacity, as noted in Section 2.0.1 Value Add in the Marketing Plan. It is assumed that the costs associated with operating the golf course will grow at approximately 3% per year, based on inflation with the exception of adding the Golf General Manager in early 2010, which is the primary reason for the negative increase in net income from 2008 to 2009. It should be noted that the change in pricing structure would not occur until the

Company Confidential 116 2010 golf season. Therefore, the revenue estimates for fiscal year 2009-2010 reflect the current pricing structure for the 1st and 2nd quarter, and the new pricing structure for the 3rd and 4th quarter. A summary of the income statement is shown in Appendix 1. 4.1.2 Assumptions The revenue that is estimated in Table 1: Revenue Model Scenarios is highly dependent on the assumptions that are being made. Below is a list of assumptions used in the revenue generation model. •

20% of daily fee golfers are residents; 80% of daily fee golfers are non-residents

•

40% of daily fee golfers play before 3pm; 60% of daily fee golfers play after 3pm

•

80% of all rounds played are by members; 20% of all rounds played are by daily fee golfers

•

40% of all rounds played are during the weekend; 60% of all rounds played are during the weekday

•

All annual membership fees are collected in the 4th quarter (April-June) of the fiscal year

•

The total membership and rounds of golf played by members are broken down as follows, based on membership logs kept by Amsterdam Municipal Golf Course (Appendix 2):

Company Confidential 117 Memberships

22% Regular Senior 45%

3%

Senior Limited Family

5%

Senior Family

5%

Junior 20%

•

The total number of rounds of golf played per open month are broken down as follows: Estimated Seasonal Rounds of Golf

6,000

5,000

Rounds Played

4,000 Daily Fee

3,000

Members 2,000

1,000

r ct ob e O

be r Se p

tem

ug us t A

Ju ly

Ju ne

ay M

A

pr il

0

Month of Play

4.1.3

Time Horizon The current time horizon for the financial statements is 5 years, beginning in

fiscal year 2009-2010 and ending in 2013-2014. During this timeframe, the financial

Company Confidential 118 statements effectively show the growth in revenues based on pricing structure changes. The additional revenue will be kept in the Golf General Fund and will be used for 3 capital improvements, 1) drainage on back of course, 2) cart paths, milling and paving, and 3) maintenance building renovation. According to the City of Amsterdam Capital Project and Equipment Five Year Plan 2009-2013 (Appendix 3), all three capital improvement projects were planned for fiscal year 2009-2010. However, due to the lack of funding available in the Golf General Fund, it is recommended that the golf course postpone those projects to fiscal years 2011-12, 2012-13, and 2013-14, respectively. Based on the projected revenue for each year beginning in fiscal year 2009-10, Amsterdam Municipal Golf Course will only need to borrow $100,000 each for the first two projects, and nothing for the final project. They will borrow from the City of Amsterdam via Bond Anticipation Note (BAN), with repayment over 4 years, to be paid once annually and an interest rate of 12%. These terms are consistent with the other BAN’s that were issued to the golf course for an equipment purchase and the replacement of the clubhouse roof, which were issued in fiscal year 2007-08. A summary of the outstanding Golf Fund Debt is shown in Appendix 4.

Company Confidential 119

4.2.0 Estimating Revenues and Costs Appendices A (Income Statement Summary) and E (Revenue Model) highlight in detail the projections for the increased revenue to be generated based on the change in pricing structure. The Most Likely scenario was used to populate the operating revenue line in the income statement summary. Increased revenues will be generated from annual membership dues, greens fees for members and non-members, weekly dues for leagues, hosting 8-12 tournaments or outings per golf season, golf cart storage fees for cart owners, and golf cart rental fees beginning in fiscal year 2012-13. Based on the projected revenues and costs, Table 2 highlights the bottom line profit (loss) for each fiscal year over the 5-year time horizon. FY09 FY10 551,733 623,070 Revenues 609,122 683,632 Expenses Net Income ($57,388) ($60,562) Table 2: Profit/(Loss) Projections by Fiscal Year

FY11 986,664 729,548 $257,116

FY12 1,005,169 742,955 $262,214

FY13 1,331,234 881,213 $450,021

FY14 1,369,773 889,979 $479,794

Company Confidential 120

4.3.0 Cash Flow Statement The Amsterdam Municipal Golf Course Cash Flow Statement Summary is provided in Appendix 6. Appendix 6 shows the actual cash flow statements from fiscal year 2004 through 2008 as provided by the City of Amsterdam Comptroller. Fiscal years 2010 through 2014 include receipt estimates based on projected revenues reflecting pricing structure changes. Disbursement estimates are based on projected maintenance costs provided by the City of Amsterdam escalated by 3% per year, and include the addition of the Golf General Manager to payroll. Additionally, the projected Bond Anticipation Notes for the cart path, drainage and maintenance building renovation are built into projected disbursements for capital debt and assets in fiscal years 2012-14. The cash flow statement is organized in the direct manner, which demonstrates the total receipts less total disbursements resulting in the cash flow for the current year. Current year cash flow is then added to the beginning year cash which totals to the ending year cash. The receipts section is broken down into three parts: 1) charges to customers, 2) other revenues, and 3) interest earnings. The disbursements are broken down into 5 sections, which differentiate operating costs (employee pay and benefits & supplier and vendor payments) from investment (acquisition of capital assets) and financing costs (interest & principal on capital debt). Fiscal year 2009-10 demonstrates the change in pricing structure midway through the year, which coupled with the additional payroll and benefits from the Golf General Manager, is the reason that the ending year cash is so nominal. Fiscal year 2010-11 shows a tremendous jump in ending year cash, which is a result of the pricing structure

Company Confidential 121 change. Significant costs of capital improvement projects and the additional revenues from golf cart rentals explain the high fluctuation between fiscal years ending 2012-2014. 4.3.1

Net Present Value & Internal Rate of Return The Net Present Value (NPV) is used to analyze the profitability of an investment,

based on the projects cash inflows and outflows, as well as inflation rates and the required rate of return. Due to the nature of the municipal golf course in that the capital improvements planned for the 5-year time horizon are required to maintain the quality of the course. Since the cart path, drainage and maintenance facility projects are unlikely to draw additional golfers, a NPV analysis was calculated based on the total cash inflows and outflows of the golf course from 2010-14. While this analysis strategy does not take into consideration the NPV for each capital improvement individually, it does assess whether the costs are too high to keep the golf course from operating profitably. Based on a required rate of return of 10% and an annual inflation rate of 3%, the net present value of the capital improvements is $420,706.84. Since this number is significantly greater than zero, it is recommended that the golf course proceed with the improvements. The Internal Rate of Return (IRR) is used to determine the rate of growth a project is expected to generate. The same strategy as NPV was used in calculating IRR for the cart paths, drainage and maintenance facility projects. Despite the fact that the free cash flow of the golf course is negative for the first year, the total IRR across the 5year time horizon from 2010-14 is 69.1%. Again, since this number is significantly greater than 0%, it is desirable to undertake this project. However, should the golf course decide not to go forth with some of the recommendations, it is prudent to recalculate the NPV and IRR based on any changes in the projected revenues and expenses. Appendix 7

Company Confidential 122 shows the full calculation of the Net Present Value and Internal Rate of Return for the capital improvement projects planned in fiscal years 2012-14.

Company Confidential 123

4.4.0 Balance Sheet The Amsterdam Municipal Golf Course Balance Sheet Summary is provided in Appendix 8. Appendix 8 shows the actual balance sheets from fiscal year 2004 through 2008 as provided by the City of Amsterdam Comptroller. See Section 4.3.0 Cash Flow Statement for an explanation of change for fiscal years 2010 through 2014.

Company Confidential 124

4.5.0 Financing Strategy Based on the projected earnings beginning in fiscal year 2009-10, the cost of the capital improvements that are planned at Amsterdam Municipal Golf Course will be offset by increased earnings each year. As a result, instead of needing to take out a Bond Anticipation Notes from the City of Amsterdam totaling $440,000, the golf course will only need to finance $200,000; $100,000 each for the course drainage project and cart path improvements. As a result, the golf course will save approximately $28,800 in interest and $240,000 in cash flow over 4 fiscal years. Currently, the City of Amsterdam’s bond rating is “A”. Bond ratings are assessed based on the following factors: economy, debt structure, financial condition, demographic factors, and management practices of the governing body and administration. According to the three major rating agencies for municipal bonds, Moody’s Investor Services, Standard & Poor’s, and Fitch Ratings, the City of Amsterdam’s municipal bonds are considered upper-medium grade. Bonds that are rated “A” possess many favorable investment attributes. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. 17

17

WM Financial Strategies. Municipal Bond Ratings. Accessed from http://www.munibondadvisor.com/rating.htm.

Company Confidential 125

4.6.0 Risk Analysis 4.6.1

Financial Risks The most significant financial risk related to Amsterdam Municipal Golf Course

is the reaction of golfers to the change in pricing structure. The Most Likely scenario of revenue generation assumes that golfers accept the new pricing structure and continue to golf at their usual rate. Even though the pricing structure aligns with the competing public and municipal courses in the Capital Region, the golfers who have been playing at Amsterdam Municipal for years may react negatively. Some people may decide to golf at a different course, but they will be paying more elsewhere than they would at Amsterdam for an equivalent amount of golf. Should a significant number of golfers decide to take their business elsewhere, Amsterdam Municipal can change their golfing mix to draw more greens fee golfers. Adding a driving range, golf instruction, and improved operations are strategies aimed at keeping members coming to Amsterdam because of the camaraderie of the local community and the convenient location, despite the change in pricing structure. 4.6.2 Strategic Risks The loss of members is a significant risk to Amsterdam Municipal. The majority of the revenue generated by the course and the rounds played. Amsterdam has consistently lost members over the past decade dropping from approximately 700 members in the late 1990’s to 534 members in 2008. The loss of members can be caused by a number of things such as: •

The current downward turn of the economy resulting in current members having less disposable income to spend on golf.

