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Senate | June 5, 2014 | Chamber | Finance Commerce

Full MP3 Audio File

Good morning, morning. Uh-oh. Hello? We're good. This mic on? We're good. Good morning. I'd like to call the meeting to order, the Joint House of Commerce Committees for a really, really what I think's going to be a special treat for all of us to hear a little bit about the golf industry and it's impact in North Carolina and we'll share some, I think, what's going to be some great stories. Before we get started, try to make it official, we do have pages with us today. From the House we have Ashley Sidden from Iredell County, Representative Brawley, see you there somewhere? Okay. Christian Stouks, New Hanover County, Representative Hamilton. Jane Nunn, Guilford County, Representative Faircloth. And Vita Honeycutt, Wake County, Speaker Tillis. From the Senate, Reeven Waters from, is it Moyock? Where is that? Don't I know where that is? It's over yonder. There it is, down east, Representative Cook. Alex McCray, Greensboro, Representative Berger. Thomas Barr, I'd have to do it again, Chuccawindy? Did I get that co-, Chawkawingy[??] works. Representative Cook, thank you sir. I'm gonna have to learn that soon, aren't I? Gabriel Nutter, hometown Oxford, Senator McKissick. Caroline Hauler, Clayton, Senator Rabin. Lance Coffee, Brewing, Senator Soucek. Before we get started we've got Representative Jamie Boles here and I want to thank you for being here but he's got to present a few bills. The U.S. Open is on his home turf, literally. So I'd like to call on Representative Boles for a couple comments. [SPEAKER CHANGES] Good morning, committee. There we go, good morning. First of all I think it's an honor that North Carolina has been chosen for the third time to hold the men's U.S. Open. We had it in '99 and 2005 and now the historical event, both the men and women's that we're going to host in Pinehurst in 2014. We're very honored that Pinehurst is featured on our North Carolina, the official 2014 travel guide. I have copies up here for you if you don't have any. I'd just like to welcome everybody to Pinehurst and I, come down for the U.S. Open. I think Mr. ?? is going to present some statistics on the U.S. Open. We anticipate 55,000 a day for the men's and 25,000 a day for the women. So it's an honor to represent Pinehurst. It's also a honor that golf plays an important economic economy here in our state and we like to call Moore County home of golf, the American golf, and welcome any time. Thank you. [SPEAKER CHANGES] Thank you, Representative. [SPEAKER CHANGES] I don't have any tickets! [SPEAKER CHANGES] So you have room for how many of us? [SPEAKER CHANGES] Yeah when is the pre-party and after party. I want to know that. We'll be looking for that invitation. Just let me, as Chair of Senate Commerce, just briefly officially welcome you again and on a personal note I have a passion for golf and I know many of our members, both House and Senate, do. I just don't think I ever realized the impact that it has. You see, everywhere you go you go by a golf course. Everywhere you go you go by a golf course. A little personal story, any time I fly I sit there and stick my head out and I'm just looking right there out the window and I'm trying to identify golf courses. So it's in our blood and North Carolina is in the forefront of the golf economy not only, really, worldwide it is recognized. It's certainly recognized as one of the biggest golf destinations in the United States and we've got a lot to be proud of. I do want to thank our Commerce Depeartment for their efforts to give the golf industry it's much deserved recognition as an incredible economic engine and as a

a driver in travel and tourism. They've done a wonderful job and I've had dialogue with them and I appreciate it very, very much. So anyway, thank you for being here. I think you're going to hear some great stories today that should make you feel good about what we're doing in North Carolina and how this industry is playing such an important part. At this point in time, we really do have some great special guests. I am going to call, by the way Chris Velori, Legislative Council for the North Carolina Golf Alliance, has been very, very active in helping us along to bring golf even further into the forefront and I do appreciate it, Christ, your efforts. You've done a great job, thank you. At this point in time I am going to call on Tim Kreger. If I got my notes right Tim is the Executive Director of the Carolina's Golf Course Superintendents and I'm going to allow you, Tim if you will, to facilitate the presentations and I want to thank you, again, for your service and your roll you're playing and we look forward to a great event here, thank you. [SPEAKER CHANGES] Thank you, Senator Gunn, and all of you for taking the time to be here with us this morning. My role is really facilitator. Not only in putting the studies together but also in the presentations here today so I'll be brief. We worked with the Stanford Research Institute and Golf 20/20, a national golf organization out of Florida, to put together an economic impact study. We did the first one in 2007 and then we updated it in 2011. The groups that were involved in that are all here today. Myself, I'm with the Golf Course Superintendents' Association. We've also got Mr. Brian Stiehler from Highlands Country Club, it's with the Golf Course Superintendents'. You'll hear from David Lee who's at Hope Valley Country Club in just a minute. We've got the Club Managers' Association with Corrine Grimaldi, the Executive Director. Ken Kinka, who is the COO at North Ridge Country Club and their legislative representative. We've also got Del Ratcliffe who you'll hear from also later with the North Carolina Owners' Association. Representatives that helped with the study that couldn't be here were also the Carolina's Golf Association, Jack Nance and his team and Ron Schmid with the Carolina's PGA section. But I do want you all to understand, I'm not trying to steal anybody's thunder here today. You're going to hear a lot of numbers but I think one of the most important things you need to realize about the game of golf is that it is an economic benefit to the state of North Carolina and there's over 50,000 people who are employed by this game/sport. And a lot of those people, I don't know the exact percentage but it's over 75%, don't even play this game or sport. So it's a tremendous, tremendous asset to the state, not only from the tourism side but also from the manufacturing that goes on in this state and those families that provide equipment throughout not only the country but the world. It