"New York Lawmakers Tee Up Tax Bill That Takes a Swing at Golf Courses"

Thanks to all who sent Keiko Morris’ Wall Street Journal story on a New York bill to give local governments the option to assess and tax golf courses based on “highest and best use”. Morris suggests the bill could be the undoing of many golf courses.

Business owners and industry representatives fear the measure would usher in tax hikes for many facilities, prompt closures of courses and hurt local tourism and hospitality markets at a time when the sport faces stiff competition to gain more fans.

“Home builders are watering at the mouth at a lot of golf course land and would pay 10 times what it’s worth as a golf course,” said Jay Karen, chief executive of the National Golf Course Owners Association. “If all of the sudden we saw tax bills at golf courses increasing by a factor of 10, you are going to see an acceleration of golf course closures.”

The bill’s Democratic sponsors, Sen. David Carlucci and Assemblywoman Sandy Galef, and proponents say it is about golf courses, especially country clubs with high-end amenities, paying their fair share of taxes.

The bill may have been inspired in part by fights with the Town of Ossining’s valuation of Trump National Westchester ($14 milion) vs. the Trump organization’s estimate (10 percent of that). The club was valued at over $50 million by President Trump in federal financial disclosure filings.

The other course feuding with Ossining is Sleepy Hollow. The club’s attorney says its market value is $20. That’s twenty, as in 2-0.

Sports Betting Legalization Effort Lagging, Only Six States In So Far

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Given golf’s interest in legalized sports betting, the early returns from states that were all in combined with lagging efforts by most states, suggests the expected windfalls may be slow to come, writes Timothy Williams of the New York Times

It’s well worth reading if you know anyone banking on sports betting windfall. The PGA Tour has largely positioned their interest on fan engagement via fantasy leagues and the mobile experience, so the early struggles with sports books as outlined by Williams may pertain less to golf. Then again, if legalization only happens in a few states, that will slow the inclusion of any expansion on any platform.

The reluctance of state lawmakers, gambling analysts say, is based on a growing consensus that legal sports betting may not bring the windfall that economic forecasters predicted only a few months ago.

“There were a lot of people who didn’t know what they were talking about,” said Allen Godfrey, the executive director of the Mississippi Gaming Commission, which oversees the sports betting ventures around Tunica.

Since the Supreme Court’s decision last May, which raised the prospect of hundreds of millions in new tax revenue, just six states have given final approval to allow legal sports betting. In a seventh state, New Mexico, Native American tribes have begun offering sports betting with federal approval.

"Money driving PGA Tour gravy train"

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Part 1 of Ron Green Jr.’s eventual two-parter looking at sports betting coming to golf is worth checking out to understand what the PGA Tour has in mind.

Two things stood out to me in Part 1, starting with this on sports betting in the U.S.:

Of that estimated $150 billion wagered, approximately 2 percent – $3 billion – is bet on golf.

Monahan said making money off legalized sports betting is not the main reason the PGA Tour is invested in what will be a new world order. The hope is to get one-quarter of 1 percent of the money wagered on the PGA Tour. That’s approximately $7.5 million annually if the estimates of what’s being bet are accurate.

That seems like a modest goal and modest amount given how the Tour has invested in various programs in anticipation of legalized sports gambling. Hardly a gravy train, but maybe this is the most conservative estimate?

Then again, if it’s about living under par, i.e. engagement…

“What that’s going to do is give fans the ability to not only bet on the winner and the low score of the day but you’re going to be able to bet much more granularly,” Levinson said.

“You’re going to be able to bet shot by shot. You’re going to have a situation where fans are going to be locked in and engaged throughout the competition. It’s going to be a fun way to bet.

“Our sport is unique in that we have 72 balls in the air at any given moment as opposed to one. For people who like to engage in sports betting and may not be interested in the PGA Tour golf, this is going to be a really fun sport to get engaged with.”

Levinson is one of the tour’s sharpest minds, so I trust that he’s seeing things to make them believe shot-by-shot betting will be fun and functional.

Our first glimpse into the merging of a match and stats came at last fall’s match between Tiger Woods and Phil Mickelson. As slow as golf is, the match did not seem to move slowly enough to assess a shot and the player’s stats before placing a bet in time. But that may change with better-designed apps that react by crafting a wager immediately after a shot has come to rest, sending us a phone notification of the
”opportunity” and making the bet option fun and fast.

