INDUSTRY SYNOPSIS: NAICS GOLF COURSES AND COUNTRY CLUBS

INDUSTRY SYNOPSIS:

NAICS 713910 – GOLF COURSES AND COUNTRY CLUBS

I. SCOPE OF STUDY

A. Industry Definition Page 2

B. Contextual Overview Page 3

II. INDUSTRY OVERVIEW

A. Size and Type of Production by Size Page 4

B. Stability of Industry Page 5

C. Geographic Dispersion Page 6

III. SERVICE INFORMATION

A. Service Delivery Process Page 8

B. Types of Service Page 9

C. Price Determining Characteristics Page 10

D. Custom Services Page 11

E. Service Substitution (Quality Adjustment Methodology) Page 11

F. Seasonality Page 11

IV. MARKET AND TRANSACTION INFORMATION

A. Intra-Firm Transfers and Intra-Industry Sales Page 12

B. Price Behavior Page 12

C. Types of Prices Page 13

D. Types of Buyers Page 14

E. Adjustments to Price Page 14

F. Additional Charges Page 14

G. Size of Purchase Page 14

H. Contracts Page 14

I. Other Variables Which Affect Price Page 15

V. INDUSTRY INFORMATION AND PROBLEMS

A. Industry Relations Page 15

B. Currently Available Price Date Page 16

C. Service Identification Problems Page 16

D. Litigation and Other Cooperation Problems Page 17

E. Checklist Clarifications Page 17

F. Industry Specific Questions and Procedures Page 18

I. SCOPE OF STUDY

A. INDUSTRY DEFINITION

The 2002 NAICS Manual defines NAIC 713910, Golf Courses and Country Clubs as (1) establishments primarily engaged in operating golf courses (except miniature) and (2)

establishments primarily engaged in operating golf courses, along with dining facilities and other recreational facilities that are known as country clubs. These establishments often provide food and beverage services, equipment rental services, and golf instruction services. This matches the definition found in the 1997 NAICS Manual.

NAIC 713910 contains establishments which can be classified as private, public, or municipal facilities. Private facilities are golf courses that restrict play to members and their guests. Private facilities can either be for-profit or not-for-profit. Public facilities are golf courses that are open at least on a limited basis to the general public. They typically operate on a fee basis, although they sometimes offer memberships or annual passes. They are often referred to as daily fee facilities. Municipal facilities are golf courses owned by a city or county. These courses would only be in scope if the majority of their funding comes from revenues collected. If they are primarily funded by government resources, then they are out of scope for this index. The operations of any of these courses (public, private, or municipal) may be contracted out to a golf-course management

company.

Industries similar to but excluded from NAIC 713910 include:

• Establishments primarily engaged in operating driving ranges and miniature golf courses. Such establishments are classified in Industry 713990, All Other Amusement and

Recreation Industries.

• Establishments primarily engaged in operating resorts where golf facilities are combined with accommodations. Such establishments are classified in Industry Group 7211, Traveler Accommodation.

Also excluded from this industry are establishments primarily engaged in operating pitch-n-putt courses. These are short courses that are comprised solely of par-3 holes averaging less than 100 yards per hole. Such establishments are classified in Industry 713990, All Other Amusement and Recreation Industries.

Two types of golf courses that may be interpreted as out of scope, but which are included in this industry are executive length and par-3 courses. Executive length courses are comprised of many par-3 holes and some par-4 and/or par-5 holes, so that it is shorter and has a lower par than a regular course. A 9-hole course must be less than 2,600 yards in length and less than par 32, and an 18-hole course must be less than 5,200 yards in length and less than par 65. Par-3 courses are comprised solely of par-3 holes that average at least 100 yards in length per hole. They are often confused with pitch-n-putt courses; however they are two distinct types of courses.

The primary activities of firms in this industry are the operation of golf courses and country clubs and the operation of associated golf course services such as food and beverage sales and golf

equipment rental services. Depending on the service, prices will be measured on a per round or actual transaction basis.

According to the 1997 North American Industrial Classification Manual, there are two 1987 U.S. Standard Industrial Classification (SIC) industries that have been combined to form NAICS 713910. These include all of SIC 7992 Public Golf Courses, and part of SIC 7997 Membership Sports and Recreation Clubs (golf clubs.)

