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September 2019

The Numbers Add Up


Emerging Simulator Strategies proving profitable for Indoor-Golf Success

By David Gould

Swinging a club indoors used to be a good way to get your sanity questioned and the replacement cost of everything in the room rattled off. These days, indoor ball striking is enabled, encouraged and welcomed as a profit center — thanks mainly to the rapid improvement of simulator technology.

“For quite a while, simulators were a novelty,” says Alec Ramsey, director of The Golf House in Fort Wayne, Indiana. “The look was grainy and to a decent player it was a joke how far the ball would go on a lousy hit. But what you find on the market now is amazingly high-quality.”

Revenue from virtual-reality golf has also been driven by entrepreneurial energy and business innovation — it arose in recent years at a point when the golf industry wasn’t considered very investment-worthy.

“The business plan for our first simulator had a three-year pay-down period,” says one early adopter, Scott Longenecker, head professional at Bill Roberts Golf Course in Helena, Montana. “We ended up paying it off in one year, and we just went from there.”

The crew at the historic and highly rated Roberts Golf Course has more simulator experience than most. Six years ago the first Full Swing unit was brought in and now there are three simulators, showcased in a new, purpose-built sports-bar-and-grill amenity. Per-hour charge for simulator use is $32, and per-hour food-and-beverage revenue that’s directly attributable to sim use is “about $15,” according to Longenecker, who has a Wine & Wedges program in the works to try and boost that latter figure. On the cost side of the simulator equation, he hasn’t found the labor factor to be problematic.

“We used to keep our shop open in the wintertime from 9 to 5, to sell season passes and whatever else,” says Longenecker. “Once the simulators were installed, we began closing later, first at 7 p.m., then at 9, and now we close at 10.” When his colleagues at other courses ask him about man-hours, he points out that it “doesn’t take any more staff to run three simulators than to run one of them.”

It’s worth noting that a sharp spike in club sales did the most to accelerate the course’s amortization of its original simulator acquisition cost. “We did $10,000 in equipment sales the very first month we had a simulator,” reports Longenecker. He had minimal experience selling golf clubs in Montana in January and February — turns out to be a good time for it. 

“You’ve got the club manufacturers doing their big promotions at that time,” says Longenecker. “And you’ve got golfers with tax refunds who are wanting to have their gear all squared away by the time the snow melts.”
One other bona fide club-fitting advantage on the simulator, he points out, is the ability to have customers hit the brand of golf ball they normally play, “not a limited flight range ball that has been hit hundred times already.”

Club-fitting activity aside, simulators reside in the space where golf overlaps with entertainment — an arena clearly dominated by Topgolf. Course operators who bring in simulators may recognize this fact, but you won’t hear them boast about going toe-to-toe with the Dallas-based juggernaut. And yet, in the case of one Ohio course, Meadowbrook at Clayton, the little guy indeed took a bite of Topgolf’s business.

“A local company that patronizes our course during golf season came by to look at our simulator area and lounge,” explains Bill Williams, director of golf at the Clayton, Ohio facility. “In the past they’ve made the 40-minute ride down to Topgolf for employee outings at least a couple of times. When they saw what we had to offer they opted to bring their employee group here instead of to Topgolf.” 

The Meadowbrook course is city-owned and its simulators were purchased with money from a central fund, although some $10,000 in capital costs came out of the course’s budget. That covered renovations such as new custom flooring, new wiring, upgrades to the Wi-Fi service and some lighting work.

“The simulator company, TruGolf, brought their own carpenters in to custom-build the bays themselves,” says Williams. “That work was included in the terms of the original bid.”

League play, by all accounts, is a cornerstone of simulator success. When the 2018-19 winter leagues wound down at Meadowbrook at Clayton, two nice things happened: A group of about a dozen avid golfers continued play indoors for an extra six weeks, and virtually every league member from that first season asked to keep their spot for the following winter.

