In this recent article from the LA Times,
Golf courses suffer as recession deals a bogey
…it reports on how golf courses are struggling and some folding up in one of the biggest golf communities in the country, the Palm Springs, CA. area.
This struggle for profitability amongst golf courses, public and private, is not isolated to just the Southern California area and is more wide spread than many communities are willing to let on. The problem many courses are experiencing has been brewing for many years and was brought on with so many golf courses being built as part of a housing development. These golf facilities, country clubs and golf resorts were being subsidized by real estate developers. Once the developers’ residential and commercial lots sold out they then left the golf courses to stand on their own without the subsidizes to their operations budget.
Many of the golf courses were forced to incur unbelievable amounts of debt to build clubhouses and golf courses with astronomical levels of uniqueness so it would draw people to buy the overinflated priced homes and lots offered around the golf course. Now with the down turn in the entire economy people are leaving the golf course lifestyle to over to areas that have work.
The real issue with the closing of golf courses is the devastating impact the closing of a golf course has on the rest of the economy. The trickle down effects starts with the homeowners who bought property on a golf course. The property values around the golf course plummeted.
Going beyond the immediate impact to the slumping golf real estate market, the laying off of the hundreds of people a golf course employ adds to the burden of the community and government resources. The many vendors of a golf course feel the pinch in their revenue when a golf course they supply with goods goes under. In short order those service businesses and management companies of the bankrupted golf courses start to see the need to lay off their meager workforce or even fold up themselves leaving another scar on the economy. The impact golf has on the entire economy is justifiably impacting to everyone.
Are there solutions to help golf survive? Absolutely.
I will have to disagree and yet agree that part of the problem many golf courses caused with reducing prices to lure in golfers to play the golf course did force many golf facilities to realize how their heavy debt was causing them to go out of business. However, it is that debt that is negatively impacting GOLF. The individuals, or institutions, who set the high interest rates and expectations of high returns on investments contribute more to the cause of the problem than the price reductions golf course owners made in an attempt to survive.
In weighting the economic impact the closing a golf course has on the national economy compared to the high risk loans many deep pocketed, federally subsidized, financial institutions made to these golf facilities, the solution to golf’s survival leans heavily in favor of the investors’ need to walk away from the loan instead of putting hundreds of more people on the streets from the result of forcing yet another bankruptcy that will not result in the recovery of even a part of the funds issued. This is one very impacting, and unpopular, solution to the golf economy’s failure that needs to be made on a broad scale across the country to keep golf courses open so GOLF can survive.
Obviously, golf courses are businesses and all businesses have to make money to get the economy as a whole moving out of the recession. To generate interest amongst the remaining golfers in these communities the golf courses have to reduce their pricing. If the debt they carry is causing the golf course to not be able to reduce price to what the REAL market can afford then something has to break and in this recession the debt has to be dropped or the golf course has to close..that is not good for golf.
These debts hammering golf courses’ bottomline were created by the loans people or institutions made to them to keep the center piece of the golf community vibrant. These people who have these funds to loan are intelligent people and should have know these loans carried a very high risk. Yes, the golf course may not have been built if the loans were not made, but they were built meaning the risk of the golf course making it to profitability was taken. These investor groups and banks chose to play in this high stakes poker game and the economy proved to hold the upper hand. Its now time for the financial institutions who anteed up to play in this high stake game to push back from the table and just walk away.
Other Viable Options:
What is being ignored by the golf courses, and the golf industry as a whole, is the golf consumer. The golf industry seems to have forgotten that the golfer is who ultimately is footing the bill for their golf business. In the case of the private golf club member or the golfer who plays at high end public facilities, the golf courses forget that these golf consumers are also business people who are suffering through one of the worst recessions in nearly 80 years.
More has to be done by the golf course to help business people with their business. Why not? ..The business people are helping the golf courses with paying inflated membership dues and green fees to cover their uncalled for debt. Shouldn’t the golf courses balance things out and help the business people stay in business so the golf course can stay in business?
It is clear golf is an expensive endeavor especially if golf is only looked at as a hobby or something that is just recreational. However, if more business people would take the opportunity to look at the positive virtues golf can have on developing new business they would have to change their minds. If more business people would take up the game of golf this one action would invigorated more golfers to play more golf. This positive reaction would put a spur in golf’s economy. Why is this not being considered?
Too many business people are running away from golf sighting all of GOLF as a frivolous entertainment cost. Why are they saying this? Because that is what so call business experts are telling them.
What they refuse to look at is the fact, if used correctly, golf could be a powerful form of business development. The problem lies in many business owners and executive not understanding golf’s underlining virtues that make it a business tool. This is evident in the many large businesses turning away from sponsoring top professional golf events.
Business Golf is based on a strong foundation of business networking. However, there is much more that goes on, or can go on, during a round of golf that will effect positively on the business’ bottomline.
To keep the recession at bay in the golf industry more golf courses need to look within their memberships and find ways to proactively help their members develop their businesses. How well someone’s business is doing will more than likely be what determines if they stay a member or even continue to play golf.
More needs to be done to show business people the virtues of Business Golf. I am doing my part and stand ready to take on more if GOLF is interested. Let me know how I can help.
