Swinton Park Golf & Country Club

East Lancashire Road

Swinton, Manchester, M27 5LX

Viability Report for

Salford City Council

prepared by

Mark Smith BA MRICS MBA

23 September 2020
 Contents
Page

1. INTRODUCTION 1
My instructions from the Council
My professional experience

2. METHODOLOGY AND PROCEDURE 2

Information gathering, meetings and timeframes
The John Ashworth Associates report
Assumptions I have made
Report structure

3. THE NATIONAL PICTURE FOR GOLF (Pre-Coronavirus) 4

The differing operational models for UK golf clubs
How golf has evolved over the years
What I believe to be the main trends as they relate to UK golf venues

4. SWINTON PARK’S VIABILITY (Pre-Coronavirus) – MY ANALYSIS 7

Separating facts from opinions
The four key ingredients

5. SWINTON PARK’S VIABILITY GIVEN CORONAVIRUS – MY THOUGHTS 26

6. MY PROFESSIONAL LIABILITY 26

7. STATEMENT OF TRUTH AND DECLARATION 27

8. MY CONCLUSIONS 28

Appendices (separate document)

Appendix 1 Background facts on the Club and other factual matters

Appendix 2 The dispute between SOSPG and the Current Owners

Appendix 3 Golf Business News article July 2018

Appendix 4 England Golf facility planning report for Swinton Park

Appendix 5 Extracts from 2017 Ltd’s financial accounts

Appendix 6 Extracts from 1996 Ltd’s financial accounts

Appendix 7 Coronavirus and the UK golf sector

Appendix 8 Procedure for information gathering, meetings and timeframes

Appendix 9 Information sent to me by the parties

Appendix 10 My professional experience

1. INTRODUCTION

My instructions from the Council

1.1 I have been asked by Salford City Council to undertake a review to establish the
viability of the golf course as a going concern which includes the associated
clubhouse. The Council wishes to obtain an independent and impartial view on
whether the golf course is a viable concern both now and moving forward.

1.2 My instructions came by email dated 14 July 2020 from Peter Openshaw who is the
Assistant Director of Regulatory and Client Services at the Council.

1.3 As part of my commission, the Council has asked me to consider the report
produced by John Ashworth Associates dated April 2020 for Your Housing
Group. Their report concluded that there was an oversupply of golf courses in the
catchment area around the Club, and if it closed, supply would still exceed demand.
They also described the viability of the business at Swinton Park as ‘vulnerable’,
and that ‘Swinton Park Golf Club does not meet local golfing needs’.

1.4 The current owners of the Club, Swinton Park Golf & Country Club 2017 Ltd
(who I will refer to as ‘the Current Owners’ or ‘2017 Ltd’), have entered into an
agreement with Your Housing Group which gives the latter the option to buy the
Club in October 2020.

1.5 The Council has also asked me to consider any information provided to me by Your
Housing Group, the Current Owners, and the Save Our Swinton Park Group
(‘SOSPG’). The latter is an action group looking to save the Club from major
redevelopment for housing, and to keep it as an 18-hole venue.

My professional experience

1.6 A reason for my appointment for this commission is my specialist professional

experience in property and business matters relating to UK golf venues. I am a
chartered surveyor and have specialised solely in the UK golf venue sector for 29
years. I attach in the final appendix (Appendix 10) some background information on
my firm, Smith Leisure, and myself.

1.7 From time to time, I am asked to comment on the need for and viability of UK golf
venues. This normally relates to expert evidence regarding planning applications
and planning inquiries.

1.8 I am acutely aware of the need to provide my true, independent professional opinion
in this case. I have included within this report (see Section 7) a statement of truth
and declaration to this effect.

1
2. METHODOLOGY AND PROCEDURE

Information gathering, meetings and timeframes

2.1 In Appendix 8, I attach a schedule (dated 31 July 2020) which I circulated between
the Council, Your Housing Group, the Current Owners, and the Save Our Swinton
Park Group. It set out the information I wished to gather, the communications
process between the parties, and arrangements for my site inspection and
meetings.

2.2 I carried out my site inspection on 19 August 2020, and I had the following separate
meetings in the order set out below on 18 and 19 August:

 With Peter Openshaw of the Council on 18 August.

 With Dave Marsh and Sean Cox representing the Save Our Swinton Park
Group on 18 August.
 With Julian Bentley, Jason Haye and Alan Nuttall (representing the Current
Owners) and Mike Riding (representing Your Housing Group) on 19
August. [note - Alan Nuttall joined us via video link].
 With the Club’s golf professional, Dave Smith, on 19 August.

2.3 The parties were given the opportunity to send written information to me stating their
case (if they so wished). The cut-off date for providing this was 21 August 2020.
In the interest of fairness and transparency, I shared this information amongst the
parties. There was then a second cut-off date of 8 September 2020 for the parties
(if they so wished) to rebut the comments made as of 21 August 2020 and to present
any further supporting information. I then circulated this further information amongst
the parties.

2.4 I attach in Appendix 9, a schedule listing all the written information supplied to me
by the parties (and which has been shared by me between the parties).

The John Ashworth Associates report

2.5 As I know John Ashworth, the author of this report, in the interests of keeping to my
own independent professional views on Swinton Park, I have not spoken to him
about his April 2020 report and the conclusions he reached.

2.6 Sometimes reports are written for clients ‘making the case’ for the client in question
in respect of what that client wants to achieve. For Swinton Park, John Ashworth’s
client is Your Housing Group who want to close the 18-hole course at Swinton Park
and develop affordable housing on it.

2.7 It therefore logically follows that in any submitted report to the Council (in its
capacities as local planning authority and wider strategic decision maker), it helps
Your Housing Group’s case considerably if it has a report suggesting that there is
an oversupply of golf courses in the local area and that the business at Swinton
Park is vulnerable.

2
2.8 At pre-planning application stage (as is the case here) and at the stage of a
submitted planning application for determination, it is commonplace for professional
reports to contain an element of advocacy bias for the benefit of their clients. In
other words, the reports are ‘making the case’ to support their clients’ aspirations to
improve the probability of obtaining planning consent and ‘making the proposed
development happen’.

2.9 There is, however, an important distinction between a report written with an element
of advocacy bias and a report written where the author is giving his/her true
professional opinion as an ‘independent expert witness’ with no advocacy
bias. The latter basis is required for reports forming part of court/tribunal/planning
inquiry proceedings but is not usually required before matters proceed to such a
stage.

2.10 There is no reference in the John Ashworth Associates report to say it was
written on an ‘independent expert witness’ basis, and indeed there was no obligation
to do so. However, I do not know to what extent (if any) the April 2020 report
contains advocacy bias.

Assumptions I have made

2.11 I have made the following assumptions for the purpose of my report:

 That the property comprising Swinton Park Golf & Country Club has good
freehold title with no materially onerous easements, covenants, or other
restrictions for its use as a golf club.

 That the property and its business as a golf club comply with all relevant
regulations and statute.

 That the property is not physically contaminated nor do the buildings suffer
from natural flooding.

 That the buildings on site are structurally sound and no major capital
expenditure is needed in the foreseeable future to keep the buildings
reasonably operational for a golf club.

Report structure

2.12 In Section 3, I set out my views on the national picture for golf before the effects of
the coronavirus pandemic.

2.13 Section 4 contains the bulk of my analysis on Swinton Park’s viability, again on a
pre-coronavirus pandemic basis.

2.14 I then comment in Section 5 on the effects of the coronavirus pandemic on the UK
golf industry at large and for Swinton Park.

3
2.15 In Section 6, I draw attention to the extent of my professional liability in producing
this report, and in Section 7 I include a statement of truth and declaration regarding
the preparation of this report.

2.16 I then provide my conclusions in Section 8, and I have done this in a ‘question and
answer’ format.

3. THE NATIONAL PICTURE FOR GOLF (Pre-Coronavirus)

The differing operational models for UK golf clubs

3.1 There are three main types of golf venue in the UK: ‘not for profit’ private members’
clubs; proprietary ‘for profit’ clubs; and ‘not for profit’ municipal venues. Each has a
differing role to play in the UK golf marketplace.

3.2 The private members’ clubs are run by the members principally for the benefit of
their members. Their main source of golf revenue is from annual subscriptions paid
by club members, although most welcome (indeed actively encourage) green fee
visitor play. Most private members’ clubs are somewhat traditional with an 18-hole
course and clubhouse, with the bulk of courses being built 80 or more years ago.
They are therefore very well established and mature. This maturity can have a
strong appeal to some golfers, as they like the idea of a club with history/heritage
being run principally for the benefit of their members and not for the benefit of a
commercially minded proprietary owner.

3.3 The municipal courses are at the other end of the scale and were built by local
authorities as a way of making golf courses more accessible and affordable to
those who could not join (or did not want to join) a private members’ club. Many
municipal courses were built in the 1930s and the 1960s/70s – but very few have
been built since. Because running golf courses has for some time not been seen
as a ‘core service’ for councils, most have outsourced the operation of their
municipal courses to specialist proprietary golf operators (looking to make a profit)
or ‘not for profit’ leisure trusts (who have advantageous tax breaks).

3.4 Proprietary golf venues can take many forms: they can be membership based,
green fee visitor based or a combination of the two; they can be fairly traditional in
format and comprise an 18-hole course with clubhouse or they can differ
significantly – such as a small golf centre with a short 9-hole course and driving
range, or they can have add-on facilities such as leisure clubs, conference
rooms, hotel bedrooms, holiday lodges etc. Most proprietary venues are the result
of the golf course construction boom that the UK experienced from the late 1980s
through to the early part of the new millennium.

3.5 Swinton Park Golf & Country Club, which was founded in 1926, was a ‘not for profit’
private members’ club until its sale in early 2017 to the Current Owners – a small
consortium of existing Club members.

4
3.6 Once the sale completed, it seems to me that technically (and whether or not
intended by the sellers), the Club became a proprietary operation - as the duty of
care for the board of directors in the new company, Swinton Park Golf &
Country Club 2017 Ltd was (as far as I am aware) primarily to the shareholders of
this new company - and not the membership of the Club at large.

How golf has evolved over the years

3.7 In the late 1980s the makeup of the UK golf industry was broadly as follows:
around 80% were ‘not for profit’ private members’ clubs; around 15% were ‘not
for profit’ municipal courses; and around 5% were ‘for profit’ proprietary venues.

3.8 At the time there was huge pent-up golfer demand: golf’s popularity had risen
substantially in the 1980s; the private members’ clubs had long waiting lists of
golfers wanting to try and join an already ‘full’ golf club; and golfers on municipal
courses often had to queue up for hours to grab a spare tee time to play.

3.9 In 1989 the game’s governing body, the Royal & Ancient Golf Club of St
Andrews (now called ‘The R&A’) published a report saying that the UK needed
700 new golf venues by the year 2000 to satisfy this pent-up golfer demand.

3.10 The market circumstances at that time then sparked a golf course
construction boom and, indeed, more than 700 golf venues got built by the year
2000. The construction boom was not without its major difficulties: due to the
recession of the early 1990s and high interest rates, many golf venues got into
severe financial difficulty and went bust. Indeed, it was reported at the time that
95% of all new golf venues were in financial trouble.

3.11 We then had a period of relative calm in the mid-1990s to around 2003 when
golf was still very popular but the national golf course supply/golfer demand
balance was reaching equilibrium (as a result of all the new courses boosting
supply).

3.12 From around 2003 onwards, the UK golf venue sector has consistently
experienced challenging trading conditions. This was primarily brought about
by a gradual but material eroding of golfer participation rates in the UK.

3.13 The drop off was caused by a number of factors: golf was seen as ‘less
fashionable’ than it was in the 1980s and 1990s; the work/life balance was
changing – people leading much busier lifestyles in the rapidly expanding digital
age; men with young families no longer able to play golf in their spare time
at weekends; and the rising popularity of ‘more active’ sports/pastimes such as
cycling, running, health & fitness etc.

3.14 Matters got worse for the UK golf venue sector with the global ‘credit
crunch’ of 2008 (and the resulting recession) plus consistently more erratic
weather conditions as a result of climate change (overly wet summers or indeed
summers that were unusually hot).

5
3.15 As at the start of 2020 (before the onset of coronavirus), the net situation on a
national scale, was an oversupply of golf venues in many parts of the country.

What I believe to be the main trends as they relate to UK golf venues

3.16 Structural decline: in my opinion, the UK golf market has been in structural
decline over the last 15 years or so, although it is important not to lose sight of
the fact that golf is still one of England’s most popular participation sports.
Indeed, England Golf, the national body for amateur golf, reports that golf is the
country’s fifth largest participation sport with around 650,000 members
belonging to one of 1900 affiliated clubs, with a further 2 million people playing
golf independently outside of club membership.

3.17 The game’s governing bodies and golf venues themselves are, in the main, all
working hard to reverse the trend of decline – and there are some encouraging
signs of improvement.

3.18 Falling/flat underlying profitability: a direct result of structural decline is the

falling/flat underlying profitability of most golf venues in the UK over the last
decade. Broadly, I think the ‘80/20 rule’ applies - about 20% or less of golf
venues are making good/excellent profits, whereas the remaining 80% are
seeing modest or poor profitability.

3.19 Adapting to modern lifestyles: golf needs to adapt to appeal to a younger

audience and the reasonable expectations of modern consumers. The
traditional private members’ clubs tend to suffer from ageing membership
profiles (not enough youngsters coming in) and, in some instances, still have
rather ‘stuffy rules’ in place. By their commercial nature, the proprietary golf
sector tends to be better at encouraging youngsters and new entrants into the
game and has a willingness to do away with outdated stuffiness.

3.20 Female participation rates too low: traditionally, 18-hole golf clubs have been
heavily dominated by male participation with female participation rates less than
20%. This needs to be rebalanced and the golf industry, in the main, knows
this, and is working to change the situation.

3.21 A move towards more nomadic play: up to the late 1980s, the norm was that
keen golfers would play 80% or more of their golf at their ‘home club’. This
encouraged strong ties to full annual membership golf. Over the last decade
there has been a significant shift towards flexible golf membership offerings
tailored to meet the needs of a growing number of golfers who like to
play a variety of courses. Furthermore, with the growth of online tee time
bookings, golfers are more likely to look for ‘destination days out/destination
breaks’ to play their golf compared to say 20 years ago.

3.22 Outdated and/or tired golf venue stock: as a ‘knock on effect’ of falling golfer
participation, generally the underlying profitability of the UK golf sector has
fallen. Falling profitability over time tends to lead to clubs cutting back on their

6
 capital expenditure programmes. Pragmatic continual investment over time is
needed to keep a venue in a condition capable of generating reasonable
operating surpluses in future years. Quite a lot of the UK golf venue stock is
now looking starved of much needed capital investment. Furthermore, many of
the venues built in the 1990s were poorly designed, poorly constructed and
are now showing the signs of being out of touch with modern market
expectations.

3.23 I attach in Appendix 3 a piece which appeared in Golf Business News in July
2018. Golf Business News is an online media outlet which publishes information
primarily related to the UK golf sector. The piece set out some of my views
about the state of the golf industry, and it touches on most of the trends that I
refer to above.

4. SWINTON PARK’S VIABILITY (Pre-Coronavirus) – MY ANALYSIS

Separating facts from opinions

4.1 In preparing my report, I have been provided with a great deal of useful information
from the parties, particularly from the Current Owners and the Save Our
Swinton Park Group. I have read all of it, and it contains a lot of facts and differing
opinions from the parties.

4.2 In order to be as objective as possible, I attach in Appendices 1 and 2 the following:

 In Appendix 1 – my summary of what I believe should be reasonably

undisputed information about Swinton Park to provide general background
information.

 In Appendix 2 – my description of the dispute between the Save Our Swinton

Park Group and the Current Owners. It is not intended to be a full description
of the dispute but is intended to give an idea of some of the issues being
raised and rebutted between the two groups.

4.3 Given the above, and my general professional experience in the UK golf sector, I
have then set out my opinions below on Swinton Park’s viability.

The four key ingredients

4.4 I believe that there are four key ingredients to consider when looking at the
financial viability of a UK golf club. They are:

1. The inherent quality of the club’s trading location. This is a mix of its
commercial location in relation to its target catchment market of golfers,
and the local supply/demand balance for golf.

7
 2. The inherent physical quality of the golf club. Is the 18-hole course of
reasonable to good quality? Are its practice facilities good or poor? What
is the clubhouse like? Is it well suited to the local market?

