Meadowood Feasibility Study

7/29/2019 Meadowood Feasibility Study

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Validation StudyFor Proposed Alterations to the

Meadowood Golf Course

Prepared For:

City of Westlake29800 Center Ridge Road

Westlake, OH 44145

Prepared By:

1150 South U.S. Highway One, Suite 401Jupiter, Florida 33477

(561) 744-6006

July 2012


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Validation Study for Proposed Alterationsto the Meadowood Golf Course


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Table of Contents

INTRODUCTION AND OVERVIEW........................................................................................... 1

Location and Accessibility Analysis ..................................................................................... 1

Local Context ...........................................................................................................................2

Regional Context......................................................................................................................3

History......................................................................................................................................3

NGF Summary .................................................................................................................... 4

SUBJECT FACILITY ANALYSIS .............................................................................................. 5

Golf Course Analysis........................................................................................................... 5

Course Layout..........................................................................................................................5

Condition..................................................................................................................................6

Equipment ............................ ......................... ............................ ............................ ................... 7

Facility Performance and Data Analysis Meadowood GC................................................. 7

Revenue Performance..............................................................................................................7

Expenses .................................................................................................................................9

Net Operating Income............................................... ......................... ............................ ......... 11

MARKET ANALYSIS................................................................................................................12

National Trends..................................................................................................................12

Market Evaluation ..............................................................................................................13Demographics ......................... ............................ ........................... ......................... ............... 13

Demand ....................... ......................... ............................ ........................... ......................... . 13

Supply............ ............................ ......................... ............................ ........................ ............... 14

Supply and Demand........................... ......................... ............................ ............................ ... 16

Competition........................................................................................................................17

Immediate Area ....................... ............................ ........................... .......................... .............. 17

Local Area ............................ ............................ ......................... ............................ ................. 18

Regulation Courses...... ......................... ............................ ........................... ......................... . 19

Executive Courses......................... ........................... ......................... ............................ ......... 21

Driving Ranges........................ ............................ ............................ ........................ ............... 23

Summary Cleveland Metroparks Facilities ......................... ......................... ........................... . 24

Market Analysis Summary..................................................................................................25

REVIEW OF ALTERATION OPTIONS .....................................................................................26

Option One: Status Quo.....................................................................................................26

Option Two: Improve the Yellow Course ............................................................................26

Option Three: Practice Facility ...........................................................................................27

Comparison of Options ......................................................................................................27

Option One: Status Quo ........................ ............................ ........................... ......................... . 28


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Option Two: Renovating the Yellow Course ......................... ............................ ....................... 31

Option Three: Replace Yellow Course with New Practice Facility................ ........................... . 34

Summary of Options ..........................................................................................................38

SUMMARY AND DISCUSSION................................................................................................39

NGF Recommendations.....................................................................................................39

Target Markets ........................ ............................ ............................ ........................ ............... 40

Range Layout and Design ................................................. ........................... ......................... . 40

Ball Dispenser ......................... ............................ ........................... ......................... ............... 41

Other Practice Facilities........ ......................... ............................ ............................ ................. 41

Marketing ........................ ........................... ......................... ............................ ....................... 41

Teaching Center.............. ........................... ......................... ............................ ....................... 42

Ancillary Sales......................... ........... ...... ..... ...... ........... ..... ...... ........... ..... ...... ...... ................. 42

APPENDICES...........................................................................................................................43

Appendix A National Rounds Played Report ...................................................................44

Appendix B Detailed Demographics ................................................................................46

Appendix C Competitive Facility Data .............................................................................48

Immediate Area Courses ....................... ............................ ........................... ......................... . 48

Local Area Courses ............................ ......................... ............................ ............................ ... 49

Regulation Golf Courses.......... ............................ ........................... ......................... ............... 51

Executive Golf Courses ......................... ............................ ........................... ......................... . 53


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National Golf Foundation Consulting, Inc. Meadowood Golf Course DRAFT Report 1

Introduction and Overview

The National Golf Foundation (NGF) was retained by the City of Westlake to review a City planto renovate the Citys 27-hole Meadowood Golf Course (Meadowood GC) to reduce thenumber of golf holes and add a new driving range facility. The NGF team has evaluated threeoptions for the City, including:

Status quo make no changes and keep the 27-hole facility as is

Upgrade the Yellow course, keeping it Regulation length

Convert the Yellow course to a modern practice facility including a large drivingrange with all-weather bays and a short game area.

NGF Director of Consulting Richard Singer and Senior Associate Consultant John Wait visitedthe site and the market area from April 9 through 12, 2012. During this visit, they met with facilityand City staff as well as completed a survey of the most direct area competition.

The need for action is apparent from both the current conditions of the course (and equipment)as well as the steady decline in economic performance. While the course has traditionally beenself-sufficient, it has not generated enough revenue to provide adequate reinvestment into itsinfrastructure. This has led to a general decline in course conditions, which usually leads to acorresponding decline in performance. Expenses appear to be at a level where it is likely thatrevenue loss stemming from these cuts is greater than the savings. Thus, Meadowood appearsto be at the point where further cuts in expenses on the existing operation will be counter-productive, and the only real solution to fiscal problems will be to modify the basic structure of

the facility and/or increase revenue.

LOCATION AND ACCESSIBILITY ANALYSIS

Meadowood Golf Course is located in the western section of the City of Westlake, in proximity tothe dense residential areas between Highway 20/113, Hilliard Boulevard, Dover Center Road,and Bradley Road. Primary access to the facility is via Highway 20/113, a primary east/westthoroughfare through Westlake. The Meadowood facility is approximately three miles fromHighway 2, and three miles from Interstate 480, both main, controlled access highwaysconnecting the area to downtown Cleveland.

The facility is relatively convenient and easily accessible for golfers familiar with the location.

For customers less familiar with the location, finding Meadowood GC should not be problematic,although the entrance sign could be improved for better visibility. NGF Consulting did notobserve any other signage in Westlake directing golfers to Meadowood Golf Course.

The facility is bounded by residential elements and the adjacent senior center and communityservices facilities, with wooded areas bounding the property to the east and north. This tends toprovide a form of signature feature of the property and provides separation between the golffacility and its surroundings. The golf course has very little topographical change, with agenerally flat terrain. The following images put the location into local and regional context.


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Local Context

The aerial image below shows the basic property configuration, with the relation to surrounding

elements.

Google Earth image showing the Meadowood GC with the Yellow course in the north/northeast portion of the property. The figureshows a new driving range added to the Yellow Course site would have a northwestern orientation, which is not ideal, but should not

be a key determining factor. Surrounding elements such as some residences and the parking lot are visible in this view.


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Regional Context

History

The current Meadowood facility is the combination of two separate courses. The first 9-hole golfcourse, currently called the Yellow course, was built in 1954. This golf course originally operatedas a private club. In 1978, a second 18-hole Executive course was built as a public-accessfacility. The City of Westlake purchased the two facilities in 1988 to operate as a municipal golffacility. The City operates the two golf courses as one entity with a single City Enterprise Fund.The Meadowood GC facility has traditionally been financially self-sufficient.

In 2002, a new 3,000 square foot clubhouse was built for the golf course by the City. Since then,there have been few capital improvements made to the facility. Those that have been madewere completed as in-house projects by Meadowood staff.


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NGF SUMMARY

The City of Westlake is operating a popular golf facility with amenities that are a good fit for the

community and property. However, recent changes in the golf economy have added pressureon the facility and it is now not clear that the present mix of amenities is the most appropriate forthe Meadowood Golf Course. NGF found six specific areas that we feel are the most significantcontributors to the recent economic performance of Meadowood Golf Course:

1. The Yellow course does not have strong market appeal and is underperformingcompared to competition

2. Declining conditions of the Meadowood GC, specifically the Yellow course

3. Recent decline in golf nationwide (recovering in 2012)

4. Intense competition from many golf courses and discounting

5. A need to improve marketing to include both passive and active efforts

6. Reductions in staff have added pressure to maintenance and customer service

In reviewing the Westlake golf system, NGF Consulting finds that action on these sixitems will provide the greatest relief from economic stress. The overall NGFrecommendation is that the City of Westlake implement the plan to close the Yellowcourse and add a new driving range/practice facility on the site. This course of action isseen as having the greatest chance for success and improving the overall economics ofthe Meadowood GC for the longer term, based on our review of several options,including continuing the status quo, significantly upgrading the Yellow course, or addingthe new driving range.

