Here is an article from TurfNet that is definitely worth a read...
The writing has been on the wall for some time now – succeeding in the golf business has become an exercise in survival. And some of those that are struggling financially and manage to survive these turbulent times will have to deviate from the accepted business practices that, until now, have been the norm.
Survival of the Fittest
The writing has been on the wall for some time now – succeeding in the golf business has become an exercise in survival. And some of those that are struggling financially and manage to survive these turbulent times will have to deviate from the accepted business practices that, until now, have been the norm.
“The fittest will survive in 2011, and those survivors will be creating a playbook with which the industry is not familiar.”
That was the take-home message during the 2010 State of the Golf Industry presentation at this year’s PGA Merchandise Show in Orlando, Fla. Entitled “Industry Darwinism” the report was produced jointly by Jim Koppenhaver of Pellucid Corp. and Stuart Lindsay of Edgehill Golf Advisors.
“The best thing I can say about 2010 is it’s over,” Lindsay said. “It wasn’t bad, it wasn’t great, and it was not the turnaround we all were hoping for.”
On Feb. 2, Golf Datatech reported that year-over-year rounds played dropped by 2.3 percent to 475 million rounds. The following day, the National Golf Foundation released this year’s edition of its Golf Facilities in the U.S. report. Contained therein is the fact that for the sixth straight year more golf courses closed than were opened. In fact, only 46 courses (in 18-hole equivalents) opened nationwide last year, compared with 107 closures for a net loss of 61 facilities. That means there has been a net loss of 220 golf course properties since this downward trend began in 2006. The total number of facilities nationwide has dipped below 16,000 to 15,890. To illustrate how tough things are nowadays in the new construction business, of those 46 new courses built last year, all are located in just 29 states. Economic bad times were far less discriminating, with closures occurring in 39 states.
None of this should come as a surprise, considering Koppenhaver reports that the overall number of golfers dropped by 3 percent in 2010 to 26.6 million players, and the number of rounds played this year is the fewest since 441 million in 1995 – the all-time high mark is 518 million 2000 and again in 2001.
What is somewhat of a surprise to Koppenhaver and Lindsay was that the number of net losses in 2010 is 33 percent fewer than in 2009 when there was a net loss of 90 facilities.
Koppenhaver believes that the banks holding the notes on properties that have been foreclosed upon as well as operators teetering on the edge of disaster are betting that the economy in general and the golf business specifically will improve before it gets any worse. For those people Koppenhaver has two words.
“Good luck,” he said.
Although each golf course that closes represents jobs and real, living and breathing people in a negative manner, officials from Pellucid as well as NGF agree that negative growth over an extended period is necessary for the industry so long as the number of golfers and rounds played continue to decline.
“This change in supply is too little, too slow,” Koppenhaver said. “It never ceases to amaze me how many courses are in foreclosure and the banks are hanging onto them in this current cycle. That says they think it is going to get better quickly.”
What should be especially troublesome is from where some of these losses are coming. Those aged 55-64 represent 16.6 percent of all rounds played, but their participation rated dropped by 7.3 percent. Seniors, those age 65 and older, represent 20 percent of all rounds played, yet the rate of play in that age group dropped by 3.8 percent.
At the facility level, play was down by 3.2 percent at private facilities and 2 percent at public-access properties, including 3.6 percent at university, military and municipal courses. Those facilities are among the most affordable and seen as critical in attracting new players into the game.
“They are the people who really took it in the shorts,” Koppenhaver said of the affordable golf properties.
If there was a glimmer of hope, said Koppenhaver, it is that utilization rate, with courses overall operating at about 53 percent of capacity, is unchanged from last year and rounds played among those in the 18-34 age bracket, who comprise 21 percent of the market, rose by 8 percent.
Of course, the $64,000 question has been how to adjust to a shrinking market and avoid becoming a statistic. Those who are able to do so will have drafted a whole new playbook for survival in the process.
“There will not be any winners,” Koppenhaver said. “There will only be survivors and former colleagues.”
What is somewhat of a surprise to Koppenhaver and Lindsay was that the number of net losses in 2010 is 33 percent fewer than in 2009 when there was a net loss of 90 facilities.
Koppenhaver believes that the banks holding the notes on properties that have been foreclosed upon as well as operators teetering on the edge of disaster are betting that the economy in general and the golf business specifically will improve before it gets any worse. For those people Koppenhaver has two words.
“Good luck,” he said.
Although each golf course that closes represents jobs and real, living and breathing people in a negative manner, officials from Pellucid as well as NGF agree that negative growth over an extended period is necessary for the industry so long as the number of golfers and rounds played continue to decline.
“This change in supply is too little, too slow,” Koppenhaver said. “It never ceases to amaze me how many courses are in foreclosure and the banks are hanging onto them in this current cycle. That says they think it is going to get better quickly.”
What should be especially troublesome is from where some of these losses are coming. Those aged 55-64 represent 16.6 percent of all rounds played, but their participation rated dropped by 7.3 percent. Seniors, those age 65 and older, represent 20 percent of all rounds played, yet the rate of play in that age group dropped by 3.8 percent.
At the facility level, play was down by 3.2 percent at private facilities and 2 percent at public-access properties, including 3.6 percent at university, military and municipal courses. Those facilities are among the most affordable and seen as critical in attracting new players into the game.
“They are the people who really took it in the shorts,” Koppenhaver said of the affordable golf properties.
If there was a glimmer of hope, said Koppenhaver, it is that utilization rate, with courses overall operating at about 53 percent of capacity, is unchanged from last year and rounds played among those in the 18-34 age bracket, who comprise 21 percent of the market, rose by 8 percent.
Of course, the $64,000 question has been how to adjust to a shrinking market and avoid becoming a statistic. Those who are able to do so will have drafted a whole new playbook for survival in the process.
“There will not be any winners,” Koppenhaver said. “There will only be survivors and former colleagues.”
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