Jeremy Sturgess on his adventure golf course at Trent Park.
Both sites are extremely busy and he is on the verge of transforming Broome Manor into the first triple-decker golf range in the UK.
He likes to combine various leisure offerings within the same complex to give diverse opportunities for all the family. This has proved hugely successful at both venues and the revamped site at Swindon will surely set the tone for golf and leisure facilities in the 21st-century.
Golf Features: How did you first get into the golf business?
My first business partner and mentor, the property tycoon Anton Bilton, had encouraged me to leave banking in 1988 to join him “to do deals” and he is the reason I’m in golf. He said to me a few months later, as the London Property Market was in freefall and we were both struggling to do any good deals, “...you like golf Jezza - why don’t you buy a golf course?” That was easier said than done. I was 24, had no money and with interest rates at 15% had just been forced to sell the flat I was living in. After failed attempts to buy first Silvermere (Doug Maclelland took the meeting and very politely told me I wasn’t rich enough and they wanted at least £20m!), and then Ruxley Park (now Orpington Golf Centre) in 1990, I alighted on a 9 hole golf course called Lime Trees Park in West London, which I eventually sold on to Tony Manai Davies in 2004. The sellers of Lime Trees, a hugely wealthy Australian company called Hudson Conway who had just made a cool £100m flipping the Courage Pub Estate in a JV with Elders, but were now pulling out of the UK, were asking £2m for it. I ended up agreeing an effective price of £1.4m on a “No money down” 3 year non recourse deal using a low interest rate vendor loan at a first meeting with the Chairman’s 28 year old son, Mark Carnegie, that took all of 15 minutes! It all happened so fast I didn’t have time to really think what I was getting myself into. I had nothing to lose, but must have been doing something right because a couple of years later in 1992 I managed to borrow 100% from Bank of Scotland to buy Trent Park for £1.4m on the fag end of a 19 year lease from Enfield Council. It took another 22 years before I could find another sensible deal to buy - Broome Manor - but that was worth the wait - and at 56 now I am still just getting started, so if you want to sell your course, do get in touch...
Golf Features: Since then, how has the industry changed and where can you see it going in the years ahead?
The R&A changed everything with their ridiculous “Demand for Golf” report in 1989 which led to massive overcapacity in the industry. That stupidity is still playing out and is not helped by the damaging fiscal distortions in the sector. Private golf clubs are now all effectively public courses competing online for the same visitors as commercial courses and, with the traditional membership model broken, many golf courses need to close for equilibrium supply / demand to be reached. This process will be further delayed by the Covid golf boom that will help the many zombie courses to hang on a few more years.
I think the next few years will see the very top end of the market and the very bottom end price wise (where we are) do well. The middle market - whether private or commercial in secondary locations - will struggle by comparison and many courses will limp on, be closed down, return to farmland or become development sites. Commercial courses will need to be multi activity offering more than just golf to attract the whole family. That’s the space we, and the competitors we admire, are in and provided the locations are good these will thrive. Golf is moving more towards an entertainment model at the mass market end and young people today are rightly not going to put up with the stuffy middle class snobbery that still pervades many golf clubs. Dress codes, blazers and silly rules are out. Entertainment, fun and gameification is in.
The planning system has changed a lot for the worse since I built the driving range at Trent Park. That 1992 planning application cost about £5,000 and included no consultants reports at all. Our recent applications at Broome Manor cost around £80,000 each, with every conceivable kind of consultants report! Really the planning system is a total disgrace and a huge reason why investment and productivity is so low in the UK. The rot started under Tony Blair, but the Tories with their “woke brigade” firmly in control have done nothing to sort it out. I was so incensed I stood for Parliament myself in 2010, but did not trouble the scorers! I will leave it to the vary capable Richard Tice to try and shake things up now.
The other big things that have changed have been the impact of the minimum wage and the reduced availability of senior bank debt for small businesses. Twenty years ago the banks were falling over themselves to lend. Nowadays it’s a different story and although I am better off these days, it’s much harder to borrow money. Banks all seem to want to lend for Buy to Let, but not to proper businesses. And golf is a dirty word at a lot of banks. As for the minimum wage, few staff in the golf business or hospitality are paid more than the minimum these days. It’s hard for good people to choose golf as a sector to work in as the wages of the more senior people like head greenkeepers and managers had to come down to subsidise the lower end.