Company Confidential 126 •

Members moving out of the area

•

As a result of age, health, or injuries

The current pricing structure does little to mitigate this risk. However, the proposed pricing structure in addition to the proposed utilization efforts will mitigate the risks of losing members. This will be done by (1) generating more revenue per round and (2) fully utilizing the courses resources, tee times, to maximize revenue generated. 4.6.3 Operational Risks Operational efficiency is critical to success for Amsterdam Municipal to increase their revenues. Lack of efficiency in expense management, revenue management, and yield management will not allow Amsterdam Municipal Golf Course to operate efficiently which is necessary to increase their revenues for the needed capital expenditures. One factor that may help with risk of inefficiency and management of these operations is hiring a Golf General Manager. This will allow a visible line of responsibility to all operation matters and further coordinate all functions that are essential to running the golf course, such as maintenance, and improvement initiatives. The reporting structure will be such that all employees would report to the General Manager, as this role will have the necessary qualifications to operate and maintain the golf course. The GM would take advisement from the Golf Commission who would act as the board of directors for top-level decision-making, but the GM would assign and enforce the roles and responsibilities necessary for proper accountability and efficiency. Hiring a GM also has some risks, as it is critical the Golf GM have sufficient experience and a proven track record to ensure the appropriate qualifications. Once way to ensure this experience is to require PGA Class A certification as General Manager. This would

Company Confidential 127 ensure proper educational experience to operate and maintain a golf course. A sufficient background check will need to be done to check references and experience in running a golf course as well. 4.6.4

Risks Outside the Company’s Control As an outdoor recreational activity, the course requires good weather in order to

operate at capacity. The impact of normal weather patterns and the current drainage abilities are taken into account in the projected financial statements. However, changing weather patterns and not repairing the current drainage system may adversely affect the projected results. While changing weather patterns, including the increased frequency and severity of storms, are beyond the control of course management, repairs to the drainage system should be made as soon as fiscally possible in order to maintain the quality of play for the course and mitigate this risk. Failure to mitigate this risk will result in a loss of membership and a decrease in daily fee play.

Company Confidential 128

4.7.0 Timeline Appendix 9 is the timeline of major events for each of the marketing, operations and financial plans for Amsterdam Municipal Golf Course. Events are broken down into 7 categories, as follows: personnel, documentation, metrics, capital improvements, maintenance scheduling, golf professional services, and pricing. Expected revenues and costs are also highlighted for each activity and are subtotaled for each category.

Company Confidential 129

4.8.0 Summary Based on all of the recommendations that were made in the marketing and operations plans, Amsterdam Municipal Golf Course has a very strong financial future. The most challenging part of this transformation is ensuring that the leadership at the golf course stops looking at the business as a not-for-profit just because it is a municipal entity. In this case, hard business decisions need to be made to turn around the structure and organization of the course and it will certainly pay off in the end, as demonstrated in the financial statements. Amsterdam Municipal Golf Course already has a fundamental advantage over competing municipal golf courses in its high quality Robert Trent Jones course design, but coupled with the aforementioned recommendations it is bound to become one of the best values in New York’s Capital Region.

Company Confidential 130 Appendix 1 – Income Statement

Company Confidential 131 Appendix 2 – Membership Comparison

Company Confidential 132 Appendix 3 – Five-Year Plan

Company Confidential 133 Appendix 4 – Golf Fund Debt

Company Confidential 134 Appendix 5 – Revenue Model

Company Confidential 135 Appendix 6 – Statement of Cash Flow

Company Confidential 136 Appendix 7 – NPV and IRR

Company Confidential 137 Appendix 8 – Balance Sheet

Company Confidential 138 Appendix 9 – Timeline

Company Confidential 139 Appendix Q – Pricing Research

The Amsterdam Municipal Golf Course’s current pricing, specifically the membership pricing, is significantly lower than there competition. As a result the Amsterdam Municipal Golf Course has the opportunity to generate significantly more revenue if they were to adjust their pricing upward to better align with their target market and their local competition. To determine the optimal pricing structure and level, the pricing structure of other local semi-private, public and municipal course were evaluated. In addition, an analysis was performed to determine the impact to revenue of different pricing structures along with a sensitivity analysis of those structures.

Competition Amsterdam Municipal Golf Course has a number of competitors. Table 1 below shows the six public or semi-private golf courses either within Fulton-Montgomery Counties or within 15 miles driving distance from Amsterdam as well as Amsterdam Municipal. We benchmarked the courses that met these criteria due to the Course’s potential to serve Amsterdam Municipal’s target market of core golfers who live within ~15 miles of the Course. Course Canajoharie Pioneer Hills Fox Run Briar Creek Hales Mills Amsterdam Average w/o Amsterdam

Weekday 25 20 33 23 27 25

Weekend 30 25 36 26 27 25

23

28

Length 5,837 5,700 6,400 5,667 5,995 6,370

Table 1: Local Competition *Carts typically range in price from $12-$16 per person for 18 holes

Notes Semi-private ($750) Semi-private ($450-$800) With cart, Semi-Private ($575-$695) No Golf Pro Semi-private ($625)

Company Confidential 140 There are a number of other 9-Hole courses in the target region. However, these were not considered competitors to Amsterdam Municipal as they cater to a different target market, focusing more on beginners than core golfers. Private courses were also excluded from the analysis. These were not considered because they serve a target market seeking a private club vice a golf course. The above courses are of comparable quality and target the same market. Briar Creek is of comparable quality, but the length of the course detracts from the challenge and quality of play. Their clubhouses are also similar to Amsterdam Municipal in that they are suitable gathering places, but are unlikely suitable venues for more formal events such as a wedding. Fox Run and Briar Creek are generally regarded as not having quality matching Amsterdam Municipal. Overall, the closest competition in terms of offerings consists of Canajoharie and Pioneer Hills.

Strengths Currently, the strength of the course is its pricing strategy. Their membership plans offer a tremendous value to core golfers, non-resident fees are lower, and daily fees do not limit golfers to a number of rounds. However, attractive pricing does not ensure customer loyalty. Additionally, the course in not or are barely making a profit each year. Making an adjustment to pricing strategy, as outlined in the Pricing Section, will allow the Course to become more profitable. This profitability will in turn allow the Course to investment in capital improvements to increase the overall quality of the Course. Investment in capital improvements will then allow the course to change Strengths from

Company Confidential 141 pricing to course quality. Superior maintenance and investment into the course will help to develop customer loyalty and ensure the long-term success of the Course.

Weaknesses Pricing as identified above is also a vulnerability in terms of customer loyalty. Pricing for League play as outlined in the pricing section, is a drain on course resources (tee times) and generate almost no revenue. Additionally, the course only utilizes 3050% of its total capacity for leagues. As a municipal course, Amsterdam Municipal faces higher operating costs as compared to their competition. Labor rates for city employees or contractors are higher for Amsterdam Municipal, as it must pay a prevailing wage. These higher operating costs make it more difficult for the Course to plan for capital improvements.

Opportunities The current pricing strategy also represents a tremendous opportunity. If the Course utilizes the pricing strategy proposed in the Pricing Section of this report, it should become more profitable. This increase in profitability will increase the viability of projects related to capital improvements. The condition of the course, which has been noted to be a major driver of course preference, would improve greatly. Additionally, an increase in long term profitability will allow the course to send more money back to the city. Communicating these improvements to members and non-member golfers in the target region, will help justify future price increases, further increase revenue, and contribute to the long-term success of the Course.

Company Confidential 142

Threats The current state of the economy has put a pinch on consumer spending. According to the National Golf Foundation, golfer confidence, as measured by attitudes and perceptions about the effects of the economic recession, has declined. “When it comes to general finances, 2/3 of the nation’s 15.7 million adult core golfers are feeling the economic strain and are reigning in their spending. As such, approximately 30-40% are playing fewer rounds of golf.” 18 Therefore, discretionary spending, which includes spending on recreational activities such as golf, has decreased as well. This could potentially threaten the future growth of the course. Another threat to Amsterdam Municipal is the political nature of the Course operations. Political officials appoint the Golf Commission and if those political officials are voted out of office, it could lead to turnover in the management of Amsterdam Municipal. Management turnover could lead to a discontinuity in operations that could have a negative effect on the Course’s customer base. This specific threat will be addressed within the operations deliverable.

Pricing Amsterdam Municipal’s current pricing, shown in the table below, is set such that the revenue generated from a round of golf on average will be between $10.03 and $13.05 in 2009 depending on the average number of rounds per member used. This could range between 40-52 rounds per member, but is not tracked by the Course. In 2008, Amsterdam Municipal generated $458,733 in total revenue from green fees and 18

National Golf Foundation. “Golfer Confidence Declining.” www.ngf.org.

Company Confidential 143 membership fees. Given the total number of rounds played, between 27,500-34,000 rounds, this calculates to be 38-50% of the standard greens fee. According to the National Golf Foundation, a golf course should strive to generate revenue per round equal to 70-75% of the standard greens fee. Current pricing for Amsterdam Municipal is shown in Table 2.

Amsterdam

Greens Fee* 25

Outing 1500

League Rates Member Non-Member 0 17

Standard Membership** 625

Table 2: Current Pricing *Includes both Weekdays and Weekends, all greens fees are for 18 holes **Members play between 40-52 rounds per year on average

Daily Green Fees As mentioned, pricing should be adjusted to attract golfers from the target market and to generate more revenue per round to support capital improvements. In addition to the local courses reviewed the Competition Section above, local municipal courses were also reviewed to help establish pricing benchmarks. Table 3 below shows the green fees for local municipal courses.

Course Capital Hills Schenectady Western Turnpike Town of Colonie Nick Stoner Amsterdam Average (Not including Amsterdam) Table 3: Municipal Green Fee Prices

Weekday NonResident Resident 17 28 18 24 22 29 21 26 20 20 25 25 20

25

Weekend NonResident Resident 17 28 20 26 22 32 22 28 22 22 25 25 21

27

Company Confidential 144 Amsterdam currently charges a non-member $25 for a day pass at the course, which allows the golfer to play as many holes as they desire in a given day. In fiscal year 2008, 7,400 rounds were played by non-members who paid a greens fee to play Amsterdam Municipal. This represents between 22-26% of the total estimated rounds played at the course. Of the 7,400 rounds by non-members, 1,140 were played by nonresidents. It is reasonable to assume that a significant portion of non-member rounds played by residents were from the target market of core golfers in Amsterdam. Changing the Amsterdam Municipal Golf Course pricing as shown below in Table 4 below is recommended. The recommended pricing changes will make the structure of Amsterdam’s pricing more consistent with its competition, including both local municipal and public courses. The changes will also result in an increase in revenue generated by daily green fees of 7%, from $118,804 to $126,546, based on the same number of rounds played.