3. The management and marketing skills of the golf club’s operator. How
professionally managed is the club? Has the management team
proactively and effectively marketed the golf club to the local market
consistently over the long term? Is there a generally good relationship
between those who run the golf club and its golfing customers?

4. The financial footings of the golf club (particularly in relation to debt and
cashflow). Has the golf club been overburdened with too much debt
which makes trading extremely hard? Does the club consistently suffer
with ‘cashflow crises’ because of too much debt and/or inadequate
working capital?

4.5 In my experience, if a golf venue is strongly positive in all four areas, it is highly
likely to be trading very well. It would easily be one of the ‘top 20%’ venues that
I referred to in my Golf Business News article dated July 2018 (see Appendix
3).

4.6 The extent to how well a golf club trades depends on these four ingredients.
However, there is a fundamentally important distinction to be made. The first
two ingredients are inherent to the property; however, the second two
ingredients are entirely dependent on management factors and the way that
the golf club is financed – which are not inherent to the property itself as a golf
club.

4.7 It is therefore possible that a golf club which is inherently sound (good location
and good physical product) fails, or is failing on viability grounds, because of
poor management and/or poor financial footings.

4.8 When assessing the underlying financial viability of a golf club it is, in my
opinion, essential to recognise this difference.

4.9 In my opinion, a golf club is inherently financially viable if it is in a reasonable

to good trading location with a reasonable to good golfing product. This is the
case, even if the golf club has got into financial difficulty in the past or is in
financial difficulty now. This is because the final two elements – how the club
is run and how the club is financed can be changed (even if that means a
change of ownership).

8
4.10 I now look at the four key ingredients in order.

1. The inherent quality of Swinton Park’s trading location

The factual data from England Golf for golf in the locality:

4.11 I have a copy of the ‘England Golf Facility Planning Report’ for Swinton Park which
was prepared by England Golf for John Ashworth Associates. Whilst this was useful,
it did not include all the information I wanted to consider, so I commissioned my own
report from England Golf. I attach it in Appendix 4, and it is called ‘Facility Planning
Report – Swinton Park Golf Club’.

4.12 I set out below some of the factual findings from the report and observations made
by England Golf (with the location of the information in the England Golf report in
brackets):

 “Jigsaw Research were commissioned by England Golf in 2015, in order to

create a market segmentation which is specific to golf. The research
identified that 24% of adults in England are potential players. This is made
up of – 9% current players, 8% lapsed players and 7% latent players –
amounting to c.9.6 million people in total. It also provided England Golf with
9 defined profiles and clearly identified behaviours, motivations and barriers
within each one.” (page 2)

 “When looking at a club … our mapping report is able to identify the total
number of golfers within a 20-minute catchment. This number will include
current, lapsed and latent golfers – the full 24%.” (page 2)

 “The mapping tool is a statistical data engine that identifies golfing demand
within a 20-minute drive of each facility within England.” (page 3)

 “Within Salford [ie the Council’s administrative area], there are 4 affiliated
clubs [ie affiliated to England Golf] and 2 closed facilities.” (page 4)

 The 4 clubs within Salford are: Worsley Golf Club, Marriott Worsley Park Golf
Club, Ellesmere Golf Club, and Swinton Park Golf Club. Of the 4 clubs, the
England Golf mapping tool predicts strongest golf demand, by some margin,
for Marriott Worsley Park. Second for golfer demand is Ellesmere GC, then
Swinton Park GC, and the weakest golfer demand is for Worsley GC. This
can be seen by looking at page 5 of the report and following the quantum of
potential golfers per course for each of the 9 profiles.1

 The 2 closed clubs are Brackley Park Municipal Golf Course and Boysnope
Park Golf Club. (pages 5 and 6)

 The map on page 7 of the report shows the 20-minute drivetime boundary
around Swinton Park GC, and all the clubs existing within the boundary are

1
For example, for ‘relaxed members’ the average number of people per affiliated facility within each
venue’s 20-minute drive time is as follows: Marriott Worsley Park GC - 28,827; Ellesmere GC –
22,595; Swinton Park GC – 19,501; and Worsley GC – 16,651. This demand ranking trend follows for
each of the remaining eight profiles.

9
 highlighted in rectangular text boxes. There is a total of 20 named golf
venues, including Boysnope Park which closed in May 2018 and Old
Manchester GC which does not have a course. There are therefore 18
existing trading golf courses falling within the 20-minute drivetime.

 Page 14 provided membership numbers for nearly all the clubs in the 20-
minute drivetime, and page 15 provides a summary of the makeup of the
clubs in terms of number of holes, whether the clubs have a driving range,
the price of full membership fees and green fees.

 Page 20 includes England Golf’s conclusions regarding their data. I noted

their following comments:

“Within the Salford local authority there is high demand for golf, much
greater than the average for the North West. The demand cuts across all
9 golfing profiles, both club based and independent. Therefore, it is rather
surprising that generally membership numbers are slightly below the
national average, with only a handful of clubs above the national average
of 484 members. However, it is worth noting that each club will have a
different financial model in terms of income generation from membership
versus green fees etc. and clubs operate successfully above and below
that average.”

“There is a limited mix of golf provision within the focus area, which is
made up of mainly traditional 18-hole courses. There is only one 9-hole
course and only one driving range, with only a number of the clubs having
any notable practice facilities at all.”

Providing and developing entry level facilities that offer more informal
playing opportunities is key, as without them the playing opportunities in
Salford will continue to be limited to traditional member golf facilities.”

 Page 22 shows a map of the 10-minute drivetime and identifies the five clubs
which fall within it as follows: Swinton Park GC, Worsley GC, Marriott
Worsley Park GC, Ellesmere GC, and Prestwich GC.

 Page 23 shows a map of the 30-minute drivetime and identifies the golf clubs
which fall within it. I identified 64 venues (on the assumption that Boysnope
Park GC is closed, and Old Manchester GC have no course).

 Page 24 shows the total resident populations within the 10, 20 and 30-minute
drivetimes (it adds a 10th category called ‘other’ to do this). The figures are
as follows: for 10 minutes – 122,179; for 20 minutes – 547,033, and for 30
minutes 1,465,084.

My interpretation and conclusions regarding England Golf’s factual data:

4.13 England Golf clearly state that “Within the Salford local authority there is high
demand for golf, much greater than the average for the North West.” If there is high
demand for golf in the area, then the next logical question is whether there is simply

10
 an oversupply of golf venues in the local area that would deem Swinton Park surplus
to golfing need requirements.

4.14 In my experience, by far the most important catchment area to consider for golf
clubs such as Swinton Park is their 20-minute drivetime. This catchment area
carries more weight than the other catchment areas such as the 10, 25, and 30-
minute drivetimes. Indeed, England Golf’s mapping tool uses the 20-minute
drivetime as the primary catchment area.

4.15 There then needs to be a reasonable benchmark to consider quantitative supply

against. In my experience, this benchmark is that broadly golf course supply and
golfer demand are in balance if the ratio of 18-hole courses to resident population
is the equivalent of one 18-hole course per 20,000 to 25,000 people.

4.16 Thus, if the ratio in a 20-minute drivetime was one 18-hole course per 15,000
people, this indicates quantitative course oversupply; and if the ratio was one 18-
hole course per 30,000 this indicates quantitative course undersupply.

4.17 The one 18-hole course per 25,000 resident population ratio originated from The
R&A (the game’s global governing body) in their 1989 report entitled ‘The Demand
for Golf’, and was their quoted targeted quantitative provision ratio to be achieved
in England by the year 2000.

4.18 In 2011, I gave evidence at a planning inquiry relating to Ingol Golf Course in
Preston, Lancashire. The Planning Inspector’s report (in paras 323 and 324) said
the following in respect of Ingol Golf Course:

“The definition of the appropriate catchment area is fundamental to the

consideration of supply and demand. The golf industry uses a 20 minutes
drive-time as a basis for its assessments… The golf industry standard for the
provision of courses is one course to 20-25,000 head of population. The
catchment area contains some 356,000 people and within this number is a
better than average representation of socio economic groups that are found to
play golf. Taking Ingol golf course into account the ratio of course to
population in the catchment area is 1:33,900. Excluding Ingol the ratio is
1:37,500. Thus on a quantitative basis using the objective industry standard
there is a significant undersupply of 18 hole golf courses. Overall, even taking
into account that the current economic situation could suppress demand, it is
evident that there is a need for the golf course.”

