In the Wall Street Journal, there’s an interesting article on the golf industry’s attempt to reinvent itself. You know the background basics: the industry took Tiger Woods and retiring boomers as a sign from the Golf Gods and began an unprecedented period of expansion. But the millions of players did not materialize (at least not for the long term). Now during the Great Recession, courses and manufacturers are worried about their futures. In “The Battle for the Soul of the Game,” author John Paul writes:
Golf’s leadership is responding to the situation with more urgency than ever. At golf’s big annual merchandise show in Orlando, Fla., last month, I sat through several state-of-the-industry hand-wringing sessions. Nobody in golf is complacent. The PGA of America is pushing a new, all-points initiative called Golf 2.0, whose goal is to make the game “more relevant” to lapsed golfers and others, especially women and minorities, it has identified as underserved. At last weekend’s annual meeting of the U.S. Golf Association in Houston, the incoming president, Glen Nager, sounded downright radical (by USGA standards) in urging golf to make itself more accessible.
From all this verbiage, one phrase from Nager’s speech stood out for me as best representing the predicament for golf’s traditionalists. At the end of a list of worthy goals—making golf more enjoyable to play, more affordable and more welcoming—he added that this must be done “without fundamentally changing the game itself.” The game itself, of course, is different than the business practices that support the game, many of which (like poor customer tracking and feckless rangers) are indeed hidebound and need to be revamped. But Nager also stressed that the USGA’s top priority is to protect golf’s core values—to preserve, as he put it, “the true spirit of the game as embodied in its ancient and honorable traditions.” But it’s unclear if that spirit is still viable for an industry that hopes to expand its customer base, as per the Golf 2.0 vision, to 40 million players by 2020 from 26 million players now? Never mind gaining those customers, especially young ones, in an ever more time-squeezed, electronically addicted culture.
Paul wonders if it’s possible to appeal to the modern masses while without losing the traditional game. Some of the ideas floated by “reformers” are larger holes, different sets of rules and non-conforming equipment. Those, he rightly points out, terrify traditionalists..
There are, however, two solutions that don’t involve a golf schism. First, PGA Professionals, course owners, rangers, etc. all need to work together to make sure people play the proper tees. I believe that playing from the wrong tees is the number one reason for long rounds, high scores and unhappy players.
Second, the powers that be should encourage people to try match play. It makes the game more social, and ends the time consuming spectacle of guys plumb bobbing for their eighth stroke.
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For the majority of golf courses in America (that is to say, courses in the $20-$50 price range), has the business model really changed at all since the 1970s? It seems to me that the answer is that it hasn’t.
It’s a very difficult business to make money in, for sure: a luxury, recreation product that has an extremely high operating cost, is extremely prone to the weather and the economy, and is a game that is so difficult to play that many customers choose not to play. Furthermore, some customers of this product can make other customers user experience not fun (the jerk that is constantly yelling at the group ahead and behind him). Additionally, in order to truly enjoy consuming this product (i.e. playing well), you have to spend tons of money practicing.
As an investor, this would seem like a very dumb business to invest it.
The business side of golf did not simply mis-read the tiger/retirement trends and over build. They over built and ramped up on the wrong cost structure. Instead of a lot of par-3 or executive style courses, and inexpensive small club sets (how many beginners/occassional players can really use 14 clubs?), we wound up with $80 – $200 + daily fee courses and $700+ clubs. What we need are $15 greens fees, $100 club sets ($5 rental), all walking, and pro/marshalling attitude that puts coaches out on the course and easily available. Why can’t golf have a coaching/teaching cost structure more in line with youth soccer/hockey/basketball/football/baseball? Even for the adults. The business needs to focus on getting the once or twice a year charity player to come out four or five times a year, and do a little practice.
PS on earlier post – Somehow the golf industry has to move to paying the assistant pros based on how often their student’s play, not simply an hourly rate. From an industry perspective, a pro who converts beginners to once a month(or more often) players is a lot more valuable than those who manage to sell a series of six lessons only to have the student fade away.