Golf that your customers sign up to play in a team format has always been great business because it’s scheduled and reliable. That’s all the more so for indoor league play, given weather can’t affect it. The winter-league arithmetic for managers like Williams is welcome indeed. It’s priced on or about $20 a night per person and can easily handle 16 players nightly over 48 nights of competition comprising a 12-week season. That totals over $15,000, not counting any food-and-beverage revenue this activity drives. In the Meadowbrook case, it also doesn’t count the additional $1,500 or so from players who extended their season.

Walk-up usage of the simulator bays at Meadowbrook comes in part from “golf geek guys” who want to practice without any weather interference and study their performance numbers on the TrackMan launch monitor. “They’re very focused on clubhead speed, ball speed, carry distance, ‘smash factor,’ all those stats,” says Williams. The other main form of walk-up play is people who want to play nine holes in an hour’s time with a friend and have their choice of one famous course or another up on the screen.

If you’re in the simulator business and haven’t thought of this trick yet, take a page from Meadowbrook and promote rounds on the Pebble Beach sim-course during the PGA Tour’s annual AT&T event at Pebble and likewise promote your Kapalua simulation during the Tournament of Champions event.

“There’s something about seeing the tour pros on TV playing those courses and then seeing your own shots to those same fairways and greens that people really like,” Williams says.

The emerging sim-golf market blurs lines between green grass and strictly indoor facilities. At the aforementioned Golf House in Fort Wayne, a golf league from a course in town continued its outdoor competition indoors at the 80,000-square-foot field house-type venue where Alec Ramsey oversees golf. Similarly, Club professionals from the area have been conducting wintertime lessons with their regular students, at the invitation of Ramsey. “We wanted to extend that courtesy,” says Ramsey, “and we figured the golf professionals would like what they saw and come back on their own with friends, which they’ve done.”

The Sport One ParkView Fieldhouse, home to The Golf House, is an immense gymnasium where AAU basketball tournaments and high school volleyball championships are contested.

“The Full Swing simulators we brought in once we’d decided to add golf are the 17-foot-wide version,” says Ramsey. “They provide a panoramic visual experience and I would recommend them highly over the 10-foot wide version. Our cost was about $60,000 each, and it’s been a great investment even after just one year.”
The cost was spread over a series of payments, according to Ramsey, but it was borne by the deep-pocketed commercial real estate company that owns the field house, and in turn owns Ramsey’s golf operation.

League play, not unexpectedly, is a cornerstone of the operation’s revenue spreadsheet. From Christmas week until the Masters, 52 two-player teams swing away at a cost of $480 per team, generating about $25,000 in “green fees,” to use the quaint term Ramsey favors. In addition there is a massive six-bay indoor range, where golfers of all shapes and sizes appear year round to pay $8 dollars a half hour or $15 an hour for “all you can hit” range-ball use.

Non-league simulator use is where money was left on the table, a scenario Ramsey is remedying through acquisition of a third unit.

“All last winter I would turn away walk-up simulator business at least 15 times each weekend,” reports Ramsey. He didn’t enjoy flashing the no-vacancy sign and he could see that the walk-up sim golfer tended to stay longer, spend more and add a night-at-the-sports-bar mojo to the premises. “Once we add more capacity, I’m sure I’ll be tempted to just expand league activity,” he says, “but I think that would be shortsighted.”

All the simulation entrepreneurs interviewed for this article spoke with enthusiasm about technology upgrades likely to come along — or exist now but need to come into much wider use. For Ramsey, that’s real-time tournament play among golfers who are hundreds or even thousands of miles apart. In Asia currently there are big-money pro tournaments played on that basis.

There will also need to be additional creativity in the programming of simulator amenity. Longenecker looked out recently on a beautiful Montana afternoon, with his green grass golf course packed with smiling players. That’s the picture you dream of, but it leads Longenecker to think about slow business indoors — he’s been in the sim game long enough to get used to sim-dollars helping pay the bills.

“I’ll have to get the staff together and come up with some promotional ideas,” says Longenecker. “It would be nice to get some more customers playing indoors with us in August.” 

David Gould is a Massachusetts-based freelance writer and frequent contributor to Golf Business. 


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