4.19 For Swinton Park, there are 18 golf course venues within the 20-minute drivetime,
of which all have 18-hole courses except for Pennington GC which has 9 holes.
There are therefore the equivalent of 17½ 18-hole courses within the drivetime. The
resident population is 547,033, so the quantitative ratio is one 18-hole course per
31,300 people, so does not indicate quantitative golf oversupply. This then
means that Swinton Park, as an 18-hole course, is not “surplus to recreational
requirements” (the planning policy benchmark in Policy R1 of the Salford City
Council Revised Unitary Development Plan, as mentioned in the John Ashworth
Associates report).

11
4.20 Turning to the 10-minute drivetime, there are five 18-hole courses, and the resident
population is 122,179. The quantitative ratio is one course per 24,400 – which falls
within the quantitative equilibrium range. However, if Swinton Park’s 18-hole course
were to close, there would only be four 18-hole courses left and the ratio would be
one 18-hole course per 30,500 people, indicating a shortfall of courses in this
catchment area.

4.21 Turning to the 30-minute drivetime, there are 64 golf venues and the resident
catchment population is 1,465,084. If I take a simplistic view that all 64 venues
comprise 18 holes, then the ratio is one 18-hole course per 22,900 – which falls
within the quantitative equilibrium range of one course per 20,000 to 25,000 resident
population.

4.22 The resulting quantitative supply/demand ratios for Swinton Park are of little surprise
to me because the golf course is situated in a highly populated area. In my article
in Golf Business News in July 2018, I was suggesting that it might be good for the
golf industry at large if it lost one in five golf courses, as this would redress the
quantitative supply/demand balance between courses and golfers across the UK.

4.23 If golf courses are to close in significant numbers, I believe that the ones which
should close are those which are situated in areas where there is proven local
oversupply and/or are poor quality facilities which are poorly matched to their target
markets (such as ‘farmers’ field’ course in isolated locations). The ones that should
not close are the ones that are in good trading locations and which are reasonably
matched to their target golfing markets.

4.24 I noted that in the Salford area, 2 of the 6 courses identified in the England Golf
report have closed in the last few years (Boysnope Park Golf Club -18 holes in May
2018, and Brackley Park Municipal GC – 9 holes in 2016).2 Therefore, in my opinion,
to close Swinton Park GC as an 18-hole venue as well would be unduly excessive,
particularly given the quantitative ratios that I have referred to above.

4.25 If a planning application was submitted for housing on Swinton Park and the local
planning authority refused the application on the grounds that there was still a need
for the 18-hole course at Swinton Park Golf Club (which is somewhat implied by
Salford City Council’s decision to put Swinton Park on the register of Assets of
Community Value), then I anticipate the appointed planning inspector placing
significant weight on the quantitative ratios I have calculated above, and conclude
that there is, indeed, still a need for the 18-hole course at Swinton Park.

4.26 On a simple, common sense ‘stand back and look basis’, in my view it is reasonable
to conclude that Swinton Park occupies a good trading location for the following
reasons:

 It has good access to the local (and large) population via its situation on the
A580 East Lancashire Road.

2
I note from paragraph 2.10 of the John Ashworth Associates report that both Boysnope Park Golf
Club and Brackley Park Golf Courses have planned residential development on them.

12
  It is close to Salford Quays, which is experiencing growth and is the home of
MediaCityUK, Trafford Park, and the centre of Manchester itself.

 Generally, Manchester (described as ‘the Northern Powerhouse’) appears

to be seeing a substantial property boom and significant new
construction/regeneration. Whilst I acknowledge that the immediate
surrounding area to Swinton Park is not affluent, over time there is a fair
probability that this will improve in line with regeneration. It tends to be the
case that golfer participation increases in line with general affluence.

My observations on the John Ashworth Associates report on golf supply/demand:

4.27 I do, of course, respect John Ashworth’s professional experience. However, I

disagree with some of his methodology, and the resulting observations and
conclusions he then draws on the local golf supply/demand balance. In
particular:

i. He uses a 25-minute drivetime as the primary catchment area. I believe that

the 20-minute catchment area carries considerably more weight in assessing
local golfer demand and golf course supply.

ii. In paragraph 4.3 he calculates the average population per golf hole in
England at approximately 1,770 people per hole (which equates to one 18-
hole course per 31,860 people). He then uses this as the benchmark for
assessing whether Swinton Park is surplus to requirements. I fundamentally
disagree with this benchmark. I strongly believe that the appropriate
benchmark is ‘one course per 20,000 to 25,000 resident population’, for the
reasons I have explained above, and which is the benchmark that I have
always used in 29 years in specialising in the UK golf sector. He has set the
benchmark measurement on quantitative supply too high.

iii. In his Table 3, he calculates the 25-minute ratio provision at 1,563 people
per hole (which equates to one 18-hole course per 28,134 people) and then
concludes that there is quantitative oversupply when measured against a
benchmark which is set too high in the first place.

2. The inherent physical quality of Swinton Park as a golf club

4.28 I will address four main questions as follows:

 Is the 18-hole golf course of reasonable to good quality?

 Are the practice facilities good or poor?
 What is the clubhouse like?
 Overall, is the physical quality of the golf club well suited to the local
market?

4.29 Taking each in turn, I firstly comment on the 18-hole golf course. On pages 2
and 4 of Appendix 1, I attach an aerial photo of the course plus a couple of
photographs and a brief description. The course has maturity on its side (almost

13
 100 years old) and was designed by James Braid, a famous golf course
architect.

4.30 I acknowledge that the course sits on a rather tight site, at around 100 acres,
but so do many other 18-hole courses in the UK, so there is nothing unusually
poor about this aspect.

4.31 The course is a decent length at 6,520 yards from the white tees with a par of
72. It is therefore a good length for a membership based ‘club course’ and for
visitor based green fee/society golf.

4.32 Taking its physical condition to one side for the time being, my perception is
that it is a good (but not exceptional) 18-hole course, and certainly not a poor
one. Indeed, I would expect this perception to be accepted by the Current
Owners and Save Our Swinton Park Group representatives because if
they did not think it was a reasonably good layout/course then none of them
would have chosen to be long term club members there.

4.33 Furthermore, Dave Smith (the Club’s professional) suggested that golf
professionals in the region generally like and rate the course’s layout as a test
of golf. He felt the fundamental layout of the course was better than the nearby
private membership based courses at Worsley GC and Ellesmere GC.

4.34 I see from various comments made by the Save Our Swinton Park Group and
the Current Owners that there have been questions raised over the
maintenance quality of the course over the last 20 years or so. For example:
bunkers in poor condition, an old irrigation system which needs regular
maintenance and repair, poor drainage on certain holes, and the need for
perimeter fencing to be improved.

4.35 These are typical issues at golf clubs in the UK, so are not unique to Swinton
Park. Furthermore, they are problems that can usually be adequately resolved
by a combination of good course maintenance programmes and a pragmatic
view to continued long term improvement works.

4.36 I note that the John Ashworth Associates report (in its paragraph 5.6) refers to
the Current Owners’ estimate of £50,00 to £60,000 needed in capital
investment on the irrigation system, bunkers, perimeter fencing and trees. The
Save Our Swinton Park Group refute that this level of investment is needed,
and they suggest that much of the work could be done in-house by the
greenkeeping team over a few years.

4.37 In my experience, it is common for golf clubs to have a list of potential capital
expenditure works that could cost in the order of £50,000 to £100,000 on the
course, especially if done by specialist outside contractors. All but the
wealthiest clubs tend to take a pragmatic approach and differentiate capital
expenditure items that are ‘we absolutely must do these works’ to those
which would fall on a list of ‘we would like to do but we can compromise and

14
 make do for the time being’. They then prioritise their capital spend to match
their cashflow position and affordability criteria, often with many of the items on
the second list not getting done for a good while, if at all.

4.38 Turning to the Club’s practice ground, this is undoubtedly poor in quality, given
its small size and short length. However, this is not fatal from a viability
perspective because many golf clubs have substandard practice grounds.

4.39 Indeed, the comment made in the England Golf report for the 18 golf venues
situated within the Club’s 20-minute drivetime was “There is one 9-hole course
and only one driving range, with only a number of the clubs having any notable
practice facilities at all” (see Appendix 4, page 20). I do know, however, that it
is a substantial benefit to have good practice facilities on site to encourage entry
level golf participation.