Amsterdam (Recommended) Average (Municipal) Average (Public) Table 4: Recommended Green Fee Prices

Weekday Resident Non-resident 24 28 20 25 23 23

Weekend Resident Non-resident 26 31 21 27 28 28

Company Confidential 145 Membership Pricing

Table 5 below shows membership rates for competing courses. Course Standard Membership Capital Hills 300 +10 per Round Western Turnpike 885 Canajoharie 750 Pioneer Hills 1050 Amsterdam 625 Table 5: Local Semi-private Membership prices

Amsterdam is currently priced significantly below that of other semi-private courses in the area. Changing the membership pricing structure to a structure similar to that of Capital Hills in Albany is recommended. This pricing structure will result in the people who play the course the most paying the most. Therefore more evenly distributing the cost of operating and maintaining the course to the members who play the course the most frequently. Pricing should be as follows in Table 6: Type Membership Green Fee Standard 350 15 Senior 336 13 Senior limited 315 13 Family 595 15 Senior Family 560 13 Junior 87.5 7 Table 6: Recommended membership pricing

The changes will result in an increase in revenue of 19% to 32%, from 458,733 to $534,666-$591,811 depending on the number of rounds per member estimated, while holding total membership constant. Chart 1 below shows the impact of membership loss on revenue. The proposed membership, the current membership, as well as a number of other pricing structure and level options were evaluated as well. As shown under the proposed strategy more

Company Confidential 146 revenue will be lost per member lost, however, this as expected due to the proposed model generating more revenue per member than the current model.

Revenue vs. Number of Members $650,000.00

$600,000.00

$550,000.00 650 Revenue

700 $500,000.00

250-10 350-10 250-15

$450,000.00

350-15 2008 Baseline $400,000.00

$350,000.00

$300,000.00 534

518

503

488

473

459

445

432

419

406

394

382

371

Total Membership

The proposed model is much more robust than the current model with regard to loss of membership and will continue to generate more total revenue than generated in 2008 with a decrease in membership up 31%.

Unlike a flat rate membership model the proposed pricing structure is sensitive to the number of rounds played per member per year. Chart 2 shows the impact of # of decrease in rounds played per member on the current model, the proposed model, and a no membership model, along with various pricing levels.

Company Confidential 147 Revenue vs. Rounds per member $650,000.00

$600,000.00

Revenue

$550,000.00

650 700 250-15

$500,000.00

350-15 No Memberships 2008 Baseline

$450,000.00

$400,000.00

$350,000.00 52

48

46

44

42

40

38

36

34

32

30

28

26

24

22

20

Rounds per member

While the proposed model is more sensitive than the current model to fluctuations in the number of rounds played per member it will continue to generate more revenue up to a decrease in rounds per member of 54%.

Company Confidential 148 Outings For group outings such as tournaments and other special events Amsterdam Municipal charges a flat rate in place of a per person rate, which is unlike other Municipal Courses. In 2008, Amsterdam generated $10,100 in revenue from outings and expects to generate $12,000 in 2009. Table 7 shows outing prices for local municipal courses including Amsterdam Municipal. Course Capital Hills Schenectady Western Turnpike Town of Colonie Amsterdam

Outings 48 w/cart 41 w/cart and gift certificate 47 w/cart 41 w/cart 1500

Average (Not including Amsterdam) Table 7: Municipal Outing and Membership Prices

44

Changing outing pricing to a per person price of $31 and $36 plus cart for residents and non-residents respectively is recommended. This will begin to start generating more revenue per outing starting at 49 participants. Additionally, Amsterdam should not conduct shotgun start outings unless the outing has committed to a minimum of 72 people. The outing requires the course to be shut down for the 4.5 to 5 hours to play the course plus the time it takes to clear the course of golfers. On average approximately 150 rounds of golf are played at Amsterdam Municipal per day. Approximately 75% are played by the members and 25% played by non members. Therefore on average Amsterdam Municipal under the proposed pricing structure will make $2,600 on average of the course of a day, this equates to 86 golfers in an outing with out carts. While 72 is less than that of the average number of golfers the revenue for the 72 is guaranteed where the others are not. In addition, many of the golfers who

Company Confidential 149 would normally play during the time outings is being held may adjust and play at a different time either before or after the outing.

League Pricing

The Amsterdam Municipal Golf Course currently charges $10 per league member to reserve the league tee-times for the season. Green Fees for playing in a league are covered under the membership fee and non-members pay the twilight price of $17. Amsterdam currently has 8 leagues with a total of 252 members of which the majority are Amsterdam Municipal members. Table 8 below shows League Rates at other local municipal courses.

Course Capital Hills Schenectady Western Turnpike Town of Colonie Amsterdam Average (Not including Amsterdam) Table 8: Municipal League Rates

League Rates Resident Non Resident 13 18 17 17 16 16 15 20 0 17 15

18

It is recommended to require Amsterdam Municipal members to pay Green Fees for participating in a league. The Green Fee should be set at $15 per round; this is consistent with leagues at other local municipal courses. Additionally, league tee times are typically premium time for golf courses, having league members playing without paying severely limits the courses ability to generate revenue from other paying customers. The change will also result in an increase in total revenue of 14%, from $458,733 to $521,983 based on the same number league members.

Company Confidential 150

The above recommendations are estimated to result in a total increase in revenue of 3548% from $458,733 to a range of $606,922 to $664,067. Additionally, revenue can be further increased through increasing Amsterdam Municipal’s share of their target market. Revenues of $100,000 or more can be generated based on total course capacity of ~48,000 rounds per year, current usage of 43-68%, and the size of the target market as discussed in Section 2.1.2. Further detail will be presented in a price sensitivity analysis, to be discussed in subsequent components of the business plan.

Company Confidential 151 Appendix R – Revenue Sources Research I.

Overview Amsterdam Municipal Golf Course (AMGC) offers the best value of many of its

municipal competitors: a top-quality Robert Trent Jones designed course for a reasonable price. However, one of the biggest challenges that the course faces is growing its membership, and in turn increasing its revenue to pay for much-needed capital improvements. Currently, the course membership consists of 523 people, with demographics highlighted in the table below: Course Demographics Gender Residency

Male 460 88% Amsterdam Residents 366 70%

Female 63 12% Non-Residents 157 30%

Table 1

In the past 10 years, membership has declined 26%, from about 700 members in the late 1990’s. The course is in need of two major capital improvements, cart path refurbishment and a new course drainage system, totaling approximately $500,000. In order to maintain the course’s current quality, the Golf Commission needs to raise additional revenue to pay for the required maintenance upgrades. As such, the Amsterdam Municipal Golf Course should consider the development of women and youth programs in order to a) boost membership among the surrounding community, and b) raise revenues to pay for maintenance upgrades to maintain its stature among the best municipal courses in the area.

Company Confidential 152

II.

Golf Programs for Women According to the National Golf Foundation, approximately 23% (5.5 million out

of 23.9 million total) of all golfers in the United States are adult women 19 . Comparatively, only 12% of Amsterdam Municipal Golf Course’s membership consists of women. This comparative statistic indicates that there is plenty of room for growth in AMGC’s membership for women. All other factors the same, if the current number of women members doubled, AMGC would earn nearly an additional $40,000 per annum. History Women in golf date back some 500 years, and it was a female in fact, Mary Queen of Scots, who commissioned the building of the sport’s Holy Grail, St. Andrews, in 1552 20 . Below is a timeline of other major milestones in the history of women and golf 21 . Women in Golf Timeline Mary, Queen of Scots, an avid golfer, coins the term "caddie" by calling her assistants "cadets." It is during her reign that the famous golf course at St. Andrews 1552 is built. 1867 The Ladies Club of St. Andrews, Scotland, is formed - the first ladies' golf club. 1895 The First U.S. Women's Amateur championship is held in Hempstead, N.Y. The Professional Golfer's Association of America is founded. It is replaced by the 1916 Ladies PGA six years later. 1944 The Women's Professional Golf Association (WPGA) is founded. 19

Berkley Golf Consulting. Statistics About Women and Girl Golfers. Available from http://www.nancyberkley.com/771810.html; accessed 25 April 2009. 20 Ocean State Womens Golf Association. The History of Women in Golf. Available from http://www.oswga.org/interviews/pressReleaseEB5-22-03.htm; accessed 18 April 2009. 21 Berkley Golf Consulting. Important Events in Women’s Golf. Available from http://www.nancyberkley.com/774892.html; accessed 25 April 2009.

Company Confidential 153 1963 First nationally televised women's event - the U.S. Women's Open. 1977 The PGA of America votes to accept female members. The first Women in Golf Summit is held. Women leaders in the golf industry meet 1991 to discuss ways to increase women's participation in golf. Table 2

Understanding Women Golfers As noted above, the women golfer demographic is one that is really an untapped source of revenue that Amsterdam Municipal Golf Course is not currently marketing to. In order to draw women golfers to this course over other competitors, it is important to understand the demographic and what they are looking for in a course. Below is a series of important statistics that any golf course should be aware of when marketing to women 22 : ƒ

About 6% of all women, age 18 and older in the United States are golfers.

ƒ

About half of all women golfers play less than six rounds per year.

ƒ

The average number of rounds per year by women golfers is about 18. Avid women players who play 60 rounds/year skew the average to the high end.

ƒ

25% of former women golfers had trouble finding someone to play with.

ƒ

47% of women golfers were introduced to golf by a family member, and 23% by a friend (compared to 22% and 31%, respectively, for men).

22

ƒ

56% of women golfers work full-time, and 28% have kids at home.

ƒ

The average age of women golfers is 45 (for men, 44).

ƒ

37% of women golfers are fifty or older, compared to 32% for men.

Berkley Golf Consulting. Snapshot of Women Golfers – Who Are They? Available from http://www.nancyberkley.com/774894.html; accessed 25 April 2009.

Company Confidential 154 ƒ

The fastest growing segment of women golfers are those between the ages of 18 and 29, representing almost one-quarter of all female golfers 23 .

Marketing to Women Golfers Given all of the data provided above, some suggestions on how Amsterdam Municipal Golf Course can more effectively market to women are as follows 24 : 9 Consult with potential golfers to discuss their anticipated frequency of play. Stress the value of the membership, but understand that some women will play fewer than six rounds per year so the daily greens fee option may be more economical for them. 9 Make them feel welcome and comfortable at the course by offering lessons and/or clinics. Marketing lessons for women individually or in group sessions helps build a network of new golfers. 9 Offer written handouts with basic information for new golfers. 9 Post a “Looking for a partner?” sheet in the Pro Shop. 9 Offer programs at varying times (daytime and after work). Advertise programs using key words and phrases “for beginners”, “no experience necessary”, “no pressure”, “fun”, and “meet other women.”

