Cautious Optimism Prevails as a New Golf Season Gets Underway
“January was terribly slow,” said the former club pro turned owner of Dave DiRico’s Golf & Racquet in West Springfield, formerly Fran Johnson’s. “And in February, we were closed for seven days due to snowstorms; it was tough.”
Like area car dealers and others in the retail sector, DiRico was feeling the effects from an interminably long, brutal winter, one in which consumers mostly stayed indoors and kept their wallets in their pockets.
But when the calendar turned to March, said DiRico, people started coming out again. And then, Golf Digest printed its annual “Hot List,” a rundown of the year’s new equipment, with the TaylorMade SLDR driver earning five stars in each of four categories, something that had never happened before.
“The Hot List comes out the first week in March, and people really pay attention to that,” said DiRico, adding that, while the SLDR has been his best seller this spring, many lines are moving, people are replacing equipment they bought from him just two years ago, and, overall, he’s off to his best start to a year.
He and others are choosing to view these early signs as harbingers of what could be a turnaround year for an industry that has seen the adjective ‘beleagured’ attached to it for the past several years.
“I don’t know where golf is going in the years to come — I don’t think anyone does, and that’s the big question, “ said Ted Perez Jr., long-time pro and co-owner of East Mountain Country Club in Westfield, a public facility. “I’m optimistic, but that’s my nature, I’m always optimistic.”
But there are still a number of challenges remaining for an industry that has never fully recovered from the recession that started six years ago, and has endured several difficult seasons weather-wise, with everything from tornadoes to heavy rains to last summer’s prolonged heat wave, and is still in a state of flux.
And for Perez and several other owners and operators, the new year is already off to a slow start.Indeed, East Mountain, famous for being open whenever the ground is clear of snow, is usually open by St. Patrick’s Day, if not before, and has long stretches during winter when the course is playable. This year, the track was open just a few days in January, due more to cold than snow, and also on Super Bowl Sunday. “But things turned south in a hurry after that,” said Perez. The official opening was March 28, and the next three days saw torrential rain, heavy winds, snow, and sleet.
Most area courses are looking to open on or about April 10, putting them somewhat behind schedule at a time when there is little margin for error, as competition for what has become a stagnant, if not declining, pool of area golfers has intensified and area clubs have turned to discounts and promotions to bring people to their first tees.
And some believe these specials are making it more difficult for area courses because the buying public has becoming increasingly less willing to pay full price, and a time when margins are tightened and expenses are spiraling.
At the Ranch Golf Club in Southwick, one of the region’s high-end, semi-private layouts — greens fees average $100 — long-time pro Hope Kelley has seen people arrive at the pro shop looking for bargains, and sometimes getting back in their cars if they can’t find one, something that just didn’t happen years ago.
“People will come in and say, ‘what’s the real rate for today?’ It’s like Hotwire nonstop,” she said, referencing the website that helps consumers find cheap deals on flights, hotel rooms, and travel. “Unfortunately, that’s pretty much taken over the whole golf industry, just as it’s infiltrated into the restaurant business and the recreation business, and it’s a tough thing.”
Dave Fleury, managing partner and leader of a group that acquired Crestview Country Club two years ago (see story, page 26), agreed, and said the discount pricing and various coupon books that enable golfers to get rounds at many area courses at substantially reduced rates, while good for consumers, are in some ways hurting the industry.
“Golf, as an industry, is going through a very interesting time, and with some of the things that are happening, like these deals, whether it’s one of these Internet companies or these cards or books, they’re almost creating the feel that golf is a commodity,” he explained. “And, in fact, golf is not a commodity. Every property is so very unique, every course is so unique; they all have their strengths and weaknesses, and some are more fun to play than others, and some are better-conditioned than others. This is not a commodity.”
For this issue and its annual golf preview, BusinessWest looks at projections for the season ahead and at the many challenges that continue to face area club owners and professionals.
Perez, who has spent most of his life working at the course his father carved out of the hills just east of Barnes Municipal Airport more than a half-century ago, said he used some of the considerable downtime from this longer-than-normal offseason to look at some recent numbers, especially last year’s, and attempt to decipher what they were telling him.
The first part of the assignment was rather sobering.
“The numbers [of rounds and overall revenues] from 2010 to 2013 were dramatically lower,” he said, adding that, while this was not a news flash, the extent of the decline was more excessive than he’d anticipated. “And last year was an off year; the number of outings was the same, but overall, play was down.”As for the reasons why, he said there are many, and they include the weather — lots of rain in the spring and hot, muggy weather through July — as well as the lingering recession and, for East Mountain, problems with three greens (6, 12, and 13) that were damaged in the application of an herbicide during the summer.
But he believes numbers are down industry-wide. “Anybody in the golf business who says they had a good year last year is flat-out lying,” he said with a strong dose of confidence in his voice. “Nobody had a good year.”
Kelley said volume was down at the Ranch last year, and weather was a big reason reason why. She said a good fall helped rescue the season to some extent, but business was off probably 2% to 4% for the region as a whole, and the Ranch’s numbers were in that ballpark.