all starts right here in North Carolina. So without further ado I'm gonna turn it over to David Lee who is the golf course superintendent at Hope Valley. And I did forget, we do have another representative with us today, I apologize. Turner Revels, who is the president and owner of Revels Turf & Tractor of Fuquay Varina. Been in the industry, very instrumental in the John Deere brand for 40-plus years. His family, you make know the name Quality Equipment, they distribute throughout North Carolina. That's his family that does the agriculture side of John Deere as well so it's important, we want to recognize Mr. Revels with us as well today. David. [SPEAKER CHANGES] Thank you, Senator, and thank you committee. As Tim said this is a special opportunity for us int he industry to come out here and tell our story, so to speak, and it's a really special day that we can sit at the table with you guys and explain what we do, how we do it, and how we're trying to help our industry and the state of North Carolina. I know everybody's busy and got a ton of stuff on their plate so I'll go ahead and get started. My portion of the presentation this morning is just to kind of sum up our most recent economic impact that study that we did with SRI in 2011. I think is 2011 data that's 2012 date. So this is post the recession. I think if everybody , I'm not gonna highlight some of the comparisons that we had from our earlier study in 2007. These numbers are in your handout, your economic impact of golf handout that you have, but out industry was not, as you may have guessed, was not immune from the financial problems we encountered in 2008. So anyway, let's get to see what golf is in North Carolina. First thing, as Tim alluded to, it generates jobs. As Senator Gunn said, when you're driving down the street and you see guys out there on lawn mowers, those aren't the only jobs that golf creates. Golf creates

… jobs from a manufacturing standpoint, from a food and beverage standpoint, from a travel/tourism standpoint. There are a lot of things. I’m sure Caleb’s going to hit on some of the jobs that have been created this week and next week and the coming weeks in Pinehurst. So one of the big things it does is it creates jobs and a lot of them in our state. It draws a lot of visitors to our state. I was down in Pinehurst with my wife and Marsh, and it’s hard when you’re in the 19th hole, it’s kind of hard to meet somebody from North Carolina. They’re from Canada, New York, Florida, California. It’s kind of good to see a lot of guys’ trips and couples coming in there enjoying North Carolina and the weather and the golf and the comradery. It gives back to charitable causes. I think everybody in here hopefully has played in a fundraising golf tournament where there’s the local high school Rotary Club, the Jimmy V Foundation for Cancer. The Duke Children’s Classic is another one. All levels of golf provides that revenue to help charitable charities, and it also provides a great pastime for anybody, any age, any skill level. It’s a great way to go out, spend four hours, five hours, six hours with your friends, your family, your son, your daughter, your wife, and it’s really special out there because you don’t have a cell phone, you don’t have a computer, you don’t have a phone ringing. Unfortunately it’s becoming more commonplace on the golf course to see that. So we challenged the SRI to see what the economic studies were, and not only did we want them to just see what the facility impact was, but the indirect and the direct impacts golf has on the economy, and we also wanted to put in a comparison with some of the other industries in our state, and if you look in the handout, in the first paragraph they’ll have some other industries that we feel we’re very comparable to that North Carolina is very well known for. The scientific R&D industry, we’re very comparable to that. I think we’re larger than the NASCAR industry. Is that not correct? Everybody think that North Carolina’s the home of NASCAR, and actually the golf industry is a larger industry. We’re getting close to our ag. crop industry and also the electronics components manufacturing, so we’re a real player in the state of North Carolina. I think that’s important. On the other hand, there are a lot of things that golf facilities, most of them, are recognized as small businesses, so we’re impacted by certain environmental regulations that come down. We’re also impacted by certain tax implications that may come down, and I think it’s important for us as an industry to stand in front of you guys and represent ourselves so when some of these policies are brought up on the table that we can do a little give and take and have some conversation where we give some and you guys give some and we can all make it work, because we’re just trying, again, to have a voice at the table and hold our own. So if you look at this graphic here, it kind of describes what golf is, and the middle one on the top kind of is the golf facility operations, and that’s what you see when you go down the road. You see the guy out there on the mower, the snack bar so to speak, the guy that’s working in the clubhouse, but then you start looking around, “How did that place get built?” I’m a member at a country club in Durham right down the road, and we just did a two and a half million dollar project renovating a pool and a terrace, and that never would have happened if those 500 members don’t like golf. And when we did that project, we had local electrical contractors, building contractors, the pool company’s from Greensboro. There were people from all over the state that came in and participated in that. So that’s the indirect benefit of what golf does for our business. We also have our major tournaments. I’m going to defer to Caleb on that; he’ll have a lot better information and more detail than I will. We also have our golf-related suppliers – Dick’s Sporting Goods. The Bass Pro Shop sells golf stuff. Golf Galaxy. All those places are generating income, putting people to work in North Carolina, all for the benefit of golf. And then we’re talking about the hospitality and tourism. Again, I’m going to defer to Caleb on that, but there’s a lot of people coming in, and food and beverage and everything revolving around the golf. And one thing we haven’t touched on right now is the effect that golf has on real estate. What’s the value of a house on the 18th green or three roads back from the golf course? There’s a pretty significant difference on what property owners are getting value for their property on that, so that’s another benefit – indirect benefit – that the game has. So here’s some hard numbers on revenues.