23

CyberGolf. Leading Indicators for Women & Junior Girls Golf. Available from http://www.cybergolf.com/golf_news/leading_indicators_for_women_junior_girls_golf; accessed 25 April 2009. 24 Berkley Golf Consulting. Women Friendly Best Practices. Available from http://www.nancyberkley.com/676303.html; accessed 25 April 2009.

Company Confidential 155 9 Designate off-peak times for beginners and lessons so as to avoid slowing play on the course for avid golfers. 9 Employ female instructor(s). 9 Stock Pro Shop with a selection of women’s clothes and accessories. 9 Invite members and other patrons to refer women golfers to the course; offer a referral bonus for the recruiter and a discount for a new golfer, for example: o $25 off for new members who joined on the referral of a current member, or o Golf 5 times this season, get your 6th round free 9 Include women on important committees. 9 Offer a social time before or after classes or leagues. 9 Encourage feedback and opinions from female customers. The most important thing to remember when trying to draw women to the golf course is that you have to make them feel comfortable. The Amsterdam Municipal Golf Commission acknowledged that it is difficult to recruit new members and patrons because people have the wrong perception of the golf course. People who are not familiar with the facility or the sport may assume that it is just a place for men to go make business deals. It is up to the Golf Commission to encourage more of the community to come enjoy the golf course for what it is; a city owned recreational facility. People should be encouraged to visit not only to socialize, but to take advantage of a heart-healthy sport that welcomes people of all ages and abilities. III.

Golf Programs for Youth

Company Confidential 156 Encouraging youth to participate in sports and extracurricular activities not only promotes good physical health, but it helps them to develop emotionally and socially. Research has also shown a link between extracurricular activities and a number of positive outcomes, including social adjustment, school attendance, drug resistance, academic performance and high school completion. Golf is an optimal sport to involve youth in because it teaches life skills and does not emphasize aggression and hostility toward opponents like other sports often do. The culture of the sport of golf promotes respect, self-discipline, courtesy and cooperation, social skills and self-monitoring of behavior and play. These social and cultural attributes make golf an excellent basis for programs which aim to teach skills that can be used in both sport and life 25 . In 2001, research conducted by GOLF 20/20 confirmed the belief that early instruction in golf leads to a greater likelihood of long-term involvement with the game. Adults who were exposed to golf through a structured junior program play 58% more rounds and spend 71% more money on golf than adults who were only informally exposed to the game in their childhoods 26 . One of the challenges that youths face, however is that there is a greater barrier to entry into the sport of golf than many other sports such as soccer, basketball and baseball. High school golf has gained tremendous popularity over the last several years, but unless youths have been exposed to the sport at a younger age it is less likely that they will pick up the sport in a competitive environment. As such, many golf courses are developing structured youth organizations dedicated not only to teaching junior golfers important life 25

Ryan, P. J. & Chorost, M. (July 2002). Youth Participation in Formal Junior Golf Programs and the Potential Impact on Social Adjustment and Academic Performance. Available from http://www.golf2020.com/Reports/YouthParticipationPaper.pdf; accessed 25 April 2009. 26 Golf 20/20. Participation Reports: Examining Efforts to Grow Young Golfers. Available from http://www.golf2020.com/reports_2002YouthImpact.aspx; accessed 25 April 2009.

Company Confidential 157 lessons and skills, but by harvesting dedicated future golfers that will continue to play their course for years to come. The First Tee ® An initiative of the World Golf Foundation, The First Tee ® has its mission “to impact the lives of young people by providing learning facilities and educational programs that promote character-development and life-enhancing values through the game of golf. 27 ” The organization was created in November 1997 because the primary reason more children, especially those who were economically disadvantaged, did not play golf was because of the lack of places that welcomed them, places they could physically get to, and places that they could afford. There are two options for golf courses wishing to become involved in the program. An Access Affiliate is a green grass golf facility that allows Chapter participants to play golf holes at a reduced cost, but no Chapter programs are delivered at this location. By comparison, a Program Affiliate is a green grass golf facility located in the Chapter’s service area that has agreed with the Chapter to provide delivery of the Life Skills Experience lessons to participants and which also may provide reduced rates, free golf, or any other benefits determined by the agreement between the Chapter and Program Affiliate. Currently, there are no The First Tee ® programs geographically located in New York’s Capital Region. In fact, the nearest program location is Syracuse, New York. It does not appear that there is a lot of revenue that may be generated immediately by becoming an affiliate of The First Tee ® program, but it would be beneficial for Amsterdam Municipal Golf Course to consider developing a similar youth 27

The First Tee. History of The First Tee. Available from http://www.thefirsttee.org/club/scripts/view/view_insert.asp?IID=13105&NS=PUBLIC; accessed 25 April 2009.

Company Confidential 158 program. Not only would such a program draw additional revenue (via greens fees and youth lessons) to the course, but it would help to develop life skills to the youth that participated and cultivate future members of the course. Structure of Youth Programs Considering Amsterdam Municipal Golf Course is a challenging and often played by seasoned golfers, it would not be wise to interject inexperienced players into normal course play. Some golf courses make the mistake of trying to open up their courses to be more family-friendly, but in the mean time end up frustrating their avid golfers by significantly slowing the rate of play. In order to avoid that from happening, the best idea is to structure the youth programs around the off-peak golf times for avid golfers. Since children are not in school during the summer months, and most golfers are employed during the weekdays, you can maximize the golf course usage by scheduling youth summer golf day camps, lessons and leagues from late morning to early afternoon. Most golfers in the summer arrive at the course either early in the morning to avoid the hottest weather or late in the afternoon after work.

IV.

Pricing Structure It is imperative that the course put the proper infrastructure in place to allow for

new golfers. For example, it may be necessary to hire an instructor. Intuitively, the Pro Shop would employ the additional employee since it is currently responsible for the course starter and ranger. It is absolutely necessary that the golf course and the Pro Shop work together on developing a plan that is mutually agreeable by both parties. It is important to understand that the Pro Shop will be earning additional revenue by offering

Company Confidential 159 group and individual lessons, and the golf course by drawing more members and daily fee golfers. Assume you hire a golf instructor (average annual salary $30,000 to $40,000) for $16 per hour and they work 8 hours per day, 5 days a week. Their weekly wage is approximately $640. Fees average $50 to $60 for a 30- to 45-minute private lesson. Instructors sometimes offer hour-long sessions for $75 to $90, which is a better overall value. There is typically no cost break for children’s lessons. Instructors typically reduce fees by 15 percent or more if golfers buy a bundle of lessons. Golfers can buy a package of six 30-minute lessons for about $250 ($42 per session), or six hour-long classes for $375 ($62.50 per session). Golfers can find deep discounts from instructors or clubs that offer group rates in conjunction with multiple-lesson discounts. A package of six sessions for two golfers is around $450 for hour-long sessions ($37.50 per session), but the price drops to $25 per golfer for a group of five that buys six hour-long sessions for a total of $750 28 . A break-even analysis is shown below, in Table 3. As the data shows, the break-even point is how many lessons you would have book each week (organized by type of lesson) in order to pay the golf instructor. Any additional lesson bookings are pure profit. As highlighted in yellow, the most efficient and profitable lessons are six 30minute private sessions, which also indicates that they are the most expensive hourly rates. Golf Instructor Break-Even Analysis Golf Instructor Cost Hourly Wage Hours/Week $16.00 40

28

Total Weekly Wage $640.00

CostHelper.com. Golf Lessons Cost. Available from http://www.costhelper.com/cost/fitness/golflessons.html; accessed 26 April 2009.

Company Confidential 160

Single Session (30 Minutes) Single Session (60 Minutes) Six 30-Minute Sessions Six Hour-Long Sessions

Two Golfers Five Golfers

Private Lessons Hourly Lesson Cost $55.00 Hourly Lesson Cost $80.00 Hourly Lesson Cost $83.33 Hourly Lesson Cost $62.50

Break-Even Point 11.6 Break-Even Point 8 Break-Even Point 7.7 Break-Even Point 10.2

Group Lessons* Hourly Lesson Cost $37.50 Hourly Lesson Cost $25.00

Break-Even Point 17.1 Break-Even Point 25.6

* Six hour-long sessions Table 3

V.

Play Golf America One of the greatest weaknesses of the Amsterdam Municipal Golf Course is that it

has a poor marketing plan. In order to get new golfers to the course, it is imperative that they develop new events and promotions. Play Golf America is the golf industry’s most comprehensive marketing campaign. Led by the Professional Golf Association of America (PGA), “Play Golf America” is supported by a variety of allied organizations including the Ladies PGA, Golf 20/20, the National Golf Course Owners Association (NGCOA), and the United State Golf Association (USGA). A multi-million dollar national marketing campaign has been launched and includes advertisements on national TV and radio during PGA, LPGA, USGA, PGA Tour and Champions Tour events, as well as web advertising 29 . All marketing elements are intended to drive consumers to this

29

PlayGolfAmerica.com. Become a Play Golf America Host Facility. Available from http://www.playgolfamerica.com/index.cfm?action=hostfacility; accessed 25 April 2009.

Company Confidential 161 national Web site, www.playgolfamerica.com, which serves as the umbrella for player development programs geared to new, former and occasional adult golfers. Courses may choose to become a host facility of Play Golf America, and receive the following benefits: ƒ

Their own facility web page on the Play Golf America national website to

promote adult player development programs to the general public and/or membership ƒ

Access to program templates, guidelines and best practices for a variety of

player development programs ƒ

Downloadable promotional materials and forms designed to market these

programs ƒ

The ability to host and track consumer information, and measure participation

in the facility’s programs and events. Resulting information can be used exclusively by facility management for future marketing opportunities including direct e-mail campaigns ƒ

Access to the Play Golf America Resource Center including best practices,

program features, and online training message boards. Some highlights of the website include general information about the sport of golf, a course locator, rules & etiquette, golf fitness, golf equipment and golf instruction. Golf courses can also register to become a host facility for a number of different nationwide promotions, including the following: ƒ

American Express Women’s Golf Month (June 1 – June 30, 2009)

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Family Golf Month (July 1 – July 31, 2009)

Company Confidential 162 ƒ

Bring Your Kids to the Golf Range Program (July 1 – 31, 2009)

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Take Your Daughter to the Course Week (July 6 – 12, 2009)

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Patriot Golf Day (September 4 – 7, 2009)

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Get Golf Ready in 5 Days

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PGA Play Golf America Days

By getting involved in becoming a host facility, Amsterdam Municipal Golf Course can open itself up to a whole new network of golfers who may be looking to become involved in nationally established programs. Often times, people are interested in special events such as the ones listed above because of the perks they offer, that you are not able to find during the regular golf season. For example, a new female golfer may choose to get involved in the sport at a facility that is hosting the American Express Women’s Golf Month in order to take advantage of perks such as free golf lessons and clinics, networking receptions, golf rules and etiquette seminars, fashion shows, oncourse golf instruction, and luncheons.

