The Waste Management Phoenix Open has put Arizona in the sporting world’s spotlight, with upwards of 600,000 fans attending the tournament and a national television audience tuning in.
But this publicity burst by itself won’t remedy longstanding challenges for the golf industry, in Arizona or elsewhere.
With fewer people playing the game than in years past, revenue growth has slowed and the construction of new courses has stalled, both nationwide and in Arizona.
The industry is trying new ways to reinvent itself and attract more participants, especially younger adults and women, partly by offering non-golf activities from dance classes to beer-tasting nights.
Will Millennials tee up?
“The key question is how do we engage Millennials and the next generation,” said Mark Gurnow, general manager of Superstition Mountain Golf & Country Club in Gold Canyon. “We’re constantly looking at ways to make it more fun.”
The problem isn’t with the professional tournament held in Scottsdale, which lured a record 655,000 spectators last year, generated an economic impact estimated by boosters at nearly $390 million and continues to unveil new entertainment and seating amenities.
The tournament might even give a temporary lift to many golf businesses, from a seasonal influx of tourists to more local residents getting inspired to shoot a round.
“You start to see that uptick” geared around the Phoenix Open, said Trevor Finton, general manager of the Golf Club of Estrella. The public course located in Goodyear and managed by Scottsdale-based Troon Golf has been mostly sold out of tee times for the past week, he said.
But the long-term outlook isn’t so bright for the sport nationally or for the more than 400 courses in Arizona.
Nationally, golf-course/country-club revenue grew at an annualized pace of just 0.8 percent over the past five years, said researcher IBISWorld. Despite some favorable tailwinds including rising consumer confidence and household incomes, the company sees that slowing even further to 0.6-percent annual growth over the next five years.
Golf in Arizona is a sizable industry, with an estimated economic contribution of $3.9 billion that directly supports around 18,700 full- and part-time jobs, according to a University of Arizona study in 2014.
The number of fairly active players declined from 25.3 million in 2012 to 23.8 million in 2016, the most recent estimate provided by the National Golf Foundation. That’s also down from 29.8 million players one decade earlier, in 2006.
Reasons for the stagnation range from the expense of the sport to a stodgy image that doesn’t resonate with a lot of people.
“While golf courses are extraordinarily popular among retirees, golf has not achieved any steady growth in popularity among younger consumers,” said IBISWorld. Dress codes and policies restricting cellphone use are among the etiquette rules that turn off some prospective players, the report added.
Nearly two-thirds of active players are 40 or older.
Participation among minors “has been declining for several years, as younger generations opt to play other sports or engage in other activities,” said IBISWorld.
Also, it takes a lot of time to play golf well — not just in spending what can easily be five-plus hours for a round of 18 holes, but in the years of practice it takes to become reasonably skilled.
FULL COVERAGE OF 2018 PHOENIX OPEN
“As an industry, we need to find ways to have a one- or two-hour experience,” said Gurnow. That’s in addition to other ways the industry might appeal to newcomers.
For example, new generations of motorized carts now are coming equipped with internet and television access and cellphone-charging plugs, making the time commitment seem less, Gurnow said. Upcoming versions of carts will feature autonomous-driving capability so that they can follow players when they get out to walk.
Some courses are trying to lure children, families, more women and friends of regular players through activities such as croquet tournaments, craft-beer tasting events and free equipment rentals for children when accompanied by their parents, Finton said. About four in five regular players are men.
Restaurants, which have always been a large part of the golf-course business model, increasingly are turning to theme nights, often with a casual sports-bar image.
“The idea is to make restaurants more fun and interactive — places where people can go hang out with their friends,” Finton said.
There’s also more interest in developing shorter and player-friendly courses “where you can get around quickly,” he said. Player-friendly courses tend to be wide on fairways and short on water holes, sand traps and other hazards.
Growth era over
Golf course communities are changing in metro Phoenix, but experts say the sport is still a big draw for homeowners. Rebecca Smouse/azcentral.com
Arizona has much to lose if the industry can’t get out of this bunker.
