GolfStinks

A Golf Blog for the Rest of Us!

The Economics of Golf

How is the golf industry doing financially? Who's investing? Is the game growing? Are Millennials playing enough? This section is about the overall health of the golf industry.

What Should Golf Courses Do In The Winter?

| By | 1 Comment

IMG_0354
Do golf courses really need to close for the winter? (photo by Greg D’Andrea)

I don’t know about any of you, but I know what I do in the winter – I hibernate.  Though I would prefer the cooler weather over the heat, that doesn’t mean I want to be out in the cold.  When I was a little kid, of course I wanted to be outside no matter what the weather.  However, as I get older, somewhere along the line I developed an internal thermometer.  And at whatever point that occurred, the chance that I would ever participate in any winter sports was out the window.  I don’t ski.  I don’t snowboard.  I don’t ice skate.  Fishing is great, just not between the months of November and April.  Hence one of the reasons I prefer golf.

But being a golfer (and I use that term quite loosely), I of course notice that, here in the northeast, many golf courses simply shut down in the winter months.  Now I don’t know about you, but that sounds like quite a waste of space and maybe even a wasted opportunity to make a bit of money during a time when no money is coming in.

For instance, when I was a kid, we used our local golf course for something that most kids used a golf course for in the winter…sledding.  As kids, my sisters and our neighborhood friends would walk half a mile through the snow just to get to the tenth hole at the local course because it was a great hill for sledding.

Also, I’ve got a friend who enjoys cross-country skiing.  But the problem is, he’s normally relegated to the streets and sidewalks when it snows.  And once everything is plowed, what then?  Well, if he lives anywhere near a golf course, then that’s a nice fluffy layer of snow which, temperature-depending, could last for a good long time.

Another thing I used to do as a kid was to go fishing in the water hazards on the local golf course.  However, I’ve never been ice-fishing there.  But who’s to say that it’s not a good place to give it a try.

Point is, if all of these activities take place on a local golf course, then why not open up the 19th hole when all of these activities are going on?  How about if the course is advertising that they are open for sledding, cross-country skiing and ice-fishing while keeping the 19th hole open for coffee, hot chocolate and a little food?  Why not invite people out to your course and have a chance to make some money on a day when normally, there would be no income flowing?

I know some of you are thinking that these people are just going to be doing damage to the course.  But keep in mind, I’m not saying to allow anyone out on the course with snowmobiles and ATVs.  I’m just saying, take advantage and make a little money off of something that’s going to be happening out on your course anyway.  I knew where the biggest hill for sledding was within walking distance when I was a kid.  It was on the tenth hole of the country club up the road.  Do you think other kids and families who live near golf courses don’t know the same thing?  Of course, they could also just keep the course open for those who are willing to brave the cold anyway…

Swing ’til you’re happy!

Is Golf Meant for the Rich?

| By | 3 Comments

golfstinks, golfsitnksTo many non-golfers, the title of this post has a very clear and direct answer: Yes.

But for those of us who play love this game, the answer isn’t that easy. After all, many of us don’t consider ourselves rich.

Most of us have to work for a living at a modest job – we’re not jet-setters, leisurely golfing around the globe at some exotic locale like Abu Dhabi or Thailand.  Nor do we tee-it-up daily at some hoity-toity private club where late-model luxury sedans fill the parking lot.

No sir, we drive our Honda Accord or Ford Fusion to the local public course and fork-over $60 to squeeze in 18-holes every Saturday. I say “squeeze” because inevitably we have to return home to mow the lawn before it gets too dark. Clearly we aren’t rich, so the headline of this post is a bit perplexing to us.

What we forget though, is that we’re the middle class…and we can afford golf. We can afford $125 for a pair of golf shoes every year or two; we can spend $600 or $700 on a new set of clubs every 5 to 7 years; we have a closet full of polo shirts that we already wear to work; and we have an extra 60 to 100 bucks a week to plunk down on greens fees. We may not always be happy with the costs associated with golf, but we pay them because (a) we love this game and (b) we can afford to pay them.

