From boom to bust?

The golf recession is for real both here on the North Shore and beyond. But is it permanent? And what are local courses doing to fight it?

By Chad Konecky

He could be riding an ordinary hot streak or maybe it’s a new grip he’s using on the composite shaft with which he plies his trade, but there’s a rising pro on the circuit you should know about.

He pulled down more than $470,000 last year via a handful of lavishly televised tour events staged by one of the sport’s two pro circuits, which paid out $30 million in prizes in 2005 as part of a $75 billion annual industry. Of course, the pro we’re talking about is Kevin VanDam and the association that he dominated was the CITGO Bassmaster Pro Fishing Tour.

Rounds at a glance For a sampling of how the golf recession has plagued the region, click here.

While digesting that little tidbit, consider the fact that the National Golf Foundation (NGF) recently reported that rounds played were down nationally last year to the tune of 4.9 percent amongst private clubs and 0.2 percent at public courses. In the Northeast, there was zero growth in private and public same-facility rounds played in 2005 and, nationwide, the population of “core-golfers,” those 18 years or older playing at least eight rounds annually, fell by almost five percent in 2004. What’s more, the fewest number of golf courses opened nationwide in 2005 (124.5) since the mid-1980s. That, by the way, is one-quarter the number of courses that opened in 2000. The golf industry, though still growing, seems to be leveling off at $22 billion annually; less than a third of the size of the sport-fishing industry.

One wonders if golf’s era of unparalleled popularity is on the verge of, well, sleeping with the fishes.

Richard Nagle, director of golf at Wakefield’s Sheraton Colonial Golf Course, floats his own conspiracy theory in fielding that question.

“Honestly, most golfers are now going over to poker and Texas Hold’em matches and, I have to tell you, we’re thinking of converting the clubhouse to a casino,” he says.

The 38-year-old Rowley resident pauses just long enough after the declaration to spark the slightest, fleeting suspicion that he is, in fact, serious. He is, of course, joking. But the larger point is anything but a laughing matter: Golf is experiencing a bonafide downturn. Everywhere.

“You think I’d be here answering the phone on February 1st if this weren’t an issue?” demands Nagle, rhetorically. “I’m trying to figure out ways to drag bodies in here this year. If I’d had a bang-up year in 2005, I’d be in Miami right now. Everybody is feeling this thing.”

There is a confluence of factors behind what is a clear dip in golf’s overall bounty, both locally and across the country. A badly winged economy. Spiraling gas prices. Weather-shortened playing seasons. Heck, Tiger’s so-called slump from 2002 to 2004 didn’t help. And we don’t even have a Commander-in-Chief who addictively grips-and-rips anymore; George W. favors mountain biking and fishing.

Some argue golf’s slowdown is simply part of a cycle. Others insist that the air is finally bleeding from an over-inflated balloon. Either way, it’s difficult to know what the future holds.

Voodoo economics

Let’s say a guy living in Rockport feels like a change of scenery from hitting those all-too-familiar nine holes along Country Club Road and agrees to meet a buddy on a Friday at Wakefield’s Sheraton Colonial. Driving his hot-selling, redesigned-for-economy Chevy Tahoe on the 60-mile round-trip journey, our intrepid golfer will return to Cape Ann – tallying up gas money, greens fees and throwing in a light lunch – with a wallet lighter by about $100. That’s for playing on a public course less than a half-hour from his house. That’s pricey.

Diminished disposable income and rising fuel prices arguably represent the tipping point in the NGF’s reported rounds-drop.

“Back in 1998 and 1999, people used to have office meetings on the first tee,” says Gregg Fellows, 32, general manager of Lynnfield’s Sagamore Spring Golf Club. “Now, people need to stay at work. Right after 9/11, we started to see a dip and now we’re seeing a major decline with the economy going downhill.”

“I’ve been trying to jumpstart our numbers for three years and I don’t know what to do,” echoes Mike Flynn, 47, head pro at Lakeview Golf Course in Wenham. “I simply don’t have any answers. Three years ago, you could sneak out of the office at 3:30 and tee off. The boss was probably already out there. Nowadays, you don’t know whether you’ll have a job or not when you come back if you do that.”

A broad spectrum of economic conditions accompanied by abysmal early season and end-of-season weather in the Northeast has severely reduced the volume of beginners taking up the game. Clubs across the North Shore report downtrends in newcomer rounds and a precipitous drop in club-rental business. A narrower window of playing weather carries the dual impact of compressing the average beginner’s learning curve and concentrating beginner out-of-pocket expense into a 12-week bleed, rather than spreading it over six or seven months.