The most important NGF recommendations for Westlake Golf include:

1. Replace the Yellow Course with a modern driving range/practice facility

2. Improve marketing

3. Complete some other modest upgrades to the Red/White Courses

4. Expand the retail/merchandise component of the Meadowood facility

5. Develop a golf teaching/learning center with the new range

6. Resist increasing fees as a method to reduce fiscal losses

NGF Consulting fully expects that this course of action will lead to improvement in the overallnet income of the Meadowood GC. The key reasons for this expectation are:

1. The general lack of high quality driving range/golf practice centers in the area

2. The lower cost of maintaining a driving range vs. a 9-hole (Yellow) golf course

3. The existing base of support among Westlake area golfers

4. The natural fit of proposed amenities to the existing Meadowood program

5. Prevents the need for Yellow course replacement and upgrade in the future


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Subject Facility Analysis

Meadowood is a 27-hole golf facility that consists of two 9-hole Executive length (par 68 or less)golf courses (Red and White) that can be combined into an 18-hole experience, and anadditional 9-hole Regulation length course (Yellow). The only practice area is a putting green.

While the NGF Consulting did not complete an agronomic study of the Meadowood GolfCourse, it is clear that there are several areas of concern. This includes the major areas of playsuch as greens, tees, and fairways. While problems were present on both the Executive courseand the Regulation course, issues were more pronounced on the 9-hole Regulation-lengthYellow course. These problems did not appear to be a result of poor maintenance practices, butinstead to a deteriorating infrastructure due to age and lack of capital reinvestment.

GOLF COURSE ANALYSISAs we were concerned mostly with issues related to the Yellow course, our review in thissection will focus on this 9-hole golf course and possible solutions to the issues faced by theCity of Westlake in its operation.

Course Layout

The Yellow course has a nice layout that is very playable. However, in relation to itscompetition, it has four major operational issues:

1. Number of Holes: With the major exception of leagues (which does account for ahigh percentage of play at area courses), most golfers tend to prefer playing 18 holes

rather than nine holes. This is especially true with golf courses that are Regulation-length. It is our experience that in markets having equivalent nine-hole and 18-holegolf courses, the 18-hole course will almost always dominate play.

2. Length: At 5,270 yards in length (two nines together), the Yellow course isconsidered a very short course, especially at a Par of 72. The vast majority of golfersprefer courses that are at least 6,000 yards in length, although modern standards arenow exceeding 7,000 yards in length. While only a small percentage of golfersactually play from 7,000 yards; a much larger percentage use the back distance tojudge a courses appeal. At 5,270 yards, the course will normally only appeal toseniors, juniors, some beginners and some women.

3. Number of Tees: Meadowood is one of very few courses to only offer one tee

location. This greatly reduces the marketability of the course as it assumes one sizefits all. However, one of the great appeals for golf is that it is an activity that offers away for players of varying abilities to play together and be competitive by playingfrom different tees. This is not possible at Meadowood. Further, as noted above, the5,270, while short for most male golfers, is actually long for women. This is becausewomen, on average, hit about 65-70% as far as men. So, assuming the preferreddistance for men is around 6,000 yards, this would equate to around 4,200 yards forwomen. In addition, the USGA recommends even shorter distances for juniors(usually around 3,300-3,500 yards).

4. Perceived Difficulty: There are only five traps on the Yellow course (none in goodshape) and only one hole with water. Coupled with the short length, there is little


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perceived challenge to golfers, limiting the appeal of the course to mostly seniorsand higher handicap players, including beginners.

Thus, even without considering course conditions, the Yellow course is at a major competitivedisadvantage and has limited appeal within the golf marketplace.

Condition

Every course eventually requires rebuilding, either because of sudden disasters, slow businessdecline, or just from wearing out. While often ignored because a golf course is natural, it isreally a built environment and the components have an expected life cycle, as estimated by theUnited States Golf Association (USGA) Green Section, below:

USGA Greens 15-30 Years

Other Sand Based Greens 15 Years

Bunker Sand 5-7 Years Irrigation System (Good Quality) 20-25 years

Irrigation System (Lower Quality) 15-20 Years

PVC Irrigation Pipe Under Pressure 15-30 Years

Cart Paths (Asphalt) 5-10 Years

Cart Paths (Concrete) 15-30 Years (or longer)

Practice Range Tees 5-10 Years

Tees 15-20 Years

Major Drain Pipes (PVC) 15 Years

Major Drain Pipes (Corrugated Metal) 15 Years, Bunker Drain Pipes - 5-10 Years

Mulch 1-3 Years

Greens and Tees Turf 10-20 years

In the case of all three nine-hole courses, every component mentioned above is past itsanticipated life expectancy. However, the problem is most severe with the Yellow course, which,for the most part, has been unimproved since it was built nearly 60 years ago. Some keyobservations by NGF about the Meadowood Golf Course:

Greens: Six of the greens on the Yellow course are around 60 years old, which isdouble the maximum expected lifecycle (the greens on the Executive courses arealso slightly past the anticipated life cycle at 27 years). Three of the Yellow courses

greens have been recently rebuilt, with two of them (holes #6 and 7) built to USGAstandards during the 1990s. This means that even the newer USGA greens areapproaching the end of their expected lifecycle. As greens age past their lifeexpectancy, they are much more difficult to maintain, and both playability andaesthetics suffer. This is obviously the case with the greens on the Yellow course.

Tees: Again, the tees are well past their life expectancy, are mostly undersized, andalso tend to be un-level, which is highly undesirable for golfers.

Fairways: The fairways suffer from both inadequate irrigation and poor drainage(especially in the northeast section of the property mostly the Yellow course). Theyalso have a variety of grasses (contamination) that reduce the aesthetic appeal.


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Irrigation: The most expensive part of modern golf courses is the irrigation system.Unfortunately, the irrigation system that services the Yellow course is severelyinadequate. Not only is it well past its life expectancy, but there is only a 10

horsepower (hp) pump (when the normal expectation for a golf course is at least 60to 75 hp), thus allowing only a few sprinklers to operate at one time. This greatlydecreases watering ability and, coupled with the lack of an automated system,dramatically increases the amount of labor time involved in irrigating the golfcourses. Given limited resources, the amount of labor being devoted to operating theirrigation system results in a deterioration of conditions elsewhere.

Cart Paths: Cart paths are present only in a few areas on the Yellow course and notat all on the other two courses. This means that during wet conditions, either thecourse is put at risk by allowing carts to travel anywhere (destroying turf and creatingruts), or play is limited through not allowing carts on the course.

There is clearly a need for substantial investment in the infrastructure on all three courses;

however, the need is definitely greater on the Yellow Regulation course.

Equipment

Like the golf course, the maintenance equipment has generally lived beyond the normaloperating cycles. Indeed, the newest piece of equipment is twelve years old. Outdatedequipment results in several negative consequences:

Operating costs are higher: it takes more money to continually repair broken-downequipment, both in terms of labor and parts.

Operating efficiency is greatly reduced:

The amount of downtime old equipment has limits a crews efficiency Older equipment, even in good repair, does not operate as efficiently or

effectively as newer equipment

Quality can also be an issue: older equipment, even when in good repair, tends tonot perform at the level of modern equipment, reducing course conditions

We recommend a program be implemented to replace the entire maintenance fleet over a five-year period.

FACILITY PERFORMANCE AND DATA ANALYSIS MEADOWOOD GC

Meadowood Golf Course is operating as a public golf course, with the predominance of revenue

generated from golf green fees (including cart fees). Additional revenue is collected from someclubhouse activities such as merchandise sales, lessons, other rentals, and food and beveragesales. A summary of activity, revenue, and expenses is shown below.

Revenue Performance

The overall performance of the Meadowood GC has declined in recent years, both in terms ofrounds and revenue. Over the past four years, rounds have decreased by 57% and revenue by41%. Even if 2011 was taken out, which was a disastrous year for all area golf facilities due topoor weather conditions, rounds had declined by 16.1% from 2008 to 2010 and revenue by13.1% or about $57.292. Green fee revenue showed the largest decline, dropping from$313,593 in 2008 to $250,793 in 2010 and $184,876 in 2011.


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Rounds and Revenue


Total Rounds and Revenue FY2008-FY2011

YearTotal

Rounds%

Change

Red/WhiteCourse

YellowCourse

TotalGreenFees

%Change

Red/WhiteCourse

YellowCourse

Rev. perRound

2008 28,767 67% 33% $313,593 65% 35% $10.90

2009 28,589 -0.6% 69% 31% $304,665 -2.8% 67% 33% $10.66

2010 24,126 -15.6% 72% 28% $260,793 -14.4% 71% 29% $10.81

2011 12,369 -48.7% 78% 22% $184,876 -29.1% 77% 23% $14.95

Source: City of Westlake.

While a decline in performance is noted on both the Executive and Regulation courses, it hasbeen greatest on the Yellow (Regulation) course. Last years performance on the Yellow course

represented a 71% decline from 2008, and even 2010s rounds were 28.8% worse than 2008.This compares to -49.9% and -9.9% for the Executive course for the same periods. As NGF willshow later in this report, Meadowood Golf Course is underperforming in relation to othercomparable golf facilities in the market area. It is evident that a significant intervention isneeded.

