The thread began as the Future of Golf Design, which this initial post below is about,but has evolved into The Future of Golf.
“I think we’ll get back to 30 firms or so, there never was a place for so many firms.” This was part of a quote from Ron Whitten used by Lorne Rubenstein in an article called
Changing Times in Golf Course Design.
This quote reminded me about when I was researching Charles Banks a few years back. When Raynor died he found himself overwhelmed by a dozen projects. The Market Crash of 1929 slowed his business dramatically but there was work for a few years. With-in a few years there was no new work and Banks was known to be bitter about his fate.
The Black Swan Event – Fall of 2008The Black Swan is an unforeseen and unpredictable event that has an enormous impact on society. There is no way to predict the coming of a black swan event, but history has shown us again and again that these events occur with regularity.
The Banking Crisis of 2008 is considered a Black Swan Event. The repercussions are still being felt even to this day. It ended the ability to access cheap money with very little collateral which essentially killed the North American real estate bubble which was driving golf course building.
The other reason I bring this up is one of the interesting ideas that goes along with the Black Swan Event is the notion of collective blindness leading up to the event. I personally think that to a large degree we have seen collective blindness as a contributing factor to why we had the financial crisis. Everybody enjoyed the endless growth, but nobody was willing to step back far enough and ask whether it was sustainable and what would happen when the music stopped.
The same can be said for golf course designers. This was one of the greatest building booms in history and it lasted close to 20 years! The profession seemed to believe/hope that the good times would last forever. And yet all we had to do was look back 20 years and find that almost no courses were being built!
In early 2009 a friend of mine asked me how I could possibly have no work after being so busy for the best part of a decade. I said that when everyone on the greens committee begins to wonder if they will have a job next week and whether they could pay their mortgage with one salary, it’s logical for them to get nervous about the situation of the other members at the club and wonder what would happen if they quit.
I said, “They have stopped all capitol spending.”
“So what will you do?” I was asked.
“I wait for them to become optimistic about the future…”
Death of the Big FirmLast year I wrote a piece called The Death of the Big Firm. When the real estate bubble popped, real estate based golf development was done and this was almost exclusively the domain of the big firms with famous names. This meant that overnight the celebrity designer had too much overhead and too many people on staff. So with-in a single year three quarters of the staff were out on their own.
I would estimate that by the end of 2009 the number of design firms had effectively doubled as many opened their own businesses and planned to go it alone. Interestingly at the same time the available work had halved. I would guess the initial crisis drove10% of all full time architects out of the workforce.
China supplied a remarkable cushion to what could have been a nasty fall for the profession. There was a growing
real estate bubble in China. This one was based upon the premise of building new courses in order to secure large private land holdings for future development. There were only two problems with this, golf does not seem to appeal to the average Chinese person and the construction of golf courses is illegal in all but Hainen Island.
But the turnaround domestically that most hoped for never came.
I would estimate that by the end of 2010 the larger firms realized things might have changed for the long run. They downsized again. The senior designer who survived the first cut became the secondary casualties since they were now expendable. Interestingly the survivor was the junior designer with CAD experience and a low salary.
I would estimate that by the end of 2010 the number of firms had grown another 50%. The architects who were no longer practicing was likely up to 25%.
Death of the Small FirmI’ll be the first to admit I didn’t see this one coming.
What all of the above created was far more pressure on the small firms. There is so much more competition out with big firms now chasing work that was up until recently too small, too limited or with too low a fee structure to catch their interest. The small firm is getting crushed by the expense of competing against them as more clubs interview larger number of architects and expect more from submissions.
The remaining small firms are largely niche players who have a specific skill set, highly touted reputation, a language advantage or a large client list of clubs built over time.
In my estimation the end of this year will see the number of firms drop by 25% as a number of single person businesses or small firms are not t finding enough work to sustain a business. I would estimate there are now approximately 30% of the golf architects from 2008 completely out of the industry.
Another Black Swan Event? I don’t think the crisis has run its course yet for golf architecture. I think there will still be a few more casualties in golf design.
The broader issue we face is stagnation in the world economy. I’m not a believer that there is another looming crisis or a double dip recession ahead. I think the worst is behind us. But I also think that economic growth will not return until we pay some of the bills we accumulated over the last twenty years of “living well beyond our means.”
So as an architect is there another possible Black Swan Event?
If the Chinese economy went into recession or the Chinese government decided to enforce the ban on golf courses a lot of architecture firms would find themselves on the precipice. The impact would be felt at home too since the competition would rise.
Before you say it will never happen, consider this comment from Jack Nicklaus recently (unfortunately can’t find the source) ….
"China, for example, is shut down right now golf-wise. We were over there about a month ago with a course two weeks from being finished that was shut down. They put a satellite up to monitor it to see that nobody was working." That would be a second Black Swan Event for golf design since half the firms are dependent upon that area of the world.
But I’m not quite that pessimistic. I’ll stick with my prediction from two years ago.
“This decade will see only a handful of well financed, well thought out, realistic business models getting built.” There were a lot of awful golf courses built in the last 20 years. While I don’t expect many new ones to be built in the next 10 years, I do expect quite a few of the bad ones in really great locations to eventually get bought. I see a new type of golf course owner who seeks only distressed facilities on great sites. They buy at discount, avoid the complications of the approval process, extract small development parcels to provide equity for the project and rebuild the golf course in the process.
I'd be curious to hear other people's prespectives on the last few years and what will come over the next decade.