New Course Requires Less Green

Arroyo Trabuco Golf Club in Mission Viejo has all the trimmings of a luxury course: a PGA Tour pedigree, manicured fairways, smooth greens and an upscale clubhouse.

But its sales pitch is decidedly budget-conscious.

It’s a “high-end experience with reasonable rates,” touted Matt Donovan, general manager of Orange County’s newest daily-fee course, which opened Thursday. “Golf has gotten so high-priced, it shuts some people out ... and you can’t make money unless people are playing the course.”

Donovan’s observation sounds like obvious economics, but it also underscores the market realities confronting luxury golf course developments in Orange County.

For years, golf courses have been a fixture of local residential developments, but after more than a decade of frantic construction, the county may have too many courses, at least for now.

Just miles from Arroyo, another high-end course, the Aliso Viejo Golf Club, is planning to pave over nine of its 27 Jack Nicklaus-designed holes and build homes.

In Tustin, city officials and developers of the closed Marine Corps base are considering scrapping plans for a high-end golf course in the redevelopment project after consultants told them the region may be saturated with luxury courses.

According to the National Golf Foundation, Orange County has 35.5 daily-fee golf courses -- the foundation tallies courses by 18-hole equivalents, so a 27-hole course counts as 1.5. Relatively speaking, that’s not too many courses, said Jim Kass, the foundation’s director of research, but the pace of construction was rather swift.

A third of the county’s public courses opened in the last 15 years, and they are all high-end venues with many of them charging more than $100 for a round.

“All of the new properties are really nice facilities,” said Steve Plummer, general manager of Tustin Ranch Golf Club, which opened in 1989 and presaged Orange County’s luxury golf boom. “Has it created a more competitive market? Yes, it has.”

The private courses are guarded about their finances, but industry analysts say most have struggled as they were forced to slash green fees to attract golfers.

When Talega Golf Club in San Clemente opened in 2001, it charged as much as $225 for a round of golf. The rate has dropped to about $120.

“Oversupply is certainly a factor,” said Gene Krekorian, a golf analyst for Los Angeles-based Economics Research Associates, a consulting firm. “But it is more complicated than that.”

Orange County’s new golf courses hit the scene just as the sport’s popularity began waning in the late 1990s after a Tiger Woods-induced boost. Novices found golf requires a relatively hefty investment of time and money -- a round can last more than five hours, and the latest technology can send the price of a set of clubs to more than $1,500.

Amid a sluggish economy and declining tourism after 9/11, golf courses across the country have seen their business drop. In 2002 and 2003, about 90 courses closed nationwide, according to the National Golf Foundation. The yearly average for the 10 previous years was about 25.

In Orange County, golf courses are hanging on, and several others are planned in the long run. Preliminary plans for the redevelopment of the closed El Toro Marine base calls for a new course next to the 18 holes once used by the military. And Rancho Mission Viejo, which recently unveiled its plans for the 23,000 acres it owns in South County, has five new courses planned in the property. The company owners are also partners in Arroyo Trabuco.

Operators of the existing courses say they are optimistic about the future. Aging baby boomers are expected to increase the ranks of golfers with more time and money to play, and the economy is showing signs of recovery.

“I am not too concerned about saturation at this point,” said Hans Maissen, general manager of golf properties for the Irvine Co., which owns Pelican Hill and Oak Creek golf clubs.

Maissen said his courses experienced growth in the last two years without cutting green fees, which are $250 for a weekend round at Pelican Hill and $135 at Oak Creek.

Other operators say the downtrend seems to have bottomed out.

“We’ve gotten to the numbers where we want to be,” said David Foster, general manager at Talega, which is attracting about 50,000 rounds a year with its lower rates.

Krekorian, the golf analyst, said some high-end courses are doing well despite the downtrend, but the future of the overall market is uncertain.

Demand for golf balls dropped 7% in the U.S. last year, a telltale sign of the sport’s declining popularity, he said.

Krekorian said his company did an analysis for Arroyo Trabuco developers and suggested lower green fees.

“We can feel the excitement and anticipation. A lot of it is due to the rates,” which are between $55 and $85, said Donovan, the course manager.

“The green fees will get them out there and the golf course will keep them coming back.”

The course, designed by PGA professional Tom Lehman and architect Casey O’Callaghan, has a resort feel, thanks to 200 acres of open space surrounding the course.

In nearby Aliso Viejo, the city could lose open space, an example of what can happen when golf developments do not meet expectations.

When the 27-hole Aliso Viejo Golf Club and Resort opened in 1999, the property had a 727-room luxury hotel and conference center planned, but it never materialized.

Now a developer is proposing to replace nine of the holes with 430 homes.