The International Herald Tribune has an alarming article on the fallout of the so-called economic crisis on the PGA and LPGA tours.
The very popular Wachovia Championship no longer has a title sponsor, and several LPGA events also are in trouble.
The future is even more muddled on the LPGA Tour.
Two tournaments already were gone before the Wall Street meltdown — the Fields Open in Hawaii and the Ginn Tribute in South Carolina, a sponsorship that leaned heavily on real estate. Ginn consolidated its two LPGA events to one outside Orlando, Florida.
SemGroup sponsored an event in Tulsa, Oklahoma, but it filed for bankruptcy in the spring. Safeway, which sponsored tournaments in Phoenix and Portland, Oregon, also consolidated and now has only the Portland event. The LPGA, which doesn’t nearly have the financial strength of the PGA Tour, said it might have to run a Phoenix event with its own money.
About one-third of the LPGA sponsorship deals are up for renewal this year.
Clearly, the golf world tied its fortunes too tightly to the financial companies. There’s something to be said in investments (and in business deals) for diversity.
At the same time, Titleist is reporting a third-quarter drop in profits. Country clubs are closing.
Golf course openings are down. The National Golf Foundation says:
U.S. golf course developers are on track to post the lowest number of openings in two decades, according to the National Golf Foundation. Measured in 18-hole equivalents, 65 courses have opened so far this year and NGF estimates, based on the number of courses currently under construction, that another 10-20 will open by December 31st. That would bring total 2008 openings to 75-85 18-hole equivalents, the lowest number in over 20 years.
Course closures, however, are down compared to the previous two years:
So far this year there have been 74 verified course closures and NGF currently forecasts the number of closures to be less than 100 by year’s end. There were 146 closures in 2006 and 122 in 2007. Therefore it appears that 2008 will be the third year in a row with zero to slightly negative net growth in supply (openings and closures canceling each other out). NGF points out that closures continue to be disproportionately public, stand-alone 9-hole facilities or short courses (executive or par-3 length) with a value price point.
In spite of all of this, I will go on record as saying that this so-called economic crisis is a bunch of media-inflated hooey. If you’re among the 94% of Americans whose jobs are NOT in the financial sector, it likely won’t affect you at all. Even if your broker goes under, you still own the assets. And you can always get another broker.
The numerical values of the stocks may be down in a panic, but unless the companies you own go belly up, you haven’t lost anything at all. Your stocks (or your mutual funds) only lose or gain real value when you sell. I have both, and am not doing any selling until the prices go back up. (Which they always do. The DOW at the end of 1930 was at 374. Even after the last few days, it’s more than 20x that figure.) My portfolio is just as ugly right now as anyone’s, but I’m not going to panic.
Credit crunch? Not from where I’m sitting. I know two people who bought and financed cars in the last week. I know another who recently closed on a house. My credit cards haven’t been rejected or canceled. And if a couple of banks go under, the depositors still are insured by the FDIC (assuming you kept your deposits in any one bank under the insurable limit) The worst case scenario is that you move to another bank. Its not like banks are going to disappear. There’s too much demand for their services.
Anyone remember the Carter years? 7.8 percent unemployment, peaking at 10% in 1980. 16% mortgage interest rates. Prices rising 40% in just three years.
Now THAT was an economic crisis. Today’s equivalent figures are: 6.1% unemployment; 6.16% mortgage rates. And the inflation rate is just over 5%, even with the increase over the last year.
And speaking of gas prices. They’re going down. But even at those prices, gas is really not any more expensive than it was in the early 1980s. Gas in those days averaged $1.35 a gallon—the equivalent of $3.17 today.
I filled up today for $2.35. That’s historically low.
And the best news is that there’s still gas available. Those of us of a certain age remember gas shortages, when we waited in line for hours to fill a tank.
So a little perspective here. The PGA Tour will survive. Golf will survive. We will all survive.