office of the operations revenues, 2011, 1.15 billion dollars. That's a real number. Golf course capital investments, this may be some of our pools, this may be rebuilding golf courses when we rebuild greens or we re-, put in a new irrigation system, 86 million dollars. Golf related supplies, you guys can read the numbers. Anyway, we get down to the total, 2.3 billion dollars of revenues into the state of North Carolina from the game of golf. So we have 556 golf facilities in the state of North Carolina. We're estimating that there are almost a million trips into North Carolina for golf-related purposes or involve golf, 250 million dollars in real estate development and added value, and then we got our suppliers, our John Deere's of the world. We have some great R&D companies in the triangle, BASF, Bayer Crop Science, that are based out of research triangle that have a big play, big part in our golf research, ?? in Greensboro, they have a big R&D facility there. We're unique, Jacobsen out of Charlotte, we're just real unique with the amount of big players in the golf industry that we have right in our back yard. Again, we've talked about the retail. So how do we measure the economic impact? And I'm not going to get in to this, I'm sure you guys have seen plenty of these impact studies. Basically, total impact is a function of our direct and indirect and induced, they use a RIMS modeling system that, because I'm a golf course superintendent I'm not versed in how they generate those numbers, but I think they're pretty well accepted in the industry. So this is the result of their indirect-direct numbers. You can see the bottom line. We already talked about the direct 2.3 billion dollars but you include the indirect and the induced numbers and you're getting a total number of about 4.2 billion dollars. And with that you're getting, as Tim said, almost 53,000 jobs that we're putting to work in the golf industry or is a part of the golf industry. Total wages of 1.2 billion dollars. So all those things combined is a significant impact on what golf is doing for this state. And this is just kind of a summary slide. Our 2.3 billion dollar golf industry supports 4.2 billion dollars of a total impact on the state of North Carolina. 53,000 jobs and 1.3 billion dollars in wages. If you're interested in the text in the handouts you can compare those to some of our other industries that are thought out or probably a little more in the forefront. With that, I'll entertain any questions any of you might have and if there are no questions I'll introduce Del Ratcliffe from the North Carolina Golf Course Owners Association. Thank you. [SPEAKER CHANGES] Alright, thank you so much David. Let's see if I can get here, into mine. Well first of all I want to tell you I am excited to be able to come up and speak with you about one of my favorite topics, golf. So thank all of you very much for your time. We've heard a lot of numbers. We've heard about the economic impact. The things that I'm going to be talking to you about today, very briefly, are the people that are part of golf. The business of golf and the courses that make up golf here and collectively we are golf and golf has a great heritage in North Carolina. We're definitely really ingrained within the culture of the state. So to give you, kind of a more personal look at what golf really is and what it means to each and every one of us, I'm going to take just a few minutes here to go through some of the things about it. First of all, the people. You may recognize Mr. Al Czervik here from the movie Caddyshack and we certainly have people like this in golf. Golf has a lot of colorful characters in the game. We do fight some kind of an image battle out there sometimes, in terms of stereotypes. Golf typically is not viewed by the people that don't play the game as what it truly is. In fact most people, when you mention golf to them, they tend to think about the PGA Tour and events like the Wells Fargo Championship, the Wyndham Championship in Greensboro, and even the upcoming U.S. Opens that we're having down in Pinehurst. These back-to-back Opens, which Caleb's going to talk about in just a few minutes, are tremendous events. They're gonna be bringing world exposure to our state and to the game of golf. But quite honestly, golf, this is a part of golf but it's a lot more than just this. We actually have, within our business, I mentioned some stereotypes here. Golf is viewed as an elitist, rich man's game.

