Staging the third biggest sporting event carries huge prestige – but comes with a £50m price tag. We examine whether the financial outlay is a licence to print money... or creates a white elephant.
Legacy. We heard that word on a daily basis in August as the Olympics filled our screens, airwaves and newspapers. And even as Great Britain surpassed expectations in terms of medals and as a host, that word was the itch which was impossible to scratch.
The truth is, UK PLC won’t know for two decades – and possibly never at all – whether it was all worthwhile.
Hosting the Ryder Cup carries with it a similar health warning; while the finances aren’t quite so eye watering, it is not a (relatively affluent) country picking up the tab – it’s a private company or even just one man with a dream.
They don’t have to wait for 20 years to know whether it was a risk worth taking though. If the tills aren’t ringing before and immediately after the matches, you know you’re in trouble.
During Ryder Cup week, you won’t find a person within a 25-mile radius who will have a negative comment to offer; the eyes of world sport are focused on the area, hotels are full and restaurants are humming. But before the stands are dismantled, reality will start to bite.
Whether Europe has won or lost is immaterial – the multi-million pound investment has to start to pay. Because it is not just that week you are leaking cash. Not even just that month or that year. Securing the event for your resort is an eight-year commitment to deliver on promises made to Ryder Cup Europe.
That means hosting a tournament on the European Tour schedule for nearly a decade – hardly a frugal enterprise. There are venues in England, Ireland and Wales who know this very well; four-time host The Belfry, The K Club and Celtic Manor. To investigate the Cup’s worth we asked all three how it’s been for them. They took different approaches to ensuring their Ryder Cup legacy, and have reaped differing rewards.
“It costs a lot of money,” says Sir Terry Matthews, owner of Celtic Manor. “We had to build a course especially for the event and all the hospitality pavilions and tented villages and practice grounds that come with it. We even had to build a £2 million bridge to the new practice ground! We also had to close the golf course for a few weeks and give over the resort to the event for that week, but that was all part of the deal and nothing we weren’t aware of when we signed up for the event. The facilities we had to develop cost about £25 million, but most of that investment in the course and clubhouse is with us forever, not just that week. You can probably double that figure if you include how much it cost us to stage the Wales Open for 15 years, which was part of the Ryder Cup agreement.”
The key to making the most of the £50m it takes to secure status as a Ryder Cup venue is clearly attracting visitors. The Belfry is in the unique position of having hosted four Ryder Cups. Interestingly, it is nowhere near the bidding process these days, but 10 years on from the most recent match there, its Ryder Cup heritage forms the cornerstone of their marketing strategy.
“We use that as our marketing tool,” says Gary Silcock, Director of Golf at The Belfry. “When I was a PGA professional at St Andrews, everyone took a photograph of the Swilcan Bridge. Everyone in golf knows that St Andrews is the ‘Home of Golf’. But if you’re a non-golfer, you may not know that St Andrews is the ‘Home of Golf’. Every single person, golfer and non-golfer, has heard of The Belfry because of the Ryder Cup being the third biggest sporting event in the world.” Being known worldwide is obviously nice – but it has limited value if you’re not filling the hotel and packing out the course.
The Belfry and Celtic Manor have capitalised effectively, using large hotels and three courses to offer a variety of packages to suit every pocket.The K Club, however, has a much smaller hotel and only two courses. With fewer rooms and green fees to sell they opted to charge higher rates to visitors and focus on premium memberships. “When I was working in Ireland, The K Club was geared towards membership,” says Silcock. “Members were paying €8,500 a year and there was a joining fee of €80,000. It was successful then. You will find that a normal member plays 28 rounds of golf a year. So if you times 28 by the normal green fee, that is generally what your subscription will be for a year. So 28 times the €300 The K Club was charging at the time and you’ve got €8,400.” It appears not to have been successful. The K Club is struggling with reported annual losses and total debts in excess of £43 million. We asked them on several occasions to give us their story, but they refrained from commenting on the success of their legacy.