B. CONTEXTUAL OVERVIEW

The following table provides statistics about NAIC 713910, and its size relative to industry group 7139, Other Amusement and Recreation Industries.

NAIC 713910 Group 7139 Group 713910 % of NAIC 713910 to 7139 Receipts (1,000) $36,371,504 $13,050,265 35.9%

Employment 861,665 276,078 32.0%

Establishments 57,510 11,758 20.4%

Source: U.S. Census Bureau, 1997 Economic Census, excluding non-employer statistics

Golf courses and country clubs are a significant component of subsector 713, Amusement, Gambling and Recreation Industries. According to the 1997 Economic Census, NAIC 713910 makes up 21.6% of the total value of receipts in NAIC 713. In addition, NAIC 713910 accounts for 23.6% of total employment and 18.7% of total establishments in NAIC 713. Basically, these numbers demonstrate the importance of golf courses and country clubs within the amusement, gambling and recreation industry.

NAIC 713910 to 713 Ratios 0% 20% 40% 60% 80% 100%

Recipts Employment Establishments

NAIC 713910 NAIC 713

The preceding graph provides a visual representation of the portion of total receipts, total employment and total establishments in NAIC 713 that come from NAIC 713910.

The only direct competition this industry faces is from resorts where golf facilities are combined with accommodations, which are classified in Industry Group 7211, Traveler Accommodation. The resorts offer the same services that are primary to NAIC 713910: golf courses, food and beverage sales, golf equipment rental services, and golf instruction services.

II. INDUSTRY OVERVIEW

A. SIZE AND TYPE OF PRODUCTION BY SIZE

According to the 1997 Economic Census, this industry is dominated by establishments with less than 100 employees per establishment. These companies make up approximately 95% of total establishments in the industry. The total number of employees in this size category makes up approximately 75% of all employees in NAIC 713910. Meanwhile, the highest concentration of total receipts appears to come from larger companies. Approximately 77% of total revenue was earned by establishments earning between $1,000,000 and $9,999,999. This group of

establishments also employed approximately 75% of total employees in the industry. One can deduce from a comparison of the following tables that small to medium sized establishments earn a considerable portion of the total revenue in this industry.

The first table provides statistics for establishments in this industry based on establishment size, according to number of employees. The statistics were derived from the 1997 Economic Census.

Establishment Size Number of Estabs. % of Estab. Total Employment % of Emp. Total Receipts ($000) % of Receipts Total 0 38 0.42% 0 0.00% 13,208 0.10% 1-4 2,209 24.18% 5,188 1.97% 633,094 4.85% 5-9 1,505 16.47% 10,174 3.86% 729,801 5.59% 10-19 1,492 16.33% 20,613 7.83% 1,178,070 9.03% 20-49 2,132 23.34% 69,028 26.22% 3,463,314 26.54% 50-99 1,309 14.33% 89,833 34.12% 4,205,066 32.22% 100+ 451 4.94% 68,412 25.99% 2,827,712 21.67%

Source: U.S. Census Bureau 1997 Economic Census,* excludes establishments not operated during the entire year

The second table provides statistics for establishments in this industry based on establishment size, according to revenue data. The statistics were derived from the 1997 Economic Census.

Establishment Size Number of Estabs. % of Estab. Total Employment % of Emp. Total Receipts ($000) % of Receipts Total 0 to $9,999 6 0.07% 7 0.00% 33 0.00% $10,000 to $24,999 21 0.23% 27 0.01% 384 0.00% $25,000 to $49,999 91 1.00% 190 0.07% 3,478 0.03% $50,000 to $99,999 313 3.40% 801 0.30% 23,858 0.18% $100,000 to $249,999 1,397 15.29% 5,581 2.08% 245,844 1.88% $250,000 to $499,999 1,643 17.98% 13,098 4.87% 600,149 4.60% $500,000 to $999,999 1,848 20.23% 33,097 12.31% 1,336,333 10.24% $1,000,000 to $2,499,999 2,192 23.99% 76,806 28.56% 3,557,904 27.26% $2,500,000 to $4,999,999 1,232 13.49% 86,653 32.23% 4,274,185 32.75% $5,000,000 to $9,999,999 338 3.70% 39,549 14.71% 2,173,136 16.65% $10,000,000 or more 55 0.60% 13,079 4.86% 834,961 6.40%

