Simon Pardoe - Marketing & Business Development

KPMG have published the results of their analysis of the economic value of the golf industry in Europe.  In summary:

• The golf industry generated EUR 19.6 billion of direct revenues in the European economy, driven primarily by three industry segments of activity:  golf facility operations, real estate and tourism.

• The game’s total economic value is EUR 48.3 billion in revenue terms.

• Once its costs (for goods and services) have been subtracted, the value of the industry in GDP is EUR 13.3 billion.

• The industry supports close to 400,000 jobs and pays almost EUR 9.4 billion in wages.

• The impact of the golf industry in Europe is approximately thirty percent of the size of the US golf industry in revenue terms, but it is growing faster.

The two aspects generating the most revenues and, indeed, roughly equal amounts, were found to be golf facility operations and golf related residential developments.  For both, total revenues were just over EUR 17 billion, whilst their direct effect revenues were broadly equal at EUR 6.9 billion and EUR 6.4 billion respectively.  Golf facility operations are defined as:

• Green fees and membership fees
• Food and beverage revenues
• Sponsorship revenues
• Lease fees, rental fees
• Other revenues

KPMG, as part of their study, also produced data regarding the percentage of golf courses in each region relative to the region as a whole.  As you would expect Great Britain and Ireland hold the lion’s share at 47.7%, followed by Western Europe (17.5%), Northern Europe (14.2%) and Central Europe (14.1%).

In Europe one out of every 150 citizens is a golfer. Great Britain and Ireland region comprises by far the largest golf market in Europe, with approximately 3,000 regular courses and around 1.5 million affiliated players. Given its strong
golfing traditions and abundant supply of quality courses, Scotland is also an important golf tourism destination. Golf is very popular in the Nordic countries, especially in Sweden, where participation rates are significantly higher than most of the sub-regions in Europe, and where there is an abundant supply of golf courses. The Iberian Peninsula is an extremely popular golf tourism destination.

In Portugal particularly, golf demand from inbound tourists offset the relatively low number of local players. It is interesting to observe that in recent years the sharp development of golf demand in countries like Austria and the Netherlands has been supported by the broad participation of female players, one of the keys to the success and increasing popularity of the game in these countries. Although in its infant stage of development, the growing economies of Eastern Europe present a clear potential for golf developments.

Figures: 2006

The Consultancy has not been involved with Loch Lomond Golf Club since late 2006, but has watched and listened with great interest to what has happened over the following years.  So, here’s the latest twist in the tale…

Wealthy members of Loch Lomond Golf Club have been given the go-ahead to buy the luxury resort after two years of negotiations that ended up with legal action being filed and golfers threatening to quit.

It is understood that each of the 850 members, who already pay a joining fee of £55,000 and an annual subscription of around £4000, will be asked to contribute financially to secure the sale of prestigious club, which is home of the Scottish Open.

While some will pay a nominal amount, others are understood to be planning to invest as much as £200,000 in a deal that follows a similar members’ buy-out at Queen’s Club in London four years ago.

The announcement sounds the death knell on a planned purchase by the De Vere hotel group, which only weeks ago was reported to be close to a deal with an offer of around £35 million for the club, whose members include Sir Sean Connery, Prince Andrew, Walter Smith and Ally McCoist.

The Alternative Hotel Group, which owns De Vere, described the directors’ decision to choose the offer from a committee of members as disappointing but said the company was “not prepared to overpay”.

A statement issued by Loch Lomond Golf Club said: “After careful consideration of all of the offers received, we are pleased to announce that the directors have elected to move forward with an offer put forth by a committee of members on behalf of the membership body of Loch Lomond Golf Club.  Philip Gund and Stephen Marotta, the directors of the club, will be working with the committee to finalise terms.”

The club, which boasts a course designed by Tom Weiskopf and Jay Morrish, was bought by US businessman Lyle Anderson in 1994.  Control was transferred to a firm of business recovery specialists in 2008 after Mr Anderson was unable to renegotiate debts with the Bank of Scotland, now part of Lloyds.

The possibility of a members’ buy-out was first mooted that year, when a group was formed to attempt to raise an estimated £100m to buy the resort. But as negotiations got under way, De Vere, which owns the neighbouring Cameron House Hotel, emerged as the frontrunner.

It sparked an outcry among members, who feared that a new owner would broaden access to the club and their £55,000 debenture payments would be written off.

In May a group of businessmen lodged a court action in Arizona, seeking an injunction to stop the sale from going ahead and claiming that Lloyds, which has a financial stake in the De Vere group, was guilty of breach of fiduciary and fraud. The court proceedings are likely to be dropped when the members’ buy-out is concluded.

Let’s see what happens next!

As the Consultancy was closely involved with the Barclays Scottish Open for a couple of years (2005 & 2006), particularly as regards (a) extending Barclay’s sponsorship to a second term and (b) leveraging the global TV coverage to maximum advantage for recruiting new members, it is always a delight when the event comes round again.   It’s a great shame that Darren Clarke did not quite manage to capture the winner’s prize on Sunday night.  But congratulations to Edoardo Molinari.

There has been much skirmishing around ownership of Loch Lomond Golf Club in recent times, and it was interesting to see a story in The Times last week that De Vere (owners of The Belfry and, just along the banks of Loch Lomond, Cameron House Hotel) are in the frame for securing a take over of LLGC for, reputedly, £30m – £35m.

Simon Pardoe Management Consultancy was hired in late 2004 to help develop the brand globally and drive all facets of the operating business, most particularly membership (£5m added in 2006) and ancilliary income – such as accommodation, food and beverage, country sports – all of which we succeeded in driving up 30% in calendar year 2006, compared to the previous 12 months.  In addition, we helped create a global events programme to open new markets, most particularly in the USA, India, Thailand and continental Europe.

At that time, Loch Lomond Golf Club was owned by The Lyle Anderson Company, based in Phoenix, Arizona.  However, the Club has been on the market since 2008 after millionaire American owner Lyle Anderson was forced by the Bank of Scotland to restructure several loss-making global business interests.  Originally valued at £100m, it would seem that, if The De Vere Group are successful, they will be getting rather a good deal.  But, it seems, the battle for ownership may not be easy for De Vere or anybody else as the members are likely to be a force to be reckoned with and have, recently I hear, filed law suits against Bank of Scotland and Lyle Anderson Companies in Arizona.

As for my time at LLGC, here’s what the then CEO was kind enough to say about me:

“Simon was a very positive strategic force in generating a member recruitment plan for Loch Lomond Golf Club. Simon was highly professional, thoroughly knowledgeable of the business, and had an excellent grasp of the customer. In all regards he fit the bill.”  Steve Elliott, Chief Executive Officer, The Lyle Anderson Company