Wednesday, August 4, 2010

It Appears We're Missed The Boat...

If anyone wonders why I keep harping about why our Government should have unloaded our golf courses three years ago should read the following article.... it appears we've missed the boat...
Golf clubs suffer in recession as membership dwindles
By Jon Swartz,
August 3, 2010
For $6,000 a year, Tom Bennett enjoyed the privileges of being a member of an exclusive, private golf course in northeast New Jersey. He golfed pristine grounds and reveled in socializing with other duffers.
But last year, Bennett ended his six-year membership at the private Stanton Ridge Golf and Country Club in Whitehouse Station, N.J.
"Cost was part of it, but service had fallen and upkeep was suffering because membership was down, a death spiral if you will," says Bennett, 48, who runs a financial-management consulting firm in California but still owns a house at the club.
"The recession (hurt) membership, and that affected the social aspect," Bennett says. "With fewer people and dues, the club didn't do as good a job taking care of non-golf parts of the course." As Tiger Woods, Phil Mickelson and other members of golf's royalty prepare to tee off at the PGA Championship — the fourth, and final, major championship of 2010 — in Wisconsin next week, the business of golf faces an economic outlook that is sinking like a downhill putt.
Recession-battered golf courses aren't just coping with lighter crowds. Some are edging perilously close to bankruptcy. Courses from Florida to Arizona, where golfing was once a daily exercise, face major cutbacks or foreclosure.
Myrtle Beach, S.C., a once-booming 70-mile strip of beachfront property nicknamed "Golftown, USA," has been hit especially hard: Where there were about 125 golf courses in 2006, there are now around 100.
"It's just a shakeout of golf," says Donald Wizeman, CEO of Myrtle Beach Golf Association, which produces a website for golfers traveling to Myrtle Beach. "The real estate market is so depressed here."
Things are just as bleak in Arizona. Eight golf courses in the Phoenix area have gone through foreclosure or bankruptcy since commercial properties started facing serious financial problems in 2008, according to, a real estate analysis firm. Many more are reducing their hours this summer, says Tom Stine, co-founder of market researcher Golf Datatech.
Billy Peterson, general manager of the World Golf Village in St. Augustine, Fla., worries that the oil spill in the Gulf of Mexico could worsen matters for courses in the region.
The root of the problem is stark: Most people just can't afford the luxury of a $100 to $400 round of golf, nor do they have the time — several hours — to complete an 18-hole round. Businesses are cutting back on golf-related expenses for executives. Travelers who once plunked down gobs of cash to golf in exotic locales are passing up golf vacations.
The cumulative effect has squeezed revenue at private golf courses and country clubs.
Today, golf is in the deep rough. Consider:
•The number of golfers fell about 3% nationally in 2008 from 2007, while the number of "core golfers" — those who play eight or more rounds a year — fell 4.5%, according to the National Golf Foundation (NGF).
•Private-club memberships stand at 2.1 million — 900,000 below the peak of 3 million in the early 1990s. (There are 27.1 million golfers in the U.S. now, down from 30 million in 2005, the NGF says.)
•Golf rounds played nationally to date this year are down 3%, according to Golf Datatech.
•Sales at private golf courses and country clubs — which include membership fees, equipment, merchandise and food, for example — were down 3% last year, and things are expected to be worse this year, says Sageworks, a company that tracks private businesses' sales.
Consequently, as many as 15% of the roughly 4,400 private clubs nationwide reported serious financial challenges, and at least 500 are scrambling to raise their cash flow, according to a recent survey by the NGF.
Private clubs lost an estimated 5% to 15% of their members last year, costing clubs, on average, $187,000 in annual dues, says Jim Koppenhaver, president of golf-consulting firm Pellucid.
He cautions that at least 400 — and worst case, 1,000 — private clubs will have to close, convert to public play, or be absorbed into healthier clubs before "some semblance of balance returns to the private club market," he says.
Last year, 140 of the nation's roughly 16,000 golf courses closed, while 50 new courses opened, the NGF says.
"The U.S. is clearly in a correctional phase," says Greg Cory, a longtime golf consultant who worked on 75 to 100 projects a year during the go-go days of the 1990s. He has not handled a domestic job the past three years.
"The big challenge is (for) courses driven by real estate, which represented about 65% of new construction in the peak development years," Cory says. "When the homeowners/members cease to support the course because of demographic shifts and increasing costs, how do you capitalize on the value of the land?"
A generational gap?
Golf's current state is a disquieting fall from the early 1990s, when Baby Boomers in their 20s and 30s took up the game. The number of golfers in the U.S. soared then to 25 million from 20 million, presaging a dizzying escalation in golf course construction.
But that very buildup went too far, Cory and others say. When the economy and the real estate market cratered, it hastened the downturn of an industry already faltering.
The rough patch predates the tabloid-tinged travails of Tiger Woods. Golf's popularity has been steadily declining for more than a decade. Woods boosted golf's popularity and ratings on TV, but that didn't translate to an increase in golfers.