VI.

Summary It is not necessary to spend exorbitant amounts of money to market your golf

course in an attempt to draw in new golfers. However, it is necessary that the golf course is willing to set up the infrastructure in order to be able to handle attract and retain potential new members. There is a tremendous amount of opportunity for Amsterdam Municipal Golf Course, but it is essential that they communicate with and market to the city residents. Golf today is no longer about sealing business deals, it is about staying healthy, learning and honing new skills, meeting new people, and staying active.

Company Confidential 163 Appendix S – Communications Research I. Introduction Communication, internally between departments and externally with key stakeholders, is an essential component of any successful business. When such communication is lacking, there may be discrepancies about how the business is performing or how customers perceive the business. At the Amsterdam Municipal Golf Course, there are several opportunities for improved communication both internally and externally that require very little capital investment. Internally, the use of a Point of Sale (POS) system and increased transparency in financial reporting would both enable course management to make sound business decisions for the course and thoroughly understand its performance. Externally, improving communication with customers and key stakeholders could be improved through the course’s website design and telephone operations. Coinciding with any improvement in communications, the operational structure of the course must be changed to ensure that someone has responsibility for such communications. If nobody is responsible for communications going forward, then any change made in communication strategy will not be sustainable

II. Internal Point of Sale System Critical to the operational success of Amsterdam Municipal golf course is an understanding of operational capacity, customer buying habits, and trends at the Course. Operational efficiency is contingent on data accuracy and baseline metrics, which could

Company Confidential 164 be determined with the use of a point-of-sale (POS) system. SPS Golf Management Solutions (SPS) provides a web-based POS system that will help to streamline tee time reservations, track buying habits and employee activity, and obtain information regarding registered consumers. The Course currently lacks a sufficient POS system. All reservations and transactions are ultimately kept track of manually without the use of an electronic system. This allows for discrepancies between reported activity and actual activity. This also makes it very difficult to obtain any accurate information regarding customer buying habits or course operations. The use of SPS’s software package will help to keep track of activity so that these metrics may be used to establish baseline metrics and project future operational needs. The POS system offered by SPS, outlined in Appendix 1, will be effective in tracking the Course’s operations. Part of the POS system focuses on the ability of the customer to reserve tee times online in real time. This streamlines tee time reservations because the customer no longer needs to speak with the cashier in order to sign up for a tee time. Additionally, reservations could also be made outside of regular operational hours. This aspect of the POS system makes the experience of registering for a tee time more streamlined and user friendly. In order to use the POS system, golfers must register for its use, providing personal information such as address and date of birth in exchange for a username and password that can then be used to reserve tee times. This allows the Course to store this information and use it to establish its customer base demographic, which is very useful when determining how to cater to customer needs or market the course. Obtaining this

Company Confidential 165 information also allows the Course to use this information for direct marketing campaigns. It could share information regarding the Course with members and daily fee golfers and keep these customers coming back to play additional rounds of golf. In addition to tracking customer behavior, the POS system could be used to track employee productivity and establish controls over tee time reservations. This feature would enable Course management to make sure the cashier is productive and not giving preferential treatment to any particular customer, ensuring that the Course will maintain a positive image for both members and daily fee players alike. While the Course currently lacks a sufficient POS system, the one purchased from SPS will be suitable for operations, as well as cost-effective. The Course paid a one-time fee of $1,500 for the software, and must pay a maintenance fee of $119 in months of operation. In addition, the Course had to purchase a computer, receipt printer, internet connection, and Microsoft Office in order to operate the equipment. Also, Course employees responsibility for operating the software must receive 2 days of online training before “go-live.” While this cost is not insignificant, the benefits provided by the software far outweigh the costs. Once this POS system is implemented, the Course will be able to obtain sufficient metrics to help plan and streamline its operations. In order to make a decision on which POS system to implement for the course, it hired a technology consultant to advise the course on how to choose a system. After reviewing alternatives, they suggested the SPS system over competitors. An alternative to the SPS POS system, offered by Golf Masters Software (GMS) and outlined in Appendix 2, does not offer a comprehensive, internet based service as SPS does. SPS’s service includes membership tracking, inventory tracking, and tee time management,

Company Confidential 166 services that cost extra through GMS. Also, the ability for a customer to log-on to the Amsterdam Municipal Golf Course website to schedule and pay for their tee times is something that GMS does not offer. Other competitor systems, such as the one offered by Active Golf, also do not offer such a comprehensive system and charge extra for including a tee time reservation system. Clearly, for Amsterdam Municipal’s purposes, the SPS system is superior to its competitor. Alternative to purchasing its own POS system, the course had the option to integrate the POS system used by the concessionaire, Pro Shop Keeper, into course operations. Unlike GMS or Active Golf, Pro Shop Keeper does offer an integrated service as part of its POS system. However, integrating this system into course operations would be cost prohibitive at $10,000, especially when compared to the $2,000 SPS system. The POS system, once implemented, will prove to be an extremely useful tool for the course. It will allow the course to better communicate its performance from year to year to its stakeholders and allow it the opportunity to communicate results to the city government and other stakeholders. The customer database management system associated with SPS’s product also will prove to be useful in communicating changes, promotions, and news regarding the course with its members and daily fee players. In addition to improving communication, the POS system will be useful in making projections for future performance. The course currently does not know how many rounds of golf are played, how many daily fee players play the course, or its customer demographic.

Company Confidential 167 SPS’s POS system will provide the data necessary to improve such operations, but ultimately, someone must be responsible for managing it. This program’s functionality is only useful if it is used to its full potential, and it can only be used to its full potential if someone is held responsible for doing so. Managing the data provided by the POS system will allow the course to better understand its operations going forward.

Financial Reporting As a municipal entity, the course’s profits and losses are contribute to or draw from its fund, managed by the city government. However, the course’s records are maintained by hand, not electronically. In addition, there is little communication between the comptroller’s office and the course’s management team. These factors contribute to a lack of financial transparency in the course’s financial reporting. Currently, everything at the Amsterdam Municipal Golf Course is managed through a traditional pen-and-paper system. There is no technology monitoring employee actions and there is no true way for course management to understand fully the course’s performance. The implementation of the POS system, as described in the previous section, will help to contribute to a better understanding of the course’s operations. Specifically, it will help the course to determine where its revenues are coming from. Coupling the POS technology with financial reporting software, such as QuickBooks, to track and manage expenses, will allow the course to communicate performance with more certainty, reducing the opportunity for fraud or theft. It will also save the time necessary to manually record operational revenues and expenses. According to the QuickBooks website, 70% of users saved 3 or more hours per week of manual work as a

Company Confidential 168 result of implementing QuickBooks. 30 Therefore, implementing this software will increase productivity, report accurate finances, and better control the flow of funds in and out of the course’s fund. In communicating finances for the course, there must be more communication with the city comptroller. The course does not receive regular updates as to the balance available in its fund. In preparing the financial section of a business plan, the course has not received comprehensive financial information from the comptroller’s office and the information that has been received has not been received in a timely fashion. In addition, the comptroller’s office is not readily available for questions or concerns regarding the course’s financial status. Such lack of communication, especially regarding financial information, is cause for concern on behalf of the course. However, the comptroller’s office receiving hand-written reports on revenues and expenses from the course is cause for concern on their behalf as well. Implementing an automated record keeping system to report information to the comptroller’s office, coupled with routine, timely communication from the comptroller’s office to the course, would help to alleviate these concerns, help ensure the accuracy of the financial statements of the course, and help the Golf Commission better manage the course’s operations.

III. External Website The course’s web site in its current state, while not completely ineffective, does not measure up to that of other municipal courses. The home page, a screenshot of which 30

Quickbooks. http://quickbooks.intuit.com/qb/products/common/direct_download/email.jsp?scid=qbkm_ssfe_hero2_getfr ee&skuId=sku0000000000006360736. 2009.

Company Confidential 169 can be seen in Appendix 3, is not particularly customized for the course. It does a very good job of describing the course, including the course’s layout, tips for playing the course, and the view of the Mohawk Valley from the clubhouse. However, the website does not have a great deal of functionality. It is informative, but you cannot accomplish anything by only going to the website. In its redesign under the control of the city of Amsterdam, the cost of maintaining the website will remain constant at $30 per month. While incorporating the course’s website into the city government’s website may benefit the city of Amsterdam, it is important for the course to maintain a level of customization with the website. If the course’s site is too similar to that of the government site, it will continue to lack functionality. Currently, as can be seen in Appendix 3, the website looks very generic. There are no photos of the course or any logo on any of the pages. The current site communicates the following to visitors: •

Rates – This includes membership and daily fee rates, as well as cart storage and locker rental fees.

•

Contact Information – This lists the phone numbers for the clubhouse, pro shop, and for tee times.

•

Course Layout – This shows a graphic of the layout for each hole of the course and includes tips for each hole.

•

News – This is used to communicate information about the course, such as the opening date.

Company Confidential 170 •

Survey Question – This is used to gather feedback, currently regarding the possibility of an amateur tournament being held at the course. A redesign of the site should still incorporate these elements, but should also

include other features commonly found at other municipal golf course websites, including: •

Weather Information – Because golf is so heavily dependent on weather, this information would be helpful to entice a visitor to the site to reserve a tee time based on the weather forecast.

•

A Calendar of Events – Including a calendar of events would help to inform visitors of tournaments, leagues, or other events held at the course. Additionally, it could be used to inform potential golfers of closure dates for when the course is reserved for a private outing, reducing the grief one may experience by traveling to the course only to find that it is closed.