"The emergence of PXG and others is indicative of how golf and golfers have changed in the decade following the last U.S. recession."

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I was thinking that PXG’s driver price drop signaled a weakening of the high end club market, but as WSJ’s Brian Costa writes, Honma’s entry into the U.S. and other signs suggest an expansion. (Thanks reader JB for this.)

There was this from Mark King, ex-Taylor Made CEO:

“How do you justify these prices? How do you justify the price of a Lamborghini?” said Mark King, the former chief executive of TaylorMade who is now a consultant to Honma. “People don’t understand what’s under the hood, nor do they care. There is a certain status it represents.”

And yet…

U.S. retail sales of golf equipment grew 8% from November 2017 to November 2018, at $2.6 billion, according to market data compiled by NPD Group. Matt Powell, a sports industry analyst for the company, said that growth was largely driven by low-cost, entry-level gear.

Higher-end clubs were not included in NPD’s data because they are not sold through retailers. But Powell said the emergence of the category is comparable to that of ultra-premium bicycles that sell for $10,000 or more.

“I think all of this is being driven by the boom in baby boomers retiring,” Powell said. “You’ve got some who are saying, ‘I always wanted to have a custom-made bike or a really high-end set of golf clubs, and now that I’m no longer working, I’m going to splurge a little bit.’”

PXG was included in the piece and Costa included this intriguing predictions that revenues would rise on the lower driver price.

PXG still isn’t profitable. Parsons said it had revenues of around $80 million in 2018—roughly at break-even—and expects to grow by 50% or more this year by opening more stores and slightly reducing prices. But it has already gained wider appeal—including among an array of pro golfers—than many in the industry initially expected.

And as Costa notes, with the economic divide growing, so might the high-end market.

TaylorMade And PXG Settle Suits With Promises Of Patent "Cross-licenses"

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Fascinating to see the two manufacturers settle and essentially announce they are both using the same technology, at least in the eyes of the patent world.

What would Old Tom make of this from David Dusek’s Golfweek.com item:

First released in 2015, the original PXG 0311 irons are hollow with thermoplastic elastomer injected into the empty chamber behind the hitting area.  The company says the TPE increases the durability of the thin face while enhancing feel and sound. PXG irons also have tungsten in the toe to lower the center of gravity and shift it to the center of the face. The company’s new 0311 GEN2 irons are designed in the same way.

TaylorMade’s P790 irons are hollow, then filled a proprietary material the company calls SpeedFoam. They also have tungsten added to the toe.

The statements from PXG and TaylorMade:

Parsons Xtreme Golf (PXG) and TaylorMade Golf Company jointly announced today that they have reached a settlement of the pending patent litigation and related patent disputes between the parties. Under the terms of the agreement, each company will have specified rights to make club products under patent cross-licenses.

David Abeles, TaylorMade Golf’s CEO, said, “I’m pleased that we were able to reach an acceptable and amicable resolution to put this this case behind us so we can continue focusing on bringing industry leading equipment innovations to the golfer.” 

Bob Parsons, PXG’s CEO, said, “As a golf equipment innovator, PXG will continue to pursue research and development and obtain patents for our novel club designs in the iron technology space. We will not hesitate to assert those patents in the future.” 

Details of the settlement are confidential.

Parsons wins 2&1?

Honma's Mark King: Pro-Bifurcation And Lamenting Multiple Driver Launches

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Adam Schupak talks to ex-TaylorMade CEO Mark King about his role at Honma USA and more.

A couple of noteworthy quotes include his admission of abusing the annual driver release with multiple drivers unveiled in one year. But he stands by the approach of a new driver every year for the 20% who will pay.

MK: That we went so fast. My last 2-3 years at TaylorMade I don’t think the model was wrong. I think we abused the model a bit. Every time sales dipped a bit, we launched a new product. I wish we had shown more discipline. If you don’t have anything that makes the club different, you should probably wait. That said, I think one-year lifecycles when done properly is still the best way because I do think 20 percent of the golfers buy 80 percent of the equipment. Those 20 percent want to buy something unique and different ever year.

Mark him down for bifurcation, still!

AS: Where do you stand on the great distance debate going on in golf?

MK: You still have to think about the masses. I’m in the business of selling clubs to them and it’s the hardest game in the world. That’s why anything we can do to make it easier, I’m all for. That’s why I’ve always been OK with bifurcating the Rules of Golf.

B Speak Alert: Pillsbury Is Back, Better Than Ever And Unveiling New Jargon Gems!

