Course of Action

Like virtually every other sector of the economy, the golf industry will be affected by the current downturn. The questions going into the 2009 season concern where and to what extent this broad business will be impacted. There will be challenges, especially for private clubs that are witnessing declines in membership as businesses and families put the brakes on spending, but also opportunities, particularly for public courses that become alternatives for people looking for places to play. The key to seizing on such opportunities, club pros agree, comes down to one word: value.

Tom DiRico has been a golf pro for nearly 40 years now, which means he’s watched the game endure a number of economic cycles. He says he’s learned firsthand that the sport — and therefore the broad business created by it — is anything but recession-proof.

“People are still going to play the game no matter what’s going on with the economy,” DiRico, now the pro at Chicopee Country Club, told BusinessWest, “but …”

There was a lengthy pause after that ‘but,’ and he didn’t really finish the thought. However, the implication was clear — that, while people will still play, there are questions as to how much they’ll play and where. And how these queries are eventually answered will determine what kind of year 2009 will be for area course owners and operators.

There is uncertainty, but also doses of optimism, said DiRico, noting that both were expressed, repeatedly, during meetings of Chicopee’s Golf Commission and, more specifically, talks about projections for the year ahead.

“We talked about the economy and how it’s going to affect us,” he said. “We feel that would could take a hit, but we’re just not sure. We offer a great golf course at a fantastic value; we just have to hope that people look and seek us out for that.”

Kevin Kennedy has similar thoughts about what might transpire over the ’09 season.

Now in his third year as head pro at Franconia Golf Club and Veterans Golf Club, Springfield’s two municipal courses, he said a general, if hard-to-quantify, decline in membership at area private clubs will likely benefit area public layouts to some extent.

“As strange as it might sound to some, we do better when people have less money,” said Kennedy, being careful and diplomatic as he discussed the recession and its many implications. He noted that he was seeing this pattern unfold last year, as the downturn began to impact the Pioneer Valley and its golf industry. In fact, Kennedy said that, despite a very rainy spring and early summer in ’08, Springfield’s golf operation would likely have eclipsed revenues posted in 2007 had repeated rains not impacted October’s volume of play.

As it was, the two courses pretty much duplicated ’07’s numbers last year, he continued, adding that most courses would be content with being ‘flat’ this season, given the way the economic downturn has taken large bites out of discretionary spending across the board.

Overall, most course operators forecast some opportunities in the year ahead, and agree that, to capitalize on them, clubs must focus on value.

“That’s the real key,” said Kennedy, noting that many now-former private club members, and also those who rotate among the public layouts, will be looking for bargains. “It’s all about providing an enjoyable experience, one that will bring people back.”

As for the private clubs, they’ve been “bumped and bruised a little,” said Dave DiRico, Tom’s brother and longtime pro at Agawam’s Crestview Country Club. He said membership is down there slightly, less than at some other clubs, at least from what he’s heard anecdotally, but there are some encouraging signs.

“We’ve picked up 12 new members over the past few weeks,” he said, adding that the club now has roughly 215 members and a budget based on 225. Thus, closing the gap is the most immediate challenge facing this and other clubs. And while working to do so, clubs must also be diligent about meeting the high expectations that are part and parcel to private-club membership.

“There is still a perception when you join a country club, there’s a level of service that you come to expect,” he explained. “And that’s where some clubs are having a difficult time. They still need to provide that service, and it comes at an expense, whether it’s great conditions on the golf course, hours and service at the food and beverage operation, lifeguards for the pool area … regardless of how many members you have, you still need to operate and provide that demanded level of service.”

In this issue, BusinessWest looks at how the recession will impact golf in ’09, and how, for some clubs, there may actually be a favorable bounce amid all the fiscal turmoil.

Course Correction

Tom DiRico told BusinessWest that he was among the 280 or so golf pros gathered at the Hartford Marriott for the recent annual spring meeting of the Connection Section of the Professional Golfers of America (PGA), which includes Western Mass. The guest speaker was Jim Remy, president of the National PGA, who went on, by DiRico’s estimation, for almost 90 minutes.

“That’s pretty long for a speech like that, and after about 15 or 20 minutes I’m usually ready for a nap,” he joked. “But he had everyone’s attention, including mine, because he talked about the economy and how it’s going to affect golf courses on a national level — public courses, private courses, and municipal courses.

“He told us to basically look around, watch what other clubs are doing, and, above all, be competitive with pricing,” DiRico recalled. “He said the average golfer was going to shop around — shop around to join a club or shop around to play 18 holes a week.”

