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A Simple Question: Why Can't Golf Be Free?

Golf Blogger blew my mind a little bit last week when I read his post on his notion that free golf may well be profitable.  He's basing the idea off Chris Anderson's book entitled Free: The Future of A Radical Price.  The book details how some companies - most famously Google - are able to provide valuable services for free because of the low or nonexistent marginal cost of doing so. 

That's economics speak, but you don't have to know Bretton Woods to appreciate it.  Marginal cost is a term used to describe the cost to a company of providing one more unit of service to a customer.  To define that term, Golf Blogger puts it into the context of golfing.

If the course opens for just player each day, the greens and fairways must be mowed, the grass watered and fertilized; the course has to open the clubhouse, pay the groundskeepers, the pro, the guy behind the counter and the starter. In short, Lake Forest will incur all of its daily expenses for just one tee time. That means that the second, third, and fourth tee times don’t really impose any additional costs on the course. Those expenses have already been incurred.

Golf Blogger reaches the conclusion that being completely full with only a chunk actually paying green fees is better than having fewer people on the course but every person paying the green fee.  So, then, why not make the leap entirely?  Why can't golf be free?

Star-divide

To an extent, there's some merit to the claim.  If the golf course can make enough profit off of the sale of food and drink, the rental of carts, and other pro shop equipment to offset the cost of course maintenance, then golf can be free. 

The marginal cost for providing golf to more individuals is spread out, but its biggest component is the added maintenance required for each golfer.  Every golfer makes divots, ball marks, and does other damage to the course that increases with each extra golfer on the course.  Therefore, in order for a course to go green fee-less, a course must make up that gap per customer.  The question, then, is how to do that.

Google can offer services for free because they are trying to drive you back to their search service and make money off of ads placed in their search service.  Golf has some potential equivalents.  The entire experience could become a la carte.  Golf carts are already an extra fee.  So are range balls.  How about GPS units?  Maybe scorecards?  Why not charge for on course water?  Recover the marginal cost by asking people to pay for convenience. 

If golfers want a no frills round of golf, then they can walk, bring their own water, and pace off the yardages themselves.  I do that a lot.  As a golfer, I am almost entirely worthless to the golf course owner.  I almost always walk and never buy anything other than the right to play the course.  Why have me pay $20 to play nine holes?  Make it free and I will come out more often.  That'll leave me more money to spend on those luxury services that I choose to avoid today.  Maybe I'll stop in for an overpriced beer after the round.  Perhaps I will snag up a shirt from the pro shop.  Hell, I may become lazy one day and just rent a GPS.  Then the golf course makes money on me.

Think of it like going to a casino - especially one in Vegas.  The room prices are so cheap because the rooms are not what make money for the casino.  It is everything else.  Gambling makes the most money, but so do overpriced dinners, gondala rides in fake rivers, and selling you used decks of genuine casino cards. 

So why can't golf do the same?  Why can't golf make enough back on the extras of the golf experience to make golf itself free?

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You're not serious...

…if I asked, would you say that health care in Canada is free, too ? Do you believe businesses pay taxes ?

That is as convoluted an argument as I have seen in quite a while. It’s free…but it costs in other areas…so it’s NOT free. Google works because investors/businesses see an advantage to having their name in front of as many people as possible. It comes at a cost – that cost gets passed along to the people who go to those businesses and spend money.

On the island of Lana’i, a 45 minute ferry ride from Maui, also where Bill Gates got married – there are two spectacular, and expensive resort courses. The owners built a 9 hole “free” course for the locals – many of whom are employed at the resorts. They keep it up with the resort equipment. A VERY nice perk for the residents – but it the cost for the land and the upkeep don’t just get paid for out of thin air – it comes from other revenues. And they still have to buy their own clubs and balls.

Are you also going to suggest that club manufacturers give clubs and balls and shoes and whatever else anybody else might want/need to play the game ?

Here’s the thing – we don’t live in an episode of Star Trek where they can play on holo-decks and things just magically appear and disappear as they are needed. The reason we have better equipment and courses these days is because companies make profits and turn some of it back into research and development.

Golf courses require income from food and drink…which have to be paid for – and cart rentals…which have to be rented or bought, then kept up…PLUS greens fees to stay in business. How many $15 beers or cokes would you buy if you were at your local course just so you could delude yourself into thinking that the golf was “free” ?

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 5:25 PM EDT reply actions   0 recs

In Venezuela, all golf is free.

Power to the people.

