The golf economy

Written by Jim Claggett

Golf’s relationship with the fluctuating economy is a constant battle, but national and local golf associations are feeling optimistic for the remainder of the 2017 season. With budgets back on track after last year, clubs and organizations are looking at what it takes to create sustainability for future seasons, including encouraging and recruiting members to get on the course. For this month’s poll, Alberta Golf wants to know what you think courses should do to help attract new players. So far, over 50% say “make golf more affordable,” with the second most popular answer being “create a welcoming culture.” Share your thoughts with us on our homepage poll. 

For many Albertans, the game of golf is something which occupies their time between late April and late October. It’s recreational, social, exercise and a break from their work schedules. For others, it’s a way to spend a good chunk of their time after they retire. For many others, it’s simply a game. One which thousands of people in this province enjoy or curse-sometimes at the same time, depending on the day.

But for more than 43,000 Albertans (NAGA report 2014) it’s a way of life and one which is not immune to the effects of an economic downturn.

“It has a been an interesting few seasons. When oil prices drop it effects everything in Alberta. Expense accounts dry up, golf tournaments are postponed, corporate memberships are smaller,” said Brent Hutcheon, President of the National Golf Course Owners Association.

With oil hanging around the $50 to $55 dollar per barrel neighborhood many golf courses felt the effects one way or another. Sure, up and down is a good thing for a golfer but not so much for the business side of the ledger.

“Like all businesses, we’re hoping the bottom has already been hit,” said Trevor Goplin, current president of the PGA of Alberta regarding 2017. “You know, that people are planning to play more and spend more and from a pre-book standpoint, corporate standpoint, maybe book more tournaments.”

Some courses saw a drop in the number of rounds played while others recorded slight increases. It seems 2016 was a mixed bag for the industry with no real definable trend emerging.

There were plenty of golfers in the unemployment lines last year, spilling over from 2015 and while they had money they still had to battle through another winter without work.

“We definitely felt it and I think people still played, they just didn’t play as much but curiously enough we had to cut off membership sales because membership sales were very strong,” according to Lesley McMahon, owner of Balmoral Golf Course just east of Red Deer.

One area which certainly saw a drop is the partnerships involved with the PGA of Alberta in running some programs and events, said Tom Grenier, the past president of the PGA.

“I know there’s been a significant reduction in corporate branding, corporate golf balls, merchandise which many of these corporations and companies would purchase through golf professionals at their respective golf clubs and that’s had a significant decline as their budgets have been cut. I mean, they’re not going to spend the same kind of dollars.”

He said support for charity events from corporations was still around but likely came in at a fraction of the support it may have been at in years past.

Goplin says in some cases play at various courses was up slightly as people were travelling less and so playing at courses closer to home. He adds from a tournament perspective though, there couldn’t have been too many courses that saw a rise in that category.

“There’s golf courses that rely a fair bit on tournament play. I’m sort of splitting those up, those full corporate charity events to groups of 40,50 60 that definitely saw that down this past year.”

According to the National Allied Golf Associations report from 2014, golf generates $5.88 billion in total gross production through direct, indirect and induced spending across Canada. In Alberta, the golf industry deposits $2.88 billion into the coffers so when this segment of business takes a hit from an economic downturn it’s noticed. But 2016 was basically a double bogey for golf in Alberta. Along with the economic hit, the weather played a significant role last season, especially in the area of green fee players.

Goplin said talking to other PGA members, they saw more people playing less simply because of the seemingly regular build-up of thunderstorms through the day and rain starting in the late afternoon in July and August.

“People were back at their office desks in 2016. I talked to a lot of people who said they were having to work because they may have lost staff and don’t have enough support so they couldn’t get to the course until say 4 o’clock, five o’clock and then there was another rainstorm.”

While some courses saw a drop off in play, others were apparently trending upwards.

“Some clubs saw their best public green fee year ever,” said Hutcheon. “This would be because of a few factors. Early season hype, more time to play with less work requirements, people not working who received severance packages, as well as more golf course promotions and specials were available. With all of these factors playing out, the season ended flat for most areas in Alberta, however we needed every one of those extra days to squeeze out those rounds.”

But the golf industry is resilient if anything. Dennis McKernan, executive director of the Alberta Golf Superintendent’s Association says courses have been very frugal in recent years in order to cushion the blow of oil prices and other economic influences on the game.

“In the past five years at least, the trend has been to a better financial model where we’re doing more with less,” he said. “I don’t think last year was any worse than other years.”

But the sport is not completely out of the woods. Fuel costs have gone up and there is the looming carbon tax, the increase in minimum wage and so budgets for maintenance are being scrutinized closely.

McKernan says all courses are looking to maximum dollars to increase efficiency due to the cost of water.

“But we’re also looking at how we can utilize a fertility budget better than we have in the past. Is there some ways where we can use the same number of dollars and still supply the turf with the nutrients in a different way than we have in the past to make it more efficient?”

In another part of the industry, course owners/managers are exploring new ideas to attract more golfers and keep the ones they already have. Golf is in competition with so many other interests these days the creative aspect of this task has increased, said McMahon.

“To get people just motivated to get out of their house and do something, which might be hard for an avid golfer to get but I think people are just slower to take up new things. We have to change that.”

Hutcheon says it’s all about diversifying what you present as a product to the public.

“You need leagues, tournaments, members, group bookings, corporate members, and public golfers. The more slices your pie is cut into the more stable your business,” he said. “All facilities need to be aware of all the new and possible communication tools available to them to improve their business.”

Moving forward the feeling within the industry appears to be it’s not all doom and gloom with the belief golf will continue to be a strong contributor to the economy, starting with this year.

“The economy is on the up-swing,” said Goplin. “Now you can argue the degree of trajectory but it is.”

The past two years saw many a corporation cut back on things like sponsorship but McKernan feels it’s going to swing in the other direction soon.

“I think we’re going to see a lot of companies come back and retool their business plans. I think a lot of people look at golf as a corporate sponsorship event that has great meaning to their business plan and their business model,” he said.

Grenier says what he’s been hearing around the Calgary region is both positive and realistic.

“I think there’ll be a small improvement by the sounds of it but we still have a long way ahead of us.”

No amount of marketing can keep you busy when it’s pouring rain outside said McMahon but courses need to grab hold of the situation and make it work any way they can.

“There’s things you can’t control, like the price of oil and the weather but there’s things you can control and things you can be doing,” she said.

With so many factors involved in how golf is impacted like taxation, water usage, and the minimum wage course operators are faced with a daunting challenge.

“Golf has been run in a certain way for decades and it will take time, effort and education to catch up to other industries such as hotels, airlines, and car rentals. There are many opportunities in golf moving forward with some adjustments,” said Hutcheon.

He added while it’s tough to pin down just where the strength of the industry is now he feels strongly about golf in the future.

“I believe the interest in the game is still high. Most leagues are still full, and our prime times are still busy.  We need to get creative and encourage more people to come to the course.”

So get out and play this summer. You’ll get some exercise, some enjoyment, meet new people and at the same time support an important piece of Alberta’s economic engine. That’s a win.

The Golf Economy

This article was originally published in the 2017 edition of The Alberta Golfer Magazine. To view the full magazine, click here.

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