BUSINESS

Putt-Putting for profits

High-tech miniature golf arrives in Canada

MICHAEL POSNER September 30 1991
BUSINESS

Putt-Putting for profits

High-tech miniature golf arrives in Canada

MICHAEL POSNER September 30 1991

Putt-Putting for profits

BUSINESS

High-tech miniature golf arrives in Canada

James Evans was visiting the CN Tower in Toronto one day last November when, he says, he was struck by an idea. For weeks, Evans, who had just been named president of Putt-Putt Golf Courses of Canada Inc., had been scouring the city, seeking potential locations for the company’s first Toronto course— and the second in Canada. Then, while waiting for the elevator with scores of other visitors, Evans casually remarked to a friend: “Wouldn’t this be a heck of a place for a miniature golf course?” Indeed, Evans quickly realized that he had found a nearly perfect site for the firm’s Canadian flagship course, part of a burgeoning multimillion-dollar craze that has already swept the United States, Japan and Australia.

Evans reasoned that a CN Tower Putt-Putt course would help relieve the Tower’s chronic lineup pressures. It would also enhance the entire experience by providing a new diversion for the 1.5 million people who visit the world’s tallest freestanding structure each year. Evans even picked out an obvious site—the base of the tower, now occupied by a reflecting pool. The next day, Evans called CN. Now, after

months of thorny lease negotiations—and pending the granting of city building permits— Evans says that he hopes to open a 36-hole facility and video-games room by next spring. It will be, he declares, one of the finest PuttPutt courses in the world.

Founded in 1954 in Fayetteville, N.C., the privately owned U.S. company has grown into a multinational enterprise, with more than 300 courses. The international firm’s chief executive officer, David Lloyd, says that Putt-Putt patrons play more than 50 million rounds of golf annually—paying, on average, about $5 a game. Over the years, Putt-Putt has added other lucrative profit centres, including spiffy indoor video-games rooms, ice-cream parlors and Nintendo and movie rentals. The Canadian operation plans to add a new feature: walk-in desktop publishing centres.

In fact, Putt-Putt has become what CN Tower representative Mary Kovack calls “the Kleenex of miniature golf”—the name-brand standard against which all other courses are measured. “This is not your typical ramshackle mini-golf course,” says Evans, 37, a veteran of

20 years in the U.S. Putt-Putt organization. “A monkey can throw some carpet on concrete, buy a few putters and get into business. What we’re offering is clean, wholesome, inexpensive, family entertainment.”

Each course is assembled from an inventory of 132 patented and copyrighted hole designs. Indeed, Putt-Putt sponsors a “Skins” circuit, with professional mini-golfers playing courses around the United States. The tournaments, now in their 32nd year, are the longest running syndicated sports show in television history. Evans says that he will use the CN Tower course to create an international championship circuit.

Putt-Putt was slow to exploit the Canadian market. That was partly because in the 1970s, two solo franchising attempts—in Sarnia, Ont., and Victoria—failed. After that, says Evans, “We were looking for someone who would buy the rights for the entire country, and come up with a solid, long-term development plan.” Eventually, Toronto lawyer Jeffrey Lipton, who specializes in securities and franchising law, purchased the rights. Lipton, 34, initially made inquiries in June, 1990, planning to buy just one franchise at a cost of about $30,000. “But the more I looked at it,” he says, “the more doing just one made no sense.”

For what he calls a “marginal extra cost,” Lipton was able to lock up Putt-Putt’s Canadian rights later that summer. He declines to reveal the price, but he says that it was “worth every penny.” Added Lipton: “This is not a get-rich-

quick proposition. Putt-Putt will be around for 50 years.”

To help finance future development, Lipton floated a 1.85 million public share offering. It was fully subscribed at a cost of $1 per share. At week’s end, Putt-Putt shares, listed on Toronto’s over-thecounter market, were trading at 70 cents.

Lipton’s first action was to hire Evans, an effervescent Texan who started working part-time at Putt-Putt in high school, and has owned franchises both in his native Wichita Falls, Tex., and in Oklahoma City. He now runs the company’s day-to-day operations from his home in Newmarket, Ont.

During the winter, the company sold its first franchise—to Niagara Falls,

Ont., entrepreneur Joe DiCosimo. Nearing the end of his first season, DiCosimo’s 36hole layout is generating revenues that PuttPutt officials claim will break Putt-Putt’s international records, taking advantage of the 12 million tourists who visit the city each year.

In addition to the CN Tower site, Evans says that Putt-Putt courses will likely be built next

year in nearby Brampton and Oshawa. The Toronto area, he says, should eventually support 10 courses. One possible snag: municipal planning departments. “In the United States,” says Evans, “you can get a building permit from city hall in two hours. Here, the scrutiny

and the delay is ridiculous. Town planners are judge, jury and executioner all in one. There’s no question, Canada is the toughest place we’ve done business.” Putt-Putt Canada officials plan to retain ownership of all Toronto and Vancouver-area courses. Other sites will be franchised for a standard fee of $30,000, plus a minimum of $80,000 for constructing each 18-hole course (not including the building to house the year-round games room), and a continuing eight-percent royalty on revenues. Lipton concedes that the cost is high, but he points out that it buys “a thematic facility”, with staying power, not just a trendy yogurt or donut shop. Whatever the price, there appears to be a high interest in franchising. Evans says that he has already received inquiries from potential investors in every part of the country—including one from Yellowknife, N.W.T. If Evans and Lipton have their way, miniature golf will become big business in Canada.

MICHAEL POSNER