“Golf facilities support jobs and income for the state economy, indirectly support other Arizona businesses … drive tourist spending by attracting visitors from outside the state, and support sales by retailers offering golf equipment,” the University of Arizona report said. Also, golf courses “exert a positive effect on the value of residential real estate in their proximity.”
Golf-course development boomed from the mid-1980s to the mid-2000s but has stalled since then as more courses closed. In Arizona, the number of new courses has largely stayed flat over the past decade or so. From 2006 to 2014, 17 Arizona courses closed and 19 opened, resulting in net growth of two courses, according to the University of Arizona report.
One local example is Ahwatukee Lakes, which closed and has sat idle for roughly the past five years, with dying landscaping that has turned to blight. Nationally, about 140 courses have closed annually in recent years.
Another trend has involved the transfer of municipal courses to private owners or managers better able to turn a profit. Local examples include Phoenix transferring management of the Maryvale Golf Course to Grand Canyon University and the Papago Golf Course to Arizona State University.
Smaller and less prestigious courses “depend on the patronage of local consumers, and profit margins for these operators are generally far lower,” said IBISWorld. The company estimates profit margins for the industry overall at a scant 1.9 percent.
Yet the slowdown in new-course construction might not be a bad thing, allowing supply to come back into balance with demand.
“Golf was overbuilt,” Gurnow said, explaining that developers a decade or two ago constructed too many courses as a way to sell homes carrying premium lot prices, often with no interest in managing them.
An estimated 11.6 million rounds of golf were played in Arizona in 2014, including 7.7 million at private or semi-private facilities, according to the University of Arizona report.
Roughly three in five rounds are played during peak-season cool months from November through March. The typical cost for 18 holes nationally is around $40, though elite Arizona courses charge well over $100 during high season.
Despite challenges, the industry in Arizona appears to be profitable, with statewide revenue in 2014 estimated in the University of Arizona report at $1.15 billion compared to $880 million in expenses.
Finton said he’s fairly optimistic for the industry, especially if it can change its stodgy image and attract new and younger players. IBISWorld estimates industry revenue nationally at around $24 billion.
In Arizona, initiation/membership fees and golf-course dues are the largest component of revenue, according to the University of Arizona report, followed by green fees — the cost of rounds played — and then food/beverage sales.
Labor tops the list on the expense side, including for clubhouse/golf-shop staff and course-maintenance workers. Water and other utility costs were next,then course-maintenance supplies/services, general-administrative expenses and food/beverage outlays.
The highest number of Arizona golf-course jobs are in course maintenance — estimated at 5,000 positions in the 2014 report, followed by food/beverage workers (2,300), golf-shop personnel (1,780) and administrative staff (1,040).
Despite the party reputation of the Waste Management Phoenix Open, golf is largely viewed as a sport for the affluent and conservative This is especially true of country clubs, where initial membership fees at ritzy facilities can cost hundreds of thousands of dollars.
“The golf (club) and yachting industries follow the same economic trends,” said Gurnow. Both businesses cater to high-end customers, and both supply goods and services that are viewed as luxuries rather than necessities.
But even here change is afoot, with many private clubs catering to a less-affluent clientele and broadening their activities beyond golf.
At Superstition Mountain, membership has grown 25 percent since 2014, including a considerable number of “social” members who join largely for activities and events that have nothing to do with golf.
The club charges $35,000 for traditional golf memberships compared to $6,500 for social members (who receive some golf-playing privileges).
“It used to be that the focus at clubs was all on golf, good food and maybe throwing one or two big parties a year,” said Gurnow.
But now, clubs include sports and activities such as bocce and pickleball, spa services such as massages, dance classes and group trips to art galleries, casinos and events like the Barrett-Jackson auto showthat appeal to men and women alike.
Then there are companies like Topgolf, which expanded on the basic driving-range concept by adding golf simulators and games, lessons and classes, lounges and upscale dining options, party events and more.
The company operates facilities in Gilbert, Scottsdale and Tucson with a fourth coming to Glendale. It claims to attract a near-equal mix of players and nonplayers alike, with about one-third of visitors women.
“The golf industry no longer is just about golf but about a lifestyle,” Gurnow said.
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