•

Tee Time Reservations – This will be made possible due to the integration of the web-based POS system. This will allow golfers to reserve their tee time without going through the hassle of calling the course.

•

Driving Directions – The course’s location may be well know to the people of Amsterdam, but if it hopes to draw golfers from elsewhere in the capital region, it ought to include specific directions on how to find the course.

•

Promotional Information – If the course chooses to run a promotion, communicating it through the website. In addition, using web specials would force navigation to the site, increasing traffic and increasing the number of rounds of golf played at the course.

Company Confidential 171 •

Course Rules – Golfers must be informed of the rules of the course prior to visiting. Open communication of these rules will help to ensure that they are followed and the desired atmosphere at the course is maintained.

•

E-Mail Club – Allowing visitors to sign up for an e-mail club will allow the course to maintain consistent communication with potential customers regarding promotions, events, or course improvements.

•

Scorecard – A scorecard accompanying the course layout would be useful in determining the difficulty level of any given hole. This may be useful for those wishing to plan a wager.

•

Links – Including links to any golf associations the course belongs to would be helpful in legitimizing the course as a quality place to play.

•

History - As a Robert Trent Jones design, the course has seen its fair share of history throughout the years. Illustrating this history online would be an appealing marketing tool. Further, the course should consider the following changes to existing components

of the website: •

Rates – Include a link to reserve a tee time.

•

Contact Information – Include or establish an e-mail address for the course. A visitor to the website is likely to prefer electronic communications to speaking on the phone.

•

Course Layout – Include pictures of the hole from the tee box. Allow the potential golfer to picture himself at the tee. Also, incorporating an aerial view of

Company Confidential 172 the course into this feature would be useful for the golfer to get a better understanding of course layout than he could from a graphic representation. •

News – Use this section to communicate special events or changes to the course. One news item currently on the website dispels a rumor of increasing prices. Communicating changes regularly with customers will decrease the amount of rumors circulating regarding the course and its policies.

•

Survey Question – This is a highly useful tool, but the question should rotate so that it is gathering information about multiple topics. Using questions from the survey outlined in the business plan is a good starting point. The website must be more customized to help attract golfers to the course. For

example, the home page of the course describes the view of the Mohawk Valley that can be seen from the clubhouse. 31 Including a photo of this view on the home page would be useful in marketing the aesthetic appeal of the course. After the redesign is complete, it will be important that users are able to access the site quickly and easily. The current web address of www.amsterdammuni.com is intuitive and will easily be remembered by golfers and site visitors alike. In addition, searching for the course on popular search engines also makes it easy to find the course website. It is important that potential customers can easily remember or easily find the web address to keep them coming back. Registering the new website under the city government may eliminate the ability of a potential customer to remember the web address, unless the page can still be accessed via www.amsterdammuni.com. If the web address is, for example, www.amsterdam.gov/recreation/golf/amsterdammunicipal.html, it will be very difficult for a potential site visitor to remember this web address and will 31

Amsterdam Municipal Golf Course. http://www.amsterdammuni.com/. 2009.

Company Confidential 173 decrease traffic to the site. Upon the implementation of the online POS system, this will result in a direct decrease in revenues, as potential customers will no longer be able to quickly and easily reserve and pay for tee times. Municipal courses elsewhere in the country typically operate a website independent from their local government. Those that are operated under a government website, as Amsterdam Municipal will be, have been more successful when there are multiple golf courses incorporated under the government website, as Albuquerque (Appendix 4) and Houston (Appendix 5) have done. However, Amsterdam has only one municipal golf course. It should be given the opportunity to manage it with relative independence. If the course is not given the opportunity to customize the website, it will not be a useful tool for promoting the course, communicating with customers, and scheduling tee times. Ultimately, an individual must be responsible for website maintenance. If a website is not consistently updated, it will become obsolete quickly. Assigning someone to be responsible for website communications will be important to the success of the site and of the course. If nobody is responsible for its operations, it will not be a useful tool for the course in its operations and marketing efforts.

Telephone Currently, if someone wants to call the course, they must call during hours of operation or they will receive no information about the course. There is no answering machine for a potential customer to leave a message and there is no recording informing

Company Confidential 174 the customer of an alternate method of contacting someone at the course. This could directly lead to lost revenue. Letting the phone ring incessantly while a customer awaits a response leaves a negative impression with that customer. By allowing the customer to reach a recording informing them of either another method of contacting the necessary party or informing them when they can call back, the customer will get the impression that the course cares about that customer’s business. In its current form, a customer calls, nobody answers, and that customer gets the impression that the course could not care less about attracting his business. The course will result in a lost customer. Not having an automatic greeting when the course is closed directly results in decreased revenue. In an effort to boost revenue, it is in the course’s best interest to schedule corporate outings and other events during which the course is reserved. However, when nobody at the can be contacted in the offseason, that company or individual cannot reserve the course. This potential customer is likely to look elsewhere to book their outing. However, an automatic message informing the potential customer of an alternate method of contact, such as a monitored e-mail inbox or a message on an answering machine may help to secure this business for the course.

IV. Conclusion The course is in need of capital improvements to the cart paths and drainage systems. Communicating these improvements will be important to the success of the course going forward. Establishing a strong communications system prior to completing

Company Confidential 175 these projects is vital to ensuring that these projects achieve the maximum payoff possible for the course. The communications system, including the POS system, financial reporting, the website, and telephone operations, must be improved in order to achieve successful communication. However, the success of these individual communications projects depends on the ability of management to delegate responsibility and establish a system in which all are held accountable for the performance of what they are managing. Establishing a management system in which responsibility and accountability are paramount to the success of the projects outlined above Managing communications contributes to the operational, financial, and marketing success of the course. Managing the communications projects outlined in Sections II and III will be vital to the success of the course as it moves forward with substantial capital projects that will help to shape the course’s reputation in the future. Communicating these changes will allow the course to achieve the maximum payoff possible on these projects and increase the number of rounds played each year at the course.

Company Confidential 176 Appendix 1 – Outline of SPS Golf Management’s POS System

Pointof-Sale System “After an extensive search for a POS system that would allow us to book tee times online, we found that having a Web-based system is the best way to go. Having everything stored offsite means that if our computer crashes, we won’t lose any of our information.” —Steve Hammond, PGA Head Professional, City of Austin

“SPS Golf Management Solutions is the most affordable software system on the market and is jam packed with hundreds of different options and reports. Since the software system is Web-based, I can look at all of the data from my home to see how our business is going. I have used many different POS Systems, and this one is the most user friendly for my staff. The SPS GMS system has given us the availability to capture data from every player that golfs at our facility, enabling us to market to them and increase our business.” —Jeff Gandee, PGA Head Professional, Auburn Hills Golf Club

SPS Golf Management Solutions has employed next generation technology and proven system architecture to bring full Point-of-Sale (POS) capability to the web. Our POS system is fully integrated with our reservation tee sheet for a quick and easy check-in process. The POS system also has built in protection that keeps it running even if Internet access is interrupted. The SPS Golf Management Solutions Point-of-Sale system incorporates the following features: •

Reservations are automatically carried over from tee sheet.

•

Employee tracking on all transactions and cashier security levels are available.

•

Inventory items can be added to a sale via keyboard, bar code scanner, or one-touch programmable keypad.

•

Multiple tender types including cash, check, credit card, gift card, club account, and gift certificate.

•

Integrated Gift Card for single or multi-location use.

•

Integrated Gift Certificates track and verify current value at the POS station.

•

Integrated, Web-based (optional) Credit Card processing speeds up the check-in process and provides competitive discount rates.

Company Confidential 177 •

Rain Check processing is tracked from tee sheet and verified at POS station.

•

Demographic tracking for POS purchases.

•

Tracking of Member purchases for targeted marketing ability.

•

Post POS transactional data into Micros Fidelio “OPERA”.

•

Touch screen key pad capability for quick reference items.

Source: SPS Golf Management Solutions, Inc. http://www.golfgopher.com/B2B/POS.asp.

Company Confidential 178 Appendix 2 – Outline of Golf Masters Software’s POS System

Golf Course Management Software Tools Pro Shop Point of Sale Touch-screen technology with easy cash register setups. All Pro Shop activity is recorded and monitored including course, cart, and merchandise transactions. Marketing tools such as gift cards, prize money, and customer contacts are included. The POS system interfaces with the Inventory and Membership modules and provides the quickest and most efficient check-in. Membership A database of customer information, the Membership module tracks personal, financial, and historical data including account balances and prize monies. The system provides easy screen searches and reporting. Picture ID's assure security and offer various opportunities for maximizing sales. Inventory A complete system of orders, receipts, sales, costs, pricing, and contacts. The GMS Inventory interacts with Point of Sale for detailed purchasing histories and activity. Use manufacturers bar coding or print your own. Reporting GMS uses Crystal Reporting to provide the best information from all data sources. In addition, GMS provides custom reporting for end-of-day closes. Training includes how to create and modify reports. Accounting GMS can provide full featured packages of AP, AR, and GL or can provide uploads of information to products such as QuickBooks or other accounting systems. But even the basic GMS system of POS and Inventory provides for reporting transactions by GL number. Tee Times The system provides single or multi-course tee times. First tee time/last tee time, tee time interval, players per tee time, days in advance, days in history and number of courses are all configurable settings. Tournaments GMS provides a complete tournament package including pairings and scoring for most types of events. The module prints cart signs, score cards, registration lists, and scoreboard, and saves tournament information for same repeat tournament or use in other tournaments.

Company Confidential 179 Handicaps USGA certified handicap system including historical data and handicap cards. System can be updated by players or staff. Food Service This GMS module features POS touch screen technology with tracking by server and time. The system interfaces with the Membership module. Modifications to screen and menu items is extremely user friendly. Maintenance (Coming) This module includes scheduling for equipment and course maintenance. Informational data fields track work performed for historical comparisons and expenditures. The system includes alerts and reminders.

