Bear marketIs the game dead?  No, and it’s not even on life support.  Some recent events and conversations have left folks with the perception that the game of golf is suffering a slow agonizing death.  Drew Harwell wrote a piece in today’s Washington Post today titled, “Whispers in the gallery get louder; Golf is dying.”  He sights some troubling figures from participation rates in the United States, like the reduction in US golfers playing at least one round per year.  This is down from 30 million in 2003 to 24 million last year.  This week Nike announced that they are shutting down their golf equipment business, and the top names in the men’s game are skipping Olympic golf at Rio.

Tracy, a beach blogger from Myrtle Beach by Word of Mouth sent along a great question about why so many golf courses in The Grand Strand area were closing and being replaced by housing developments.  And finally, yesterday at lunch, a friend was wondering why nobody was showing up to play the “perfectly fine” golf course in his parents gated retirement community.

Taken at face value these events point to a decline in the game, but these are merely leading indicators in a market correction.  As is often the case with real estate, stocks, oil, pork bellies, or beanie babies, when we are in the midst of a market shift, it’s difficult to observe from the inside.  Hard-core golf enthusiasts (I count myself as one) get emotional and defensive about the game.  We love the sport and want to share our joy and experiences while playing and watching, and when negative observations are made, get upset.  But take a step back and think about the reason this is happening.  There is one single explanation that is driving most if not all of the above phenomena.  Tiger Woods.

Tiger took the golfing world by storm from his Masters win in 1997 until the autumn of 2009.  This twelve-year run constituted a bubble in the market which was identified by an increased demand for equipment, clothing, an over-saturation of professional events (FedEx Cup started in 2005, IOC reinstated golf as an Olympic sport in 2009), and most importantly, increased participation by individuals that would not normally play golf.  Courses and resorts were built to accommodate the additional demand for rounds.  Clothing and equipment manufactures sprung to life to supply and outfit newly minted players and prize money and endorsement deals skyrocketed for professionals.  Greens fees and club membership costs soared.  The Tiger effect had bestowed great wealth on many in the corporate world and the elite playing class.  Amateurs were enamored with his chase of Jack Nicklaus’ major record, and his power, physique, and playing style were captivating.  Everyone bought into his brand.  The game was hot and so were the ancillary markets for equipment, real estate, and golf course design.

The bubble burst in November of 2009 when his wife buried a 9-iron in the back window of his SUV after his well publicized cheating scandal.

Middle age guys (like me) have always been the backbone of the game.  We are the majority of players and continued to play at the same rates, unabated by the scandal; but enough of the genuflecting newbies soured on Tiger’s behavior, and when he exited the national stage, pulled out of the game, which started the downward trend in rounds played.  Declining participation is commonly mis-perceived as the struggle to get poor kids or women to take up the game, or to grow the game globally.  While there are obvious barriers to entry such as cost and time, they have always been there and probably will be, but the trend is actually a return to the normal rates of participation.

Sponsors dropped Tiger (except for Nike) and the demand for equipment and clothing ebbed.  Greens fees at public and upscale daily fee courses started to discount, as tee time supply exceeded the demand for rounds.  Some courses could not survive and closed, which was what Tracy was seeing in Myrtle Beach.  While interest rates remained low it was still cheap enough to borrow money and the real estate market began to fill the void in the golf market which is why housing developments have sprung up on old golf course land.

So rest easy and go stock up on newly discounted Nike golf equipment.  Just because Rory McIlroy, Jason Day, Jordan Spieth, and Dustin Johnson aren’t playing the over-hyped event at Rio doesn’t mean there’s anything wrong with the game.  We’re market correcting and that’s okay.

Play well!

 

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