While total revenue is the bottom line, another metric that is used in the golf industry to reviewfacilities is the total revenue per round of golf (revenue/round). Surprisingly, revenue/round hasactually increased since 2008, going from $15.24 to $20.90 in 2011, a jump of 37.1%. Most ofthis increase came from an increase in revenue/round from green fees, which went from $10.78to $14.82, up 37.5%. Thus, while rounds are decreasing, the course is generating more incomefrom each person playing. This suggests that the loss in rounds has been greatest on the lowest

revenue rounds.

Revenue by Line ItemThe increase in revenue/round is across the board. Power cart revenue has increased from$1.74/round to $2.06 (18.4%), food & beverage from $1.83 to $2.58 (40.6%), and merchandisesales from $0.23 to $0.24 (0.8%).

Meadowood Golf CourseTotal Gross Revenue by Category FY2008-FY2011

2008 2009 2010 2011

Revenue

Golf $310,125 $303,122 $258,814 $183,306

Riding Carts $50,066 $43,308 $41,347 $25,479

Pull Carts $10,607 $10,355 $8,416 $6,417

Food & Beverage $52,786 $47,454 $40,712 $31,910

Golf Merchandise $6,716 $5,834 $4,441 $2,911

Other $8,200 $5,171 $27,477 $8,475Total $438,499 $415,244 $381,207 $258,499



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Expenses

The NGF team has reviewed operating expenses for the Meadowood Golf Course facility. For

purposes of this review, the NGF has not included two line items included in the Meadowoodbudget that are not typical for golf course operations. These include the expenses forRepayment of Advance, which is debt service, and concessions, which we consider as costof sales. Further, to get a better handle on the expenses, we have categorized them into one ofthree areas: 1) course maintenance, 2) golf operations, and 3) general and administrative. Forpayroll, we split administrative payroll 50/50 between maintenance and golf operations. Wealso allocated unknown payroll between the two departments based on history. It should benoted that we did not have enough information to make food and beverage a separate profitcenter as it should be, so its payroll is included under golf. It should also be noted that we haveexcluded sales tax from both revenue and expense calculations.

Meadowood operating expenses have decreased by $87,400 or 18.7% since 2008. Half of thisamount ($43,413) occurred last year, when expenses decreased by 10.5%. From 2008 through2010, expenses had declined by 9.1%. Total payroll dropped $21,776 or 8% since 2008. All ofthis decline (and more) can be attributed to last year when payroll fell by $24,590.

Course maintenance took the biggest hit as maintenance expenses fell from $237,197 in 2008to $211,539 in 2010 (-10.8%) and $194,539 in 2011 (-18%). Maintenance payroll accounted forabout $14,000 of the decline. Unfortunately, cutting course maintenance often leads to a declinein course conditions, which in turn leads to a decline in revenue.

Golf operations expenses have declined by $27,342 since 2008, with $21,030 of this cominglast year. Payroll fell about $11,000 last year (7.9%), but only $7,200 since 2008 (5.2%). Cartlease expense fell the most, dropping from $21,280 in 2008 to just $9,463 last year as a newfleet was purchased. General and administrative expenses have fallen from $46,802 in 2008 to$31,946 last year, a decline of 31.7%. The decline in the last year alone was $5,384 (14.4%).

Expense by Line ItemTotal Meadowood expense is shown in the table below:


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Total Expenses by Category FY2008-FY20112008 2009 2010 2011

Cost of SalesConcessions $23,911 $19,034 $19,379 $16,167

ExpensesCourse Maintenance

Payroll $164,641 $176,776 $163,460 $150,104Leases $1,640 $782 $840 $765Equip Maint $14,555 $14,890 $13,340 $13,763Grounds Maint $13,846 $4,100 $6,504 $210Irrigation $1,413 $6,168 $2,999 $204Supplies $1,275 $677 $237 $300Gasoline $10,141 $7,345 $6,784 $8,604

Other $10,821 $460 $767 $0Fertilizers/Chemicals $18,865 $20,640 $16,607 $20,590

Subtotal $237,197 $231,839 $211,539 $194,539Golf Operations

Payroll $138,456 $142,943 $142,452 $131,218Leases-carts $21,280 $16,317 $15,670 $9,463Sport Programs $10,153 $3,142 $5,454 $1,867

Subtotal $169,889 $162,402 $163,576 $142,547General & Administrative

Utilities $28,107 $23,418 $26,410 $21,917Advertising $675Building Maint $3,241 $2,033 $1,956 $1,531Meetings/Seminars $2,453 $1,644 $850 $85

Computer Maint $1,610Office Supplies $975 $812 $297 $187Postage $145 $84 $13 $10Building Improvements $5,504Expenses $9,059 $6,967 $6,536 $7,039Technology Allocation $1,084Licenses $1,212 $1,268 $1,268 $1,177

Subtotal $46,802 $43,487 $37,330 $31,946TOTAL EXPENSES $453,888 $437,728 $412,445 $369,032



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Net Operating Income

Perhaps the best measure of a golf courses performance is Net Operating Income (NOI), which

only takes into consideration operating income and expenses and excludes things such asdepreciation, capital improvements, debt service and taxes.

Meadowood Golf CourseNet Operating Income FY2008-FY2011

2008 2009 2010 2011Total Revenue $438,499 $415,244 $381,207 $258,499

Cost of Sales $23,911 $19,034 $19,379 $16,167Gross Profit $414,588 $396,210 $361,828 $242,332Total Expenses $453,888 $437,728 $412,445 $369,032Net Operating Income (Loss) ($39,300) ($41,518) ($50,617) ($126,700)

CommentsSince 2008, Meadowood has shown a negative NOI each year with losses growing larger eachyear since 2008. While Meadowood has been very responsive in cutting expenses, the cutshave not kept pace with the decline in revenue. Gross Profit has fallen by $172,256 (41.5%)since 2008, with $52,761 coming in the years from 2008-2010. As a result, NOI has declinedfrom a 39,300 loss in 2008 to a loss of $126,700 in 2011, a drop of 222%. More than half of thisloss ($76,083) came from last year.

NGF Consulting also noted that:

Advertising: It is our experience that no other factor correlates higher withperformance than marketing expense. Since 2008, the city reported no direct budgetfor advertising the golf course to non-residents, although the City did reportmarketing the facility to its residents through its website and posts on the Mayorsnewsletter and Recreation Gazette. However, we must point out that effectivemarketing can get new customers to the course, but it is up to the staff and thecourse conditions to get them to return. Given the declining conditions, eveninvesting heavily in marketing would only be a short-term fix. But it doesmean thatany capital improvements must be accompanied with an investment in marketing inorder to maximize the return on the investment.

Merchandise sales: Merchandise sales are exceptionally low. We would anticipatemerchandise revenue to be closer to the food and beverage revenue, although the

yield would be much less due to a higher cost-of-sales. Lack of funds to purchaseinventory is the most likely reason for the slow sales.


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Market Analysis

In this chapter, NGF Consulting provides an overview of national trends with respect to golf, asummary of the greater Cleveland public golf market, a profile of the areas demographics, andkey points regarding economic factors that have the potential to affect golf demand. In thesecond part of this section we provide an analysis of key golf market demand and supplyindicators and a review of the competitive public golf market in the Westlake / greater Clevelandarea. The objective of this section is to identify and assess those local factors that may affectthe volume of rounds played at Meadowood Golf Course. Many variables have the potential toaffect the activity of a golf course, including regional weather variations and unforeseenoccurrences such as a severe downturn in the economy. In this section, we focus on thosefactors that are most likely to affect play levels at Meadowood.

NATIONAL TRENDSGolf participation in the U.S. has grown from 3.5% of the population in the early 1960s to about9.2% of the population today. NGF estimates that about 26.1 million golfers ages 6 and abovereside in the U.S. Other surveys completed outside the golf industry show the number of peoplewho identify themselves as golfers is as high as 45 million, indicating a large potential latentdemand from very inactive golfers.

In addition to increased competition, three other factors have contributed to a decline in thenumber of rounds per course nationally during the 2002 to 2010 period. These include: 1) anuneven national economy; 2) the aftereffects of 9-11, which greatly reduced the traveling golfermarket; and 3) the increasing time pressure on individuals and families. The combination ofthese factors has caused many golf facilities to become distressed, particularly those that have

a high debt load because of higher construction costs and the perceived need to build high-endcourses.

The number of golf course closings quadrupled from an annual average of 24 courses per yearin the 1993-2001 time period to more than 100 courses in 2005. In 2006, there was negative netgrowth in golf facilities for the first time in six decades, with 146 18-hole equivalents closing and119.5 opening. In 2007, there were 113 openings and 121.5 closures, and in 2008, 72 golfcourse openings and 106 closures. In 2009, 49.5 openings minus 139.5 closures equated to anet loss of 90 18-hole equivalents. In 2010, 107 18-hole equivalents were closed. Closurescontinue to be disproportionately public, stand-alone 9-hole facilities or short courses (Executiveor Par-3 length) with a value price point. Considering the decade as a whole, there was net gainof 656 18-hole courses from 2001-2005 and a net loss of 220 from 2006 to 2010.