Not very open to the average person to play, but the reality is, many average people do play golf. And it touches the LIVES of many more people than what that typical stereotype does. In fact, our typical customers are much more average people. They're average, economically, and apparently, they don't have a lot more highly intelligent level than the average person does have here. We see stuff like this quite commonly on our property. So, you're much more likely to see an image like this right here. Golf is certainly becoming much more open to the masses. We have a lot more people playing the game. It is truly a family sport. And in fact, in many ways, golf is a better family sport than some of the others that we see out here. Now, think about that for just a minute. The typical young people's sport these days involves the kids playing some kind of an event on a field. It might be football, soccer, something like that. The kids are out on the field. They are having a good time. They're playing. The parents are up in the stands. Every now and then, they're cheering for the kids. The parents are talking to each other. The kids are interacting. But, in golf, we have a totally different environment. In golf, you can go out and you can spend quality time with the family. It doesn't matter what the age differences are. It doesn't matter what the skill levels are. You can go out and you can have a good time. I often tell--if you go up and tell a family, "If you go out and you go play golf, with a young man or young woman, by the third hole, you're going to be having your arm around them. You're going to be talking about them: what's interesting to them, what things do they like. By the sixth hole, you're going to know how they are doing in school: what classes do they like, what teachers are being good to them. By the twelfth hole, you are going to know who the boyfriend or the girlfriend is. And by the time you come off that eighteenth green, you're going to have a friend. Now, I challenge you to find any other sport that you can find that in. And it is inherent in golf. North Carolina is a broad state, and a lot of people think that golf is owned by big mega corporations, but that's not really true. Many of our owners are mom-and-pop type operations--just small business owners, like Hilda Sloan, who owns The Links at Cotton Valley. He have Mr. Charlie--I'm going to have to look at my notes here--Mr. Charlie Walker owns Beau Rivage down in Wilmington. A lot of our courses are owned by multigenerational families, where even second and third generation members of the family are still operating the family business. This is true of Kelly Miller down in Pinehurst, Mr. Scott Knox at Verdict Ridge in Lincoln County, and also, Mr. Mark Hagel of Mountain Aire. And Mountain Aire is actually up in Ashe County. I think gravity must be affecting his star--something on this map--because it is a little bit higher than that right there. But these are small businesses that are all across the state and they have a tremendous impact on the economy of North Carolina, as we just saw from that economic impact study. And it goes beyond just the golf courses. We mentioned Mr. Turner Revels and his business that he has here, but we also have a John Deere manufacturing facility that manufactures turf equipment for the industry right down at Fuquay-Varina. Charlotte is headquarters to Jacobson Turf Equipment, which manufactures turf equipment into the golf industry and is distributed all across the world. And it is headquartered right here in our state of North Carolina. Also, in Charlotte, we have Smith Turf and Irrigation: the largest ?? distributor in North America. And so the impact of these businesses go far beyond what people normally realize within golf. But at the same time, golf, as a business, presents some challenges. We have a very unique business that's highly affected by the weather. In some instances, we're really just glorified farmers. And if it's raining or if it's cold out, people don't play golf, but the bills keep coming. We still have to pay our power bills. We still have to pay our light bills. We still pay our tax bills. So, all of these things still continue, but in our business--it is a very difficult business at times for us to manage. And it's a complex business. The management of the golf course, itself, can be highly complex in nature. The average superintendent today has to be more than just somebody that cuts the grass. They have to be part engineer. They have to be part scientist. They have to be part artist to achieve all the things that they have to achieve, and they do it--these men and women that do this, do it on a budget that is very highly dependent on what the weather is. It is very difficult to budget based on what the weather is going to do twelve months from now. But we're often forced with having to do something like that. And so I wanted to talk about the difficulties of this business and just give you a little idea of what we face from the standpoint of operations. In the golf business, we also have a food service component. This can range anywhere from a snack bar to a full-service sit down restaurant in our club houses. So, we're in the restaurant business, as well. Our pro shops are really and truly retail stores, and we're faced with all the challenges that the typical retailer has, in terms of merchandising, displaying, stocking, reordering--all of those things--inventory control. They all come into play in the retail operation that comprises our pro shops. And all of this is before we get to what our real core business is, which is selling rounds of golf at the counter, just like this. So, I just wanted to let you know that the typical golf course operation is very complex. It's a lot more involved than a lot of us tend to realize. But at the same time, we love our business. We all love what we do. And there is a true passion within our industry for what we do

