kahn golf

Check the dates on this article. I wrote it in 2000 and updated it in 2002.

Tough Times for Golf?


Update! 515 new golf courses opened in the USA in 2000. That's almost a 4% increase in golf courses in one year - or a dilution of available play per golf course of 4%. In cash terms, $32,500 reduction in revenue per $$ million -- all bottom line cash!

What I'm trying to say is, "For every $ million in revenue a golf course took in 1999, each course dropped an average of $32,000 in pure profit in 2000. Another 400+ golf courses opened in the USA in 2001.

Operators who were asleep at the wheel lost a lot more (Watch American Golf Corporation. Some say American Golf Corporation could become the golf version of 'Enron'. Meanwhile, the competition watches each other's prices like hawks. In fact, many Sarasota, Florida daily-fee golf courses do area fee surveys almost every week (I know we did).

FACTS: The number of golf courses increased from 13,600 to 17,300 between 1988 and 2001. That's an increase of 3,700 new golf course, or 27%. The number of golfers since then has grown from 23 million in 1988 to 26 million in 2001- and increase of only 13%. DO THE MATH!


Read the article in Golf Course News, Volume 13, Number 2, February 2001; "If you build that new course, will they come?" by Editor, Jay Finegan. In it he says, "Do the math! we've grown from 13,600 golf courses in 1988 to 17,300 today, an increase of 3,700 golf courses. However, golf players have only increased from 23 million in 1998 to 26 million in 2000."

"So, let's see. Golf course facilities have increased by 27% in a dozen years. The number of golfers has increased by only 13%. Or, let's look at it another way. In 1988, 13,600 golf courses shared 23 million golfers, that was 1,691 golfers per golf course. In 2000, 17,300 golf courses share 26 million golfers, that's 1,503 golfers per golf course. Unless my calculator is out of whack, isn't that a drop of 188 golfers per golf course?"

"So, don't be making fun of Florida voters. Instead make fun of the dreamers who've been building golf course like there's no tomorrow!"

We've got up to 1,000 new golf courses under development or planned for the USA in 2001-2. STILL NOT (REALLY) ANY NEW GOLFERS!

We have very few more golfers in the USA in 2001 than in 1989 - but thousands more golf courses! The National Golf Foundation hints in their "Strategic Perspective on the Future of Golf": January 30, 1999, that the demand gap for golf courses of the 1980's has disappeared -- or even overlapped! Today, evidence indicates that many areas already have an oversupply of golf courses.

New courses often begin already in trouble because their development cost ran vastly over budget. Too much emphasis is placed on big-name architects, and endorsements. The name, Nicklaus on the marquee increases the 18-hole fee $12.00 to $15.00. Not only increasing the initial investment, but a Nicklaus course costs a fortune to maintain. Meanwhile, nobody wants to create affordable, recreational 'fun-to-play' golf courses that can be built for under $2 million.

Here's an extravagant example: I watched one of the top design teams in action. The architects were given 'cart-blanche' to design an 18-hole golf course. What did they do? One hole, a par-3 has eight (8) tee boxes! Why? Another hole has two (2) separate greens! The practice range doesn't fit. It's to small! Red-stripe range balls land on two fairways. One cart path runs 85 yards from the fairway center - 125 yards from a slice that's still on short grass! Another hole, a par-5, has two routes - a 430 yard short cut, and a 575 yard route. Which route would you take?

The fee to design this golf course - $600,000! Meanwhile, the project is almost $2 million over budget. That's $26.00 a round just to cover design and cost overruns. It'll cost at least 20% more to maintain it - about $2.00 more a round. In simple terms, add about $27.00 to a daily fee round. Hello!

Across the country we see vastly distorted prices to play a round of golf indicating an industry still sorting itself out while it overbuilds and over-prices itself. You can pay over $150.00 to play a golf course in Milwaukee. Pay less than $20.00, including power cart, to play a golf course in Sarasota. But they're building courses by the hundreds, up to 500 courses to come on stream in 2001!

With daily fee prices going down, and costs to build golf courses going up, they keep adding new golf courses in Florida (it's estimated that 200 new courses are on the drawing board in Florida, January, 2000). Meanwhile, we suspect that hundreds of Florida golf courses are behind paying their bills.

Distortions are being caused in the golf industry, because large financial groups are recklessly overpaying for golf courses. They accept too much debt, and further add to operational overheads to support their off site infrastructures. Later, as revenues fail to meet expectations, they start cutting back on essentials like maintenance and player service - usually before they make adjustments at the top.

At the operations level, we are seeing golf course cost escalations, because of new problems like fire ants, mole crickets, fungus diseases, non-native grasses and weeds. Many Florida areas are overrun with extremely destructive wild pigs. Pigs multiply like rats and can cause unbelievable damage to a golf course.

(Sand hill Cranes can chop a fairway to pieces, while all you can do is watch. They're as tall as a man, and you can walk right up to them. Fully protected, they seem to know they are safe and pay no attention to golfers or machinery. Meanwhile, more and more defense applications and measures are banned by environmentalists.)

We are seeing golf course irrigation restrictions in almost every state in the country. Underground water tables are dropping while golf courses thirst for water - many needing up to 1/2 a million gallons daily. Water consumption by golf courses makes them an easy targets for conservationists.

Watch the markets. Many golf stocks are sick! Some, like Brassie Golf (Brassie is gone - just like I said!) are down to zero! Look at Family Golf Centers (Family golf Centers is bankrupt - just like I said!) and Golf Trust (Golf Trust is bankrupt - just like I said!). They are all crashing!