U.S. rounds decreased about 25% to 30% for the 12 months ending March 31, 2012, with theEast North Central Region (includes Ohio) increasing about 200% over the same period. Theweather data showed much warmer temperatures and less precipitation in the early part of 2012leading to higher rounds totals. In terms of the total number of rounds produced in the UnitedStates, NGF estimates that rounds fell about 4.9% over the past five years (Appendix A).

There is no denying a significant drop in golfers, but it appears to be mainly economically drivenand therefore we can expect some post-recession recovery. The long-term view remainsmoderately favorable, due to population growth, latent demand, and baby boomers retiring.


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MARKET EVALUATION

In this section of the report, NGF will examine the market area surrounding Meadowood Golf

Course. For this analysis, we examined three market areas:

Immediate: the area within 5 miles of Meadowood

Local: the area within 10 miles of the target facility

Regional: a 15-mile radius from the facility

Demographics

Detailed area demographics can be found in Appendix B. Following is a summary of significantfindings.

Population: an estimated 149,532 people live within five miles of the facility, and

these are the people most likely to use the Meadowood facility. An estimated499,527 live in the Local market and 930,149 in the Regional.

Population Growth: growth in all three market areas has lagged behind the nationalaverage over the past 30 years. However, the closer to the target facility, the betterthe growth trend. For example, for the period 2000-2010, the Regional areaexperienced a 0.4% decline in population, while the Local area had a modest 2%growth and the immediate area had a much stronger 8.1% growth. All three areasare projected to continue losing population over the next five years. The Local area isexpected to have the largest percentage decline (1.8%) and the Immediate area theleast (1.6%), although the differences between the three areas is likely notsignificant.

Race: residents in the Immediate area are 93.4% white, compared to 88% for the

Local area and 84.2% for the Regional. Whites have a much higher golf participationrate than other races, although golf participation among minorities is rising and maybe a key for beginner-friendly facilities such as Meadowood.

Income: residents in the Immediate area are apparently much more affluent than inthe other market areas, a significant factor, as golf participation correlates stronglywith income. The Median Household Income for the immediate area is $68,627,which is 24% higher than the Local area ($55,429) and 34.7% higher than theRegional area ($50,947). It is also 27.3% higher than the national average ($53,908).Not only does this imply a greater golf participation rate, but also has implications asto the quality of the preferred facility.

Household Tenure: a good indicator of an areas stability, the Immediate area has a

much higher Owner-Occupied percentage (76.3%) compared to 66.3% for the Localand 62.3% for the Regional) and a much lower vacancy rate (5.7%) compared to7.6% and 8.8%.

Demand

The NGF performs an annual survey of golf participation across the United States. Based onthese survey results we can estimate the local participation rates and, taking into considerationarea golf courses, the demand for golf. Based on survey results and area demographics, wefind the following:


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Golf Demand

5 miles 10 miles 15 miles U.S.

Number of golfing households 15,768 52,985 98,567 21,237,600Number of rounds played 245,224 806,706 1,484,471 498,831,616

Rounds played locally (less than 50 mi) 139,351 431,129 786,552 279,190,432

Rounds played regionally (50-200 mi) 77,505 272,566 504,995 168,914,336

Rounds played on vacation (more than 200 mi) 20,318 71,484 133,916 33,584,420

Rounds played at Seasonal home 8,050 31,527 59,008 17,144,112

Golfing Fees $9,706,262 $31,429,956 $58,191,972 $20,179,122,176

Hard goods spending $1,370,066 $4,507,065 $8,293,736 $2,794,251,520

Soft goods spending $880,749 $2,897,363 $5,331,636 $1,796,280,960

Source: National Golf Foundation.

Using the national average as a baseline value of 100 we have created an index for variousvalues based on the percentage difference to the national average. For example, an index valueof 90 is 90% of the national average while a value of 110 is 110% the national average.

Golf Demand Indices


Index: Golfing Households 147 139 141 100

Index: Rounds Played by Residents 97 90 91 100

Index: Rounds Played Locally (less than 50 mi) 99 86 86 100

Index: Rounds Played Regionally (50-200 mi) 91 90 91 100

Index: Rounds Played on Vacation (more than 200 mi) 122 121 123 101

Index: Rounds Played at Seasonal Home 96 106 108 104

Index: Golfing Fees 95 87 88 100

Index: Hard Goods Spending 97 90 90 100

Index: Soft Goods Spending 97 90 90 100

As can be seen on the above table, all three market areas have significantly higher golfparticipation rates than the national average, with each about 140% the national average. TheImmediate area does have a slightly higher index than the other two areas. All three areas havea slightly lower number of rounds played per resident than the national average. This is mostlikely due to the short golf season in the Cleveland area.

Supply

The following table shows the number of golf facilities by type in the three market areas:

Golf Supply - Number of Golf Facilities

5 miles 10 miles 15 miles

Total facilities 9 27 39

Public facilities 6 22 33

Private facilities 3 5 6

Resort facilities 0 0 0


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As can be seen, one-third of the local facilities are private, compared to 18.5% of the Local and15.3% of the Regional. This also compares to 26% for the national average. Again, this is agood indicator of the affluence of the immediate area. The story is similar when we examine the

total number of holes, instead of number of facilities. Thirty percent of the local golf holes areprivate, compared to 17% and 14.6%

Golf Supply - Number of Holes


Total holes 180 531 738 268,443

Public holes 126 441 630 191,214

Private holes 54 90 108 77,229

Resort holes 0 0 0 25,155

Next we look at the public facilities and break them down by price point.

Golf Supply - Number of Golf Facilities by Price Point


Public facilities 6 22 33 11,633

Premium facilities (>$70) 0 0 0 1,300

Standard facilities ($40-$70) 1 5 12 3,857

Value facilities ($70) 0 0 0 28,683

Standard holes ($40-$70) 18 126 252 73,602

Value holes (


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The story is similar when we examine the total number of holes, instead of number of facilities.

Golf Supply - Number of Holes


Total holes 180 531 738 268,443

Public holes 126 441 630 191,214

Private holes 54 90 108 77,229

Resort holes 0 0 0 25,155

Golf Supply - Public Holes by Type


Public holes 126 441 630 191,214

Daily fee holes 81 360 504 151,065

Municipal holes 45 81 126 40,149

Supply and Demand

Perhaps a more telling way of looking at the data is to look at the number of households foreach type of facility. Given that golf participation is similar across the area, using householdsshould produce equivalent results to using actual number of golfers.

Households Per 18 Holes


Households per 18 Holes: Total 5,967 7,175 9,478 7,933

Households per 18 Holes: Public 8,524 8,640 11,102 11,137Households per 18 Holes: Private 19,890 42,334 64,764 27,575

There are 16.8% fewer households per 18 holes of golf in the immediate area than the Localand 37% fewer than in the Regional area, suggesting a lower demand per facility. However,when looking at just the public golf holes, we find that Immediate area has a similar demand tothe Local area, although 23% less than the Regional area or national average.

Households Per 18 Holes: by Price Point


Households per 18 Holes: Premium (>$70) NA NA NA 74,245

Households per 18 Holes: Standard ($40-$70) 59,669 30,238 27,756 28,934Households per 18 Holes: Value (


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Households Supply Indices (per 18 Hole Facility)

5 miles 10 miles 15 miles U.S.HH Supply Index: Total 76 91 120 101

HH Supply Index: Public 76 77 99 99

HH Supply Index: Private 74 158 242 103

HH Supply Index: Premium (>$70) 0 0 0 94

HH Supply Index: Standard ($40-$70) 197 100 92 96

HH Supply Index: Value (


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Other notes: Age: The courses are all older, with the newest being the Red/White at Meadowood

at 34 years. The average age is 48.8 years. This is significant, as golfers tend to

prefer newer courses. Length: The courses are generally short, with none over 7,000 yards and only three

over 6,500 yards.

Tees: Meadowood is the only facility with just one set of tees. North Olmstead hastwo, and the rest have at least three,

Green Fees: The average weekday green fee is $23.50, ranging from Meadowoods$16.50 to Sweetbriars $36. The next lowest to Meadowood is Links at $20. On theweekend, fees range from $18 (Meadowood) to $43 (Sweetbriar), with an average of$26.31.

Local Area

Fourteen public golf courses are between 5 and 10 miles from Meadowood. These include twofacilities with multiple courses: Emerald Woods with three and Mallard Creek with two, for a totalof 17 courses. Of these, one is a Par 3 (Aqua Marine), three would be considered Executive(Little Met, Mastick Woods and Emerald Woods Walk in the Park), with the rest beingRegulation. Five of the courses are 9-hole (Little Met, Mastick Woods, Walk in the Park, CherryRidge, and Aqua Marine). Three of the facilities are municipally owned, all by ClevelandMetroparks.

