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Why global golf development will lag

The U.S. golf market constitutes about half of the golf courses in the world, so, the U.S. golf economy will continue to be the driving force in the growth of the game internationally. However, the downturn in the U.S. economy, coupled with the decline in the number of golfers and rounds played forebodes poorly for future international golf development. Golf is a mature market in the U.K., Australia and Japan, in addition to the U.S. Therefore, the global growth of the game and the development of new international markets will likely lag behind the languishing U.S. golf market.

The conventional wisdom of many in the golf industry is that international golf course development is booming when it isn’t; furthermore, many industry leaders believe that the exposure that golf will receive on the world stage at the Olympics in 2016 and 2020 will ignite global interest and demand for the game. While well-intended, this wishful notion and theory is not plausible given the economic, political, societal and cultural realities in the world today. I wish it was true, but it isn’t. However, what is true is that golf’s presentation on the Olympics’ world stage could greatly expand golf viewership and the global interest in the game. Golf is associated with the Western lifestyle and is the envy of the world; so, there is no downside in presenting golf at the Olympics.

The facts regarding the global development of the game do not support the myth that golf is booming internationally. The National Golf Foundation (NGF) with the R&A recently completed the first count of the number of international golf courses; so, until now, there has been no credible baseline data. The new NGF/R&A global database has identified 33,651 golf courses in the world; 55.7 percent are in North America; 21.5 percent are in Western Europe; 12.2 percent are in Asia; and, 6.1 percent are in Oceania.

Further analysis of the NGF data reveals that golf has flourished in democratic societies with capitalistic economies; and, most importantly, golf has grown only where there is an existing and/or emerging middle class that has the time, money and cultural interest in the game.

Many point to what they believe will be a boom in international golf course development. However, the NGF estimates that worldwide, 350 golf courses are in planning and 300 are under construction. The estimates for the number of golf courses in planning or under construction are not significant and/or are not indicative of international growth in the game and golf industry. Most of the golf courses under construction are upscale resort and/or residential projects that are intended for tourism development, western expatriates and the political/economic elite of those countries.

Golf is not a cultural imperative in most of the emerging international markets (except for South Korea), because these countries do not have an emerging middleclass that is interested or can afford to play the game. One only needs to compare North and South Korea to understand this. Many might recall the media reports in the early 1990s that the late North Korean leader, Kim Jong il, set a golfing record that will never be broken. After only starting to play golf on the day prior to the opening of the new Pyongyand Golf Complex, the “Dear Leader of the Democratic People’s Republic of North Korea” was able to shoot 38 under par for 18-holes. How this remarkable achievement never stimulated tremendous interest in playing golf in North Korea is unfathomable. Putting this absurdity aside, it does illustrate that regardless of the nature of exposition of golf to a population, there are some requisite preexisting conditions for the game to grow.

In other words, the economic, political and socio-cultural preconditions for the growth of the game internationally do not exist. China is often cited as a prime prospect for growing the game. As reported in the March/April 2017 issue of Golf Inc., “The government of China recently confirmed that it has closed 111 courses and imposed restrictions on another 65 during the past five years as part of an ongoing crackdown on its fledgling golf industry.” Further, “China’s Xinhua News Agency claimed that the courses were ordered closed because they were improperly using groundwater or were built on either arable land or protected land with mature reserves.”

While China has a population of 1.3 billion, and is the second largest economy in the world, it is not fertile ground for growing the game internationally. On the face of it, the large population is impressive and sounds very promising, because if just 1 percent of the Chinese played golf, it would translate into China having 13 million golfers.…more than half of the number of golfers in the U.S. Obviously, there are other factors that must be considered such as China’s gross national income per capita in 2012 being $6,091, which ranked 90th in the world. About 10 percent of the Chinese population is identified as living below the national poverty line (earning about $1.80 a day).

The point here is simply that if you are living in China and earning $1.80 a day, have access to a television and were watching golf during the 2016 Olympics in Rio, you are part of the primary target market for growing golf in China. The probability of that person someday playing golf is as likely as most of us taking up equestrian jumping after watching it during that same Olympics. Please don’t misunderstand that I am not against golf being in the Olympics. I was one of the early and leading advocates of it back when I was the NGF CEO. My only objection is characterizing this exposition of golf on the world stage as being a pivotal point in the growth of the game internationally.

It’s a lot of smoke and mirrors for a business opportunity based upon building the global broadcast base and viewership for professional golf. There’s nothing wrong with the PGA Tour doing this and there is no downside in having golf become an Olympic sport. It is a smart strategic decision to build global interest in their broadcast product. And, hopefully, when more favorable societal, political and economic conditions emerge around the world, the exposition of golf in the Olympics, as well as the worldwide presentation of professional golf on television will foster the growth of golf participation in those countries and stimulate the demand and supply for the world golf economy.

David Hueber, Ph.D, is a veteran of the golf industry who served as the CEO of the National Golf Foundation and the Ben Hogan Company, and was also a vice president of the PGA Tour. His new book, In the Rough: The Business Game of Golf is available from TCU Press and online from various book retailers. Autographed copies are available from the author at www.InTheRough.golf.

source: http://www.golfincmagazine.com/blog/why-global-golf-development-will-lag


Golf course reduction continues, NGF reports

The number of golf courses in the U.S. declined again, dropping by 190 to end 2016 with 15,014 facilities, according the the National Golf Foundation. Overall, the number of facilities is down 5.6 percent since 2006.

”NGF views the slow and steady reduction of U.S. courses as the natural economic response to the opening of more than 4,000 new golf facilities between 1986 and 2005,” said Greg Nathan, NGF’s Chief Business Officer. "This gradual reduction is indicative of the market’s healthy self-balancing of supply and demand, and a trend we expect to continue for several more years. American golfers have more than 15,000 green-grass facilities where they can tee it up, one reason the contraction in supply has shown no direct impact on frequency of play, with rounds played in the U.S. increasing each of the past two years."

The industry saw 230 facilities close permanently. Most have been redeveloped into housing or parkland, a trend that continues into 2017.

“The dirt is worth more than the grass,” said NGF President and CEO Joe Beditz, referring to the value of the land courses are built on.

NGF projects closings will be in the 150 to 175 range per year as natural contraction continues.

There were only ten new golf facilities in 2016, the lowest number on record. This included The Loop at Forest Dunes in Michigan, and Mossy Oak in Mississippi, both Golf Inc. Development of the Year honroees.

NGF reported there is still new course activity in the pipeline. It is tracking 55 18-hole equivalent golf courses under construction and another 37 in the planning stages. Of those, 28 are daily fee courses, with 12 new facilities and 16 additions to existing properties. Courses such as Steamsong Black in Florida, the reversible Silvies Valley Ranch in Oregon, Bayou Oaks in Louisiana, and Stoatin Brae in Michigan are among those scheduled to open in 2017.

Investment in renovations remains high. NGF tracked 986 major course renovations completed since 2006, representing a total investment of at least $3 billion. This does not include minor rehabilitation projects, which are done without a significant impact on the course’s operation.

source: http://www.golfincmagazine.com/content/golf-course-reduction-continues-ngf-reports