OK, it’s not true—but it may be soon.

by Cairo on Aug 26, 2009 6:00 PM EDT up reply actions   0 recs

yeah – Hugo Chavez National :-) and Miss Venezuela is all natural.

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 6:11 PM EDT up reply actions   0 recs

In the example given by GolfBlogger, the club charged for a season pass – meaning as the marginal cost approaches zero, the club makes $200 x each person who signed up for no additional cost. And lots of golf courses offer season passes already.

by DiabloDan on Aug 26, 2009 5:27 PM EDT reply actions   0 recs

$200 for a seasonal pass ? I seriously doubt that…unless he’s talking about Alaska. :-) Unless there is almost no overhead and the course is on private property with minimal upkeep…meaning the course is in pretty bad shape. You would have to sell a boatload of season passes for this to work.

We have courses around Atlanta that have season passes but they don’t sell enough to offset the costs of the course. Players might get to play “free” if they don’t want a cart – or they can only play on weekdays – or other such restrictions. The course has a bit of income ahead of time – but still depends on a majority of non-member players to stay in business.

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 5:36 PM EDT up reply actions   0 recs

read the golf blogger post. it’s $200 to play as much as you want for two years.

regardless, the idea is to have enough golfers that the extra money they make on food/beverage sales (which if you’re saving money, you will be more inclined to splurge on these costs) and cart rentals more than covers for the cost of lost revenue in tee times. this is perfectly plausible.

jet blue just did a, ‘fly as much as you want’ promo (of course, restrictions and additional costs applied) but free looks like the way a lot of things are going to go.

by DiabloDan on Aug 26, 2009 5:55 PM EDT reply actions   0 recs

Repeat after me...

… Nothing is free. Nothing is free. Nothing is free.

Using your example of you coming out at off hours paying $20, what possible incentive would the owner have to let you come for free just so you’ll maybe buy other “premium” services? He’s already getting $20 from you. A bird in hand, and all that.

Google’s model is more about subsidies. They make money with AdSense and with selling search appliances. That’s pretty much it (or at least was at some point). They then use that revenue to subsidize other ventures. It’s for the sake of developing new technologies that will eventually make money either through increased advertising exposure or through sales and the like.

And they’re almost forced to do that. I mean, who would have paid for Gmail or docs or YouTube, etc. in their early stages? Instead, they subsidize long development cycles with revenue from other areas so that they can do long term development on technologies that may never get out of the red in terms of money making potential.

Golf courses, on the other hand, stand to gain little or nothing by letting people come out for free. There’s just not a lot more to sell to make up the difference when tee sheets are already packed with people willing to pay a daily greens fee or a yearly membership fee. Not to mention, there’s nothing to gain by subsidizing greens fees with other sales as there is in the Google example because cramming more people in who might not even provide much more revenue is kind of pointless and may degrade the experience for everyone (longer rounds, more wear and tear, etc.).

If a golf course doesn’t have sufficient play to stay afloat, then it either charges too much or there isn’t enough demand in the market.

by Double Eagle on Aug 26, 2009 5:55 PM EDT reply actions   0 recs

well said

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 6:15 PM EDT up reply actions   0 recs

The Milwaukee Brwers and the KC Royals have done similar programs.

They sometimes offer free tickets to late season games, but they see higher revenue as they still charge for parking, concessions, etc.

I say “sometimes” because I think people would end up still try to save money if it were offered every game or weekly. Something like that may be viable for golf. Why not allow kids under 14 free range balls after school on Wednesdays, for example? It promotes the game, gives them time to practice, and it brings more people to the course on the least busy time of the week.

by Cairo on Aug 26, 2009 5:59 PM EDT reply actions   0 recs

Now this, I could see

Limited promotions and things like that are perfect and free golf would be excellent for all the things you mentioned. I was more talking in terms of a long-term free golf model. But using promotions to get people in and promote the course and game is a good thing.

by Double Eagle on Aug 26, 2009 6:12 PM EDT up reply actions   0 recs

The Brewers and Royals are also small market teams that struggle to put butts in seats. What also happens with the free tickets or reduced price tickets or 2 for 1 tickets is that they piss off their season ticket base, who stop buying seats for full price and just buy tickets for the games they want.

The short term promotions definitely work to get people out to the course – but they also have to make up the revenue elsewhere…which keeps prime time prices high.

It’s a real balancing act.

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 6:22 PM EDT up reply actions   0 recs

Season ticket holders sit between first and third. They probably don’t care if the team gives away bleacher seats at the end of a season.