Local Area Primary Competitors

Course Name City Type # Holes

Yr

Built Age

M

Par

#

Tees

BackTee

Yard

BackTee

SlopeLittle Met Cleveland MU 9 1924 88 68 2 5,030

Big Met Cleveland MU 18 1926 86 72 3 6,524 114

Mastick Woods Cleveland MU-E 9 1955 57 62 2 3,800

Emerald Woods - 1&2 Columbia Station DF 18 1978 34 70 3 6,612 114

Emerald Woods - 3&4 Columbia Station DF 18 1963 49 72 3 6,360 122

Emerald Woods - Walk Columbia Station DF 9 1978 34 68 1 4,256

Royal Crest Columbia Station DF 18 1966 46 71 3 6,746 115

Hickory Nut Golf Club Columbia Station DF 18 1967 45 71 2 6,344 118

Dorlon Columbia Station DF 18 1971 41 72 4 7,191 125

Mallard Creek 1&2 Columbia Station DF 18 1992 20 72 4 6,638 115

Mallard Creek 3&4 Columbia Station DF 18 1996 16 72 4 6,307 115

Creekwood Columbia Station DF 18 1960 52 72 3 6,154 116Pine Brook Grafton DF 18 1972 40 70 3 6,062 113

Cherry Ridge Elyria DF 9 1931 81 70 6,626 113

Spring Valley Elyria DF 18 1926 86 72 3 6,556 128

Avon Dale Avon DF 18 1974 38 71 3 6,258

Aqua Marine Avon DF-P 9 2007 5 54 3 2,668

TOTAL / AVERAGE 5 261 1963.9 48.1 69.4 2.9 5,890 117.3

MU Municipal; DF Daily Fee; E Executive length; P Par-3


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NGF offers other observations regarding the Local area courses below. It is notable and ironicthat the least expensive facility in the Immediate and Local areas (the subject Meadowood) islocated in the most affluent community.

Age: As with the immediate area, almost all of the Local area courses are older, withan average age of 48.1. Aqua Marine, which is a 9-hole Par 3 built as an amenity fora condo development (and getting very little outside play), is the newest, being builtin 2007. Mallard Creek is the next newest, being built in the 1990s. On the otherhand, four of the courses are more than 80 years old.

Length: Only one course, Dorlon, tops 7,000 yards, with an average length of just5,890 from the back. Four other courses are over 6,500 yards.

Green Fees: Green fees averaged $22 during the week and $25.96 on weekends.Mastick Woods, at $17 and $21, was the least expensive.

Regulation CoursesFor this analysis, we combined the Regulation length courses in the Immediate and Local areas,a total of 20 Regulation courses, located on 16 different facilities. Only two of these,Meadowood Yellow and Cherry Ridge, have nine holes. The relevant findings:

Age: Only Mallard Creek, at 16 and 20 years of age, is less than 30 years of age; theaverage age is 50. Again, players tend to prefer newer courses.

Cart Paths: About half of the facilities have cart paths tee to green (all around).Notably, these were the highest performing facilities. In fact, the six courses thatreported rounds and full cart paths averaged 29,167 rounds last year, compared to12,179 for the three reporting rounds and not having cart paths. While we would notclaim the cart paths alone are responsible for the improved performance, it is likelythat golfers prefer the more upscale facilities that have cart paths. Meadowoods lackof cart paths may be a competitive disadvantage.

Tees: Meadowood is the only facility with just one tee; all others have at least three.The lack of other tees limits Meadowoods ability to attract a wider market,particularly women and lower-handicap golfers.

Length: The average length from the back tees was 6,384, ranging from Yellows5,270 to Dorlons 7,191. Only one other course, Bob-O-Link 2, was less than 6,000yards (5,606), while 10 are over 6,500 yards. Yellows length places it at a majorcompetitive disadvantage.

Difficulty: The USGA utilizes the slope index as a measure of a courses difficulty;the slope scale is based on a national average for all courses and tees of 111.Slopes over 130 are considered very difficult, and under 100 very easy. The averageslope from the back tees was 118.2, ranging from 113 at Sweetbriar, Pine Brook,and Cherry Ridge to 128 at Bob-O-Link and Spring Valley. At 118, the Yellow courseis right at average for these facilities. It is notable that none are over 130.

Middle Tees: The middle tee location generally gets over 50% of the play, and inmany cases the average is closer to 70%. Typically, the preferred distance for mostmale golfers from the middle tee is 6,000 to 6,300 yards. For these courses, theaverage was 6,009 yards, ranging from Yellows 5,270 to Hilliards 6,389. Five otherfacilities were less than 6,000 yards (Bob-O-Link 2: 5,212; Springdale: 5,691;Sweetbriar: 5,728; Pine Brook: 5,741; and Avon Dale: 5,993). Again, Meadowood isat a competitive disadvantage.


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Senior Tees: Senior tees, in a four or more tee setup, are tees designed for seniormales and are normally around 5,500 yards (ideal range 5,300 to 5,600). This is theyardage most preferred by senior players. Notably, seniors are reluctant to play from

the forward tee as many of them still consider them ladies tees and thus they havea stigma attached to them. (Courses have been moving away from calling theforward tees ladies, but the label still is remembered by seniors). Five of thecourses (Hilliard Lakes, Sweetbriar Legacy, both Mallard Creek courses, andCreekwood) have senior tees.

Forward Tees: The forward tee is used mostly by women and juniors. Unfortunately,many if not most facilities are unfriendly to women because of the length from theforward tees. Given that women hit the ball about 70% as far as men, and given themost popular yardage for men is between 6,000 and 6,300 yards, the equivalentyardage for women would be 4,200 to 4,410. (Even if we assume a 75% difference inlength, the yardages would be 4,500 to 4,725). Yet the average length for thesecourses from the forward tee is 5,176 yards. Seven courses had yardages under5,000: Bob-O-Link 2, Sweetbriar (both courses), Emerald Woods 3&4, Mallard Creek3&4, and Creekwood. On the other hand, Royal Crest at 5,903 from the forward teeis the equivalent for women of 7,870 yards. Six others were over 5,400 yards, theequivalent of 7,200 yards for women (less than 4% of male golfers play from over7,000 yards.). Being too long not only hurts the marketability of the course forwomen, but because of the difficulty for women, it will result in a much slower pace ofplay that affects all golfers playing the course. The Yellow course at 5,270 yards isstill the equivalent of a 7,000 plus yard course for women. This is an opportunity lostfor Meadowood. Ironically, the course that is too short for most male golfers is toolong for most women.

Driving Range: Ten of the 16 facilities (62.5%) had driving ranges. None of the

ranges were lighted or had heated stalls. Again, although the sample size is small, itis worth noting the four facilities without ranges reporting rounds averaged just16,529 rounds per course, while the six courses reporting rounds and having a rangeaveraged 30,167 rounds. Along with the cart paths, this does seem to indicategolfers prefer a fully amenitized facility.

Cart Fee: The average cart fee for 18 holes of golf was $12.18. At $14.50,Meadowood has the highest cart fee and is at a competitive disadvantage. No otherfacility charged more than $13.

Green Fees: The average weekday green fee was $24.23, ranging fromMeadowoods $18 to Sweetbriar Legacys $36. No other course charged less than$20. On weekends, the fees ranged from $19.50 at Yellow to $43 at Legacy, with anaverage of $28.13. The next cheapest course was at $25. There would appear to be

considerable room for increasing fees at Meadowood, especially with improvementsto the playing experience.

Weekend Difference: The average increase for weekend green fees was16.1%. Meadowood had an 8.3% increase. Only Bob-O-Link (4%) andEmerald Woods (8%) were less. Five courses had over a 25% increase.

Seniors: The average rate for seniors was $16.87, ranging from $10 at PineBrook to $21 at Legacy. Meadowood was at $15. The average seniordiscount was 29.5%, with Meadowood having the third smallest at 16.7%.Only Hickory Nut (10%) and Avon Dale (15%) were less.


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Nine-hole Weekday: The average 9-hole weekday rate was $14.12. Yellowwas closer to average at $12.50, still the cheapest, but not by as much. PineBrook was next at $12.75. The nine-hole rate averaged 61% of the 18-hole

play. Meadowood was one of the highest at 69.4%.

Rounds: Eleven courses provided rounds information, averaging 28,983 rounds in2011. The Yellow course, at just 3,136, was by far the worst performing, with thenext lowest course reporting 17,400. The average decrease from 2010 to 2011 was28.3%. Again, Yellow had the worst performance, with a drop of 55.9%. Threecourses had a drop of only around 16%, representing the smallest decrease.

