Golf Industry's Big Short

[Joe Hancock]

I think a lot of the comments about millenials are right on the money.

Not only do most of them have zero financial wherewithal to join a club, and likely never will, I doubt many have interest even if they could.

This young generation is very anti-establishment, justifiably so, because the establishment has left them on the outside looking in. Saddled with massive college loans which is further compounded by low paying jobs waiting for them when they graduate, their current future is so bleak that they can't even see themselves being home-owners much less owning a golf membership.

The privates are going to have to figure out something quick....

They could afford the club life, at the expense of giving up ancient grains, $12/ pound pea pods and eggs that come from free range, generally content chickens.....but everyone has choices.

[Dave Doxey]

 To attract me, a club would:
 

• Be entirely private
• Have a group of members with whom I'd enjoy playing
• Be focused entirely on quality golf (course design, maintenance, operation)
• Avoid spending on non-golf (tennis, pool, health club, kids entertainment)
• Limit food service to a good after-round pub and have no spending requirement
• Have no initiation fee (lost if I move, the club is sold, goes Chap-11, or loses quality)
• Have dues that is no more than 2X what I would pay elsewhere on a cost-per-round basis

 
Members can wear their hats backwards, play music, wear jeans or whatever  they want, peck at smart-phones, pierce and tattoo whatever body parts that they want, and ride hover-boards.  As long as they play fast and take care of the course, they're welcome.

 
Unfortunately, this eliminates pretty much all of the clubs in my area and seems counter to growth strategies that I've seen with clubs adding non-golf amenities trying to be “family friendly”. Adding gimmicks like foot golf or huge holes falls into this camp.

 
It gets to the question of “What business in the club in?”.  If it's “Golf” that leads one way. If it's “Family Entertainment” that's entirely another (TopGolf?).  Both can probably be successful, but trying to do both seems a bad approach to me.

 
There seems to perhaps be a 3^rd - “Golf/Social” which cover what clubs historically have been.  I'm not sure trying to be all 3 will work. Clubs need to pick one and go with it 100%.

 

[Kalen Braley]

I think a lot of the comments about millenials are right on the money.

Not only do most of them have zero financial wherewithal to join a club, and likely never will, I doubt many have interest even if they could.

This young generation is very anti-establishment, justifiably so, because the establishment has left them on the outside looking in. Saddled with massive college loans which is further compounded by low paying jobs waiting for them when they graduate, their current future is so bleak that they can't even see themselves being home-owners much less owning a golf membership.

The privates are going to have to figure out something quick....

They could afford the club life, at the expense of giving up ancient grains, $12/ pound pea pods and eggs that come from free range, generally content chickens.....but everyone has choices.

Joe,

Rest assured the millennials are not shopping at Whole Foods, even thou they would like to.  Its almost entirely Gen Xs and older.  And the extent of their splurging is usually a few drinks at the bar on Friday night.

[Tim Gavrich]

I think a lot of the comments about millenials are right on the money.

Not only do most of them have zero financial wherewithal to join a club, and likely never will, I doubt many have interest even if they could.

This young generation is very anti-establishment, justifiably so, because the establishment has left them on the outside looking in. Saddled with massive college loans which is further compounded by low paying jobs waiting for them when they graduate, their current future is so bleak that they can't even see themselves being home-owners much less owning a golf membership.

The privates are going to have to figure out something quick....

They could afford the club life, at the expense of giving up ancient grains, $12/ pound pea pods and eggs that come from free range, generally content chickens.....but everyone has choices.

Joe--


I don't know how old you are, but I daresay that for every Millennial who fritters away their money, as you seem to be implying, by buying pricier organic foods, there has to be at least one Baby Boomer who buys a brand-new $50k-plus car instead of a Honda Accord or something used that costs $30k or less.


Don't kid yourself - every generation is materialistic in its own way. Millennials aren't space aliens.

[John Kirk]

Comparing golf's current economics with the "Big Short" housing bubble, fueled by a demand in mortgage-backed securities, is not a very good comparison.

The people invest a certain amount of discretionary money in golf, and it appears that amount has been gradually decreasing.  I don't expect a catastrophic event, but rather a gradual contraction of the game's importance, and the number of playing fields.

John,
I think in someways it is very similar when you look at the games played in purchasing these large groups of companies by some of the larger management companies with Wall St money.  Lot of paper games played....and some of these equipment manufacturers who could almost stop production for  a year and have product to sell....there's some stuff out there....