Truth has a well-known liberal bias.

by dianemarie on Aug 26, 2009 9:34 PM EDT up reply actions   0 recs

season tickets are sold in every section of the ballpark

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 9:40 PM EDT up reply actions   0 recs

I definitely am getting the desired debate, so this is good :)

I thought about this some after I posted it. I think a better example than Google might be an amusement park. You can charge for an annual pass to the park. (Like the golf course in Golf Blogger’s post.) You then make the money based off of the extras when they come to the course.

A follow up question: other than the usual extras I thought of, what are some ingenuitive ones?

Email me any comments or questions at ryan@thegolfnewsnet.com.

by Ryan Ballengee on Aug 26, 2009 6:36 PM EDT reply actions   0 recs

desired debate, eh ? You should be feeling like General Custer about now. :-)

same outcome with the amusement park – cost of regular admission, outrageous as it may be, plus food, souveniers, and other goodies have to go up to cover the lost revenue from the season passes.

If everyone coming through the gate had a season pass, you would be paying twice as much as you do now for everything inside the park.

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 7:40 PM EDT up reply actions   0 recs

OMG, South Park reference from Ryan?!

Remember that episode where Cartman buys the amusement park.

That was great.

by The Constructivist on Aug 27, 2009 2:11 PM EDT up reply actions   0 recs

That is one of my FAVORITE South Parks!

Email me any comments or questions at ryan@thegolfnewsnet.com.

by Ryan Ballengee on Aug 27, 2009 2:24 PM EDT up reply actions   0 recs

FWIW

Chris Anderson is a massive asshat. So yanno…just something to keep in mind when basing biz models on his sage guidance:

http://gawker.com/5325619/chris-anderson-asshole-interviewee

by NiceBallz on Aug 26, 2009 7:51 PM EDT reply actions   0 recs

Wait... I hear John Lennon...

Imagine there’s no greens fees
It’s easy if you try
No sand below us
Above us, only sky
Imagine all the golfers
Playin’ free todaaaaaaay….

by Double Eagle on Aug 26, 2009 9:10 PM EDT reply actions   0 recs

encore !

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 9:42 PM EDT up reply actions   0 recs

Ryan, I ran your suggestion past the

Board and Membership Chairman, they asked me to withdraw any invitation to join our club I may have mentioned to you in the past. They are scared to death a proposal other than from them might actually work…

...from the land of pleasant living, Baltimore.

by One-Eyed Golfer Guy on Aug 26, 2009 9:34 PM EDT reply actions   0 recs

Vince – aren’t you a member of a country club ? That’s a great example of how this idea doesn’t work. You don’t pay greens fees when you show up…but you paid an initiation fee, possibly an annual renewal fee, and monthly dues that, if they follow the example of many clubs, also require you to spend so much in the restaurant and/or pro shop each month. All that for “free” greens fees.

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 9:45 PM EDT up reply actions   0 recs

Not only that...

…but the membership and initiation fees aren’t just random numbers that are throw out there to see what the club can get. They know what their operating budget is, and they need to make the numbers work or they will be swirling around the toilet in short order.

I pay about $1800/year for membership at my course (which is not private, and that’s just greens fees – with carts included, it’s probably $2500). That number is just low enough to make it seem worth the money for people who play there a lot and figure it’s cheaper to just pay it up front. A person would have to play 38 weekend morning rounds (normally $65) to break even. Many members have probably never done the math and don’t play that much (or play at off hours when it’s cheaper anyway, meaning that many more rounds to break even). But even for those that do play that much (don’t forget, we have an off-season here from, say, November to April) it’s still worth it for the course to get the money up front.

However, the price certainly isn’t just a guesstimate. There is method to the madness.

by Double Eagle on Aug 26, 2009 9:58 PM EDT up reply actions   0 recs

Boring

I can’t imagine paying money, a large amount or small, that would commit me to playing the same course all the time.

Truth has a well-known liberal bias.

by dianemarie on Aug 26, 2009 9:37 PM EDT reply actions   0 recs

I know people like that...

…but I’m the exact opposite. It’s not that I don’t like playing other courses once in a while, but I like to play my home course a lot because I see it as an ever-present challenge. Playing a different course the first time isn’t as much fun because I don’t know where to hit the ball or what the yardages are like and so on. At my course, I have to manage each shot and it’s like a chess match, but without the missing information. I know the layouts of all the fairways and greens so I know exactly what shot I want to hit so it becomes all about execution and then about adjustment when unplanned things happen.

