One Golf Participation Benefits 091014...

CONFIDENTIAL & PROPRIETARYCONFIDENTIAL & PROPRIETARYCONFIDENTIAL & PROPRIETARYCONFIDENTIAL & PROPRIETARY © GEMBA GROUP© GEMBA GROUP© GEMBA GROUP© GEMBA GROUP

One Golf Governance ModelOne Golf Governance ModelOne Golf Governance ModelOne Golf Governance Model

September, 2014September, 2014September, 2014September, 2014

Participation BenefitsParticipation BenefitsParticipation BenefitsParticipation Benefits

1111 Executive SummaryExecutive SummaryExecutive SummaryExecutive Summary

2222 Our ApproachOur ApproachOur ApproachOur Approach

3333 Project ContextProject ContextProject ContextProject Context

4444 Current StateCurrent StateCurrent StateCurrent State

a) Overall Participation

b) Program Performance

c) Resourcing

d) Commercialisation

5555 Future StateFuture StateFuture StateFuture State

a) Proposed Governance Models

b) Participation Outcomes by Model

c) Commercial Outcomes by Model

AppendixAppendixAppendixAppendix

2© GEMBA GROUP© GEMBA GROUP© GEMBA GROUP© GEMBA GROUP

gemba was engaged to assess the participation and commercial benefits of the proposed move to a One Golf governance model

Golf Australia / ASC

• Golf Australia (“GA”) is currently undertaking a review of its governance structure, with the view to investigating the potential benefits of a change in the governance model

• Following a preliminary evaluation performed by the Governance Sub-Committee, the Board of GA decided that a “One Golf” model was the most appropriate for further investigation

• The One Golf concept is a centralised model that will see GA and its Member Associations work together as a single organisation with top-down control from an operational point of view

• In addition, the One Golf model includes a centralised revenue process and associated reporting lines, with a single organisational brand to be adopted nationally

• It is hypothesised that a One Golf model will deliver a range of benefits to GA and its Member Associations, including organisational synergies and scale efficiencies, revenue growth from the diversification and aggregation of commercial assets, and an uplift in participation from streamlined pathways and program delivery

• To test these assumptions, GA sought independent input into the quantification of benefits in participation, and associated commercial returns, of a shift to a more centralised governance model

• This document therefore represents the results of gemba’s analysis and subsequent forecasting of the participation and commercial outcomes of both the One Golf and Status Quo models

Project BackgroundProject BackgroundProject BackgroundProject Background


Detailed analysis and robust projections suggest One Golf will produce superior participation outcomes and commercial returns


Project ResultsProject ResultsProject ResultsProject Results

PathwaysPathwaysPathwaysPathways ParticipationParticipationParticipationParticipation CommercialCommercialCommercialCommercial

• Ownership and control of the entire Golf pathway within Australia will be greatly enhanced under a One Golf model

• The amalgamation of various State Bodies into GA will lead to consistent branding, go-to-market strategy, programs, events and communication

• The creation of National programs will provide single points of entry for the sport, reduce confusion and clutter within the market and will allow Golf to capture a larger proportion of the participant pool

• Modelling of various participation scenarios under both models determined that the One Golf model is best placed to drive participation outcomes through increasing acquisition, retention and conversion

• The forecast participation outcomes under the One Golf model are as follows;

- More than double participation in National ProgramsNational ProgramsNational ProgramsNational Programs from 130k to 189k

- Gradual increase in EventsEventsEventsEventsparticipation from 64k to 70k

- Reduce the trend of decline in club membership membership membership membership from -1.8% to -0.05%

- Increase acquisition of GA Social Social Social Social GCGCGCGC from 2k to 9k in Year 3

• A centralised governance model will see increased commercial returns in two key areas;

SponsorshipSponsorshipSponsorshipSponsorship

• Revenue from sponsorship of participation programs under the One Golf model is projected to increase to $629k from the $230k currently being realised

• The One Golf model is forecast to provide more than twice the sponsorship revenue of the Status Quo model

MembershipMembershipMembershipMembership

• Growth in both club and GA Social GC memberships will lead to increased revenue from $14m to $14.24m, which is $0.5m higher than the Status Quo

1 2 3

1 Organised Participation is defined as those people participating in coaching programs, weekly competitions or tournaments. This figure is lower than national club membership tallies, as a proportion of club members do not participate formally in the aforementioned “organised” formats







c) Resourcing


5 5 5 5 Future StateFuture StateFuture StateFuture State






We utilised a four-phased approach to assess and quantify the participation and commercial upside of the One Golf model


Current Participation Landscape

1

Future Golf Pathway

2

Participation Projections by Scenario

3

Commercial Value of Participation Outcomes

4

Key Steps:Key Steps:Key Steps:Key Steps:

• Analyse golf participation universe and profile using gemba’s proprietary research tracker (gASP)

• Identify current Golf program offering and pathway, and assess participation rates across national programs and membership offerings

• Compare golf participation metrics, including churn and acquisition, to market benchmarks

• Quantify sponsorship revenues generated by national and State-based participation programs

Output: Output: Output: Output: Summary of current golf participation landscape


• In consultation with GA Golf Development team, document the proposed golf pathway, including:

- Existing national programs developed by GA

- Proposed new programs targeted at specified consumer segments

- Intersection with club membership, competitions and other offerings

NoteNoteNoteNote: gemba : gemba : gemba : gemba is not responsible is not responsible is not responsible is not responsible for developing or refining the for developing or refining the for developing or refining the for developing or refining the golf pathway and golf pathway and golf pathway and golf pathway and has relied has relied has relied has relied wholly on information provided wholly on information provided wholly on information provided wholly on information provided by by by by GAGAGAGA

Output: Output: Output: Output: Documented future participation pathway for golf


• Forecast future participation outcomes under both the current (Status Quo) and proposed (One Golf) governance models, using data inputs gathered through market benchmarking, consumer research and golf landscape assessment

• Define the key participation benefits of the One Golf model

Note: gemba Note: gemba Note: gemba Note: gemba has not quantified has not quantified has not quantified has not quantified the investment required to the investment required to the investment required to the investment required to implement the proposed golf implement the proposed golf implement the proposed golf implement the proposed golf pathwaypathwaypathwaypathway

Output: Output: Output: Output: Comparison of participation outcomes under Status Quo and One Golf scenarios


• Using participation projections developed in Phase 3, quantify the commercial value of the future golf pathway, including upside delivered through:

• Growth – participation and frequency of current and new programs

• Width – whole of sport sponsorship opportunities

• Depth – access to grassroots for national sponsors

Output: Output: Output: Output: Commercial value of future participation under Status Quo and One Golf scenarios

Phased Project ApproachPhased Project ApproachPhased Project ApproachPhased Project Approach


Basis of Preparation and Limitations of Information

• Unless otherwise referenced, current state participation data and information contained in this document was provided to gemba by Golf Australia. gemba has not taken steps to verify the accuracy of this information

• gemba issued a data request to Golf Australia to assist it in preparing this document and has completely relied on the accuracy of this data and statements of staff in its analysis

• As per the scoping document, gemba is not responsible for developing or refining the golf pathway and has relied wholly on information provided by GA. In addition, gemba was not engaged to quantify the investment required to implement the proposed golf pathway

