The Golf Business Faces Some Formidable Hazards
Grinding It Out
Two decades ago, people were clamoring to get into the golf business. It was seen as an almost can’t-miss proposition, and individuals and municipalities alike were looking to cash in. Things changed in a hurry, of course, and today, operations are struggling to stay in the black. To do so, they must be imaginative, flexible, and diverse.
For several years now, area golf-course operators have been saying there’s at least one too many courses in this region for the collective good, especially given the downward trajectory of the business as overall play has declined.
With the accent on ‘at least.’
Well, now there is actually one less track in the Greater Springfield area with the sale last fall of Southwick Country Club to an area developer. Where once there were fairways, greens, and tee boxes, there will soon be homes priced at roughly $300,000 and above.
Just what kind of impact this development will have on the region’s golf industry remains to be seen — Southwick was a relatively small operation, but the course had several leagues, was popular with women and seniors, and had a loyal core of regulars.
“Those people and those leagues will have to play somewhere,” said Ted Perez Jr., long-time pro and co-owner of East Mountain Country Club in Westfield, a truly family-run operation launched 55 years ago by Ted Sr. “They’re not going to stop playing, they’re not going to quit the game, so they’ll have to go somewhere else; that much is clear.”
What is also abundantly and even painfully clear is that the problems facing all golf-course owners and operators, public and private, are not going to be solved or even remotely dented by one course closing its doors. Those problems are far too systemic for that.
That’s why Perez and others we spoke with believe it’s not a case of whether other courses will join Southwick as casualties of a changing landscape, but when. While there is no consensus on when it will actually happen, the overriding sentiment is ‘soon,’ which is obviously a relative term.
Meanwhile … in professional golf, when a player has to work exceedingly hard to make pars and keep from falling down the leaderboard, those analyzing the action on TV like to say that he or she is ‘grinding it out.’
And that’s exactly what area courses are doing — working exceedingly hard so as not to lose ground, as in revenue or profits.
These exercises in grinding it out take many forms, and the efficiency of some of them can certainly be debated. And one large realm that falls in that category is pricing.
Many courses are actually lowering theirs, even as the cost of everything from fertilizer to health insurance for employees continues to rise. Meanwhile, others are adopting what is now a common practice among airlines and hotels — dynamic pricing.
In these scenarios, open stretches on the tee sheets can be filled by discounting those slots in the same way that hotels will let unsold rooms go at below-rate prices on the theory that an occupied room is better than a vacant one.
Jamie Ballard, head pro at Crumpin-Fox Golf Club in Bernardston, said the club is now using dynamic pricing, and it is helping to fill in more lines on tee sheets and get people on the course.
“The margins in golf are so thin now, you have to value every tee time,” he noted while explaining why the club utilizes a company called Golf Now to handle its tee sheet use dynamic pricing to fill slots that may otherwise go unsold. “We don’t ever want to cheapen our brand by giving things away, but if I have a block of tee times on a weekend from 10 to 12 that we’re telling to sell our $100 rack rate that’s not booked, we have to find a way to fill that tee sheet more.”
But others, like Perez, who called such tactics part of what he termed the ‘race to the bottom,’ and Dave Fleury, owner of Crestview Country Club in Agawam and Elmcrest Country Club in East Longmeadow, see inherent dangers in discounting the product, especially the fear that people will be reluctant to pay full price.
“Sometimes it gets like a market in Morocco,” said Fleury, referring to the growing amount of price negotiating going on in golf now. “Golfers are much more emboldened to basically try to demand the price they want to pay, and that’s not really good for the game.”
Meanwhile, there are other elements to grinding it out. These include changes and improvements to make clubs more customer-friendly and especially family-friendly. And this involves both public and private courses; among the latter, Springfield Country Club initiated a massive makeover last year coinciding with new ownership, and stoic Longmeadow Country Club is making nearly $5 million in improvements this year (see related story, page 28).
And then, there’s diversification.
Diversification? Yes, there’s always been some of that at golf operations — from weddings in the clubhouse to snowshoeing on the course. But now, there’s much, much more of it, out of necessity. And it comes in all forms — from Easter brunches to bands to comedy nights, as we’ll see — in an effort to create critically needed revenue streams.
At Waubeeka Golf Club in Williamstown, in the far northwest corner of the state, diversification and grinding it out are being taken to new and intriguing levels. Indeed, Mike Deep, a real-estate business owner who bought the club five years ago to keep it from closing, is advancing plans for an elaborate resort at the course.