Women: We asked the pros to estimate the amount of play from women (noone tracked this statistic). The average was 12.3%. Yellow, at 5%, was tiedwith two other courses at the lowest percentage of play by women.

Seniors: The average reported percent of play from seniors was 37.7%,ranging from a low of 16% to a high of 75% (one of the shortest courses).

Yellow was close to average at 35%.

Juniors: The average reported percentage of play from juniors was 7.8%,ranging from 1% to 20%. Meadowood reported 10%.

Leagues: Leagues account for a large percentage of play at most of thefacilities, with an average of 28.9% of the play. Meadowood, at just 2%, wasat the bottom. The highest rate was 60%.

Tournaments: Non-league tournaments and outings accounted for 19.5% ofplay. Again, Meadowood was at the bottom with just 1%. Two facilities had40% of the play from tournaments and outings. Tournaments are importantbecause they not only represent good revenue (often at higher than the

average rate), but also represent a great marketing opportunity as they bringnew golfers to the course. With only nine holes and no range, Meadowood isat a major competitive disadvantage for attracting tournaments.

Nine-hole play: Notably, the facilities reported an average of over 50%(52.9%) of all play was just nine holes. This is largely due to the high leagueparticipation. It also represents a much higher rate than what is seen on anational level. Not surprisingly, Yellow had the highest percentage at 98%.Only one facility reported having less than 10% of their play being nine holes.

Revenue/Round: Only five facilities in addition to Meadowood reported revenue perround figures. The average for these six facilities was $30.18. Meadowood, at$20.90, was near the bottom.

Merchandise: The average merchandise sales/round was $2.03; Meadowoods$0.24 greatly curving this figure, as the next lowest was $1.20. When Meadowood isexcluded, the other facilities averaged $2.43/round.

Food and Beverage: The average F&B revenue per round was $5.05. Only onecourse was less than Meadowoods $2.58. One course reported $18/round, with theother two at around $4/round.

Executive Courses

For this analysis, we combined the Executive length courses in the Immediate and Local areas.We excluded Aqua Marine because it is a Par 3 and gets very little play from outside itsadjacent development. We did include Washington Golf Center (operated by Cleveland


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Metroparks), since it is the closest comparable facility to the one being proposed forMeadowood. This yields a total of seven Executive courses that were examined by NGF. Fourof these are municipally owned and operated. The key NGF findings from this segment include:

Number of Holes: Only two of the seven facilities had more than 9 holes:Meadowood (Red/White) and Links.

Age: The average age is 44 years, ranging from just six years old (Washington) to88 years old (Little Met).

Cart Paths: Only Washington Learning Center offered cart paths from tee to green.

Tees: Meadowood and Emerald Woods Walk-in-the-Park were the only golf courseswith just one tee. Three had two tees and two (Links and Washington) had three.

Par: The average par for men was 62.6. Washington (58) and Meadowood (57) werethe only two under 60. Little Met was the only course with a higher par for women(70).

Difficulty: Only three of the courses were rated with a formal USGA slope rating(measure of difficulty): Meadowood, Olmstead and Little Met. Of the three,Meadowood was rated the easiest with a slope of 80. At that level of difficulty,Meadowood would have maximum appeal to beginners and less skilled players,while likely having difficulty attracting good players.

Driving Range: Only two of the courses, Links and Washington, had a driving range.Neither was lighted, but Washington does have five heated stalls.

Cart fee: The average cart fee for 18 holes of golf was $12.83. Meadowood, at $13,was close to the average.

Green Fees: There was little variation in green fee pricing among the sevenfacilities. The average weekday green fee was $17.92, ranging from Emerald Woods

$16 to Links $20. Meadowood, at $16.50, was the second cheapest. On weekends,the fees ranged from $16 at Emerald Woods to $23 at Little Met and Washington,with an average of $20.50. Meadowood, at $18, was the second cheapest. Again, itappears that there may be room to adjust the fees higher at Meadowood.

Weekend Difference: The average increase for weekend green fees was14.1%. Meadowood had a 9.1% increase. Only Emerald (0%) was lower.Three courses had 20% or more increases.

Seniors: The average rate for seniors was $13.20, ranging from $12 atEmerald to $15 at Little Met and Washington. Meadowood was at $13.50.The average senior discount was 21.8%, with Meadowood having thesmallest at 18.2%.

9-Hole Weekday: The average 9-hole weekday rate was $9.50. Meadowoodwas actually the second most expensive at $11, behind only Links. Given thatthe vast majority of play on these courses is 9 holes, Meadowood is actuallyone of the most expensive to play. The 9-hole rate averaged 53% of the 18-hole play. Meadowood was the highest at 66.7%.

Rounds: Four courses provided rounds information, which averaged 17,797 roundsin 2011. Meadowood Red/White, at 12,546, was higher only than WashingtonLearning Center. Given that Meadowood has 18 holes (two 9-hole courses) and theother three had only one 9 hole course, Meadowoods performance is comparativelyeven worse. In comparing 2010 and 2011 rounds, the average decrease was 23.6%.Meadowood, at 24.4%, was just slightly more than average. It is interesting that the


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Executive courses averaged a smaller loss than the Regulation courses, althoughMeadowoods own Yellow course helped distort the value for the Regulation courses.

Women: We asked the pros to estimate the amount of play from women. The

average reported was 21.4% (much higher than for the Regulation courses).Meadowoods Red/White reported in at 30%, the highest for those surveyed

Seniors: The average reported percent of play from seniors was 22.7%,ranging from a low of 9% to a high of 40% (Meadowood).

Juniors: The average reported play from juniors was 18.4%, ranging from10% to 40%. Meadowood reported 20%. It is noteworthy that the Executivecourses are reporting twice the play from juniors as the Regulation course.

Leagues: Leagues account for 19.9% of the play on average. Meadowoodreported the highest percentage, by far, at 60%. The next highest was just at15%. On average, it would appear that leagues prefer the Regulation courses

to the Executive. Tournaments: Non-league tournaments and outings accounted for just 2.9%

of the play. Again, Regulation courses are clearly the preferred venue.

9-hole play: Not surprisingly given most of the facilities are 9-hole courses,9-hole play dominated, with an average of 92% of the play. Meadowoodreported 95% of their play came from 9-hole rounds. However, the other 18-hole Executive course, Links, had 70%.

Revenue/Round: A total of four facilities reported revenue per round figures, allmunicipal courses. The average for these facilities was $16.79, ranging from $11.51at Little Met to $31.64 at Washington, which was boosted considerably by the range.Meadowood was at $12, which is similar to both Little Met and Mystic Woods.

Merchandise: The average merchandise sales/round was $0.94. Meadowood at$0.24 was the lowest, with the next lowest at $0.75.

Food and beverage: The average F&B revenue per round was $0.98. Meadowoodwas highest at $1.60, with Little Met at the bottom at $0.44.

Driving Ranges

There are only three stand-alone driving ranges within the market area, All American Sports inNorth Ridgeville, Golden Tee in Olmstead and West Pines in Avon. The three ranges are verysimilar in nature and apparent target market, as well as in price. All American and West Pinesboth offer about 80 tees, with one-fourth being covered and heated. Golden Tee has only 30stations, with none covered or heated. Only All-American is lighted for night use, but they do not

use the lights much as they stop selling balls at 8:30 pm.

Local Area Driving Range Competitors

Small Medium Large

CityTotalTees

#Heated Lighted # Price # Price # Price

All American Sports CenterNorth

Ridgeville80 20 yes 40 $5.00 75 $7.00 110 $9.00

West Pines Golf Range Avon 80 20 yes 30 $4.50 75 $6.50 110 $8.50

Golden Tee Olmstead 33 0 no 30 $4.00 50 $5.00 80 $8.75


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None of the ranges has target greens and all appear to be maintained at a below-average level.Each facility is offering lessons or lesson programs (camps, schools, etc.), but none has an

extensive short-game practice area. We also understand that one of the ranges, West Pines, isfor sale and may be closing soon as the land is being sold for development. Golden Tee issupposedly closing in two years for development. This should certainly increase the localdemand for a good practice facility. Given the affluence of the Westlake area, there wouldappear to be demand for an upscale driving range featuring heated stalls, target greens, and ashort game area.

Summary Cleveland Metroparks Facilities

Given the overlap in market areas and because Metroparks operates Regulation and Executivecourses, as well as Washington Learning Center, which is a very similar in scope to the facilityproposed in Option Three, we felt a closer examination of performance of this system was in

order. It should be noted that all eight facilities in the Cleveland Metroparks golf system lostmoney last year, with an average loss of $126,075 (excluding Seneca, which was open onlypart of the year), with average revenue of $551,094 and rounds of 26,830.