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One of the real maestro’s of B-Speak is back on the golf stage as Club Corp CEO hired David Pillsbury and the time away has done wonders for his vocabulary.

While he paints in many of the best modern colors—employee partners, speed to market—Pillsbury unfurled some new modern classics discussing Club Corp’s initiative with BigShots, a family golf center concept.
While broadening “the top of the funnel” and a “cradle to grave strategy” gave me goosebumps, it’s the concept of friction that most astounds.

“Interest in golf has never been higher. The problem is friction. There’s too much friction when someone wants to convert interest…”

It’s not cost, difficulty or time, people. It’s friction!

Enjoy:

Market Research Group: Golf Sales Up 8%

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Market researchers NPD Group put out a release saying that golf retail “experienced a significant uptick in sales over the last 12 months.” Thanks reader JA for catching this bit of good news for the golf business:

Golf sales in the mass/sporting goods retail space generated $2.6 billion and grew by 8 percent in the 12 months ending November 2018, after facing declines the year prior, according to The NPD Group.

"The macro environment for golf has been in a turbulent state, fueled by Golfsmith's bankruptcy, major brands cutting back on their golf business, and courses closing. But today, we're starting to see normalization in the market as those deep holes are now being filled," said Matt Powell, vice president and senior industry advisor, Sports, The NPD Group. "Major sports retailers are now investing in golf to pick up some of the business, and brands are also placing emphasis on the category to spur innovation."     

All golf product categories grew in the last 12 months. Comprising around 50 percent of total market sales, golf clubs grew by +7 percent. Sales increases were also seen across balls (+6 percent), gloves (+7 percent), accessories (+21 percent), and training aids (+13 percent).

Yes, someone tracks training aid year-to-year sales.

Titleist Wins All Club Counts At Sony On The Back Of...Speed? TaylorMade?

There’s a little something for everyone in Jonathan Wall’s Golf.com story on Titleist winning the driver and every major club category at the 2019 Sony Open. It was Titleist’s first PGA Tour week win since 2000. These counts don’t mean much to everyday golfers but are of interest to hardcore club junkies and the golf business.

While Wall cautions this is just one week and it’s a long season ahead, the Darrell Survey results did allow Wall to explain a key factor in the surge of Titleist usage. With claims of more speed using the new TS3, players looking for more distance were understandably intrigued. But here’s why players were able to consider the club:

TaylorMade, which won every PGA Tour, World Golf Championship and major driver count during the 2017-18 season, is unlikely to repeat the feat this year due to the significantly reduced Tour-player staff the brand now employs — only five staffers are listed on its website.

TaylorMade’s decision to partly back out of the driver arms race helped Callaway and Ping pick up one “win” apiece during the fall portion of the season; TaylorMade still logged six wins.

Still, just five players?

Coupled with Nike getting out of the club business not too long ago and TaylorMade out of the everyday Tour player endorsement business, it seems there are more free agents than ever. At least when it comes to what’s in the (tour pro) bag.

"Golf-Home Owners Find Themselves in a Hole"

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While the PGA Tour Commissioner sees golf as “growing and thriving,” the Wall Street Journal’s Candace Taylor details a growing crisis in the golf course real estate community world. (Thanks reader JB for sending.)

As younger generations do not take to golf or have little interest in golf course-fronting homes, values are plummeting and closures are commonplace.

“There are hundreds of other communities in this situation, and they’re trapped and they don’t know what to do,” says Peter Nanula, chief executive of Concert Golf Partners, a golf club owner-operator that owns about 20 private clubs across the U.S. One of his current projects is the rehabilitation of a recently acquired club in Florida that had shut one of its three golf courses and sued residents who had stopped paying membership fees.

More than 200 golf courses closed in 2017 across the country, while only about 15 new ones opened, according to the National Golf Foundation, a golf market-research provider. Florida-based development consultant Blake Plumley said he gets about seven phone calls every week seeking advice about struggling courses, from course owners or homeowners’ associations. He said most of those matters end up in court, and predicted that the U.S. is only about halfway through the number of golf-course closures that will eventually occur.

Growing and thriving…

Rory Unveils New Hospital-Friendly Nike's And Everyone Wants His Shoe Bag

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With a new season means awkward photos of players in their new gear, showing off new clubs and writers pretending to be surprised by announcements they were told about in September.

