Golf Goes From Business Essential to PR Hazard

Retreat From Game of Privilege Hits Courses, Equipment Sales

By Published on .

Most Popular

Photo: Index Stock Imagery

NEW YORK (AdAge.com) -- Does it seem like you're doing less business on the golf course these days? Join the club.

From the PGA Tour to the weekend hacker, golf -- like many other sports -- is suffering from the effects of a weakened economy. For now, it's a slight drop across the board, but the recession doesn't bode well for a gentlemanly sport often associated with wealth, power and corporate privilege -- all of which haven't had the greatest associations of late.

"People are under more pressure to perform, have less availability of idle time, and even if they do have the time, it's difficult to justify in this financial environment," said Miles Nadal, chairman-CEO of ad holding company MDC Partners, an avid golfer known to play with Wall Street buddies and, less frequently, with clients. "In terms of the message it sends to your organization -- especially when you're setting a tone about discretionary spending and in an environment where clients are extremely discriminating with how you're spending your dollars -- it doesn't show well if you're investing in golf events."

MARKETING IN A RECESSION
Ad Age explores what marketers, media and agencies are doing to survive and even thrive in the downturn.
According to Golf Datatech and the National Golf Foundation, the number of rounds played in 2008 dropped 1.8% from the number played in 2007. At America's unofficial golf capital in Myrtle Beach, S.C. -- where there are 74 courses, including 10 of Golf Digest's Top 100 Public Courses -- rounds played in 2008 were down 8.5% compared with 2007.

At Greenbrier, a resort in White Sulphur Springs, W.Va., Director of Sports and Recreation Robert Harris has seen the drop. "Advanced bookings are fewer than last year," Mr. Harris said. "Reservations for all our sports activities are done with less notice than in the past."

'Meetings for serious times'
Greenbrier is one of a select number of resorts that routinely host annual meetings for ad and marketing associations with their requisite golf tournaments. But lately, there hasn't been much greens time at those meetings. "We're very conscious and respectful of agencies' training and travel budgets during this tough economy, and we've programmed our national conferences as serious meetings for serious times," said a spokesman for the American Association of Advertising Agencies. "In the past, the 4A's held meetings at resorts and featured golf tournaments. While our CEO, Nancy Hill, is a pretty good golfer, golf isn't high on her agenda right now."

It isn't just the ad industry looking for ways to cut back. At the annual PGA of America Merchandise Show in Orlando, Fla., in January, attendance was down 4.5%, and exhibitors were down 9% compared with January 2008. TaylorMade and Nike Golf, two of the premier golf manufacturers in the world, skipped the show altogether.

Final 2008 numbers aren't in yet, but the National Golf Foundation found that the number of golf-course openings was on track to be the lowest in more than 20 years. Through September, 65 new courses had opened, and the NGF estimated another 10 to 20 would open by Dec. 31, 2008. On the flip side, the NGF reported 74 golf course closures by September '08 -- the third-consecutive year the number of new-course openings and the number of course closures canceled each other out.

"The economic situation, particularly the continued decline in the housing market, has and will continue to suppress golf-course-development activity in the U.S.," said Joe Beditz, the NGF's president-CEO.

"Golf is an expensive game, a luxury, a leisure sport, and most people are not spending a ton of money on leisure these days," said Ed Sanchez, CEO of Colorado-based Gulf Pulp, which owns websites The Golf Biz and Golf Pulp Media. "But golf has contributed to its own 'funk,' and that is by pricing [customers] out of rounds, equipment and so on. The golf industry is old and not flexible, and changes will need to be made."

By nearly all accounts, sales of golf clubs, balls, apparel and other accessories fell in 2008 compared with 2007. Callaway Golf Co., the world's biggest golf manufacturer, saw a 0.9% decline in profit in 2008 -- after a 6% rise in 2007 -- and laid off 164 people from its Carlsbad, Calif., headquarters last year. Fortune Brands, which owns the world's best-selling golf ball company, Titleist, reported a 13% drop in golf sales. Dick's Sporting Goods reported a $35 million loss in 2008, compared to a $155 million profit in 2007, due in large part to sagging sales at its 89 Golf Galaxy golf-equipment stores across the country. The company reported a 20.7% decline in same-store sales at Golf Galaxy for the three months ended Jan. 31, compared with a year ago.

~ ~ ~
Contributing: Rupal Parekh

In this article: