Golf industry trying to hit out of the rough (Nov 21)

November 21, 2014 – While the weather across much of the country has turned frightening, many people here in San Diego County and Southern California will include a round of golf during the Thanksgiving weekend celebration.

To be sure, the golf industry — a major part of the region’s growing sports business community — has struggled in recent years. The global recession, especially in Asia, has been a festering problem for companies such as Callaway Golf Co. and TaylorMade-Adidas.

“While challenging market conditions have made sales growth in the first nine months of this year more difficult than we would have liked, we are encouraged by our market share gains and are confident that we are outperforming the industry,” said Chip Brewer, president and CEO of Carlsbad-based Callaway Golf.

The company, founded in 1982 by Ely Callaway and the creator of the large Big Bertha driver, recently raised its full year’s 2014 earnings guidance.

“Our brand continues to build momentum, our organization is strengthening and we have an incredible product pipeline,” Brewer said.

But, while companies have been able to improve their bottom
line thanks to cost-cutting efforts and other internal actions, the retailers who sell golfing equipment are having a tougher time.

For instance, Dick’s Sporting Goods announced last week that golf sales remained anemic in the third quarter.

“As we look at our golf business, Golf Galaxy comped down 8.9 percent, and our Dick’s gold business was down a similar magnitude,” CEO Joe Schmidt said. “As we look to the fourth quarter, we believe that our merchandising product offerings and advertising will make us a destination this holiday, both in stores and online, and drive our comp store sales growth.”

Dick’s earlier this year scaled back its in-store golf service, dropping the availability of PGA professionals to assist customers. It also closed two Golf Galaxy stores, causing Schmidt to say, “We’re not exiting the golf business, and we’re not exiting the Golf Galaxy business.”

Not only is the game of golf having a difficult time attracting new players, it is also fighting to keep existing golfers in the game. The PGA of America estimates that there were 28.7 million golfers in the United States in 2013.

At its peak in 2000, there were 29.8 million golfers in the U.S. and they played an estimated 518 million rounds, compared with 462 million rounds last year.

However, the National Golf Foundation points out while 3.7 million players took up the game last year, 4.1 million walked away, with a net loss of 400,000 players.

And the number of golf venues continues to decline. At the end of the year there were an estimated 24,564 golf courses in the United States. In 2013, 157 closed and only 14 new facilities were added.

Here in San Diego County, golf courses in Escondido and San Luis Rey closed. At the same time, several previously private golf clubs opened their doors to the public to increase rounds played.

Bottom line: The golf industry is pressured more by the time of play than the cost.

The PGA kicked off a campaign this year using “While we’re young!”the Rodney Dangerfield line from the 1980 movie “Caddyshack,” to encourage people to pick up the pace of play and to play from the appropriate tees.

But, slow play continues to extend a round of golf to five hours or more, an investment more and more people are unwilling to pay.

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