U.S. Core Golfer Number Adjusted Up

National Golf Foundation has adjusted the number of golfers it defines as "core golfers." Tracking the activity of adult core golfers (those who play eight or more rounds per year) is important because core golfers make up 87% of the total rounds volume in the U.S. per year.

In 2006, the NGF counted 12.5 million core golfers in the U.S. However, according to NGF President Joe Beditz, following a methodology change from paper-and-pencil surveys to online surveys, it seems there are more core golfers out there than we knew—20% more. The new U.S. core golf figure has been adjusted to 15 million.

The methodology change coincided with NGF joining the Sporting Goods Manufacturers Association and joining with two other trade associations to participate in joint market research. This change allowed for finer survey detail and larger respondent sample sizes. One unintended result: super-infrequent golfers fell through the cracks of the new methodology. Apparently, these golfers are less likely to self-identify in surveys that are not specifically about golf.

The biggest competition for golf leisure time across all age groups? Watching TV or movies, followed by Internet surfing for fun and playing video games. Hmm, if there were only a way to combine Internet surfing, TV, and golf. Hey, that gives us an idea.

Green Means Green

What can owners do right now to positively change the environmental impact of their golf courses? Surprisingly simple: reduce maintenance by a small amount in key areas of the course layout.

From the July 2007 issue of Golf Business magazine, these are the measures that can not only give you a "green" advantage in your marketing efforts but also yield financial improvements to the bottom line.

1. Move low-maintenance down to no-maintenance
Take areas that are completely out-of-play off the mowing schedule entirely. For example, leave the areas behind and beside the tees alone. This reduces labor costs, fuel, irrigation, emissions, and on and on.

2. Go native
Reintroduce native plants to low-maintenance and no-maintenance areas. These plants will be better suited for local weather and more resistant to area insects. That means less pesticide, but it also means less worry about watering and less seasonal reseeding.

3. Reduce high-maintenance turf by 30%
U.S. courses average about 100 acres of high-maintenance areas for greens, fairways and tees. But the required playing area for an 18-hole course is estimated to be only 70 acres. That means most U.S. courses are 30 acres over-managed. Moving even some of this land off the high-maintenance docket could have a dramatic effect on costs associated with water use and chemicals.

4. Take the public relations opportunity seriously
Answer your golfer's questions (or protestations) before they ask. Many U.S. golfers do not understand the benefits of reduced course maintenance. They tend to think "less maintenance" translates to disorder or a lack of attention to details. Not the case at all! Similarly, non-golfers in the community don't understand that most golf courses have an incentive for environmental protection. Tell them about it! Leverage the green buzzwords, but back it up with tangible action plans.

Making Bubbles

In a great article in Golf Business magazine, author Ray Tennenbaum examines the decline of golf-course-based residential developments from a peak in the 1990s. ("On the Rocks," Golf Business, July 2007, 38.) It's a complementary economic arrangement, where rising land values often make golf courses susceptible to becoming converted to tracts of single-family housing. However, housing on a golf course still grabs a market premium of 9% due to retirement dreams and baby boomer aspirations.

That 9% figure is according to a VP at Pulte Homes. Incidentally, this VP goes on to say that since he is "a golf course buyer, it's kind of in my business interest to cause a sense of panic in the marketplace." Touche. Pulte Homes built over 41,000 homes and had $14.3 billion in revenue in 2006. The Pulte brand, Del Webb, is the U.S.'s largest builder of "active adult communities for people age 55 or better."

Basically, here's the way it seems to work: a golf course is built for $10 million. Homes are built around it for $20 million. The homes are sold for a premium, say $30 million. The course is sold to an operator for $7.5 million dollars. The developer makes a profit overall, even though he might sell the course for a loss. Now, the new owner of the course has to try to sell golf rounds at a price and volume that can satisfy the lender that the property is making the expected income stream for a $7.5 million dollar course.

Due to market saturation of golf course developments and due to lower demand from new golfer populations, the course cannot possibly sell tee times at high enough prices to maintain operations. The $7.5 million dollar course is sold at a loss to someone else for $6 million. That owner, if he cannot sell tee times at high enough prices, sells the course for $5 million. And so down the line the sales go until eventually the price of a tee time at the course supports the value that lenders and other business interests place on the property.

The article states that the struggling golf courses located in over-developed markets are seeking—in extreme cases—municipal government bailouts. In effect, public bailouts are sought for failed private "enterprises" after the profit is long gone from the equation. Presumably, this bottoming out of golf course value would drive prices so low that golf developers could again step in ("it's kind of in my business interest"), buy it at fire sale, and turn a profit on the course again or build more homes on top of it and take out the premium value of the homes that formerly backed up to fairway #5. Business cycle, it's called, though I don't see the cycle part of it. When would all of the homes be torn down to build a golf course anew, for example? It seems that the golf course is just a place holder for land development, an artifice to prop up price: refrigeration for the low-hanging fruit.

Anyway, a worthwhile article to think about. Never has there been such a premium on golf course management. And with the coming boom in retirement numbers, never has there been more pressure to position golf courses based on tee time price. Perhaps many more courses will be returning to what's been called the "charter" of municipal courses: to provide affordable golf. But what is the price of an "affordable" round? That's the real question, beyond all the McMansion speculation.