Golf Industry's Big Short

[Sean_A]

Ben,

You really are right. The only reason one has to worry about anything golf is if they get paid by being involved with golf. There will always be golf....maybe less of it, maybe less employed by it, but at the end of the day, those who are more talented than average will still be there. An occupational hazard, I suppose.

For sure Joe.  Except that members of clubs are watching their beloved clubs slowing going down the tubes. So it is natural for clubs to look for ways to retain and increase membership.  Some will do smart thngs and get lucky, some will do not so smart things and get lucky, some will be unlucky regardless.  The part of luck in all this really is overlooked...as if clubs have power over the economy and where they are located.  So from that perspective, the industry and golfers are tied together. 


Ciao

[Mike_Young]

Ben,

You really are right. The only reason one has to worry about anything golf is if they get paid by being involved with golf. There will always be golf....maybe less of it, maybe less employed by it, but at the end of the day, those who are more talented than average will still be there. An occupational hazard, I suppose.

For sure Joe.  Except that members of clubs are watching their beloved clubs slowing going down the tubes. So it is natural for clubs to look for ways to retain and increase membership.  Some will do smart thngs and get lucky, some will do not so smart things and get lucky, some will be unlucky regardless.  The part of luck in all this really is overlooked...as if clubs have power over the economy and where they are located.  So from that perspective, the industry and golfers are tied together. 


Ciao

Sean,
There's no luck regarding this in most cases.  The top thing is location beginning with region, state, city, neighborhood...I'm just so tired o hearing of all the programs to save the game.  Golf is no different than any other industry.  The right product works in the right location.  Np different than a car dealership.  If the main dealership in a small town farm town was Mercedes and they started a Hook a kid on Mercedes program would it work?  NO... They might even have a great program where the younger adults could purchase a car at no down payment and extend payments etc but eventually the maintenance and the cost of the car would catch up and the majority would sell it or give back or whatever.  Golf is the same. There is a market for a certain amount of golf at various price points. 

[Sean_A]

Mike


You are forgetting that an over-saturated market has already happened.  Clubs must go and much of this is down to luck. That isn't to say that clubs can't influence their fate, but luck plays a big part in all this. Business isn't nearly all about making all the right decisions....luck plays a big role much of the time.   

Ciao

[Joe Sponcia]

I want to amend a couple things.  In a previous post, I said I thought that golf participation and the number of operating golf courses would decline gradually.

This is all speculation, of course.

It's a bit surprising that so few courses went out of business after The Big Short.  Many went bankrupt and therefore many changed ownership.  But anecdotal reports seem to suggest that many clubs are still weak financially.

Therefore, a real possibility exists that the next major recession/contraction will knock out a large number of courses and clubs, and no one will try to revive them.  I'm amending my initial comment to suggest there may be a knockout blow that downsizes the game.

John,


I believe many CAN'T go under because they are so closely tied to the neighborhoods they are in.  If they shut down, home values would plummet so they keep playing the game of musical owners hoping at some point they will at least break even.  The problem, at least in my view is, most of these courses used the worst land (and the homes got the best), are mostly unwalkable, and their clubhouses were built for their three busiest days and not their average day.  That story has played out in my area as there aren't enough home owners to support the course within a 3 mile radius, and those outside that area don't want to join a course that they have to take a cart to play each time, or budget 4 hours because of the green to tee spacing. 


Traditional courses with tight routings on good land have had their players/members siphoned off by these boondoggles and it appears to golf 'experts' the game is suffering?  Meanwhile we have a golf channel that didn't exist when I learned the game in the early 90's, magazines on iPads, FREE quality instruction on youtube, TPI/golf fitness that used to be looked down upon, clubs on eBay that are half of retail, golfnow (which I hate, but nonetheless has made the game cheaper), entire websites devoted to golf only, and junior initiatives that are flat out impressive (at least in my area sponsored by my local PGA chapter).   