And any time we have the opportunity to talk about it in front of a group like this, I’m highly appreciative of that. Now there is something that I want to mention to you. In our business, it’s very unique in a lot of ways. Every golf course is unique. There are no two golf courses that are alike out there and they vary all over the map, and in today’s world there’s kind of a move towards standardization, trying to come up with a one-size-fits-all-type strategy for things. In our business, one-size-fits-all is not a good idea, and I want to thank this particular legislative committee for posing for this picture of a recent… up at Lake Lure, they were on a retreat up there and everything. In our business, we have to schedule very tightly. We’re kind of like airlines in the fact that we only have a certain amount of product that we can sell at a certain given point of time, and in the airline business if a plane takes off and it’s got empty seats, you can’t sell those seats. If we lose a tee time in golf we can’t sell that tee time, and we do it in lots of four, so we so it four at the time, so there are challenges to this business. Golf courses themselves contribute a lot to our environment, the environment that we’re in. You might be surprised to know that golf courses are really fresh air machines. In fact, the typical 18-hole golf course produces enough oxygen to support between five and seven thousand people. That means the almost 600 golf courses that we have here in North Carolina produce enough oxygen to support over ten percent of our population. Now as an industry, we’re in favor of breathing. We want you to know that, so we’re happy to support that. Another thing that’s an interesting statistic is gold courses are huge water filters. People don’t realise this but the turf actually acts as a natural bio-filter. There are studies that show that golf courses clean the water, and I’ve got quotes from the ?? Society where they’ve gone in and looked at golf courses and determined that water filtering through the turf grass on a golf course is actually cleansed of a lot of the contaminants that it has even as it falls as rain water, so by the time it gets down to the aquifer, the water’s in a much purer condition than what it was when it first fell. This one is something that’s really kind of interesting too. My text didn’t come up really good on this, but a golf course is an air conditioner, and I’ve got a real specific quote that I want to read to you right here too. “A University of Manchester study’s calculated that a mere ten percent in the amount of green space in built-up centers would reduce urban surface temperatures by as much as 7.2 degrees Fahrenheit. This 7.2 degrees Fahrenheit drop in temperature, which is equivalent to the average predicted rise through global warming by the year 2080, is caused by the cooling effect of water as it evaporates into the air from leaves and vegetation through a process called transpiration.” So golf courses actually help to cool areas in which they’re located. Another thing, and if you play golf you know this, but if you don’t play golf, you don’t really realize this. Golf courses are refuges for wildlife. We are truly wildlife habitats. There’s deer, rabbits, foxes, squirrels, snakes. My daughter, who is actually in school right now – she’s going to pharmacy school down at Campbell – she serves sometimes for us and works at one of my courses as a beverage cart girl, and she will testify that there are plenty of snakes out there on the golf course, and as a matter of fact, she said to me, she said “Why in the world do you want to tell them we’ve got all those animals out there?” But they do. Golf courses are home to a large number of wildlife. [SPEAKER CHANGES] They’re not all crawling on the ground either. [SPEAKER CHANGES] That’s right. They’re not all crawling on the ground. We have birds, we have all kinds of wildlife out there, and a golf course is one place where you will actually see nature. You’ll see wildlife out there living, interacting, eating, playing on the golf course in the same space that humans are out there doing the same thing. They’re actually having a good time out there playing golf, and you’ll see creatures just like this deer out there on the golf course, interacting with humans in a way that’s very unique and you don’t see it in a lot of places. So the bottom line on this is golf, it’s good for all of us. It doesn’t matter whether you play the game or not, golf is good. It’s good for our economy, it is definitely intertwined within our culture here in North Carolina, and it is something that all of us benefit from whether we realize it or not. Thank you again for the time that you’ve given us today, and I’d like to bring up Mr. Caleb Miles now to talk about the back-to-back US Opens that we’re having down in Pinehurst next week. [SPEAKER CHANGES] Thank you, Dale. I had one question for you. The typical golf course is how many holes? [SPEAKER CHANGES] 18 holes. [SPEAKER CHANGES] Please don’t tell my wife. She thinks there is a 19th hole. As a matter of fact, other day we finished, I told her I was going to go to the bar with the guys. She said “Well you ain’t going to come home drunk, are you?” I said “Well where do you want me to go?”

Again, I'm Caleb Miles, I'm from Moore County, and thank you Senator Gunn, thank you. Following Del is always tough because you're always going to learn something. And as long as I've been involved in working with the golf industry, I've always learned something new from him. And that's one of the great things about the game, it's that it's so dynamic and each course is different. You know, in next week, we get to start to celebrate a pretty amazing event: The US Open championships. With an "s" on the end. We've never been able to say that before. It's two events, back to back, and my job is to tell you a little bit more about that, answer any questions that you have on the upcoming events. Some background: A lot of you probably have heard this, but I'm just going to run it down real quickly. Again, first time back-to-back men's and women's opens. It's the -- you can see the third US Open since '99, we've had three since '96 at nearby Sutton Pines at Pine Needles. Two weeks -- now here's some key numbers here. Four hundred thousand spectators over the two week period. Let me put that into perspective: If you have a football game going on at NC State or Carolina, a full stadium, you'd have four of those taking place consecutively to cover the Men's Open for the championship rounds. If you had a football game at Duke, and had four of those consecutively - Thursday, Friday, Saturday, Sunday, full stadium - you add that into the picture. And then you add the rounds of a stadium that's about half full for the practice rounds. That's how many people are going to be at the Open championship the next two weeks. I don't know of a larger professional sporting event that's ever taken place in North Carolina. It may be no one's come - we've sort of put the challenge out. If you know of it, let us know, then we'll say we're the second largest. Right now we're going to claim the first in terms of total attendance in people and impact and when we get to that in just a minute. Sixty-five hundred volunteers. Tell you a real quick story, it was in California doing a preview of a championship in San Francisco, and I ran into some folks in Los Angeles who were - and I asked them what they were doing there, what was the purpose of their visit, and they said "Volunteers", and I