Plans are still in the developmental stage, but he can envision dozens of small cabins, a large conference facility, a banquet hall, and more. It’s an ambitious plan, he said, but the current landscape demands such boldness.
“You can’t stand still in this business — you’ll get run over,” he said, speaking for everyone involved in golf. “You have to change, and you have to think differently.”
Setting a New Course
The wall behind the desk in Dave Fleury’s office at Crestview goes a long way toward explaining all of what’s happening in golf today.
Indeed, space that years ago would probably have gone toward pictures of Fleury with many of the golf pros he’s met during a long career in course design (and he has a few of those around) now boasts posters announcing different events Crestview has staged over the past several years.
And the depth and diversity of these events gives new meaning to ‘diversification’ in the golf business.
There are appearances by bands, a Harley night, brunches, comedy nights, a Kentucky Derby party, cruise nights … you name it.
Fleury displays these posters … well, because he’s proud of them; he helped design them. But as a group, these events show in a powerful fashion just how much this operation has changed.
Years ago, Crestview was a private course, and the focus was on golf and the membership. Period. There were no Harley nights and no U2 tribute bands playing there.
But today, more than 70,000 people make their way down the winding road to the Crestview clubhouse annually, by Fleury’s estimates, and only a small percentage of them will take golf clubs out of the trunk.
The rest will be going to the restaurant, using the pool, checking out vintage cars, or taking part in what Fleury called “block parties,” events that become important revenue streams. Ton sum up how it works and what it means for the operation, he borrowed terms from baseball, not golf.
“There are very few home runs in this business,” he explained. “So if you can hit a lot of singles and doubles, then you can stay in business. If you look at every event like that, as long as we make a reasonable profit and we’re doing a good job of what we do, then they’re well worth doing.”
This is how it is now and will be moving forward, said those we spoke with.
Why? Well, let’s start by going back to where we started — the now-closed Southwick Country Club. A visit there provides some some intriguing perspective, geographically and otherwise, on a changed but still-crowded golf landscape.
Indeed, one can actually see another course from what used to be Southwick’s first fairway — the Ranch is right down the road, although it is a world away when it comes to price, quality, and amenities. And there are two more public courses within just a few miles of Southwick’s driveway — Shaker Farms Country Club in Westfield and Edgewood Country Club in Southwick. Tekoa Country Club, also in Westfield, is maybe three and a half miles away, and there are three more public courses just over the line in Agawam — Oak Ridge, St. Anne’s, and Agawam Country Club. East Mountain Country Club is only six miles away.
Things aren’t quite as crowded on the east side of the Connecticut River, but there are plenty of choices there as well.
There is simply an oversupply, said Fleury, adding that it would have been hard to imagine such a scenario 20 years ago. That’s when Tiger Woods was creating huge amounts of energy and interest in the game — and the business — of golf.
SEE: List of Golf Courses
A stroll through the BusinessWest archives puts things in perspective. The headline on the cover of the May 1997 issue (this was a monthly back then) said it all: “Going for the Green: Round Numbers Are Adding Up for Golf Entrepreneurs.” One of the principals behind the Ranch project, talking about a surge in play at area courses, said at the time: “all you have to do is open the cash register and point to the first tee; everyone wants to play these days. You’ve got to get that $20 bill out of your pocket fast … because there’s a guy in line behind you who has his out already.”
But things changed relatively quickly, from a business-cycle perspective, and there’s no better evidence of this than the Ledges Golf Club in South Hadley, arguably the poster child for a struggling industry.
A municipal course — meaning it’s owned by the town — the Ledges was conceived just as Tiger and the game of golf were booming and it seemed like things would stay that way forever. Golf wasn’t a get-rich-quick scheme, per se, but for many private developers and even towns like South Hadley, it was something close to that.
Until it wasn’t.
Which, in the case of the Ledges, was essentially right away; from the start, it has been a losing proposition. The town’s manager said last fall that it has lost almost $9 million since the first foursome went off in 2001. And, remember, this was sold as a can’t-miss revenue generator!
The Ledges is still operating, but it is on the golf-business equivalent of life support. Town officials have said that, if things don’t turn around this year, they will pull the plug, and the course will close and revert to parkland.
If that happens, there will less competition for area courses, but the region will still be saturated, if not oversaturated.
And those in the business will still be grinding it out — or not. As noted earlier, more casualities are expected.
