DRIVE SHACK INC. Management's discussion and analysis of financial condition and results of operations is intended to help the reader understand the results of operations and financial condition ofDrive Shack Inc. , which is referred to, together with its subsidiaries asDrive Shack Inc. or the Company. The following should be read in conjunction with the unaudited Consolidated Financial Statements and notes thereto and with Part II, Item 1A. "Risk Factors" of this report and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 . This discussion contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "forecast," "predict," "continue" or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual outcome of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results, including those set forth in the section entitled "Risk Factors" in our Annual Report on Form 10-K filed with theSEC onMarch 16, 2021 and in our quarterly or current reports as filed with or furnished to theSEC . We disclaim any intent or obligation to update these forward-looking statements. GENERAL Business Overview
The Company owns and operates golf-related leisure and social entertainment venues and courses focused on bringing people together through competitive socializing, by combining sports and entertainment with elevated F&B offerings.
The Company conducts its business through an integrated portfolio spanning three brands,Drive Shack , American Golf, and Puttery.Drive Shack , which launched in 2018, owns and operates four entertainment golf venues featuring tech-enabled hitting bays with in-bay dining, full-service restaurants, bars, and event spaces. American Golf, the longest-running business in our portfolio, owns, leases, and manages 56 traditional golf properties spanning nine states throughoutthe United States . Puttery, the Company's newest competitive socializing and entertainment platform, is an adult-focused, modern spin on putting, re-defining the game and creating an immersive experience supported by innovative technology focused on competitive socializing. With a high-energy atmosphere that combines plentiful curated culinary offerings and inventive craft cocktails centered around a lively bar area with great music, guests can relax and enjoy their evening before, during and after their tee time. The Company launched its first Puttery venue inSeptember 2021 in TheColony, Texas . Recent Developments OnJuly 12, 2021 , the Company entered into an Investment Agreement among the Company andSymphony Ventures , a partnership organized under the laws ofIreland , pursuant to whichSymphony Ventures committed to invest$10.0 million in Puttery (the "Commitment"). On the terms and subject to the conditions set forth in the Investment Agreement, the Company will sell toSymphony Ventures 10% of the partnership interests in each of the wholly owned subsidiary limited partnerships, which we refer to as "SLPs", formed by the Company to hold each of the Company's Puttery venues, in exchange for an amount in cash equal to 10% of the total cost to build the Puttery venue owned by such SLP.Symphony Ventures' purchase price in each such SLP will be applied to satisfy the commitment. In connection with each investment in an SLP,Symphony Ventures will receive the option to purchase partnership interests representing an additional 10% of the partnership interests in such SLP, at a purchase price equal to the original purchase price, exercisable within the first year following each investment. The Commitment expires onJanuary 1, 2024 . Following the satisfaction of its commitment of$10.0 million ,Symphony Ventures will have the right, but not the obligation, to invest in each Puttery venue that the Company opens through the end of 2023, on the same terms as those applicable to the committed amount. See Note 1 to the Financial Statements for further information. 26 -------------------------------------------------------------------------------- OnNovember 5, 2021 , the board of directors of the Company declared dividends on the Company's preferred stock for the period beginningNovember 1, 2021 and endingJanuary 31, 2022 . The dividends are payable onJanuary 31, 2022 , to holders of record of preferred stock onJanuary 1, 2022 , in an amount equal to$0.609375 ,$0.503125 and$0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively.
