Talk about a strange way of making friends.
Nearly 100 devoted followers on the morning of Jan. 28 packed a conference room at the Orange County Convention Center in Orlando and almost as many attended online to get their yearly beat down from Jim Koppenhaver of Pellucid Corp. and Stuart Lindsey of Edgehill Consulting during their 12th annual State of the Golf Industry Report at the PGA Merchandise Show. If that wasn't enough, almost 200 more showed up in the afternoon to take their medicine. The message out of Orlando, as usual, was mixed.
Rounds played in 2015 were up for the first time in three years, fees and facility revenue both were up slightly as well, but the supply of golf courses measured in 18-hole equivalents was down for the 10th straight year, with almost no end in sight, said Koppenhaver.
Still, it might be the most good news Koppenhaver and Lindsey have voiced in their 12 years of delivering haymakers at the PGA Show.
"Things are stabilizing," Koppenhaver said. "It's a little bit better, but we still have a really long road."
That long road could be another 15 years or more.
Nine new courses were built in 2015, while 234 closed, leaving a net loss of 225 18-hole equivalents. It was, by far, the greatest net loss in course supply since closings began outpacing openings in 2006. In that time, there has been a net loss of 993 18-hole equivalents. That number will have to get larger, much larger, Koppenhaver said, before the golf industry can be declared healthy once again.
"The absorption is picking up, a little over 200 facilities. The problem is it's still too little," he said. "That's about six-tenths of a percent. We're about 8 percent over supply currently, so at six-tenths a year we're still 15 or 16 years away from getting back to what we believe was healthy equilibrium in the industry, which happened back in 1994.
"The good news is absorption of supply is picking up. The bad news is it's still a glacial pace. We need to take a couple thousand courses out of play, and it's just not happening quick enough."
Among the courses coming out of the ground are a disproportionate amount of public and nine-hole facilities. Public facilities comprise 73 percent of the country's overall supply, but 83 percent of the courses closed in 2015. It's a darker picture for nine-hole facilities that make up 7 percent of the nationwide supply, yet represented 58 percent of last year's closures. These are the types of courses the industry needs, Koppenhaver said, to attract and retain new golfers.
"Unfortunately, we're taking bunny slopes out of play," he said. "And oh, by the way, we're trying to introduce people to the game of golf.
"A little bit of a concern for me is that the balance of what we're taking out is not going in the same direction we'd like the industry to go."
In 2014 (the last year data was available for golfer population), a net 900,000 people stepped away from the game, leaving the industry with 22 million golfers. That is the fewest in the industry pipeline in decades at least since the mid-1980s. The game was at its zenith in 2002 when 29.9 million people said they played the game. Population segments that dropped out of the game were men (down 4 percent), women (3 percent), ages 35-54 (6.7 percent), ages 18-34 (7.8 percent) and ages 7-17 (8.5 percent).
We are not successful in generating demand outside of what weather is giving us. So, at this point, we're just on a roller coaster that says if Mother Nature gives us a good year, then we're OK; if she doesnt, then we just follow her down."
Koppenhaver referenced projections from 2010 in the wake of several growth initiatives that many hoped would resuscitate the industry. According to Koppenhaver, Golf 2.0 projected we would be back at that 29.9 million golfer level by 2014. The National Golf Foundation predicted the number of golfers to be at 27.9 million, and even Koppenhaver thought the number of people in the game in 2014 would be at about 25.2 million.
All were way off, and Koppenhaver said Thursday he expects the number to dip below 20 million sooner rather than later. The problem has been a steady stream of attracting 3 million to 4 million new golfers per year, but losing 4 million to 5 million others.
"Our biggest problem is we're losing golfers at 3 percent per year," he said.
"We gotta figure out a way to retain the people who are playing the game and get the people who are engaged to play more frequently."
Although the number of golfers in the game decreased for the 15th straight year, rounds played were up, even if just slightly.
According to Koppenhaver, golfers played 456.7 million rounds last year, a 1.5 percent increase over the 450 million rounds played the year before, about all of which Koppenhaver attributed to favorable weather conditions. It was the first increase in rounds played since 2012, however, it is well off the record of 501.8 million rounds set in 2000.
"We are not successful in generating demand outside of what weather is giving us," he said. "So, at this point, we're just on a roller coaster that says if Mother Nature gives us a good year, then we're OK; if she doesn't, then we just follow her down."
Rounds played averaged 32,441 per EHE, which was the most since 32,991 per EHE in 2012. Ideal capacity, Koppenhaver said, is about 35,000 rounds per facility.
Facility revenue also increased in 2015, rising 3 percent over the year before. Most of those gains were made in food and beverage (5.4 percent) and merchandise sales (4.2 percent). Only 2.2 percent of those revenue hikes came in the form of golf fees.
"The slight concern I have is the big driver there is golf fee revenue," Koppenhaver said. "We can sell a bunch of food and beverage and merchandise, what drives our businesses are golf fees."