Regulation vs. ExecutiveWe compared data for three Regulation facilities (Big Met, Sleepy Hollow and Manakiki) withthree Executive courses (Little Met, Mastick Woods and Washington Learning). Shawnee Hillswas not used because of being unable to separate revenue from the Par 3 and Regulationcourse. Seneca was not used because of incomplete data. The three Regulation courses are all18-hole facilities, while the three Executive courses have only nine holes each.

The Regulation courses averaged 38,392 total rounds, or more than double the 17,797 for theExecutive courses. The three Regulation courses produced an average of $994,944 in revenuelast year, over triple the $287,707 for the three Executive courses. This is likely due to theRegulation courses having a much higher percentage of 18-hole play (more expensive) at 45%,compared to just 2% for the nine-hole Executive courses. There is also a large difference inrevenue per round, with the Regulation courses averaging $25.89/round compared to $16.17 forthe Executive courses. Green fees averaged $14.68/round on the Regulation compared to$7.38 on the Executive. Cart fee/round was nearly triple for the Regulation courses ($6.22 vs.$2.26). Merchandise revenues were about double ($2.05 compared to $1.04), while food andbeverage was about 1.5 times higher ($1.32 vs. $0.79).

Regulation courses averaged nearly three times the expenses as the Executive courses, withan average of $1,140,718 compared to $403,799, suggesting they were being maintained at amuch higher level. As a result, the Executive courses actually had a better financialperformance, with an average loss of $126,092 compared to $136,774 for the Regulationcourses.

It is clear that there is a much stronger demand for 18-hole Regulation courses than for 9-holeExecutive as seen from the rounds performance. However, from a financial perspective, theExecutive courses, especially if they had a range, did slightly better than the Regulationcourses.

It should also be noted that in terms of revenue, Meadowood, although having a nine-holeRegulation course, resembled the Executive courses more in terms of both revenue and NOI.


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Driving RangesThree of the Metroparks facilities have driving ranges - Sleepy Hollow, Shawnee Hills, andWashington. These ranges averaged $93,996 in revenue or $4.69/round of golf. Washington

had the highest revenue per round at $8.84, with the 2nd highest revenue at $104,687.

Shawnee HillsShawnee Hills is noteworthy because it has both an 18-hole Regulation course and a 9-holePar-3. While we cannot separate revenue, we can separate the rounds for the two courses. TheRegulation course produced over three times as many rounds, with 36,830 compared to 10,240.

Washington Learning CenterWashington Learning Center is relevant, as it is the facility that most resembles that proposedfor Westlake Meadowood in Option Three. This facility has a par 58 Executive course coupledwith a modern range and covered and heated stalls; it is very narrow and has netting on bothsides. We note that Meadowood may require netting on one side if Option Three is undertaken,

but it will be nearly twice the width in back as the range at Washington.

Notably, Washington had the best NOI (smallest loss) of the eight facilities (-$82,894), althoughit still lost money. More significantly, perhaps, is the fact that the range generated more money($104,637) than the course produced in green fees ($84,345). This is very encouraging in termsof range performance, especially in light of the fact that Washington is located in an immediatemarket area with much lower expected golf participation than the subject Meadowood GC.

MARKET ANALYSIS SUMMARY

The following points summarize the NGF review of the local market area and the external(uncontrollable) factors and their potential effect on the continued operation of the MeadowoodGolf Course in consideration of changes being proposed.

The national trends in golf participation are generally unfavorable to golf operators.One key to increasing demand is to stimulate greater interest in golf among inactivepopulations through beginner-oriented programs and facilities. Meadowood GolfCourse appears to be a great fit to provide this service, especially with the practiceadditions being proposed.

The demographics of the local Westlake, Ohio area show a large population ofgenerally affluent households. The higher incomes observed in the market area aregenerally consistent with higher-than-average participation in golf.

There is a potentially large golf economy in the Westlake market area with thedemographics as noted above. While the demand estimates prepared by NGF show

that households in the Westlake area are more likely to contain golfers, the totaldemand in rounds played is slightly lower than average due to a shorter golf season.Anything that can be done to stimulate increased winter golf activity, such as addingheat and a cover to a driving range, will have a positive impact on golf facilityrevenue.

A large supply of golf facilities are in the market area, many of which are directlycompetitive with the Meadowood facility as it stands today, or how it would be ifalterations are made as proposed.

However, there does appear to be a market opportunity to provide a high-quality golfdriving range and practice facility, as there is generally a limited number of facilitiesof this type in the area.


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Review of Alteration OptionsIn this section, NGF Consulting will provide a summary review of the three options we haveconsidered for alteration of the Meadowood facility. The options evaluated include:

Doing nothing and leaving the course as is (Status Quo)

Renovating the Yellow course

Closing the Yellow course and replacing it with a modern practice facility.

OPTION ONE: STATUS QUO

This option assumes that no intervention takes place and the facility continues to operate as it isnow, with no significant capital improvements.

OPTION TWO: IMPROVE THE YELLOW COURSE

The objective of Option Two is to make the Regulation course more competitive by makingsubstantial capital improvements to the course. Because money is expected to be limited to nomore than about $1.5 to $1.7 million, the improvements would fall short of a completerenovation. For example, the existing layout would be preserved and only seven of the greenswould be renovated. These improvements would include:

Length: Where possible, the City would attempt to add the overall length to the golf

course. However, without a complete renovation, rerouting and possible additionalland acquisition, it is unlikely that the course will be able to add much more thanabout 200 yards. This still results in a course too short to be competitive amongRegulation length facilities.

Irrigation: Replacing the entire irrigation system with a modern, automated system,would also include expanding the irrigation lake and may require an additionalsource of water.

Greens: Rebuilding the seven non-USGA greens. To save money, they would likelybe rebuilt as California greens (a type of green) rather than to USGA standards.

Fairways: Fixing the drainage problems on the fairways.

Tees: Rebuilding the existing tees to increase size and improve conditions. Addingat least two more sets of tees to increase market share.

Cart Paths: With limited funds, it is likely cart paths would be installed only aroundgreens and tees.

Bridges: Replacing existing bridges that are literally falling apart.

Features: Adding more features to the course such as bunkers to improve bothaesthetics and perceived difficulty.

NGF expects that a complete renovation as detailed in Option Two would cost the City a totalinvestment of approximately $2.2-$2.4 million.


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OPTION THREE: PRACTICE FACILITY

The Option Three calls for replacing the Yellow course with a modern and comprehensive

practice and teaching facility. Key elements to be included in this new facility include:

A large driving range that potentially could be lighted for twilight and night use. Therange would have at least 40 stations, with at least 20 covered and 10 heated. Therewould also be top quality target greens.

A large putting green

A short game area

Additional options may include:

A putting course

An indoor teaching facility

Video-equipped stalls for teaching

A teaching tee at the back of the range

Netting along the right side of the range

The driving range would be located near the clubhouse and replace much of the Yellow course.However, there would likely be about 12-15 acres at the northeast corner of the property thatwould no longer be needed for the golf course. This land presumably could be repurposed, suchas converted into a park or into soccer fields. NGF Consulting expects that the cost to developOption Three would be approximately $600,000.

COMPARISON OF OPTIONS

In this section, NGF will compare the three Options in terms of cost and cash flow projectionsover the next five years. The key assumptions used in creating our projections include:

Average weather (not like last year).

Construction costs for the project will be similar to today.

3% annual inflation on operating costs.

Basic City operations will not change fundamentally in any of the Options.

Construction in Options two and three would occur in 2013, resulting in the closing ofthe Yellow course for the season.

Construction estimates are rough approximations only. The City is encouraged toconsult with an ASGCA architect for more precise estimates.

Performance projections for 2012 is the same for all three Options.

We did allow for some advertising expense in Options 2 and 3 to promote thechanges. However, the amount allocated (about $20,000/year) is still well below ourrecommended amount.


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Option One: Status Quo

The Status Quo Option assumes there are no significant capital improvements or operational

changes over the next five years. Because 2011 was such a bad year, we are projecting thisyear to be better, although not quite reaching 2010 levels. Performance will then continue todecline with deteriorating conditions. This slide can easily be worse than projected, should theCity reduce funding to the golf course further, which would accelerate the decline in conditions.

A detailed table for the cash flow projections immediately follows. We will summarize the resultsbelow.

In 2012, we are anticipating a total of 20,000 rounds, with 4,500 on the Yellow course and therest on Red and White. Total revenue is expected to reach $381,000. An $18,080 cost of salesresults in a gross profit of $362,593, which is actually slightly better than in 2010, although withfewer rounds. Expenses total $398,740, which is about $15,000 less than in 2010, resulting in a

Net Operating Loss of $35,820.

However, rounds continue to fall the following years at a gradually accelerated pace. By 2016,rounds will have fallen to 12,352, and the Gross Profit to $325,515. Expenses will increase withinflation to $467,442. As a consequence, the Net Operating Loss increases to $141,927.