COVID-19 Update
In response to the COVID-19 global pandemic declared by theWorld Health Organization inMarch 2020 , many states and localities in which we operate issued "stay at home" or "shelter in place" orders and other social distancing measures, in addition to mandatory store closures, capacity limitations and other restrictions affecting our operations. As a result, duringMarch 2020 , we temporarily closed all of our entertainment golf venues and substantially all of our traditional golf properties. Subsequent to our closures, the gradual easing of restrictions has permitted us to safely and responsibly resume operations at both our entertainment golf venues and our traditional golf properties. Subject to locally mandated COVID-19 capacity and other limitations, all of our traditional golf properties and three of our fourDrive Shack venues were safely and responsibly reopened by the end of the second quarter 2020. The fourthDrive Shack venue was reopened at the end of the fourth quarter of 2020. As ofSeptember 30, 2021 , all of our entertainment golf venues and traditional golf properties were fully open and operating. CARES Act
On
General
•Entertainment Golf |Drive Shack and PutteryDrive Shack offers competitive, social entertainment through its golf-related leisure and large-format entertainment venues with gaming and premier golf technology, a chef-inspired menu, craft cocktails, and engaging social events throughout the year. EachDrive Shack venue features expansive, climate-controlled, suite style bays with lounge seating; augmented-reality golf games and virtual course play; a restaurant and multiple bars; an outdoor patio with lawn games; and arcade games. As ofSeptember 30, 2021 , the Company operated fourDrive Shack venues located inOrlando, Florida ;West Palm Beach, Florida ;Raleigh, North Carolina ; andRichmond, Virginia . Additionally, the Company is committed to leases inNew Orleans, Louisiana and inManhattan (Randall's Island),New York forDrive Shack venues.Drive Shack venues are freestanding, 60,000 square feet, open-air venues built on approximately 12 acres. This segment also includes the Company's newest entertainment golf brand, Puttery, an adult-focused, modern spin on putting, re-defining the game within an immersive experience and innovative technology focused on competitive socializing and offers curated culinary offerings and inventive craft cocktails. Puttery venues range in size from 15,000 to 20,000 square feet and feature tech-forward putting courses anchored by bars and other social spaces that will serve to create engaging and fun experiences for guests. The Company has announced its first five venues in TheColony, Texas just outside ofDallas ;Charlotte, North Carolina ;Washington DC ;Miami, Florida andHouston, Texas . TheColony, Texas venue opened inSeptember 2021 andCharlotte is projected to open inDecember 2021 .Washington DC is projected to open in Q2 2022;Miami andHouston are projected to open in Q3 of 2022. Three additional locations are currently in or nearing lease execution.
•Traditional Golf | American Golf
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American Golf, acquired by the Company in December 2013 , is one of the largest
operators of golf properties in the United States . As an owner, lessee, and
manager of golf courses and country clubs for over 45 years, we believe American
Golf is one of the most experienced operators in the traditional golf industry.
As of September 30, 2021 , we owned, leased or managed 56 properties across nine
states. American Golf is focused on delivering lasting experiences for our
guests, with over 35,000 members and over 1.2 million rounds played at our
properties during the nine months ended September 30, 2021 .
Our traditional golf operations are organized into three principal categories
due to the nature of the revenue streams generated by the following properties:
(1) public properties (all leased), (2) private properties (leased and owned)
and (3) managed properties (public and private).
We believeDrive Shack Inc. is the only company comprised of a truly integrated portfolio of both Entertainment and Traditional Golf businesses, which provides us with a unique opportunity to unlock top site locations by leveraging the operational experiences and municipal relationships developed by our traditional golf business. The Company strives to forward innovate and revolutionize next generation experiences. InSeptember 2021 , the Company launched Puttery, its newest competitive indoor socializing and entertainment platform. Puttery is expected to expand our business by diversifying our experiential offerings with an adult-focused modern spin on indoor putting through innovative technology featuring a series of tech-forward putting courses anchored by bars and other social spaces that will serve to create engaging and fun experiences for our guests. Our Puttery venues require much less space than aDrive Shack venue at approximately 15,000 - 20,000 sq.ft. of indoor new or existing retail space. Puttery expands store potential by hundreds of markets due to the vast availability of real estate, shorter development timelines, less capital risk and higher development yields. Advanced data and demographic analytics will allow us to strategically evaluate and develop a robust pipeline of target sites in prioritized markets acrossthe United States . As we look to further grow our Puttery brand, the smaller format offers us the opportunity to improve investment returns and take advantage of the vast availability of retail space at favorable rates.
