Bloom is off rose for golf; courses face adversity
Taking a tough look at golf industry
By Phil Kosin
Chicagoland Golf editor
While
data for 2007 has yet to be compiled, golf course closures nationwide
are expected to outpace openings for the third straight year.
After
nearly 20 years of strong growth, the nation’s total number of golf
courses topped off in 2004 with 16,057. That represents an increase of
3,211 courses – about 25 percent – in 15 years.
Those 3,211 new courses represent this country’s second “Golf Boom” –
the first coming during the 1920s when clubs and balls became
affordable for everyone thanks to machinery that allowed for mass
production. Previously, clubs were affordable only to “the privileged”
because they were made one at a time by skilled craftsmen; while wound balls were being mass-produced, the market was small.
After the
number peaked at 16,057, in 2005 the nation’s total golf course supply
dwindled by five; last year, that number jumped to 62. Insiders are
saying that number may be closer to 80 or more in 2007.
Manipulating statistics?
According to the National Golf Foundation, there was negative net
growth in golf facilities in 2006 for the first time in 75 years (since
The Depression), as the number of courses that closed (146 18-hole
equivalents) was greater than the number of openings (119.5).
In
releasing the data, NGF said it was not an alarming occurrence, but a
confluence of events – openings returning to more normal levels and
weaker facilities being culled.
In the late 1980s, the number of new course openings in
the U.S. was about 100 per year. There followed a wave of increased
construction in the 1990s that peaked in 2000 with nearly 400 openings.
Since then, the wave has subsided.
In the Chicago market, we saw 141 new courses open between 1990 and 2004 seasons.
The NGF claims this culling of courses should not be
viewed as a negative. It expects the overall course supply to stop
expanding due to decreases in demand, as has been happening for the
last ten years. It is primarily the weaker courses that are closing,
the NGF says, and in many cases, owners who sell are profiting from
long-term real estate appreciation (a lot of good that does golfers).
Finally, a better quality overall golf supply means a better quality
experience for players.
At least that’s the spin we’re supposed to
believe, like the NGF was expecting this all along.
Keep reading.
In the late 1980s, the number of new course openings in
the U.S. was about 100 per year. There followed a wave of increased
construction in the 1990s that peaked in 2000 with nearly 400 openings.
Since then, the wave has subsided.
In the Chicago market, we saw 141 new courses open between 1990 and 2004 seasons.
The NGF claims this culling of courses should not be
viewed as a negative. It expects the overall course supply to stop
expanding due to decreases in demand, as has been happening for the
last ten years. It is primarily the weaker courses that are closing,
the NGF says, and in many cases, owners who sell are profiting from
long-term real estate appreciation (a lot of good that does golfers).
Finally, a better quality overall golf supply means a better quality
experience for players.
At least that’s the spin we’re supposed to
believe, like the NGF was expecting this all along.
Keep reading.
NGF recorded a 56 percent jump in the number of closures
between 2005 and 2006, from 93.5 to 146. These 146 closures represent
about 1 percent of the total supply of golf courses in the U.S.
Closures were primarily public courses (97 percent). They were
disproportionately short courses (executive and par-3) – 20 percent
were short courses vs. 8 percent of total facilities. And, they were
disproportionately stand-alone 9-holers, 46 percent vs. 28 percent of
total facilities. Closures were predominately “value” courses, with
nearly half having peak green fees under $25. Closures occurred in 39
of 50 states.
'In all my years of observing I have concluded that the National Golf Foundation is neither a predictor nor a barometer of the golf industry. It is little more than a cheerleader, a windsock that compiles data.'
So much for ‘growing the game’
This,
of course, goes against the grain of any major golf organization
claiming to be truly involved in “growing the game.” During this last
golf boom, we built far too many upscale courses and not enough in the
“value” range.
That is unfortunate, as those “value” courses are
the petri dishes where new players are grown. Attracting and keeping
new players is another initiative where the industry has failed
miserably. Building a $25, “basic golf” 18-hole golf course isn’t
“sexy” to wealthy investors and developers, who’d much rather cater to
their own kind.
