US Golf Course Closures Continue

by Ryan Ballengee on Oct 27, 2008 2:32 PM EDT

The National Golf Foundation reported on the trending of course openings and closings, with projections through the end of the year. As might be expected given what we know about the real estate sector and the economy on the whole, course starts are outpaced by course closures.

Measured in 18-hole equivalents, 65 courses have opened so far this year and NGF estimates, based on the number of courses currently under construction, that another 10-20 will open by December 31st. That would bring total 2008 openings to 75-85 18-hole equivalents, the lowest number in over 20 years.

While openings continue to fall, so do course closures. So far this year there have been 74 verified course closures and NGF currently forecasts the number of closures to be less than 100 by year's end. There were 146 closures in 2006 and 122 in 2007. Therefore it appears that 2008 will be the third year in a row with zero to slightly negative net growth in supply (openings and closures canceling each other out). NGF points out that closures continue to be disproportionately public, stand-alone 9-hole facilities or short courses (executive or par-3 length) with a value price point.

Some reasons for course opening issues cited include: housing market, construction delays, financing acquisition problems, and permit issues.

This is the second time that the NGF has modified its projections, telling you that things have changed drastically two times this year. (Really, things change on a weekly basis, it seems.)

But the most disconcerting thing to me is the closure of public, small facility courses. I think this could lead to a trend that upticks to public courses of full length - particularly government-owned. With many states facing huge budget shortfalls for 2009, golf courses will suffer. (And they should in the grand scheme of things.) But, this means that demand is not high enough for value priced golf.

This could indicate a variety of things:

Golf participation in the lower and middle classes is down dramatically
Golf simply takes too long for people to commit to right now
Facilities are not up to snuff to continue servicing any golf population

Again, many factors could weigh in on this trend, but it is in the interest of the industry to get together and figure out the issues to keeping people in the game and bringing new people into the fold.

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does this really surprise anybody ?

aside from those golf courses that are closing, of course.

When the golf boom hit, people in the business started building and developing and doing R&D with the idea that golf would just spread like wildfire and not stop. A lot of golfers and writers recommended a little bit of modesty in these plans, but that’s not how markets work. They grow until they can’t grow anymore – then they back off to a level that it can sustain.

Golf isn’t easy – and it isn’t always cheap. It isn’t football or basketball. It isn’t going to take over a major portion of the sports world. Now the markets are having to settle into a plateau that fits the market.

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 2:56 PM EDT reply actions

Totally agree

It’s not surprising, but I wanted to make the connection to golf participation. I have been talking about it for years and that we’re not growing the game because we make it too hard to get involved in the first place. If you kill off public facilities that help people learn in a pressure-free (relatively) environment, then it’s tougher to get the average person involved and stick with it.

by Ryan Ballengee on Oct 27, 2008 3:05 PM EDT up reply actions

"kill off" ???

Ok Lucy – you got some ‘splainin’ to do. Nobody kills off the public facilities. Courses go out of business because they don’t do enough business to stay viable. Sometimes a developer just comes along and makes the land owner an offer they can’t refuse to buy the land for houses, malls, etc – but that’s business, too.

If you make a cheap golf course – it will get played to death and rounds take 6 hours – and eventually the condition of the course will deteriorate.

Golf is a weird game. Beginners want to jump in and play the back tees before they are ready – and they back up the golf course. Those people give up on the game because they can’t break 120 – but they won’t move up a few sets of tees – won’t take lessons – won’t practice…etc etc etc.

Growing the game so that people will play it for a lifetime pretty much has to come from the kids – and that’s not a quick fix.

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 3:17 PM EDT reply actions

That last part

Really isn’t true, though. So many people come into the game once they become professionals in the working world. Anecdotally, I can’t tell you the number of co-workers that want me to teach them to play, or go with them to the range, etc. Growth can come from those people if you encourage them and give them a real plan to learn the game. It’s kind of like the First Tee’s plan, but without the life lessons component. Reaching achievable goals. (Patent pending cause that’s a good idea for a book.)

I agree with you about my wording of public facilities. But, I was talking more specifically about munis and jurisdiction-owned courses.

by Ryan Ballengee on Oct 27, 2008 3:32 PM EDT up reply actions

True true

I didn’t start playing until I was almost 28 – and I know a number of people who didn’t take up golf until they got too old to run the tennis courts.

My point was that if you want REAL long term growth, you have to have a base that starts early and grows up with the game. Kids who grow up playing baseball, basketball, football…..whatever….generally continue and it gets passed down from generation to generation.

LOL – good idea on the book.

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 3:49 PM EDT up reply actions

Completely agree

The future starts with the kids. And adults always try to get involved with their children’s sports.

by Ryan Ballengee on Oct 27, 2008 3:53 PM EDT up reply actions

One closing I personally know of...

…is the course I came up on. It was in my home town and closed down this year. It’s a pretty rural area (in general, but especially for NJ). It was open since the 60’s. It always did solid business. I worked there for the better part of 7 years while I was in college (that was for 2 degrees, smarty-pants(es)).

The last owner was a real estate developer from the northern part of the state who came in with the desire to build housing developments around the course. Over the 7 or 8 years he was in ownership, he proceeded to plunder the course for every nickel he could squeeze out. He let the place get dilapidated and run down (contrast to 1994/5 when I worked there full time and we were the number one public course in southern NJ). Play kept declining and declining because the conditions got worse every year and word of mouth finally kept people from coming down there to play it.

