Sunday, 2 January 2011

Is Golf Healthy in Canada?



This was originally written in 2008 - while we still were building courses....

I started to think about this subject after reading and article called More Americans are Giving Up Golf written by Paul Vitello. The link is here:
http://www.nytimes.com/2008/02/21/nyregion/21golf.html?_r=1&hp&oref=slogin

The article contains the usually gloomy statistics that make you sit up and take notice of it: “The industry now counts its core players as those who golf eight or more times a year. That number, too, has fallen, but more slowly: to 15 million in 2006 from 17.7 million in 2000, according to the National Golf Foundation. “
The article sites goes on to sight the typical factors that are hurting the participation levels:
1. The game taking too much time.
2. Roles in society have adjusted and men are expected to have the week-ends with the family
3. The costs of the game have risen to a point that golf is too expensive for many.

There was also a study from IPSOS Ried a few years back that indicated that unlike American Golf, the Canadian game was just fine – and I openly questioned the results and the polling methods – particularly since the RCGA paid for the study. The link to that article is here for your perspective: http://thecaddyshack.blogspot.com/2007/01/course-closures-outpace-openings-in.html


So is it healthy?
– well yes and no.

I started to think about private first. They are full of older members who were brought up with the golf memberships and country club social circles, but the new players are much harder to come by. The majority of new members seem to be corporate in nature where the game of golf is still important to conducting business. What they have trouble finding is the younger social player who is simply there to play golf. They have too many options and also there has been a massive change in society where the family comes first. After all most families now need two jobs just to afford a house! The successful private clubs, like an Oakdale in Toronto, are built around the entire family. I’m most curious to see how Coppinwood and Goodwood do in Toronto with their incredibly high initiation fees.

The High end Public market is largely saturated in most areas since too many projects were begun to be larger and flashier than the last but requiring a much more difficult business model to support them. Once there became too many of these courses to fill the niche, or the price point was cut by competition in the market place, an some of these clubs are incapable of operating under this financial structure – there was too much financed to work. Now the countdown begins on how long the person with deep pockets is going to underwrite the operation.

The destination course or resort is the next one having a tough go right now – think about the effect of a 25% change in the dollar had one them. They desperately need the dollar to change and yet the same source of the currencies’ strength is the Oil Boom out west which has fueled the massive build out of real estate golf in British Columbia. I think these two saw off overall but certain regions like Niagara are getting killed in the economic environment. The other concern is the level of over-supply in certain areas out west as this boom takes place – it reminds me of both Ontario booms that ended up in the same place.

The public courses where the green fee is manageable and is in decent condition is great demand – in fact this will always be strong since this business model is fine from boom to recession.

The reality is “golf” is fine – the problem stems from too many bad business models built in the last 20 years and the market will have to shake this out before it can move forward again. Once the price for a round is reasonable the players will come – the only problem is someone will have to foot the bill until the model works or we will need a bankruptcy to bring in a new owner who borrowed less and is able to change a lower rate to make the business model feasible. That’s the real problem in golf – it seems everyone forgets that it’s a business too.

Here is Robert Thompson's take (which comments on the same article I do and then on another article about it by Garth Woolsey): http://www.ontgolf.ca/g4g/

Here is Garth Woolsey's from the Tronto Star: http://www.thestar.com/Sports/Golf/article/305899

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