The Week That Was, july 29, 2012

united states Some Dealing from Wheeling

An investor from Wheeling, West Virginia has purchased a major piece of golf history for just $410,000.

The unidentified investor agreed to buy Oakhurst Links, one of the nation’s oldest golf courses, at an auction held yesterday. The nine-hole track was built in the mid 1880s and requires its customers to play the 19th-century way, with hickory-shafted clubs and gutta-percha balls. Kilts and knickers are optional.

The seller, Lewis Keller, Sr., is 89 and has been trying to sell the course for several years. Just a year or so ago, a group from Richmond, Virginia had offered $2.5 million for the 30-acre property, but it couldn’t secure the financing to complete the transaction.

The Associated Press reports that Keller was “disheartened by the winning bid” and the “lack of interest” that “the golfing industry” showed in his course.

“I felt like it was worth more to the world of golf than it is,” Keller told the news service.

Keller believes the prospective owner will maintain Oakhurst Links’ traditions and run it pretty much the way he did. The course is listed on the National Register of Historic Places.

worth reading An Update on the Bleeding

Is the financial condition of U.S. golf communities even worse than cynics like me believe it is?

A week or so ago, Nancy Keates of the Wall Street Journal delivered a gruesome account of the price-slashing that’s taking place at some high-profile golf communities these days. Sadly, she writes, $150,000 lots are being dumped for as little as a dollar, and initiation fees at some high-priced spreads have been cut by six figures.

This is part of the fallout from our industry’s development binge. Most everyone believes that prices have bottomed out, but there are clearly a lot of property owners who are being squeezed.

Here’s part of Keates’ report on the decline and fall of the golf community:

The past two decades saw an unprecedented boom in the building of high-end golf courses linked to luxury real-estate communities. Betting that aging baby boomers would embrace golf as their pastime of choice, the National Golf Foundation set a goal of building “A Course a Day” beginning in 1988. Real-estate developers teamed up with top-name golf-course architects, building exclusive communities adjacent to courses and requiring homeowners to pay annual club dues -- sometimes even if they didn’t play. Then, in a moment of spectacularly bad timing, both the golf industry and the real-estate market took a nose dive at once.

Now, private golf communities are dealing with the fallout. Many sellers are dropping their prices radically, in some cases even paying people to take their land. Gated communities that once traded on their exclusivity are aiming to appeal to a wider swath of buyers, building family-friendly “village centers” with ice cream shops, hiking trails, and bowling alleys. A few are even “repurposing” by reducing courses to nine holes from 18 and selling off the reclaimed land. . . .

From 1990 to 2003, some 3,000 new courses were built in the U.S., swelling the total number of courses nationally by 19 percent and costing about $20 billion, according to the National Golf Foundation.

Many of these new courses were inextricably linked to the luxury real-estate market. About 40 percent of the courses built during the 1990s were tied to real-estate communities -- a shift from the previous decades, when that number was closer to 18 percent and the vast majority of golf courses didn’t have people living on them. The golf courses were the lure to get people to buy houses: The bigger the name of the architect who designed them, the greater the prestige and the more expensive the real estate. . . .

Many of these courses designed by brand-name golf-course architects were championship-level, too difficult for the average player. They took a long time to play and cost millions a year to maintain, pushing up annual dues.

“It was a perfect storm,” says David Hueber, former president and CEO of the National Golf Foundation.

talking points Another Update on the Bleeding

The U.S. golf business continues to lose its most important asset -- its customers -- at an alarming rate. In 2011, we lost another 1.9 million golfers. We’re now down to about 25 million.

I know, this is no surprise to most of you. But you may be surprised to learn who we’re losing.

Jim Koppenhaver, the president of Pellucid Corporation, says that in 2011 “the largest departing age group” consisted of players between the ages of 18 and 34 and “the largest declining group” consisted of players earning $75,000 or more a year. Once upon a time, people in these groups were our bread and butter.

Writing in July’s Pellucid Perspective, Koppenhaver put the losses in perspective:

We shed almost 2 million golfers, or 7 percent, in 2011. . . .

Golf’s consumer base now stands at the threshold it crossed in 1990, during its growth trajectory. An inconvenient truth not pointed out among the industry eternal optimists is that back in 1990 the population was 25 percent smaller than today, which means in participation (i.e., relevance to the total potential participant universe), we’ve declined from being a sport of choice to nearly 11 percent of the population to today’s level of under 9 percent of the population. . . .

Adding insult to the injury of us collectively (Pellucid included) presiding over an unprecedented decline in the golfer base since its apex of 30 million in 2002 is the fact that this is occurring in the face of the most expansive player development effort ever undertaking in the industry.

wild card click  My search for fresh insights into the wired generation continues.