Andrew Smith, Your Golf Travel’s Director of Product, is quick to point out that there are other factors at work in a venue’s prosperity. “You have to remember the Celtic Manor legacy is at a time of economic hardship, they simply couldn’t justify huge green fee increases. Whereas the economic situation was much rosier in 2006. You also need to look at the individual venues; Celtic Manor has over 400 bedrooms to fill and 50 per cent more start times than The K Club, which has a hotel with less than 80 rooms. This gives you much more opportunity to yield your return with a disparate rate structure. But, I would also suggest that if The K Club had their time again, they would have adopted a more scalable marketing strategy.“The boost to golf tourism should be huge, but it depends how it’s managed. Business to South Wales over the last three years has grown over 40 per cent, and not just to Celtic Manor. This year we are on budget for a further 25 per cent increase on last year.”
These statistics perfectly demonstrate the potential benefits for the host country as a whole, and David MacLaren, European Tour director of property and venue development, is keen to emphasise the Ryder Cup’s legacy. “Legacy is an increasingly important aspect of a successful bid, as shown in the bid criteria and in the laudable commitments from both Wales in the Ryder Cup Legacy Fund and Scotland through its ClubGolf programme,” he says. “France’s successful 2018 bid includedthe ‘starter course’ programme, which will see the establishment of at least 100 new golfing facilities (short course, par-3 courses or ranges) throughout the country.”
The 2010 Ryder Cup was an alliance between the private financial muscle of Matthews and the Welsh government – so its success must be measured in terms of the Celtic Manor coffers as well as in more holistic terms such as facilities and participation numbers. “Using the Ryder Cup as a catalyst, we were able to promote Wales as a golf destination for the very first time,” explains Rob Holt, former CEO of Ryder Cup Wales. “We saw the growth of golf tourism from 30,000 visitors in 2002 to 200,000 visitors in 2010, bringing in £42 million. The figures have been maintained into 2011 and 2012. So it is undoubtedly paying itself back in golf tourism terms already.“On the back of that, we had a £2 million legacy fund where we put in place 40 projects across Wales to help develop public facilities and encourage people to get into golf. We also put in place Golf Development Wales (GDW) to encourage participation.”
In the year prior to the Ryder Cup, there were 23,000 participants in GDW linked schemes and this rose to 33,000 in 2011 – including increases in the number of people in GDW beginner schemes, more children participating in school golf and more clubs and Local Authorities delivering golf-related activities. Nearly 180,000 people have been involved in GDW-related schemes since 2002.Holt is clear that the relative success of hosting the Ryder Cup shouldn’t be judged merely in economic terms. “You’ve got to have a joint working environment between clubs, golf union and tourism authority in order to drive golf tourism and development,” he continues. “Luckily, with the establishment of the Welsh Government, the government and ministers supported the whole project.”
Sadly, Ireland has not been so lucky. According to Fáilte Ireland (the National Tourism Development Authority), the Ryder Cup generated €143million (£112.5million) in tourism revenue during and after the competition. But Irish clubs are no longer feeling the benefits six years on, as Graham Byrne, pro at Palmerstown House GC, located 20 minutes from The K Club, reports.
“The 2006 Ryder Cup showed Ireland could plan and deliver a huge event and there was most definitely a boom just before and during the event as we had many Americans and other nationalities visiting us, but there is certainly no boom now as we have seen a massive decrease in tourists visiting and playing. I think many clubs tried to overcharge for green fees during and after the Ryder Cup and the downturn of the economy and horrendously bad weather conditions really haven’t helped. Overall it was great for the country. It broadcast us as a welcoming nation to millions around the world and got many youngsters interested in the game.”
So, what would we reply if a golf resort asked us if we would recommend hosting the Ryder Cup? It is evidently a financial gamble – when figures reach upwards of £50m, most things are. But if you have the nerve – and pockets deep enough to handle the heavy initial costs – the associated prestige can be capitalised on significantly if you market well and set prices astutely. And if local golf clubs, unions, tourism authorities and the government work together effectively, its legacy can be worth every penny.