[Sean Leary]

Jerry,

I am the one who brought Microsoft into the thread, unwisely I might add, and it really doesn't have much bearing on this discussion.  I have a burr in an uncomfortable place having to do with my investment in that company, and for whatever reason, when Richard Choi posts, the irritation comes to mind.  Nothing to do with Richard at all, he seems to be a fine young man; it is solely my problem that I need to get over.

Concernig traffic, on my two visits from Bellevue down to CH, traffic was difficult.  The twilight round and dinner was easier, missing the rush hours.

Sean,

What will that market bear even if the greens are perfect?

How many rounds do the best munis do annually?  How about Aldarra?  

Lou,

I am not sure what the market will be. The greens are much much better but they still have a bad reputation, whether deserved or not.With the reduced fees for locals, it might go up. My course does 11-12k per year which is very light. Most other privates do 20-25k. The Munis probably do about the same, but charge 35 bucks, not 175.

All of the local clubs are hurting to some extent, and there are some really great deals out there. If you play a lot of golf around here, chances are you are a member of a private course, IMO. Unless you are Rich Choi.

[Richard Choi]

All of the local clubs are hurting to some extent, and there are some really great deals out there. If you play a lot of golf around here, chances are you are a member of a private course, IMO. Unless you are Rich Choi.

Not when you lost FAR more on MSFT stock than Lou did...

[Tiger_Bernhardt]

With all due respect to Cos, the home course will get minimal play from the traveling golfer. It is a nice but nothing special course. I think Peter, Cos and Sean understand this deal better than most of the guys posting. As I noted earlier there is much much more to this story than we(GCA) seems to want to discuss or understand. I laughed when I read Brad comment about China. lol As most travelers know it is miserable for others to visit the USA. It is not much fun for US citizens to come home. But if they had a welcome Chinese line that took less than 30 seconds to get through, there would not be enough play to give over $100,000 to the bottom line each year. Oh by the by they had a line like that for the Arabic countries in Houston a few years during an Oil industry trade show.

[John Kirk]

Lou Duran,

I feel compelled, out of the goodness in my heart, to call you on this one.  I just checked the Forbes 400 list of wealthiest Americans for the years 2000 and 2010.

According to Forbes, Gates was worth $63B in 2000, but only $54B in 2010.  So he's down 14% or so over the last decade, like the rest of us.

The S&P 500 was around 1450 in September, 2000, and is around 1250 now, which is also a 14% drop in value.  He would have to take some significant capital gains to diversify (now 15%), but Washington state has no state income tax.

[Brett_Morrissy]

It seems to me that $21m is highly excessive, but if the land acquisition was significant and written off to the County as another of it's long term assets, (even if it does lose money, they have built more green space for the people), and everyone takes the long term view of golf course, will residents and critics look upon the construction in 100 years time, as one of the great projects ever invested by the County?

Clearly, it seems like they have paid far above the odds for construction, and surely they could reduce expenses by bringing management in house instead of another Sports Management company - they need to make large profits/bring in expenses to cover their large company strucure and returns.

With the long term approach, price points will sort themselves out, manage the design and construction costs over the longer term sans land acquisition, community should then be able to embrace CB, and ensure it's success gor them and their children's children. Eventually it will be an income producing asset that fits well with small local govt investment in their constituents - win win for all. And us golfers get another great track!

The hijacking with the American politics is frustrating, tedious and distracting, how hard is it to just take your OTT where it belongs?!

[Phil_the_Author]

John,

Not wanting to put myself into the middle of the discussion, but I think you just made the classic mistake that many researchers do, namely they have come to a conclusion and then produce the vidence to "prove" it.

You stated, "According to Forbes, Gates was worth $63B in 2000, but only $54B in 2010.  So he's down 14% or so over the last decade, like the rest of us."

What you seem to be forgetting are the multiple billions of dollars that Mr. gates has given to charity in that same time period vastly reducing his net worth...

There's my one punch and I'm out of this ring... 

[Greg Chambers]

$175 for a muni course is insane.

[John Kirk]

Philip,

I am well aware that Gates may actually spend money along the way.  It's a simplification.  Lou indicated he thought Gates was getting richer.  I doubt it.  It would be difficult for anyone whose wealth was accumulated at Microsoft to be doing better than 2000, during the Nasdaq bubble.

[Matt_Ward]

Tiger:

Curious comment --

"It is a nice but nothing special course."

In terms of a Doak rating what # would you give it ?

As a public course where would you rate it -- top 10%, top third, top half -- or even higher than that ?

And, if you were a taxpayer for that jurisdiction would you have supported such a referenda for its construction and development ?

If so -- why? And if not -- why not ?

[Sean Leary]

Matt,

He is talking about The Home Course, not CB.

[John Kirk]

There's my one punch and I'm out of this ring... 

Well, I tried to land one glancing blow, but missed the mark.

Have you seen "The Fighter"?  Might be a classic.  Christian Bale has a chance for an Oscar.

