ORLANDO, Fla. – For some folks, the golf business is a healthy, beaming giant that confidently strides through the halls of major industry. For others, golf is a downbeat, slightly elfin figure eking out a living and trying right now to get through the night armed with little more than a flickering flashlight. Two wildly divergent images – and both of them on display Jan. 17-19 at the PGA Merchandise Show here at the Orange County Convention Center.
The account offered by leaders of golf’s major industry associations is glowing. The account offered by data nerds on the outside looking in offers a more sobering picture tied to lagging recruitment, operational shortfalls, and warnings about the game getting too expensive to sustain the number.
The official version is impressive, indeed. At the PGA of America Economic Forum, four industry heavyweights lent their considerable institutional backbone to a report proclaiming that in 2005, golf in the U.S. was a $76 billion industry, making it larger than the newspaper business or even – the comparison is priceless – the motion pictures and video industry.
Quite the array of rosy numbers: 6 percent annual growth since 2000, which was comfortably above the inflation rate of 2 percent annually; 2 million jobs dependent upon golf; $61 billion in wages; and a multiplier spin-off effect radiating out into the general economy that brings the total impact of the game to $195 billion. And here I’m used to sweating over $5 Nassaus.
It’s hard to argue with the combined gravitas of a podium such as that: David Fay, executive director of the U.S. Golf Association; Tim Finchem, PGA Tour commissioner; Joe Steranka, CEO of the PGA of America; and Steve Mona, outgoing CEO of the Golf Course Superintendents Association of America and also the incoming CEO of the World Golf Foundation, whose Golf 20/20 Initiative commissioned the economic study. The research was undertaken by the consulting firm SRI International.
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.
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.
It’s certainly impressive to find out, for example, that the $3.5 billion raised for charities generated in 2005 means, as Mona stated, that “golf generates more money for charity than any other sport on this planet that we know.”
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; the vast majority are looking for open space and other recreational amenities. True, they are also attracted by the sense that golf real estate is a reliable investment value, but to credit all of that economic activity to the golf industry ledgering is creative accounting, not objective analysis.
Besides which, using 2005 as a benchmark tells us nothing about subsequent (i.e. present) years, when golf real estate is faltering, 10-plus courses are closing annually, and stock-market jitters and declining dollar valuation have had a ripple effect across the golf industry. All of which to say is that such glowing economic pictures give us little if any guide as to how the industry is actually operating and how precarious margins really are at the vast majority of facilities.
Which is precisely where industry observers such as Jim Koppenhaver of Pellucid Corp. and Stuart Lindsay of Edgehill Consulting get their traction and their following. (Note: Koppenhaver used to write for our sister publication, SuperNews/TurfNet). Their sixth annual “State of the Golf Industry” presentation drew 80 people, the most I can remember seeing at this ritual gathering.
Yes, they have an annoying habit of covering too much, with dozens of excessively detailed charts. But these guys are smart, persistent and clever. And their approach to the game is from a consumer-marketing and data-gathering angle rather than public relations. They also have a folksy, down-to-earth approach, evident in Koppenhaver’s claim that “golf is an agrarian industry . . . where people grow grass for a living and move people across it outdoors.”
They rely upon impressive data regarding facility utilization rates, number of rounds per facility, golf-playable hours that vary according to weather and sunlight (all of which they track by region), and how much golf various demographic groupings actually play. They know, for example, that golf has missed out on recruiting a prized group, those ages 18 to 34. And more than any other analysts in the industry, they have shown the disastrous downward spiral that afflicts a golf market when some operators heavily discount their rates in order to draw play.
It’s not a pretty picture they paint. But it’s one I’d take seriously if I owned a golf course and wanted to recruit more players and price the tee sheet to maximize revenues.
Is golf a booming industry at the cornerstone of the U.S. economy? Or is it, like family farming, just barely holding its own? Think of it as a data war. The generals are trying to rouse their troops and rally the public. Meanwhile, down in the trenches, the grunts are fighting the day-to-day battles.