Golf Styles, May 2008
The average American golfer looks more like the average American than ever before. That is the conclusion reached by a new examination of the history and current trends in the game.
A look at golf prior to 1960 in America reveals that it was primarily a game reserved for participation at private clubs by society’s upper crust. Public golf began to grow in the sixties and the greater number of middle income golfers spurred a boom in new course construction that peaked in the mid to late ‘90s.
In 1950, there were 3.5 million golfers in America. Today there are slightly less than 30 million. Two factors responsible for the increase-population growth and the rate of participation. In the 50-year span from 1950 to 2005, the U. S. population grew by more than 143 million – 152 to 295 million.
The percentage of Americans playing the game also rose in the same period from 3.5 percent to 12.6 percent of the population.
The game is no longer a sport played mostly by wealthy white men, but one enjoyed by a heterogenic audience reflective of our society as a whole. The increase in participation by women, juniors, seniors, and minorities has contributed significantly to this diversity.
During the same period, the surge in people playing golf spurred a construction boom that increased the number of facilities from 5,000 to almost 16,000 today. And, golf has changed from a predominantly private club game to one that is all-inclusive.
Public golf grew rapidly in this period, particularly in the last 15 to 20 years. There was minimal but slow and steady growth in the number of municipal courses, while private courses maintained their numbers. The greatest increase has been daily fee clubs. Many were billed as “the country club for a day experience.” Supported by favorable economics and an opportunity to serve an ever increasing number of middle-income players entering the game, public golf grew ver rapidly. What are the implications of this historical data? How will the trends affect you?
Currently, there is an oversupply and stagnant demand. There were 2,400 new courses added between 1995 and 2004, but 2006 saw construction slow dramatically. Openings, closures, and courses under construction are occurring in 40 to 50 sates . There are 28.7 million golfers today but the number has been relatively static for the last 10 years. In 2006, the industry experienced negative growth for the first time ever. That year, more courses closed than opened. Golf course openings continued to be dominated by real estate- related facilities (69 percent in 2006). New Jersey broke even,with the same number of courses closed as opened.
Oversupply in any industry creates a challenge. Elementary economics begins with the laws of supply and demand. It is these forces and how companies react to them that determine business success and fairly. Golf facilities are no different.
Success on the bottom line is connected to the same forces – supply and demand will decidedly impact who will be successful or not.
Golf participation has been flat or down for the last five years. Rounds played were also flat or down in the same period. Rounds dropped 4.5 percent after September 11, 2001, due primarily to less business travel and lower entertainment budgets. It improved slightly over the last few years but is still three perfect below its 200 level.
Will it take five to 10 years before sufficient demand will merge with a net decline in the number of golf courses before we experience a balanced marketplace?
Adjustment is not necessarily a bad thing if it brings the actual number of properties back in line with demand. The problem is that construction of public, private, and real estate courses continues. The rate of land value increases has outpaced the return from a marginal golf operation. They are frequently being replaced by real estate development.
Will the golf industry be able to create and grow demand-side solutions – loyal customers who play more, buy more in the shop and restaurant, become members, bring friends, and cost less to attract than to new players? Will they be able to increase rounds from current travel and local customers – daily fee members, and outings? In most industries the top 20 percent of customers supply 80 percent of revenue. Golf generates 76 percent of revenue from 30 percent of the participants. Will targeted loyalty programs for golf courses attract new players, especially women , families, juniors, and niche groups?
Many golf courses in the region may have experienced a recent increase in the number of rounds played. Warmer, milder weather and less rain has extended increased rounds. Discounted fees necessitated by lower demand and an increase in the number of golf courses to choose from are determinants of how the bottom line has been affected.
There are pitfalls to discounting. Yield management techniques that fill lower demand time periods without borrowing from lucrative tee-time slots help to balance the books and attract more business.
Why are golfers playing less? It varies somewhat from group to group – married with children, workaholics, empty nesters or retirees with more free time. But the most frequent reasons cited are: job responsibility, working more hours, time with family, less money to spend, rounds are too expensive, life change, health finding partners, other hobbies, traveling less, it takes too much time, difficulty getting tee times, didn’t play well, and equipment too expensive.
Will baby boomers resurrect golf? They embody the largest population explosion in history – 78.9 million of them were born between 1946 to 1964. The oldest in the group turned 60 in 2006 and 9 million are golfers who will soon move into higher-pay frequency and golf-spending years.
The National Golf Foundation’s 2007 annual report, A Strategic Perspective on the Future of Golf, is a primary source article. The report includes an examination of changes in the industry over the past eight years, a forecast of the potential future for the industry to the year 2025, and historical and future perspectives regarding supply and demand.
NGF is a member-based organization in Jupiter, Fla., that provides information and insights on the business of golf. It offers golf-business research, information and consulting services to companies and organizations worldwide.