4.40 Turning to the clubhouse, this was purpose-built in 1996 and is around 23,300
square feet in size, plus there is a tarmac car park with about 170 spaces. Whilst
the Current Owners inherited a clubhouse that was starting to look tired
internally as at early 2017, they soon invested considerably in it, and internally
it appears generally in good order now. I provide a brief commentary on the
clubhouse on pages 5 and 6 of Appendix 1 and include some photographs of
it.

4.41 The clubhouse is undoubtedly unusually large for an 18-hole course,

particularly for one which was operated by a not for profit private members’
club. Most private members’ clubs have clubhouses extending to around 6,000
to 12,000 square feet, so 1996 Ltd’s decision to build one so big was definitely
against ‘the market norm’; and, in hindsight, appears to have had much to do
with the financial demise of 1996 Ltd. I will comment on this aspect later.

4.42 Having such a large clubhouse is both an opportunity and a threat to the Club’s
financial viability. Its unusual size has much to do with the large function suite
which can hold substantial non-golf events such as weddings, parties,
conferences, wakes etc. If this aspect of the Club is managed and promoted
well, it has the potential to be a good revenue/profit generator for the Club.
However, if it is managed and marketed poorly, and thus trades poorly, it then
becomes an under-utilised asset and a potential drain on financial viability.

4.43 The clubhouse is much better than many of the poor clubhouses that I see at
other 18-hole golf courses around the UK.

4.44 Overall, my conclusion is that the inherent physical quality of the golf club is
reasonable to good in relation to the local catchment market that it serves.

15
 3. The management and marketing skills in running Swinton Park

4.45 In Appendix 1, I set out some facts about the trading performance of Swinton
Park plus some other factual matters:

 In its Section 6, I provide information on club membership details.

 In its Section 7, I summarise the financial accounts for the Current

Owners (2017 Ltd).

 In its Section 8, I provide some information on the financial accounts for

the previous private members’ club (1996 Ltd).

 In its Section 9, I provide some observations regarding the Club’s

management by 1996 Ltd.

 In its Section 10, I provide a commentary on the sale of the Club in 2017.

 In its Section 11, I provide a timeline of certain events.

4.46 I will refer to these sections in my comments below.

4.47 In Section 6 I cover membership pricing and membership numbers. Paragraph

3.2 of the John Ashworth Associates report includes a table showing a decline
in membership numbers between 2010 and 2019 (428 golf members in 2010
falling to 317 golf members as at 2019).

4.48 At first sight one might conclude that this is suggesting that golf is no longer
viable at Swinton Park because of the long-term drop in membership numbers.
In my view, it would be premature to jump to this conclusion without identifying
the root causes of the membership decline.

4.49 If one wanted to advance a case for golf non-viability, one would blame the fall
on a difficult UK golf market that has been in decline and that golfers’ playing
habits are changing (more nomadic play, less time available etc).

4.50 I agree that the golf market has been in decline, and I agree that golfer playing
habits have changed (I stated as much in my article in Golf Business
News in July 2018 – see Appendix 3). However, is the sharp decline at Swinton
Park solely down to these ‘external factors’; or have other ‘internal factors’ –
such as poor management and poor marketing at Swinton Park played a
significant part in the fall?

4.51 ‘External factors’ are matters over which golf clubs have little or no control –
such as the state of the economy, general golf market conditions, the weather
etc. ‘Internal factors’ are matters over which a club does have some control and
influence – such as how well the golf course is maintained, the strategy for
gaining new members and retaining existing ones, the strategies adopted on

16
 the choice of membership options to offer and their associated pricing, the
relationship between those running the club and the club’s members, the
competency of those running the club (including how well trained the staff are
to do their jobs well) etc.

4.52 In my view, the situation at Swinton Park is that it is a golf club which is
inherently sound in terms of both its commercial trading location and the
physical quality of the course and clubhouse but where the external market
conditions are difficult. This sets a general benchmark of likely potential trading
performance for the Club given these aspects.

4.53 How well the Club actually performs against its likely potential trading
performance will be heavily influenced by the ‘internal factors’. Perform well on
the ‘internal factors’ and the Club should trade in line with its likely potential
trading performance. Fall short on the ‘internal factors’ side of the operation and
the Club can then significantly underperform against the reasonably expected
norm. This would then provide an explanation for any unusually high falls in
membership numbers and/or poor financial trading performance.

4.54 On page 9 of Appendix 1, I summarise the trading performance of 2017 Ltd,

and in Appendix 5 I attach extracts of these accounts. Of particular importance
are the yearly turnover figures, the breakdown of turnover, and the yearly
EBITDA performance of the business. EBITDA stands for ‘earnings before tax,
interest, depreciation and amortisation’ and is also before exceptional ‘one-off’
income and expenditure items. It is a key performance industry benchmark
when assessing the underlying financial viability of a golf club.

4.55 In somewhat simplified terms, the yearly achieved EBITDA figure is the amount
of net operational cash a golf club generates (or loses) over the trading year
from its normal golf club trading activities (ie before exceptional one-off items
of income and expenditure); and is also before any money is spent on a) capital
expenditure items (which would then appear on the balance sheet as fixed
assets), b) interest and capital payments on loans, c) directors’ remuneration,
and d) corporation tax.

4.56 For analysis purposes, I will ignore 2017 Ltd’s first period of trading (13 April
2017 to 31 March 18), as there is always a period needed to move to a fair
maintainable trading pattern when a business is in a ‘turnaround situation’ –
which was the case at Swinton Park.

4.57 For the second year of trading (the year ended 31 March 2019) the Current
Owners achieved a turnover of £1,072,000, and I calculated their EBITDA at
£84,000, whereas their accounts report a net loss of £30,000.

4.58 For the third year of trading (the year ended 31 March 2020) the Current
Owners achieved a turnover of £1,007,000, and I calculated their EBITDA at
£83,000, whereas their accounts report a net loss of £247,000.

17
4.59 In the table on page 9 of Appendix 1, I have shown my calculations to arrive at
my EBITDA figures. I have added back to the stated net losses in the accounts
figures that clearly fall below the ‘EBITDA line’. This included adding back some
of the exceptionally high legal and professional fees that would not be
associated with running a golf club in normal circumstances.

4.60 Furthermore, there is an add back for the £166,345 ‘provision for bad debt’ in
the March 2020 figures, as this is an accounting exercise relating to 2017 Ltd’s
purchase from 1996 Ltd, which should have nothing to do with the inherent, day
to day underlying operational trading performance of the Club.

4.61 Turning to 1996 Ltd’s trading performance, the only full set of accounts that I
have seen are for its year ending 31 December 2012. I have carried out the
equivalent calculations (see page 12 of Appendix 1), and in Appendix 6 I attach
extracts from these accounts.

4.62 For the year ended 31 December 2012, 1996 Ltd achieved a turnover of
£902,000, and I calculated their EBITDA at £78,000, whereas their accounts
report a net loss of £49,000.

4.63 For the year ended 31 December 2011, 1996 Ltd achieved a turnover of
£982,000, and I calculated their EBITDA at £105,000, whereas their accounts
report a net surplus of £29,000.

4.64 When the accounts are normalised to ‘like for like’ EBITDA comparisons, the
performance of 1996 Ltd in 2012 and 2011 (£78,000 and £105,000) was largely
similar to 2017 Ltd’s performance for the years ended March 2019 and 2020
(£84,000 and £83,000). Furthermore, the respective turnover figures were not
that different (2017 Ltd’s were slightly better).

4.65 I cannot stress enough the importance of considering the yearly EBITDA figures
if one is going to make a fair and meaningful judgement on whether Swinton
Park, inherently as a golf club, is financially viable, both now and in the future.

4.66 The John Ashworth Associates report’s ‘Table 6’ (its paragraph 5.2) does not
state the EBITDA calculations for the years 2014 to 2020 but instead refers to
‘Operating Loss’ and ‘Loss before tax (excluding exceptionals)’. The report’s
calculations can be factually correct from a company perspective, but they
do not represent the inherent trading performance of the golf club as a freehold
asset including its fixtures, fittings, furnishings and equipment. It is necessary
(in my view fundamentally essential) to calculate yearly EBITDA figures to
consider the latter.

4.67 Part of the work I do in the UK golf sector is property valuation related, and this
has allowed me to benefit from studying hundreds of detailed trading accounts
of UK golf venues. As a result, I believe I have objective clarity about the
yearly trading performances golf clubs achieve in terms of turnover, breakdown
of that turnover, and EBITDA. I can then form reasonable judgements on the

18
 likely ‘fair maintainable turnover’ and fair maintainable EBITDA’ of golf clubs,
as this is an essential element of golf club valuation work.