Notable Operational Results
During the third quarter, our traditional golf properties generated revenue of$65.1 million , ourDrive Shack venues generated revenue of$10.5 million , and our newest brand, Puttery, generated revenue of$0.8 million in its first month of operation inSeptember 2021 .
Golf continues to emerge as one of the top outdoor activities naturally
conducive to social distancing practices. Our traditional golf properties
produced strong results during the nine months ended
28
--------------------------------------------------------------------------------RESULTS OF OPERATIONS
The following tables summarize our results of operations for the three and nine
months ended
Three Months Ended September 30, Increase (Decrease)
(dollar amounts in thousands) 2021 2020 Amount %
Revenues
Golf operations (A) $ 62,257 $ 58,766 $ 3,491 5.9 %
Sales of food and beverages 14,109 7,699 6,410 83.3 %
Total revenues 76,366 66,465 9,901 14.9 %
Operating costs
Operating expenses (A) 60,729 54,993 5,736 10.4 %
Cost of sales - food and beverages 3,696 2,170 1,526 70.3 %
General and administrative expense 9,685 7,916 1,769 22.3 %
Depreciation and amortization 5,823 6,853 (1,030) (15.0) %
Pre-opening costs 2,030 227 1,803 794.3
(Gain) Loss on lease terminations and
impairment 324 302 22 7.3 %
Total operating costs 82,287 72,461 9,826 13.6 %
Operating loss (5,921) (5,996) (75) (1.3) %
Other income (expenses)
Interest and investment income 190 135 55 40.7 %
Interest expense, net (2,626) (2,896) (270) (9.3) %
Other income (loss), net 107 (157) 264 168.2 %
Total other income (expenses) (2,329) (2,918) 589 20.2 %
Loss before income tax $ (8,250) $ (8,914) $ (664) (7.4) %
Nine Months Ended September 30, Increase (Decrease)
(dollar amounts in thousands) 2021 2020 Amount %
Revenues
Golf operations (A) $ 177,170 $ 137,066 $ 40,104 29.3 %
Sales of food and beverages 34,167 22,634 11,533 51.0 %
Total revenues 211,337 159,700 51,637 32.3 %
Operating costs 0
Operating expenses (A) 165,234 142,584 22,650 15.9 %
Cost of sales - food and beverages 8,951 6,654 2,297 34.5 %
General and administrative expense 25,697 24,102 1,595 6.6 %
Depreciation and amortization 17,852 20,329 (2,477) (12.2) %
Pre-opening costs 3,375 1,049 2,326 221.7
(Gain) Loss on lease terminations and
impairment 2,972 (2,031) 5,003 (246.3) %
Total operating costs 224,081 192,687 31,394 16.3 %
Operating loss (12,744) (32,987) (20,243) (61.4) %
Other income (expenses)
Interest and investment income 502 400 102 25.5 %
Interest expense, net (7,964) (8,232) (268) (3.3) %
Other income (loss), net 29 (24,212) 24,241 100.1 %
Total other income (expenses) (7,433) (32,044) 24,611 76.8 %
Loss before income tax $ (20,177) $ (65,031) $ (44,854) (69.0) %
(A) Includes $14.7 million and $41.3 million for the three and nine months ended
September 30, 2021 , and $15.2 million and $37.1 million for the three and nine
months ended September 30, 2020 , respectively, due to management contract
reimbursements reported under ASC 606.