Thanks for the response, Mike.

In my first comment, I almost mentioned that the price of some or most golf equipment seems too high compared to its manufacturing cost.

Like you suggest, a key feature of golf's growth has been debt and bankruptcy.

My home club Pumpkin Ridge was sold this summer to a Dallas, TX firm that owns about 20-25 golf properties.  The club was purchased with borrowed money.  Speaking for our aging, core membership, we are hopeful that the new owners will invest in and take pride in our beautiful golf club on the outskirts of suburbia.

[BHoover]

The sooner US clubs adopt the practices of their UK/Irish/Australian brethren, the better (more members, lower dues, fewer frills, more sustainable maintenance practices, focus on golf, etc.).

I'm all for it, but I'm not holding my breath.

[John Kirk]

There is still room for superior new courses, but the number of courses will decrease overall.

I saw The Big Short at the movies last night.  I enjoyed it immensely, but left the theater feeling gloomy about the future, and humanity in general.

[Jim Tang]

I think the next 20 years will be enormously important for the private golf club model.  Can private clubs, used to doing things a certain way for a very long time, adapt to the changing social landscape and economic realities of the world we now live in?

[Charles Lund]

The sooner US clubs adopt the practices of their UK/Irish/Australian brethren, the better (more members, lower dues, fewer frills, more sustainable maintenance practices, focus on golf, etc.).

I'm all for it, but I'm not holding my breath.

Last summer I played at a decent public course outside of Seattle.  Around the fourth hole, I heard a commotion behind us in the form of a boom box on a cart playing Lynnrd Skinnerd's Saturday Night Special.  Of course, the driver had his cap on backwards and was imbibing.  Over the course of the round, the music changed but it was basically loud rock which I actually like in my car or occasionally at home.

This is the problem of golf courses watering down versions of standards of golf etiquette and player expectations to the level they have as the result of trying to be all things to all people.  I can understand to a degree the issue of course and clubs wanting to survive in an economic sense.  Unfortunately, I shudder to think of what will emerge in the long run.

The Aussies and the Irish make an effort to uphold standards and traditions of the game with most courses and clubs not being overly stodgy about it.  Players know the rules and mostly play in frequent competitions.  Pace of play is good.  Players mostly make an effort to do course maintenance and follow policies.  They rake bunkers, leave bunkers in the recommended areas, fix pitch marks, and sand and replace divots.  Pace of play is generally very good.  Mobile phones are off, caps are worn with bill forward, and people follow dress standards.  Beverage carts intrude minimally or are non-existent and local players usually walk.  I can't think of an example where I have seen much drinking as part of the activity on the course, even though both cultures are known for enjoying alcoholic beverages.

Aussie and Irish culture are noted for spontaneity and both value "craic."  So it is possible to maintain standards which relate to respect for the game, courses, and fellow players.

The golf industry in these countries is struggling but I think what will survive will be something like what I grew up around when I learned the game playing with an aunt and uncle.

That explains in part why I spend extended time in both countries these days.

[BHoover]

Excellent post, Charles. Not only should we strive to adopt the economics and maintenance practices of clubs in the UK, Ireland, Australia here in the USA, but we also should strive to adopt more of their attitudes and behaviors with respect to the game.

Personally, I don't care much how one dresses on the golf course (wear your hat facing forward or backward for all I care), but maintain pace of play and respect the course by fixing pitchmarks and replacing divots.

[Joe Sponcia]

To attract me, a club would:
 

• Be entirely private
• Have a group of members with whom I'd enjoy playing
• Be focused entirely on quality golf (course design, maintenance, operation)
• Avoid spending on non-golf (tennis, pool, health club, kids entertainment)
• Limit food service to a good after-round pub and have no spending requirement
• Have no initiation fee (lost if I move, the club is sold, goes Chap-11, or loses quality)
• Have dues that is no more than 2X what I would pay elsewhere on a cost-per-round basis

Dave,

What you have essentially described already exists, it's called Semi-private minus the 'entirely private' part.  I live in Tennessee where a muni w/cart is $25, a former nice course (public) 10 years ago that used be $50 w/cart is now $30-35 on golfnow.  I don't know where you live, but are you telling me you would pay double the golfnow price at say $65 cost-per-round if you could get your wish list?  If you played twice per week, that's $520.  Surely you have a club that you could walk for $520 even with a food minimum in your area (or just join a semi)?   


