Economics and Finance of Sport
Instructor: Yongseek Kim, Ph.D. Financial Project (Case Study) Albuquerque Country Club hosting USGA Event Albuquerque Country Club (ACC) is considered one of the premier golf clubs in Albuquerque, New Mexico. This club is private 501(c)(7) organization which was established in 1928 features the 18-hole golf course with an abundance of trees lining the fairways, contoured greens and a park-like atmosphere that challenges both the amateur and the pro (ACC Website), a putting green, driving range and chipping green; state of the art clubhouse, swimming pool, tennis facilities, and fitness center. The club hosts numerous events for its members, including member tournaments and guest events, as well as weddings, banquets, family gatherings, and corporate meetings. The board of directors and the golf planning committee is considering a proposal to bid on hosting the USGA US senior Amateur Men’s Championship in 2020. This event brings together 156 qualifying golfers from across the country for a weekend-long tournament that begins with two rounds of match play and culminates with the top 634 golfers advancing to match play. Qualifying tournaments are held nationwide, and in 2013 more than 2,000 amateur golfers participated. Hosting a USGA event requires clubs to meet basic golf facility requirements with regards to course length/yardage, the driving range, club house capabilities, parking capacity, and so on. ACC General Manager Tom and Head Golf Professional Jerry both support the proposal based on the potential benefits and exposure that the club can expect to receive. Tom and Jerry feel that this event will bring additional prestige and recognition to the club. This would be the first USGA event to be hosted in this club and only 13 events are held around the United States each year. Hosting the event is also likely to have a positive impact on the demand for membership at the club as well as the city of Albuquerque. The club will incur some costs that need to be fully assessed. Costs of hosting the event will be incurred in the following categories (unless sponsors are secured): housing of officials, the welcome dinner, a champions reception, transportation for officials, meals for golfers, gift packets, and any necessary course and/or facility improvements that are needed. The board of directors agrees that this is a prestigious event and the opportunity to host it would further enhance the club’s image. The board does, however, have other concerns that need to be considered before a final decision is made.
First, the club’s membership is already at capacity, and a waiting list for new members exists, which many diminish the value of hosting the event in terms of its impact on membership recruitment. Second, the golf course will also be out of commission to members for the week of the tournament and for 2 additional days prior to the event. Third, because the event will be held in September, members would lose access to potential tee times during some of the best playing times in the fall golf season. Finally, members would also have to vacate the locker rooms during this time and have limited access to certain areas of the clubhouse. Tom and Jerry plan to get feedback from the members prior to the board meeting and are hopeful that the board will see this as an exciting opportunity for the ACC. They are also preparing a presentation to inform the board of the details of this undertaking. The board will need to make a decision quickly and also send a formal invitation to the USGA declaring the club’s interest in hosting this prestigious event. Please answer the following questions with the rationale: 1. What information should be gathered from the membership prior to the meeting with the board of directors? 2. If you were preparing this presentation for the board, what five key points would you make to open your remarks? 3. What are the most significant benefits to the club in hosting this event? 4. What areas are likely to be the most costly and time-consuming in managing the USGA event? 5. How would you manage the additional work that will come with the event? 6. What has to be done after the event has been completed