The question now becomes, will it get better in 2014? The quick answer is usually ‘yes,’ but with the typical caveats, with weather at the top of the list.
“In this part of the country, about 80% of our revenue has to be made in a five-month period — the second week in April to the second week of September,” said Perez, noting that, while early fall saw good weather last year, many players had put their clubs away by then. “It’s during those five months that you’re at full capacity, there’s more daylight, the leagues are playing. This is when you have to do it, and in recent years, we just haven’t been doing as well.”
By ‘we’ he meant East Mountain, but also the industry in general. He said the recession is still a factor, but the bigger issues are stagnancy in the number of players and relentless competition for consumer dollars.
That competition has led some clubs to take what Fleury called “desperate measures,” such as deep discounts on everything from individual rounds to club memberships, with some positive results short-term, but real question marks about the long term-impact.
“Golf is going through the unfortunate circumstance of having to deal with a really poor economy,” he explained. “And in a poor economy, people may do things from a general business sense that they wouldn’t do otherwise because they feel forced into it, and I think that’s what we’re seeing.”
Kelley said the “Hotwire mentality,” as she called it, presents challenges, but also some opportunities, especially during off-peak times of the day and the season.
“You have much longer days in summer, so there’s more inventory you can sell,” she told BusinessWest, adding that the Ranch does offer what she called “qualified promotions” (she doesn’t like to use the term ‘discount’) to help fill the tee sheets and expose new audiences to the course.
But Perez clearly doesn’t like the way things are trending.
“I think the golf industry in this area is hurting itself by running too many specials, at least low-priced specials,” he said. “The golf ‘passbooks’ that are going around are hurting the business; they’re lining some people’s pockets, but they’re not helping the golf courses.
“These things cheapen golf in the area,” he went on, “and it schools everyone to think they should be able to play for $12 — golf, cart, lunch, dinner, and more. It’s gotten out of hand, and that’s why you’re seeing fewer clubs in this area take part in these anymore.”
The discount pricing and intense competition challenges all clubs, public or private, because it forces them to maintain current pricing levels even as the cost of doing business continues to rise, with everything from payroll to insurance to fertilizer.
“Any business shows that, if your expenses go up, you are supposed to pass that expense on to the consumer, somehow, some way,” said Perez, who is nothing if not candid and outspoken about what he’s seeing in his industry. “And that means going up a dollar or a half-dollar on greens fees. But you can’t do that anymore, because if you do, people will go down the road to the guy who has a better special.”
Moving forward, club pros and owners we spoke with said their facilities have to become proactive, aggressive, and imaginative when it comes to operating their courses, bringing players to their pro shops, and introducing the game to various audiences, especially women and young people.
“To me, golf is very healthy,” said Kelley. “We have a goal within the PGA of America to try to grow the game and get more people to play the game; golf is still a very popular sport, and golf professionals across the country are doing their best to offer programs that appeal to the masses.
“And that’s what I want to focus my energies on,” she continued. “At the end of the day, if we can bring more people to the golf course, that’s what really matters.”
Elaborating, she said the challenge for individual clubs, and the industry as a whole, is to do more than just bring people to the club. The focus must be put on what she called the “experience,” and getting visitors to return — to that club or another one.
“The glass is half-full as far I’m concerned, not half-empty,” she went on. “I’m optimistic that there will be a lot of people playing golf. Yes, there are a lot of courses competing for players, but I’m rooting for everyone — I don’t care if you’re a muni (municipal course), private, or public. At the end of the day, it’s all about the game of golf.”
Perez summoned that well-worn phrase ‘thinking outside the box’ to sum up the challenge, adding that, in some cases, it means going back to basics, such as with customer service and marketing.
He noted that East Mountain was one of the first area courses, if not the first, to market itself extensively, especially through cable television, and also one of the facilities to see a dramatic benefit from such exposure.
“My dad said we should be doing advertising on television,” he recalled, adding that this was in the ’80s, cable was still in its relative infancy, and the notion of the courses taking to the airwaves to promote themselves was a novel concept. “It really made a hell of a lot of difference; we went from being a little busy to a lot busy in a year.
“When we first got into it, our brand-new ad was being shown at 2:30 in the morning on CNN,” he went on. “But we learned how to do it. And when your ad is in the middle of a golf tournament on the Golf Channel or one of the networks, you’ve got a captive audience; that’s going to reach a lot of people.”
Beyond marketing, the club will look to continue to find ways to control and cut costs without impacting the quality of the experience, and create repeat business.
“You have to make the most of the opportunities that you have to show people a good time and make them want to come back,” he said, speaking for everyone in his business as he did so.
As he talked with BusinessWest about his start to the year and thoughts on what happens next, DiRico kept referring to what he called an “improved forecast.”
Initially, he was talking about weather, and how, after roughly 15 weeks of misery, the mercury was ready to soar past 40 — and stay there.
But he was also talking about projections for the industry as a whole.
This business has been playing out of the rough for several seasons now, and its score, the bottom-line results, clearly show it. Challenges, and many of them, remain, but there are indications that the industry’s lie, and its fortunes, might be improving.
George O’Brien can be reached at [email protected]