Source: U.S. Census Bureau 1997 Economic Census,* excludes establishments not operated during the entire year

While nothing has been written to substantiate this assumption, one would expect that country clubs would be larger than golf courses, and would also provide more amenities in the forms of other sport and recreational facilities and food and beverage services. One would also expect that larger facilities would have more than one golf course available for play. Otherwise, one would expect establishments in NAIC 713910 to offer the same standard services with regards to golf. Although there are variations in price levels charged by different golf courses and country clubs, there has been no evidence found to imply that the size of establishments have an impact on price levels or trends.

B. INDUSTRY STABILITY

According to the National Golf Foundation, the total number of golf facilities increased 0.9% in 2002. This is the smallest increase in 24 years according to the NGF’s “The Growth of U.S. Golf.” From 1993 to 2002, the total number of golf facilities increased an average of 1.8% per year, with a high of 2.9% in 1995, and a low of 0.9% in 2002. The slowing rate of increase in total number of golf facilities is due to a drop-off in construction over the past five years. The

slowdown in development was expected by the industry, as NGF research has shown that since 1991 the supply of golf courses has outpaced demand.

This industry uses two different measures of demand, the number of golfers and the number of rounds played. Since 1993, the number of golfers has increased steadily. The number of golfers, in millions, rose from 23.4 to 26.2 over the period of 1993 to 2002, an increase of 12%. While the number of golfers is important in determining the overall demand, the number of rounds played is a more accurate indicator of demand for this industry. From 1993 to 2002, the number of rounds played, in the millions, increased from 438.8 to 502.4, a total increase of 14.5%. However, total rounds played has been decreasing since 2000. The main causes attributed to the recent decreases have been the weather and the economy.

During the 1990’s, club membership and initiation fees, as well as greens fees, increased rapidly with the booming economy. In more recent years, due to the slowdown of the economy, many golfers are no longer willing or able to spend so much on a leisure activity. Corporations have also cut back on their expense accounts, corporate memberships, and meetings at high-end clubs. From this information, it appears that this industry is vulnerable to business cycles, and business should pick back up as the economy improves.

Still another example of industry stability is revenue growth over the past decade. The following table shows revenue growth in millions of U.S. dollars from 1998 to 2002 for NAIC 713910 according to the 1997 Census.

Year 1998 1999 2000 2001 2002

Revenue

($000) 14,737 15,546 15,935 16,090 16,738

% Change

in Revenue - 5.5% 2.5% 1.0% 4.0%

Source: U.S. Census Bureau, 1997 Economic Census, excluding non-employer statistics

Government regulation does not play a role in price movements or stability in NAIC 713910.

C. GEOGRAPHIC DISPERSION

Establishments in NAIC 713910 are located in all regions of the country, with the highest concentration located in more highly populated states. The top 17 states according to the 1997 Census are listed in the following table. These top 17 states are home to 67.96% of total establishments in NAIC 713910.

State Number of Establishments Percentage of Establishments VOS ($1000) California 717 6.10% 1,612,979 New York 699 5.94% 810,485 Florida 657 5.59% 1,372,499 Ohio 643 5.47% 665,143 Michigan 640 5.44% 593,401 Pennsylvania 595 5.06% 695,189 Texas 589 5.01% 899,824 Illinois 501 4.26% 620,396 North Carolina 444 3.78% 506,547 Wisconsin 358 3.04% 281,071 Indiana 356 3.03% 259,242 Minnesota 356 3.03% 250,501 Iowa 309 2.63% 137,782 Massachusetts 301 2.56% 385,468 Georgia 287 2.44% 426,515 South Carolina 277 2.36% 400,541 Missouri 262 2.23% 227,759

Source: U.S. Census Bureau, 1997 Economic Census, excluding non-employer statistics

According to the National Golf Foundation’s Golf Facilities in the U.S., the same 17 states above are home to the most establishments in NAIC 713910. The difference in the rankings and the total number of establishments is due to the exclusion of non-employer statistics from the 1997 Census data. The rankings and totals according to the NGF are listed in the following table.