Rory McIlroy posted the new shoes in what appears to be a Seamus golf-made shoe bag and judging by the comments on his post, most just wanted the bag. The shoes, eh, not so much.

Others posted on the shoe design, or lack thereof, and the themes were predictably focused on the medicinal qualities—i.e. nurse’s shoes—, the lawn-bowling friendliness of the new line and a surprising number of Cousin Eddie references! You know, in the Christmas Vacation holiday spirit that we are all in, even the cynical millennials of Instagram!

Here is one of the posts followed by the best of the comments sections from various posts of the shoes (I see another was taken down…).

Some highlights from the comment sections…

thelext Shuffleboard shoes.

rtmartinaz Paging Nurse Ratched

303michael When you've got a tee time at 9 but you gotta go be a nurse at 2.

new84man @jeffcolburn4 better if they have Velcro.

5m_madden Does @rorymcilroy have bad circulation or diabetes? Those are absolutely terrible.

seth_thomas Where can we get the shoes bag?! Wow. Fire. 🔥

rlab77 Not even an endorsement contract like Rory's could get this pair on my feet. The bag looks top notch though

prettyzach @handcuff11 Nike making footjoys now?

ken212525 They handed those out at local bowling alley last night. Rolled a 98

therealroymcavoy Air Griswold’s? Modeled after the gift from cousin Eddie? #superdope

majortimmy01 Pee wee Herman Shoes!

American Golf Sounds More Interested In Golf Shacks Than Courses

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Keith Carter files a fascinating read for futurists and those interested golf business looking at American Golf’s investors putting a focus on Drive Shack, a Top Golf competitor.

Besides the obvious effort by Newcastle Investments to cover its bets, some of the quotes in Carter’s story suggest very little bullishness on the future of golf compared to entertainment-driven ranges. While American Golf has been downsized, spliced and diced from its former standing as the world’s largest course operator, the new direction is still an eye-opener.

Wynn To Resurrect Closed Course On Site Of Resurrected Desert Inn Layout

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The Strip’s historic Desert Inn course, rebuilt by Steve Wynn and then closed, is going to get new life after Wynn Resorts decided to abandon an ambitious expansion project. Oh, and they found out golfers were taking their money elsewhere.

From Richard Velotta’s Las Vegas Review Journal report:

Company executives discovered that removing the golf course resulted in some loyal customers going elsewhere. Maddox estimated the company lost $10 million to $15 million of domestic casino business from people coming in for golf trips who decided to go elsewhere.

What Could Go Wrong? Sometimes World No. 1 Rose To Make Big Leap To Honma

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It’s always strange to see a player with all cylinders firing making a big equipment move. But that’s what Justin Rose has planned at years end, reports Golf’s Jonathan Wall, who says if Rose regains No. 1 status he’ll be the first top players since Rory McIlroy in 2013 to make such a move.

Two elements of Wall’s reporting are of interest, starting with Taylor Made’s apparently focus on fewer players under new owner KPS Capital Partners.

Assuming Rose is no longer in the picture, TaylorMade’s Tour staff for 2019 would consist of Dustin Johnson, Rory McIlroy, Jon Rahm, Jason Day and Tiger Woods, who are all currently ranked inside the top 13 in the Official World Golf Ranking.

Then there is Honma, known as a maker of high-end and high-priced equipment now run by former Taylor Made CEO Mark King. It sounds like Rose has wisely reserved the right to not jump into their unproven-at-the-highest-level woods.

It’s been reported that Rose’s deal with Honma would require him to play the brand’s irons and wedges but allow him to continue using TaylorMade woods. It’s unclear if he’d continue using a TaylorMade golf ball or switch to a Honma model.

Topgolf CEO: 50 Markets By End Of 2019, IPO Under Consideration

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Topgolf Executive Chair Erik Anderson was the featured interview at the Octagon Sports Marketing Symposium Tuesday and said the company hopes to be in 50 markets by year’s end with aggressive plans to expand stand-alone and other off-shoot versions of Topgolf.

Eric Fisher from SportsBusinessDaily reports and includes this:

Roughly half of Topgolf clientele were not initially active golfers, though play at their facilities has translated to some increases in play at traditional courses. Roughly half are aged 18-34, a highly coveted demo by every other sports property. “The big idea for us was take out a lot of the barriers of golf, such as around time, cost and skill, and make it about fun and community,” Anderson said.

