NATIONAL GOLF FOUNDATION
tRACKING THE IMPACTS OF COVID-19 ON THE GOLF BUSINESS
Recent NGF Perspectives
November 19, 2020 | Written by: Joe Beditz, NGF President and CEO
Back in 2009, towards the end of the Great Recession, we surveyed U.S. golf courses and clubs regarding their financial health. We did it again in 2016 to see how things had changed, and again over the course of the past few months.
In both 2009 and 2016, roughly a quarter of public courses admitted to being in bad shape, financially. Among private clubs, 21% were doing poorly in ’09, but seven years later that proportion had dropped to 14%.
Did these self-reported financial health measures have any predictive validity? Yes, they did.
- Nearly 20% of the public courses in our previous samples who rated their financial health 0-4 on a 0-10 scale are no longer in business – a 4x higher ‘closure rate’ compared to those on the upper end of our health assessment scale
- A third of private clubs who rated their health 0-4 in those previous studies are now either closed (7%) or converted (26%) to semi-public or public facilities (8x higher rate
So where do things stand today? Much improved. See graphic below.
There’s been a dramatic rise in the proportion of U.S. golf facilities reporting to be in good financial shape compared to our previous studies, including more than half of public courses and nearly 2/3 of private clubs. And, fewer than 1 in 10 (public and private combined) suggest that they’re currently in bad shape (0-4).
For public courses especially, the summer swell has had a profound impact on financial well-being. Coming into 2020, 14% of public courses would have rated themselves in financial distress (down from 25% in 2016), but today that proportion has been cut almost in half (8%), thanks to over 2,000 extra rounds on average.
NOTE: Our 2020 sample consisted of 876 public courses and 337 private clubs, but because 9-hole and value-priced (<$40 rack rate) facilities are under-represented in our sample, a slightly higher overall percentage of public courses may be distressed than our results show.
So, what do the courses and clubs who remain in trouble have in common?
• They are disproportionately 9-hole and/or value-priced facilities (<$40 rack rate)
• They claim to be in oversupplied/bad markets
• They have made little/no investment in capital improvements over the past 5 years, and don’t have plans to make any
The takeaway here is that the overall financial health of U.S. golf facilities has improved significantly since 2016 – a function of stabilizing participation, an improved overall economy and the closing of many lower-performing courses, and now the surge in rounds played. And, with fewer facilities now financially “at risk,” we should expect the rate of closures/conversions to slow down, and the marketplace to find its way closer to equilibrium.
November 5, 2020 | Written by: David Lorentz, NGF Chief Research Officer
There’s an adage in business that 80% of sales come from 20% of customers. This phenomenon – known also as “the law of the vital few” – may not be the universal truth that some suggest, but it does have pretty broad acceptance and application, and is viewed by many as a powerful tool for growing business.
Coincidentally or not, this principle applies nicely to the pandemic-induced lift that golf has experienced over the past five months, as it’s become pretty clear that a certain 20% of existing customers are contributing disproportionately to the outcome. (What follows begins to answer the question we’ve been asked more than any other in recent months: Who’s driving the surge?)
Since March we’ve surveyed several thousand Core consumers, chronicling their sentiments and behaviors and drawing distinctions between different groups, time periods and locations. Within this pulse survey we’ve also inquired about current and expected 2020 golf spend, asking respondents to compare these amounts to 2019 and/or their “typical” annual spend.
The data here is more directional than scientific/projectable, but it’s showed us that 20% of Core golfers will be “over-spenders” this year, while roughly 30% will be “same-spenders” and, believe it or not, half will actually underspend this year versus last (or typical).
This increased spend among the 20-percenters – who represent 2.5 to 3 million golfers nationwide – applies to both equipment and rounds. Over-spenders are 44% more likely to have purchased a driver and/or set of irons so far in 2020 (despite entering the year with equal expectations to buy). And when it comes to rounds, they’re estimating an average increase of 37% for the year (compared to +23% for same-spenders and -6% for under-spenders).
So, who are these over-spenders, you ask? Well, two-thirds are under 50 years old and half are in households making $150,000 or more, which is about 1.5x and 2x more common, respectively, than the average Core consumer. This group is also 23% more likely to live in the Northeast and Midwest Census regions, which supports the state-by-state rounds increases we’ve detailed in previous weeks.