• The assessment of various growth scenarios has required gemba to make a number of estimates and performance projections, based on robust industry benchmarks and market data. In relation to these estimates and projections, actual results may be different to those forecast, because the future implementation of initiatives, programs and events do not occur as anticipated, and those differences may be material. gemba can give no assurance as to whether, or how closely, the actual outcomes will correspond to those estimated or projected and no reliance should be placed on such estimates or projections








c) Resourcing








Aligned behaviour and centralised operations have delivered participation and commercial success for leading sports


• A number of Australian sports including; the Australian Football League (AFL), Cricket Australia (CA) and Tennis Australia (TA) have achieved strong alignment between National and State bodies via a combination of top-down funding models and changes to federated governance practices. This landscape has in turn facilitated a centralised approach to participation and commercial strategy, with unified behaviours in the development and delivery of participation initiatives. Specifically, stakeholder alignment has delivered the following benefits;

– enabled control of national participation pathways

– removed duplication in the development and delivery of programs and events

– ensured consistency in branding and go-to-market strategies

– improved communication with grassroots participants and delivery partners

– Facilitated the development of national sponsorship properties and improved commercial returns

• Golf proposes to achieve similarly aligned behaviours through a change in governance structure and the consequent centralisation of operations. The purpose of this report is to investigate and quantify the participation and associated commercial benefits of a change to the One Golf model

Strengthening Stakeholder AlignmentStrengthening Stakeholder AlignmentStrengthening Stakeholder AlignmentStrengthening Stakeholder Alignment







c) Resourcing







10© GEMBA GROUP© GEMBA GROUP© GEMBA GROUP© GEMBA GROUPGolf Australia / ASC

Golf participation rates have weakened over the past four years, with a slower but equally consistent decline in club memberships

• According to gemba’s sports participation tracker (gASP) the percentage of Australians that played golf at least once within a 12 month period has declined from 11% in 2011 to 8.5% in 2014

• This equates to a -5% annual decline in the number of participants, from 1.95m people in 2011 to1.68m in 2014

1,9541,861

1,772 1,688

2011 2012 2013 2014

Participation DeclineParticipation DeclineParticipation DeclineParticipation Decline

Source: gemba Active Sports Participation (gASP) study, and GA Membership data

• Membership of golf clubs has also experienced a steady decline since 2000, with a loss of approximately 30k members over the past four years (average decline of -1.8% annually)

• This implies a need to adapt membership offerings in order to meet the changing needs of golf participants

*CAGR = compound annual growth rate

429 427 419 405 399

2009 2010 2011 2012 2013

Annual Golf Participation aged 5 to 75 Annual Golf Participation aged 5 to 75 Annual Golf Participation aged 5 to 75 Annual Golf Participation aged 5 to 75 (‘000) Golf Club Membership Golf Club Membership Golf Club Membership Golf Club Membership (‘000)


0%

5%

10%

15%

20%

25%

30%

2011 2012 2013 2014

Whilst most sports are experiencing some level of participation decline, Golf is declining at a faster rate than industry benchmarks


Participation TrendsParticipation TrendsParticipation TrendsParticipation TrendsGolf vs. Industry Benchmark Sports

0%

2%

4%

6%

8%

10%

12%

2011 2012 2013 2014

• The majority of Australian sports are in decline, with industry benchmarking revealing that participation rates are declining on average at -5.4% annually

• Golf is dropping faster than the industry benchmark, with an annual decline of -9.7% in national participation rate

• Industry benchmarking shows that regular (i.e. weekly) participation in leading Australian sports has experienced an average annual decline of more than -5%.

• Golf has been acutely effected in regular participation, with the annual percentage decline in weekly participation rate (-15.7%) almost three times the industry benchmark

Participation at least once in P12M Participation at least once in P12M Participation at least once in P12M Participation at least once in P12M (% of Aust. Population)

CAGR* = CAGR* = CAGR* = CAGR* = ---- 15.7% decline15.7% decline15.7% decline15.7% decline


CAGR* = - 5.4% decline CAGR* = - 5.7% decline

Weekly Participation Weekly Participation Weekly Participation Weekly Participation (% of Aust. Population)

Golf Industry Benchmark Golf Industry Benchmark

Source: gemba Active Sports Participation (gASP) study, and GA Membership dataIndustry benchmark = the average of leading Australian sports with aligned participation behaviours and centralised operations


0%

1%

2%

3%

4%

2011 2012 2013 2014

Interestingly, Golf is declining faster than tennis in both organised and social participation, despite a similar offer and target market


Participation TrendsParticipation TrendsParticipation TrendsParticipation TrendsGolf vs. Tennis

4%

6%

8%

10%

2011 2012 2013 2014

• Despite facing similar barriers to participation with respect to required technique and infrastructure, Golf has experienced a significantly more profound decline in organised participation (i.e. coaching programs, competitions and tournaments) than tennis

• Social participation is also decreasing for both Golf and Tennis, however the difference in the rate of decline is not as stark as is the case with organised participation

Organised Participation Organised Participation Organised Participation Organised Participation (% of Aust. Population)



CAGR* = - 5% declineCAGR* = - 6.2% decline

Social Participation Social Participation Social Participation Social Participation (% of Aust. Population)

Golf Tennis Golf Tennis

Source: gemba Active Sports Participation (gASP) study, and GA Membership data


In addition to the declining participation rate for the sport, Golf faces increased barriers to acquiring new and past participants


Barriers & Reasons for StoppingBarriers & Reasons for StoppingBarriers & Reasons for StoppingBarriers & Reasons for StoppingGolf vs. Other Sports

• The top barriers to participation in Golf among those interested are 31% higher than in other sports

• Major barriers to participation fall into 3 broad categories; financial, social barriers (who to participate with and lack of time) and accessibility barriers (lack of equipment and requiring membership)

• When assessing the reasons for stopping participation, there are differences compared to the barriers for starting participation

• While over indexing in reasons for stopping participation compared to other sports, there is no prominent reason for stopping participation in Golf, with a mix of social, health, interest and financial contributing to ceasing participation

Main Reason Stopping Participation Main Reason Stopping Participation Main Reason Stopping Participation Main Reason Stopping Participation (% past participants)Barriers to Participation Barriers to Participation Barriers to Participation Barriers to Participation (% of those interested)

Golf All other sports

Source: gemba Active Sports Participation (gASP) study

19%

14%11%

8% 7% 7%

13%11%

10%

6% 7%5%

Became toobusy

Injury / Healthreasons

Lost interest /no longerenjoyed it

Became boredof it

Financialreasons

No longer hadanyone to

participate with

39%

23%

20% 18%

14%

31%

19%

14%12% 12%

Cost Who toparticipate with

Lack ofequipment

Requiremembership

Lack of time

Golf All other sports


A review of the age profile for Golf reveals major churn points during young adulthood and early parent years


7.6%6.7%

8.6%

7.3%

8.7%8.3%

6.3% 6.3%

8.0%8.5%

9.2%10.2%

13.0%

1.6% 1.3% 1.3% 1.0%1.5% 1.4% 1.5%

1.0%1.5%

2.3% 2.4%

3.8%

5.1%

5-9 10-15 16-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-75

Age GroupAge GroupAge GroupAge Group

Decline caused by adolescents trying other sports and a lack of a tailored teenage offering

Decline caused by adolescents trying other sports and a lack of a tailored teenage offering

Decline potentially caused by entrance to

tertiary education and part-time work

Decline potentially caused by entrance to

tertiary education and part-time work

Increases caused by increased leisure time due to increasing independence of children and retirement from full-time work

Increases caused by increased leisure time due to increasing independence of children and retirement from full-time work

Golf Age ProfileGolf Age ProfileGolf Age ProfileGolf Age ProfileAnnual and Weekly Participation

Participated at least once in past 12 months Weekly participation


Decline caused by parenthood with

increased responsibilities at work and home

Decline caused by parenthood with

increased responsibilities at work and home


Comparing age profiles reveals Golf is underperforming in teenage acquisition, but is superior in attracting participants beyond 45 y.o.