State Number of Establishments Percentage of Establishments Florida 1,081 6.80% California 914 5.75% Michigan 854 5.37% Texas 847 5.33% New York 811 5.10% Ohio 762 4.79% Pennsylvania 702 4.41% Illinois 677 4.26% North Carolina 553 3.48% Wisconsin 492 3.09% Minnesota 477 3.00% Indiana 457 2.87% Georgia 405 2.55% Iowa 399 2.51% Massachusetts 370 2.33% South Carolina 362 2.28% Missouri 337 2.12%

Source: The National Golf Foundation, Golf Facilities in the U.S.

III. SERVICE INFORMATION

The service delivery process for NAIC 713910 is fairly uniform within the general categories of golf courses and country clubs. Both golf courses and country clubs provide regulation length, executive length, or par-3 golf courses consisting of either nine or eighteen holes. To use these facilities, golfers schedule a tee time, which is the time that they will start playing their round of golf. Usually, tee times are scheduled in advance. They also provide equipment rental services and instructional services, to varying degrees. The variety and availability of these services depends on the size and type of the particular golf course or country club. Most private clubs and larger public courses offer these services, while smaller public courses may not. In addition to these services, country clubs also provide dining facilities and other recreational facilities. These facilities may require advanced reservations for their use.

According to The World Golf Foundation GOLF 20/20’s 2002 Golf Economy Report, the average capital investment for existing facilities was $359,477 for 2000, or approximately 28% of the average revenue. This money is used towards golf course and clubhouse renovation, installation of irrigation systems, turf maintenance equipment, golf carts, and infrastructure improvements. Below is a chart detailing the major categories of expenses for golf facilities and their relative values.

Golf Facilities Expenses

Capital Investment, 28%

Equipment Lease Expenses, 9%

Cost of Food & Beverage, 9% General & Administrative, 6% Other, 8% Payroll, 40% Turf Supplies, 3%

Source: The Golf Economy Report, December22, 2002, The World Golf Foundation GOLF 20/20

Although establishments within this industry may improve, expand, or contract basic services, a complete change in production or services offered does not really fit into the nature of this industry.

B. TYPES OF SERVICE

The following table lists the major services provided in NAIC 713910 from the 1997 Economic Census.

Product Golf courses and country clubs Membership dues and fees Greens fees/Guest fees Food and beverage Equipment rentals Other

Source: U.S. Census Bureau, 1997 Economic

Memberships. Memberships will include individual memberships for various age groups, such as

adult, youth, and senior, as well as group memberships, such as family and corporate memberships. Family memberships will normally offer access to a facility/facilities by a

predetermined number of family members for one specific fee. Corporate memberships will offer reduced rates to individuals, who work for a specific company that has an agreement with a specific course or club. Seasonal passes will also be included in this category. Seasonal passes

function the same way as memberships, as long as they offer unlimited access to a specific facility/facilities for a predetermined length of time.

Greens fees/Guest fees. Greens fees are the fees collected for individual rounds of golf. Guest

fees are charged at private clubs to non-members.

Food and beverage. Food and beverage services include those services provided on the premises

of the golf course or country club. These services may be provided through food and beverage carts, snack bars, or restaurants. However the golf course or country club must own the food and beverage facilities.

Equipment rentals. Rentals of golf clubs, golf carts, or any other equipment will be included in

this category.

Other. This category will include instructional classes, merchandise sales, admissions to

tournaments, and all other golf related services.

Instructional classes are provided by the golf professional, who is typically an independent contractor. These classes can be provided on or off the premises depending on the presence of a driving range. Please refer to industry specific procedures for further clarifications.

Merchandise sales are generally provided through the pro shop. Typically, the pro shop is owned and operated by the golf course. However, for private clubs, the golf pro will usually own and operate the shop. Please refer to industry specific procedures for further clarifications.

C. PRICE DETERMINING CHARACTERISTICS

Price determining characteristics for services to be collected for this industry include:

Memberships.

• Age group (e.g. youth, adult, senior)

• Number of persons (e.g. individual, group/multiple persons) • Services included in fee (e.g. golf, social, or full membership) • Type of payment (e.g. annual billing, monthly billing, etc.)

Greens fees/Guest fees.

• Age group (e.g. youth, adult, senior) • Membership status

• Day and time (e.g. peak weekend, non-peak weekend, peak weekday, non-peak weekday) • Time of year (peak season, non-peak season)

• Number of persons (e.g. individual, group/multiple persons)

Instructional classes.