This was not exactly a news flash, DiRico acknowledged, but it served to reinforce what course owners and local pros knew as they entered the ’09 season — that this would, in many respects, be a challenging year, as individuals and businesses responded to the economic downturn.

Overall, courses should expect total play to decline somewhat, said DiRico, meaning everything from casual weekday get-togethers to the number of people who will pay to play in the myriad benefit golf tournaments staged between April and November.

“I don’t think the number of tournaments will decline,” he explained, noting that the golf outing has become one of the more popular and enduring methods of fund-raising over the past few decades. “But you’re definitely going to see fewer people playing in them. The banks and other companies are picking and choosing now which tournaments they’ll support.”

The projected decline in tournament participation is just one of the many factors that will go into determining what kind of year 2009 will be for the local golf community. There is also speculation about everything from how the downturn will impact sales of clubs, bags, apparel, and other golf-related merchandise, to how it may affect golf travel and play at some of the area’s higher-end clubs.

But much of the discussion at the start of the year has been about private-club membership, and how the decline in those numbers would impact not only those facilities, but also the public courses that will now become an attractive alternative for those who still want to play but not pay thousands of the dollars in annual dues for a club membership.

When asked just how many fewer private club members there would be this year as opposed to last or in 2007, Kennedy thought for a minute about coming up with a number, but then opted for a percentage instead.

“Maybe 15% to 20% fewer across the area,” he said, noting quickly that he was merely speculating and that this amounts to probably several hundred individuals who, collectively, add up to a good amount of business for public and semi-private clubs — those that have members, but are also open for public play at certain times of the day or week.

Geography will be a key element in determining where those now-former private-club members play, said Kennedy, but value and accessibility will also be big factors.

“Who wins the battle for those players? It all comes down to who can provide the best value, conditions, and accessibility — people want to play when it’s convenient for them,” he explained. “At our courses, people get great value for what they pay.”

Rough Going

Tom DiRico said the same thing about Chicopee, and echoed those thoughts about value. He said that, overall, and despite some of the general public’s perceptions to the contrary, golfers are frugal, and they will shop for the deals.

“They’ll look at $35 for 18 holes and a cart, and then $31 for the same thing elsewhere, and go for the lower price,” he explained. “They may very well waste $4 on gas in the process, but they’ll look at that $4 as lunch or maybe a few extra beers.”

So pricing is critical, he continued, noting that officials in Chicopee want to position their course appropriately, while also making it accessible, but not at the expense of leagues that provide a steady source of revenue for the course — and the 19th hole as well.

“People are going to play golf — this is a recreational sport — but everything is geared toward that discretionary income,” said DiRizo. “When people lose that discretionary income, they have to make some decisions — where they’re going to play and how many times a week they’re going to play.

“If you have a good facility where you’re offering value, condition, and service, then you can pick up that stray golfer who is not a member of a private club who is used to that value, condition, and service, and that’s why I stress to my employees that they have to be on their toes every single day.”

A month into the season — and a cold, rainy month as well — Tom DiRico said it’s much too early to tell how the recession will be impacting the ’09 season. “On the nice days, we’re not seeing too much difference from what we saw last year,” he explained. “We’ll know a lot more by July or August.”

Within the private-club realm, there is speculation about how that lifestyle plays with younger generations and whether they will make investments in such facilities. In the meantime, changes in tax laws have made some businesses less willing to offer club memberships as perks, and some employees less willing to accept them.

But Dave DiRico said he’s seen some signs of optimism amid those questions and the economy itself.

“Our phone is ringing; people are calling and asking questions,” he said. “There is interest out there; we’re seeing it every day.”

And much of that interest is from what would be considered younger constituencies, those under 50, said DiRico, noting that these individuals would likely be less intimidated by what’s happening with the economy and on Wall Street than those at or very near retirement age.

Overall, private clubs must do the same as public facilities and focus on providing value and service, he said, adding quickly that the expectations will be considerably higher at those private clubs.

Hole Card

Kennedy told BusinessWest that he believes golf will endure through the recession in part because it gives players a four- or five-hour break from the downturn and the anxiety it creates.

“When it’s tough going, golf can provide an escape,” he explained, noting quickly that, for course owners and operators and everyone involved in the business of golf, there will be no escaping all of the many impacts of the recession.

But there is considerable room for optimism at many clubs, where the assignment is to be properly positioned to take advantage of what opportunities develop.

George O’Brien can be reached at[email protected]