But perhaps the most obvious or expected difference is that this group of over-spenders appears to be a bit more serious about the pandemic. Compared to other Core golfers (8+ rounds annually), they’re:
- 15% more likely to believe that “normal” isn’t returning until the second half of 2021 (or later)
- 15% less likely to feel that their work and personal lives are “getting back to normal”
- 16% less likely to have dined out in the past seven days
- 63% less likely to have visited a crowded outdoor spot in the past seven days
All of these observations lead to two important points. The first is not new but worth revisiting – that golf and the pandemic have a bit of a synergetic relationship going, both broadly speaking and, more specifically, as it relates to the 20-percenters who are doing a lot of the heavy lifting. It seems the emotions they harbor towards the pandemic are stimulating some of this golf-crazy behavior.
The other point is about retaining and “leveling up” your best customers. Do you know your vital few? Their differentiating characteristics? How are you identifying, serving and rewarding this group? Finding look-alikes?
We talk often about attracting new golfers, and there’s a tendency in business towards investing disproportionately in customer acquisition, but sometimes (maybe most times) the easiest source of new and sustainable revenue is right under your nose.
October 8, 2020 | Written by David Lorentz, NGF Chief Research Officer
In a recent article about pandemic winners and losers, New York Magazine described golf – one of its winners – as “slow and expensive.”
These are just two of the game’s unflattering perceptions (there’s also “difficult” and “exclusionary”), and are used by non-golfing/non-endemic journalists almost as a matter of course. Whether a function of bad experiences, skewed exposures or innate human ‘negativity bias,’ the reputation of golf among those who don’t play has leaned unfavorably for years. As industry researchers we’ve not only tracked these sentiments, but have long been curious to understand their origins and impacts.
Perceptions as you know are formed based on relatives. Golf is “slow” because most sports require running and jumping and other lively exertion. It’s “expensive” because most of the recreational equipment in your garage can be used for free at any time (and just about anywhere). In a way, that’s what makes golf “exclusionary” too – since there are certain places that many of us can’t play, as they’re prohibitive in cost or access or both.
These contrasts aren’t worth apologizing for, necessarily, and they certainly don’t stop roughly 1 in 9 Americans from actively engaging with the sport each year (or another 2 in 9 from doing so passively), but I needn’t tell you that perceptions matter in business. They influence behaviors and strengthen loyalty. Or, they push people away. Roughly 75% of non-golfers with a negative opinion of golf also express zero interest in taking it up. By comparison, only 27% of non-golfers with neutral perceptions have closed the door on the game. The difference there is intuitive but it does underscore the importance of managing golf’s brand and owning its narrative. It’s said that the market will define your story if you don’t give it a story to talk about.
So what’s our story, and how do we present a better one? A few thoughts:
- For starters, we can do some counter-punching with better information and context. Take “expensive” as an example. Golf obviously has startup costs, but in terms of ongoing expenses it’s actually quite practical for the majority of Americans. Right now our database shows a median maximum rate of $48 for 18 holes†, including cart, at a regulation-length public course in the middle of peak season. If you’re willing to steer away from the busiest times, that median rate drops to almost $30. That’s somewhere between an $8 and $12 hourly rate for recreation, give or take, which would seem to be as good as anything else that’s pay-to-participate. And that’s just the median! Context can change perceptions. Just ask Ikea, who used the approach successfully in their “It’s that affordable” campaign.
- We also don’t have to counterpunch every negative opinion or misperception, but instead can use certain ones to our advantage, which marketers often accomplish through irony or self-deprecating messaging (remember Golfsmith’s #AnythingForGolf campaign, which cleverly faced up to the difficulty of the game?). Satire can be an effective way to capture attention, but perhaps more importantly can appeal to emotion and earn trust
- Finally, we can tell a better story by focusing more on our customers (and prospects) than ourselves. Branding is inherently self-centered but ultimately your customers care a lot more about themselves than they care about you. So make it about them! Last year we piloted a marketing program in Denver that aimed to activate interested adults by using strategically-crafted messages directed at various consumer targets. Before going to market with those ads, we tested their effectiveness among samples of Denverites and other Americans. In doing so we discovered that our message about dress code, and needing “More golfers who don’t dress like golfers,” was most effective in making golf seem relevant, approachable and fun. The message wasn’t about sprawling fairways, challenging greens or timeless traditions – it was about them, and us needing their unique sense of style.
The good news is that opinions of golf have been improving. Seven years ago, 43% of non-golfers had neutral or positive things to say about the game. Earlier this year (pre-pandemic), that proportion had risen to 55%. It’s significant progress but there’s room to keep going. Golf has a lot of people’s attention right now, and with that comes the opportunity to create impressions – new and better impressions. And while we have the power to do this through words and storytelling, the real convincing is going to happen at the course.
We’ll continue to track how sentiments change during and after this Covid-fueled boom.
