 |
|
||||||||||
 From the News Desk...Golf receives passing (barely) mid-term gradesby John ReitmanThe mid-term grades for golf are in. And if Chicago-area analyst James Koppenhaver were its business professor, he might assign an overall passing grade considering the challenging economy – perhaps followed by a recommendation for tutoring. But for hundreds of the country’s 16,000 or so golf courses that are struggling and show little if any hope of recovering, failure appears inevitable. “Historically, the supply balance is 10 or 12 percent. So, if 10 percent (of all golf courses) went away tomorrow we would be better off,” Koppenhaver said. Some of the test papers Koppenhaver has graded recently would seem to support that assertion. Industry reports indicate that rounds played were relatively flat for the first six months of the year, and that alone is no small feat during these troubling economic times. But data also shows that golf facilities nationwide reported a decrease in revenue of 5 percent through June, according to the PGA of America, indicating that rounds have been propped up by a combination of discounting green fees at the facility level, increasing use of coupons and rate cards, as well as third-party tee time providers. “Historically, the supply balance is 10 or 12 percent. So, if 10 percent (of all golf courses) went away tomorrow we would be better off.”“We’re still hanging on in rounds, and that is somewhat of a surprise,” Koppenhaver said. “If rounds are flat and revenue is down 5 percent, it looks like we’ve decided to take our medicine on rate.” According to the Monthly Rounds Played Report, participation was up 0.2 percent for the first six months of the year compared with the same period in 2008. The report, a joint effort of Golf Datatech, National Golf Foundation, PGA of America and the National Golf Course Owners Association, samples some 4,000 golf facilities and can be useful for measuring participation. But it does not give the backstory of why rounds are up, down or sideways. Rounds played often are loosely associated with golf playable hours. Specifically, rounds played are expected to suffer when golf playable hours are adversely affected by factors such as precipitation, humidity, daylight variances and wind, or go up when the opposite is true However, variances in rounds played – whether positive or negative – cannot always be dismissed as a function of weather, Koppenhaver said.  A complex equation that factors weather and other data relative to the total pool of daylight hours, golf playable hours were flat through June when compared with the first half of 2008, Koppenhaver said.
The 5.4 percent nationwide drop in revenue through the first half of the year, which includes a 4 percent decrease at daily fee and semi-private courses; 3 percent at municipal, military and university facilities; 7.4 percent at private clubs; and a 16.3 percent falloff at resort courses, is in part a result of owners and operators engaging in a price war to attract players. When that happens, Koppenhaver said, the challenge for facilities becomes attracting enough new or repeat business to offset those discounts. That is unlikely, Koppenhaver said. “There are two ways to react to a down economy. The first is to protect rounds played by decreasing the rate,” Koppenhaver said. “But if you only hold rounds (steady), or if they drop 5 percent, and you’ve cut your rate by 5 percent, then where are you? The other way is to hold your rate. You’ll lose rounds, but get to the same place, which is a 5 percent drop in revenue.” Through dissecting the data as well as conversing with golf course clients, Koppenhaver also suggests that golf consumers are becoming increasingly savvy when it comes to finding a deal. Some clients at public and semi-private daily fee facilities have expressed that many regulars are switching tee times to later in the day to take advantage of reduced afternoon or twilight rates, he said. “People definitely are changing when they play,” Koppenhaver said. Data also indicates that private club members either are playing at an accelerated pace, or rounds played figures are inflated, Koppenhaver believes. If things do not perk up soon for facilities that are struggling, the trend of foreclosures likely will intensify throughout the second half of 2008 and next year, he said.Historically, private clubs overall shed about 10 percent of their members during exceptionally tough economic times with an estimated 5 percent going inactive. However, a 1 percent drop in rounds played through June suggests that play in this segment is up by as much as 15 percent. “Something is going on there,” Koppenhaver said. “That just doesn’t make sense.” As bad as the economy has been, the overall picture as it relates to golf still is not as bad as some had expected. Koppenhaver predicted that 2009 would bring a 5 percent decrease in revenue attributed to rate cuts and another 5 percent loss in weather-neutral rounds, which would have resulted in a 10 percent decrease in revenue. While the former is holding true, the latter likely will not happen – barring any unforeseen catastrophic events, he said. Still, if things do not perk up soon for facilities that are struggling, the trend of foreclosures likely will intensify throughout the second half of 2008 and next year, he said. Koppenhaver estimates as many as 25 percent of the country’s daily fee supply and 10 percent of private clubs are experiencing extraordinary financial hardship. According to NGF, 374 courses (18-hole equivalents) have closed from 2006 through 2008. “We’re plowing under about 100 a year,” Koppenhaver said. “The killer for us is that we were not that healthy as an industry going in,” said Chicago-area-based Koppenhaver. “There are still a lot of facilities that cannot survive another sideways year. I talk to several (owners/operators) who $200,000 or $300,000 under water every year. I don’t know how they hang on.” |
 In other news... Greens of envy Olympic Club members and 2012 U.S. Open reap benefits of converting from Poa annua to bentgrass. Posted: 11/19/2009 Read more » News and people briefs Register now for New England turf show, Toro introduces walk-behind trencher, Sipcam adds to sales staff Posted: 11/19/2009 Read more » A better divot digger Motorized device developed at the University of Arkansas produces uniform damage quickly and could help advance turf recovery research. Posted: 11/19/2009 Read more » Currier moving on from Bethpage Site of this year's U.S. Open to get new superintendent and 15th green. Posted: 11/18/2009 Read more » Economic struggles mean finding more fat to trim Superintendents look for ways to cut due to shrinking budgets. Posted: 11/16/2009 Read more » Complete news index »
|
|
 |
 — The TurfNet Media Network: TurfNet.com, TurfNet TV, TurfNet Monthly, TurfNet University — Connecting golf course superintendents worldwide, since 1994. © 1994-2009, Turnstile Publishing Company. All rights reserved. |
 |