Most year-end recaps about golf will probably include references to Dufnering or incite debate about the value of winning a major versus winning five events… but our look back at 2013 focuses on some key metrics reflecting the state of the business of golf.
To put the year into context, remember that great weather and improving economic conditions drove rounds up 5.7% nationally in 2012, the largest increase in years, which stimulated other areas of the golf economy. The story is a bit different in 2013.
Rounds Played
Unfavorable weather across most of the country in early spring had a major impact on rounds played. PGA PerformanceTrak reported a 6.7% decrease in national playable days through September. In fact, the number of playable days during this nine month period were the lowest in the history of PerformanceTrak.
As a result, national rounds played have been down most months this year and are down 4.4% YTD through October. If rounds remained flat for the rest of the year, the year-end loss would be about 4%. Overall, we will give back some of the 2012 gains in rounds played, but rounds are still up versus two years ago.
On the sunnier side, golfers are playing more rounds later this season. In each of the last three reported months (August – October), rounds have been up an average of 2.7% compared to 2012.
Economic Indicators
Weather has a clear and profound impact on golf, but it does not deserve all the credit or all the blame for golf’s ups and downs. Golfers’ financial situations have an influence as well and, fortunately, economic indicators continued to move in a positive direction in 2013. National measurements of consumer confidence and spending have been consistently edging upwards since the Great Recession. In 2013, consumer confidence reached a five-year high and, although this may have not been enough to offset the bad weather, it still bodes well for the future.
Golf Course Operations
With rounds down versus lastyear, golf fee revenues also declined. PerformanceTrak reports that YTD median golf fee revenue is down over 3% nationally at reporting facilities. However, operators are reporting small gains in median merchandise revenue and food & beverage revenue, which brings total median revenue per facility to about even.
But as you know, all golf is local, and not all golf facilities are breaking even. Courses are very much affected by local economic conditions, weather, and competition. With the current supply and demand imbalance, it’s still a golfer’s market. Golf courses are battling for business with creative methods of attracting golfers,and operators are working diligently to generate some margin on current revenues.
Golf Course Development
Despite the fact that closures continue to outpace openings in the U.S., there is meaningful development activity in the pipeline. With attention focused on golf’s supply reduction over the last seven years, even people in the golf industry are surprised to learn that there are currently about 170 new golf facility projects in various stages of planning and development in the U.S., including 55 now under construction.
NGF’s International Golf Facility Database shows that for the rest of the Americas and the Caribbean, there are an additional 150 projects in the pipeline, with 53 already underway. The number of new golf course projects in the Americas outstrips any other region of the world, including Asia.
Golf Equipment
NGF’s overall golf equipment sales index, which tracks wholesale shipments of clubs, balls, bags, gloves and shoes, has leveled off somewhat over the past year, after consecutive gains since bottoming out in 2009. Equipment sales are still short of pre-recession levels and 2013 wholesale golf club dollars are essentially flat compared to 2012 (-0.6%), while units are down (-11%). The difference in dollars versus unit sales indicates that manufacturers did receive slightly higher prices in 2013. Innovation drives changes in replacement cycles. Hopefully, new product technologies coming to market will help stimulate sales in the near future.
International equipment sales behaved similarly to U.S. sales through the first three quarters of 2013.
Turf Equipment
Turf equipment purchase intentions among golf facilities have slowly rebounded since bottoming out in early 2011, but are down in 2013 versus 2012. While purchase intent has risen, it is still well below historical levels in the mid-2000s (pre-recession). This is evidence that golf facilities are holding on to their equipment longer in an attempt to preserve capital. Recent purchase intent increases have been positive, but operators remain cautious.
Looking Ahead
The near-term outlook for the golf industry is still tied to the general state of the economy. Experts agree that economic growth and recovery from the recession should slowly but steadily endure. Continued rises in stock market values, housing markets, consumer confidence, and spending should help the golf economy. Uncertainty still exists about the government’s ability to agree on a spending plan, as well as the next steps with the Federal Reserve’s monetary policy. But if these factors positively affect the net worth of golfers, the industry should benefit.
At the local level, golf courses will still need to find innovative ways to attract golfers to their courses. A continued emphasis on new player development will help the golf economy,as will increasing golf’s fun factor and value proposition among current players. As for weather, with 2013 being such a poor weather year, we hope that the law of averages is in our favor and weather improves in 2014.