Age Profile ComparisonAge Profile ComparisonAge Profile ComparisonAge Profile Comparison

0.0%

5.0%

10.0%

15.0%

20.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

Benchmarking

• Unlike the majority of other sports, Golf experiences significant increase in participation amongst people aged 45 and above

• Conversely, it experiences declines in participation as children enter their early teens which is at odds with the patterns of most other sports

• Between the ages of 25 and 40, the change Golf’s participation profile is most similar to the rest of the market

Golf Average All Sports Tennis

Participation Rate by Age GroupParticipation Rate by Age GroupParticipation Rate by Age GroupParticipation Rate by Age Group

Change in Participation Rate by Age GroupChange in Participation Rate by Age GroupChange in Participation Rate by Age GroupChange in Participation Rate by Age Group








c) Resourcing








The cluttered junior Golf landscape is causing fragmentation of the participant base into multiple programs


• According to gemba’s Active Sports Participation study approximately 168k children aged 5-12 have played Golf at least once in the past 12 months, of which approximately 40k have participated in an organised program or competition

Market SizeMarket SizeMarket SizeMarket Size

Junior Participation LandscapeJunior Participation LandscapeJunior Participation LandscapeJunior Participation Landscape

• The junior participation landscape for Golf is fragmented with multiple product offerings that Golf Australia and State Members Associations have limited control over

Product OfferingProduct OfferingProduct OfferingProduct Offering

• GA’s national junior program, My Golf, achieved approximately 4.8k registered participants in 2013/14

• This equates to only 12% of organised Golf participants in the 5 to 12 age group

National Program ParticipationNational Program ParticipationNational Program ParticipationNational Program Participation

1 Organised participants = children aged 5 to 12 who participated in a Golf coaching program, competition or tournamentSource: gemba Active Sports Participation study; gemba Market Insights; Golf Australia

Children Aged 5 to 12Children Aged 5 to 12Children Aged 5 to 12Children Aged 5 to 12

2.29m2.29m2.29m2.29m

Played Golf in P12MPlayed Golf in P12MPlayed Golf in P12MPlayed Golf in P12M

168k168k168k168k

Organised Organised Organised Organised ParticipantsParticipantsParticipantsParticipants1111

39.9k39.9k39.9k39.9k

39.9k

4.8k

OrganisedParticipants

My GolfParticipants

12% 12% 12% 12% conversionconversionconversionconversion


National Program

Conversion of Organised Participants

20% 50% 81% 58% 40% 39% 12%12%12%12%

Conversion of Acquisition Pool

13% 25% 30% 29% 17% 23% 2%2%2%2%

This is impacting the sport’s ability to convert participants into organised forms of the sport and national programs


814k

712k

619k588k

536k

317k265k

534k

359k

229k299k

223k183k

40k104k

181k 185k 173k

89k 72k5k

Athletics Soccer Cricket Australian Rules Tennis Netball Golf

Acquisition Pool1 No. of Organised Participants2 No. registered in national program3

1 Acquisition pool = the number of children aged 5 to 12 who participated in the past 12 months, plus the number interested in participating in the sport2 Organised participants = children aged 5 to 12 who participated in a coaching program, week-to-week competition or tournament in past 12 months3 Figures for national program participation does not include those who may participate in schools programsSource: gemba Active Sports Participation (gASP) study, NSO program registrations data

Junior Participation and Program ConversionJunior Participation and Program ConversionJunior Participation and Program ConversionJunior Participation and Program Conversion


Conversion to competitions / tournaments

44% 30% 20% 23% 8% 36% 6%6%6%6%

Similarly, Golf has low conversion of junior participants into competitions and events


814k

712k

619k588k

536k

317k265k

359k

212k

121k 137k

45k115k

17k

Athletics Soccer Cricket Australian Rules Tennis Netball Golf

Acquisition Pool1 No. in Competitions / Tournaments2

1 Acquisition pool = the number of children aged 5 to 12 who participated in the past 12 months, plus the number interested in participating in the sport2 Competitions / Tournaments = any week-to-week competition or one-off tournament delivered by clubs, private operators or State/National bodiesSource: gemba Active Sports Participation (gASP) study, NSO program registrations data

Junior Competitions and EventsJunior Competitions and EventsJunior Competitions and EventsJunior Competitions and Events

While the current conversion of 6% for participants into competitions and tournaments is low, GA and the States manage to convert 44% 44% 44% 44% of this figure (~7.4k) into their own competitions (which is well above market benchmarks)


For adult participation, the conversion of social golfers into membership offerings remains a challenge for GA and the States


• According to gemba’s Active Sports Participation study approximately 1.25m people aged 16 to 64 have played Golf at least once in the past 12 months, of which approximately 223k have participated in an organised program or competition

Market SizeMarket SizeMarket SizeMarket Size

Adult Participation LandscapeAdult Participation LandscapeAdult Participation LandscapeAdult Participation Landscape

• In addition to individual club memberships, there exists a number of competing programs that sit outside the National Body’s remit

Product OfferingProduct OfferingProduct OfferingProduct Offering

• Of the 1.25m people who play Golf annually, approximately 32% have been converted to club membership, with only 0.3% becoming members of GA’s Social Golf Club

Product Participation Product Participation Product Participation Product Participation (‘000)

People Aged 16 to 64People Aged 16 to 64People Aged 16 to 64People Aged 16 to 64

15.42m15.42m15.42m15.42m

Played Golf in P12MPlayed Golf in P12MPlayed Golf in P12MPlayed Golf in P12M

1.25m1.25m1.25m1.25m

Organised Organised Organised Organised ParticipantsParticipantsParticipantsParticipants1111

223k223k223k223k

0.3% 0.3% 0.3% 0.3% conversionconversionconversionconversion

33332% 2% 2% 2% conversionconversionconversionconversion

1,250.0

403.0

847.0

2.5

AnnualParticipants

Club Members Non ClubMembers

Social GolfClub Members


Conversion to Club Membership

15% 32%32%32%32% 25% 39% 26%

Conversion to competitions / tournaments

13% 17%17%17%17% 24% 19% 48%

Despite historical declines in club membership, Golf is converting more adult participants to members than competing sports


1,381k

1,246k

827k754k

458k

205k

403k

204k290k

119k173k 207k 199k

141k217k

Tennis Golf Cricket Aussie Rules Netball


Adult Participation and Membership ConversionAdult Participation and Membership ConversionAdult Participation and Membership ConversionAdult Participation and Membership Conversion

Participation in Past 12 months (aged 16 to 65) No. of Club Members No. in Competitions / Tournaments

Conversion of the adult participation base to competitions / tournaments (17%) is almost three times more than the equivalentconversion of junior participation. However, GA and the States only manage to convert 27% 27% 27% 27% (~57k) of the competitions /

tournament participants into their own competitions (compared to 44% in the junior participation market)


Conversion to organised participation

16% 18%18%18%18% 29% 30% 54%

National Program

N/A N/A

Conversion to National Program

8% 2%2%2%2% N/A 18% N/A

Golf is underperforming, however, in converting participants into national programs or initiatives


