UNE VISION / ONE VISION

GOLF CANADA COMMERCIAL PROPERTIES AUDIT

Update and Status Report

Content & Discussion Points

• Background • Topline Catalyst Report Summary • Assessment of key issues • Opportunities and Risks • Next steps

Background

• In 2012, Golf Canada commissioned Catalyst to conduct an analysis of its commercial properties to determine optimal yields for RBCCO and CNCWO and recommendations for achieving these financial goals.

• Catalyst issued a preliminary report in January which: • Summarized current revenues (optimal yield to follow)

• Identified external and internal (structure, culture, brand) challenges Golf Canada faces to develop and compelling and competitive “sponsorable” product

Background

• Catalyst has been acquired by Wasserman Media Group

• Scott Simmons (supported by Paul McLean and Nick Marrone) were asked to explore next steps in completion of the initial Catalyst report, and possible relationship with Wasserman.

• A follow up report was requested for the April Board meeting

Initial Catalyst Report Summary

1. Golf Canada’s success at acquiring very high revenue title sponsors for both Men’s and Women’s Opens mitigate the value/potential for secondary sponsorships. The revenue risk is that we may not be able to re-structure to the proposed optimal sponsorship tiers.

2. Auxiliary programs (ie. Grassroots GIS/FL) are over-priced at this time relative to values delivered.

3. Golf Canada structural gaps in commercial department results in a marketing leadership void, and inability to plan and effectively move forward on new strategies and plans.

Initial Catalyst Report Summary

4. Budgetary restrictions impede ability to invest and plan for the long term

5. Golf Canada must package all its assets together, and have well defined turnkey activation elements included when approaching corporate Canada.

6. Golf Canada (and Foundation) brands still in nascent stages; brand value needs to grow; strategic alliances are key in lieu of budgetary restrictions.

7. Issues management and short term sales needs are skewing focus of sales and servicing team

Next Steps Following Initial Catalyst Report Summary

• Requested Wasserman/Catalyst to provide further clarity and recommendations in the following areas: • Size of the prize (total net commercial upside for Golf Canada’s

“sponsorable” assets

• Resourcing options (internal – outsourcing optimal mix)

• Investment & Risk (realistic timeline for return on investment in each resource option)

Next Steps Following Initial Catalyst Report Summary

• Scott, Paul, and Nick met with Wasserman/Catalyst in mid-April for full credentials presentation as well as completion of commissioned report.

Assessment of Catalyst/Wasserman Report • Wasserman estimates that there is $5,200K in new revenue and $1,760K

in incremental margin that could be secured in the 2013-2015 time frame.

• This estimate is $2,500K in revenue and $680K in margin not including the CWO.

• Wasserman estimates that 75% of the new business can be realized; 10%-2013, 25%-2014, 40%-2015.

• The net total incremental bottom to line to Golf Canada, over 3 years (after agency fees), would be $443K. ($168K not including the CWO)

• Wasserman has strong relationships with the USGA, PGA of America, and PGA TOUR, and expertise in the Digital & Interactive area that may be very synergistic with Golf Canada's asset management and branding needs.

Yield (Margin) Snapshot

RBC CANADIAN OPEN Categories Available: 1 Premier Partner, 3 Suppliers. 5 Licensees Gross Sales Target: $950,000 / Net Revenue Yield Potential: $380,000

CANADIAN WOMEN’S OPEN Categories Available: Title, Presenting, 3 Premier Partner, 6 Suppliers. 5 Licensees Gross Sales Target: $2,700,000 / Net Revenue Yield Potential: $1,080,000

AUXILIARY PROPERTIES [to be bundled as category sponsorships] eg. Team Canada Multiple Property options available Gross Sales Target; $1,250,000 / Net Revenue Yield Potential: $465,000 **Current plan is to bundle at n/c

ACTIVATION & LICENSING Categories Available: 1 Premier Partner, 3 Suppliers. 5 Licensees Net Revenue Yield Potential: $300,000

What is the result of

these business

development efforts?

$1,760,000 in incremental

revenue potential for Golf Canada

Wasserman estimates that there is $1,760,000 in net incremental margin that could be secured in the 2013-2015 time frame.

Return On Investment Potential Category 2013 2014 2015 Cume Total

10% of $1.46M target

+ 25% additional of $1.46M target

+ 40% additional of $1.46M target

75% of $1.46M target realized by end of

2015

Sponsorship Revenue $146,000 $365,000 $584,000 $1,095,000

Activation / Licensing Revenue

$0 $100,000 $200,000 $300,000

TOTAL NEW REVENUE $146,000 $465,000 $784,000 $1,395,000

Less: Agency Fees ($136,000) ($408,000) ($408,000) ($952,000)

Net $10,000 $57,000 $376,000 $443,000

* As previously outlined, agency fees based on approximate monthly retainer fee of $34,000 * Assumption has been made for 2013 that resourcing is implemented beginning in September

Risk Snapshot

**Breakeven analysis identifies a gap from June 2013 to September 2014 before new revenues outpace resource requirements.

