Golf Industry Adjusts to a Changing Climate
While golf courses in the Pioneer Valley will certainly be opening earlier than those east of Worcester — where close to nine feet of snow fell in less than two months and temperatures have not induced much melting — they will be getting down to business later than what would be considered normal or desirable.
And that has Kevin Kennedy a little worried.
The head professional at Springfield’s two municipal courses, Franconia and Veterans Memorial, told BusinessWest that golf seasons have a tendency to reflect how — and often when — spring begins.
“I really believe that, if you get off to a good start in the spring, it trickles down to club sales and everything else — everyone’s raring to go,” he explained. “I’d rather have a good spring than a good fall; if they don’t excited about golf in the spring, some people may not get excited for the whole year. A good spring start is imperative.”
However, it looks like area courses won’t be getting that good start. As BusinessWest went to press on April Fool’s Day, the professionals we spoke with were predicting it would be at least another week and probably two before anyone would be putting a peg in the ground.That’s a few weeks later than normal — many courses are typically able to open in late March — and this year it’s after Good Friday, which is usually one of the busiest golfing days of the year. In fact, area courses with a lot of snow will likely kick off after the Masters tournament (April 9-12), which has become a symbol to many golfers in colder climates that it’s time to get out and play.
And a slow start certainly isn’t what courses need at a time marked by myriad and, in some cases, historic challenges for the industry — everything from the lingering effects from the recession, especially when it comes to discretionary spending, to an oversaturation of the local market when it comes to courses (although that’s certainly not a recent phenomenon); from continued discounting and price stagnation that has many consequences, to societal changes that have left many people, especially younger audiences, with little if any appetite for an activity that consumes five hours or more.
Yet, despite all this, there is optimism to be found among the pros we spoke with, who said they’re learning to adapt to this new environment.
E.J. Altobello, long-time professional at Tekoa Country Club in Westfield, said the course registered “minor growth” in 2014, another season that started later than what would be considered normal, a byproduct of predominantly solid weather during the summer and few lost weekend days. Overall, he said the golf market has stabilized somewhat after several challenging years immediately following the Great Recession.
“We’ve been pretty steady the past several years,” he said, referring to both Tekoa and the regional market in general. “I think we’ve managed to stop some of the bleeding from six or seven years ago. We’ve had minor growth — nothing off the charts — and that’s what we’re probably going to see this year.”
Mike Zaranek, head pro at Crumpin Fox, a higher-end course in the Franklin County community of Bernardston, agreed.
“We had a good year last year, with about the same number of rounds as we did in 2013, which I really can’t complain about in this golf world,” he said, adding that this was despite a similarly late start, April 19 to be exact. “Our membership has been hanging on — the numbers are steady, which, for our neck of the woods and this business climate, is pretty good.”
Even Kennedy, despite his apprehension about a late start, takes a decidedly glass-is-more-than-half-full attitude as he talks about the local market, the state of the sport, and the industry’s prospects for the future.
“I tend to be a little more optimistic than many,” he said. “There are some people in the industry, and not just locally, who prefer to sit around and whine about the golf industry and how bad it is. It’d definitely challenging, but I think the game is healthy, and we can grow it.”
Still, challenges abound, and for this issue and its focus on sports and leisure, BusinessWest looks at how they are forcing clubs to bring their A-games to the table in order to post some solid numbers.
Par for the Course
To summarize the state of the game and the environment in which clubs are operating today, Kennedy summoned some numbers to get his points across.
“In 1995, there were about 25 million golfers,” he said, noting that was the year before Tiger Woods joined the PGA tour and inspired people of all ages to not only watch the sport on TV, but take it up. “And in 2013 there were … about 25 million golfers.”
In between, or roughly around 2000, there were maybe 31 million or 32 million, he went on, noting that this surge, fueled by Woods and a strong economy, was greeted with a wave of new course construction that was country-wide and included Western Mass.
Indeed, this region saw the construction of several new tracts, including the Ledges in South Hadley, the Ranch in Southwick, and, most recently, Cold Spring in Belchertown.
“The overall supply of golf courses skyrocketed — every developer wanted to build 100 condos with courses around them,” said Kennedy, talking about the scene nationally, adding that demand is currently what it was two decades ago and much less than at the start of this century.The laws of supply and demand dictate that there would be some attrition, that some courses would fail, he went on, noting that this happened nationally, with several hundred courses closed or soon to close.
But it hasn’t happened regionally, where the inventory has only grown.
And that has left clubs and their managers to take whatever steps they deem necessary to compete, he went on, adding that this means keeping prices stable (the two Springfield courses have not had an increase the past three years, for example), adding value wherever possible, focusing on good customer service, and, in many cases, marketing themselves far more aggressively than they did years ago.
Altobello agreed, and noted that the greater inventory of courses, even just a few new layouts, impacts everything from daily fee play to league play to the myriad outings and charity tournaments staged each year. And it all matters when there is already little margin for error.
“We’ve lost a few tournaments to some of the newer courses,” he said, noting the Ranch specifically because of its proximity. “Every new option out there hurts a little bit and dilutes the business for the rest of us.
“The real issue around here is saturation,” he went on. “It’s great for the consumer — this is a wonderful place to play golf — but not so great for course owners and operators.”