4.68 Excluding London and golf clubs which fall within the M25, in my experience,
most 18-hole golf clubs with reasonable clubhouses trade with EBITDAs
consistently in the range of £50,000 to £150,000 per year.

4.69 The best performing 18-hole clubs might expect to achieve an EBITDA of
£200,000 to £250,000 per year, and anything over £300,000 per year would be
exceptionally good. The poorest performing clubs have EBITDAs below
£50,000. If a club’s yearly EBITDA is consistently negative, then that is dire
performance.

4.70 Outside of London and the M25, typically, 18-hole golf clubs with normal sized
clubhouses (say 6,000 to 12,000 square feet, as opposed to Swinton Park’s
23,300 square feet), would expect yearly turnovers in the region of £600,000
to £1,200,000. This turnover would largely be made up of annual golf revenue
(the sum of membership subscriptions and visitor green fees) and clubhouse
revenue (mainly food and beverage revenue) with the golf shop being
separately run by the clubs’ golf professional (so his/her turnover is not
included).

4.71 Normally, annual golf revenue exceeds clubhouse income, but this is
often reversed when the clubhouse is unusually large, and so has the capacity
to derive substantial non-golf related function income, as is the case for Swinton
Park. If well-managed in all aspects (golf and clubhouse), I would expect
Swinton Park’s yearly clubhouse income to exceed its annual golf revenue by
some margin, given the size of its clubhouse.

4.72 As I mentioned earlier, most 18-hole golf clubs with reasonable clubhouses
trade with EBITDAs consistently in the range of £50,000 to £150,000 per year
At these levels no golf club operator is going ‘to get rich’ from bumper yearly
profits; but at the same time the bulk of 18-hole golf venues in England are still
trading at this level and intend to do so for the foreseeable future.

4.73 This then generally means that that they cannot, inherently as 18-hole golf
clubs, be financially unviable if they trade within this £50,000 to £150,000 range.
This is because if they were financially unviable, we would already have had
‘industrial scale’ closures of typical 18-hole golf clubs in England (say 30% to
50% of the market or more) on financial viability grounds – which has not
happened, nor do I expect it to happen.

4.74 Swinton Park’s yearly EBITDA performances for the full set of accounts that I
had for 1996 Ltd in 2012 and 2011 fell within the £50,000 to £150,000 EBITDA
range (£78,000 and £105,000), as did 2017 Ltd’s performance for the years
ended March 2019 and 2020 (£84,000 and £83,000).

19
4.75 What can and does make golf club operators fail financially when their existing
yearly EBITDAs are in the range of £50,000 to £150,000 are factors ‘below the
EBITDA line’. The most common one is having too much debt. Indeed, the
demise of 1996 Ltd appears to be a good example of this happening.

4.76 I understand that the main driver of 1996 Ltd’s decision to sell the Club to a
consortium of members in 2017 was 1996 Ltd’s level of debt, at around
£800,000 – which the Royal Bank of Scotland were threatening to call in, which
would then have forced the Club to close. This high level of debt had much to
do with the Club’s decision to build such a large clubhouse in 1996 (a time when
the UK golf market was more buoyant).

4.77 I do not know how much 1996 Ltd’s yearly bank repayments were to the Royal
Bank of Scotland (capital and interest). I did, however, note from the 2012
accounts that yearly interest alone was around £60,000.

4.78 Say they were around £80,000 per year including capital repayments. If 1996
Ltd’s EBITDA was around £50,000 in 2016 (the lower limit of my £50,000 to
£150,000 range) then the Club’s business would go ‘cash negative’ (£50,000
minus the £80,000 payment to the bank equals minus £30,000), particularly
once other ‘below the EBITDA line’ items were factored in compounding the
£30,000 cash shortfall.

4.79 If this situation continued, it would only be a matter of time before 1996 Ltd, as
a company, runs out of cash/credit lines to pay the bank. However, inherently
the golf club as a property, was still producing an EBITDA surplus of £50,000;
and if 1996 Ltd was debt free, it would not have to pay out the £80,000 in
interest and capital repayments to the bank, and so would probably remain
‘cash neutral’ on a trading basis.

4.80 A ‘cash neutral’ position at £50,000 EBITDA is not ideal, so this then suggests
that in order to generate surplus operational cash from the inherent property of
Swinton Park as a golf club, it would be preferable to aim to drive the Club’s
yearly EBITDA performance to around £150,000.

4.81 When 2017 Ltd stepped in to buy the Club in 2017, the intention was that the
new company would be debt free with money spare as working capital to
improve the Club and put it on a stable footing. See my commentary about this
on page 16 in Appendix 1. Thus, in theory, there should have been no
substantial ‘below the EBITDA line’ costs to break the new company, although
the yearly EBITDAs would need to be sufficiently high to generate enough
operating surplus cash to be able to reinvest back into the business for capital
expenditure projects.

4.82 I note the comments in the John Ashworth Associates report about the cash
reserves in 2017 Ltd’s balance sheet being eroded, which is described as a
‘major concern for the future’ (see paragraphs 5.5 and 5.6).

20
4.83 Generally, if cash reserves dwindle at a golf club company’s financial year end,
this is usually the result of: falling/inadequate operational cashflow (ie
falling/inadequate yearly EBITDA); and/or large cash outflows relating to
expenditure items which appear below the ‘EBITDA line’ (typically bank loans,
finance charges, and capital expenditure projects at the club); and/or large cash
outflows on expenditure not directly related to the inherent trading of the
property as a golf club.

4.84 On page 10 of Appendix 1, I show the ‘cash at bank’ positions for 2017 Ltd as
of 31 March 2018, 2019 and 2020. The respective figures were £208,000,
£186,000, and £70,000. The year-on-year differences are therefore £22,000
and £116,000.

4.85 The EBITDA position changed little between the financial years 2019 and 2020
(by my calculations £84,000 and £83,000), however some substantial ‘below
the EBITDA line’ legal and professional costs were incurred: £30,402 in 2019
and £73,073.

4.86 These costs are well above the norm for running a golf club and are exceptional
items (the norm is usually around £5,000 or less for legal and professional
costs). If the bills of £30,402 and £73,073 were paid promptly, then they appear
to largely account for 2017 Ltd’s deteriorating cash position. This is a company
issue and not an inherent freehold golf club trading issue.

4.87 I now consider in more detail the quantum of the EBITDAs achieved at Swinton
Park over the years, and I state my views on its likely fair maintainable trading
levels.

4.88 Given the Club’s large clubhouse, and the possibility for profitable non-golf
function trade from it, in my view, a reasonably experienced and focussed golf
operator (with good food & beverage skills) would expect to achieve a yearly
fair maintainable EBITDA of around £150,000 or more; and at worst, say
£100,000; and at best, say over £200,000.

4.89 From my tables on pages 9 and 12 in Appendix 1, the achieved yearly EBITDAs
at the Club were substantially below my suggested £150,000. Say I take an
achieved £80,000 as an example. If the Club ought to have been achieving say
£150,000 per annum but was only achieving £80,000 per annum, then this is a
yearly cash shortfall of £70,000. Compound this over a five-year period and it
amounts to £350,000 in ‘lost’ operational cash from the business. It is therefore
relatively straightforward to see why the Club’s business has struggled
financially over the years.

4.90 Was a yearly EBITDA of £150,000 realistically achievable for Swinton Park?

4.91 The business turned over £1,072,000 for the year ended 31 March 2019. This
was the second year of the Current Owners’ tenure, and I accept that the
summer of 2018 was a good trading year for the golf industry. It was

21
 boosted by the 2018 World Cup (people watching matches on TVs in
clubhouses) and generally favourable summer weather.

4.92 Normally it takes three to five years for a new owner of a golf club to turn around
the trading performance of a previously poor performing golf club. After three
to five years, a club should reach its fair maintainable yearly turnover and
EBITDA.

4.93 On page 18 of Appendix 1, I provide a timeline of certain events. What is critical,

in my opinion, is that the month after the second financial year end of 31 March
2019 (April 2019) it becomes public knowledge that the Current Owners have
accepted an offer, subject to planning permission, from Bellway Homes to sell
the Club for housing development for a reported £30 million. In accepting the
offer, the Current Owners relayed to me that they felt at the time that the Club’s
members were not supporting the Club sufficiently, and it was going to fail
as a golf club (again).

