Favorable weather, increased rounds, bigger budgets and new player initiatives have helped the golf industry to recover.
Golf in the U.S. is growing for the first time in five years as an economic recovery strengthens enough to be measured in the clubs, cleats and plaid shorts that fuel the sport’s $25 billion consumer market, reports Bloomberg.
The number of rounds played on American golf courses has climbed for four straight months through February. Club maker Callaway Golf Co., mower-maker Toro Co. and Nike Inc., which makes golf gear and clothes, are registering revenue growth and stock gains outpacing the Standard & Poor’s 500 Index.
The rebound is reflected on the links.
“It will probably be the strongest year since the recession,” Cindy Davis, president of the golf unit of Beaverton, Oregon-based Nike, said in an interview. “I’d say it’s definitely one of the indicators that maybe consumer confidence is coming back.”
In the past few years, rounds played on U.S. courses dwindled as unemployment surged to 10 percent in 2009, and golf courses closed after a building boom mirroring the housing bubble that started to burst in 2006.
The number of golfers dropped to 26.1 million in 2011 from about 30 million in the middle of last decade, said Greg Nathan, a senior vice president for the National Golf Foundation.
“We were bouncing along the bottom and expect we’ll see a modest recovery in 2012,” said Nathan. “The signs since the beginning of the year have been positive.”
He said golf’s consumer market draws about $4 billion from equipment, $1 billion from apparel sales and $20 billion from green fees.
The number of golf rounds jumped 10 percent in February. That capped four months of year-to-year gains from the economy that were helped by a mild winter in the northern U.S., Nathan said.
Even in California, where the average temperature was about the same as last year, rounds rose 16 percent in February.
With the economy and golf industry showing signs of rebound, course managers are willing to spend on equipment, driving up sales for Toro and agricultural machinery-maker Deere & Co., based in Moline, Illinois.
“There’s older equipment out there that has quite a bit of hours and courses are realizing that they need to go ahead and re-fleet and purchase new equipment,” Denny Docherty, Deere’s Director of Global strategic marketing at the Agricultural and Turf unit, told Bloomberg.
Toro, based in Bloomington, Minn., raised its forecast for 2012 revenue growth in February to as much as 7 percent from 5 percent in December, partly because of increased sales to the golf industry, said Kurt Svendsen, chief of investor relations. The company announced in December it bought the Graden golf greens-roller line for an undisclosed amount.
Sales of clubs, balls, shoes and other equipment measured from 600 pro shops and 250 off-course golf specialty stores rose 1.3 percent last year to $2.41 billion, reversing a slide since 2007, said Tom Stine, co-founder of Golf Datatech LLC, which provides statistics on golf-related sales.
Textron Inc.’s Jacobsen unit, which sells golf mowers, sprayers and machines that rake sand bunkers, has seen purchases increase as returning players bolster golf courses’ budgets.
“We’re pretty much riding the wave of the economy right now,” said Glenn King, marketing manager for Jacobsen. “We’re seeing a lot of pent-up demand.”
On the club side, ClubCorp, the largest owner and operator of private golf clubs, sold the most memberships last year since 2005, said Eric Affeldt, chief executive officer of the Dallas-based company. “People are feeling more comfortable spending money again because things aren’t getting any worse,” he said. ClubCorp which operates in 26 states, bought four golf courses last year and is looking for more, Affeldt told Bloomberg. “We are rebounding and like what we’re seeing in terms of the recovery,” he said.
The weather has also helped to improve golf’s rebound. Thanks to the recent winter that wasn’t, many clubs were able to open a few weeks earlier than normal — helping provide much-needed cash flow — and some, like Oak Ridge Golf Club in Agawam, Mass. and East Mountain Country Club and Tekoa Country Club in Westfield, Mass., never actually closed, reports BusinessWest.
To help drive membership, each participant in a tournament played at Elmcrest Country Club, East Longmeadow, Mass., is given a coupon for a free round at a later time, a strategic initiative that not only boosts play for those events, but also introduces people to the course and helps fuel new memberships.
But looking ahead, some of the most creative thinking has to be devoted to bringing more people into the game, or back into the game, said Hope Kelley, PGA head golf professional at The Ranch Golf Club in Southwick, Mass.
She noted that the PGA’s Golf 2.0 initiative is just one of many endeavors designed to increase the pool of players, which most agree is in decline, and for several reasons. Time is one of them — it takes five hours, on average, to play 18 holes — while the economy is another. And then, there’s the difficulty factor.
“A big part of it is ability — people feel they’re not successful, so they just walk away from it,” said Kelley, adding that this is one of many key concerns to be addressed by Golf 2.0.
The strategic initiative has many facets, she said, including concerted efforts to schedule tee times for young players, initiatives to get those core golfers back on the course and increase the number of rounds they play, and, in general, “reaching out to different groups — men and women, young and old — and get them excited and re-energized about golf.
“We want to show them golf can fit in their life, and fit in their family’s life,” she continued. “It’s a social game, it’s a healthy game — these are the points we’re trying to get across to people.”
Referencing the many reasons why people have stopped playing golf or scaled back — time, money, ability, or combinations of these factors — Hope said clubs have to be proactive and address all of them.
“Courses need to be ready for this,” she explained. “They need to run programs, they need to offer incentives, they need to better explain that it’s a social game. They need to say, ‘we’ll have 9-hole rates, we’ll run 9-hole tournaments, we’ll run family nights, we’ll open our doors to the young, the old’ — not out of desperation and not out of the need to sell more tickets, but because we need to keep this game alive and let more people in on what has been such a wonderful sport for so many years.”
Time will tell if Golf 2.0 can succeed with its ambitious goals to nearly double the number of people currently playing the game by the end of the decade.
For the immediate future, reports BusinessWeek, most course owners and managers are looking to rebound from a difficult year and take full advantage of an improved economy and what should be much better weather.