Using his own specific competitive situation, or “micro-climate,” as he called it, to illustrate his points, Altobello said that, although he’s competing against courses across the Pioneer Valley, the situation in his own backyard is especially intense.
Indeed, there are six public or semi-private courses in Westfield and neighboring Southwick alone — Tekoa, East Mountain, and Shaker Farms in Westfield; Southwick Country Club, Edgewood, and the Ranch in Southwick — along with two driving ranges and a par-3 course. And they serve only about 65,000 people, said Altobello.
“That’s a huge number — this is a tough environment to compete in,” he told BusinessWest, adding that a few of those courses are offering “ridiculously low” yearly rates to woo members and keep the daily time sheets full.
Given this competitive climate, Tekoa and other higher-end courses are forced to compete on quality, because they can’t compete on price.
“I certainly feel that our facility is a little better, and hopefully that wins out in the end,” he said, adding quickly that, while quality is important to some, increasingly, the golfing public is being motivated by rates and deals.
That’s because there are so many of them — available through coupon books, Groupon, Golf Now, and other online phenomena, and individual courses looking to drive traffic, especially on the slower weekdays, through golf-and-lunch specials.
“Some people are just looking to get out quick and get the lowest price available,” said Altobello. “It’s different strokes for different folks.”
Zaranek agreed. “People will ask, ‘what’s the special of the day?’ and ‘how much is this going to cost me?’” he said, adding that many will look to do better than the prices posted at the counter. “Everyone wants a deal — that’s the battle you fight.”
At Crumpin Fox, where daily rates average around $100, the club has to specifically focus on those for whom quality and excellent course conditions are a priority, he added.
“There are some places south of us where people can play three rounds for what it costs to play one at Crump,” he explained. “Our job is to get them to come up and understand the value attached to that high-end daily-fee golf course — how you’re treated, the experience you get, the golf holes you remember, the conditions you play under — and make it worth their trip once, maybe twice a year.”
Meanwhile, there are many other challenges for club owners and professionals — everything from declining sales of clubs (generally, people are holding onto equipment longer than they did even a few years ago and buying last year’s models at a fraction of the cost of new sticks) to a younger generation that seemingly has no patience or passion for a game that takes so much of their time.
“The retail side of the business has changed considerably since the recession of 2008 and 2009,” said Altobello. “Guys aren’t spending money like they used to, and the equipment makers have trained people on when to buy; the 2015 driver is $400, but the 2014 driver is now $149. Is the 2015 driver $250 better than the 2014 model? Probably not. And when the next new driver comes out, people will know to wait it out.”
As for attracting younger audiences — and even those a little older who have similarly stiff competition for their time and attention — clubs are doing what they can to spark interest and hold it.
But it’s an uphill battle.
“Young kids want instant gratification — they want to pick up their phone and play a game, they want to go do this and then do that,” Kennedy explained. “Five hours? If I tell my daughter she’s going to have something good in five hours, she looks at me like I have seven heads. Five hours? How about five minutes? That’s what they have patience for.”
Despite those sentiments, clubs are being more aggressive with programs aimed at attracting younger audiences and, when possible, keeping them in the game, said Zaranek, noting that Crumpin Fox has pricing programs for families and juniors. Meanwhile, it is stressing options for time-strapped individuals, such as nine-hole outings or even playing a handful of holes.
Clubs are also working hard to keep younger individuals and families interested in golf through that challenging period when they are otherwise preoccupied with their career and their family.
Altobello said an all-too-common pattern is for young people to start playing the game in high school, maybe stay with it through college — although that’s challenging as well — but then drop the game when the responsibilities of parenthood and their career consume most all of their time.
“I don’t think the 17-and-under crowd is playing any less than they were 10 or 15 years ago,” he explained. “But I think that, as they get into business and get into their 20s, it seems like we lose them for about 10 to 12 years.
“The whole dynamic of the family has changed over the past 25 or 30 years,” he went on, adding that, while this isn’t a recent phenomenon, societal changes have amplified its impact. “Today, both parents are working, and kids are into more things — and parents need to be there, whether it’s a soccer game or practice or dance. It’s a time factor.”
The challenge for clubs is to try to keep people in the game, he went on, or at least make sure they get back into it when their children get older and time is more plentiful.
There are some positive developments, said the pros we spoke with, although the impacts are more likely to be felt down than the road than in the present.
One is the retirement and pending retirement of the huge Baby Boom generation, said Altobello, adding that this constituency has two things the golf industry requires — time and, generally speaking, disposable income. And many have the wherewithal to retire early.
“The real factor for most people is time,” said Altobello. “If you have a family and you’re working, you just don’t have a lot of time. Anyone who’s retiring early, people in their late 50s and early 60s — that really helps out, and we’re seeing more of those people, men and women, out there.”
Spring in Their Step
It will probably be at least mid-April before they’ll be out on many of the courses in this region.
That later start will only add to the many challenges facing golf-course owners today as they deal with changing societal patterns, lingering effects from the recession, a time-challenged population, and, yes, the weather.
In this climate, ‘steady’ is a reasonable goal and, in the end, a good number on the scorecard.
George O’Brien can be reached at [email protected]