Company Confidential 180 Appendix 3 – AmsterdamMuni.com

Company Confidential 181 Appendix 4 – Albuquerque Municipal Golf Website

Company Confidential 182 Appendix 5 – Houston Municipal Golf Course Website

Company Confidential 183 Appendix T – Driving Range Research Introduction Amsterdam Municipal golf course currently has a practice driving range available to their customers, however it lacks necessary amenities such as range balls for use and ample space to practice with use of the full range of club distances required to fully utilize as a viable revenue stream as an open to the public range. The range is currently used by the Golf Pro to help support lessons and local school team programs, as well as members, on a limited basis, with use of their own shag balls. An opportunity exists for expansion of the driving range to help generate additional stand-alone revenues as well as the potential to increase revenue streams of the Golf Pro and Concessionaire. In addition, an expansion of the golf range will help support instruction for women’s and youth programs, which will strengthen long term success of golf operations by generating new customer loyalty to Amsterdam Municipal Golf Course. The following research will review the potential market opportunity; discuss the advantages, risks, local competition, and viability of this expansion project. Further, marketing ideas, expenses and potential revenues will be approximated such that sound decisions or recommendations can be made to move forward on this project.

Market An open to the public driving range facility at the Amsterdam Municipal Golf Course may expect to draw most of its customers from a 15-mile radius. According to the 2000 census data, demographics within this 15-mile radius total approximately 102,915 people, which includes Amsterdam, Johnstown and several other smaller

Company Confidential 184 municipalities. 32 This will be considered the target market for the driving range addition as golfers and non-golfers alike visit driving ranges across the country.

Opportunity According to the National Golf Foundation, it has been estimated national driving range participation is approximately 12.5%, meaning 12.5% of the US population used some type of commercial golf range in the preceding year. 33 In addition, an average of 5.4 commercial range visits per golfer per year was estimated based on a survey completed by the NGF. 34 Given the above demographics within the target market and the assumption that the target market is representative of the US population, potential driving range visits per year is calculated to be 69,478 for the entire market. It is also estimated that range visitors on average demand 1.25 baskets for each visit, which calculates a total basket demand of 86,848 baskets per year.

Factors for success Understanding the factors that correlate into successfully tapping into this market opportunity is critical to profitability. Location is one of the most critical factors to help the recuperation of investment into the driving range. Research suggests that 85% of ranges in North America make poor returns, 15% of ranges make great returns. The difference is the location. 35 While the market has the potential to generate considerable revenues, the location of Amsterdam Municipal Golf Course may be less than ideal for

32

US Census Data. 2000. “Golf Practice Facilities in the US- A Summary of Supply and Demand”, www.NGF.com, 2005 34 “Golf Practice Facilities in the US- A Summary of Supply and Demand”, www.NGF.com, 2005 35 www.golf-research-group.com/reports/report/index.asp?id=4 33

Company Confidential 185 drawing upon this market. Located of Route 30, it might seem difficult for the course and subsequent driving range operation to draw many customers based on location alone, as it is not visible from one of the more traveled roads in Amsterdam, therefore, a considerable marketing strategy must be employed, which will be discussed further. Another key to success is operational efficiency. Leveraging current operations at the golf course will help the driving range be very efficient and keep operational expenses low, as the grounds are already maintained by current operation. In addition, the cashier can be used to handle the purchase of tokens for ball baskets and possibly the maintenance crew or Assistant Pro can be used to pick up balls and wash balls though the day. Lighting for the driving range addition may be critical to increasing revenues in this relatively short season of 152 days (April 1 – Sept 30). Research has shown that the addition of lights can increase revenues by 30-40%. 36 Lighting may allow for approximately 3-hour extension of the 12 hours a day operation and add to the community leisure activities to the city of Amsterdam.

Marketing Strategy Given the current location and need to get the communication out on the potentially new expansion project, it is necessary to employ a good marketing strategy. A few options will be proposed below. •

Television advertising spots can be purchased on the Golf Channel and ESPN 2 in conjunction with the golf operations to include the new golf range, which will focus on family atmosphere and golf instruction. These spots will highlight the

36

http://www.golf-research-group.com/reports/report/index.asp?id=4

Company Confidential 186 new operations and can speak of youth and women’s programs discussed below, such that packages of instruction can be offered which include range and course instruction during slow course times, to lower the pressure barriers to customers new to golf. •

Local businesses should also be targeted by offering packages of a bucket of range balls and lunch, such that customers can experience the range during slower times during the day. This will help spread the word around businesses and open up conversations with patrons on a potential outing scheduled or leagues for the golf course as well.

•

A larger sign should to be posted that can be seen by both directions on Route 30 to highlight both the golf facility and new range. This will allow better visibility to commuters on one of the busier roads in Amsterdam.

•

Coupons for a free bucket of balls can be offered in the local newspaper with the purchase of an equal size bucket. This will get a good value proposition out to potential customers to visit the facility and bring a friend.

•

A free large basket can be given to current golf club members for brining friends or partners to the golf range as current membership may be the best opportunity to get low cost advertising by word of mouth.

Advantages There are many reasons for support of a driving range at Amsterdam Municipal. The first of which is an additional stand-alone revenue source as will be explored. Further, it will help the support the golf programs recommended for women and youth

Company Confidential 187 golfers, which in turn may help foster long term success of all golf operations and develop lifetime golfers at Amsterdam Municipal.

Womens programs According to the National Golf Foundation, approximately 23% (5.5 million of 23.9 million total) of all golfers in the United States are adult women. 37 This represents a large market for growth at Amsterdam Municipal, as currently only approximately 12% of the memberships at Amsterdam Municipal are women. Adding the driving range will help support instruction, tap into this market and allow for the creation of a wider variety of programs designed to ease the entry and development of this high-potential target group. Instructional programs to start on the golf range will relieve the pressure of performance and allow necessary speed of play on the golf course. In addition, tailoring instructional programs for women will make them feel comfortable on the course and could include instruction to make golf more fun and inviting with a user-friendly, nonintimidating environment. This would include basic instruction on use of the clubs and the swing, but most importantly it should encompass strategy, course management, short game, and other important aspects of playing that a golfer must learn to become a genuinely committed player. In addition, women’s group lessons can be offered to increase the social involvement of women, help foster relationships and build long lasting golfing partners at Amsterdam Municipal.

37

Berkley Golf Consulting. Statistics About Women and Girl Golfers. http://www.nancyberklet.com/771810.html

Company Confidential 188 The driving range will become a strong partner for the golf course and will help increase course utilization as slow times on the course can be better understood through use of the POS system. Slower times on the course can be used for instruction packages, that would include time on the driving range with 9-holes of golf. The Golf Pro will be able to evaluate skill levels and the more skilled golfers that are ready to bring the instruction to real scenarios on the course.

Youth Programs According to research conducted by GOLF 20/20, early instruction in golf leads to a greater likelihood of long-term involvement with the game, as adults who were exposed to golf through a structured junior program play 58% more rounds and spend 71% on golf than adults who were only informally exposed to the game in their childhoods. 38 Taping into the youth market is critical to growing life long golfers for long-term success at Amsterdam Municipal. A driving range addition will help ensure golf is offered to youths in an instructional format that will be all encompassing and free from speed of play pressure of the golf course as well. First Tee® programs can be offered at Amsterdam Municipal Golf Course with instruction and life skills experience lessons to participants that promote character development and life enhancing values though golf. These lessons can begin on the driving range and again move to the golf course during slower times, typically early afternoon where most golfers avoid due to the hottest of weather conditions. First Tee

38

Golf 20/20. Participation Reports: Examining Efforts to Grow Young Golfers. http://www.golf2020.com/reports_2002YouthImpact.aspx;

Company Confidential 189 Programs will offer lower cost golf and instruction to otherwise less fortunate youth in the Amsterdam region as golf typically has a higher barrier to entry with the cost for clubs and greens fees. However, dedicating to the youth of Amsterdam will generate future value for the course by developing future loyal customers. The driving range and golf course can also offer youth camps to encourage participation in sports and extracurricular activities. Camps can include Golf range instruction and package with 9-holes of golf during slower times on the course, as well. This offers many benefits to the community as well as the golf operations, as youth involvement can build life skills and focus children that may otherwise have found less desirable outlets to fill their time.

Operational Overview Location The practice range at Amsterdam Municipal as it is currently is shown in Diagram 1 outlined in red. As shown, it is approximately 185 yards long and 50 yards wide. In the current state it can allow for approximately 17 stations of about 8.5 ft wide, however 185 yards is not long enough for golfers to utilize all clubs for longer distances and range balls are not offered. The highlighted area in yellow shows the expansion. This will open up additional stations to 25, or 75 yards, and lengthen approximately 70 yards to 250 yards. This expansion would allow for use of the full range of clubs for most golfers. However, it would cut into Hole 1 on the right side of the course and force it to shorten by approximately 60 yards from 380 to 320 yards. This would still allow for the hole to remain a par 4, but represents a potential issue to the challenge of this hole by making it shorter.

Company Confidential 190

Current hole 1

Proposed hole 1

Diagram 1: Location of driving range(red=current; Yellow=proposed)

Extending the driving range and opening to the public will require the use of netting to be erected around the range area for the protection of golfers playing the course. The netting will be approximately 50 feet high and surround the range area. In addition, removal of trees in the way of range shots will be required.

Operations The range, as noted will have 25 stations each will be 8.5 feet wide. Each patron will see the cashier to obtain tokens for use with the ball dispenser. Tokens will be inserted into the ball dispenser and dispensed in 30 ball increments. For example, one token will be inserted for the purchase of a small bucket and 30 balls will be dispensed, similarly, 60 balls for 2 tokens(med) and 90 balls for 3 tokens(lg). This will allow for one token type to be used and one ball basket size(lg) to be purchased by the golf range, as the purchased

Company Confidential 191 basket will house all increments of balls. Patrons will hit balls on the range and leave empty baskets for retrieval by the golf range cashier or attendant when baskets are running low. The ball dispenser will have the capacity to hold 10,000 balls, which will allow for 333, 167, 111, small, medium and large bucket respectively. At the projected rate of utilization, which will be explored in the section below, this will likely require the ball dispenser to be filled only once per day. Similarly, the range will have to be cleared of balls only once per day, with use of the ball picker. At the end of the day, balls will be picked up and loaded into the ball washer, then loaded into the dispenser for use the following day. Top-level customer flow process is shown in Diagram 2 below as well as needed support functions for personnel shown in Diagram 3.

