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Sep OtR abstract: Golf Industry Toxicity & Tiger Resurgence

Golf Investment Toxicity & Tiger Resurgence:
Things Aren't Always As They Seem

Two unrelated exchanges with golf industry associates over the past two weeks made me pause to think about the human tendencies to attribute higher plausibility to statements heard recently, repetitively or both.  Were I so inclined, I could really have some fun with this line of thinking in relating to the current events in Washington DC around Judge Kavanaugh's confirmation hearing but I'll resist that temptation and stick to a topic that's more fact-filled and of which I have considerably more knowledge of all the forces in play vs. the current "I believe" drama playing out on the national stage.

The first comment came from an operator of several resort properties that are doing reasonably well but the investor group is questioning the long-term play and payout for golf vs. other options currently.  The second was about the "buzz" surrounding Tiger Woods' TOUR Championship win and the likely impact on the golf industry at large.  I'll take a look at both of these and offer some supporting facts and professional opinions on why neither of these is what it seems on the surface and yet they seem to have a life of their own due to recency, repetition or both:

  • "Golf is a toxic asset class for investment" - This was the exact statement made to our potential future client as they looked to us for facts and an advisory perspective that would either support or refute this belief by their investor group.  Spoiler alert, golf is not toxic in my opinion and the facts don't support that but there are likely easier, higher-return investment vehicles today if your sole investment purpose is the highest return with the lowest risk.  However, we work with clients everyday who are making money in this industry and are comfortable with their current return and future potential vs. the associated risks.
  • "Tiger's return to the winner's circle will unleash the Tiger Effect Part II" - Logic being that his resurgence will translate into participant and rounds increases for the average owner/operator and other industry stakeholders (i.e. equipment manufacturers, architects, construction companies etc.).  I'll take a look at the original Tiger Effect period and project/opine on what the value of the sequel might be. 
  • I'll tie those two together via a third conversation where a real estate developer reached out to Pellucid to put together the support for why a proposed development in a particular market was a bad idea.  While the odds currently favor that line of thinking, our response was that we'd have to run the analysis and see what the numbers told us; there isn't a universal "bad idea" principle regarding golf and real estate development meaning, as always, due diligence, rational (vs. emotional) thinking and independent advice should be employed prior to jumping to any positive or negative conclusion (novel concept for much of the golf industry).
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