Just How Strong is the Golf Industry?
If you are a regular reader of mine, you know that I talk golf business and participation a lot and that I am concerned about declining participation signals in the form of course closures, golf real estate issues, declining rounds played, and fewer "core" golfers. Unfortunately, I do not have the resources - time and money - to be able to conduct my own investigation. BUT, Golf Digest does! And they did so recently and published the results in a lengthy piece well worth reading if you are new to the discussion. If you are in touch with this issue, there is some new data for you, but the same conclusions are reached that I have made in past pieces.
If you want to skip the whole thing, then at least read this paragraph:The resulting picture of the industry -- a mix of Longitudes' research and the existing surveys and economic data -- is a complicated one. Interest in the game among sports fans and kids has never been greater. But a combination of a weak economy, a September 11-related travel hangover and fiercer competition for consumers' time and entertainment dollars has crunched margins at resorts, mid-range country clubs, small retail stores and daily-fee courses.
I cannot believe someone other than Rudy Giuliani made a 9/11 inference when talking about golf. There's no way that is true. Other than that, this basically sums up what I've been saying for a while now. Good to see that the data reflects that and I haven't been spouting lies.
Here are some updated participation numbers to confirm what I've been saying:The National Sporting Goods Association's 2008 survey shows golf's player pool shrank 7.3 percent from 2003 to 2007. The National Golf Foundation's latest report shows rounds played are down 3.5 percent for the first quarter of 2008 and basically flat since 2005. It also shows the number of core golfers has declined.
But, GD does some analysis of why this is happening based on price points for a round of golf and comes up with some stunning news:Courses' peak fees have gone up at the same rate as inflation, but off-peak rates -- which account for a majority of the rounds played -- increased 33 percent more than the CPI. In other words, prices have risen even in the face of flat or reduced demand.
Prices have increased in line with the spike in energy costs and an apparent doubling of the price of fertilizer. I thought that was a stagnant market!
Speaking of the market, the article goes on to talk about record sales numbers for the industry's heavy hitters - Callaway and Acushnet. (No mention of Taylor Made-adidas, though.) The golf industry has hiked up about 23% in the last time range of five years. Nothing to scoff at, but if you consider the saturation of the Pro V1 and the dramatic increase in the price of a driver ($300 used to be normal, now it's $500), then you could explain some of this away easily.
The piece kind of moves all over, but gets back into participation with Joe Louis Barrow, CEO of the First Tee. He offers the suggestion of expanding the First Tee and Play Golf America concepts as a means of getting new players (presumably to replace the ones that are leaving the game)."I'd partner with the 16,000 golf courses out there to offer a set program for adults to learn the game and develop a love for it," says Barrow. "We found that if you introduce people to the game in a set curriculum, then ask them to come back with people they learned with, they push through that learning barrier that exists at the start."
And then a slap to my face shows that tennis is growing exponentially (28.1% in the last 7 years) compared to golf (down 7.3% in the same time frame).
As I said, overall, a good summary for someone new to the topic. If you want some additional analysis, take a look at a few pieces I did last year and this year on the subject. There's some front loaded into this lengthy piece on the state of the game. I have some analysis on minority participation here. And here are some posts on golf participation from this blog earlier in the year:
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