I think the spin being splashed on this issue by the NGF
(weaker courses being “culled” leaving an overall better product) is as
ironic as it is ludicrous.
That’s because in all my years of
observing I have concluded that the NGF is neither a predictor nor a
barometer of the golf industry.
It is little more than a cheerleader, a windsock that compiles data.
I
cannot forget when, back in 1989, the NGF in a sudden fit of
self-importance declared the Chicago area would need to build at least
200 new courses by the year 2000 to meet the demand.
Instead, in
that time period we built 85 new courses, and hindsight shows that
number to be too many. In all, in the last 22 years, 164 new courses
that draw significant revenue from the Chicago market have opened. In
this I include popular, out-of-area courses like Whistling Straits,
Blackwolf Run and the Lake Geneva courses in Wisconsin; Eagle Ridge in
Galena; Weaver Ridge in Peoria; Blackthorn and the Warren Course at
Notre Dame in South Bend, etc.
Reasons for courses closing, according to my extensive research as a golf writer over the last 30+ years:
Overbuilding gone wild, spreading the available number of players too thin for every course to remain profitable.
A flattening at the same time of the number of
players – ever since 1998. Debatable are the reasons, which have been
discussed ad infinitum, ad nauseam (cost of equipment, costs to play,
time to play, et al.) Whatever, they’re not playing.
Suburban sprawl has finally reached the courses,
making the land far more valuable as real estate for
residential/commercial development, especially when you factor in No. 1.
Too many ultra-upscale courses built to meet the
demand – especially in the wake of the gentle softening of the economy
that began in 1999. The courses are not only expensive to play, but
extremely difficult as well.
Not enough $25 golf courses built during the recent
boom – privately developing a course was in too many cases an ego trip
and at the time venture capital was flowing, thanks to the “house of
cards” stock market during the dotcom craze.
Too many municipalities jumping on the “golf is a
gold mine” image created in large part by the media and building golf
courses on land that could provide real estate tax and sales tax
revenue.
With the growth in the number of municipal courses,
it became difficult for privately-owned public courses of similar
quality and golf-experience to compete at the same price point –
because the munis did not have to include payments toward real estate
taxes in their green fees. As public property, they are not on the tax
rolls. This amount in our area adds as much as $9 to $10 to a single
green fee at a publicly-owned public course.
Failure by the ENTIRE industry to grow the game –
most junior golf programs are little more than lip service and the
results have yet to reach golf course cash registers. Few if any
courses offered beginner’s programs to ease new players into the game
and explain to them that the golf they’ll play will never resemble what
they’ve seen on TV. And while it seems noble to introduce inner-city
youth to golf, they do not have the financial means to play the game
and the courses are not in their neighborhood. What the industry DID
succeed at during the last Golf Boom was selling new sets of clubs and
green fees to new players. Several million were attracted to the game
during “Tigermania” in 1997 – but the industry did virtually nothing to
welcome them and sustain their interest.
Too many other demands on people’s time – family, kids’ athletics, etc. Plus too many alternate diversions.
Not enough “starter” or “recreational” courses built
during the boom – too often, new players found themselves on too tough
for beginner (not-fun) tracks – which quickly forced them to leave the
game.
Survival of the fittest
I
used to get upset when a course was sold and converted for other uses.
I read where some north suburban real estate talking head says he
personally knows of six or seven golf courses that are for sale. But
that statement – from an outside to the business – means nothing
because he failed to name the courses.
On the other hand, just about any course is for sale if someone comes along and offers the right number.
But
I don’t get upset anymore. I understand courses disappearing is part of
the food chain. I suppose we need to close about 15 to 20 more (of over
370 in the market) right away to ease the stresses, to where all public
courses can be profitable once again.
Stats don’t lie
The
Chicagoland area usually mirrors national trends – with certain
exceptions. For instance, while the U.S. gained 3,144 courses between
1990 and 2006, the growth came mainly in new daily fee (public) courses
with 3,145 while the number of private clubs was reduced by 428. Total
coincidence is that in those 17 years, the U.S. gained 427 munis – the
Chicago area contributing more than 50 to that number.
