The Week That Was, may 27, 2018

     Last week, an analyst on CNBC bashed the Gap, the slumping international retail chain. In particular, he noted that the company’s stock is nowadays trading at the same price it sold for in 2000, and he suggested that only a fool would invest in an enterprise that hasn’t made any progress for nearly two decades.
     Which brings us to Joe Beditz, the president of the National Golf Foundation, who proclaimed in a recent commentary that these days golf “looks much like it did 20 to 25 years ago,” with a comparable number of facilities (close to 15,000), a comparable number of golfers (roughly 24 million), and a comparable number of annual rounds played (about 450 million). In other words, it’s a business that hasn’t made any progress for a generation.
     But Beditz is the NGF’s chief salesperson, so he needs to sell potential investors (not to mention the industry’s rank and file) on the future of golf. The thing is, he’s doing it with suspect data.
     Citing statistics from the NGF’s new “Golf Industry Report,” Beditz acknowledges that the number of golfers in the United States has dipped to 23.8 million, but he tries to shift our focus to the 8.3 million people who last year played a version of “off-course” golf such as Topgolf. By combining traditional golf’s declining number with pseudo-golf’s increasing number, he happily touts 32 million as “the game’s overall participant pool.”
     This number sounds good, certainly better than 23.8 million, but it’s an illusion. Its existence is tied to another doubtful claim, namely the one about the pipeline of players that will inevitably come to golf as a result of “latent demand.” Suffice to say that the NGF has been peddling the importance of “latent demand” for years, and participation continues to wane. In the corridors of the NGF, hope springs eternal.
     For years now, in an attempt to gloss over golf’s problems, the NGF has engaged in what might be called imaginative thinking. This is a dangerous strategy for an industry leader, because a person’s imagination can be stretched only so far before it snaps.

     The key takeaways from the National Golf Foundation’s freshly published “Golf Industry Report”:
       – The NGF counted 23.8 million golfers in 2017, a number that the Jupiter, Florida-based trade group believes will serve as “a new support level” over the near term. It’s worth noting that the United States had 30 million golfers in 2005 and that in 2010 the NGF predicted that the number would reach 30 million again by 2020.
      – The number of rounds played in the United States last year fell by 2.7 percent, to 456 million. For context, our nation’s owners and operators rang up 518 million rounds in 2000. The NGF suggests that more rounds would’ve been played in 2017 if the weather had been better.
      – The pace of new construction continues to limp along, but the pace of closures remains strong. The NGF reports that just 15.5 “18-hole-equivalent” courses opened last year, while our nation lost 205.5 “18-hole-equivalent” courses. After crunching the data, it was determined that in 2017 the total number of U.S. golf facilities fell by 1.5 percent. The NGF views the reduction in supply as “a natural economic response” to “a competitive and over-supplied environment” and predicts that the shrinkage will persist “for several more years.” In 2018, it expects that our industry will lose roughly 150 additional “18-hole-equivalent” courses.
      – As of year-end 2017, the United States was home to 14,794 golf facilities – 45 percent of the world’s total supply.

     Golf development is still going like gangbusters in Vietnam, but the nation’s golf operations appear to be a different story altogether. According to Voice of Vietnam, a top official of the Vietnam Economics Institute fears that the socialist republic’s golf business will struggle because golf courses “don’t bring high profits, as it is very difficult to attract players.” Echoing that sentiment, the Ministry of Planning & Investment concedes that some Vietnamese golf venues “have been unprofitable” – a significant acknowledgment, because last year the ministry proposed to change the legislation that regulates the number of golf courses that can be built in Vietnam through 2020. As things currently stand, Vietnam can have 96 operational courses by then, a number that some say isn’t enough.

     An update on the future of Concert Golf Partners, which has agreed to sell 16 of its 18 golf properties to ClubCorp. The properties that Concert intends to keep are Fountains Country Club in Lake Worth, Florida and Muttontown Club in East Norwich, New York. In a text message, Peter Nanula of Concert writes that he’s holding on to those two because they were “recently acquired.”

     Duly Noted – The unfortunate, racially charged incident that occurred last month at Grandview Golf Club has become the subject of an investigation by the Pennsylvania Human Relations Commission. I’m still waiting for one of golf’s institutional leaders to say publicly that discrimination of any kind, whether intended or not, doesn’t reflect golf’s values. . . . In his latest financial disclosure, the U.S. president acknowledged that his Doonbeg resort, in County Clare, Ireland, generated just over $14 million in what was described as “golf-related income” last year. He believes the property is worth between $25 million and $50 million. . . . As if losing his golf resort in Shropshire, England isn’t punishment enough, KK Downing is being forced to sell a share of the royalty rights he earned for 136 songs recorded by Judas Priest.