4.94 April 2019 is when the Save Our Swinton Park Group say that the atmosphere
fundamentally changed at the Club, with general uproar prevalent from
many members about the consortium of member investors looking to sell out
for housing development, when notes from the 1996 Ltd’s EGM made
statements about keeping the Club for golf use (see my commentary in
Appendix 2 and page 16 of Appendix 1).

4.95 In June 2019, the Save Our Swinton Park Group started an online petition to
try and stop any housing development plans for the Club.

4.96 Having discussed the above events with the parties along with studying the
paperwork sent to me, my overriding conclusion is that the atmosphere at the
Club went severely ‘toxic’ as from April 2019; and has continued to deteriorate
to this day.

4.97 The Save Our Swinton Park Group have been vehemently against any housing
development plans since April 2019; and they state that once the Current
Owners decided they wanted to sell out for housing for a large financial
payment, they have deliberately run the Club into the ground.

4.98 The Current Owners are equally vehement that the blame lies with the actions
of Club members and the Save Our Swinton Park Group, which then made it
impossible for them to trade on a reasonably viable basis as a golf club.

4.99 It is not for me to take sides for either party as to where blame lies. My brief is
to focus on whether the Club is financially viable.

4.100 What is clear to me is that as from April 2019, with it being in the public domain
that the Current Owners intended to sell out for residential development, this
then killed the normally expected ‘upward trajectory’ of trading for turning

22
 around a golf club over a three to five year period. The ‘upward trajectory’ path
was halted just after the end of year two.

4.101 From April 2019 onwards, it was always going to be extremely difficult for the
Current Operators to have any chance of growing the golf club business at
Swinton Park. Many existing members were disgruntled; and it was ‘out there’
amongst the local golfing community that Swinton Park’s 18-hole course might
close, so it would be difficult indeed to recruit new golfing members.

4.102 Furthermore, given a toxic club atmosphere, I can fully understand some
existing members, potential members, and indeed consortium member
investors in 2017 Ltd, wanting to avoid being at the Club.

4.103 Despite the April 2019 announcement of the proposed sale to Bellway Homes,
the trading figures for the year ended 31 March 2020 were not that bad: turnover
£1,007,000 (prior year £1,072,000); and EBITDA £83,000 (prior year £84,000).

4.104 Had there been no announcement of the proposed sale for housing in April
2019, meaning that the general perception was that Swinton Park would remain
as an 18-hole golf club for the foreseeable future, then with focussed
professional management, strong club marketing, and tight control of
expenditure, I see no reason why the fair maintainable turnover of Swinton Park
should not have reached around £1.2 to £1.3 million after allowing for a three
to five year build-up of trade.

4.105 I think that exceptionally good golf venue operators would look to achieve an
EBITDA to turnover margin at Swinton Park of 20% to 22.5% on fair
maintainable turnover. If I take a turnover of £1.2 million then this means a
fair maintainable yearly EBITDA range of £240,000 to £270,000.

4.106 I would expect reasonably effective golf operators of Swinton Park to achieve
an EBITDA to turnover ratio of 12.5% to 15% on £1.2 million, giving a
yearly EBITDA range of £150,000 to £180,000.

4.107 Effective golf operators achieve these numbers by working to a set of key
performance indicators which they regularly measure ‘to keep on track’.
When shortfalls happen, they then tend to take swift corrective actions to ‘get
back on track’. They do not let important operational problems drift. If left, such
problems can turn into poor downward performance over the longer timeframe.

4.108 In my experience, many not for profit private members’ clubs (such as 1996
Ltd) are run in a somewhat lacklustre way by comparison. From the meetings I
had with the various parties regarding Swinton Park and from various
comments made in the paperwork given to me, my impression is that 1996 Ltd’s
management was indeed ‘lacklustre’. See my comments on page 15 of
Appendix 1 regarding this.

23
4.109 This would explain their poor yearly EBITDA performance leading up to the
sale in 2017, despite having to achieve healthy EBITDAs to have any
meaningful chance of paying their bank debt.

4.110 I note from paragraph 5.4 of the John Ashworth Associates report that 2017 Ltd
‘strengthened the management team’. From the information sent to me by the
Current Owners this process included: a new finance director, new chartered
accountants, a website designer and marketing consultant, a new course
manager, administration staff trained in accounts and the Sage system, a new
bar and a new functions manager, a new head chef, the retainer reinstated for
the club professional, and a ‘hands on’ board of directors replacing the cost of
a full time club manager.

4.111 Whilst I do not doubt that the Current Owners’ board of directors have had
considerable success in running other non-golf related businesses, in my
experience, this does not translate into the ability to fully turn around a
previously underperforming golf club.

4.112 Over the years, I have seen many successful people from other industries buy
a golf club and then struggle to make it work financially. Usually, the ones that
struggle the most are those who do not come from a leisure and hospitality
background in the first place.

4.113 Thus, whilst the Current Owners are strongly of the view that Swinton Park is
not viable for continued golf use, I need to respectfully state that this does not
mean I agree with them.

4.114 To date, I have focussed on looking at the yealy turnover figures of the Club
and its EBITDA figures. I have not yet commented on the golf revenue side
of the Club’s yearly turnover figures.

4.115 On page 11 of Appendix 1 is a breakdown of 2017 Ltd’s management accounts

for the years ended 31 March 2019 and 2020 (their second and third years of
operation). For the second year of operation, total annual golf revenue (the sum
of membership subscriptions and green fees) was £318,000. In the following
year it was £297,000 (the year where the proposed sale to Bellway Homes was
announced).

4.116 Given the quality of the Club’s commercial trading location and the inherent
quality of the property (course layout and clubhouse), I am surprised that the
annual golf revenue figures are so low. Figures at this level are what I would
expect to see for a golf club situated in a rural location where the local
population levels are sparse.

4.117 In Swinton Park’s location, I really do believe that a good golf operator would
expect to generate at least £375,000 in annual golf revenue, and they would
probably look to target £425,000 or more.

24
4.118 Given the largely fixed cost nature of golf course maintenance (greenkeeping
wages, machinery costs, materials and supply costs), increasing annual golf
revenue for the 18-hole course should largely correspond to a similar increase
in EBITDA.

4.119 In other words, if a club’s current annual golf revenue is £300,000 but it grows
to say £400,000, I would expect the club’s yearly EBITDA to grow by
£75,000 or more. Add this £75,000 in increased EBITDA to the yearly £83,000
EBITDA achieved by 2017 Ltd in the years ending March 2019 and 2020, and
total EBITDA of the Club is then £158,000 – which is in line with what I think
Swinton Park is capable of achieving.

4.120 As well as aiming to grow membership subscription revenue, annual golf

revenue should be boosted by driving considerably more visitor green fee and
golf society revenue. Indeed, if membership subscription income is dwindling,
it is essential to do so.

4.121 The poor past annual golf revenue performance of Swinton Park over the last
decade indicates to me that lacklustre management/marketing by 1996 Ltd
along with the course and clubhouse falling into somewhat poor condition in
places, as a result of 1996 Ltd’s high level of debt, meant that, over time, service
and presentation levels fell. Golfers then started leaving the Club, and it
became increasingly hard to recruit new members.

4.122 The Current Owners then start turning the Club around during 2017 and 2018.
However, in my opinion, as soon as the announcement was made to sell for
housing in April 2019, the toxic atmosphere which followed then killed the
prospect of growing annual golf revenue to the expected normal levels for the
golf industry.

4. The financial footings of Swinton Park (particularly in relation to debt)

4.123 I have largely covered this fourth ingredient in the previous section. The high level
of bank debt was the principal reason for 1996 Ltd failing as a company. It was not,
in my opinion, because of the inherent trading potential of Swinton Park as a golf
club being unduly poor.

4.124 Indeed, I note the comment made to me by the Current Owners which appears at
the bottom of page 15 on Appendix 1, which was: “There is one word that local
golfers associate with Swinton Park – the word is DEBT and even when we took
over in 2017 there has remained a stigma that we have been unable to get rid of
and we believe if [Save Our Swinton Park Group] took over, the stigma will still
remain.”