For whatever reason, he didn’t get all the housing developments off the ground like he wanted (though a couple went up). He tried to sell, but had basically driven the thing into the ground and no one would pay the asking price. He finally sold the thing off to the state (don’t get me started on THAT waste of tax payer money) so they could turn into some kind of open space initiative preserve of something. If you saw our town, you’d laugh. It’s 35 square miles with one traffic light and a few thousand people. It’s almost all open space. Thanks, NJ for swooping in to save 180 acres and line the pocket of a bandit.

I’m clearly annoyed over the matter because that’s where I learned the game. I can’t even being to estimate how many rounds I played there. I’ve always believed that course had a ton of potential.

Anyway, that’s one closing that you can attribute to everything other than the state of golf in 2008.

by Double Eagle on Oct 27, 2008 3:26 PM EDT reply actions

The course I grew up playing

was bought out by Palmer Management and it turned into a crummier course. It wasn’t that great to start, but didn’t get the lovin’ it needed. It’s still around, but I wouldn’t play it now.

by Ryan Ballengee on Oct 27, 2008 3:36 PM EDT up reply actions

my first course

was Mystery Valley – a Dekalb County muni – and it remains one of the most popular courses in the area. They have done some decent upgrades on the greens over the years – but it is a great layout and gets a lot of play. (they didn’t even have an irrigation system until the late 80’s)

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 3:51 PM EDT up reply actions

sentimentality gets us all

None of us likes seeing things from those happy days of our youth disappear – but it happens. That guy clearly had ulterior motives for owning the land and the golf course – and it eventually bit him in the arse. He sat on the fence trying to make as much as he could from the golf – but wouldn’t pull the trigger on his development plans – and eventually he lost both.

The year has nothing to do with it. That’s just bad management and bad business – I’m guessing that there are new courses in the area that replaced that one that you enjoyed so much ?…or maybe there were bodies buried in those New Jersey bunkers. :-)

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 3:32 PM EDT reply actions

Normally, I'd agree

…but he didn’t get bitten. He got a bailout from the state to create “open space” in an area full of open space.

There aren’t any new courses in the area, but the course I have a membership at now came on the scene in 1999. There really hasn’t been anything new since then, except for around the shore area (over an hour east) where you’d kind of expect courses to pop up since it’s a tourist destination.

As far as I know, there were no bodies in the bunkers, but I have heard stories about the box trailer that they used to store pesticides years and years ago suddenly disappearing in the middle of the night back in the 80’s. Mmmmm…yummy tap water…

by Double Eagle on Oct 27, 2008 4:26 PM EDT up reply actions

bailout ?

Hmmm – that sounds like friends in low….errr…high places. The guy didn’t make nearly the money he thought he was going to make with a housing development.

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 5:00 PM EDT up reply actions

Should've been allowed to fail

He wasn’t “too big to fail” :)

by Ryan Ballengee on Oct 27, 2008 5:20 PM EDT up reply actions

He certainly didn't

I’m not sure why the housing fell through. I don’t know if the town stonewalled him or what. But I’m not even sure he needed any friends to get the deal done with the state. They love to throw away money.

In fact, a good friend of mine (who used to work with me at the course in question) stuck with that career and eventually became the maintenance superintendent of another local golf course. That ownership eventually sold the course to the state and now leases the property back and operates it. So not only did they receive a tidy sum from the original purchase, they also continue to profit as the acting operators.

NJ is consistently ranked as one of the worst states in the country to do business. It’s not hard to see why. If you’re not among the unfortunate small businesses that get regulated and taxed out of existence, it seems like you can certainly use the state to your advantage to turn a profit.

by Double Eagle on Oct 27, 2008 5:46 PM EDT up reply actions

aayyy - yo !

ey now – Nicky da nose and Tommy four fingers disagree wit yous on Joisey being a bad place to do bidness. (pay no attention to those humps of dirt on the open space land) :-D

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 6:04 PM EDT up reply actions

Hah!

Fortunately, we don’t talk like that down here. That’s north Jersey which really should be a separate state. Our accents are Philadelphia based, which aren’t much better, now that I think about it. That reminds me – there was a horse farm that got shut down not far from here years back – heard stories about shallow graves and that sort of thing.

I have to get out of this place.

by Double Eagle on Oct 27, 2008 7:57 PM EDT up reply actions

is it still

the open space they bought it for ?

I agree RB – though I’m sure he took his check from the state and ran – he had to be a little disappointed that he screwed up and didn’t get those developments built.

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 5:34 PM EDT reply actions

It is, but...

…it just closed down this spring.

With all the “open space” initiatives the state has going on, I’m starting to think that it’s a big investment for profit at taxpayer expense. I won’t be surprised if these desirable parcels of land are re-sold later. Of course, that would be great if that means the tax payers get paid back for our investment. But it doesn’t work like that here. New revenue is promptly put to new use, leaving us with the highest property taxes in the country.

by Double Eagle on Oct 27, 2008 5:50 PM EDT up reply actions

???

how do you close down open space ? besides, it keeps the Hudson cleaner without all those decomposing bodies and cement blocks and rusting chains. :-)

"this ball will fit in that fairway"

by courtgolf on Oct 27, 2008 6:06 PM EDT up reply actions