1,381k1,246k

827k754k

458k

224k 230k 240k 229k 245k

17k 2k 42k

Tennis Golf Cricket Aussie Rules Netball

Participation in Past 12 months (aged 16 to 65) No. of organised participants1

Adult Participation and National Program ConversionAdult Participation and National Program ConversionAdult Participation and National Program ConversionAdult Participation and National Program Conversion

1 Organised participants = those who participated in a coaching program, week-to-week competition or tournament in past 12 monthsSource: gemba Active Sports Participation (gASP) study, NSO program registrations data

No. in national program/initiative







c) Resourcing








Capacity exists within the current Golf development network to increase participation without the need for increasing resources

Golf Development ResourcingGolf Development ResourcingGolf Development ResourcingGolf Development Resourcing

Source: GA and NSO resourcing data

• Compared with the industry benchmark, Golf has capacity within the existing development workforce to increase participation

• If industry benchmark’s were to be achieved, Golf could realise an additional uptake of ~70,000 participants

5.8k

3.8k

Industry Benchmark Golf

Registered Participants per FTERegistered Participants per FTERegistered Participants per FTERegistered Participants per FTEDevelopment officers are critical components to the growth and success of sports in Australia. Currently the State and National bodies employ 35 Golf Development staff across the country. The ratio of participants to development staff is below industry benchmarks, which provides the opportunity for the more effective use of existing infrastructure to achieve growth.

Organisation Golf Development FTEs

Golf Australia 3

Golf VIC 12

Golf NSW / JNJG 11

Golf QLD 3

Golf WA 3

Golf SA 1

Golf TAS 1

Golf NT 1

Total 35







c) Resourcing








The lack of co-ordination in structure, communication and go-to-market approach is resulting in reduced sponsorship incomes

• The National Body currently contributes 87% of the total sponsorship revenue stemming from the sale of a single property (GA Social Golf Club)

• Golf is more than three times behind the industry benchmark for sponsorship revenue per participant contact

Opportunities

There are opportunities for Golf to increase sponsorship revenues through implementing:

• A refined, national sponsorship structure and clear delineation of benefits

• A coordinated approach to program delivery and the aggregation of participant databases

Risks

There are barriers preventing Golf from maximising commercial value:

• States and national bodies are not coordinated in their go-to-market approach

• There is no direct national communication channels for sponsors (e.g. aggregated participant databases)

200

30 230

GA State MAs Total

Golf Participation Golf Participation Golf Participation Golf Participation Sponsorship Revenue ($’000)Sponsorship Revenue ($’000)Sponsorship Revenue ($’000)Sponsorship Revenue ($’000)

Sponsorship Income FY14Sponsorship Income FY14Sponsorship Income FY14Sponsorship Income FY14

Source: Golf Australia financial data, and Golf Development data, market benchmarks

1 Participant contact = each time an individual participates in a program designed and managed by the National or State bodies

Sponsorship $$ per Registered Sponsorship $$ per Registered Sponsorship $$ per Registered Sponsorship $$ per Registered Participant ContactParticipant ContactParticipant ContactParticipant Contact1111

$0.26

$0.90

Golf IndustryBenchmark

Note: the above revenue figures relate to the sponsorship of participation programs onlyNote: the above revenue figures relate to the sponsorship of participation programs onlyNote: the above revenue figures relate to the sponsorship of participation programs onlyNote: the above revenue figures relate to the sponsorship of participation programs only


With the benefits delivered to members at club level, membership revenue received by the national body is below the benchmark

• While Golf generates less membership revenue per club member at the State/National level compared to other sports, the benefits and infrastructure offered to members at club level in Golf is far more significant than what is offered at the State/National level

• An increase in National programs and services offered to both members and clubs could see an opportunity for the National and State bodies to increase their membership fees

Opportunities

There are opportunities for Golf to increase membership revenues through:

• Creation of new/tailored membership offerings (e.g. the Social Golf Club)

• Increasing shared services available to Clubs and Members at the NSO level

Risks

There are barriers preventing Golf from maximising commercial value:

• A declining club membership base

• A lack of control over club membership models and offerings

4,888

9,115

14,004

GA State MAs Total

National and State National and State National and State National and State Membership Income ($’000)Membership Income ($’000)Membership Income ($’000)Membership Income ($’000)

Membership Income FY14Membership Income FY14Membership Income FY14Membership Income FY14

Source: Golf Australia and State Member Associations financial data, market benchmarks

Membership Revenue per Club Membership Revenue per Club Membership Revenue per Club Membership Revenue per Club MemberMemberMemberMember

$35.11

$51.03

Golf Industry Benchmark


Golf participation is declining at a rate faster than other sports, which is impacting commercial and membership outcomes


1

2

3

4

5

Weekly sports participation in Australia is declining at an annual rate of -5.7% across all sports, however Golf participation is declining at a faster rate of -15.7%. In addition to this, Golf memberships have steadily been declining at a rate of -1.8% p.a.

Golf faces challenges in acquiring new participants and reacquiring past participants. There are significant barriers to participation that are impacting Golf’s ability to attract new participants in comparison to other sports. Similarly the reasons for participants ceasing participation in Golf are higher than in other sports.

The fragmentation of the junior and adult participation offer through various National, State and Commercial providers is restricting the ability of the sport to attract and convert its participant base into organised and structured formats of Golf

Existing development officers within the State and National development network have capacity to increase participation without the need for additional resources to be employed in the short-medium term

The misalignment between the State and National bodies is reducing the ability for Golf to maximise both sponsorship and membership revenues as multiple go-to-market strategies and communication channels exist

Summary of Current StateSummary of Current StateSummary of Current StateSummary of Current State







c) Resourcing








Our Future State analysis has assessed the participation and commercial outcomes of both the Status Quo and One Golf models


The decentralised governance model currently in operation for GA and its State Member Associations, which has the following characteristics:

• Golf Australia and State Member Associations (“MAs”) operate independently

• Each MA has its own independent revenue process, with individual accounting function

• Staff employed by individual MAs with no reporting to national body (i.e. GA)

• State CEOs report to MA Boards

• MA Boards collectively elect the GA Board

• GA and each MA maintain their own organisational brands

• Cooperation and collaboration on participation programs and events achieved through goodwill of GA and State bodies, rather than governance and/or operational structures

Status QuoFederated Model

One GolfCentralised Model

A centralised governance model proposed by the Governance Sub-Committee as the optimal future framework for Golf, the main features of which include:

• GA and State MAs merge into a single organisation with top down constitutional control and operations

• All staff in Australia employed by GA

• State CEOs to report to GA CEO and not the State Board

• A single, centralised revenue process, with central accounting function

• State organisations remain in place as shell companies that retain all existing assets

• State Boards remain in place with defined responsibilities, including the continued election of the GA Board

• One national brand with state divisions underneath (e.g. Golf Australia Queensland Division)

• Only national programs in place, with some State customisation possible

1 2

Future State Governance OptionsFuture State Governance OptionsFuture State Governance OptionsFuture State Governance Options

The ensuing sections of this report describe and quantify the future participation benefits, and associated commercial outcomes, under each of the above models







c) Resourcing








There are three primary levers through which any sport can maintain and grow its registered participant base


Participation Growth LeversParticipation Growth LeversParticipation Growth LeversParticipation Growth Levers

RETENTION

FREQUENCY

ACQUISITION• New participants

• Existing participants

• All participants

The acquisition of new participants is driven by increased consumer demand, resulting from :

