Long WSJ article about no boom in boring golf.
April 13, 2000
The Golf Industry Is a Hit --
For Spectators, But Not Golfers
By JAMES P. STERBA
Staff Reporter of THE WALL STREET JOURNAL
ORLANDO, Fla. -- The Masters last weekend was more than the year's first
major golf tournament: It was the opening bell of a new season, time up North
for golfers to dust off their clubs, tune up at practice ranges, drool over new
drivers at pro shops, and marvel at the many signs of their game's prosperity
across the land.
New golf courses are sprouting like dandelions. Golf has never been more
popular on television. The nation's economic boom was made for a game so
associated with luxury. And Tiger Woods, the 24-year-old
Thai-African-American playing sensation, has come along to make golf cool
for a new, diverse generation. Hundreds of millions of investor dollars are
counting on it.
There's just one problem: Golf isn't booming. Golf boomed in the 1980s, when
baby boomers came of age and flocked to the fairways. Since then, the
industry has managed to ride the biggest, longest wave of economic prosperity
in American history to almost nowhere. And so far, Tigermania has created far
more spectators than golfers.
"Golf's tremendous exposure has created the impression of a boom," says
Joseph F. Beditz, president of the National Golf Foundation, an industry-funded
research group. Even golf insiders come to his talks believing it. "Then I give
them the statistics," he says.
The Unboom
Those statistics show that the game's key indicators -- the number of golfers
and the amount they play -- have stagnated for a decade. The latest figures,
says Mr. Beditz, reveal another flat year in 1999. About 26 million American
golfers played around 530 million rounds of golf last year -- not much more
than in 1988. To be sure, visits to practice ranges have increased, and about
three million people take up the game annually. But each year, nearly three
million golfers also drop out.
Why? Golf is too expensive, too
time-consuming, too intimidating and
too difficult, say dropouts. So what,
say traditionalists. What do you expect
from a game invented by dour Scots?
But golf has become much more than
a humbling game for country-club
elites. It's a $30 billion-a-year industry
in America alone -- but one smugly
resistant to the growth many think it
needs to thrive in the new century.
"If we can't capitalize on this moment
in history, we might as well forget
about it," says Ruffin Beckwith, senior
vice president of the World Golf
Foundation and organizer of an
industry summit this November to do
just that. The goal, Mr. Beckwith says, is to tap into the 41 million Americans,
identified in a recent study, who want to play golf or want to play golf more
than they already do.
"I'm only interested if this is a call to action," says Mr. Beditz. "If it doesn't
happen, shame on this industry."
"There's no reason why we shouldn't have 50 million golfers," says David
Pillsbury, president of American Golf Corp., a Santa Monica, Calif., company
that operates 320 golf courses in the U.S. and the United Kingdom, and is
known as a beginner-friendly innovator.
But the industry has been slow to react, mainly because its revenues grew
steadily in the 1990s by milking money out of its cash cows -- avid golfers
who play at least 25 times a year -- with ever-more-costly equipment and
playing fees. These golfers number only 5.4 million, but they pony up $1,710 a
year each on gear and fees and account for 61% of all golf spending. In
contrast, occasional golfers play fewer than eight times annually and spend an
average of only $183 a person.
"Not one organization in golf has as its mission statement the growing of the
game," says Jim Baugh, president of Wilson Sporting Goods Co. "We need
proper introduction and retention programs. But many in golf haven't woken up
yet. People don't react until they bleed."
The bloodletting began three years ago for club makers. Massive marketing
campaigns persuaded golfers to buy up every new "revolutionary" high-tech
club that came along. It worked for a while, even though clubs that sold for
$500 cost less than $60 to produce. Then golfers rebelled, the weather turned
bad, and a recession hit Asia (home to 15 million golfers). Retail equipment
sales dropped $400 million to $6.5 billion in 1998, according to Golf Datatech,
a private research firm. And club makers are still digging out from under a
heap of bankruptcies, fire sales, layoffs and share-price nose dives.