However, there are many, many people who cannot afford to play golf. Golf is not soccer or baseball – where you can organize a quick game at the local park. Nor is it basketball – where you can just show up at the courts down the street and play a quick pick-up game for free.

The mere fact that you have to pay to play golf sets it apart. In fact, you even have to pay to practice golf. Let’s ponder this for a second: First you pay to learn golf; then you pay to practice golf; and then you pay to actually play golf. Add to that the costs associated with clubs, balls and apparel and you begin to get the picture.

The USGA and other authoritative organizations within the industry want to grow the game. They want to bring golf to inner-city kids and others who wouldn’t normally have an opportunity to play. I say kudos to them. But this is not an easy task. The very foundational structure of golf requires the need for money. And not just initial money to learn the game – but liquid cash on hand throughout a lifetime of playing the game. We can get them started, but will they be able to continue?

Something within golf needs to change in order bring more diversity to the game. Perhaps golf course developers need to consider creating (or investing in) more 9-hole or Executive-style links – this would provide an inexpensive alternative to the typical 18-hole facility. These smaller tracts would be more cost effective to run and serve as a training ground for newer golfers and/or those who simply can’t afford 18-hole greens fees.

Funneling money to smaller-sized courses is just one possible solution – I’m sure there are many others – like removing this notion that every part of the golf course must be lush and green (AKA the Augusta effect). But ultimately, the point is something needs to change or the dream of growing the game will forever be…a dream.

So, is golf meant for the rich? Well, let’s put it this way: It’s certainly not meant for the poor.

Are Golf Course Closures a Good Thing?

| By | 1 Comment

According to a recent report from the NGF (National Golf Foundation), new golf course openings are at “historic lows,” while course closures continue to pile up. While many will take this as a negative sign within the industry, perhaps we should look at it from a different angle?

Here’s a breakdown of golf course openings and closures last year:

golf course openings and closures
Source: NGF

So what does the above graphic tell us? Well, that in 2012, only 13.5 18-hole facilities opened compared to 154.5 that closed. But beyond that, it tells us that the closures mostly stemmed from Daily Fee and Muni-type courses (90%). And of those, nearly 70 percent had greens fees under $40.

So what?

Well, this means lower-end courses are the ones folding. While that may not bode too well for your particular community, it might be a good sign for golf as a whole. Courses offering 18-holes of golf for under $40, at least in my area, are typically not the most well-maintained tracts of land around; there are usually waits on multiple tee boxes; and inevitably end up becoming training grounds for newbie golfers (hence the backups on the course – not from overuse, but instead from slow play).

Let me be clear here: Not every 18-hole facility with greens fees under $40 fits my description above – but, it is extremely difficult to operate a respectable 18-hole course in today’s economy…especially for under $40 per round. Thus the ones that are run the risk of being understaffed and in disrepair (prime candidates to buckle under tough economic times).

Now, there’s nothing wrong with learning the game at an inexpensive course, but perhaps a full-sized 18-hole facility isn’t the best place? There are many decent and inexpensive “9-hole” or “par 3” or “executive” courses out there (which are excluded from the graphic above) that offer a wonderful learning opportunity for newbies. This is where you need to go if you are transitioning from the driving range to the course.

No one asked for this economy, but the reality is we have it. And perhaps the 150+ courses that closed last year will ultimately benefit the golf industry as a whole. Because what we are left with is survival of the fittest. The better 18-hole facilities will remain – and that bodes well for when those golf newbies are ready to make the transition from a 9-hole or executive course to a bigger facility. They will not be disappointed with what they find – rather they will get to experience the best golf has to offer.

And if that happens, then you will have golfers for life.

Investing In Golf.

| By | 1 Comment

for saleI’ve been reading some interesting articles recently about investing and one of them brought up the opportunities for investing in the golf sector. When I think of golf and investing together it’s usually about someone who invests in other things to play golf. Not necessarily investing in golf to make money.