• Product development

• Brand awareness and communications

• Alignment of delivery channels and efficient use of National and State resources

1

2

The retention of participants is underpinned by:

• Product pathway

• Transition mechanisms (i.e. activity and personnel to pull participants through pathway)

1

2

The frequency of participation is driven by:

• Program format / content (e.g. organised competition vs. social participation)

• Type of delivery channel (e.g. clubs vs. schools)

1

2

3


The future pathway for Golf will incorporate both existing programs and new offerings targeted at specific consumer segments


Proposed Golf Product PortfolioProposed Golf Product PortfolioProposed Golf Product PortfolioProposed Golf Product PortfolioCore National Programs

Target MarketTarget MarketTarget MarketTarget Market

• 5 to 12 year olds

ObjectiveObjectiveObjectiveObjective

• Introduce kids to the sport of Golf in a fun and social environment

ContentContentContentContent

• Tiered structure, with mix of skills development, games-based activities and competition based on age group needs

Delivery ChannelsDelivery ChannelsDelivery ChannelsDelivery Channels

• PGA coaches, clubs and schools

My Golf

Source: Golf Australia Participation Plan

Product RefinementProduct RefinementProduct RefinementProduct Refinement New Product DevelopmentNew Product DevelopmentNew Product DevelopmentNew Product Development


• 16+ year olds


• Engage new and current female participants in a program delivering on social, skills development and fitness objectives


• Skills development, game-based and fitness exercises


• PGA coaches and clubs

SwingFit


• 13 to 18 year olds


• Retain existing and engage new participants in a program aligned to skills development, social and competitive needs


• Yet to be defined



Teenage Program




• Acquire new adult participants via a fun and engaging skills development program





Adult Learn to Play

The above programs are yet to be developed and are unlikely to be implemented until 2016 and beyond


The One Golf model is best placed to deliver participation growth and successfully implement a best practice participant pathway


StatusStatusStatusStatus Quo ModelQuo ModelQuo ModelQuo Model One GolfOne GolfOne GolfOne Golf ModelModelModelModel

Score Comment Score Comment

AcquisitionAcquisitionAcquisitionAcquisition

Product DevelopmentImproved content for individual core programs

Coordinated approach to development of entire product portfolio

Brand Awareness and Communications

Inefficiencies from independent marketing activities and communications channels

Efficiencies in marketing investment via centralised planning and aggregated communication databases

Program DeliveryInconsistencies in quality control due to independent operations

Consistent delivery and combinedresources

RetentionRetentionRetentionRetention

Product PathwayCurrent lack of coordination ofprogramming and inefficient delivery

Ability to streamline and tailor programming, and efficient delivery

Transition MechanismsCurrent resources to facilitate transition between current programs

Combined investment and efficiency in resources to assist transition

FrequencyFrequencyFrequencyFrequency

Program Format Format of current program offerings Coordinated product development

Delivery ChannelsOpportunities to better utilise available delivery channels

Combined resources to penetrate available delivery channels

Total Score

Model AssessmentModel AssessmentModel AssessmentModel Assessment

ConclusionConclusionConclusionConclusion: : : : Based on the ability to improve participant acquisition, retention and frequency, One Golf is the optimal model to maintain and grow Golf’s registered participant base

1 2

Key Criteria


To forecast participation outcomes under both models, we have utilised a three step methodology, underpinned by market data


Objective:Objective:Objective:Objective:

• Quantify current Golf participation across all formats and age groups, including assessment of historical growth rates and current acquisition and churn

Methodology:Methodology:Methodology:Methodology:

• Using gemba’s Active Sports participation study (including extrapolation via ABS statistics) quantity the current Golf participation base, including:

• Annual participation by age group

• Participation in organised programs and events

• Changes in participation year on year, including churn and acquisition

• Collate GA’s participation data to quantify conversion into national programs and GA/MA events

Step 1Quantify Current Participation

Step 2Benchmark against Industry

Best Practice

Step 3Apply Future Acquisition and

Churn Rates


• Benchmark Golf participation metrics against leading sports, particularly centralised governance models quantity the upside delivered by a potential change to the One Golf model


• Using gemba’s Active Sports Participation (gASP) study and available market data (i.e. NSO registration, participation and membership figures), benchmark Golf participation metrics against industry best practice including:

• Historical participation changes

• Age profiling, including acquisition and churn by age group

• Conversion into membership, participation programs and events


• Forecast the potential growth in Golf participation using realistic growth rates towards industry benchmarks


• Growth rates in overall participation, program and event registration, and membership have been applied under the two proposed governance scenarios:

• Status Quo – conservative growth in acquisition based on resources to invest in product development, and low improvement in churn due to independent management of programs and events

• One Golf –growth in program acquisition and minimising of membership decline towards industry benchmark rates (refer to appendix for key assumptions)

Participation Projections Participation Projections Participation Projections Participation Projections –––– MethodologyMethodologyMethodologyMethodology


A centralised governance model has the ability to lessen the current decline in annual participation


1,6881,613 1,551

1,500

1,688 1,6291,521

1,445

Base Year Year 1 Year 2 Year 3

Overall Participation ProjectionOverall Participation ProjectionOverall Participation ProjectionOverall Participation ProjectionStatus Quo vs One Golf Model

One Golf (Mid Case)

Status Quo

• The majority of Australian sports are currently experiencing a decline in annual participation rates1, however those with aligned participation behaviours and centralised operations have exhibited a slower rate of decline (average of -3.9% p.a.) than Golf (-5%)

• A One Golf model therefore has the ability to minimise the rate of decline to the industry benchmark of -3.9% p.a.

1 Annual participation rates = the percentage of Australians aged 5 to 75 who have participated in the a given sport at least once in the past 12 monthsSource: gemba participation modelling (refer Appendix I for methodology and key assumptions)


Despite a decline in annual participation rates, a centralised model is forecast to maximise organised participation

• Market benchmarking shows that sports with aligned participation behaviours and centralised operations have experienced increased participation in organised programs, competitions and tournaments, despite decreases in overall annual participation

• If Golf is to adopt a One Golf governance model, it is forecast to slow the decline in organised participation and achieve superior growth in proportion of participants registered in programs delivered by GA and MAs (please refer to next page for a breakdown of the growth by individual program)

Organised ParticipantOrganised ParticipantOrganised ParticipantOrganised Participant1111 ProjectionsProjectionsProjectionsProjectionsStatus Quo vs One Golf Model (‘000)

1 Organised participation = those participating in some form of organised program, weekly competition or tournamentSource: gemba participation modelling (refer Appendix I for methodology and key assumptions)

130 146 165 189

204 182 162 140


130 137 143 150

204 182 162 141


Total Participation Organised Participants Organised Participants Registered in GA/MA Programs

One Golf (Mid Case)One Golf (Mid Case)One Golf (Mid Case)One Golf (Mid Case)Status QuoStatus QuoStatus QuoStatus Quo

334 334319 305 291 328 327 329


The One Golf model will deliver superior growth in registered program participants, from 130k to 189k by Year 3

• Market benchmarking shows that sports with aligned participation behaviours and centralised operations have delivered higher acquisition and retention of participants in national programs, through consistent product delivery and branding, superior communications via aggregated databases and streamlined channels, and the efficient use of game development resources to educate, acquire and align delivery channels (e.g. clubs, schools)

• As such, the One Golf model is forecast to deliver superior growth in established and new programs, including My Golf, SwingFitand other programs targeted at new consumer segments