“We see nowhere near the number of beginners we saw from 1999 to 2001,” says Flynn, a South Hamilton resident. “[Lakeview] is a beginners’ and seniors’ easy-walking course. This is where you want to start and we aren’t seeing them.”

“If a newcomer to the game hasn’t played by the time summer rolls around, because we don’t have a spring, that shuts out a lot of potential beginner rounds for the year,” notes Dave MacDonald, 35, store manager of Golfer’s Warehouse in Danvers. “When we go right from winter to summer, it’s too late for a beginner to start.”

Flynn reports that at the peak of his rental-club business in the summer of 2001, a casual player might show up on a Sunday and be forced to hit with his partner’s clubs because all 15 rental bags were out on the course. Today, Flynn maintains five rental bags in the clubhouse and signs out one or two a week.

“Our business is basically made up of regulars now,” says Peter Cronan, 40, director of golf at The Meadow at Peabody. “We see the same faces on the same days.”

X-factors

Former President Clinton held the perfect job at the perfect time for the game of golf. He presided over the longest period of post-war economic growth in the nation’s history and he played the game fiendishly, once teeing off at 2 a.m. The absence of a golf-addicted president can’t be discounted as having an impact upon golf’s popularity backslide. The regressive economy, the Northeast’s uncharacteristically poor spring weather and post-9/11 travel phobia are also factors.

Regionally, the wild popularity of the three-time Super Bowl champion New England Patriots has reshuffled fall social calendars across the region. Three straight postseason appearances by the Boston Red Sox, including back-to-back epics against the Yankees and a World Series title, have shifted regional sports-entertainment priorities between April and October. Nationally, Tiger Woods endured a 22-month drought between major titles from 2002 to 2004, dampening the Big Cat craze. Meanwhile, professional bass fishing evolved from relative obscurity in 2001 to a prized viewership bauble that ESPN and Fox are battling over for broadcast supremacy. The World Poker Tour debuted in March of 2003 and three years later is on pace to dispense $100 million in annual prize money.

Other stuff is drawing our attention.

“People are finding other uses and other places for their money,” adds The Meadow’s Peter Cronan, a Peabody native.

The golf-boom newbies are also now discovering that the acreage between taking up golf and playing golf well is vast and fraught with tribulation.

“Golf is not an easy game and not everyone can play,” says Tom Jones, 26, director of marketing for the Sun ’N Air Golf Center in Danvers. “A lot of people don’t have the time to get great at the game. To go out and consistently shoot under 90 takes time.”

“It’s no fun to chase your ball all over a golf course,” says Lakeview’s Flynn. “Golf is hard. It takes a time-investment to get good. A lot of beginners play a couple rounds and say, ‘To hell with this. I’ll go to a range and kill some balls I don’t have to chase.’”

Counter-measures

Golf courses are waging the same economic war as players on a separate front. The higher cost of fertilizers and other chemicals made from petroleum makes course maintenance more costly. Course operators saw food-service costs associated with petroleum-based plastic disposables like cups, cutlery and other serving ware jump 33 percent last year.

Course owners dealt with continued increases in sectors of food and beverage operations as well in 2005, with coffee prices up 20 percent due to higher demand and limited supply and fresh produce running 15- to 20-percent higher because of rainy, cold weather in the tropics. Chicken and beef prices were up 10 percent last year, while shrimp and tuna prices also spiked by double digits. Courses throughout the Northeast have been forced to make the most of fewer golfers and thinner profit-margins.

“We’ve definitely had to get creative to remain competitive,” says the Colonial’s Nagle. “The pie is getting smaller. We introduced memberships for the first time in 2004. We’ve got a juniors’ and seniors’ rate, which we’ve never seen before on this course. We’re even running a discount-coupon advertisement.”

In spite of those innovations, Nagle says the Colonial’s annual rounds played have dropped from 38,000 at their peak in 2000 to 23,000 last year. That 39-percent falloff is not inconsistent with competing North Shore venues. Other courses surveyed in association with this story reported anywhere from an eight- to 28-percent decrease in rounds played between 2000 and 2005. Even Middleton Golf Course, the pristine par-3 course that has typically been jammed with beginners and core golfers alike, reported a 25 percent drop-off in rounds played since the late 1990s.

Only The Meadow at Peabody, which played its first full season as an 18-hole course in 2002, has dodged a dip in rounds played among the courses surveyed. The course has enjoyed a 26-percent rise in starts over the last four years, topping out at 38,000 in 2005.