said "Volunteers? What do you mean?" "We're recruiting volunteers." They were having a Senior Open Championship, which was about the size of a Women's Open championship, and they were going all the way to San Francisco to get volunteers to come down to LA to volunteer. Do you know when the volunteer list filled up for the US Open here in North Carolina? Almost a year before the event even took place. It's a testament to North Carolina, and the love of golf, but the willingness to volunteer and help out for their state. I'm going to talk about the economic impact here in just a minute. Talked about the largest sporting event, I had to put it in writing up there. Visitor spending: One hundred and five million dollars in direct spending by the people who are going to be here for the two weeks. These are estimats, and I'm going to talk about how in just a second how we're going to verify all this information after the fact. The total estimated economic impact: A hundred sixty-nine million dollars for the two weeks, Men's and Women's open. Now never before in a US Open or Womens' Open have we verified those numbers after the fact. With the USGA, we kept asking the United States Golf Association if that's something they could do - they started doing it a couple of years ago, and that's going to happen at this event. There'll be kiosks located throughout the US Open Championships, so if you attend I encourage you to go there and use the kiosks and there are a series of questions to measure it. But here's what we did, we went one step further. The kiosk program is put together by a Canadian company, out of Vancouver. We didn't feel like it did really full justice to what we needed so we recruited some of the smart people of North Carolina, in particular Dr. Gene Brothers from NC State University to help us make that study even better, and we put some resources together to have even a better study. So when that's done, we're really going to be able to report to you the full impact of the event. Hosting: Just real quickly on this, the United States Golf Association runs the show. Theres some confusion - some people think it's the PGA, it's not. It's the United Stats Golf Association and they run thirteen national championships, the US Open Men's is the largest one, and then they run other ones: Women's, Seniors, and on down the line every year. The people who do that for those championships are located in Moore County, their offices are actually there. The USGA's main offices is in New Jersey. The USGA took a risk by putting the championships back to back, and their real motto is "It's two championships, one event." So they're running it seamlessly, there's some economy to scale, but they're not making any extra money, the main motivation for doing the event is, and they've been saying this over and over, is that they really want to showcase the Women's -- the quality of the Women's game by playing on the same-- at the same venue as the men. And I think you're going to see that. (recording ends)

of the next two weeks come true. The U.S. Open is a North Carolina event, and let me assure you it could not happen in Moore County if we just put up fences around Moore County and said everything's here. Between the housing, the food and beverage, the corporate support, all that has to be in place for North Carolina to have an event like the U.S. Open Championships. Here's just some quick numbers, we'll have, the core block in Moore County will have about 30,000 room nights consumed. The spectators, media, and volunteers, about another 60,000. So almost 100,000 room nights generated as a result of the U.S. Open. All at a premium rate. We get a little bit of heat for our room rates being too high. We've had to work real high to keep those down but it's the old supply and demand factor. So we've worked really hard over the last couple years to try to help make sure people have a place they can stay at a good rate. I've got to talk about private home rentals and the importance of it. In Moore County, thousands of homes will be rented which lets people stay there and not have to travel further distance. I want to thank all of you, in particular Representative Boles and Senator Tillman, for helping the recent legislation that passed to help us deal with the sales tax and occupancy tax issue related to private home rentals. Logistics. People tell us, and I've been to a lot of U.S. Opens, the transportation system as a U.S. Open here in North Carolina and in Moore Country is the best, bar none. When I recently went to San Francisco to the U.S. Open, I had to park at Candlestick Park. I had to walk about 15 minutes around the lot to get on a bus. I had to go through security, which took about another 20 minutes. Then it took about 45 minutes to finally get to the site. Ours, from the minute you get in to one of the two parking lots, by the time you get off the bus and go in to the main gate it's going to be somewhere in the neighborhood of about a third of that, half to a third of that, in terms of total time. So, a big difference. So it actually is, being a small town, helps because we have a lot more space. We don't have the congestion that a Washington D.C. or a New York City has, and the USG likes that. The USG likes to be able to set things up their way and this is kind of, this is the place, really, that's pretty special to them. By the way, you probably know the answer but I'm going to ask you anyway. What community, what golf course, what open, holds the record for the largest attendance ever at a men's open? Any Guesses? Pinehurst, 2005. A lot of people are surprised by that. No it's got to be New York, it's got to be-, well they can't because the infrastructure and available footprint to put the event on is too small. We have the largest footprint. That Pinehurst can close two courses and it doesn't affect them. Just real quickly some of the things we're trying to do a little bit better are to you, we're going to have some ambassadors there, Moore County Airport has been upgraded. We actually bring in a temporary tower for air traffic control it's so busy there but they'll have that there. They have to do that. So a lot of things going on. A lot of events taking place in the evenings, both in Pinehurst and Southern Pine, so if you're there we encourage you to take advantage of those. Media coverage. Some people ask what's the most important thing. When it's all said and done this actually may be as important as the dollars I talked about, 44 hours of live TV coverage, NBC and ESPN. NBC, this is the last year that they will present the USGA package of events on television. Fox will take over next year. So it's kind of a neat opportunity for them to say farewell but do a super job of presenting the championship, 150 countries. So for commerce, what better way to send a message to countries around the world about what a great place North Carolina is to visit and do business than have it broadcast for you in 44 hours of live coverage in those 150 countries? 