29
--------------------------------------------------------------------------------Revenues from Golf Operations
Revenues from golf operations comprise principally: (1) daily green fees, golf cart rentals, andThe Player's Club membership dues at American Golf's public properties, (2) initiation fees, membership dues and guest fees at American Golf's private properties, (3) management fees and reimbursed operating expenses at American Golf's managed courses and (4) bay play atDrive Shack locations. Given the discretionary nature of our products, trends in consumer spending will impact our revenue from golf operations on a quarter-by-quarter basis and, particularly in traditional golf as an outdoor activity, and seasonal weather patterns have a significant impact. Three Months Ended Increase (Decrease)September 30 , September
30,
(dollar amounts in thousands) 2021 2020 Amount % Golf operations$ 62,257 $ 58,766 $ 3,491 5.9 % Percentage of total revenue 81.5 % 88.4 % Revenues from golf operations increased by$3.5 million primarily due to (a) an increase of$1.0 million in traditional golf related to course re-openings after courses closed during part of 2020 due to COVID-19 restrictions, and (b) an increase of$2.5 million in entertainment golf, of which$2.2 million is attributed to higher traffic at the venues as COVID-19 restrictions continue to be lifted versus the prior year period, and$0.3 million is attributed to the grand opening of the Puttery inColony, Texas . Nine Months Ended Increase (Decrease) September 30, September 30, (dollar amounts in thousands) 2021 2020 Amount % Golf operations$ 177,170 $ 137,066 $ 40,104 29.3 % Percentage of total revenue 83.8 % 85.8 % Revenues from golf operations increased by$40.1 million primarily due to (a) a$33.5 million increase in traditional golf related to course re-openings after courses closed during part of 2020 due to COVID-19 restrictions, and (b) a$6.5 million increase in entertainment golf, of which$5.7 million is primarily due to higher traffic at the venues as COVID-19 restrictions continue to be lifted versus the prior year period at the onset of the pandemic, and$0.3 million is attributed to the grand opening of the Puttery inColony, Texas .
Sales of Food and Beverages
Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Sales of food and beverages $ 14,109 $ 7,699 $ 6,410 83.3 %
Percentage of total revenue 18.5 % 11.6 %
Sales of food and beverages increased by $6.4 million , due to a $3.8 million
increase in traditional golf, and a $2.6 million increase in entertainment golf.
The increase in traditional golf was primarily due to the return of tournament
and large group event-related revenues as COVID-19 related restrictions were
lifted. Entertainment golf increased due to higher traffic at the venues related
to the lifting of COVID-19 restrictions.
30
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Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Sales of food and beverages $ 34,167 $ 22,634 $ 11,533 51.0 %
Percentage of total revenue 16.2 % 14.2 %
Sales of food and beverages increased by $11.5 million , due to a $5.0 million
increase in traditional golf, and a $6.5 million increase in entertainment golf.
The increase in traditional golf was primarily due to the return of tournament
and large group event-related revenues as COVID-19 related restrictions were
lifted. Entertainment golf increased due to higher traffic at the venues related
to the lifting of COVID-19 restrictions.
Operating Expenses
Operating expenses consist of course and venue level payroll and payroll-related
(including hourly and salary wages, bonuses and commissions, health benefits,
and payroll taxes), occupancy (including rent, property tax, and common area
maintenance), and other course and venue level operating expenses (including
utilities, repair and maintenance, and marketing), excluding pre-opening costs,
which are recorded separately. Operating expenses also include course level
operating costs for our traditional golf managed courses, for which we are
reimbursed.
Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Operating expenses $ 60,729 $ 54,993 $ 5,736 10.4 %
Percentage of total revenue 79.5 % 82.7 %
Operating expenses increased by $5.7 million , primarily due to a $3.2 million
increase in traditional golf, and a $2.5 million increase in entertainment golf.
The increase was primarily due to increases in payroll and payroll related
expenses as venues and events continue to ramp up this year with COVID-19
restrictions lifting.
Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Operating expenses $ 165,234 $ 142,584 $ 22,650 15.9 %
Percentage of total revenue 78.2 % 89.3 %
Operating expenses increased by $22.7 million , due to a $20.3 million increase
in traditional golf, and a $2.4 million increase in entertainment golf. The
increase was primarily due to increased costs to support increased operations
with the lifting of COVID-19 restrictions.