• Age group (e.g. youth, adult, senior)

• Number of persons (e.g. individual, group/multiple persons) • Membership status

• Frequency of class • Length of class

Equipment rentals.

• Type of equipment • Membership status

D. CUSTOM SERVICES

Although service offerings tend to be fairly standard in NAIC 713910, one would expect specific services, such as instructional services, to be tailored to the community that a facility services. However, this does not really fall under the category of custom services.

E. SERVICE SUBSTITUTION (QUALITY ADJUSTMENT METHODOLOGY)

Explicit quality adjustments (QA) will need to be performed on items which experience a change in the scope of the service offered by the establishment for a type of membership or other service. For example, clubs that once offered restricted facility access with a particular type of

membership, but later alter the membership to offer unrestricted access, will require an explicit QA to adjust for the change in service. An explicit QA will also be needed if new services are added to the type of membership being priced, such as the addition of a tennis court or driving range. Changes in the food and beverage fare will also be adjusted explicitly. Establishments will typically have cost data available, which will allow for a QA by the industry analyst (IA).

Reporters will need to make the IA aware of a change in the scope of the service, in order to allow the IA to know when to make a QA.

Greens and guest fees represent a fixed form of service. Unless remodeling and renovation alter the level of service of the course, the greens and guest fees are not likely to require substitutions during repricing.

F. SEASONALITY

Seasonality plays a significant role in this industry. Since the primary service of this industry takes place outdoors, the local climate determines the months during which each of the facilities is able to operate. In the Northeast and northern Midwest, most of the industry is closed during the winter months, when snow makes operations impossible. The actual opening and closing dates of each facility vary due to local weather conditions; however, the typical season for golf courses in these areas is from April to November. Establishments in areas of the country with milder winters are usually able to stay open year-round. Below is a map showing in which states this industry is usually seasonal.

While golf courses in the northern states are closed for the winter, country clubs often offer other services as well, such as indoor sports and recreation facilities or dining facilities. These other services may be offered throughout the year, even when the golf courses are closed, or the establishment might close completely. This varies by region and facility.

IV. MARKET AND TRANSACTION INFORMATION

Intra-firm transfers and intra-industry sales are generally not applicable in NAIC 713910.

B. PRICE BEHAVIOR

In the 1990s, prices in this industry, greens fees and membership fees, were increasing as the industry enjoyed a boom mimicking the rising stock market. In more recent years, due to the economic downturn, these increases have abated due to a decrease in demand. The number of golf courses also increased rapidly in the 1990s, leading to increased competition. Establishments located in areas where the concentration of golf courses is relatively high have had to cut prices in order to stay competitive. According to a 2002 survey by the National Golf Course Owners, only 35% of daily fee facilities and 38% of private facilities were planning to increase greens fees in 2003, and the increases were expected to be approximately 5 to 10 percent.

In the northern states, where weather is a factor in course conditions, most courses have “peak season” and “non-peak season” rates. The non-peak season usually starts in early fall and runs

through the middle of spring. Demand is lower at these times due to the poor weather and course conditions, so courses will lower their greens fees to entice more people to play. In the southern states, the peak and non-peak seasons are reversed. In Florida, for example, the peak season will run from late November into the late part of May. This is due to increased demand because of all the people who vacation in or move to the South each winter to avoid the cold.

CPI Data for Related Industries

75 125 175 225 Ja n-99 Ap r-99 Jul-9 9 Oct-9 9 Ja n-00 Ap r-00 Jul-00Oct-0 0 Jan-0 1 Ap r-01 Jul-0 1 Oct-0 1 Ja n-02 Apr-0 2 Jul-0 2 Oct-0 2 Ja n-03 Ap r-03 Jul-03Oct-0 3 Jan-0 4

Club Membership Dues/Fees Fees for Lessons/Instructions Admission to Sporting Events Full Service Meals and Snacks

The Consumer Price Index currently publishes four indexes, which could be combined to form an index similar to NAIC 713910. These four indexes are for Club Membership Dues and Fee for Participant Sports, Full Service Meals and Snacks, Fees for Lessons or Instructions, and Admission to Sporting Events. These indexes correspond closely to the PPI index for primary services for the industry. These indexes would provide data on long-term price trends for these services. The graph above shows the history of these indexes over the last five years.