Some of the areas covered were equipment and technology but the biggest is obviously real estate. One would think now is the time to strike and buy up golf real estate. Rates are low, the market has dropped by half. Courses that were on the market for $5 million a few years ago sold last year for $2.5 million. Ouch!

Funny but true: Bloomberg Businessweek mentioned that when you invest in real estate, rarely are you given a mulligan. I’m guessing I’ll need to do my due diligence. And in doing so, my visions of owning a golf course at a discount price isn’t as promising as I first thought. Almost forgot about a key expense – maintenance. Although the price for the course is low, the cost to keep it looking good hasn’t really changed.

Oh well, I’ll just keep plugging away and dreaming.

Disclaimer: I am in no way qualified to tell people what to invest in nor what they should do with their money…but if you want to send me money I’ll take it. Keep it in denominations of $20 bills or less and unmarked…just saying.

Hit’em long…yell FORE!!!

7 Ways Golf Helps Drive the U.S. Economy

| By | 1 Comment

Source: 2011 Golf Economy Report (golf2020.com)

Money circulates in, through and around the golf industry – that much you know. What you might not know is just how much money. What if I told you it was in the hundreds of…wait for it…BILLIONS.

According to the latest Golf Economy Report (commissioned for the 2011 calendar year and released in October 2012 by the World Golf Foundation and Golf 20/20), the golf industry has an indirect economic impact of $176.8 billion in the United States. And, if you extrapolate that out to include everyone’s salary who is affected by a golf-related transaction, the number is even more staggering: Nearly two trillion dollars.

Such robust numbers led the report’s authors to conclude that, “The game of golf is an industry in its own right, and contributes significantly to the U.S. economy.” But how does golf pump that much cash into the system on a annual basis – especially in light of recent economic woes? Well the report boils it down to seven ways.

1) Let’s begin with golf courses. There are nearly 16,000 facilities in the U.S. (some with multiple courses) that employ nearly a million people. But beyond wages, money is spent on several other things such as maintenance (gas, fertilizer and pesticides etc.) and food and beverage (the 19th hole) – in all, golf courses are collectively responsible for contributing more than $86 billion to the U.S. economy.

2) What about hospitality and tourism? This is an area that has actually seen a rise over the last decade. People are traveling to play golf and the money they spend in relation to that travel is substantial – nearly $65 billion is in some way, shape or form correlated to golf-related travel every year.

3) We all know the real estate market has suffered over the past half decade and golf real estate (residential golf-related construction) is no exception. But it’s still the third-biggest contributor, to the tune of nearly $11 billion.

4) The next category lumps the pro tours in with associations (both national and local) and player endorsements. When Tiger and Rory sign a lucrative deal with Nike, many people benefit. This bucket contributes $6.6 billion.

5) Need a new set of clubs? Although people haven’t been spending as much on golf supplies (including equipment and apparel) over the last few years, this space still accounts for $6.5 billion annually.

6) Another thing to suffer due to the recent recession has been new course openings. And while not as much capital has exchanged hands, investors are still investing – nearly $1.8 billion on new course developments in 2011.

7) The last thing on the list might surprise you, but believe it or not, the golf industry is a bit of a philanthropist. Be it a local charity tournament or other fund raising through various organizations within golf, the industry donates nearly $4 billion a year. Top that Bill Gates!

This all adds up to that $176.8 billion indirect economic impact I mentioned earlier – and this is just within the United States! There’s no doubt golf contributes much more on a global scale.

So the next time you’re walking alone down a quiet fairway, just remember – every ball you lose; every dollar of your greens fees; every soft spike you wear-down contributes in some small way to the economic juggernaut that is the golf industry.

The complete report can be found HERE.

Questions / Advertise

info@golfstinks.com

Disclaimers

See here

Privacy Policy

See here