Golf Features: You have already diversified into five-a-side football pitches at Trent Park. How has this been received by the footballers and also by the golfers whose clubhouse is shared with these new guests?
The members were concerned at Trent Park when we talked of introducing a Football Centre. It’s this ghastly middle class snobbery again that has put off many people from golf. Change is always resisted rather than embraced. Until they realised the football pitches are very busy only between 6-10pm Monday to Thursday. There is so little overlap between the two uses that they hardly notice it now and comfortably share changing rooms as they so rarely overlap. As for the footballers, their only moan is that it’s hard to get a pitch. We have built probably the most successful (on a per pitch basis) football centre in London. It has brought us great footfall, which has helped the other areas of the business and particularly the range, which sits adjacent and is busy during the same hours.
Golf Features: Golf retail has seen many changes over the past few years. How do you approach golf retail at your sites, and do you think that this will change in the years ahead?
I think I may have been one of the first with the on-course golf superstore model in 1991, when I built a pre- let 2,000 sq.ft superstore at Lime Trees for Stuart Dockar at London Golf Centre Ltd. No one else except golf pros were on course at the time. I had also approached American Golf Discount and Ivan Norman and his Dad at Nevada Bobs, but they were both still high street back then and showed no interest. London Golf Centre signed a 25 year FRI lease at £50,000 a year rent and turned over around £1m their second year in 1993 - still a good performance even now. Stuart Dockar was a great operator, but sadly is now retired. These days American Golf lease our two stores. We like them a lot, particularly the new team led by Gary Favell who is very entrepreneurial. It’s a win-win for us both as we are heavily incentivised in the rent deal for them to do well.
Golf Features: Adventure golf has been booming for the last 15 years in the golf sector - what is your experience of this relatively new part of the golf industry? Are you building your new facility at Swindon with any improvements or modifications compared to the one you ave at Trent Park?
I attended the IAAPA show in Orlando in 1991 to specifically research adventure golf to put into Lime Trees Park GC, which I had just purchased. It was clearly a huge success over there but I wasn’t sure the British weather would allow the same success here, so I wasn’t brave enough to build the first proper one in the UK. I’ve never wanted to be the guinea pig. We are still learning how to manage adventure golf properly at Trent Park and have made several mistakes, but are getting better at it. Oliver Mahoney at MAG built it for us and we would use him again at Swindon if we do it ourselves. He is excellent.
Golf Features: How do you operate your food and beverage service at Trent Park and what are your plans for Broome Manor?
I have run F&B in-house in the past, but have more recently outsourced it to tenants. It was always the least profitable and most hassle part of the business. It needs to be run by experts who are passionate about F&B. Outsourcing has enabled me to concentrate on only the really important things - but you always have to be ready to take it back and operate in-house if a tenant lets you down or goes bust.
Golf Features: For a golfing entrepreneur such as yourself, do you think that England Golf is helpful and supportive of your efforts to increase the numbers of golfers, and what more could be done to enhance golf in general?
My thoughts on England Golf are largely unprintable. I am not a fan of unelected quangos staffed by people who know little about business. They have never had any positive impact on my business so I ignore them. I think their latest plans to offer handicaps to nomad golfers will annoy a lot of clubs and is the first step in them getting involved in other areas like promotion of green fees, etc and we don’t need any more Golf Nows in the industry, who (like Booking.com for hotels) have removed all pricing power from individual clubs and skimmed off huge sums along the way.
Golf Features: I understand that you tend to be a hands-off operator, focusing on the key strategic decisions and letting the every day operation of the facilities be handled by others. Can you explain more about how this works and why are you have selected this style of management?
Since 1997 I have mainly lived and worked full time abroad doing projects in France, Egypt, Russia and Ukraine. Golf in the UK is still important but no longer my sole interest as I found it was not an easily scaleable business and I needed to earn more money to keep my show on the road. In the 20 years between 1993 and 2013, I was never able to compete for the same deals with the likes of The Golf Fund, American Golf Corporation, Clubhaus, Playgolf, Crown, Glendale and Mytime, who by overpaying massively for everything they bought have collectively destroyed enough wealth between them to put investors and the banks off golf forever. Thankfully they usually have short memories. Only the Burhill Group (who I admire) of the large multiple UK golf course owners I know of have a decent record of value creation in the industry, and only because they also refuse to overpay, are excellent operators and have a very long term outlook.