Yes, golf has gotten better
One
of the biggest changes in public golf over the past 21 years is the
emergence of bentgrass fairways. Years ago, public golf courses had
Kentucky bluegrass in the fairways, a cheaper alternative to bentgrass,
which demands more expensive equipment and care and was almost
exclusive to private clubs. Kentucky Blue also held up better if kept
moderately long.
That’s not the case nowadays. Of the 134 public courses to open in Chicagoland (or remodel) in the last 15 years, I’d bet less than 10 have a turfgrass other than bent in the fairways, although several now have bluegrass fairways.
This because a middle ground has emerged in the last few years, an alternative to drought- and disease-prone bentgrass. “Low Blue” is the nickname for several different turf mixtures with the cost and maintenance advantages of bluegrass while thick enough to be close-mowed to produce nearly the same tight lies as bentgrass.
While the number of golf courses skyrocketed in the mid-1990s, the number of players in the U.S. (about 26 million) remained flat since 1995. It is disturbing that for every new player that has taken up the game in the last ten years, another has quit the game. Estimates put that “in/out” number at approximately 3 million per year.
Chicagoland Golf readers know that our area is second to none for opportunities to play great courses, both public and private. Northeast Illinois has a luster that should be marketed as a golf destination, but for some strange reason has not.
A national online business publication recently published a list of best places to retire. Chicago ranked No. 1 in golf courses with 347 within 30 miles, followed by New York (255) and Los Angeles (250). But in the other two towns, more than 50 percent of those courses are private.
This all started here in 1986
After years of sporadic activity, we first got an inkling of an imminent golf course building boom here in 1986, and for some reason I decided to start keeping records. We since have opened 164 new courses (134 public) in the Chicago market.
That year, 1986, saw two new courses open. The average new course construction pace in the two decades previous to 1986 was about two openings every five years.
A big trend here in Northern Illinois has been for many forest preserve districts, counties and villages to build or buy courses for revenue streams and as a service to residents. Munis are popular because they usually offer lower green fees than privately-owned public courses of similar quality, for many reasons.
One reason for the lower rate structure is because some munis are set up to operate at a break-even financial pace (subsidized golf) through special rates for residents. This while non-residents often are charged a premium not worth the experience and are blocked from the best tee times.
Another reason is because courses (and land) owned by government entities are off the tax rolls – meaning they do not pay real estate taxes. So while they may provide some revenue for taxpayers in the form of operating profit, there is no real estate tax revenue being generated by the land.
Some munis, as “non-profits,” also do not pay sales tax on maintenance equipment and supplies, which may help contribute toward lower green fees.
On the other hand — and continuing that thought — many munis can be considered environmental saviors. Many were built on real estate totally unsuitable for either residential or commercial development. For instance, some munis are built on flood plains and incorporate intense stormwater management into the design: Village Links of Glen Ellyn, Seven Bridges, Oak Meadows and Glendale Lakes come to mind.
Some munis reclaim wasteland, like the courses built on former landfills, heretofore useless for most other uses: Harborside International, Palos Hills, Settlers Hill, WillowHill, Fountain Hills and The Meadows of Blue Island are among that group.
And yet others are on land donated for public use by housing community developers, like Orchard Valley.
Nobody does it better
Chicagoland Golf research shows no single market area has opened more courses in the last decade in such a small geographic region than greater Chicagoland. No other geographic area in the world has as many courses, either.
Player totals stay even
What fed the boom for so many years, then? According to Chicagoland Golf research, it isn’t new players. The Chicago area has approximately 1.75 million golfers in the nine-county metro area. That number has been stagnant for almost ten years now.
Nationally, too, the numbers stayed about level from 1998 to 2007. The industry should have received a boost from “Tigermania: in 1997, and it did. But little was done, as we said, to facilitate the new players’ entry into the game. Many of those new players who were attracted to the game after Woods’ win at the 1997 Masters quickly discovered it isn’t as easy as Woods made it look. Phil Kosin has been the publisher and editor of Chicagoland Golf since it debuted in 1989. He has been covering golf in Chicago since 1975.
