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Course Closures Today For A Better Tomorrow

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Every year around this time, the National Golf Foundation (NGF) releases its Golf Course Openings and Closures Update. And every year for the past eight years, the number of course closures in the U.S. has significantly outpaced the number of openings – 2013 being no exception.

For example, in 2013, 157.5 golf courses closed their doors, while only 14 opened. Many of you might know one of those 157.5 courses that are now defunct. In fact, some of you may have frequented one of them. But you shouldn’t let it get you down for long, because there’s a light at the end of the tunnel.

Obviously the courses that closed were struggling – most likely a direct result of the 20-year golf course boon between 1986 and 2006, where more than 200 courses were built per year on average. When the real estate market crashed in 2007, something had to give – and that has translated into a reverse of what we saw from ’86 to ’06 (and according to the NGF, we’ll probably continue to see for at least the next few more years).

This is what we call “market correction.” For over twenty years, golf courses sprang up like weeds across the U.S. landscape. And while we golfers might have indulged in the gluttonous pleasures for a time, course owners and developers were pushing beyond the logical limits of market demand.

So now the market has taken things into its own proverbial hands. We are witnessing almost the exact opposite of what we saw during the boon on a year-over-year basis – golf courses are closing so the market can readjust to actual demand. And, according to the NGF report, the majority (66%) of the closures were courses that were public and had sub-$40 greens fees. This is reminiscent of a thinning of the herd.

In nature, a thinning of the herd is a good thing – it supports survival of the fittest and those remaining are typically of higher quality. From an economic standpoint, these closures are positive for golf in general – especially in the long-term.

So while your local muni closing may have you worried that the golf industry is at the precipice, fear not. When the dust settles (and it will), the industry will be stronger than ever – with higher quality courses at more competitive prices. And that bodes well for all golfers – especially those who haven’t even swung a club yet.

Research Shows “Frustration” Contributes to Quitting Golf

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golfstinks-frustrationWe’ve written before about why people quit the game of golf – from the obvious time and money to suffering an injury to simply hating the game, there are plenty of reasons.

But now, a study conducted by the National Golf Foundation (NGF) has put some primary research behind it. Atop the list were the aforementioned time and money. But for one particular group of golfers (those NGF identifies as “never-committed”), “frustration” ranks near the top.

According to NGF, “never-committed” golfers are people who play golf, but either don’t consider themselves golfers or typically have more fun doing other recreational activities. These folks also comprise around two-thirds of the 21 million golfers who quit the game within the last two years. So the question then becomes; Why aren’t these people having any fun playing golf?

Well, frustration seems to be one big answer. It’s interesting that research would reveal “frustration” as a key reason for quitting golf. The GolfStinks slogan (“taking the frustration out of golf”) implies that most golfers are frustrated with their game. But now, it seems, we have empirical evidence to support this notion!

And NGF’s analysis makes a good point:

“Improving retention will help golf’s participation problem tremendously.  Making golfers feel more comfortable on the course is paramount to retention, as is helping beginners feel good enough about their skills to lessen frustrations and eliminate embarrassment.  All of this will contribute to making golf more FUN, and build a larger base of committed players.”

So how do we do this? Do we, as some have proposed, change the rules to make the game easier? Use illegal equipment to hit balls straighter and farther? Maybe we triple the size of the hole!

Or perhaps we don’t change anything with golf – perhaps we just change our attitudes instead? Instead of the bottom line always being about what you write down on your scorecard, maybe we can take a different approach to teaching golf? Sure, teach them the fundamentals of the grip and swing and the basic rules and etiquette. But we need to also keep in mind that the main point is to not create the next tour member (raw talent will always dictate that). But rather, the focus should be on providing someone with an activity they can enjoy for the rest of their lives.

With this in mind, we should focus our teaching efforts on the other aspects of the game – like camaraderie and being out in nature. And let’s not overlook the importance of challenging themselves to play better (rather than just competing against their golf buddies).

We need to show new golfers that this game is so much more than just how good you can play. And if we can be successful in doing that, we can also be successful in creating new, lifetime golfers…with less frustration.

Are Golf Course Closures a Good Thing?

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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.

Is the Golf Industry Improving Economically?

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The recession we’ve experienced over the last few years has been tough – The job market is terrible; real estate prices are wretched; and progress has been, well…slow. But apparently, more people have been hitting the links this year!