These days I live in Cyprus working full time as Chairman of my old friend Anton’s Raven Russia property business there. Raven has a $1.5bn portfolio of logistics warehouse investments in Russia compared to my small UK Golf business with net assets of only £5m. So outsourcing has become an essential part of my golf business model now and I leave all the day-to-day to my excellent small team, which now includes my eldest son Isaac whom I’m training up. I find that being far away allows me to see the real value creation opportunities and focus on them alone. I still keep an eye out for UK golf deals and hope to slowly grow the portfolio further, but am not holding my breath...it’s very hard to do sensible deals in the golf course market as some mug will always overpay!
Golf Features: what sort of operators are you looking for in the new Broome Manor Golf Complex?
We are talking to several people at present including range, football and adventure golf operators. It would be easier to lease up the individual elements separately, but our ideal partner is someone who shares our vision and wants to partner and lease all aspects of the development together as there are synergies between all the three businesses of range, adventure golf and football. With overall development cost of around £3.25m and expected EBITDA post rent of around £1.25m we have lots of interest and hope to conclude something this year so we can start to build in 2022. At Trent Park we partnered with the very wealthy Johnson family to build the football and adventure golf, and in the main this has worked well for both of us with these two businesses on track to (post Covid) achieve pre-rent adjusted EBITDA of circa £600,000 on build cost of about £1.5m.
Golf Features: Do you have any more plans to build golf courses in Egypt or elsewhere?
No, the only course I have been involved in designing and partly building (it’s not finished yet!) has been at Ancient Sands Golf Resort in El Gouna Egypt. That was a special case as I had a very exceptional partner in Samih Sawiris at Orascom. We used Karl Litten as the designer, who was excellent. But building new golf courses is a mug’s game in my view - unless you are Tony Manai Davies who has had huge success. That man is a genius in my opinion. My biggest mistake was selling Tony Lime Trees in 2004 instead of insisting he partner with me to teach me the landfill business. I believe he made a fortune from Lime Trees (much more than I did! ) and turned it into West London Golf Centre - good for him!
Golf Features: Has your experience from overseas helped you to develop the ideas and themes for your two golf complex’s?
My experience in banking, property and business generally have all helped. I have always been a voracious reader and it was what I learnt reading that always stopped me overpaying for assets. You make your money when you buy. I am not an original thinker and most of my ideas have been simply a rehash and hopefully an improvement on what other people have thought of first. I have made so many mistakes and often repeated them, but have usually been bailed out by my very loyal small team who I keep in close touch with. I have also tried to learn from the “winners” in our small industry like Doug Maclelland, Bill Woodman, Nicky Lumb, Grant Wright, Richard Haygarth, Ivan Norman and yourself Colin. All have been a much bigger influence on my career than they could ever imagine from the few meetings we’ve had.
Golf Features: As golf reopens, have there been any advantages for your business over the last year?
Well back in March I was worried about running out of money. With £3m of bank debt it was a big worry for a while. There were certainly some advantages in our outsourcing model. These days I only have 10 staff compared to over 70 at the peak when we ran everything in-house. But one of the disadvantages was that with over 50% of our revenue coming from rents we were not eligible for Bounce Back or CIBLS loans. In the end all of our tenants traded well over the year and rents were mostly collected on time and in full. We didn’t need to take on any more debt either in the end, which was a relief, and even ended the year with lower net debt than we started. There are not many businesses that can say that about 2020 and shows the resilience of our business model and the extraordinary boost that Covid gave golf once it reopened. Our driving ranges which we still operate performed particularly strongly and we ended up well ahead of 2019, despite being closed for 3 months. Adjusted EBITDA from the two sites we own was around £850,000 last year and we hope for over £1m this year if, as we expect, the Covid effect lasts a bit longer - and hopefully some of the new people who took up the game will continue with it after the pubs reopen.