2,000 media credentials will be issued. Down on the lower right hand side is what the media tent looks like. It's pretty amazing. What they did is they took about 8 of the tennis courts out of commission at Pinehurst resort and just put this tent on top of the tennis courts. So that's where it takes place. One of the behind-the-scenes secrets. Merchandise pavilion, this was the week before they stocked it. They stocked it last holiday weekend, the end of May, 40,000 square feet, 50 cashier stations, the average person will take 12 1/2 minutes to walk through the championship. The average person, some people will take even more time and I kind of kid about it, as people walk out $1,000 in the left hand, $1,000 in the right hand. It's not unusual if people spend that much money because what they do is they come with lists from their friends of stuff they need to buy. 500 logo items, 50 different vendors, and they change it over for the Women's Open and they change the apparel appropriately because they have more purchases for women. I'm winding down here, I just want to mention a couple other things. We really wanted to try to leverage the U.S. Open a little bit better this time. In '99 and '95 we just

... kind of hosted it. Pinehurst Resort had a bigger role in running it. So we asked our community, what are some things we can do to try to leverage the US Open, and one was talent recruitment, so we created an entity called Moore Alive, which talks about the quality of life in Moore County and why you might want to live there, and then Moore Forward, which has to do more with entrepreneur development. So we’re real excited about those two programs and if you’re interested in that from a commerce perspective, let us know. We’d be happy to share that information with you. Here’s some resources. The good news is the Men’s Open is almost sold out in the championship rounds. Thursday still has tickets available. We have information. The USGA as a great website, USGA.org, and now also the usopen.org, and homeofgolf.com is our site for housing, golfing, dining, etcetera. And following me is going to be Wit, I think. Is it Wit? Is Wit up next? Wit Tuttell. And Wit is, I’m sure you all know, he does a terrific job for North Carolina tourism, and Wit’s going to tell you a little bit more about how they’re leveraging the US Open to make sure that the effect afterwards is significant as much as it is during the event. Do we want to wait for questions or take questions now? Any questions? Thank you. Appreciate your time. Wit? [SPEAKER CHANGES] I’ll get this going. I’m just going to talk a little about how we do golf tourism marketing for the state. Thank you, I’m Wit. I’m the Executive Director of the Division of Tourism. So I want to talk a little about how we market the state for golf. Of course, we are the division of tourism, so our purpose is to get more people – to get them to come here, stay, spend more money and then leave, as they will do with the tournament, so that’s always great. We really do that through leveraging partnerships, and that’s why it was great that Caleb introduced us, because we don’t just want people to think “I want to go to North Carolina.” We want them to book a room in Pinehurst because that’s where the economic impact comes. That’s a big part of what we do, is work with those partners throughout the state. Every county has a tourism office and we work with all of them – Pinehurst, Southern Pines, Aberdeen. CVB is a great partner that Caleb runs. Just as an overall impact on tourism, from 2013, tourism is a 20.2 billion dollar industry in the state, and that’s just direct spending. Nearly 200 thousand jobs, and of course it brings a lot of tax revenue back into the state. We tend to typically work in our area with the state with out-of-state visitors because they’re spending is higher when they come in rather than in-state visitors. It’s a real good synergy we have here because a lot of the county tourism offices focus a lot of their dollars and their efforts on in-state visitors, so then we assist them with them leveraging their resources to generate out-of-state travel, and as you can see, one of the big keystones for North Carolina is that we have so many different offerings for people to do. One of the great features of North Carolina is our diversity, and I tell you, we’re the envy of so many other states, and this is a chart of what people do when they come to North Carolina, and there’s no other state in the county that has as many options and activities for people to do, and golf is a big important part of that. We don’t want to become a monoculture where people come here just for one thing because if that one thing goes away, that has a serious impact on your ability to leverage visitors, so the beauty of North Carolina is we have a lot of different things that people like to do, and golf is one of them. We as the Division of Tourism work with those partner industries throughout the state to talk about helping them spend their money, so we look a lot at how they spend their dollars and invest them, because primarily what we do are co-op activities where we leverage their funds and our funds and put them together to get further along, and in that way, we leverage our 3 million dollar advertizing budget and turn it into 9 million dollars in advertizing to spend, and part of that we’re doing is on the US Open. One of the biggest things we do is draw people to our website, visitnc.com. It generates about 4 million unique visitors a year, and what we’re real proud of is it gets about 1.2 million downstream traffic, and so that would be people coming to Visit NC to plan for things like the open, and then going and booking a room in Pinehurst or researching a restaurant, those kinds of things. So we’re real proud of that. We have a whole special section up on Visit NC for the open and are promoting it in several different ways, and I wanted to talk some about our golf travel marketing, how we market golf in the state. We have a big challenge. A lot of people have heard of the Robert Trent Jones Golf Trail in Alabama – I’m sure many of you have heard of that – and we get a lot of questions about that. We actually spend more money on golf marketing than the state of Alabama does. Unfortunately, the Robert Trent Jones Golf Trail is owned by the Alabama Retirement System, which also owns Raycom Television. Raycom owns 53 different television stations, including some operations in Charlotte, and they give that golf trail 12 million dollars in free advertizing every year, so we don’t…

