PART ONE
The state of golf: Who can you believe?
By Tim McDonald,
National Golf Editor
(June 24, 2004) - Trying to determine the state of the golf industry in the United States is like talking to two different doctors examining the same patient.
One doctor smiles and assures the patient he is in the pink of health. The other doctor holds up the X-rays, frowns, and says in an ominous tone he is concerned about those strange discolorations around the liver.
"The people at the PGA Tour and National Golf Foundation say everything is marvelous," said Golf Research Group President Colin Hegarty. "But, of course that isn't true."
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The Golf Research Group and Pellucid, both independent golf research firms, both say the number of golfers in the U.S. is sliding downhill.
But, the NGF and other research alliances with ties to the golf establishment say the opposite.
"We're definitely not in decline," said Jim Kass, NGF's research director.
"Fudging" the numbers?
Who do you believe? Since both use similar methodologies, how can there be such a discrepancy in numbers?
You can't believe the golf establishment, says Pellucid President Jim Koppenhaver, who claims the NGF is "fudging" the numbers to make it look like more people are playing the game than actually are.
"The challenge we've got here is you cannot have people who, in their charters, are industry cheerleaders, " Koppenhaver said. "You cannot have them being the people reporting on the state of the industry - it puts them in a large conflict of interest position. It's not a vast, right-wing conspiracy, but the PGA Tour, PGA of America, NGF, the National Golf Course Owners Association, Golf 20/20 - they're all joined at the hip."
NGF's board of directors include such golf establishment figures as PGA Tour Commissioner Tim Finchem, and executives of PGA America, Nike, Adidas, Callaway and Top-Flite.
Golf 20/20 is a World Golf Foundation initiative that focuses on the growth of the game. Members sitting on its executive board also include Finchem, as well as executives from the PGA of America, Callaway, the USGA and GolfWeek. The project reports that there are now 37.9 million golf "participants" and 27.4 million golfers, both all-time highs.
"Our surveys are solid"
The
NGF, which does most of the research for the alliance, says its
surveys are solid.
"I think we have the best dedicated sample and the longest term history dedicated to golf," Kass said. "Trends are best measured over long periods of time rather than one year or even two years."
Koppenhaver admits that his firm has been tracking golf participation numbers for only three years. But, in those three years, his numbers and those of Golf Research Group are drastically different from what golf's powers that be proclaim.
Over the last two years, there has been a 6.2 percent reduction of people playing golf, according to figures from Golf Research Group. Pellucid reports similar numbers.
"Core" golfers growing
The NGF recently released its 2004 "Golf Participation in the U.S." survey in which it said the number of "core" golfers grew by five percent, from 12.6 million in 2002 to 13.2 million in 2003. It marked the second straight year the number of core golfers, defined as adults who play more than eight rounds a year, increased.
Koppenhaver said the NGF report is flawed in that it highlights the gains in "core" golfers while probably ignoring losses in the "avid" golfer category, defined as those who play 24 or more rounds a year.
"What they did was put the former "core" and "avids" together and now call them "cores," Koppenhaver said. "So they changed the definition in 2003. My take is the "avids" went down and (NGF) didn't want to come out and say the "avids" went down. The "cores" went up enough to offset the "avids" going down. You put those two groups together, you can make a positive statement. However, there was a downward migration of involvement."
Kass admitted the report combined the "core" and "avid" golfers - for the last two years. The confusion, Kass said, is that Golf20/20, which uses NGF research, used a different definition for the two categories. But, Kass argued, the numbers still added up to an overall increase.
"For the purpose of that story, we put them together, as we often did in the past," he said. "We reverted back to the old NGF definition of core golfers. But, they both increased."
Shrinking or growing?
Koppenhaver also questioned the report's usage of "junior" and "alternative participants."
"By almost any combination of the (report's) numbers, it appears that NGF is now reporting the number of golfers to be growing and to have crossed 30 million," he said. "By contrast, Pellucid's numbers would suggest that the number of golfers is shrinking and retreated below 26 million in 2003."
Beyond the confusion in terminology, there are still dramatic differences. Kass and others say there are other indicators that show golf is growing.
"If you want to look at what the state of the industry is, you have to look at all segments - rounds revenue, ball sales, equipment sales like irons, woods, footwear, gloves bags," said Mike Tinkey of the National Golf Course Owners Association. "Those are pretty good indicators."
From 1997 to 2002 spending on equipment dropped 14 percent, according to the National Sporting Goods Association, though there were broad gains in February, according to Golf Data Tech, a Florida-based market research firm.
Rounds falling, courses closing
Also, annual rounds played have fallen 4.5 percent since 2000. Businesses are hurting. For example, Gotham Partners, a hedge fund with $200 million in assets, folded last year because of losses on golf course investment.
Although TV ratings have surged - largely due to the Tiger Woods factor - more golf courses have been closing.
Measured in 18-hole increments, 43.5 courses closed in 2003 and 47 closed in 2002, according to the NGF. The average number of closings for the 10-year period prior to 2002 was 24, Kass said.
"Keep in mind this is less than half a percent of the total supply (of more than 13,600 U.S. courses)," he said. "That's a minuscule failure rate compared to small businesses in general. It's never a good thing when a course closes, but it's not time to say the sky is falling."
Supply/demand imbalance
But, Koppenhaver said the issue is more serious - a case of drastic oversupply.
"We built more courses in the 1990s than any other period of time other than the 1960-1970 period," he said. "We're on the back end of one of the largest supply booms in golf ever known. We did that when the consumer base was flattening, and so what happened was we dumped a lot of the supply in to the system, anticipating we would have a growth in the consumer base - the Tiger Woods factor and the baby boomers phenomenon and the rest of that.
"But, what we're seeing is neither of those things materialized to the level people thought they would. We went through a large, speculative building phase, and now the problem is the absorption rate of golf courses is very slow."
Tinkey said many of the course that have closed have sold out to development, and re-opened elsewhere, particularly those in urban areas.
"Like the Cherokee Town Club in Atlanta," he said. "They closed the downtown club and built another in the suburbs. Clearly, some don't fit that model, but more often than not, they do."
Similar methodologies
So what's the deal? Is golf losing or gaining the people who keep the game solvent?
NGF has used Synovate, an information provider based in Chicago, for the past 20 years. The company is a consumer mail panel company, one of the "big three," the others being the National Family Opinion Panel and the NPD Group.
In 2004, Kass said, they surveyed 40,000 households and had responses back from 52,000 individuals regarding their golf participation.
Pellucid uses National Family Opinion. Koppenhaver said surveys go out to a minimum of 25,000 households that are demographically and geographically representative of the U.S. population.
"Our methodology and NGF's is nearly identical, so it's very curious how our numbers could produce the existing divergence," he said.
Different studies, different results
Kass said the sheer numbers of golf participation studies out there produces, invariably, different numbers. He tracked various surveys from a variety of research groups, which showed golfer participation to be, at once, flat, growing and decreasing.
He also said the margin of error in NGF's studies was two percent, which still would not account for the large discrepancy.
"We're not here to get into a philosophical argument with other research companies," Kass said. "We produce our numbers and they produce theirs."
Koppenhaver isn't convinced.
"We're making slow but steady progress on the war against ignorance in the golf industry," he said. "I look at some of the stuff that gets passed off as knowledge here and I say, 'you've got to be kidding me.' There's some very curious trends going on if you really study the numbers."
Curious, indeed.
Next week: The problems facing golf
Any opinions expressed above are those of the writer and do not necessarily represent the views of the management. The information in this story was accurate at the time of publication. All contact information, directions and prices should be confirmed directly with the golf course or resort before making reservations and/or travel plans.
