"You can't grow an avid golfer in a quarter"

A couple of interesting columns have rolled in from the PGA Show and focusing on the rosy economic picture recently painted by some of the game's leaders.

Thanks to reader John for John Paul Newport's look, which included this:

So why the undercurrent of pessimism about the golf industry? Joe Steranka, chief executive of the PGA of America, which sponsors the show, suggests that the industry's outlook became a bit skewed starting in the 1990s. Many well-known golf businesses were gobbled up by investor-owned companies, which focused on short-term earnings.

"You can't grow an avid golfer in a quarter," he said. "For a while there, I think some in the industry lost sight of what the game needed for its long-term good."

And...

The possible looming recession may have only a minor effect on golf, argues Mr. King at TaylorMade. For one thing, more and more baby boomers are entering their prime golf-playing years. "The fact is that when people can't afford bigger vacations or fancier cars, they still make smaller purchases for recreation," he said. "Sometimes it means they even play more golf than they did when times were better."

Brad Klein at Golfweek wasn't quite so keen on the numbers presented...

Macro-economic studies like this serve a useful industry function in that they help generate public attention and set the stage for legislative lobbying efforts and behind-the-scenes policy bargaining. That’s precisely one purpose of this report. It will certainly be part of a widespread golf industry show and tell effort in Washington on April 16, National Golf Day. Similar, state-by-state studies have also been completed for Iowa, Louisiana, Michigan, Minnesota, Ohio and Virginia. They can help steer public policy toward pro-golf, pro-tourism efforts, and they can be powerful tools for impressing legislators and policy-makers when it comes time to decide upon water allocation, land use, tax rates and zoning provisions.  

This was interesting and a point I haven't seen written about before:

Perhaps the biggest issue facing the golf industry, which went unmentioned in the report or in the news conference accompanying its release, is the vast dependence of maintenance crews and clubhouse operations on immigrant labor for staffing. If the golf industry can effectively lobby for immigration reform to assure a steady supply of legal workers, that would be a major legislative achievement.

And it's hard to disagree with this:

But some of the numbers here in this report seem inflated, with suspect counting rules that create an unduly rosy picture. For example, the $28 billion in golf-facility operations includes weddings, banquets and all food and beverage operations. Why all of this should be attributed to golf is a legitimate question, because folks would be having meals and banquets somewhere, and it’s not as if golf created that expenditure.

More questionable is the exaggerated activity attributed to real estate: $14.97 billion in 2005, accounted in terms of 63,840 homes constructed at a cost of $11.6 billion ($181,704 apiece, plus 28 percent premium of additional value ($50,877 per home), which the report explains as “the amount a buyer is willing to pay for a home or property located on a golf course or within a golf course community.”

But why does golf get credit for all of those homes? Only 20 percent to 25 percent of homeowners at golf communities buy there for the game and play golf at the facility;

Comments

[Pickworth]

They've forgotten the Bat Mitzvahs...again.

The report by Brad Klein is right to question the figures. This is not dissimilar to the long history of Chinese regional bureaucrats logging very fertile production figures each season. Chinese GDP is just not what it is stated to be. It's huge, but there is a big investment in over-stating the actual production and not a lot of science about recording it. Golf is no different, it seems.

What the heck, it's a market out there.

[Stewbacca]

They need to perform another report about 9 months from now. Private courses will always be fine, but public courses could experience a big squeeze.
Brother, can you spare a round?

[Iggy]

The squeeze will affect all. Only if public and private courses budget efficiently, will they stand a good chance of survival.

There is tremendous waste at private clubs, with incoming officials and committees thinking up new ways to spend money, just for the sake of spending.It's a constant battle for the membership, fighting this nonsense.

[Four-putt]

Joe Steranka correctly states many well-known golf businesses were gobbled up by investor-owned companies, which focused on short-term earnings.

"You can't grow an avid golfer in a quarter," he said. "For a while there, I think some in the industry lost sight of what the game needed for its long-term good."

FACTOID: In 1999 when the PGA Merchandise Show and the equipment/softgoods industries were at their zenith, the PGA of America suddenly sold the show to a private corporation for a whopping $125 million. Within two years most major manufacturers (Titleist, Cobra, Ping, TaylorMade, etc) ceased buying exhibit space at the show. It is now a shadow of what it once was.

4p