In the meantime, course operators will continue looking for ways to bring more people to their doorsteps — for golf or anything else that will generate revenue and help keep people employed.
This is the broad topic that is dominating regional and national meetings of golf-course operators, said Deep, adding that he has now attended many such gatherings.
“We have to change how people think about golf,” he said while summing up the broad assignment, which is even more daunting in Berkshire County, which has, as Deep noted, among the highest rates of golf courses per capita. There are 14 of them, by his count, and they are all fishing in a pool that seems to get smaller each year.
There might be only 13 if Deep had not stepped in five years ago. Waubeeka was losing about $400,000 a year at the time, he said, adding that he was confident (and now he has no idea why) that he could turn things around quickly and profoundly.
Instead, he could do neither, although he did make progress, reducing those losses consistently to where the club is now maybe $100,000 in the red. “We’re going in the right direction, but there’s no way anyone can continue to lose that kind of money,” he went on, adding that this reality prompted the plans for a destination hotel and convention facility, something the area lacks and needs.
Preliminary plans call for what Deep called a “village,” with a new clubhouse, a dining facility for 300 or more, and cabins scattered around the property. The project would be built in phases, and 2020 is the goal for the first stage.
To borrow another phrase from those television analysts, this ambitious move is, like a reachable par 5, a risk-reward scenario. There is considerable risk, but also potential rewards. And this is what is going on across the industry, albeit on a generally much smaller scale: Taking risks to realize rewards.
Put another way, and to paraphrase those we spoke with, the biggest risk comes in doing nothing and simply hoping the golf gods (ask anyone who plays) will smile on your operation.
One of the risks being taken is lowering prices, a difficult step at a time when other costs are escalating, but a necessary one for many clubs.
Crumpin-Fox is in that category, said Ballard, noting this step wasn’t taken lightly and is considered a calculated response to the changing landscape.
“Whether you like it or not, this is a business,” he told BusinessWest. “We might love our golf course and say, in our opinion, that we don’t have any competition, but the reality of it is we do. And if you have options, price is one thing that people consider.”
Other risks are more minor in nature and reflect Fleury’s comments about hitting singles and doubles — a discussion that prompts Perez to talk about ‘upstairs.’
That would be East Mountain’s expansive yet flexible ballroom.
“My brother, Mark (also a partner in the EMCC operation), talked about this six or seven years ago — he said we had to start using upstairs more,” said Perez, adding that, while the facility had always played host to weddings, chamber breakfasts, Rotary meetings, and more, it was clear that it was still being underutilized as a revenue generator.
To get his point across, Perez referenced Trivia Night, or the latest in a series of them, staged on the Thursday night before he spoke with BusinessWest.
“We do it from the first Thursday in October until the last Thursday in March — that’s six months,” he said, adding that an average turnout would be 40 players, or about eight teams.
That’s not a large number of people, but most of them order food and drinks, and thus it becomes well worth turning the lights on. The goal, obviously, is to do this as many nights of the year as possible. And East Mountain does this with bands, comedy, and more.
“Pretty much every Friday, we’ve got something going on upstairs,” he said. “You don’t make a lot of money with it, but you keep people coming here, and you keep a few dollars going through the system.
“You realize why nightclubs open and close all the time,” he went on, referring specifically to the decidedly hit-or-miss nature of booking bands. “It’s nice to have, but thank God we don’t have to make a living with that.”
In many ways, though, golf-course operators do have to make a living with such events — or at least a part of their living.
“That’s part of the new reality,” said Fleury, noting that, if clubs do not adjust to it, then they increase their risk of being the next casuality.
As he talked with BusinessWest, Deep offered an observation that many in golf have made over the past few months: Tiger is back.
Indeed, he is playing on the tour again after almost three years of being sidelined by back ailments and surgeries to correct them. And he’s not only playing, he’s competing at a high level, with a few top-10 finishes.
His presence has been noticed in a number of ways: TV ratings have soared, attendance at the tournaments he’s played in has skyrocketed, competitors paired with him are complaining about how hard is to play in front of such huge galleries, and anticipation about the upcoming Masters is off the charts because he’s listed among the favorites.
“Tiger coming back is good for the game,” said Deep, expressing, without actually saying as much, the hope that maybe Woods’ comeback can fuel some sort of resurgence for the industry.
Maybe, but what’s more likely is that Tiger’s return will be like the closing of Southwick Country Club — it will help, but it won’t change the big picture.
No, course operators are going to have to keep grinding it out.
George O’Brien can be reached at [email protected]