Take Callaway Golf Co., which introduced the Big Bertha oversize driver in
1991, went public a year later, and quickly became the biggest, most-profitable
club maker in the world. Competitors rapped its mantra saying "bigger isn't
better" and "oversized is overrated." Two years ago, sales nose-dived, bringing
Callaway to its knees; its share price plummeted from a peak of $38.50 in June
1997 to $9.31 by August 1999. It's now around $16. It restructured,
eliminating 700 full-time and 300 part-time jobs, and branched -- along with
other club makers -- into a more stable commodity: golf balls. They cost 40
cents to make and can sell for $4 or more.
Meanwhile, golf-course construction continues to boom. Investments in golf
courses soared to $2 billion in 1997 from only $250 million in 1987. A record
509 new or expanded courses opened last year, upping the national total to
16,747. And 936 more are under construction. But industry insiders warn of a
shakeout. Courses are opening faster than new golfers are coming along to fill
them. Despite mob scenes on weekends at many courses, the average number
of golfers per course has been declining nationally since 1990.
The big problem is that two-thirds of the new courses are of a type that is
hugely costly to build and maintain -- some cost $10 million or more and
require green fees of $60 to $100 or more to make them viable. Courses that
look like the ones on TV do help sell the housing developments around them.
But the big green fees attract only avid golfers, not beginners. The average
municipal course fee is $30, and commercial public courses average $36. (To
attract new golfers, some courses deeply discount fees during off-peak times,
charging as little as $5 to play five holes after 5 p.m.)
Of Airwaves and Fairways
When Eldrick "Tiger" Woods turned pro in 1996 and then won the 1997
Masters by a record 12 shots, the consensus was: Golf is about to be
transformed. As a Fortune magazine headline put it: "Tiger! Now the Sky's the
Limit for Golf -- The Game and the Business."
Entrepreneurs plunged into golf with new lines of clubs, clothes, balls and
gadgetry. Magazines for golf's new hip-hop multitudes flowered overnight.
Companies paid Mr. Woods tens of millions of dollars to sell their products.
But Nike's first line of Tiger clothes and shoes bombed: They were too flashy
for traditional golfers and too expensive for the hip-hop youngsters who liked
them. Nike quickly about-faced, producing a new line of Tiger gear aimed
squarely -- who would have guessed -- at avid golfers.
Tigermania, the creation of an international superstar mobbed on golf courses,
avidly watched on television, and worth tens of millions of dollars in
endorsement deals, happened big time -- at least on television. TV networks bet
big bucks that Mr. Woods could sell commercial time, and they were right.
Golf's TV audience grew. The Golf Channel, the only 24-hour cable channel
devoted to one sport, became profitable. And because of Mr. Woods, golf has
been outdrawing professional basketball audiences in head-to-head competition
on network television. One problem: This audience is basically interested only
in Mr. Woods and a handful of up-and-comers such as 20-year-old Spaniard
Sergio Garcia. They see the rest of the PGA tour as a robotic bunch of white
what's-their-names.
The other Tigermania -- the infusion of fresh, young, diverse hordes of new
golfers into the game -- has yet to happen. Somewhere between watching their
hero on TV and becoming golfers, many of them stumble into a thicket of
intimidation, cost and access. The Minority Golf Association of America,
founded in 1991, conducts golf clinics for more than 125,000 so-called at-risk
kids in inner cities in 25 states.
"After we teach them to play, the big problem is, where do they play?" says
David Press, its marketing director. Efforts to find and develop such places,
even those pushed by the Tiger Woods Foundation, have been slow getting
started.
Announced with great fanfare three years ago by former President George
Bush, the First Tee, an industry initiative to create golf facilities for poor and
minority kids, vowed to build 100 new affordable courses near inner cities by
the year 2000. So far, it has 13 facilities in operation, most of them existing
courses spruced up, and 45 more under construction.
Slow starts are nothing new. Although the Professional Golfers Association
dropped its "Caucasian only" membership rule in 1961, it took until 1975 for
black golfer Lee Elder to break the color barrier at the Masters. Not until 1990
did the game's governing bodies resolve not to hold tournaments at clubs that
excluded minorities (Augusta National got its first black member that year, and
lots of other clubs desegregated.) Still, more blacks (19) played in the National
Hockey League last year than in the top four professional golf circuits-the PGA
Tour (1), the Senior Tour (7), the LPGA Tour (1) and the Nike Tour
(1)-combined.
As for other up-and-coming African-American players?