Unfortunately, this eliminates pretty much all of the clubs in my area and seems counter to growth strategies that I've seen with clubs adding non-golf amenities trying to be “family friendly”. Adding gimmicks like foot golf or huge holes falls into this camp.

I don't know of a 5 decent clubs that have added foot golf or those stupid holes?  As much as I think I would have loved to be Ward Cleaver, I recognize that era is probably never coming back.  Since birth control became prevalent and divorce became more acceptable clubs almost HAVE to be family friendly or forget getting the guy since so many households are now dual-income.  The golf-club only (completely private) model works in limited areas if the golf course is exceptional (and if its exceptional, it's not cheap)...but even then, I think a deep-pocketed individual has to subsidize it.


I think where the AVERAGE club misses the mark is kind of what Joe H was alluding to with their heart-friendly menu, free range this, cage free that, craft beer, and child care.  Clubs think the 30-40 year old is going to want to sit back and knock back $5 beers with multiple adjectives, eat $14 chicken sandwiches, and drink $8 cosmopolitans?  1) They don't want to see that on their bill (adding to the overall golf bill) and 2) they would rather do that with people their own age.  They add all that and then construct a gym that no one uses to capture 15 families that don't spend above their minimum and then what? 

My wife played last year in a 9 hole group with 24-28 other ladies.  Highly organized.  Inexpensive group lessons. Fun games.  They played other clubs frequently. The 18 hole lady group had just as many totaling 60-65 very active women.  We played in a 9 hole couples league that was held every other Friday and was often sold out (14 couples).  We all played together and ate together afterward.  These events don't cost much to run other than staff but combine that with inexpensive kids camps, lessons, and a good junior league and clubs can do fine. 

I understand most guys I know wouldn't want their wives near their golf club but for me at least, it makes the dues go down a lot easier than if I was the only one playing. 

[BCowan]

To attract me, a club would:
 

• Be entirely private
• Have a group of members with whom I'd enjoy playing
• Be focused entirely on quality golf (course design, maintenance, operation)
• Avoid spending on non-golf (tennis, pool, health club, kids entertainment)
• Limit food service to a good after-round pub and have no spending requirement
• Have no initiation fee (lost if I move, the club is sold, goes Chap-11, or loses quality)
• Have dues that is no more than 2X what I would pay elsewhere on a cost-per-round basis

Dave,

What you have essentially described already exists, it's called Semi-private minus the 'entirely private' part.  I live in Tennessee where a muni w/cart is $25, a former nice course (public) 10 years ago that used be $50 w/cart is now $30-35 on golfnow.  I don't know where you live, but are you telling me you would pay double the golfnow price at say $65 cost-per-round if you could get your wish list?  If you played twice per week, that's $520.  Surely you have a club that you could walk for $520 even with a food minimum in your area (or just join a semi)?   

Joe,

     It exists on private level too.  If Dave lives up North, its a 6 month season, so basically his $500 mark would be $250 a month.  If he's paying $500 a month for upscale public it's only 6 months of the year if that counting shoulder season.  Why should money be wasted on food min. (services/products) people no longer want?  My parents club doesn't have a food min.  Dave is spot on about initiation fees.  People are moving a lot.  Why wouldn't you want their monthly dues for the 5 years they live in your city?  I wouldn't give 250 members my money knowing how they would piss it away.   

Unfortunately, this eliminates pretty much all of the clubs in my area and seems counter to growth strategies that I've seen with clubs adding non-golf amenities trying to be “family friendly”. Adding gimmicks like foot golf or huge holes falls into this camp.

I don't know of a 5 decent clubs that have added foot golf or those stupid holes?  As much as I think I would have loved to be Ward Cleaver, I recognize that era is probably never coming back.  Since birth control became prevalent and divorce became more acceptable clubs almost HAVE to be family friendly or forget getting the guy since so many households are now dual-income.  The golf-club only (completely private) model works in limited areas if the golf course is exceptional (and if its exceptional, it's not cheap)...but even then, I think a deep-pocketed individual has to subsidize it.
"the golf only model only works in limited areas'', that is BS!  Deep-pocketed individuals don't subsidize Golf only places.  Don't lump in 1% destination clubs with golf courses focusing on Golf.  No, the golf course can be a Doak 5 or 6 and be golf only.  I've said this before that you can have a million dollar maint budget and $250 a month dues.  I'm not advocating that high of maint budget, I'm saying that unless in a high rent area, people are there to play Golf.  The other stuff causes the Golf monthly rate to go up substantially.  Tom Doak nailed it earlier, the memberships are too expensive and the model needs to shift with cheaper memberships and more members. Now people disenfranchised with the current model have destination golf to fill their need. 