† The cost to play golf has actually fallen over the past decade – had we kept up with inflation since 2007, that median maximum rate would look more like $53, not $48.
September 10, 2020 | Written by Joe Beditz, NGF President & CEO
The big question in March and April was whether golf courses and retail would reopen and remain open. In May and June, we wondered how quickly and strongly the golf economy would bounce back from spring losses. Then, in July and August, our curiosity turned towards understanding how golfers were behaving differently in the new normal, and which consumer groups were contributing to the summer spikes in play and spend.
Now, the big unknown seems to be the extent to which we might retain new golfers and sustain increased levels of play when COVID is finally in the rearview. That’s of course a longer-term question, but we can certainly speculate based on past and current knowledge.
Let’s first recognize how we got to this point. There’s no question the leading driver of golf’s nationwide surge is less resource competition – fewer commitments, fewer trips, fewer available activities, and fewer ways to spend disposable income. There’ve been other transient factors too, like favorable weather, extended shutdowns at golf entertainment venues, and perhaps even a pandemic-induced need for mental and physical escape.
But nothing about the past few months seems structurally different for golf, whether with the product itself, the service that supports it, or the overall user experience … unless you count extended tee time intervals, which for a time seemed to produce faster, smoother and more enjoyable rounds. Either way, we weren’t suddenly marketing ourselves differently, onboarding new players differently, or managing customer relationships differently. (In fact, remote check-in procedures may have made it more impersonal.) Which is to say we should expect a similar churn rate as before, because nothing changes if nothing changes.
The ability to retain customers has been golf’s Achilles heel for some time now. In the past five years alone we’ve “welcomed” more than 12 million people to the traditional game, and yet our ‘sea level’ has risen by only 200,000, give or take. It’s almost inexplicable, and signals a serious issue with the experience and/or perceived value among new customers.
We can certainly hope that the pandemic reorients consumers – making them appreciate open space, fresh air and less crowded activities than before. But those are probably fleeting effects.
Perhaps the one thing that may be different these days, and should contribute positively to golf’s retention rate, is the fact that more and more beginners are coming in with off-course experiences under their belts – specifically golf entertainment – which means more competence and confidence. Our data shows that beginners who’ve played at a golf entertainment venue are 20% more likely to say they’ll stick around, barring health or financial setbacks.
This message isn’t meant to be a tub of ice water dumped over the hopes of those currently celebrating golf’s surge, but it is a ‘bucket challenge’ of sorts. If it motivates some to fight the natural tendency to relax and enjoy the extra business, and instead strive to identify our newcomers and make an extra-large effort to ensure that their experience is sticky … then it was worth the risk of dampening some of the enthusiasm out there right now. Encouragingly, we’ve had recent dialogues with operators about this very topic (experience and retention), and can sense a different level of determination.
July 30, 2020
Based on NGF research at the midway point of the year, there’s evidence the number of junior golfers (ages 6-17) could swell by as much as 20% this year. With approximately 2.5 million kids having teed it up on a golf course last year, that’s a potential Covid-related bump of half a million junior golfers by year's end.
If we had used the first quarter of 2020 (January, February and March) as any indication, we’d have seen no real change in the junior ranks, as the numbers were relatively normal. But in Q2, the rise has been significant from a directional standpoint.
It makes sense, with golf celebrated as a safe and healthy outdoor activity for all ages as the coronavirus rages on. With many youth sports on hold or slowly coming back, and families seeking activities they can do together, especially as schools were out, golf has emerged as a terrific alternative. Our data also suggests that these newbies may actually be a little bit younger than usual, with an increase in the number of girls and about the same racial/ethnic diversity (~25% non-Caucasian) that we’re now accustomed to seeing among the junior set.
The number of overall beginning and returning golfers during the Q2 stretch appears equally significant – both about 20% higher than in recent years.
The question, as always, is whether the industry will be able to convert these golfers into committed customers. That will depend on the experience they have at the golf course, which can no doubt be managed in a way that enhances satisfaction, fosters loyalty and improves retention.
Bear in mind, this inflow of new golfers will be offset, to some extent, by a natural churn that occurs every year. This may end up even more pronounced in 2020 due to Covid, as some golfers will elect not to play this year because of financial hardship or health and safety concerns.
October Rise Puts 2020 Almost 11% Ahead of Last Year's Pace
Play increases continued in October, with the national rounds total jumping by 32.2% over a year ago.
The industry is now 10.8% ahead of last year’s pace despite losing 20 million rounds in the spring due to the coronavirus, according to Golf Datatech’s monthly report.
