The economic meltdown of 2008 did not create the downturn in the golf industry it just happened to be the convergence point of many key factors which created the Perfect Storm. A storm that turns 10 years old this September.
1. First, you have an oversupply of courses fueled by the infamous National Golf Foundation’s edict to “Build a course a day to keep up with demand.” Oversupply causes price drops and business failures in any industry.
2. Add to this already worrying dynamic the number of courses built never intended to succeed as viable business entities. Instead used to inflate the price of homes, sell hotel rooms or in many cases a pure EGO PLAY. Case in point Adena, in Ocala a spectacular course which closed last week. In this part of northern Florida, you could easily build a course for five million but this billionaire owner who does not even play golf spent in excess of 50 million. Of course, he’s not the only one, despite picking it up “cheap” and with an acclaimed re-model to an already world-class course, Trump will never make a dime at Turnberry, amazingly he even admitted this himself! (According to corporate filings in the UK, Turnberry lost US$36.1 million in 2016 (the most recent figure available) on revenue of just US$12 million.)
There are hundreds if not thousands of these ego courses that are not and never will be financially viable that none the less drain business from courses set up to actually cash flow. There are a few other businesses where you see this phenomenon like restaurants but not many!
3. Next, you have the aging of the population, aging beyond the point where they enjoy golf. At Black Diamond where I was a member for over a decade, the membership dropped from almost 600 to under 300 in the time I was there. Of the three hundred 60 of them where over 80 and at age 48 in 2010 when I quit I was one of 3 members under 50. The scratch group had gone from 40 plus players to 6 guys playing the senior tees.
The price of membership during this period rose from $30,000 and 3,000 a year to $70,000 and $12,000 a year pretty much guaranteeing no younger members would ever join a club located in rural, Northern Florida.
4. Tiger mania begins to wane and then goes into free fall along with his marriage, his clean-cut image, and his game. Ricky, Rory, Jordan, and others have a buzz, but not a mania, one day it will happen again but who knows when?
5. Then you have the massive increase in other options for younger people extreme sports, cycling, MAA and of course surfing the internet and playing video games!
Every form of entertainment is competition for golf, therefore, golf clubs MUST be entertaining at every level possible, few clubs really embrace this truth. (See the “One Strategy” chapter in the Golf Marketing Bible.)
6. Then you have the advent of third-party tee time booking companies both a blessing and a curse. They make it easy for people to book but cut into already diminished margins for daily fee courses. Strategic use of these distribution platforms can be very valuable, even profitable, but since no golf club can actually articulate their marketing strategy, they are usually misused instead.
7. Facing declining membership many previously private clubs started opening their door to daily fee play some changing entirely to a semi-private model. Thus, increasing competition dramatically in some markets where the amount of available golf jumped 20-30% overnight.
8. Facing increased competition from private clubs, decreased play and paying commissions to third parties, courses discount in the hope of generating more play. Thus starts a death cycle, with their loyal customers, who were more than willing to pay the going rate, the first to benefit from the discounts.
9. As golf courses got into trouble they increasingly turned to the large golf management companies, surely, they could save them? Instead of saving them they add $120,000 to expenses and run cookie cutter marketing across a wide range of very different properties far more intent on promoting their brand than the uniqueness of their individual client’s.
Uniqueness not sameness is what allows a company to charge a premium price!
When you go to a resort that has three management company logos on the golf carts and one club logo you ought to realize something is out of whack! Yet owners, boards and pension funds put up with it because it’s too much trouble to do something more creative than check the box; BIG management company, nice dog, and pony show. Five years later they try a different one with the same lackluster results.
10. Finally, you have a course that has 15 years of deferred maintenance, a clubhouse that was young when Nixon was, and an old guard that’s doesn’t want jeans in the clubhouse, cell phones on the course or rock music on the range. They just want their old club to out-last them without doing anything radical in the meantime. There is no marketing budget, no remodeling budget, and no strategic marketing plan.
Despite this perfect storm, many courses will not just survive but thrive in these difficult conditions. Some like my friend Richard Haygarth, will add amenities like Adventure golf and a full-service coffee shop to rival any Starbucks. Others will dispense with their clubhouse, pool, and tennis altogether in favor or pure golf from a starters hut, like back in the old country.
Some with thrive through marketing properly for the first time ever with a real marketing budget and a strategic marketing plan, not just a website, a booking engine and the waitress posting random stuff on Facebook.
Yes, my friends, in every storm, there are opportunities for the bold, the brave, the pirates, and the explorers to flourish and profit. If the above makes sense to you, then you also know you need to chart a different course than the rest of the herd, a herd who are slowly but surely staggering towards a lingering death. Doing what they have always done and expecting different results!
There is plenty of opportunity in the golf business for those willing to chart a different course…
If you have a marketing budget of at least $60,000 and at least average demographics I’ll help you chart a course to success in 2019. For maximum response, you must start your 2019 marketing in September and it takes 30 days to ramp up so NOW is the time! I am only going to work personally with five clubs at this high strategic level, so if you are really serious about moving forward, (most only give it lip service) call me 1-352-266-2099
I’m in Scotland the next couple of weeks so 5 hours ahead of EST. www.LegendaryMarketing.com