have that luxury. What we have to do is leverage the funds we have to get as much exposure as possible. So I'm going to talk about that a lot, and i agree with Caleb 100%, one of the most important things about this event is, there's the economic impact but there's also the media leverage that we have and that the eyes of the world will be focused on it. And that's important for us, not just for tourism, but also as part of the Department of Commerce, that's important how we film it as well. So as it was already mentioned we put the golf on the cover of our travel guide, our annual travel guide. There's 600,000 copies of those go out every year and we also do golf sweepstakes in our regular marketing. We do about $200,000 worth of marketing every year for golf. We have a website dedicated specifically to golf that mentions every course in the sate and so we're proud of all those efforts. I'm going to talk a little more. We, you won't see us on the NBC broadcast and that's because it is very expensive and NBC makes a lot of money but that's part of the big impact that it has. So what we're going to do is find ways to leverage around the edges of this event to get our exposure. One of the things we do is an in-state marketing campaign with the North Carolina Print Association and the North Carolina Association of Broadcasters, and you'll see there are two ads up top that will run. They'll run in newspapers throughout the state and they'll also run in radio and television and we're actually adding a piece that you'll see on the highways coming up soon with the North Carolina Outdoor Media Association. So that, what you''ll see across the bottom there is a billboard that's going to run on some of the major highways. And the idea there is to leverage the aspect of our website can help people get away and find ways to get away and do great things and play golf. Now, that's a wonderful program for us. We get a 10-to-1 return on investment for those spots, which are essentially PSA's that are run by the Broadcast Print and Outdoor Media Associations. We'll also do a lot of digital advertising. What we found is that we can leverage our golf experience easier and more cost effectively by using other things other than direct golf media, such as NBC.com, which is very expensive. We use things like Amazon.com, find people when they're actually searching for golf products so we know we've got a qualified customer there, that's somebody that really loves golf and we'll put a digital ad in those type of spaces. So primarily the way we advertise are on Fox Sports, PGA.com, places like the Bleacher Report, and Yahoo Sports. These are places that generate a lot of sports fans, a lot of golf fans, but they don't bring the high cost of advertising that a place like NBC would. So we'll be doing a lot of that, about $200,000. We also do some new, we're trying some new advertising, contextual advertising, with a group called Contera[??] and so what that will be is when you're on a website and you notice sometimes the text is highlighted, if you click on that text you'll see a video ad and you'll get to run, take a look at our video. I wanted to real quick show you our golf video and this is really the way we market North Carolina golf. If I can get it to run. Let's try to get some sound. [SPEAKER CHANGES] [ADVERTISEMENT] Golf, it's a game of great odds. You don't just play the other golfers, you play against yourself, you play the natural surroundings, you play the course designer, the greens keeper, and the rules of the game. Taking on these odds in North Carolina is a unique experience. When you play amidst stunning beauty the game begins to change. The course invites you to conquer it. Picturesque views inspire you. The challenge becomes enjoyment and successes become stories. From the highest mountains in the east to the warm winds on the coast, you'll find great golf that's out of the ordinary. If you're looking for beauty, it's everywhere. If you're looking for challenge, you'll find it. When you're ready to play golf on a higher level, look to North Carolina. [SPEAKER CHANGES] So that's the way we leverage the state's beauty for golf, and that's really our brand and we're trying to sell more and more of that. I wanted to talk specifically about the Opens and what we're doing there and that's really a partnership of the whole entire Department of Commerce. What we're doing is we're spending about $500,000 on a hospitality area. We're going to bring in about 150 international and domestic corporate executives and we're gonna showcase the state. We're gonna have meetings there, we're gonna try and use it for an opportunity for business development. We're gonna bring in about 50 international tour operators, travel agents, and

. . . journalists to have them come back and do stories about the whole State. We're bringing those writers, not just to Pinehurst, but we're sending them also to the mountains, to the coast, and throughout the State, and in those ways, we hope to leverage this opportunity and that boosts us in partnership with the Research Triangle Park Organization and also the Pinehurst CBD. So we want to bring a lot of people in, and use this time to leverage and market, and also use this group as a focus group as we continue to brand the State to find out what their perceptions are of the State, and to encourage them to develop more businesses here. That's really our plan for the Open from a tourism standpoint, and I don't know if Chris wanted to come up - has it finished - or if we can answer any questions. [SPEAKER CHANGES] Thank you for the presentation. I know the Senate goes into a session at 11:00, so I wanted to see if any members of the Senate had any questions or comments about the presentation we've heard. I think it's pretty remarkable. We do a lot of important things here in the General Assembly, but it's also good to look at the fun things that happen in our State that have an economic impact, like the Golf Industry with the over five hundred and fifty courses that we have, and almost seventy thousand jobs that are supported. It's about a two-and-a-half billion dollar economy that we're talking about here, so this is not a small subject that has an economic impact on our State. Many of our districts have residential communities that have golf as the center hub. I know my district with Prestonwood Country Club - it's really changed the landscape of that area and the Triangle. So if any member has any questions or comments . . . I appreciate the presentations that we've heard today and I look forward to a successful event next weekend. And with that, this meeting is adjourned.