According to a recent report from the National Golf Foundation (NGF):

“The big story of 2012 in the golf business is the year over year increase in rounds played. In fact, if fourth quarter rounds are flat with the same period in 2011, we would end the year with the largest single-year jump since the turn of the century; a national gain of more than 30 million rounds.“

This surprised me, considering the tough times we’ve been living in. Personally, my number of rounds played has also gone up this season, but that was to be expected after a couple of golf-limiting events in 2011: A new addition to the family and my battle with a foot ailment.

Though I was playing more, I suspected many were not. So I was extremely pleased to see that things seem to be improving within the golf industry – at least as far as the number of rounds played is concerned.

Golf has certainly not been immune to the recent economic woes – NGF notes that golf rounds played has declined around 11% over the past decade, bottoming out in 2009 (the height of the recession). But the good news is the numbers from 2012 appear to show nearly half of what was lost might be recovered.

NGF attributes some of this to the weather, in which 2012 saw an 8% increase in “playable days” compared to 2011. But it also credited the general increase in spending in the U.S., which seems to have roughly paralleled the increase in golf rounds.

So more people are playing golf – great! But what about the rest of the industry? Not surprisingly, course operators have seen an increase in revenue this year. But new course development is still at “historic lows and that should continue for the foreseeable future.” Meanwhile, golf equipment sales are progressing slowly – but progressing nonetheless (still below pre-recession levels).

NGF points out that as we continue to emerge from the recession, so too should we see a general improvement in all things golf-related. But one has to wonder, with Tiger a cub of his former self and no real face to the PGA tour, will the golf industry ever reach its pre-recession hay day – even in a thriving economy?

Related Posts: The Economics of Golf

Golf Course Bankrupt? Blame Tiger Woods

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In this recent recession, some big investment banks were rescued from a mess that company spokespeople claimed they didn’t need to be rescued from. Nevertheless, they were labeled as “too big to fail” and were pulled to safety on the public’s dime.

Meanwhile, golf courses have been buckling under current economic conditions those aforementioned banks had a hand in creating. The last five years have not been kind to courses in the United States. But recent data from the National Golf Foundation (NGF) suggests golf facilities in general are holding their ground fairly well.

A preview of The NGF’s Golf Facilities in the U.S. report, 2011 edition (which will be released in February) reveals course closures from 2006-2010 represent just 1.5 percent of courses overall. In 2010, the figure was less than half of one percent. These statistics prompted the NGF to state the following: “Considering the severity of the recession, one could argue that golf has held its ground reasonably well.”

However, despite NGF’s positive spin, the raw numbers still reveal a glaring issue: Every year since 2006, more golf courses have closed in the U.S. than have opened. For example, last year saw 107 18-hole courses bite the dust, while only 46 were born. But does the recession deserve all the blame?

Remember the days (late 1990’s and early 2000’s) when new courses were sprouting up like daisies? And these weren’t shabby municipal tracks either – many were high-end daily fee courses that featured sharp grooming and sweet facilities. I remember one such place in my area – Pistol Creek Golf Club. It was a great course (see photo at top) with a good layout, awesome grooming and a dandy club house. It opened in 2001 and closed in 2005. Why?

If you’re observant, you’ll note that the year it closed (2005) is well before the current recession even started. Even 2006, which is when course closures began outpacing course openings in the U.S., was a full year before the effects of the subprime market started taking hold. So it’s obvious golf courses have been suffering for a while – certainly longer than the current recession.

The NGF gives a clue as to why in the headline of their press release: “NGF 2010 Openings/Closures Summary – Market Correction of Supply/Demand Imbalance Continue.” Simply put, they built too many damn courses for the number of golfers out there! So the next appropriate question would be; why?

I’m going to go out on a limb here and say it has something to do with Tiger Woods. Now I don’t have any data to back this up, but imagine it’s 1999 and you want to build a golf course. I’d give good odds that Tiger would be mentioned somewhere in your business plan or your pitch to the city council: “It’s this Tiger Woods, man! He’s changing the game!”

But did the golf industry over-estimate the impact of the Tiger phenomenon? Sure, he was good for the game, but perhaps his presence caused too many investors, architects and designers to jump on the bandwagon and simply overdo-it. Of course, this is all just speculation, but it seems entirely plausible.

So if the juggernaut that Tiger Woods once was compelled shiny new golf courses to be stacked upon the proverbial camel’s back, then the recession was only the proverbial straw. Golf, after all, is a luxury. And luxurious things are usually the first to go when money gets tight. Still, losing only 1.5 percent of courses over the past 5 years isn’t terrible. But it sends a clear message: “Market Correction of Supply/Demand Imbalance” is just a nice way of saying the golf industry is shrinking, not growing.

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