Program Participant ProjectionsProgram Participant ProjectionsProgram Participant ProjectionsProgram Participant ProjectionsStatus Quo vs One Golf Model (‘000)

1 Other programs = include existing niche programs (e.g. Seniors) and new programs to be developed for specific consumer segments (e.g. teenagers)Source: gemba participation modelling (refer Appendix I for methodology and key assumptions)

5 7 9 12

71 83 97113

46

8

5453

54

56130

146165

189


My Golf Core Program My Golf Schools Program SwingFit


Other Programs1

5 6 7 8

71 74 78 82

4 4 554 52 51 50

130 136 140 144



A centralised model will also deliver increased participation in organised events, including those delivered by GA and MAs

• Market benchmarking shows that sports with aligned participation behaviours and centralised operations have experienced increased participation in organised events (i.e. competitions and tournaments), due to an ability to conduct more effective communications with participants and better align delivery channels (e.g. clubs and schools) to transition participants into competitive arenas

• A One Golf governance model is forecast to increase organised participation in line with market benchmarks, including those participants registered in events delivered by GA and MAs

Event Participant ProjectionsEvent Participant ProjectionsEvent Participant ProjectionsEvent Participant ProjectionsStatus Quo vs One Golf Model(‘000)

Source: gemba participation modelling (refer Appendix I for methodology and key assumptions)

57 58 60 62

7 7 8 964 66 68 70


GA/MA Events Junior Events


57 57 56 56

7 7 7 7

64 64 63 63



The One Golf model is expected to also lessen the decline in club membership, and deliver growth in the Social Golf Club concept

• Most Australian sports are experiencing a decline in club membership, however those that have aligned participation behaviours and centralised operations have exhibited a lower rate of decline due to an ability to support clubs to adapt their membership offering to meet the changing needs of grassroots participants. Therefore the One Golf Model is forecast to slow the rate of decline in club membership relative to the Status Quo

• Both One Golf and Status Quo models are expected to deliver growth in the GA (Qantas) Social Golf Club membership

Membership ProjectionsMembership ProjectionsMembership ProjectionsMembership ProjectionsStatus Quo vs One Golf Model(‘000)

Source: gemba participation modelling (refer Appendix I for methodology and key assumptions)

399 395 394 393

2 4 6 9

401 400 400 402


Club Members GA (Qantas) Social Golf Club Paid Members


399 392 385 379

2 4 6 9

401 396 391 387



In conclusion, One Golf will deliver superior growth in program and event participation, and minimise decline in club membership


1

2

3

4

There are three primary levers through which any sport can maintain and grow its registered participant base: 1) acquisition, 2) retention and 3) frequency

The One Golf model is best placed to deliver participation growth via an ability to:

• Drive acquisition acquisition acquisition acquisition through tailored program development, consistent program delivery through aligned channels, and superior brand awareness via aggregated marketing resources and streamlined communications channels

• Ensure better retention retention retention retention of participants through the implementation a nationally consistent pathway and coordinated use of Golf development resources to transition and educate

• Increase frequency frequency frequency frequency of participation via conversion into programs across multiple delivery channels

A centralised governance model has the ability to lessen the current decline in annual participation and club membership due to an ability to support delivery channels to adapt their offering to meet the changing needs of grassroots participants

Market benchmarking shows that a One Golf model will deliver superior growth in program and event registration, via consistent product delivery and branding, superior communications via aggregated databases and the efficient use of game development resources to educate, acquire and align delivery channels. Highlights include:

• Increased participation in national programs from 130k to 189k in Year 3

• Increased participation in GA/MA events from 64k to 70k in Year 5

• Increased membership of the GA (Qantas) Social Golf Club to 9k in Year 3

Summary of Participation OutcomesSummary of Participation OutcomesSummary of Participation OutcomesSummary of Participation Outcomes







c) Resourcing








Golf can commercialise its participant base via sponsorship of grassroots properties, as well as direct and indirect membership


Commercialising ParticipationCommercialising ParticipationCommercialising ParticipationCommercialising Participation

Sponsorship RevenueSponsorship RevenueSponsorship RevenueSponsorship Revenue

• Golf can commercialise its participant base via the sale of sponsorship properties attached to grassroots programs and events (both National and State)

Membership RevenueMembership RevenueMembership RevenueMembership Revenue

• Golf can commercialise its participant base via the sale of direct memberships (e.g. GA Social Golf Club) and the affiliation of club members

1 2


The ability to increase the commercial value of a sport’s sponsorship portfolio is determined by three core factors

Sponsorship Value Levers

DepthDepthDepthDepth

WidthWidthWidthWidth

GrowthGrowthGrowthGrowth• Participation and Participation and Participation and Participation and frequencyfrequencyfrequencyfrequency

• Whole of SportWhole of SportWhole of SportWhole of Sport

• Access to grassrootsAccess to grassrootsAccess to grassrootsAccess to grassroots

Unlocking Commercial Value of SponsorshipUnlocking Commercial Value of SponsorshipUnlocking Commercial Value of SponsorshipUnlocking Commercial Value of Sponsorship

Sponsorship Growth LeversSponsorship Growth LeversSponsorship Growth LeversSponsorship Growth Levers• To unlock additional commercial value from its sponsorship portfolio, Golf needs to focus on three core levers: 1) Reach, 2) Width and 3) Depth

• Each of these factors is crucial to maximising the benefits and value to sponsors

Lever Description How is it delivered

GrowthGrowthGrowthGrowth

Maximising consumer exposure is a primary objective of sponsorship. For a sport’s property, this is determined by:

• Reach (e.g. no. of participants)

• Frequency (e.g. no. of sessions)

Growth in reach and frequency is determined by ability to generate and capture consumer demand through:

• Product development

• Brand promotion

WidthWidthWidthWidth

Commercial value can also be unlocked via the width that an organisation or sponsorship property can provide. For a sport, this is determined by the ability to provide ‘whole of sport’ engagement across the participation pathway

For sport sponsorship, width is delivered through ‘whole of sport’ access, including the provision of:

• An Integrated pathway

• Single seller

• NSO endorsement

DepthDepthDepthDepth

Commercial value is also determined by the depth of a property, which refers to the ability of a sponsor to communicate and engage with end consumers. For a sports property, this equates to the ability to communicate directly with participants and fans

For sport sponsorship, depth, or the ability to engage directly with participants, is determined by:

• Stakeholder alignment

• Development Officers

• Communication channels and database/IT structures

Source: gemba intellectual capital and market insight


The One Golf Model will deliver superior commercial value and improve the efficiency and effectiveness of sales mechanisms


Status Quo ModelStatus Quo ModelStatus Quo ModelStatus Quo Model One GolfOne GolfOne GolfOne Golf ModelModelModelModel


Commercial ValueCommercial ValueCommercial ValueCommercial Value CreationCreationCreationCreation

GrowthParticipation and Frequency

Current product offering and limited ability to grow individual programs

Ability to grow participation through coordinated product development and streamlined promotion

Width‘Whole of Sport’

Inability to offer access to ‘whole of sport pathway’

Ability to provide ‘whole of sport’ access via streamlined national pathway

DepthAccess to grassroots

Lack of stakeholder alignment and direct communication channels

Coordinated go-to-market approach and aggregated databases

OperationalOperationalOperationalOperational EffectivenessEffectivenessEffectivenessEffectiveness

Sales EfficiencyIndependent organisational structures and lack of alignment in sales