I’m happy to go out there and continually try and conquer the place and to try and constantly improve. I think maybe that developed when I did golf course work during college. I would go out and play most days after work and because it was really my only outlet for golf at that time, I just kind of developed that attitude.

by Double Eagle on Aug 26, 2009 10:08 PM EDT up reply actions   0 recs

I understand the fun and comfort of playing a familiar course – trying to master an unmasterable game on a course that never plays the same two days in a row.

But what do YOU (personally) like to do to shake things up at your home course ? Different tees ? Mix up the clubs on the tee ?

"this ball will fit in that fairway"

by courtgolf on Aug 26, 2009 10:27 PM EDT up reply actions   0 recs

Hmmm...

You know, I don’t really do much to shake it up. I don’t tend to play from different tees. I might try different shots, changing how I play a hole from the tee, like you said. I might go for shots that are bad gambles, or try to play intentionally conservative.

When I feel like things really need shaking up, those might be the times I go out and play somewhere different. I play elsewhere maybe 5+ times per year versus dozens at my home course.

I think I’ve developed a shot-oriented mentality. In other words, the challenge for me lies in each individual shot, as opposed to looking at the course as a whole. And since they’re never the same (except from the tees), the challenges are endless. Certainly score (and thus the course as a whole) matters, but I definitely find myself lost in each shot and satisfied with the challenges of each. Maybe that’s why I don’t have as much fun at a new place right away, because I don’t have the information to fully accept the challenge of each and every shot.

I could have fun playing lots of different places all the time, but I might not have as much fun until I’ve played a particular place a few times, enough that I know what I’m facing on every shot.

by Double Eagle on Aug 26, 2009 10:51 PM EDT up reply actions   0 recs

I have a "home" course

I play in an after work, ten week summer league at a pretty nice Muni nearby. I also play there another five to ten times a year. That’s enough that I’ve been behind a particular tree on the second so often, it ought to have a plaque with my name. I’ve suffered the risk and benefited from the reward that’s available on the blind tee shot at 15. I know the slope of the greens and the depth of the bunkers, all of them. I love playing there. That’s my “home” course.

But I also participate in a weekend travel league that plays a rota of about 15 courses. I agree, the first time I play one of those courses I don’t do so well, but after a couple of times through I develop a familiarity with each. Most I look forward to playing, a few I don’t care if I ever see again. Even the “bad” courses have a hole or two that are a pleasure to play and the “good” courses have a hole or two I dread.

If I almost exclusively played the same course I’m certain my index would go down, but I don’t really care. I like coming to a hole I’ve only played once before and thinking, “Oh, yeah, I remember this one…”

Truth has a well-known liberal bias.

by dianemarie on Aug 27, 2009 8:28 AM EDT up reply actions   0 recs

NOT Boring

I used to say that, but playing the same course repeatedly has its charms, because it is different every time I play it. The weather is different, the pins are never in the same place, the course conditions vary and my own game varies from round to round.

Say that I have a tad of a fade going today because my swing plane has crept up some. It requires a different strategy to score. Or say I am having a bad day hitting greens in reg and I have to rely on my up-close short game.

It’s never the same…and always interesting.

by Old Man Par on Aug 27, 2009 9:23 AM EDT up reply actions   0 recs

Wasn’t saying “boring” – but if you hit driver / 8-iron on a hole for 10 years, you never find out what happens if you try 3-wood or even a 5-iron off the tee. Or even try a Mo Norman..told that a hole was just driver 9-iron, he hit 9-iron off the tee then driver to the green.

"this ball will fit in that fairway"

by courtgolf on Aug 27, 2009 9:26 AM EDT up reply actions   0 recs

lol – definitely not me ! I struggle with club choice at the putt-putt course. :-D

I was just curious what someone who does play the same course most of the time does to keep things fresh.

"this ball will fit in that fairway"

by courtgolf on Aug 27, 2009 2:34 PM EDT up reply actions   0 recs

It's not the course, it's the people...

and the time that make being a member at a private club worthwhile to me.

I typically play 18 holes of golf, in a foursome, whether it’s a Wednesday afternoon or Saturday/Sunday morning, in no more than 3.5 hours. And that’s walking. Often we’ll grab a cart and play an extra nine holes in under an hour and a half.

There are also roughly 50 guys with handicaps in the +2 to 8 range that I can set up matches with on any given day. There are tournaments, interclub team events, and the list goes on.