And this on a possible looming IPO is of note:

Anderson said Topgolf is considering an IPO for the company, but did not provide specifics around the likelihood of that or a potential timetable for a decision. “We are a candidate to go public for sure. It would be silly to say otherwise. ... We’re probably an interesting public company, like Starbucks was given how people connect with us.”

SBD posted a couple of snippets of Anderson’s conversation.

Of course there was a “subscription” and a Netflix mention, but you’re not a good CEO if you aren’t tossing the millennials and those who want to pick their pockets the preferred candies of the day.

Here is Anderson on golf needing more shortened pay-as-many-as-you-play options (“mini subscriptions”):

On the companies Topgolf says you should be on the look out for. No big surprises here…

Golf Inc's Most Powerful People In Golf...Tiger's Really Back Now!

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Troon Golf’s Dana Garmany tops the annual Golf Inc list, followed by PGA Tour Commish Jay Monahan and Tiger returns to the list at 7th. However, when you are two slots behind the Finchem-Nike-American-Golf-some-health-care-company castoff David Pillsbury, who somehow conned Club Corp’s board into making him CEO, it’s hard to hold your head too high Tiger if you are in the six slot and beyond.

Much more entertaining than the list are the photos of the execs and architects. Some airbrushes were out in full force!

What Happens If We Make The Golf Ball Slightly Larger?

The old Spalding Magna, an oversized ball

The old Spalding Magna, an oversized ball

Gary Van Sickle at MorningRead.com considers the distance matter and concludes something must be done based on the next wave of players coming along and rendering most courses obsolete.

I was curious about one of this three suggestions beyond the usual bifurcation options.

I’ll credit Tom Watson with Option One, and he concedes that he heard it from golf analyst and entertainer David Feherty: make the golf ball bigger. It’s already been done once. Golf in the U.S. used a ball 1.68 inches in diameter versus the ball used by the rest of the world, 1.62 inches. The British Open switched to the bigger ball in 1974, and the United Kingdom’s small ball finally went away in 1990 for recreational golfers.

Watson said that .06 inches may have made a 20-yard driving decrease. What would another .06-inch increase mean, and would that be enough? I’d love to see some research on that.

Indeed research is needed. Because we need another study in this game!

While it seems so logically simple, this option has the potential to be costly for manufacturers and more difficult to implement due to patents. Our old pal Max Behr swore by the old floater ball and still played it when others had moved on to more advanced pellets. As anyone who has hit shots with a ball different than the weight of the modern ball, is typically not enthralled in the way many of Max’s contemporaries loathed the floater. Whether this was a matter of resisting change, struggling to adapt or legitimate complaints about the feasibility of such a ball, we’ll never know.

Either way, when writing your governing body, do not hesitate to ask for a golf ball size study. We’ve waited this long, what’s another…year.

If you need some inspiration, here was Behr’s 1937 petition to the USGA to require the "floater” the official ball for golf.

From an unbylined New York Times story, Behr’s resolution: 

“Whereas, it is out opinion that golf as pursued today no longer reflects its ancient and honorable traditions which it is out wish to protect; and, in that the ball manufacturers, not the player, dictate the sort of golf that is played which, instead of reflecting its honorable past, in a sense has become dishonorable in that mere brawn off the tee receives an unfair reward at the expense of ancient ways of skillfully maneuvering the ball—no longer required to win—we protest against the perilous state that golf has fallen into.

“Therefore, we respectfully petition the U.S.G.A. that it decree its amateur and open championships henceforth will be played with a ball that floats in water. We firmly believe that in this way only may its ancient and honorable traditions be re-established and preserved for future generations to enjoy.” 

Cart Girls Put On Notice: Golf Course Instituting Food Delivery By Drone

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CNN's Matt McFarland repots that King's Walk GC in Grand Forks, North Dakota will be selling food starting September 15th. The bad news? It could snow two weeks later. 

Anyway, the folks behind it feel the order-by-phone, deliver-by-drone option could add a cool and fun factor that will keep golfers coming back. 

Like many golf courses, an employee roams the area in a beverage cart. But on busy days, players might wait as long as an hour before having the chance to buy something. Yes, they can duck into the restaurant positioned midway through the 18 holes, but the course and its partners say that's a bit much to ask in today's age of instant gratification. 

"Wherever you are, you should be able to get what you want within a few minutes," Yariv Bash, CEO of FlyTrex, the Israeil drone logistics startup operating the service, told CNNMoney. "Why wait?" 

Looks pretty swell!