C. TYPES OF PRICES

There are several types of prices that exist in NAIC 713910. The first of which is membership dues and fees for golf courses and country clubs. These prices will be reported as either fees for new memberships or fees for continuing memberships. Prices will also be characterized by tier level (single membership, family membership, etc), residency status, length of membership, frequency of billing, and by what services are included in the fee. To become a member it is necessary to pay a lump sum initiation fee. This initiation fee will be collected for new members. In addition to the lump sum initiation fee, members are required to pay fees each year thereafter. This annual fee should also be included in the price for new members. For continuing (renewal) memberships, only the annual membership fee will be collected as the price.

The remaining fee types in this industry are: greens fees/guest fees; equipment rental; food and beverage; and other golf course service fees (including fees for instructional classes, tournament admissions, etc.). Each of these fee categories has similar price determining characteristics, as one must determine time/day restrictions, membership status (club/facility member versus club/facility non-member, and type of membership) and residency status.

For greens fees and guest fees, most courses calculate an “average member round” (which includes only fees paid by members) and an “average public round (which includes only fees paid by non-members.) This average price is the preferred price. If this average cannot be provided, an individual fee is an acceptable fallback. Lagged monthly averages are not acceptable. For food and beverage sales, merchandise sales, equipment rental, instructional classes, and event/facility rental, the actual transaction price should be collected.

D. TYPES OF BUYERS

Almost all sectors of the United States population take advantage of the services offered by the golf courses and country clubs industry. Men and women, young and old, representatives of all backgrounds and regions of the country, make up the total population of U.S. golfers. In addition to individual buyers, businesses also purchase corporate memberships to establishments in this industry, to be used by their clients and employees.

E. ADJUSTMENTS TO PRICE

Any adjustments for or discounts on services offered by this industry are typically reflected in the reported price. Discounts on initiation fees for club memberships or on tournament admissions for groups are normally factored into the reported price calculation.

F. ADDITIONAL CHARGES There are no additional charges.

G. SIZE OF PURCHASE

There are only two size related distinctions that exist in this industry. The first is in the area of individual memberships, admissions or usage/rental fees versus group fees. Group rates would apply to corporate, family, and other such multiple person purchases. The second is in the area of greens fees/guest fees. These fees are usually set for rounds of either 9 holes or 18 holes.

H. CONTRACTS

Short and long term contracts (more than one year) are quite common in NAIC 713910. Although fee per use type pricing is common with most public courses, contracts are standard for private clubs. Contracts usually include use of the golf facilities, use of all other sports and recreation

facilities, and access to the clubhouse and food and beverage facilities. Members usually have the choice of paying a flat fee up front or paying in installments of various lengths.

I. OTHER VARIABLES WHICH AFFECT PRICE There are no other variables which affect price.

V. INDUSTRY INFORMATION AND RELATIONS

National Golf Course Owners Association (NGCOA) 291 Seven Farms Drive

Charleston, SC 29492

www.ngcoa.org

Phone: 843-881-9956

The National Golf Course Owners Association (NGCOA) is a not-for-profit trade association representing golf course owners and operators. The mission of the NGCOA is to enhance the lives of golf course owners by making their businesses more profitable, more efficient, better managed and more stable.

National Golf Foundation (NGF) 1150 South US Highway One Suite 401

Jupiter, FL 33477

www.ngf.org

Phone: 561-744-6006

The National Golf Foundation (NGF) provides golf-business research, information and consulting services to companies and organizations world-wide. The mission of the NGF is to provide information and insights on the business of golf.

World Golf Foundation (WGF) One World Golf Place

St. Augustine, FL 32092

www.wgf.com

Phone: 904-940-4000

The World Golf Foundation (WGF) is a non-profit corporation created by and representing major golf organizations throughout the world. Its mission is to honor the history of golf and

achievements of its greatest individuals and to create entertaining and educational opportunities for both golfers and the general public to learn about the game and the positive values intrinsic to the game. It is comprised of four divisions: The World Golf Hall of Fame, The First Tee, Golf 20/20, and The National Minority Golf Foundation.

