When baseball legend Yogi Berra said, “The future ain’t what it used to be,” he wasn’t addressing the golf course industry. But Berra’s observation is a spot-on reflection of the state of golf as a business today. And for anyone connected to golf at any level, the news that the previously struggling golf industry re-energized and booming feels almost too good to be true. (Read: Welcome Home to the Golf Course)
CAN THE GOLF COURSE INDUSTRY EXHALE YET?
As the world first emerged from isolation and social distancing in 2020, quarantine-weary golfers found their way back to the golf course in near-record numbers. Despite new protocols for cart use, bunker rake, flag management, and a host of other pandemic-related challenges, golf course operators, golf course superintendents, and hard-working course maintenance crews found ways to accommodate the welcomed surge of golfers. Until 2020, the golf industry, however, had experienced decades of course closings and dwindling rounds of golf. With this memory still painfully fresh in the minds of many in the business, no one has been overly quick to declare that golf’s positive pandemic trends are the industry’s guaranteed new future.
The year ahead looks to be another strong year for golf, with the potential to sustain the levels of play reached in 2020 and surpassed at some venues in 2021. Golf course superintendents, however, won’t be taking anything for granted. They are ordering ahead of schedule or buying locally in the face of the still unstable supply chain. They know that weather always brings risk and that an inflationary economy is a potential ticking timebomb.
REALITY CHECK: THERE WILL ALWAYS BE GOLF COURSE CLOSINGS
Regardless of how much or for how long the game continues to enjoy its current resurgence, the truth is there will always be golf course closings. Golf courses, like any other business type, can fail from bad management or poor decision-making. Small and mid-size businesses of all types go under every day, and their collapse may have nothing to do with the pandemic or the demand for their service.
Another factor that contributes to a baseline number of golf course closings actually stems from positive circumstances for the course’s owners. Certain facilities, including many that are well managed and successful, may simply afford the course’s ownership greater value and fewer headaches when sold as real estate. These golf courses are often built in areas of the high-density population where the land the course is built on becomes more valuable than the business it supports.
Nevertheless, the good news for the golf course industry is that golf course closings are down significantly. Although the final numbers for 2021 were not available at the time this article went to print, the mid-year closings of 18-hole equivalent golf courses, reported by the National Golf Foundation, (NGF) were down 46 percent year-over-year from closings in 2020. While there were, as of July 2021, still 3,631 fewer courses operating in 2021 than in 2006, there were 2,025 more courses operating last July than there were in 1991, which indicates, the golf course industry might have been overbuilding for a number of years and is now simply finding its sweet spot.
GREENS FEES AND MEMBERSHIP FEES ARE LIKELY TO GO UP
Golf country club membership fees or the cost of a round of golf are likely to increase at many properties in 2022 if they haven’t already. Joe Beditz shared NGF data that more than one-third of public golf courses increased their peak-season weekend green fees in 2021. The average amount of increase was 11 percent above the courses’ previous rates.
Inasmuch as no one is eager to greet the wave of new and returning golfers with price hikes, the cost of doing business may make this increase unavoidable. Projections regarding the Consumer Price Index for 2022 range from a 2 to a 6-plus percent increase, and many prognosticators feel these numbers are too conservative.
The need to increase membership fees at golf country clubs or daily fees at public play facilities in 2022 can also stem from decisions made in the past. Fearing they could drive their already dwindling business or membership away during the pre-pandemic years when rounds of golf were declining almost everywhere, many course managers avoided price increases they justifiably should have been making. Now, with rounds of golf increasing, these same decision-makers have found that they cannot serve more golfers without also raising rates to cover their higher operational costs.
Consumers may be fighting their own battles with rising inflation, leaving course management hesitant to do anything that could potentially deter rejuvenated enthusiasm for the game. On the other hand, courses that don’t raise fees could be forced to cut maintenance and labor costs. Golf course superintendents often already struggle to maintain optimal playing conditions in the face of inadequate budgets for chemicals, equipment, and workforce, especially at small facilities.
THE BIGGER YOU ARE IN THE GOLF COURSE INDUSTRY, THE BRIGHTER THE FUTURE MAY SEEM
Last summer, CNBC TV interviewed Chip Brewer on “Closing Bell,” a show devoted to day trading, money managers, and investor news. Brewer has been President and CEO of Callaway Golf since 2012. Interviewer Morgan Brennan asked Brewer to go to his crystal ball and look at the near-term future of the golf industry. Brewer spoke optimistically, pointing out that more people are joining golf courses, there are more new consumers, and that Callaway as a company thought long-term trends would be attractive. One of his most profound takeaways was that the golf market is larger coming out of the pandemic than it was going in.
Brewer acknowledged that Callaway Golf Company benefits from multiple areas of business, including golf clubs, balls, and other equipment, sports apparel, and the company’s merger and exclusive ownership of sports entertainment giant, TopGolf. Describing a “shift in consumer spending from goods to services,” Brewer identified the synergy of Callaway’s distinctive business components by saying the elements of the business all work together. “We have the largest audience in golf now of any publicly-traded, available competitor and the competitive advantage … reaching all types of golfers from TopGolf golfers to people using a Toptracer Range to the company’s legacy business in the golf equipment space.
“They all work together. And they also kind of support each other as TopGolf is going to be providing a great growth boost to the game in the future.”
Big golf companies with a diversity of products and services to sell have every reason to approach 2022 with great enthusiasm. Equity markets have been strong. Even if the markets roller coaster in the short term, no one is predicting the kind of market plummet we saw between 2007 and 2009 in the Great Recession.
But the stock market and the economy don’t move in tandem. While large organizations may continue to thrive, smaller businesses, golf country clubs, and mom and pop golf courses or golf ranges may succeed, or they may struggle. Businesses on the frontline of the economy, Main Street not Wall Street, will want to tread carefully as continuing inflation in the new year has the potential to impact both their cost of doing business and the discretionary spending of the market based on which they depend.
One big positive, however, prevails across the entire golf industry. The golf market is larger, with a higher percentage of new and returning golfers today than it has been in a long, long time. This fact alone justifies popping a champagne cork and celebrating a new year in which, thankfully, the future of golf “ain’t” what it used to be.”
Linda Parker has been writing professionally since the 1980s. With clients in finance, sports, technology, resorts, and nonprofit global initiatives, Linda helps organizations communicate their stories in meaningful ways to the people they most want to reach. She has authored, ghostwritten or contributed to more than a dozen nonfiction books. Linda is a member of the Authors Guild and the Golf Writers Association of America. You can connect with her at firstname.lastname@example.org