25
5. SWINTON PARK’S VIABILITY GIVEN CORONAVIRUS – MY THOUGHTS

5.1 Whilst many businesses in the UK have been in turmoil because of the coronavirus
pandemic, golf has seen a quite extraordinary resurgence.

5.2 In Appendix 7 I attach some articles which have appeared in the media in recent
weeks which give a flavour of the unprecedented resurgence.

5.3 Virtually every golf club in the country has seen a spike in golf trading performance
since golf courses were able to reopen in mid-May after the national lockdown.

5.4 SOSPG have suggested that the Current Owners have not made the most of this
unprecedented demand and the Club has fallen way short in terms of take up of
new members compared to the local norm, and indeed the national norm. This does,
indeed, appear to be the case to me.

5.5 After many years of the UK golf industry suffering with structural decline, it is very
welcome news to see this boost to the golf sector. My own view is that we should
treat the new spike in demand with some caution because as and when other
sectors emerge from lockdown, golf is likely to see some of the gains disappear.

5.6 If some of the gains do disappear, I believe we will still see a healthy upturn in golfer
participation prior to the coronavirus pandemic. I think the upturn will be around 10%
better than in the years 2018 and 2019 – which would still be good news for those
running golf clubs.

5.7 I believe that the 18-hole golf course at Swinton Park was inherently viable prior to
the effects of lockdown and so the result of lockdown is to improve its prospects for
the future.

5.8 What is less certain is the profit potential for the clubhouse whilst the coronavirus
restrictions remain in place. This is difficult to forecast because there as so many
‘unknowns’ as to what might happen with Government policies on lockdown
restrictions, Government aid to keep businesses going, whether the virus spreads
or contracts, and whether some form of vaccine is found for it.

6. MY PROFESSIONAL LIABILITY

6.1 My client is Salford City Council, and the purpose of my report is to provide the
Council with an independent and impartial view on whether Swinton Park Golf Club
is a viable concern, both now and going forward.

6.2 In the interests of fairness and transparency, the Council’s instructions included the
ability for the following parties (‘the Interested Parties’) to provide information to me
and make representations stating their facts and opinions on the matter: the Current
Owners; Your Housing Group; and the Save Our Swinton Park Group.

26
6.3 It was understood and accepted by the Interested Parties that whilst I would
carefully consider the information and representations they made; my sole client is
Salford City Council. I am not instructed by the Interested Parties.

6.4 The Interested Parties therefore understood and accepted that I extend no
professional liability to them for my report and the opinions I reach. My professional
liability for this assignment is solely to my instructing client, Salford City Council.

7. STATEMENT OF TRUTH AND DECLARATION

Statement of truth

7.1 I confirm that I have made clear which facts and matters referred to in my report are
within my own knowledge and which are not. Those that are within my own
knowledge I confirm to be true. The opinions I have expressed represent my true
and complete professional opinions on the matters to which they refer.

Declaration

7.2 Under this instruction from Salford City Council I am acting as if I was an expert
witness giving evidence to a planning inspector at a planning inquiry. When giving
evidence to a planning inspector on this basis, my duty to the planning inspector in
providing impartial and objective opinions overrides any duty to those instructing or
paying me (ie Salford City Council).

7.3 I confirm that I understand and have complied with my duty on the above basis, and
that I have prepared my report impartially and objectively in my capacity as a
chartered surveyor with 29 years of professional experience in dealing solely with
business and property matters relating to UK golf venues.

7.4 I confirm that my report has drawn attention to all material facts which are relevant
and have affected my professional opinion.

7.5 I confirm that I am not instructed under any conditional or other success-based fee
arrangement.

7.6 I confirm that I am not aware of any conflicts of interests in producing my report,
having previously declared the following - which are accepted by Salford City
Council and the Interested Parties:

 Prior to accepting Salford City Council’s instructions, I have never previously

carried out any fee earning work relating to Swinton Park Golf Club or for
any of the following: Salford City Council; the Current Owners; Your Housing
Group; or the Save Our Swinton Park Group.

27
  Prior to accepting Salford City Council’s instructions, I had never visited
Swinton Park Golf Club.

 Prior to Salford City Council’s instructions, I was approached by the Save

Our Swinton Park Group asking me whether I would be willing to provide an
expert witness report giving my independent professional opinions. My
instructions for this assignment are, however, solely from Salford City
Council and not from the Save Our Swinton Park Group. I hold no other
contractual instructions for this assignment from any party other than Salford
City Council.

 I have declared to Salford City Council that John Ashworth of John Ashworth
Associates (the author of the April 2020 report for Your Housing Group) is a
professional leisure consultant who I know, and I have occasionally
collaborated with him in the past in a consultancy capacity (over eight years
ago for fee paying work). Both he and I are long standing members of Golf
Business International - an organisation made up of experienced members
with professional expertise in the golf sector. I am aware that whilst I know
John Ashworth in a professional capacity, it is my absolute overriding duty in
this assignment to provide my own objective professional opinions.

7.7 I confirm that my report complies with the requirements of RICS – Royal Institution
of Chartered Surveyors, as set out in the RICS practice statement ‘Surveyors acting
as expert witnesses’.

8. MY CONCLUSIONS

8.1 I have set out my conclusions in a ‘question and answer’ format.

Question 1: Prior to the coronavirus pandemic, was the 18-hole course at Swinton
Park ‘surplus to recreational requirements’ (the planning policy benchmark in Policy
R1 of the Salford City Council Revised Unitary Development Plan)?

Answer: No, because there is not quantitative oversupply in accordance with the
benchmark statistic of one 18-hole course per 20,000 to 25,000 people within the
primary 20-minute drivetime catchment area.

Also, within the Salford local authority area, up until 2016 there were six golf
courses, but two have now closed (Boysnope Park GC in May 2018 and Brackley
Park Municipal Course in 2016 – both for proposed housing development). In my
view, it would be inappropriate to close Swinton Park as well given the inherent
quality of the course.

28
Question 2: Prior to the coronavirus pandemic, was Swinton Park inherently viable
as an 18-hole golf course with a large clubhouse?

Answer: Yes, because the quality of the commercial trading location is good, and
the inherent physical quality of the property is also good. The course then needs to
be maintained to a consistently high standard.

The 18-hole course was designed by James Braid, a famous golf course architect,
and is generally a good layout, albeit on quite a tight site. The clubhouse is good
because it was built in 1996 and is therefore still a relatively modern building. It is
much better than many of the clubhouses I see at 18-hole clubs in England. The
practice facilities are poor at the Club, which is a drawback, but not fatal to the
inherent viability of the Club.

Question 3: What caused the previous private members’ club (1996 Ltd) to fail?

Answer: They got into too much debt (unaffordable bank loan at £800,000 as at
2016) because of building the large clubhouse in 1996. In my opinion, this, coupled
with lacklustre management and poor marketing meant that service and
presentation standards slipped over a number of years – which made the decline in
membership and trading performance considerably worse than the golf market norm
from around 2014 to 2016.

Question 4: Is 2017 Ltd viable as a going concern?

Answer: It looks to me as though 2017 Ltd will be reaching a ‘crisis point’ regarding
their cash position in the coming weeks. There is little doubt in my mind that the
atmosphere went ‘toxic’ at the Club in 2019 when the Current Owners announced
their plans, subject to planning for housing, to sell to Bellway Homes for £30 million.

Whilst 2017 Ltd might not be viable as a company on a ‘going concern’ basis, that
certainly does not mean that Swinton Park ‘as is’ as a freehold golf club, fitted and
equipped is not viable for continued golf use, especially with the unprecedented
upturn in golf participation as a result of the coronavirus lockdown.

I note the comment in the John Ashworth Associates report in paragraph 4.15 which
says: “It is highly unlikely that a purchaser could be found to invest in the club as it
is”.

I fundamentally disagree with this viewpoint. I have sold and leased many golf clubs
on behalf of clients over the years, and in my opinion, if the Club was offered for
sale at a price reflective of continued use as an 18-hole golf course with clubhouse
(rather than reflecting housing land values) then there would be a lot of interest in it
from the market. Golf courses that are near on 100 years old rarely come up for
sale, so this would create additional demand from the market.

It is a good golf course with a sizeable clubhouse in reasonable order. If the threat
of housing on the site was taken away, I am confident that a good golf operator

29
 with decent food & beverage skills would re-energise the place and get it trading
well again.

8.2 I trust that the report is helpful in the decision-making process in the coming weeks.

Mark Smith BA MRICS MBA

30