Game’s future depends on how well golf courses can evolve in changing times
March 13, 2015 By Mike Jiggens
THE state of the North American golf industry is changing, and the game’s future will depend on how golf courses are able to evolve, those attending January’s Ontario Golf Superintendents Association conference in Niagara Falls were told.
Pat Jones, publisher and editorial director of GIE Media’s Golf Course Industry, said there are key characteristics happening within the industry that will separate those who are going to be successful from those who may not.
Noting that golf course closures in the United States are occurring at a rate of about 150 a year, Jones said courses which will emerge as winners will be those which have a clear niche, are creative and focused and invest intelligently in their infrastructure. Their managers will be revenue-focused and will understand their customers. Golf courses which will come out as losers, he said, are those patiently waiting for the golf and housing markets to bounce back and don’t see the need to improve their product. They also have managers who don’t communicate with one another.
Golf put itself into its current bind during the period from 1988 to 2002 when the number of golf holes created in the United States increased 42 per cent, yet the number of rounds played increased only 18 per cent. Although Jones quoted U.S. statistics during his presentation, he said the situation in Canada has essentially mirrored what has been happening south of the border.
New golf course construction went “crazy” during that period with overbuilding, resulting in thousands of courses coming on line that weren’t needed.
“We ended up with a huge debt load on many of those courses.”
Jones said all these courses were able to do was to refinance their debt, and they weren’t succeeding in attracting new golfers.
“We went crazy with the idea that everybody wanted to play golf, and Tiger (Woods) was going to bring all these people in.” Jones added LPGA golfer Michelle Wie made a statement in the golf world a decade ago as a teenage superstar and was supposed to bring more young golfers and Asians into the game. But that didn’t happen, he added, because the game is not that opening and is seen as difficult to play.
Things came to a head in 2001, but it wasn’t the terrorist attacks on Sept. 11 which triggered it, Jones said.
“Rather, it was the dot com bubble bursting.”
Billionaires who got rich in the dot com world were “throwing money around” by building golf courses left and right, but then realized it was time to apply the brakes. An oversaturation of golf courses had occurred and many of them were near empty. The recession of 2008-09 compounded the problem, Jones said, leading several courses to trim their budgets by an average of 18 per cent.
But in general, the golf industry put itself into its predicament by artificially creating a golf boom “when there really wasn’t one. We created the situation we’re in now. We have way too many courses.”
Historically, the male golfer of about 35 years of age was the one who drove the golf business by becoming the new club member or customer of the future, but today he is playing less golf, Jones said. The young parent who used to play golf every Saturday and Sunday is now spending more of his time with family activities and has fewer opportunities to play the game. Who that new member or customer of the future might be remains to be seen because it’s no longer the 35-year-old male, he said.
Jones said he has seen some positive incentives aimed at getting children interested in the game, but the numbers aren’t particularly significant. Programs such as The First Tee are at least exposing children to golf at a young age, he acknowledged.
Much of what makes golf attractive is the relaxation it offers and the chance to get away from it all for four or five hours. But there is a perception among young adults that devices such as cell phones are frowned upon at golf courses, and many of these individuals have the “fear of missing out” on something important if their phones aren’t turned on and close at hand.
One thing golf courses tend to forget to help sell the game is to promote it as fitness and recreation. Jones said walking nine holes burns approximately 1,800 calories. Even those who ride can burn 600 or 700 calories over nine holes.
Golf must cater more to women if it wants to grow the game, he said. They are generally attracted to the game by the social opportunities it offers. Golf courses must become more “female friendly,” Jones said.
The industry must do what it can to emphasize the fun aspect golf offers because most people who take up the game are apt to find it frustrating.
The golf course superintendent will always be an important member of the management team, Jones said.
“There’s never been a more important time to have the superintendent be part of that decision-making process.”
Superintendents must be creative and focused and should be cautious if they hear their employer say he’s waiting for the golf market to come back.
“You have to take matters into your own hands instead of sitting around, waiting for things to get better.”
Jones said about one-third of golf courses in the United States are unprofitable. About four or five years ago, one-third of U.S. courses were losing money, one-third were breaking even and one-third were making money.
“The good news is profitability is going up,” even though about one-third of golf courses are still losing money.
Courses are finding ways to better manage their costs and are discovering ways to generate more profit from the same revenues. The trend of golf courses becoming more profitable will see them emerge into a smaller, leaner, smarter and “cooler” market in which superintendents will play a more critical role.
At its peak, there were about 16,000 18-hole golf courses in the United States, but the number has since dwindled to about 15,200. A trend that has occurred over the past half-dozen years is that as smaller facilities have struggled, they have formed partnerships or have found themselves with four or five others under one umbrella management company.
“You get some nice benefits, you get some collective buying benefits, you get a better deal perhaps in chemicals, you get a better deal on mowing equipment…You’re centralizing your purchasing.”
Jones said this is an example of how golf has managed to evolve under current market conditions.
As far as the superintendent is concerned, umbrella corporations can either be good news or bad news. The good news is they provide centralized resources, will teach management skills and perhaps provide support training. The bad news, however, he said, is that some of these corporations “suck” and treat superintendents poorly and will cut budgets, salaries and staff.
Jones suggested that if a golf superintendent sees someone from a management company “sneaking around your course,” to do as much research as possible to learn what the company is like.
In the 1970s, there were several nine-hole golf facilities in the United States where new golfers could learn the game without feeling intimidated by playing an 18-hole course. But many of those courses eventually expanded to 18 holes, leaving fewer nine-hole facilities available.
“That’s a mistake we made that hopefully we’ll rectify over time.”
Jones said many of today’s 18-hole courses cannot sustain themselves and may be looking to eliminate nine holes and operate as a smaller business. He said he anticipates the number of golf courses in the United States will level off at about 13,000 which will be niche driven and propelled by customer service. He said customer service currently tends to be better at Starbuck’s than at the average golf course.
Golf’s economic impact in the United States is about $ 76 billion annually, and in Canada it’s about $ 13.9 billion. Golf employs about two million people in the U.S. and about 300,000 people in Canada. Jones said all of these people vote and must be heard in Ottawa and Washington when legislation which might negatively impact golf may be introduced.
“We have to tell our story and tell it well,” Jones said, adding the message is that golf matters and it’s important to develop such economic impact stories.
The Augusta perfection syndrome is a thing of the past, he said, and the message that a little brown around the edges is clear.
“You don’t have to be Augusta, and you can’t expect that. That has a cost.”
Jones speculated that golf will prevail and the business will evolve and improve if golf courses’ expectations are sound. He added there will be big opportunities for superintendents who can combine a passion for turf with a head for business.
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