[Jim Nugent]

I feel compelled, out of the goodness in my heart, to call you on this one.  I just checked the Forbes 400 list of wealthiest Americans for the years 2000 and 2010.

According to Forbes, Gates was worth $63B in 2000, but only $54B in 2010.  So he's down 14% or so over the last decade, like the rest of us.

The S&P 500 was around 1450 in September, 2000, and is around 1250 now, which is also a 14% drop in value.  He would have to take some significant capital gains to diversify (now 15%), but Washington state has no state income tax.

But he's taken a lot of money out during that time.  A billion or more each year, I used to understand.  If so, that could push him back up to or above his year 2000 total.   

[Doug Siebert]

Jud & Phil,

There are enough people visiting Seattle during the summer months from all over the world already to fill up the tee sheets, unlike Bandon. They need to make sure that those people know that Chambers Bay exists. They also need to concentrate on filling out the winter months with local players.

Sure, Seattle is a destination in its own right, there is plenty of business travel and plenty of tourism.  But not being a golf destination is still a problem, because many people are like me, and won't deal with the hassle of bringing clubs to play one course.  Even moreso now that you are paying $100-$150 extra on most airlines to bring those clubs.

[Garland Bayley]

$175 for a muni course is insane.

If $175 is insane for Chambers Bay, then $250 is insane for Bandon.
Have you played the course?

There has been an awful lot of BS on this thread about MSFT and Bill Gates. You guys act like he is the only CEO in the world that has received bazillions in stock options. You would be much harder pressed to name CEOs that aren't raping their companies and the stock holders with stock option grants and the such for mediocre performance.

Finally McBride, you clearly don't understand what a Microsoft millionaire is. You insinuate that is executives that made out like bandits. In reality, Microsoft millionaires come from across the company. A very high percentage of the technical people that joined the company early enough are Microsoft millionaires. If you bought the stock during the early years, there was a good chance you could become a Microsoft millionaire. The company went from nothing to being valued at one point as the most valuable company in the world if my memory serves me right. If you got in at the beginning you were going to make out like a bandit. Clearly Lou got in after the growth peaked.

[Jim Nugent]

$175 for a muni course is insane.

If $175 is insane for Chambers Bay, then $250 is insane for Bandon.

If Bandon had to rely on a local market, $250 would be fatal.  I bet that is true, even if it were near a major metro area. 

Bandon gets the national market, in part because it has four courses, each of which is usually ranked above CB.  Having greens that are beyond marginally playable helps, too. 

On Gates: I don't begrudge whatever money he made or took out.  My programmer friends all think he (his monopoly) held back computers and the Internet about a decade though.  If they are right, it's interesting to think how much more advanced we would be today. 

[RJ_Daley]

Tim Nugent said:

Just what is in the $21m number?  I would like to see a breakdown of how it was arrived at.  I would also like to see a comparison of the original "pre-design" Development and Operation Pro-Forma and current account revenues and expenditures.

It seems to me that given that high of a number, and all the basic simple math one can do regarding how many rounds are needed in a market where other muni rounds go for ~$35, at what price this project logically had to charge to make that nut;  then this decision to go forward could only be made by some very well schooled and refined 'high finance' practitioners, because a simple fool could never conceive of something this convoluted... 

I've been to CB and loved it as a golf design on the site and how it was done architecturally and construction wise, along with the intended design, maintenance meld with style of play theme.  But, at that price, it was never going to succeed, it seems to me. 

[Jim Nugent]

According to the News Tribune, "Chambers Bay finished 2009 with a deficit of $1.3 million on revenue of $5.5 million.  One reason: fewer golfers willing to pay up to $169 for a round of golf.

According to its latest financial report, golfers played 31,834 rounds in 2009 – 17 percent fewer than the previous year. The course budgeted for 36,372 rounds in 2009.  In addition, food and beverage sales declined 15 percent. Merchandise sales were down 22 percent."

Average revenue per round was around $172.  That includes food, beverage and merchandise sales.  But they needed another $40 per round to break even.  Interesting that even the 36,372 rounds they budgeted would still have brought a loss, assuming peripheral sales stayed the same per person. 

At costs of $6.8 million, we can figure out how many rounds they needed in 2009 to break even at various price points.  The prices include food, beverage and merchandise sales.  I'm assuming costs stay the same, no matter how many rounds they handle.  (They may not.) 

At $100 a round Chambers Bay needed 68,000 rounds.  At $75, it needed over 90,000 rounds. 

$6.8 million in costs seem real heavy to me.  Wonder what that includes, and how they could bring the figure down. 

[Phil McDade]

Re. Jim's point, anyone out there know what's a reasonable number of rounds per year for a course? I'm thinking 10-minute intervals, fewer rounds on Mondays and Tuesdays, some weak months in the winter. What's an attainable figure, not figuring cost into it, i.e, how many rounds a year can the course handle?

[PThomas]

i wonder how much the "no-cart " policy hurts the bottom line...

[Bill_McBride]

$175 for a muni course is insane.