Ball Dispenser

Cashier

•1 Token = 4.00 •2 Token = 6.00 •3 Token = 8.00

•1 Token = 30 balls •2 Token = 60 balls •3 Token = 90 balls

Range

•Average range time per patron 1 hour

Diagram 2: Customer flow

Pick up Baskets

Store @ Ball Dispenser

•As needed Pick up balls

Wash

Fill dispenser

•At closing Diagram 3: Top level support functions

Company Confidential 192

Capacity/Utilization Given the layout of the range, 25 stations can be built at Amsterdam Municipal Golf Range. According to the National Golf Foundation usage rates, the average capacity of 1 bucket an hour per station is used. 39 Therefore, using number of stations and a 12-hour a day operating time, capacity is shown below in Table 1. Included in the table are various yearly utilization rates for number of days open of 152(May1-Sept30). The table does not include pricing, which will be discussed in the pricing section.

# of Stations Utilization % Calc Utilzation* Buckets/Hour Avg # Hours/Day # Buckets/Day # Days open Balls per day # Buckets/Year

25 100% 25.00 1.0 12 300 152 18000 45600

25 90% 22.50 1.0 12 270 152 16200 41040

25 80% 20.00 1.0 12 240 152 14400 36480

25 70% 17.50 1.0 12 210 152 12600 31920

25 60% 15.00 1.0 12 180 152 10800 27360

25 50% 12.50 1.0 12 150 152 9000 22800

25 40% 10.00 1.0 12 120 152 7200 18240

25 30% 7.50 1.0 12 90 152 5400 13680

25 20% 5.00 1.0 12 60 152 3600 9120

25 10% 2.50 1.0 12 30 152 1800 4560

Table 1: Utilization rates assuming open 152 days * indicates # stations fully utilized all day every day

Highlighted in dark yellow is the total capacity of 45,600 buckets a year, which calculates to roughly 53% of the available market calculated above for the range. The light yellow columns are likely projected ranges of capacity for the golf range given new to the market, and is in line with the estimated average national utilization at golf ranges by the National Golf Foundation. 40 Extending the season will clearly effect capacity, however only in-season times were used to calculate capacity such that Current Golf course resources can be used.

39 40

“Golf Practice Facilities in the US- A Summary of Supply and Demand”, www.NGF.com, 2005 “Golf Practice Facilities in the US- A Summary of Supply and Demand”, www.NGF.com, 2005

Company Confidential 193

Pricing According to a survey conducted by Golf Research Group of every stand-alone golf range in the United States, average cost to charge per ball for the first bucket is 9.9 cents. 41 Graph 1 indicated the ranges of price per ball indicated nationally. Therefore it is recommended to charge $0.10 cents per ball and offer 3 sizes of buckets as shown above at 30, 60, and 90 balls. Subsequent cost per bucket would be $3.00, $6.00 and $9.00 respectively. However, an incentive to purchase larger buckets should be employed thus pricing per bucket should be $4.00, $6.00 and $8.00, which will keep the average price per bucket at $6.00.

Graph 1: National cents per ball analysis

41

http://www.golf-research-group.com/reports/report/index.asp?id=4

Company Confidential 194

Competition Analysis The Amsterdam Municipal golf range would face limited competition, as an evaluation of competition was completed and is shown below in Table 2. Within the15 mile radius target market only Fox Run Country Club and Hales Mills CC have a driving range. Each has 15 stations and costs are in line with the proposed ball costs at Amsterdam Municipal. It is noted that no range on the below list had lights and each operates until roughly dark(~7:00PM). Using 20% utilization rates and the same usage parameters as shown for Amsterdam Municipal above the Market cap was calculated for both Fox Run and Hales Mills. This shows of the 86,848 basket market opportunity calculated, approximately 12.6% may already be served by this competition. This leaves 87.4 or about 76,000 baskets left in the market, which is more than ample and far exceeds the 45,600 total capacity. Plac e Location Fox Run CC Johnstown Hales Mills CC Johnstown Rolling Hills at Antlers Fort Johnson T-Time Stadium GC Schenectady Golf W orld Saratog Springs Amsterdam Muni Amsterdam

Distance 8mi 12mi 5.5mi

Driving Range Y Y N

23.5mi 25mi 0mi

Y Y Y

Avg Bucket AVG # price BALLS 5.6 43 5.00 53 NA NA CLOSED 5.5 60 7 70 6 60

Avg Cents per ball 0.13 0.09 NA

# of Stations 15 15 0

0.09 0.10 0.10

30 18 25

Lights N N N

Market cap # 5472 5472 NA

Market cap % 6.30% 6.30% NA

N N

Not incl Not Incl

Not incl Not Incl

Table 2: Competition evaluation

Stadium Golf Course range and Golf World range were included above to evaluate pricing, but not included in the market calculation shown as they are outside the target market and therefore were not considered competition. In addition, it was noted that TTime used to be a driving range off Route 30, but had closed down. No information could be found as to the reason. Further research should be done to find out reasons for failure such that these risks can be mitigated.

Company Confidential 195 Financial Overview An estimate of start up costs was completed to identify the approximate investment needed, this is shown in the Table 3 below. These costs include all of the equipment needed to open and operate a golf range, but do not include equipment costs for grounds care as these are sunk costs already incurred by the golf course, but can be used to maintain the golf range. It is noted that lighting was included in the below cost, however further analysis may need to be done to evaluate the lighting option. It was noted that lighting would increase revenues by 30-40% and extend operating time during the day, however operation costs such as utilities may out weight benefits. Also included below was use of mats to hit from as an option for patrons. The use of mats could be rotated through positions in the tee area to help lower maintenance costs of the tee off area with wear and tear divots.

Netting installation (turnkey)* Lights( turnkey)* Ball dispencer 10,000 balls** Ball washer** 300 tokens** 90-100 capacity basket ** Ball picker use with cart 1000balls(6ft)** 3" rubber tees for mats** 10 mats for (195 each) 58x58" 5ft sq** Golf cart cover(safety)** Range signs 50 each(need 14)** Balls $90 for 600 ea(50 doz=9600balls)** Total startup costs

Cost

Quantity

3800 1200 0.35 7.7 1695 0.65 1950 150 50 90

1 1 300 50 1 30 1 1 14 16

Ext Cost $ 90,000.00 $ 40,000.00 $ 3,800.00 $ 1,200.00 $ 105.00 $ 385.00 $ 1,695.00 $ 19.50 $ 1,950.00 $ 150.00 $ 700.00 $ 1,440.00 $ 141,444.50

Table 3: Start up costs *Quote from TEX-NET www.texnetusa.com **Quote from www.rangemaster.net

Revenues/Payback Expected revenues were calculated at utilization rates of 10% and 20% and shown below in Table 4, which include average pricing of $6.00 per bucket. Also included were

Company Confidential 196 the projections associating the increased sales of Golf Merchandise and Concessions sales, as well as projected lessons revenues. According to the National Golf Foundation, a conservative estimation of increases to merchandise and concessions were noted of $0.50 and $1.00 per customer as shown. 42 These revenues may not be directly taken in by the Golf course, but could be used for negotiation of potential revenues, during a new contract, which may offset salaries given to the Golf Pro and or increase the bid price of the concessionaires contract, and were therefore included in these estimated projections. Utilization Buckets/ year Avg Price/Bucket Total Golf Ball Sales

10% 4560 6.00 $ 27,360.00 $

$ $

Golf range Customers Per capita spending Est Merchandise sales Less Cost Merchandise(65%) Net Merchandise sales

$ $ $ $

4560 0.50 2,280.00 1,482.00 798.00

$ $ $ $

9120 0.50 4,560.00 2,964.00 1,596.00

Golf range Customers Per capita spending(concessions) Est Concession sales Less Cost Concessions(50%) Net Concession sales

$ $ $ $

4560 1.00 4,560.00 2,280.00 2,280.00

$ $ $ $

9120 1.00 9,120.00 4,560.00 4,560.00

41.00 2 12,464.00 73,340.00

Avg Price/ lesson Lessons/day Gross lessons/yr

$ $

40.00 $ 1 6,080.00 $

Total revenue projection yr 1

$

36,518.00 $

20% 9120 6.00 54,720.00

Table 3: Revenue projections

Ranges of revenues of $36,518 and $73,343 were calculated, which are conservative estimations of capacity and customer spending as noted. Given start up costs above of $141,444.50, relative payback period is calculated at 3.87 and 1.93 years. Additional operating expense will be incurred, but can be minimized as noted with use of cashier and maintenance staff or Assistant Pro for ball picking and washing. Elimination of lighting costs totaling 40,000, will decrease the payback period to 2.78 and 1.38 years 42

“Golf Practice Facilities in the US- A Summary of Supply and Demand”, www.NGF.com, 2005

Company Confidential 197 respectively, and may be the most viable option until operating costs and utilization are better understood.

Risks Risks to the Golf range at Amsterdam Municipal are highlighted below along with plans for mitigation where possible. The factors may contribute to lower revenue projections as noted. Aesthetics- Extending the golf practice range and adding large netting may detract from the golf course aesthetics, and will also cause hole 1 to be shortened. This may take away from the golf experience from the golf course. However, adding a range will offer current members amenities not seen before and its use can be promoted with offerings of free range baskets for current members. A survey can also be completed to better understand this risk such that a better decision can be made prior to beginning the extension. Utilization uncertainty- Utilization directly relates ball sales and has the largest impact on revenues. A conservative estimate was included in revenue projections such that more responsible decisions can be made. Additional competition can lower utilization rates, which include not only other golf range facilities, but other local nongolf activities. A better understanding of these other activities may need to be better understood prior to a decision to move forward on this plan. Economic conditions- The down turn in the economy may have an effect on the available funds customers will have to spend on extracurricular activities. Pricing is however, in line with local competition and national averages, but should be monitored

Company Confidential 198 along with the economy to minimize impact on paying customers. Creating a fun and friendly family environment with good customer service may keep loyal customers returning during difficult times.

Conclusion The expansion of the golf range at Amsterdam Municipal Golf Course would definitely be a viable option as the payback period, using conservative estimates of utilization, is between approximately 1.38 and 3.87 years, and adding revenues to the golf course of approximately $55,000 on average every subsequent year, assuming constant utilization levels. A good marketing strategy to bring in new customers and a dedication to operational efficiency by leveraging current golf operations would prove the expansion a good option for Amsterdam Municipal Golf Course. It will help foster loyal life long customers by building upon the youth programs and allow for better instruction to support one of the highest potential target market of women’s golfers. Further, it can help strengthen the relationships with the Golf Pro and Concessionaire with potential for increased revenues, and offer a great practice option for current members, league and tournament customers awaiting tee off. Finally, it would add additional value to one of the City’s largest assets, Amsterdam Municipal Golf Course.