“You do need to try to do different things to keep people coming,” concedes The Meadow’s Cronan, who is offering a discount package called the “600 Club” this season. “The best options out there are going to get the business.”

Course operators across the North Shore are welcoming leagues for the first time, adding special hourly and age-group rates and offering gimmicks like prepaid discount cards. Take, for example, The Colonial’s decision to allow senior golfers free greens fees on Tuesdays, including a cart, during the month of May this season. Lakeview has added similar deals.

“On Saturday and Sunday, we offer juniors a $10 greens fee after 3 p.m. and the same rate for their accompanying adult,” says Lakeview’s Flynn. “On Monday through Wednesday, players 55 and over who come before noon play for $10. We’ve seen some bump from that, but not what I anticipated.”

Flynn also reports that Lakeview’s annual charity-tournament volume has dropped from a high of 125 golfers per event five years ago to 60 or 70 last year. The course was host to 20-plus tournaments annually as recently as 2000, including as many as 10 evening events. Last year, those numbers bottomed out at 10 and three, respectively. Tournament-play has taken an across-the-board hit along the North Shore.

“If you have a chance at guaranteed money, you’ve got to take it now,” says Sagamore Spring’s Fellows, a Topsfield resident. “We got rid of leagues back in the late 1980s, but we got back into them in 2005. We need them now. Before, we couldn’t fit people on the course. We prefer to keep the course generally available at all times, but you have to roll with the times.”

Fellows now splits the course on Monday through Wednesday after 3 p.m. for league play. He says a “big gap” persists in weekday play between the hours of 10 a.m. and 3 p.m. Sagamore has also begun offering a web sign-up component (www.sagamoregolf.com) that entitles users to special deals via e-mail bulletins. Guys like Fellows are trying to squeeze every available round out of their course, as evidenced by the fact that Fellows insisted we note that there is “still room for walk-ons during league-play hours as long as they call and make a tee-time.”

Staying attractive as a venue in the face of rising infrastructure costs and fewer golfers is a difficult balancing act. And it’s not just the publics that are suffering. While Essex County Club (1893), Myopia Hunt Club (1894), Salem Country Club (1896) and Tedesco Country Club (1903) can rest on their considerable laurels and the fact that they are legacy-driven, contemporary clubs cannot.

Locally, clubs like the Ferncroft, Thomson Country Club and The Georgetown Club are aggressively seeking new members, as are the majority of the semi-private clubs in the area. Even Tedesco opened its doors to 14 new members this year.

“In what I think is a legitimate downturn, we’ve all had to double down and do a better job satisfying golfers and members,” says Damon DeVito, managing director of Virginia-based Affinity Golf Management, which purchased golf operations at Ferncroft in February. “A club can’t outsource to India. You’ve got to deal with the demographics and the market and the course you were dealt. It’s hard to make new customers. You need to do things that are consistent with the culture of the club, but you’ve got to be in growth mode. You can’t sit in the office and wait for the phone to ring.”

Affinity put its money were its mouth seems to be this past winter, breaking ground on the re-construction of drainage on eight holes the morning after closing the Ferncroft deal. The gesture was one of several demonstrations of good faith that earned the club 110 founding memberships at $25,000 apiece during the first 72 hours of informational, open house meetings with area golfers.

The Colonial’s Nagle says his fees must stay in line with the likes of Sagamore, The Meadow and Lynn’s Gannon Municipal Golf Course for survival’s sake. With that in mind, the course has slashed rates for this season. Flynn reports that his course hasn’t gambled with a rate-increase in four years. Meanwhile, courses must continue reinvesting in the facility to retain their allure. Nagle says The Colonial added more bunkers throughout the course and completed extensive fairway work on holes No. 4, 5 and 6 last year as well as installing a new drainage system on No. 7.

“It’s tough to find the sweet spot,” admits Nagle, who intentionally reduced course tournament play to 40 events in 2005. “We’ve cut back on tournaments because members prefer flexibility of start times, but tournaments are a third of our revenue. That base keeps member-fees down. We all need the outing business and the retail business.”

The two ‘R’s

With rounds played trending down, it would only make sense that golf retail sales would sink accordingly. People don’t need new balls if they’re not hitting them. But according to Golf Datatech, the National Golf Course Owners Association’s contracted data-analysis firm, virtually every category of hard good golf product sales was up in 2005.