The United States Golf Association (USGA) PO Box 708

Far Hills, NJ 07931

www.usga.org

Phone: 908-234-2300

The United States Golf Association (USGA) is a not-for-profit organization that serves as the national governing body of golf. The mission of the USGA is to preserve and protect golf’s tradition. They monitor the rules of golf and equipment standards to ensure that skill rather than technology represents the essence of the game, conduct turfgrass and environmental research, maintain a National Handicap and Course Rating System, and conduct Open Championships.

B. CURRENTLY AVAILABLE PRICE DATA

The Consumer Price Index currently publishes four indexes, which are all components of NAIC 713910. These indexes are Club Membership Dues and Fee for Participant Sports, Full Service Meals and Snacks, Fees for Lessons or Instructions, and Admission to Sporting Events. However, the CPI does not publish by NAICS industry and does not have an index that matches NAIC 713910 in its entirety. There is currently not an index published for NAIC 713910 by any other source.

C. SERVICE IDENTIFICATION PROBLEMS

One foreseeable service identification problem would be in classifying an establishment as private or public. Many facilities in the industry classify themselves as “semi-private.” If the facility is open to the public, even on a limited basis, then they should be classified as a public course. In

order for a course to be considered private, they must restrict play to only members and their guests.

There could also be a problem in the area of restaurants/snack bars/concessions, which would fall into the primary services category. Food and beverage services should be given a chance of selection as primary services during the disaggregation process only if managed by the golf course or country club in question. If a restaurant, snack bar, or concession stand has merely leased property from a particular establishment, then the lease revenue should be classified in “other receipts” and collected accordingly. This also applies to any retail sales offered at the

establishment location.

D. LITIGATION AND OTHER COOPERATION PROBLEMS

While there is not currently any pending anti-trust litigation in this NAIC, there have been recent lawsuits against individual facilities in NAIC 713910 as well as related organizations such as the PGA and USGA related to the Americans With Disabilities Act of 1990 (ADA). The ADA requires that public entities and privately owned places of public accommodation, such as golf courses, cannot discriminate on the basis of disability. This has impacted facilities in NAIC 713910 in that they must make teeing grounds, putting greens, fairways and weather shelters accessible to persons with disabilities. This means that they must make all of these areas accessible by golf carts, and allow persons with disabilities to use golf carts to access them. There might be a cooperation problem with private establishments in this NAIC. While some establishments list publicly what their initiation fees and membership dues are, many of these establishments are averse to disclosing any membership or financial information.

E. CHECKLIST CLARIFICATIONS

INSTRUCTIONS FOR FILLING OUT CHECKLIST A713910A

Group 03. When collecting a quote for a single corporate membership, select code 007-009. If the membership fees are being paid for by the employee/individual who will be using the

membership, then select code 007. Select code 008 if the fees are being paid for by the employer. Select code 009 if both employer and employee pay the fee. Indicate how many employees are eligible to use the membership selected if this is a price determining characteristic.

In some cases, such as when the facility selected is part of a real estate development (equity-owned course), prices can vary based on ownership of property in the development. If property

ownership is a price determining characteristic select code 014 for a property owner, or code 015 for a non-property owner.

Some private facilities also offer memberships based on how close to the club the member lives. They sometimes offer limited memberships to those who live outside of a predetermined radius from the facility. If this type of membership is collected, select code 016 and indicate how many miles from the club the member must live to qualify for this type of membership. Also indicate any restrictions, such as number of visits allowed per month, under Group 04, code 007.

Group 04. If a membership at the facility sampled includes the use of all services at any additional facilities, list the additional facilities on the line provided for code 001. If the

membership includes only limited services at additional facilities list the additional facilities and the services included at those facilities under code 007. If additional space is needed, continue under Other Features.

If the membership selected requires a minimum expenditure on food and beverage purchases, select code 008. If this code is selected, provide the amount and the time frame for which it is required (e.g. monthly, quarterly, annually, etc.).

INSTRUCTIONS FOR FILLING OUT CHECKLIST A713910B

Group 03. Some courses require the rental of a golf cart in addition to the greens fees charged. Some courses always require the rental, while others base it on the time of day or the day of the week. If a golf cart rental is required in addition to the greens or guest fee select code 017. Some facilities that provide memberships vary prices based on whether or not the customer is a member of the facility. If membership is a price determining characteristic select code 022 for a member or code 023 for a non-member.