I think where the AVERAGE club misses the mark is kind of what Joe H was alluding to with their heart-friendly menu, free range this, cage free that, craft beer, and child care.  Clubs think the 30-40 year old is going to want to sit back and knock back $5 beers with multiple adjectives, eat $14 chicken sandwiches, and drink $8 cosmopolitans?  1) They don't want to see that on their bill (adding to the overall golf bill) and 2) they would rather do that with people their own age.  They add all that and then construct a gym that no one uses to capture 15 families that don't spend above their minimum and then what? 
You are completely wrong again.  I am 35 and would drink 2-5 craft beers at the club.  A friend of mine is a member of a private Ross course and the 30 year olds redid the menu.  Tacos, great burgers, and wings.  Craft beer and can beer.  Those are the ones staying and spending money.  They took the 3 steak selections off the menu.  People go to steakhouses out on the town.  Older members eating soup are not spending.  I think converting conference rooms at my parents club into a gym would be brilliant.  The one thing I agree with you is baby sitting. My parents paid for babysitters, clubs shouldn't be providing that.  They almost have to now because the failed FAMILY only model exists and is pushed.   

My wife played last year in a 9 hole group with 24-28 other ladies.  Highly organized.  Inexpensive group lessons. Fun games.  They played other clubs frequently. The 18 hole lady group had just as many totaling 60-65 very active women.  We played in a 9 hole couples league that was held every other Friday and was often sold out (14 couples).  We all played together and ate together afterward.  These events don't cost much to run other than staff but combine that with inexpensive kids camps, lessons, and a good junior league and clubs can do fine. 
I can't stand leagues at private clubs and the point of joining a club IMO is to not have to deal with them.  If wives and kids want to play golf take them to par 3 courses or out at night like my parents did.  I don't agree that it doesn't cost a lot to run.  It requires bigger staffs and the idea that people need someone to group them together and can't just show up and Buddy Up impromptu. 
 
I understand most guys I know wouldn't want their wives near their golf club but for me at least, it makes the dues go down a lot easier than if I was the only one playing.

I don't think its that.  People want more active golfers.  If my wife decides to take up golf, I'll take her to the range and or a muni.  If she gets hooked then we would get two INDIVIDUAL memberships.  At my course we have a lot of woman golfers and ones with really good etiquette and they play quickly. 

[Sean_A]

The bottom line is that a load of older "middle class" privates charging $400-600 a month are going to have to find a way get closer to $200 a month, increase membership to ~400-500 and tone down costs if they want to survive...or else go semi private or public.  I have no idea how newer middle class clubs with land purchase loans to pay off will survive.

Ciao

[Mike_Young]

Sean,
I don't see it that way.  Golf is like anything else.  Some of these places will close and things will eventually be fine.  So many people think if a course is a great, old classic then it must survive and eventually it will be ok.  No, not all will.  It works just like with restaurant or anything else.  The decline in golf participation was one thing but let's not forget the influx of restaurants in many communities that at one time considered the private club the spot AND for some of the older places alcohol was also a draw.  In my area the VFWs, American Legions and private clubs all suffered once some of the cities and counties allowed alcohol. 

Going back to the housing crisis...Imagine if there had been a campaign to have more younger people buy homes whether they could afford them or not.  Well, we have been doing the same thing with golf.  Now we just need to let it find itself.

[Sean_A]

Mike

Yes, some will close basically because there is little will to change to remain viable...this I think is a direct link with older memberships.

Ciao

[Greg Stebbins]

I might be a touch older than a millennial but these issues hit home for me.  As I have evaluated memberships, the following issues seem to be nearly universal at clubs trying to attract those in their 30's.


1) Usage costs - I don't think the $500/mo. dues that have been derided on this thread are the issue.  It's the fact that most clubs I see have mandatory cart or caddie policies, food minimums, bag room tips, locker room attendant tips, weekend tournament entry fees, etc.  If you play 8 times a week as you hope to as a member, your "all in" for the month is suddenly $1,000 or more.  These are nice luxuries, but I bet most people would happily go without a lot of these services if it will bring their costs down.  I suspect that most of these extras exist just to impress guests rather than serve the membership.