[BCowan]

Mike and Sean,

   Ur both half right. Sean most of the courses overbuilt in 80s and 90s were upscale public.  Those were the pieces of shit built.  As Mike said location is more important then anything assuming the course doesn't suck. Im watching a few courses struggle in nice areas.  The biggest problem is there are too many Country Clubs and too many of the same model.   The 1950s country club model will have to change in the declining areas to make it.  It's sad when those go, u can't get back the land.  The luck that Sean speaks of is only with having a great location! 

[Mike_Young]

I want to amend a couple things.  In a previous post, I said I thought that golf participation and the number of operating golf courses would decline gradually.

This is all speculation, of course.

It's a bit surprising that so few courses went out of business after The Big Short.  Many went bankrupt and therefore many changed ownership.  But anecdotal reports seem to suggest that many clubs are still weak financially.

Therefore, a real possibility exists that the next major recession/contraction will knock out a large number of courses and clubs, and no one will try to revive them.  I'm amending my initial comment to suggest there may be a knockout blow that downsizes the game.

John,


I believe many CAN'T go under because they are so closely tied to the neighborhoods they are in.  If they shut down, home values would plummet so they keep playing the game of musical owners hoping at some point they will at least break even. 

John,
I think many WILL go eventually.  Actually it's already happening. 

[BCowan]

I want to amend a couple things.  In a previous post, I said I thought that golf participation and the number of operating golf courses would decline gradually.

This is all speculation, of course.

It's a bit surprising that so few courses went out of business after The Big Short.  Many went bankrupt and therefore many changed ownership.  But anecdotal reports seem to suggest that many clubs are still weak financially.

Therefore, a real possibility exists that the next major recession/contraction will knock out a large number of courses and clubs, and no one will try to revive them.  I'm amending my initial comment to suggest there may be a knockout blow that downsizes the game.

I am a gloomy contributor these days, but it makes no sense to sugar coat things.  Quantitative easing after The Big Short set a precedent, and now the major oil producers are pumping at full capacity, despite the fact they are exceeding current demand.  This is also new.

All of our primary contributors actually in the golf business have it right.  Design and build for efficient maintenance and use of resources, while restoring and renovating the best existing courses.  Within 10-15 years, unmanned maintenance equipment using GPS and powered by either gasoline or natural gas is a real possibility.

Frankly, if I were in the golf business, I would be wishing that life's other expenses weren't so onerous.  Medical expenses now account for something like 18% of U.S. GDP, about twice as much as Great Britain and Australia.  The desirable golf culture of these countries cannot be separated from their political/economic model.

John,

Ur last paragraph is one of many reasons why private golf isn't affordable.  US private membership has always been founded on elitism.  Mentioning cost as in market forces was never to be mentioned.  That is changing culturally regardless of the housing golf courses imo. 

In prior post you said u had little hope for humanity.  I wish you had little hope for the fed reserve which created the housing cartballer tracks with artifical demand.  Krugman said in 2001 we needed a housing bubble.  I guess the same idiots get idolized day in and day out. 

[Sean_A]

Mike and Sean,

   Ur both half right. Sean most of the courses overbuilt in 80s and 90s were upscale public.  Those were the pieces of shit built.  As Mike said location is more important then anything assuming the course doesn't suck. Im watching a few courses struggle in nice areas.  The biggest problem is there are too many Country Clubs and too many of the same model.   The 1950s country club model will have to change in the declining areas to make it.  It's sad when those go, u can't get back the land.  The luck that Sean speaks of is only with having a great location!

Ben


I also said middle many class clubs charging $400-600 a month need to fnd a way to get closer to $200 a month.  That would eliminate much of the luck I speak of 

Ciao

[Kalen Braley]

I think everyone on this page has valid points.

Its part luck, part location, part pricing, part <insert here>....Its certainly a complex business model with many inputs and hopefully you can get "lucky" and get the recipe right.

P.S. I've always thought that older clubs that have paid off their notes, would have a tremendous advantage in staying afloat in that they effectively only have to break even on operation costs to keep things going.  Its the ones that are still trying to pay back land acquisition costs and course design costs that are likely in big trouble.