"I really don't see any on the horizon," says Mr. Elder. "I've been to quite a few
colleges around the country, and I don't see any."
Long-Term Improvement?
To be sure, Mr. Woods's goal of making golf "more like America" is long term,
says Tim Finchem, PGA Tour commissioner. And golf has already come a
long way beyond the country-club elites historically associated with the game
-- although they're still around to give golf the luster of luxury so appealing to
marketing gurus. The National Golf Federation says only 3.5% of Americans
played golf in the 1960s. Today, 11.7% play. Back then, 60% of courses were
private. Now, more than 70% are public. The number of women golfers grew
24% in the last decade to 5.7 million. The number of African-American golfers
has nearly doubled to 870,000 since 1988.
"Interest has never been higher, access has never been greater, and golf has
never been more affordable," says Mr. Pillsbury of American Golf Corp. "But
unfortunately, as an industry, we're not effective in breaking down the
perceived barriers for people interested in playing."
One reason to do so is that there's plenty of competition for the recreational
time and money of young people. (The National Sporting Goods Association
ranks golf 10th in participation sports among the total population. It lags
walking, swimming, camping, fitness, fishing, bicycling, bowling, blliards and
basketball.)
Mr. Baugh, of Wilson, sees a lesson for golf in tennis. Manufacturers watched
tennis plummet from 30 million players in the 1970s to 16 million, its low point,
by 1994. "When tennis was getting all its visibility, it was declining," he says,
"because people got caught up in the commercial part of the industry and
forgot about participation."
Nobody expects golf to tank like tennis. Overall, the number of annual rounds
played is growing at no more than 1.5% to 2% a year -- not exactly an industry
on the move, but by no means a disaster, says Mr. Beditz. Moreover, golfers
play more as they get older (because they have more time), and there are scads
of aging baby boomers coming along.
Significantly, last year, a National Golf Federation study reported "latent
demand" in 41 million Americans: 14 million golfers who wanted to play more,
12 million former golfers who want to get back into the game; seven million
non-golfers who wanted to play, and eight million young people who wanted to
play or play more. Why wasn't this demand catered to? No need. "There exists
a pervasive perception of growth and prosperity in golf. This perception has
masked the flatness that the industry has experienced in number of players and
rounds," the study said.
Widening the pool of players? Nope, the study said, "almost every golf
business is chasing that one segment, the high income, avid golfer," while
hardly anyone was addressing "real and significant barriers" to women,
minorities and kids.
"These barriers make the game so intimidating that people say I don't need to
go out and feel ignorant -- why should I bother," says Mr. Pillsbury of
American Golf Corp. Too much is taken for granted, he says. Example: A
woman new to golf signs up to play and is handed the keys to an electric golf
cart. She's scared, having received no instruction on how to drive it.
Golf-course workers assume people know.
American Golf's antidote for that, says Mr. Pillsbury, is to assume nothing at
its courses. "The first thing we do is give new players a tour: Here's the pro
shop, here's the pro. Here is the first tee. Make people feel comfortable. Make
it fun. We show a video on the history of golf."
American Golf's aggressive recruiting program includes paying its instructors
$10 bonuses each time their pupils play, and opening 100 user-friendly Nike
Golf Learning Centers in three years.
"There are still a lot of clubs out there that people don't feel comfortable
walking into," says Mr. Baugh, of Wilson. "Open doors for women aren't really
there yet. There are too many high fees average customers can't afford. The
fun factor is huge with today's Americans, and golf has to be a total fun
experience."
Kent Mauney is a good example of "latent demand." He's an enthusiastic
33-year-old golfer and high-school golf coach who would love to play more.
But he can't afford it. He lives in West Palm Beach, Fla., with his wife and two
young children and teaches science. But in the peak winter season, with area
greens fees ranging from $40 to the moon, he plays less than once a month.
As for the high-school golfers he coaches, they've been squeezed out of peak
season. Golf used to be a spring sport for high-school teams in Florida, and
spring was January to April. But Florida golf courses shooed away charity
school rounds to capitalize on peak-season players, including wintering
"snowbirds" from the North and vacationers. So last year, high schools moved
the golf season to begin in sweltering August, long before the snowbirds arrive.
Write to James P. Sterba at jim.sterba@wsj.com
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