Meanwhile, Massachusetts is one of 11 states that support the existence of 80 or more driving ranges, and a U.S. Driving Range survey of the nation’s 2,800 ranges indicates usage is rising. More than five million golfers hit at a range in 2003 – the latest year for which data is available – up 14 percent from the year before.

Retail and ranges are somehow booming.

“It’s inexplicable and yet it makes sense,” says MacDonald, the Golfer’s Warehouse manager and a Lawrence resident. “Technological change drives this industry. The demand for hybrid clubs, for example, is way up, especially last year. All those newcomers that came to the game five years ago are coming back and trying to turn their game over and take it to the next level with the latest technology.”

MacDonald isn’t whistling Dixie. The average off-course golf retail space increased its square footage by four percent from 2004 to 2005. Big-box golf stores with 10,000 square feet or more of retail space are increasing dramatically, currently representing 41 percent of all square footage in the market. Though new-club sales have declined since the 2001 high-water mark of $3.9 billion annually, golf-equipment retailers are far from hurting.

What’s more, a jump in reliable online vendors over the past five years coupled with a spike in new-club prices has created a thriving individual-club resale market. Sales of used individual golf clubs in the U.S. nearly tripled from 1999 to 2003, with more than $40 million changing hands annually.

On balance, golf-equipment retailers are still riding a wave that crested with the arrival of Tiger Woods and the dawn of bigger, more forgiving, metal-headed woods, pioneered by Callaway’s Big Bertha driver. Since then, club technology – more or less stagnant since steel shafts replaced hickory in the 1930s – has mushroomed and manufacturers have scrambled to outpace one another.

“It’s amazing to see the volume of people still coming into the store,” says MacDonald, whose store checks in at 17,500 square feet. “There are still a lot of people watching on TV and viewers want to be like those guys. There are still a lot of families that play and parents introducing kids to the game early. We’re still seeing a lot of golf-related travel too.”

Folks are also apparently taking their clubs – new and used – to driving ranges in droves.

“For less than the price of a movie, you can get your swings in,” says Sun ‘N Air’s Jones. “It’s a fraction of the cost, a fraction of the time and you don’t have to walk that far. ESPN’s broadcasts of the long-drive contests haven’t hurt. Honestly, we have guys that just bring three or four drivers and let it go.”

Ranges boast other built-in advantages, not the least of which is extended business hours at lighted facilities. According to the U.S. Small Business Association, studies have shown that up to 80 percent of a driving range’s revenue is generated after 4 p.m. Ranges also tend to be more family oriented. It’s not generally feasible to occupy a 7-year-old with an ice cream or a golf club at a typical 18-hole course.

“That’s our niche – the beginner,” says Jones, a Hamilton resident. “We have a three-hole course that’s specifically geared toward father-and-son and adult-and-child pairings to introduce people to the game. You can’t send that pairing on an 18-hole course. You’ll have a member uprising and it takes forever. On our three-hole [loop], it’s perfect. It’s not too big, it introduces the game, it’s cheap and it doesn’t take six hours.”

The cult lives

The clear and present belt-tightening in the golf business notwithstanding, the good news is that revenue was up in 2005, with America’s 15 largest operators reporting average revenue increases of two- to five-percent over the preceding year.

Americans’ travel habits are finally bouncing back too, more than four years after the September 11 terrorist attacks. Smith Travel Research reported a three- to four-percent increase in overall travel in the United States last year. Golf-resort occupancy grew as much as six percent with average lodging rates up as much as 20 percent in 2005. Those revenues are now nearing pre-9/11 levels.

Locally, the game is stubbornly hanging on. Tedesco CC, for example, closed its membership waiting list to new additions in 1998 and currently has no plans to reopen it.

“The numbers have ebbed and flowed over the years and golf has always been somewhat of a cult sport,” says Tedesco CC’s Head Pro Bob Green, 56, now in his 28th season in that position. “People will jump on and off the bandwagon, but golf is extremely healthy. You can’t judge this game’s health by the number of players going up annually. It’s not like the movies, where the most numbers matter most. What matters is that we draw people who love and respect the game and build a lasting relationship with it.”

Indeed, most local observers who have enjoyed longtime affiliations with the game aren’t exactly worried about their local front nine getting converted into condos.

“Even when there is a dip in the game, the diehards always play,” says Lynnfield’s Anne Marie Tobin, 48, general counsel to the New England PGA and the 2000 WGAM state champion. “As a rule, it’s easy to get into a club now, but overall, this game has proven itself recession-proof.”