Jun '13 Sep '13 Dec '13 Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15New Revenue $0 $0 $146,000 $196,000 $396,000 $446,000 $611,000 $761,000 $1,161,00 $1,261,00 $1,395,00Agency Sales, Service $0 $102,000 $204,000 $306,000 $408,000 $408,000 $408,000 $408,000 $408,000 $408,000 $408,000Golf Canada Internal $0 $187,500 $375,000 $562,500 $750,000 $750,000 $750,000 $750,000 $750,000 $750,000 $750,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

Rev

enue

/ Ex

pens

es

+ 25% sold of $1.46M target (35%

total) + $100k in activation / licensing

10% sold of $1.46M target + $0

in activation / licensing

+ 40% sold of $1.46M target (75% total) +

$200k in activation / licensing

Our Assessment • Work to date has revealed that Golf Canada’s current risk/opportunity is multi-

dimensional, and not simply a “new revenue” exercise.

• The net new yield may as low as $168K total over a 3 year period.

• Golf Canada needs to ensure all

• We need to consider five key elements as part of both a short term and long term strategy:

• “Sponsorable” Assets and how they are packaged/priced

• Revenues/Margin yield potential

• Brand building (Golf Canada and Golf Canada Foundation)

• Staff Structure (internal, outsourced, or combination)

• Strategic alliances/Partnerships (i.e., media, retail, First Tee etc)

• These elements are functionally inter-related and must be considered as we move forward.

• Building our brand equity/awareness is the top priority, and is essential if we expect to attract/recruit new corporate partnerships.

Preliminary Assessment Assets Revenues Brand Partnerships Structure

• We have a mix of proven and emerging assets of interest to the marketplace.

• We need to identify the best opportunities and nurture growth in the right programs.

• Will require investment of financial and human resources.

• Olympic asset must be exploited.

• Golf Canada Foundation opportunities

• We have a mix of proven revenue generating assets, and emerging assets.

• Ongoing work required to optimize value of programs.

• If CWO sponsor can be secured, we will have a strong foundation for Professional Championships for building years.

• Golf Canada/Golf Canada Foundations brands remains at early stages of evolution.

• We must develop the right products and partnerships to move the brands forward.

• Brand value will grow with program and partner exploitation and vice versa.

• As is the case with every property, our future success will depend upon partnerships.

• Partnerships will support: • Program

development • Implementation • Communications • Marketing

• We need to assess partnership opportunities and select the ones that best meet our needs and further our goals.

• We are not equipped at this time to undertake the scope of work required for success.

• Need marketing leader reporting to CEO.

• Job scope and specs to be identified.

• Search and hire. • Develop short

and long term resource plan to achieve above.

Opportunity Overview Assets Revenues Brand Partnerships Structure

Professional Championships • RBC Canadian Open • Canadian Women’s Open

• Catalyst report reveals value in key professional assets.

• Revenue optimization depends upon value delivered, structure and brand value.

• Assess how we can exploit major properties to build Golf Canada and Golf Canada Foundation brands

• Assess role of Wasserman in delivery of this property.

• Assess role of strategic alliances (Shaw, national retailer) to support Golf Canada brand efforts.

• PGA Tour

• Develop optimal account management and sales team.

• Communications support • Integration of account

management into Tournaments Ops (Bill and Brent)

Grass Roots Programs • Golf in Schools • Future Links • Integration of First Tee

Program

• Catalyst has initially undervalued these assets.

• However, in discussions regarding work they have done with USGA, they are beginning to understand the Golf Canada has different assets and metrics than other tournaments.

• Understand how these grass roots programs are a national delivery of the Golf Canada brand.

• PGA of Canada • NGCOA • Provinces • PGA Tour/First Tee

• Integrate Sport Development and Sponsorship team

• Communications Support

Other Assets • Amateur Championships • New Media Assets • Canadian Olympic Team

Membership • Golf Canada Foundation

• Opportunities to

explore how these assets can be monetized

• Role for amateur

championships in brand building?

• Work with media partners to build Golf Canada brand

• Build Olympic team platform that can be monetized without encroaching on COC rights

• Wasserman • Shaw/Global TV • Score Media • COC • Other media partners • Golf Canada Foundation

• Optimal structure to

manage new external partnerships

• Determine how we build optimal Olympic brand platform

Next Steps-Priority Items • Continue search for CN replacement

• Complete due diligence on Wasserman/SCORE/other potential agency partners and make decision

• Finalize optimal staffing model and begin recruitment of Marketing/branding expertise, and commercial account team (internal or outsourced)

• Refine go to market sponsorship packages that incorporate all assets, activation, new pricing

• Recruit strategic alliances with key media, retail, golf industry partners (First Tee) to grow brand

• Develop and leverage Olympic opportunity