2) Debt - A lot of clubs have funded necessary capital expenditures with long-term debt in the past decade.  It's a turn off to be asked to pay assessments for the kitchen upgrade that was finished 7 years ago when you know that the irrigation system will need to be replaced in 5 years.


3) Overly Helpful Staff - I'm in my 30's - carrying my bag 50 yards to the putting green is not a problem and it feels really awkward to have someone constantly offering to do it for me.


Contrary to some popular beliefs, I think most millennials appreciate a certain level of decorum that is traditionally associated with a club as long as it doesn't go overboard.  What they don't want is for someone to scold them if they take 3 steps into the clubhouse without remembering to remove their hat. 

[Dave Doxey]

 Joe:

 
I don't know what “semi-private” means.  Either a course is public, meaning anyone can pay a greens fee & play, or it is private, where only members can play.  Semi-private seems to be a marketing term to make public golf look like more than it is.

 
I live outside of DC.  Public (or semi-private, if you prefer) golf costs between $80 and $150 per round on weekends.  Annual passes (or semi-private membership, if that sounds classier) cost between $3000 and $6000. One would need to play more than 40 rounds at the course makes that cost effective and probably more than 50 to justify limiting course choices to one a rewarding deal.    Playing weekdays increases the number of rounds, but the equation changes little as weekday fees are much less.

 
No doubt there areas of the country where costs are much less.   There are 4 NLE courses withing 10 miles of my home, all closed within the last 5 years and at least that many operating in Chap-11.

 
Currently I play with a couple of regular groups who shop the online tee time brokers for the best deals, restricting it to the half dozen best design/conditioned courses.  I think that golf discounting is a temporary thing. When enough courses close, demand-supply will be back in balance.

 
A private club runs $15K-$100K and up for initiation, and anywhere from $500 and up monthly. (A couple of the above NLEs were private, including one that I was close to joining which took with it $50K of initiation from my neighbor...)

 
Ben:

 
Sounds like we agree in many areas.  The point that I was trying to make, but likely didn't do a good job, is that private clubs should not try to be everything to everybody.  They need to pick a specific product offering and stick to it.

 
Either cater to a specific market.  For example:
1 -  Hard core golfers with an affordable golf-focused offering (no fancy restaurant, pool, or other non-golf add-ons) [Many UK courses?]
2 – Families (have an easy to play course, lots of tee lengths, pool, tennis, kid stuff, no expectations of fast-play golf)
3 – Elite private (big name course, manicured conditions, fancy clubhouse & restaurant, high prices, exclusivity)
4 – “Goofy golf” (foot-golf, large holes, blasting music, fancy food, less than 18 hole rounds) [Maybe TopGolf has this one]

 
Over a long golf career, I've belonged to the first 3.  This winter, I'm going to TopGolf for grins to round out the sample.   I prefer #1.   I acknowledge that others with different needs will prefer others.

 
Again, my point is that clubs need to decide on a focus area and stick to it.  Trying to do it all alienates a lot of the potential members for one reason or another.

[Mark Pavy]

Interesting question...The Pellucid report today asked the following and wrote the following:

Golf Industry's Big Short:
How Will it Play Out?

"Call me a sucker for Michael Lewis' take on the financial markets, baseball etc. but after seeing the movie "The Big Short" and reading the book, the characters who are trying to fight their way through the never-ending haze of confusion and misdirection in each story just resonate with me and remind me of the 15 years now I've spent in the golf industry trying to figure out, "What the hell is really going on at the most basic and fundamental level?"

Fortunately for those of us trying to make our living in this industry, there isn't any "big short" of the magnitude of the housing market mortgage loans manipulation between '05 and '08 portrayed in the book and movie, but we continue to be in desperate need of simple, clear thinking on the path forward for the industry in the face of declining participation and rounds that are simply following weather patterns against the backdrop of latent oversupply that's being absorbed at a glacial pace.

