The Week That Was, june 24, 2012

china Mission Hills’ Next Mission

Mission Hills Group intends to spread its sphere of influence beyond its massive, multi-course golf properties in Shenzhen and Haikou.

Ken Chu, the company’s chairman, recently told China Daily that he’s created a golf management division that will work for golf course owners all over the mainland. His immediate targets are under-performing properties that believe they can improve their bottom lines by associating themselves with the Mission Hills “brand.”

“We are bringing our tried-and-true brand and golf management services to Beijing, Shanghai, Xi’an, Yunnan, Chongqing, and other destinations,” Chu explained. “Just like hoteliers developing hotel chains, we’ll spread the golf brand throughout China.”

The members of the golf properties within the network will receive reciprocal playing privileges at the world-famous Mission Hills clubs that Chu and his late father have already developed. The original club, in Guangdong Province, features a dozen courses designed by many of the world’s best-known “signature” architects. The property on Hainan Island currently has 10 courses, and it’s rumored to have others either under construction or in planning.

It sounds as though Chu is taking this step in reaction to the moratorium that’s put the squeeze on golf development on China’s mainland.

“I understand that there is land restriction in golf development in China, so it doesn’t mean Mission Hills will roll out and go to different cities to build new Mission Hills,” he told the newspaper. “I can help existing golf courses that are not doing as well as they should to reposition them, to re-market them, and to make them profitable for the existing owners because Mission Hills has 20 years of experience in golf management.”

China currently has about 600 golf courses, and its management business will eventually offer a wealth of opportunities to both domestic and foreign operators. It’ll be interesting to see how effectively Chu capitalizes on his company’s formidable reputation.

united states Going Out of Business

The owners of golf courses from coast to coast happily continue to ring up rounds this year. The number of rounds played across the country was up by 22 percent through the first quarter of the year, according to the National Golf Foundation, and Golfweek reports that the number was up by 17 percent in April. Through the first four months of the year, says Golfweek, the nation’s courses have registered a 20 percent increase over the numbers they posted in 2011.

That being said, many U.S. courses are still hurting, particularly municipal courses. Here are five munis whose future is threatened:

   -- To ease financial pressure, Tucson, Arizona is thinking about closing one of its four golf properties. The most likely candidate is Fred Enke Golf Course, a layout that’s long bled money. City officials have given the golf operation’s managers four months to come up with a plan to turn a profit and pay off debts incurred when the courses were last renovated. The city’s director of golf told Tucson News Now that it’s still “premature to talk about whether to close golf courses,” but he admitted that “the golf utility will not look the same a year from now.”

   -- One of the eight municipal courses in Salt Lake City, Utah is also on the critical list. The city’s golf managers may soon pull the plug on Jordan River Par-3 Golf Course, a nine-hole track that reportedly loses $60,000 a year. “It’s a great place for beginners to learn golf,” a councilmember told the Salt Lake Tribune, “but it’s tough to subsidize it year after year. It’s chewing away at a lot of our operating revenue.”

   -- You can already circle the date: Oaklawn Golf Course, a municipal track in Marshall, Texas, will go to the gallows on September 15. The city hasn’t officially decided how to re-purpose the course’s property, but the smart money is betting on a version of general-purpose recreation. “This option gives us a great opportunity to build a park for our entire city to enjoy,” a city official told the Marshall News Messenger.

   -- The cost-cutters in Bethlehem, New York may close Colonial Acres Golf Course, despite losses of just $20,000 in 2011. Since 2009, revenues collected at the town-owned nine-hole track have reportedly fallen from $148,668 to $89,591, partly because an 18-hole course with better clubhouse amenities opened in a nearby town.

   -- The town of Stoneham, Massachusetts wants to close one of its two nine-hole golf courses. The likely victim is Stoneham Oaks Golf Course, which isn’t a financial drain but is unfortunately located on property too valuable for golf. “Stoneham, like many communities, is struggling, and we have got to maximize the assets we own,” the town’s administrator told the Boston Globe. “Maintaining a golf course that is barely breaking even is not maximizing its value or assets.”

russia Unlocking Moscow’s Secrets

A local development group wants to build a golf community in metropolitan Moscow.

Let me confess at the outset that I can’t tell you a whole lot about the to-be-named community. I stumbled across this news while researching a related subject, and translations of Russian and Eastern European news stories can sometimes be extremely difficult to interpret.

Here’s what I can deduce: The community will take shape on 370 acres along or near Kaluzhskoe Highway, which maps show as being southwest of downtown Moscow. The community will feature an 18-hole, “championship-standard” course that will occupy about 250 acres, and construction is scheduled to begin next year.

A Russian news source says the community is being developed by Anton Wiener, the principal of Khimki Group, but I’m not even sure that I’ve got Wiener’s name spelled correctly. In the United States, at least, Wiener is more commonly spelled “Weiner,” and the account identifies Wiener as the son of a famous rhythmic gymnastics coach named Irina Viner.

And you thought writing about international golf development was easy.

Khimki plans to lease the site from the landowners, who’ll become partners in the venture. “We are not going to buy land, because in this case the project becomes uneconomical due to the high time of return,” Wiener explained to a newspaper called Kommersant.

The “time of return” is expected to be seven or eight years, maybe more.

Finally, the golf community is just one of several real estate ventures that Khimki is working on the area.

wild card click You know what they say about people who live in glass houses.