A host of issues, both practical and societal, bedevil private courses, says Hud Hinton, CEO of Troon Golf, which manages 160 golf facilities worldwide, 51 of them private.
Once havens for well-to-do scions of the community, private clubs now face withering competition for the money and time of younger consumers, Hinton says. The under-40 crowd works harder and prefers to spend their limited leisure time with family members at facilities with fitness rooms and spas — accoutrements often lacking at private courses, he says.
"It's become a Catch-22," Hinton says. "There are a number of clubs that need facilities to appeal to a younger demographic, but they just don't have the capital to build them."
Many teens and twentysomethings also prefer doodling on an iPhone, iPad, Wii or Facebook over playing golf six to seven hours. "In this era of instant gratification, that's too long," Wizeman says. "Kids play video games indoors and can excel. Golf is outside and hard."
What's more, participation in tennis, yoga, pilates and weightlifting over the past few years is up — reflecting the popularity of physical exercise that is less expensive and time consuming, according to national organizations representing those activities.
Jennifer Reuting, a 26-year-old tech entrepreneur based in Los Angeles, wanted to take up golfing as a way to network with other business executives. But the price tag for membership at an exclusive club there — $100,000 a year — was too much.
David Carlson, 27, a public-relations specialist in Chicago, says time constraints preclude him from playing more.
Compounding the industry's woes is the decision by some lenders to shut off funding to golf properties "under any circumstances," says Roger Garrett, head of the golf-properties group at Phoenix-basedbrokerage firm Insight Land and Investments.
Indeed, the trio of lenders that once provided the majority of financing for golf courses nationally — GE Capital, Textron Financial and Capmark Financial Group— "have closed their doors" to buyers, Garrett said.
Wilson Gee, who owns four golf courses — three of them public — in the Phoenix area, says gaining private members the past two years has been "non-existent." Gee calls the industry's current slump the "worst" he's seen in his nearly two decades in the business. "Phoenix used to be an extreme example (of golf's problems because it has so many courses). Now it's nationwide."
"Golf is very expensive. It requires a lot of discretionary income, which is hard for a family to deal with," Gee says.
Deals, deals, deals
There is an upside to golf's dip. In their aggressive bids to retain or draw consumers, private and public golf courses are more willing than ever to lower greens (playing) fees or waive fees for new members.
Private courses in the Phoenix area are offering deals and more deals to attract golfers.
Greens fees at tony Arizona Biltmore Golf Club, in the heart of Phoenix, are just $39. A summer pass is $250. Plenty of Internet specials can be had at its website,
Troon North Golf Club in nearby Scottsdale is now offering $400-per-summer memberships.
Last year, the private The Golf Club of Cape Cod in Massachusetts decided to freeze its $85,000 initiation fee because the club had trouble attracting new members. As a result, it gained 43 members, who must pay the fee within three years or leave, says Charles Passios, chief operating officer of the club.
PGA National Resort & Spa, a complex of five private golf courses in Palm Beach Gardens, Fla., is offering preview memberships that, for up to 60 days, let you use the private club with an option to join.
"Golf membership is a luxury, so you have to seriously think about it during tough economic times," says Kathy Blazer, general manager of the members club. Nonetheless, she says memberships at its private clubs are up.
"It's still the game of golf," says Blazer, who notes that many of the club's 3,500 members are traveling on vacation less and spending more time at the facility. "Once you start playing it, you fall in love with it."
Despite its woes, the sport remains a huge draw on TV and a hit among advertisers. Only the NFL topped the PGA Tour in advertising sold on network and cable TV last year, according to Nielsen. (The PGA Tour declined to say how much.) The tour's aggregate TV audience is doing swimmingly because of more hourly coverage on ESPN, the three major networks and the Golf Channel.
What's more, prize money is slightly up this year ($275 million). The PGA Tour has added 15 title sponsors since 2009, including Travelers Insurance and Zurich Financial Services. And the tour's charitable contributions — a key indicator of its financial health — should be $116 million to $118 million in 2010, topping last year, says Ty Votaw, executive vice president of communications and international affairs for the PGA Tour.
At the same time, the real estate meltdown, an oversaturated domestic golf course market and an iffy lending climate have prompted course designers to eschew the U.S. and build courses overseas in hot spots such as China, South Korea, Eastern Europe, the Middle East and South America, says Chad Ritterbusch, executive director of the American Society of Golf Course Architects. The organization represents 185 golf-course designers in the U.S. and Canada.
"You have countries around the globe whose standards of living have increased in recent years, and continue to rise," he says. "Golf course development tends to mirror standard-of-living increases and tourism."
Future golf courses may have fewer holes to save costs and appeal to the time constraints of younger golfers, he says.
"Golf has to think out of the box," Ritterbusch says. "It has to adapt to the times."
Here's the article

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