Efficiencies created through combined sales resources

Sales Acumen Current organisational expertise in salesImproved capability created through combined sales expertise

Sponsor Relationships Independent sponsor relationshipsOpportunities to leverage combined sponsor relationships

Total Score


ConclusionConclusionConclusionConclusion::::• The One Golf has the potential to achieve improved operational effectiveness and revenue growth from sponsorship than an independent model

1 2

Key Criteria


The One Golf Model is forecast to generate an additional $399k in sponsorship revenue by Year 3

Sponsorship Revenue PotentialSponsorship Revenue PotentialSponsorship Revenue PotentialSponsorship Revenue PotentialStatus Quo vs. One Golf ($’000)

Based on participation growth projections, and a streamlined/aggregated approach to sponsorship, the One Golf model is forecast to achieve significant growth in commercial revenues:

• One Golf (Mid Case) – increase from $230k in the base year to $629k in sponsorship revenues by Year 3, via growth in participation, the aggregation of communications channels to provide depth of relationships for sponsors, and the ability to sponsor a national participation pathway

• Status Quo – increase from $230k in base year to $292k in Year 3, due to limited growth in participation programs

Source: gemba Market Benchmarks and Revenue Modelling (refer appendix for assumptions and methodology)

230 255 272 292

230

294

426

629


One Golf (Mid Case)

Status Quo


This additional revenue is the combination of superior depth, growth and width, which the Status Quo cannot deliver

Year Year Year Year 3 3 3 3 Sponsorship Revenue by Value DriverSponsorship Revenue by Value DriverSponsorship Revenue by Value DriverSponsorship Revenue by Value DriverOne Golf Mid Case ($‘000)

• Based on an ability to deliver depth, growth and width, a One Golf model, with its associated efficiencies and opportunities, could unlock an additional $399k in sponsorship revenue

• The above revenue projections are based on securing investment from high spend sponsorship categories (e.g. Telecommunications) that will not cannibalise local sponsorships for club events

Enablers

A centralised governance model can achieve sponsorship growth via three means:

• Aggregation of national benefits to provide depth

• Growth in the acquisition and retention of participants

• Leveraging ‘whole of sport’ access to create and sell new properties attached to multiple niche programs and initiatives

Barriers

All growth opportunities are contingent on the alignment of all State and national stakeholders in the go-to-market approach, and the development of direct communication channels between sponsors and end consumers (i.e. participants)

1 Gross margin figures have been calculated using an assumed margin of 70%, which aligns with industry benchmarks for NSOs2 This figure is based on the ability to leverage ‘whole of pathway’ access to bundle multiple grassroots properties (i.e. for specific segments)Source: gemba Market Benchmarks and Revenue Modelling, and GA/MA financial accounts

Gross MarginGross MarginGross MarginGross Margin1111 81.5 137.0 60.7 440.3

230.0

116.5

195.7

86.8 629.0

Current SponsorshipIncome

Depth (access tograssroots)

Growth (participation) Width ('Whole ofPathway')

Total PotentialSponsorship Income

2222


At a property level, My Golf will deliver the majority of new revenue, with smaller contributions from the broader pathway

Year Year Year Year 3 3 3 3 Sponsorship Revenue Sponsorship Revenue Sponsorship Revenue Sponsorship Revenue by Propertyby Propertyby Propertyby PropertyOne Golf Mid Case ($‘000)

• Based on project participation rates, My Golf is forecast attract sponsorship investment of $356k in Year 3, with SwingFit contributing $43k in revenues, and $230k by the broader pathway (i.e. aggregation of programs and events targeted at specific consumer segments)

1 Gross margin figures have been calculated using an assumed margin of 70%, which aligns with industry benchmarks for NSOsSource: gemba Market Benchmarks and Revenue Modelling, and Golf Australia and Member Association financial accounts

Gross MarginGross MarginGross MarginGross Margin1111 249.4 29.4 440.3

230.0

356.4

42.6629.0

Pathway Assets My Golf SwingFit Total Potential Sponsorship Income


For membership revenue, sports typically achieve growth via increased margins, increased sales or new product development


Driving Membership GrowthDriving Membership GrowthDriving Membership GrowthDriving Membership Growth

+ Increase + Increase + Increase + Increase MarginMarginMarginMargin

+ Increase + Increase + Increase + Increase VolumeVolumeVolumeVolume

REACH UPREACH UPREACH UPREACH UP1

REACH OUTREACH OUTREACH OUTREACH OUT3

REACH DOWNREACH DOWNREACH DOWNREACH DOWN2

+ + + + New products New products New products New products and segmentsand segmentsand segmentsand segments

MEMBERSHIP MEMBERSHIP MEMBERSHIP MEMBERSHIP REVENUEREVENUEREVENUEREVENUE

Reach Up

Sports organisations can increase membership revenue via increased fees for direct membership products or affiliation fees charged to affiliated clubs and organisations. Given the current decline in club memberships this strategy has low likelihood of long-term success for Golf

Reach Down

Sports organisations can increase membership revenue via higher volumes and improved conversion of current participants to paid membership products. To achieve higher volumes requires GA to assist clubs in refining current club membership offers (i.e. price and benefits)

Reach Out

Sports organisations can also grow membership revenue via the development of new membership products that meet the needs of specific consumer segments. Golf is well positioned to achieve such growth via the development and promotion of the Qantas Social Golf Club concept

3

2

1


The One Golf model is best positioned to maximise membership conversion via improved product, club support and promotions



ConclusionConclusionConclusionConclusion::::

• The One Golf model will better maximise membership conversion and new product development, via improved support to clubs to adapt membership offerings, the ability to drive national ‘buy-in’ to the Qantas Social Golf Club concept, and the aggregation of communications channels and marketing resources

Status Quo ModelStatus Quo ModelStatus Quo ModelStatus Quo Model One GolfOne GolfOne GolfOne Golf ModelModelModelModel


Revenue GrowthRevenue GrowthRevenue GrowthRevenue Growth StrategyStrategyStrategyStrategy

Reach UpIncreased membership fees

Decreased demand for current club membership offer

Decreased demand for current club membership offer

Reach DownIncreased sales volume

Current membership trends and inability to influence club offers (i.e. price and benefits)

Coordinated club support and education to adapt membership offerings to consumer needs

Reach OutNew products

Current lack of total ‘buy-in’ to nationalmembership propositions (e.g. Qantas Social Golf Club)

Ability to drive mass adoption of national memberships and eradication of State-centric propositions

OperationalOperationalOperationalOperational EffectivenessEffectivenessEffectivenessEffectiveness

Sales EfficiencyIndependent organisational structures and lack of alignment in sales

Efficiencies created through combined sales resources

Communications Channels

Inefficiencies from independent marketing activities and communications channels

Efficiencies in marketing investment via centralised planning and aggregated communication databases

Total Score

1 2

Key Criteria


The One Golf model is forecast to deliver an additional $243k in membership revenues by Year 3

• The One Golf Model is predicted to minimise membership decline through supporting clubs to adapt their membership offering to meet consumer needs, and by delivering growth in the Qantas Social Golf Club membership via the ability to build awareness through aggregated communications channels

• Based on current fee levels ($35 per club member, and $50 per Qantas Social Club member), the One Golf model will deliver increased membership revenue from $14m in the base year to $14.2m in Year 3. This includes an additional $447k in revenue from the Qantas Social Golf Club membership

Membership Revenue PotentialMembership Revenue PotentialMembership Revenue PotentialMembership Revenue PotentialStatus Quo vs One Golf Model ($‘000)