Cost of Sales - Food and Beverages
Three Months Ended Increase (Decrease)
September 30 , September 30,
(dollar amounts in thousands) 2021 2020 Amount % Cost of sales - food and beverages$ 3,696 $ 2,170 $ 1,526 70.3 % Percentage of total revenue 4.8 % 3.3 %
Cost of sales - food and beverages increased by
31
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Nine Months Ended Increase (Decrease)
June 30 , September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Cost of sales - food and beverages
$ 2,297 34.5 % Percentage of total revenue 4.2 % 4.2 % Cost of sales - food and beverages increased by$2.3 million directionally in-line with corresponding increase in sales partially offset as prior year also included spoilage charges isolated to Q1-2020 from the onset of the pandemic and resulting course and venue shutdowns.
General and Administrative Expense (including Acquisition and Transaction Expense)
General and administrative expense consists of costs associated with our corporate support and administrative functions that support development and operations and includes stock-based compensation.
Three Months Ended Increase (Decrease)
September 30 , September 30,
(dollar amounts in thousands) 2021 2020 Amount % General and administrative expense$ 9,685 $ 7,916 $ 1,769 22.3 % Percentage of total revenue 12.7 % 11.9 % General and administrative expense increased by$1.8 million consisting of a$0.2 million decrease in traditional golf resulting from a reduction of legal expenses, a$1.4 million increase in entertainment golf, and a$0.6 million increase at Corporate. The increases are due primarily to higher payroll and payroll-related expenses compared to reduced headcounts during the pandemic. Nine Months Ended Increase (Decrease) September 30, September 30, (dollar amounts in thousands) 2021 2020 Amount % General and administrative expense$ 25,697 $ 24,102 $ 1,595 6.6 % Percentage of total revenue 12.2 % 15.1 % General and administrative expense increased by$1.6 million , consisting of a$0.6 million decrease in traditional golf, a$0.9 million increase in entertainment golf, and an increase of$1.3 million at Corporate. The decrease in traditional golf is primarily due to payroll related expenses. The increase in entertainment golf is primarily due to an increase of$2.0 million in business development and personnel costs, offset by a reduction of$1.3 million in professional fees. The increase at Corporate is mainly due to increased payroll related expenses of$1.8 million partially offset by a reduction of$0.5 million in business development and insurance related expenses.
Depreciation and Amortization
Depreciation and amortization consists of depreciation on property and equipment and financing lease assets, as well as amortization of intangible assets.
Three Months Ended Increase (Decrease)
September 30 , September 30,
(dollar amounts in thousands) 2021 2020 Amount % Depreciation and amortization$ 5,823 $ 6,853 $ (1,030) (15.0) % Percentage of total revenue 7.6 % 10.3 %
Depreciation and amortization decreased by
32
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Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Depreciation and amortization
$ (2,477) (12.2) % Percentage of total revenue 8.4 % 12.7 %
Depreciation and amortization decreased by
Pre-Opening Costs
Pre-opening costs consist primarily of venue-related lease expenses, employee
payroll, marketing expenses, travel and related expenses, training costs, food,
beverage and other operating expenses incurred prior to opening an entertainment
golf venue.
Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Pre-opening costs $ 2,030 $ 227 $ 1,803 794.3 %
Percentage of total revenue 2.7 % 0.3 %
The increase is due to the recent opening of Puttery Colony and the impending grand opening of Puttery Charlotte.
Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Pre-opening costs $ 3,375 $ 1,049 $ 2,326 221.7 %
Percentage of total revenue 1.6 % 0.7 %
The increase is due to the recent opening of Puttery Colony and the impending grand opening of Puttery Charlotte.
(Gain) Loss on lease terminations and impairment
Impairment and other losses consists of any gains or losses due to lease
terminations, inclusive of lease termination costs and related legal fees as
well as the write-off of the net book value of property and equipment,
intangible assets, ROU assets and liabilities, and remaining working capital
items; impairment charges on long-lived assets, including property and
equipment, intangibles, and operating lease assets; and the net book value of
assets retired in the normal course of business.
Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
(Gain) Loss on lease terminations and
impairment $ 324 $ 302 $ 22 7.3 %
Percentage of total revenue 0.4 % 0.5 %
There was no significant change in (Gain) Loss on lease terminations and
impairment.
Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
(Gain) Loss on lease terminations and
impairment $ 2,972 $ (2,031) $ 5,003 (246.3) %
Percentage of total revenue 1.4 % (1.3) %
33-------------------------------------------------------------------------------- (Gain) Loss on lease terminations and impairment increased by$5.0 million primarily due to the 2021 gain on lease termination of SeaCliff, partially offset by the impairment of assets related to ourNew York, NY corporate office totaling$3.2 million , versus the 2020 gain on lease terminations related to two properties,Buffalo Creek andMonarch Bay .
Interest and Investment Income
Interest and investment income consists primarily of interest earned on cash balances and a real estate security.
Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Interest and investment income $ 190 $ 135 $ 55 40.7 %
Percentage of total revenue 0.2 % 0.2 %
There was no significant change in interest and investment income.
Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Interest and investment income $ 502 $ 400 $ 102 25.5 %
Percentage of total revenue 0.2 % 0.3 %
There was no significant change in interest and investment income.
Interest Expense, Net
Interest expense, net, consists primarily of interest expense on the accretion
of membership deposit liabilities, on the Company's junior subordinated notes
payable, and on financing lease obligations, offset by amounts capitalized into
construction in progress during the construction and development of new venues.
34
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Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Interest expense, net $ (2,626) $ (2,896) $ (270) (9.3) %
Percentage of total revenue (3.4) % (4.4) %
Interest expense, net decreased by less than $(0.3) million , not a significant
change.
Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Interest expense, net $ (7,964) $ (8,232) $ (268) (3.3) %
Percentage of total revenue (3.8) % (5.2) %
Interest expense, net decreased by less than
Other Income (Loss), Net
Other income (loss), net, consists of gains on the sale of traditional golf properties and earnings from our equity method investment.
Three Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Other income (loss), net $ 107 $ (157) $ 264 168.2 %
Percentage of total revenue 0.1 % (0.2) %
Other income (loss), net increased by
Nine Months Ended Increase (Decrease)
September 30, September 30,
(dollar amounts in thousands) 2021 2020 Amount %
Other income (loss), net $ 29 $ (24,212) $ 24,241 100.1 %
Percentage of total revenue - % (15.2) %
Other income (loss), net increased by $24.2 million primarily due to $24.7
million impairment that was recognized during the nine months ended September
30, 2020 .
SEGMENT RESULTS
Entertainment Golf
Three Months Ended Increase (Decrease)
September 30, September 30,
(in thousands) 2021 2020 Amount
Revenues
Golf operations $ 5,239 $ 2,736 $ 2,503
Sales of food and beverages 6,070 3,440 2,630
Total revenues 11,309 6,176 5,133
Total operating costs 17,392 11,062 6,330
Operating loss $ (6,083) $ (4,886) $ 1,197
35--------------------------------------------------------------------------------
Total revenues
The increase in total entertainment golf revenues during the three months endedSeptember 30, 2021 was due to more events and customers after the lifting of COVID-19 restrictions. Operating loss The increase in operating loss during the three months endedSeptember 30, 2021 was primarily due to increased general and administrative expenses as a result of higher payroll and payroll-related expenses as venues reopened once COVID-19 restrictions were lifted. Nine Months Ended Increase (Decrease) September 30, September 30, (in thousands) 2021 2020 Amount Revenues Golf operations$ 13,976 $ 7,408 $ 6,568 Sales of food and beverages 17,145 10,675 6,470 Total revenues 31,121 18,083 13,038 Total operating costs 42,712 36,004 6,708 Operating loss$ (11,591) $ (17,921) $ (6,330) Total revenues The increase in total entertainment golf revenues during the nine months endedSeptember 30, 2021 was due to the return of events and customers as the venues reopened following pandemic closures.