October marked the fifth straight month that play has been up year-over-year in every state in the continental U.S. and continues a streak of ascending monthly increases. June was up 14% YOY, followed by increases of approximately 20% in July, 21% in August and 26% in September.
October’s YOY increase was the biggest yet this year, percentage-wise, and represents just over 11 million additional rounds for the month than in 2019. Since June, the surges translate to more than 50 million incremental rounds.
For perspective, the last rounds-played increase of 5% or more for a full year was in 2012, when an early-season heatwave contributed to a major uptick in play in parts of the country typically still in their offseason. This year, the industry faced a -16% deficit in play at the start of May before the turnaround.
In the below link, we've updated our year-end forecast based on two different scenarios: 1) rounds in the fourth quarter come in flat compared to last year; and, 2) 2020 rounds continue to outpace 2019 in the final two months by 20%. The graph shows those assumptions would tell us that rounds for the year could finish up between 10% and 12%.
Our +20% assumption for the rest of the year may not prove to be correct, but it isn’t unrealistic either, given the increases of the past several months.
When considering year-end totals, November and December combined represent just over 11% of annual rounds. Based on feedback from operators and management companies in areas not significantly affected by seasonal weather, the strong turnout in play has continued in November and offers further positive signs for the above year-end forecast.
A couple of things to bear in mind. All these extra rounds do not benefit everyone in golf equally. There are several business segments, such as resort golf, that are not enjoying a “V” recovery. And secondly, significant increases in rounds played don’t necessarily indicate the same is happening with golf participation. While we’ve recorded noticeable increases in juniors and beginners, the stocks and flows of our consumer base may end up evening things out in the end.
The Emergency Nine
Have you gotten out to play nine holes in recent months? If so, you're not alone.
Golf course operators report that afternoon and evening tee times have been popular, which seems right given that Covid-19 has changed the contours of the work day for many. Sorting through recent golf participation and engagement research, the number of short loops (as a percentage of total loops) is up over 15% in 2020.
Core golfers report that 33% of their rounds this year have been of the nine-hole variety, while occasional golfers tell us that nearly half (48%) are playing nine holes. This will be seen as good news by many, especially the USGA given their PLAY9 initiative, and would indicate that the “time barrier” to golf is being overcome by more golfers.
We've talked about the increase in beginners and youth golfers (see below), so clearly the late-day tee times aren't just for the work-at-home crowd. With late summer days, those nine-hole twilight rounds present the perfect opportunity for families to get to the course after an early dinner, or newcomers to get more comfortable with the game.
A Look at U.S. Nine-Hole Golf Facilities as a Proportion of Total Supply
Did you know that up until 1974, there were more nine-hole golf facilities in the U.S. than those with 18 or more holes?
18 holes wasn't always the preferred layout. Indeed, many of today’s 18-hole courses were built in two stages -- nine holes at a time. Today, there are 3,777 nine-hole golf facilities in the U.S. that account for about 26% of the total supply.
The seven states with more nine-hole facilities than 18 or 27?
Iowa -- 248 vs 135
Kansas -- 137 vs 101
Nebraska -- 123 vs 90
North Dakota -- 88 vs 28
South Dakota -- 79 vs 40
Maine -- 72 vs 60
Alaska -- 14 vs 6
And yes, Iowa has more nine-hole golf facilities than any other state in the nation. The only other state with more than 200 nine-holers is Texas, with 202.
• Currently open
• Not yet open or operations suspended temporarily
• Non-sampled golf facilities
The map above represents a sample of approximately 10% of all golf courses in the U.S., and is intended to provide perspective as to the geography of courses that are either open or have temporarily suspended golf operations.
While not representative of a complete view of golf course availability, it is the most nationally representative sample of courses available in the industry -- one that includes daily fee, private, municipal, resort and residential communities.
Trend in Course Openings
Less than 50% of golf courses were open to play for more than a month during the height of the coronavirus pandemic -- a combination of governmental efforts (state and local) to reduce the spread of the virus as well as seasonality (wintry weather in the northernmost parts of the country).
The percentage steadily increased from the last week of April through mid-May as more than a dozen states lifted bans on golf while others -- most notably California and Florida -- eased significant local restrictions. By early June, no states had restrictions on play.
The second quarter participation surge revealed 20% jump in the number of junior, beginner and returning golfers.Read More
At one point in mid-April, as many as 19 states had restrictions on golf, either at a statewide or local level. The following is an overview of how governmental executive orders affected golf operations nationwide.Read More
As the pandemic stretches on, NGF’s ongoing national participation study shows that 35- to 49-year-old golfers have been especially engaged.Read More