Regardless of handicap level, age, gender, etc. there are always groups to play with on any given day.

There are plenty of courses in the area that I like as much, if not more than my club. However, it’s the overall experience and the people that make it worthwhile to me.

by MattSpence on Aug 27, 2009 9:12 AM EDT reply actions   0 recs

dang ! That’s some club with 50 guys at +2 !

"this ball will fit in that fairway"

by courtgolf on Aug 27, 2009 9:23 AM EDT up reply actions   0 recs

It is one hell of a club, but that’s clearly not what I said… ;-)

by MattSpence on Aug 27, 2009 9:36 AM EDT up reply actions   0 recs

I would like to join a club (Matt’s club, actually) because of the people there. Played the course in high school for my golf team and loved the course and the atmosphere.

Email me any comments or questions at ryan@thegolfnewsnet.com.

by Ryan Ballengee on Aug 27, 2009 9:39 AM EDT up reply actions   0 recs

I am still waiting for an invite from Vince to come up there and play, but I understand hoi polloi like me aren’t welcome…. :-)

by Old Man Par on Aug 27, 2009 9:42 AM EDT up reply actions   0 recs

I know – just kidding around – that’s still a VERY impressive 10 shot club to be in.

How many members are there ?

"this ball will fit in that fairway"

by courtgolf on Aug 27, 2009 9:56 AM EDT up reply actions   0 recs

Membership numbers have fluctuated a bit this year, so I’m not sure of the exact number. I’m guessing it’s around 350-400 total members, with 70% being golfing/full members and 30% being social members. OEG was the membership committee chair a couple years ago and could probably give you the exact numbers, heights, weights, blood types, SSNs, childrens’ names, etc. of each member. He’s a little strange like that…

A typical Wednesday goes something like this:

I sneak out get off of work around 3pm and head to the club. About 20 guys are on “the list” for 4pm. We take the five guys with the lowest handicaps and do a draft of five teams with four players each. We’ll then play a four-ball where the lowest two balls on each hole count. The team with the lowest score “wins”, which only means you don’t have to pay the $10/man that all the other teams kick in. We then put all the money towards the “game check” (bar tab) for that evening, settle our side bets, and bullshit until our wives call or the bar closes.

The side action is typically the most fun and keeps everyone in it, as your #1 & #2 players from each team may have side bets with the #1 & #2 from the other teams, your #2 & #3 the same thing, #3 & #4 the same thing, and so on. There’s also some heads up side bets and all the usual chatter that goes along with that.

The guys who are self-employed and retired do this every day of the week, but the biggest days of the week are Wednesdays & Fridays.

When it starts getting dark earlier, we just leave work earlier!

It’s a blast and RB would be a welcome addition!

by MattSpence on Aug 27, 2009 11:37 AM EDT up reply actions   0 recs

now THAT’S the way to spend a Wednesday.

just one question – do you have Fresca ? :-)

"this ball will fit in that fairway"

by courtgolf on Aug 27, 2009 11:44 AM EDT up reply actions   0 recs

court, you'll love this

…we have a big Texas Hold ‘Em card game every Wednesday night ,, 52 weeks per year. There are usually 9-12 players and the ’ante’ is $150. Blinds are timed, rebuys in the first hour. Pot split either 3 or 4 ways. Winner usually walks away with a Grover Cleveland ($1,000)

Ketel One martinis, big cigars, three hour round of golf, steaks on the veranda AND Texas Hold ’Em. You can come up from Atlanta any time. Stop in Carolina for Charles, but leave Ryan in Columbia, MD. Anybody who comes up with a “get more for free” scam is way too smart for my club…

...from the land of pleasant living, Baltimore.

by One-Eyed Golfer Guy on Aug 27, 2009 11:55 AM EDT reply actions   0 recs

that does it – find me a job up there – I’m MOVING !!

"this ball will fit in that fairway"

by courtgolf on Aug 27, 2009 11:59 AM EDT up reply actions   0 recs

Umm, how can I get in on this game?!

Email me any comments or questions at ryan@thegolfnewsnet.com.

by Ryan Ballengee on Aug 27, 2009 12:09 PM EDT up reply actions   0 recs

Bring a lot of cash, for starters.

by Old Man Par on Aug 27, 2009 12:17 PM EDT up reply actions   0 recs

I can do that.

Email me any comments or questions at ryan@thegolfnewsnet.com.

by Ryan Ballengee on Aug 27, 2009 2:24 PM EDT up reply actions   0 recs

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