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A trial ballon has floated for quite some time stating golf is recession proof. The basis behind this line of thinking is that the end user is an affluent consumer who isn’t nearly as vulnerable to the arrows and stones of the economy such as the everyday man or woman is. The sport also enjoys somewhat of a halo effect cast by its association with the PGA Tour. As the rank and file that toil inside the ropes week in and out jockey for an annual multi-million dollar pay check in sexy and exotic locations, it generates a panacea that golf is a world in and of itself. The truth of the matter is that eventually the past catches up with everyone, including golf. Just as banks, auto makers and real estate developers are living proof today that all good things must come to an end, golf could be another industry that has the rug pulled out from underneath it. Not that there has been any dirty pool played as with the instance of the banking industry. No golf has its own inherent challenges, which won’t be on display in the next CBS or NBC telecast.
First and foremost, golf suffers from an over supply of just about everything but the very thing it needs the most, participants. There has been an overwhelming amount of companies, clubs, balls, courses and even tournaments in the US. Can it get any more apparent when you have two private clubs (Isleworth and Lake Nona) playing against each other using PGA Tour players including Tiger Woods in the Tavistock Cup and its televised on the Golf Channel. Who cares?
Please raise your hand if your in NEED of another $400+ driver? What about another oversized one made of titanium? Anyone ... Equipment sales have largely been driven (pardon the pun) throughout the years by technological advancements. In my April 13th posting I shared some rather sobering thoughts from Wally Uihlein, CEO of the Acushnet Company (Titleist, FootJoy and Cobra Golf) with respect to his opinion on future performance enhancements in equipment. Agree or disagree with his position but its difficult not to process what he is saying simply due to the position he has within the industry.
There are a lot of companies, frankly far too many, that compete for consumer sales of clubs and balls. Some are large and others small, but they have been essentially fishing the same waters each and every year. While the game boasts the most recognized athlete in the world, Tiger Woods it hasn’t meant more people have taken up the game, even though he has been at it now for 10 years.
Throughout the industry there are three leading reasons for why people give up golf. In no particular order, its time consuming. “What is happening today, golf is separating the family,” Gary Player, a three time Masters champion said recently. “The father wants to go and play. By the time he gets home, it's taken six hours, and he's got a family. The wife complains about it, and he doesn't feel good about it and he cuts his golf down and so golf goes down.” There is a lot of truth in what he says.
The fact of the matter is golf is also a very difficult game. Even the very best players acknowledge they spend more time losing than ever wining. “I wish I had your success rate winning 91 percent of the time,” Greg Norman confessed to his wife Chris Evert. For some male egos, getting humiliated by a little white ball isn’t worth the effort and after a while they decide it isn’t for them.
But perhaps the biggest reason is cost. If you have ever tallied up the cost for a new set of clubs or rationalized the chance to play Pebble Beach its a lot harder to justify now that that the world money flow isn’t quite so liquid. There are those who will still pay $400+ for a day at the Beach, but the numbers aren’t what they use to be.
The economy isn’t what it once was and its the old high tide (raises all boats) theory is officially in reverse. Callaway Golf just reported first quarter sales down 26% from a year ago, thus signaling even one of the big boys in golf is feeling the pinch of the economy. Don’t expect it to be the only one. The company said it has completed a 10% employee reduction program. Acushnet is on the record of reducing its employee base by 6%. Nike Inc., which owns Nike Golf, is also laying off 4% of its workforce. The company hasn’t specifically stated how many from its golf division will be affected by the reduction decision.
These difficult and painful decision can easily be attributed to the global economy contracting. While unemployment is much higher in the US than a year ago, some, not all but some of those affected considered themselves at one time to be golfers. Safe to say that is in the rear view mirror for those who have more pressing matters to attend to.