Operating loss
The decrease in operating loss during the nine months endedSeptember 30, 2021 was as due to increased revenues following the return of events and customers as the venues reopened following pandemic closures. Traditional Golf Three Months Ended Increase (Decrease) September 30, September 30, (in thousands) 2021 2020 Amount Revenues Golf operations$ 57,018 $ 56,030 $ 988 Sales of food and beverages 8,039 4,259 3,780 Total revenues 65,057 60,289 4,768 Total operating costs 62,049 59,006 3,043 Operating income (loss)$ 3,008 $ 1,283 $ 1,725 Total revenues The increase in traditional golf total revenues during the three months endedSeptember 30, 2021 was primarily due to course re-openings after the courses were closed inMarch 2020 due to COVID-19 restrictions.
Operating income (loss)
36
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The reversal of our operating loss during the three months ended September 30,
2021 was primarily due increased revenues and enhanced margins as the courses
fully reopened following pandemic closures.
Nine Months Ended Increase (Decrease)
September 30, September 30,
(in thousands) 2021 2020 Amount
Revenues
Golf operations $ 163,194 $ 129,658 $ 33,536
Sales of food and beverages 17,022 $ 11,959 5,063
Total revenues 180,216 141,617 38,599
Total operating costs 169,113 148,791 20,322
Operating income (loss) $ 11,103 $ (7,174) $ 18,277
Total revenues
The increase in total traditional golf revenues during the nine months ended
September 30, 2021 was primarily due to course re-openings after being closed
due to COVID-19 restrictions.
Operating income (loss)
The reversal of our operating loss during the nine months ended
Corporate
Three Months Ended Increase (Decrease)
September 30, September 30,
(in thousands) 2021 2020 Amount
Total operating costs $ 2,846 $ 2,393 $ 453
Operating loss $ (2,846) $ (2,393) $ 453
Operating loss
The increase in operating loss during the three months ended
Nine Months Ended Increase (Decrease)
September 30, September 30,
(in thousands) 2021 2020 Amount
Total operating costs $ 12,256 $ 7,892 $ 4,364
Operating loss $ (12,256) $ (7,892) $ (4,364)
Operating loss
The increase in operating loss during the nine months ended September 30, 2021
was primarily due to the $3.3 million impairment of corporate assets located at
our New York, NY office, and a $1.7 million increase in payroll related expenses
partially offset by a $0.6 million decrease in acquisition and transaction
expenses.
37
--------------------------------------------------------------------------------LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash and cash equivalents on hand which resulted primarily from ourFebruary 2021 equity offering. The Company raised net proceeds of$54.6 million , after the underwriters discount of$2.9 million , through a common equity offering that closed inFebruary 2021 . Other expenses related to the offering totaled$0.6 million . Additionally, the company closed on the sale of itsRancho San Joaquin property inOctober 2020 resulting in net cash proceeds of$33.6 million . The proceeds generated by these transactions are being reinvested in our entertainment golf business.
As of
Our primary cash needs are capital expenditures for opening new
The Company's growth strategy is capital intensive and our ability to execute is dependent upon many factors, including the current and future operating performance of our entertainment golf venues and traditional golf properties, the pace of expansion, real estate markets, site locations, our ability to raise financing and the nature of the arrangements negotiated with landlords. Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with other financing alternatives in place or available, and further combined with the asset sales, as discussed below, will be sufficient to meet our working capital and capital expenditure requirements for the foreseeable future. As ofSeptember 30, 2021 , we are actively exploring the capital markets to meet our medium and long-term liquidity requirements to fund planned growth, including new venue development and construction, product innovation and general corporate needs. Our financial objectives include diversifying our financing sources, optimizing the mix and maturity of new debt financings, public or private equity and debt issuances and strategically monetizing our remaining real estate securities and other investments. We continually monitor market conditions for these financing and capital opportunities and, at any given time, may enter into or pursue one or more of the transactions described above. However, we cannot ensure that capital will be available on reasonable terms, if at all.
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