Over the next five years, we are projecting a total operating loss of $412,687. Again, this likelywill be worse as many municipalities with the golf course as an Enterprise fund elect to react todeclining revenue by slashing expenses. Should this happen, the amount of loss will likely be fargreater as revenues will decrease by a greater amount than the savings on expenses.


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Option One Projected Facility Performance 2012-2016

Meadowood Golf Course Option OneActual and Projected Revenue and Expense 2010-2016

2010 2011 2012 2013 2014 2015 2016 Five Yr

Rounds 24,126 12,369 20,000 19,400 18,430 17,324 15,938 91,092

Yellow 6,755 2,721 4,500 4,365 4,147 3,898 3,586 20,496

Red/White 17,371 9,648 15,500 15,035 14,283 13,426 12,352 70,597

Revenue

Golf $258,814 $183,306 $275,000 $274,753 $268,845 $260,296 $246,657 $1,325,550

Riding Carts $41,347 $25,479 $37,000 $36,967 $36,172 $35,022 $33,187 $178,347

Pull Carts $8,416 $6,417 $9,000 $8,992 $8,799 $8,519 $8,072 $43,382

Food & Beverage $40,712 $31,910 $40,000 $39,964 $39,105 $37,861 $35,877 $192,807

Golf Merchandise $4,441 $2,911 $4,000 $3,996 $3,910 $3,786 $3,588 $19,281

Other $27,477 $8,475 $16,000 $15,986 $15,642 $15,144 $14,351 $77,123

Total $381,207 $258,499 $381,000 $380,657 $372,473 $360,628 $341,731 $1,836,490

Cost of Sales

Food & Beverage $19,379 $16,167 $15,200 $15,186 $14,860 $14,387 $13,633 $73,267

Merchandise $2,880 $2,877 $2,816 $2,726 $2,583 $13,882

Total $19,379 $16,167 $18,080 $18,064 $17,675 $17,113 $16,217 $87,149

Gr oss Pr ofi t $361, 828 $242,33 2 $362, 92 0 $362, 59 3 $354, 798 $343, 515 $325, 515 $ 1, 749, 341

Course Maintenance Expense

Payr oll $163,460 $150,104 $158,000 $164,320 $170,893 $177,729 $184,838 $855,779

Leases $840 $765 $840 $874 $909 $945 $983 $4,550

Equip Maint $13,340 $13,763 $14,000 $14,560 $15,142 $15,748 $16,378 $75,829Grounds Maint $6,504 $210 $6,000 $6,240 $6,490 $6,749 $7,019 $32,498

Irrigation $2,999 $204 $1,500 $1,560 $1,622 $1,687 $1,755 $8,124

Supplies $237 $300 $300 $312 $324 $337 $351 $1,625

Gasoline $6,784 $8,604 $10,500 $11,130 $11,798 $12,506 $13,256 $59,189

Other $767 $0 $2,500 $2,600 $2,704 $2,812 $2,925 $13,541

Fertilizers /Chemicals $16,607 $20,590 $20,000 $20,800 $21,632 $22, 497 $23,397 $108,326

Subtotal $211,539 $194,539 $213,640 $222,396 $231,514 $241,011 $250,901 $1,159,461


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Meadowood Golf Course Option OneActual and Projected Revenue and Expense 2010-2016

2010 2011 2012 2013 2014 2015 2016 Five Yr

Golf Operations Expense

Payr oll $142,452 $131,218 $137,500 $143,000 $148,720 $154,669 $160,856 $744,744

Leases-carts $15,670 $9,463 $9,500 $9,880 $10,275 $10,686 $11,114 $51,455

Sport Programs $5,454 $1,867 $3,000 $3,120 $3,245 $3,375 $3,510 $16,249

Subtotal $163,576 $142,547 $150,000 $156,000 $162,240 $168,730 $175,479 $812, 448

General & Administrative ExpenseUtilities $26,410 $21,917 $24,500 $25,480 $26,499 $27,559 $28,662 $132,700

Advertising $0 $0 $0 $0 $0 $0

Building Maint $1,956 $1,531 $1,800 $1,872 $1,947 $2,025 $2,106 $9,749

Meetings/Seminars $850 $85 $100 $104 $108 $112 $117 $542

Computer Maint $200 $208 $216 $225 $234 $1,083

Office Supplies $297 $187 $250 $260 $270 $281 $292 $1,354

Postage $13 $10 $50 $52 $54 $56 $58 $271

Building Improvements $0 $0 $0 $0 $0

Expenses $6,536 $7,039 $7,000 $7,280 $7,571 $7,874 $8,189 $37,914

Technology Allocation $0 $0 $0 $0

Licenses $1,268 $1,177 $1,200 $1,248 $1,298 $1,350 $1,404 $6,500

Subtotal $37,330 $31,946 $35,100 $36,504 $37,964 $39,483 $41,062 $190,113

TOTAL E XPE NS ES $4 12 ,4 45 $3 69 ,0 32 $3 98 ,74 0 $ 4 14,90 0 $ 43 1,71 8 $ 449 ,2 23 $ 46 7,44 2 $ 2,16 2,023

Net Operating Income(Loss) ($50,617) ( $126, 700) ( $35, 820) ($52, 306) ($76,921) ($105, 708) ( $141, 927) ($412, 682)


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Option Two: Renovating the Yellow Course

Option Two involves renovating the Yellow course to bring it closer to modern standards. In

these projections, we are using an anticipated budget of $1.0 to $1.2 million, which weunderstand is a little more than what is being planned. However, we feel this is the minimumamount of investment needed to make improvements that will result in a long-term improvementin performance.

Construction CostsBelow is an anticipated breakdown in costs for the renovation. Some of this work may be donein-house at considerable cost savings, such as the bunker and tee additions.

QuantityUnitCost

EstimatedExpense

Greens 7 $27,500 $192,500

Irrigation System $500,000Bunkers - new 7 $15,000 $105,000

Bunkers - renovate 6 $6,000 $36,000

Cart Paths $150,000

Bridges 4 $10,000 $40,000

Tees (new) 18 $12,000 $216,000

Tees (renovate) 9 $5,000 $45,000

Drainage $50,000

Other $50,000

Subtotal $1,384,500

Architect/Engineer 7% $96,915

Contingency 10% $148,142

TOTAL $1,629,557

ProjectionsWith the Yellow course being closed in 2013, rounds are projected to decline. However, we doanticipate greater use of the Red/White courses with the closing of the Yellow. Helping tobalance out the loss of revenues are decreased maintenance costs with the closing of theYellow course. However, the drop is expected to only be around $40,000. Golf operations andG&A should be unaffected. For 2013, we project revenue of $336,018 off of $17,125 with aGross Profit of $320,073. Operating expense of $359,910 will leave a Net Loss of $49,837.

In 2014, maintenance costs are assumed to increase as the Yellow course should bemaintained at a higher standard than present or as the Red/White course. We are estimating an

increase to $303,909. However, revenue will also jump, going to $519,923 with the opening ofthe new Yellow course (which we hope will be renamed). We project 10,500 rounds the firstyear on the new Yellow, which when coupled with the Red/White course yields a total of 26,769rounds. Rounds will increase significantly over the next couple of years on the new Yellow,reaching 12,000 rounds in 2016, where it should stabilize. However, we also anticipate theRed/White course increasing play with the increase in advertising and the exposure from thenew Yellow. We also anticipate better course conditions as revenues improve.

In 2014, we are projecting a Net Operating Loss of $52,922, which is similar to 2013. However,starting in 2014, the facility should turn profitable, yielding a positive NOI of $75,290 in 2015 and$111,276 in 2016. For the five-year period, we project a positive NOI of $46,997. A detailedtable for the cash flow projections immediately follows.


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Option Two Projected Facility Performance 2012-2016

Meadowood Golf Course Option Two (Yellow Course Renovation)Actual and Projected Revenue and Expense 2010-2016

2010 2011 2012 2013 2014 2015 2016 Five Yr

Rounds 24,126 12,369 20,000 17,125 27,838 28,500 30,250 123,713

Yellow 6,755 2,721 4,500 10,500 11,250 12,000 38,250

Red/White 17,371 9,648 15,500 17,125 17,338 17,250 18,250 86,588

Revenue

Golf $258,814 $183,306 $275,000 $242,533 $384,158 $470,250 $514,099 $1,886,039

Riding Carts $41,347 $25,479 $37,000 $32,632 $54,636 $94,050 $102,820 $321,137

Pull Carts $8,416 $6,417 $9,000 $7,937 $13,290 $14,014 $15,321 $59,562

Food & Beverage $40,712 $31,910 $40,000 $35,278 $59,066 $62,285 $68,093 $264,722

Golf Merchandise $4,441 $2,911 $4,000 $3,528 $5,907 $6,229 $6,809 $26,472

Other $27,477 $8,475 $16,000 $14,111 $23,626 $24,914 $27,237 $

Documents

Meadowood Feasibility Study