Finally McBride, you clearly don't understand what a Microsoft millionaire is. You insinuate that is executives that made out like bandits. In reality, Microsoft millionaires come from across the company. A very high percentage of the technical people that joined the company early enough are Microsoft millionaires. If you bought the stock during the early years, there was a good chance you could become a Microsoft millionaire. The company went from nothing to being valued at one point as the most valuable company in the world if my memory serves me right. If you got in at the beginning you were going to make out like a bandit. Clearly Lou got in after the growth peaked.

That's "Mister McBride" to you!

Nothing tough to comprehend about "Microsoft millionaires."  People who work/worked for Microsoft and cashed in stock for a fortune.  I didn't say it was a pejorative.

What happened to that "Gambers Baysound" guy?   

[Sean Leary]

According to the News Tribune, "Chambers Bay finished 2009 with a deficit of $1.3 million on revenue of $5.5 million.  One reason: fewer golfers willing to pay up to $169 for a round of golf.

According to its latest financial report, golfers played 31,834 rounds in 2009 – 17 percent fewer than the previous year. The course budgeted for 36,372 rounds in 2009.  In addition, food and beverage sales declined 15 percent. Merchandise sales were down 22 percent."

Average revenue per round was around $172.  That includes food, beverage and merchandise sales.  But they needed another $40 per round to break even.  Interesting that even the 36,372 rounds they budgeted would still have brought a loss, assuming peripheral sales stayed the same per person. 

At costs of $6.8 million, we can figure out how many rounds they needed in 2009 to break even at various price points.  The prices include food, beverage and merchandise sales.  I'm assuming costs stay the same, no matter how many rounds they handle.  (They may not.) 

At $100 a round Chambers Bay needed 68,000 rounds.  At $75, it needed over 90,000 rounds. 

$6.8 million in costs seem real heavy to me.  Wonder what that includes, and how they could bring the figure down. 

I am assuming that these numbers don't include caddies as well. They are fairly service heavy (which they need to be at that price point). I live here but honestly have no idea what the top course is in terms of number of rounds. At their play rate, they averaged about 85 golfers per day, or 21 foursomes. Would love to see how many rounds were at the local rate. I have played it maybe 6-7 times and every time it seems like there are more out of towners than locals..

[Garland Bayley]

$175 for a muni course is insane.

Finally McBride, you clearly don't understand what a Microsoft millionaire is. You insinuate that is executives that made out like bandits. In reality, Microsoft millionaires come from across the company. A very high percentage of the technical people that joined the company early enough are Microsoft millionaires. If you bought the stock during the early years, there was a good chance you could become a Microsoft millionaire. The company went from nothing to being valued at one point as the most valuable company in the world if my memory serves me right. If you got in at the beginning you were going to make out like a bandit. Clearly Lou got in after the growth peaked.

That's "Mister McBride" to you!

Nothing tough to comprehend about "Microsoft millionaires."  People who work/worked for Microsoft and cashed in stock for a fortune.  I didn't say it was a pejorative.

What happened to that "Gambers Baysound" guy?   

Well, I recon I'll start referring to you as Mister McBride when you start referring to me as Dr. Bayley. As far as comprehending Microsoft millionaires is concerned, you earlier claimed it was "insiders" which would mean certain high level execs and members of the accounting or financial departments. Now it is just "people" employed by Microsoft. You are still leaving out those with the insight to buy the stock of a company with a bright future.

Gambers Baysound is that guy that is trying to give up this addictive habit.

[Adam Clayman]

When I was out in the PNW, I was shocked and amazed at how many golfers walked. I probably toured at least 5 courses and the majority were walking. So, the only reasons people would choose to stay away from CB, would be 1. Price 2. Logistics and 3.The perceived quality of the design.

With a preponderance of courses that are heavily tree lined, I'd speculate that the links style of CB is not to the liking of the local avid golfer.

For those that don't know, I believe a huge chunk of the debt is from cleaning up the site, prior to construction.

As someone correctly mentioned, the long term view is the only way to look at this. But if they can't make money on 5.5m worth of revenue, something is rotten.

[Garland Bayley]

...
With a preponderance of courses that are heavily tree lined, I'd speculate that the links style of CB is not to the liking of the local avid golfer.
...

There is a strong preference for treed courses out here. So much so it would seem every super that removes a tree knows his job may be short lived. I have heard the sentiment, "why should I play there, there are no trees?"

As to the 21 million, the entire site was stripped, the sand sifted, and then hauled back to rid the grounds of the debris from the mining period.

I think the entire state should be grateful that the site did not just become another Microsoft millionaire enclave.

[Sean_A]

It is absolutely crazy that a muni turning over $5.5 Million cannot take a serious bite out of the debt.  On the flip side, why is a muni borrowing money for cleanup job on a site?  At the very least this should be seen as for the public good and should have state/federal authorities footing the bill.  In any case, I think a muni on this scale and with debt is beyond the pale.  I can see wanting to cleanup a site, but does that take such a heavy debt burden? Regardless of these sorts of issues, I can't see myself getting on a plane to play CB.  Perhaps if I was in town and it was convenient, but a special trip - what are lot made of money?

Ciao

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