Source: gemba revenue modelling

Club Membership Revenue (GA and MAs combined) Qantas Social Golf Club Membership Revenue

One GolfOne GolfOne GolfOne GolfStatus QuoStatus QuoStatus QuoStatus Quo

14,004 13,886 13,828 13,800

0 188 290 44714,004 14,074 14,118 14,247


14,004 13,766 13,532 13,301

0 188 290 447

14,004 13,954 13,822 13,749



In conclusion, One Golf will deliver superior growth in both sponsorship and membership revenues to the Status Quo


Summary of Commercial OutcomesSummary of Commercial OutcomesSummary of Commercial OutcomesSummary of Commercial Outcomes

1

2

3

4

There are two primary means by which Golf can commercialise its participant base: 1) via sponsorship of grassroots programs and events, and 2) via indirect (i.e. club) and direct (i.e. Social Golf Club) membership products

The One Golf model is best placed to drive growth in sponsorship revenue via the delivery of improved value to potential sponsors, including:

• GrowthGrowthGrowthGrowth –––– larger participation base in national/State programs and events through consistent product delivery and branding, tailored product development and a streamlined pathway

• Depth Depth Depth Depth –––– ability for sponsors to communicate and engage directly with grassroots participants via aggregated consumer databases and streamlined marketing channels

• Width Width Width Width –––– the ability for sponsors to access all components of the participation pathway through aggregated national and State properties

The One Golf model will also better maximise membership conversion and new product development, via improved support to clubs to adapt membership offerings, the ability to drive national ‘buy-in’ to the Qantas Social Golf Club concept, and the aggregation of communications channels and marketing resources

Commercial forecasting, underpinned by robust market benchmarks, shows that a One Golf model will deliver superior revenue growth to the status quo, including:

• Growth in grassroots sponsorship revenues from $230k in the base year to $629k in Year 3

• Growth in membership revenues from $14m in the base year to $14.2m in Year 3, due largely to higher sales volumes in the Qantas Social Golf Club concept







c) Resourcing







I) Participation Model Assumptions

II) Commercial Model Assumptions


To forecast participation outcomes under both models, we have utilised a three step methodology, underpinned by market data



• Quantify current Golf participation across all formats and age groups, including assessment of historical growth rates and current acquisition and churn


• Using gemba’s Active Sports participation study (including extrapolation via ABS statistics) quantity the current Golf participation base, including:

• Annual participation by age group

• Participation in organised programs and events

• Changes in participation year on year, including churn and acquisition

• Collate GA’s participation data to quantify conversion into national programs and GA/MA events

Step 1Quantify Current Participation

Step 2Benchmark against Industry

Best Practice

Step 3Apply Future Acquisition and

Churn Rates


• Benchmark Golf participation metrics against leading sports, particularly centralised governance models quantity the upside delivered by a potential change to the One Golf model


• Using gemba’s Active Sports Participation (gASP) study and available market data (i.e. NSO registration, participation and membership figures), benchmark Golf participation metrics against industry best practice including:

• Historical participation changes

• Age profiling, including acquisition and churn by age group

• Conversion into membership, participation programs and events


• Forecast the potential growth in Golf participation using realistic growth rates towards industry benchmarks


• Growth rates in overall participation, program and event registration, and membership have been applied under the two proposed governance scenarios:

• Status Quo – conservative growth in acquisition based on resources to invest in product development, and low improvement in churn due to independent management of programs and events

• One Golf –growth in program acquisition and minimising of membership decline towards industry benchmark rates (refer to appendix for key assumptions)

Participation Projections Participation Projections Participation Projections Participation Projections –––– MethodologyMethodologyMethodologyMethodology


Participation Forecasting Metrics and Benchmarks


1 Benchmarks = average of leading sports with more centralised governance models and national participation operations Note: All participation modelling was conducted at an age group level, however for the sake of simplicity, only aggregated rates have been reported

Forecast

Governance Model Key Metric Current State Benchmark1 Benchmark Source Year 1 Year 2 Year 3

Overall Participation

One GolfParticipation Growth Rate -5% decline -2.5% decline

gemba Consumer

Research (gASP)

-4.5% -3.8% -3.3%

Status Quo -5.0% -5.0% -5.0%

Organised Participation

One Golf% of Total Participants in Organised Programs 20%

28% (currently 41% but declining

at 8% p.a.)

gemba Consumer

Research (gASP)

20.4% 21.1% 21.9%

Status Quo 20% 20% 20%

My Golf Participation

One GolfConversion rate (of participants aged 5 to 12) 3% 20%

Market Data: junior

program registrations and

gASP

4.2% 5.9% 8.1%

Status Quo 3.8% 4.6% 5.7%

My Golf Schools Participation

One GolfSchools participant acquisition rate 5% 17%

Market Data: junior

program registrations

17% 17% 17%

Status Quo 5% 5% 5%

SwingFit

One GolfConversion of Female Organised Participants

Conversion Growth Rate

0%

N/A

10%

45%

Market Data: female

program registrations and

gASP

1.5%

45%

2.2%

45%

3.2%

45%

Status Quo1.5%

10%

1.65%

10%

1.82%

10%

Membership

One GolfMembership growth rate -1.7% decline -0.05%

gemba Consumer Reearch

and Market Data

-0.8% -0.4% -0.2%

Status Quo -1.7% -1.7% -1.7%

GA (Qantas) Social Golf Club

One GolfConversion rate of adult participants

Growth in conversion rate

0.3%

N/A

10%

70%


and Market Data

0.5%

67%

0.9%

68%

1.7%

69%

Status Quo0.5%

52%

0.8%

52%

1.3%

52%

Membership

One GolfMembership growth rate -1.7% decline -0.05%


and Market Data

-0.8% -0.4% -0.2%

Status Quo -1.7% -1.7% -1.7%







c) Resourcing







I) Participation Model Assumptions

II) Commercial Model Assumptions


Our commercial projections are based on assumptions founded in consumer and market data


Commercial ValuationCommercial ValuationCommercial ValuationCommercial ValuationKey Inputs and Assumptions

Depth

(access to grassroots)

• To calculate the commercial value of the current participation base we have utilised industry benchmark - ‘cost per contact’1. This figure is based on the average amount that sponsors of grassroots programs pay for each contact with a target consumer (program contacts are the multiple of reach by frequency)

• The final figures presented represent the difference between the current sponsorship investment in Golf participation programs, and the market value that can be achieved in a 3-year timeframe

• The achievement of this figure is contingent on Golf’s ability to aggregate reach and sponsor benefits on a national scale, and provide direct communication channels with end consumers (i.e. participants)

1 The average ‘cost per contact’ for sports properties has been calculated based on gemba’s market insights and relationships with sponsors / brands. As a result, for confidentiality reasons, gemba will not publish this figure in this report

Growth

(participation)

• The incremental revenue associated with participation growth is based on the gemba’s participation modelling presented in section 1a of this report

• To calculate the final figures, gemba has multiplied the additional growth in participants by the average cost per contact (as described above)

Width

(‘whole of sport’)

• The incremental revenue presented is indicative of the commercial value of new properties that are able to be sold as part of a ‘whole of sport’ package. These properties could be attached to other niche programs (e.g. seniors) or new participation programs (e.g. Teenage program)

• This value has been benchmarked against relevant ‘whole of sport’ sponsorship deals with major sports, the details of which are commercially sensitive

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