As I complete my 13th year of chronicling the information fundamentals of the golf industry (that's ~227 newsletters at an average of 7 pages each or over 1,500 pages of the written word trying to figure out this puzzle and enlighten subscribers/readers), we certainly have more information than we did back in 2002 but the "industry narrative" remains remarkably the same.  In this issue I'll draw some parallels to themes from The Big Short and outline how we might find our way out of this maze quicker and with better clarity by learning from the financial markets' mistakes:

There is a finite level of demand for golf, building real estate around golf supply doesn't increase that finite level of demand
There is a segmentation of that demand across accessibility (private vs. public), value points (Public Premium, Value and Price) and experience types (Regulation vs. Learning & Practice) which needs to be heeded
Losing low-involvement golfers today masks the eventual rounds demand day of reckoning as our core golfers "age out" of the system and when it will take multiple new or existing golfers to replace their rounds contribution

Industry reports are noise for people who don't listen.

[Thomas Dai]

Last summer I played at a decent public course outside of Seattle.  Around the fourth hole, I heard a commotion behind us in the form of a boom box on a cart playing Lynnrd Skinnerd's Saturday Night Special.  Of course, the driver had his cap on backwards and was imbibing.  Over the course of the round, the music changed but it was basically loud rock which I actually like in my car or occasionally at home.

Exactly the kind of behaviour that many, many folk play golf to get away from!


Society and attitudes and behaviour has/is changing, evolving, always does, but peace and tranquility and serenity and all that kinda stiff is a key element in why I for one play golf. Take these aspects away and I reckon I'd give the game I've played and enjoyed since I was a youngster up pretty pronto and I doubt I'd be alone.


Clubs/courses need to recognise this because it's the middle/older age group that largely dominate amateur club golf, and this age group in general terms don't tend to appreciate the kind of behaviour mentioned in the quote above, and the middle/older age group probably spend more money at said clubs/courses than do the Saturday Night Special, cap backwards, imbibing crew.....so where's the cash going to come from if the middle/older brigade move away from the game?


Rant over.......for now!


Atb

[Jerry Kluger]

I have two sons, one is 22 and just graduated from college, and the other is 19 and a college sophomore - both played golf growing up and enjoy the game.  I am a baby boomer and fortunate that I have done well enough that I am comfortably retired - had my kids late in life with a much younger wife.  Here are some observations I have:


Most of us play golf because we view it as challenging and fun, mostly with friends, and have no problem with a round taking 4 hours if play keeps moving - longer than that is a question of enjoyment.  Millennials are unable to do any one thing for four hours outside of work or sleep, without having something else to do at the same time such as playing on their phone, etc. 


Cost of golf is not so overwhelming that it has to be either play on a regular basis or don't play at all. I lived in the DC area and there are clubs that have basically eliminated initiation fees and dues are substantially less for younger members.  Here in North Carolina there are golf options that are much lower than in DC and certainly easily affordable - $200 a month and perhaps a small initiation fee. 


Student debt can be a factor but that is not the case for most students.


There were far too many courses built just as there were with houses whenever someone sees a get rich scheme and houses are coming back because people need to live somewhere but golf is discretionary so it will never be in that circumstance.

[Mike_Young]

Interesting question...The Pellucid report today asked the following and wrote the following:

Golf Industry's Big Short:
How Will it Play Out?

"Call me a sucker for Michael Lewis' take on the financial markets, baseball etc. but after seeing the movie "The Big Short" and reading the book, the characters who are trying to fight their way through the never-ending haze of confusion and misdirection in each story just resonate with me and remind me of the 15 years now I've spent in the golf industry trying to figure out, "What the hell is really going on at the most basic and fundamental level?"

Fortunately for those of us trying to make our living in this industry, there isn't any "big short" of the magnitude of the housing market mortgage loans manipulation between '05 and '08 portrayed in the book and movie, but we continue to be in desperate need of simple, clear thinking on the path forward for the industry in the face of declining participation and rounds that are simply following weather patterns against the backdrop of latent oversupply that's being absorbed at a glacial pace.

As I complete my 13th year of chronicling the information fundamentals of the golf industry (that's ~227 newsletters at an average of 7 pages each or over 1,500 pages of the written word trying to figure out this puzzle and enlighten subscribers/readers), we certainly have more information than we did back in 2002 but the "industry narrative" remains remarkably the same.  In this issue I'll draw some parallels to themes from The Big Short and outline how we might find our way out of this maze quicker and with better clarity by learning from the financial markets' mistakes:

There is a finite level of demand for golf, building real estate around golf supply doesn't increase that finite level of demand
There is a segmentation of that demand across accessibility (private vs. public), value points (Public Premium, Value and Price) and experience types (Regulation vs. Learning & Practice) which needs to be heeded
Losing low-involvement golfers today masks the eventual rounds demand day of reckoning as our core golfers "age out" of the system and when it will take multiple new or existing golfers to replace their rounds contribution

Industry reports are noise for people who don't listen.