INSTRUCTIONS FOR FILLING OUT CHECKLIST A713910C

Group 03. For code 010, enter the number of people served at the banquet. If there are any additional items, such as flowers, chair covers, or ice sculptures, that are a part of the total cost of the event, list them under “Other Features.”

A combination meal (code 014) refers to a fixed price meal which usually includes at least two items and possibly a beverage and/or dessert. In the spaces provided, identify the name of the combination meal.

For codes 016-020 enter a brief description of the item(s) ordered. (e.g. prime rib, lemon meringue pie, etc.). Select all that apply. Do not further specify buffet meals.

INSTRUCTIONS FOR FILLING OUT CHECKLIST A713910D

Group 03. If there are time restrictions for instructional classes and other golf course services, select codes 014 or 015 and provide further description on the line below the code title. For code 014, provide the number of hours which the class lasts or for which the admission is good. For code 015, provide the number of days the class lasts or for which the admission is good.

F. INDUSTRY SPECIFIC QUESTIONS AND PROCEDURES There are no industry specific questions.

Facesheet Procedures

1. SizeMeas1 is a dummy value of either 999 or 9999. The collected SizeMeas1 should be the total number of rounds of golf played.

2. On the third page of the facesheet, Type denotes the type of course and Cat denotes the category.

Type

PR Private Facility (Equity unknown or combination of equity/non-equity PE Private Equity Facility

PN Private Non-Equity DF Daily Fee Facility MU Municipal Facility

Category RD Real Estate Development MI Military

UN University PK Park JG Just Golf

3. SU Comments provides the number of regulation, executive, and par 3 holes.

Sample Unit Identification Procedures

1. The sample unit is an individual golf course.

2. For establishments which offer both golf course or country club memberships and instructional classes, the plurality of revenue must fall in the area of memberships in order to be in scope. When the plurality of revenue falls in the area of instructional classes, the establishment should be coded out of scope.

3. For public agencies that are selected for collection, it must be determined whether or not there are separate financial records maintained for just golf course facilities. If records cannot be separated out for this specific area, then the establishment is out of scope and should be classified as such (because the plurality of revenue in this case will likely not be in the golf course and country club industry).

Contact Person

The best company official to contact is the General Manager. The manager should be able to provide all of the necessary pricing information.

Collection Procedures

1. When collecting quotes for memberships, disaggregate between new and continuing (renewal) memberships. For new memberships, collect the initiation fee as well as the annual

membership fee paid each year for the type of member selected in group 01. For renewals, collect the annual membership fee paid each year for the selected type of member.

2. For greens/guest fees, collect an average per round. If records can be separated, greens fees paid in tournaments should be included in the average. Lagged monthly averages are not acceptable.

3. Food and beverage sales should be given a chance of selection during the disaggregation process only if the service is managed by the golf course or country club. If a restaurant has merely leased property from the golf course or country club, then the lease revenue should be classified as an “other receipt” and collected accordingly.

This also applies to any retail sales offered at the establishment location. For private clubs, it is likely that the golf pro will own and operate the pro shop independently. In this case any lease revenue would be captured as an “other receipt.”

4. Instructional classes should only be given a chance of selection if provided on-site. For many golf courses the pro may provide classes off-site and will retain all revenues generated. 5. Tournaments and facility rentals, such as for a banquet or wedding, are usually sold a la carte

and not as set packages. Services should be priced on an a la carte basis if records can be separated. For example, the greens fees paid for tournaments should be included in the greens fee average. If records for tournaments or facility rentals cannot be separated by the various service components, then disaggregate to an actual event held and list all the services

G. PUBLICATION GOALS

Producer Price Index Revision

Publication Title Listing ( ordered by higher map code ) NAICS/Cycle/Version – 713910A1

PPIR Code PPIR Title Continuation Code

_________ __________ ____________

713910 Golf courses and country clubs 713910P Primary services

7139101 Membership dues and fees 7139102 Greens and guest fees

7139103 Food and beverage sales

7139104 Equipment rentals and all other golf services

713910SM Other receipts

713910M Miscellaneous receipts 713910MM Miscellaneous receipts 713910S Secondary services 713910SS Secondary services