Mark,
So tell me where you see the problem with the above....always open to listening....

[Jud_T]

While it's painful to earn your living in a contracting industry, this is possibly the best time in history to be a golf consumer.  There are more good to great courses accessible on both the public and private side than at any time in history.  Prices and services are becoming more competitive by simple economic supply & demand.  If people want firm & fast 9-hole reversible courses you can play in under 2 hours with no frills then that's what the market will provide.  It's not rocket science.   

[Kalen Braley]

Jerry,

"Student debt can be a factor but that is not the case for most students. "

Not trying to be argumentative but this is simply not true.  While it may not be an issue for the circles you run in, the best estimates are 7 in 10 graduates leave college with an average of nearly $30k in debt.

http://www.usnews.com/news/articles/2014/11/13/average-student-loan-debt-hits-30-000

[Mark Pavy]

Interesting question...The Pellucid report today asked the following and wrote the following:

Golf Industry's Big Short:
How Will it Play Out?

"Call me a sucker for Michael Lewis' take on the financial markets, baseball etc. but after seeing the movie "The Big Short" and reading the book, the characters who are trying to fight their way through the never-ending haze of confusion and misdirection in each story just resonate with me and remind me of the 15 years now I've spent in the golf industry trying to figure out, "What the hell is really going on at the most basic and fundamental level?"

Fortunately for those of us trying to make our living in this industry, there isn't any "big short" of the magnitude of the housing market mortgage loans manipulation between '05 and '08 portrayed in the book and movie, but we continue to be in desperate need of simple, clear thinking on the path forward for the industry in the face of declining participation and rounds that are simply following weather patterns against the backdrop of latent oversupply that's being absorbed at a glacial pace.

As I complete my 13th year of chronicling the information fundamentals of the golf industry (that's ~227 newsletters at an average of 7 pages each or over 1,500 pages of the written word trying to figure out this puzzle and enlighten subscribers/readers), we certainly have more information than we did back in 2002 but the "industry narrative" remains remarkably the same.  In this issue I'll draw some parallels to themes from The Big Short and outline how we might find our way out of this maze quicker and with better clarity by learning from the financial markets' mistakes:

There is a finite level of demand for golf, building real estate around golf supply doesn't increase that finite level of demand
There is a segmentation of that demand across accessibility (private vs. public), value points (Public Premium, Value and Price) and experience types (Regulation vs. Learning & Practice) which needs to be heeded
Losing low-involvement golfers today masks the eventual rounds demand day of reckoning as our core golfers "age out" of the system and when it will take multiple new or existing golfers to replace their rounds contribution

Industry reports are noise for people who don't listen.

Mark,
So tell me where you see the problem with the above....always open to listening....

Mike,

The problem is that sensible business operators are subscribing and reading this crap. I just love how the author uses "us" and "we" as though he's in the same boat, trying to survive the same storm, as his audience.........vomit.
Honestly, who on earth would listen to a guy who on one hand says," remind me of the 15 years now I've spent in the golf industry trying to figure out, "What the hell is really going on at the most basic and fundamental level?" " and than professes ,"how we might find our way out of this maze quicker and with better clarity by learning from the financial markets' mistakes:".

Comprehension of the decline in participation is not really that hard to work out and modify existing business models to suit. I'd be listening to the market and not some newsletter publisher.

[Adrian_Stiff]

One of the few occasions where everybody is united that the US model for can't survive as it is except for a slim few.


Even the UK model is changing. Everyone is driving the price down. The under 40s want value and shop around. Most UK golf clubs are still average age 60. Under 40s don't want to pay the initiation fee and with plenty of clubs not charging they will go the best deal.


Many UK courses still some that see having no booking tee times as plus. Your under 40 man wants to open his phone and see there is a gap he can play. The under 40s join modern clubs.  Many clubs now have a sliding scale from 16 to 30 (full price) £150 - £1000 per year. In the UK the view is really that the cheapest way to play golf is by being a member and that view does not seem to be shared by the US private model.