Golfweek, 14 Feb 2015

Early in his annual State of the Industry presentation at last month’s PGA Merchandise Show, Jim Koppenhaver of Pellucid Corp. acknowledged that his candid analysis of the golf business sometimes draws blowback from various sectors.

“People say, ‘Jim, be more positive. People want to hear good news,’ ” Koppenhaver said.

The industry has enough cheerleaders, enough people who tout various participation initiatives despite the fact that rounds played continue to decline annually. What it needs is serious analysis that clarifies the problems and offers some hints on how to rectify them. That’s where Koppenhaver comes in.

Every year at the PGA Show, the most valuable thing I do is attend the presentation by Koppenhaver and his sidekick, Stuart Lindsay of Edgehill Golf Advisors. I’m obviously not the only one who values their opinions. I attended their morning presentation at the PGA Show, and it was standing-room only, with about 25 people lined up against the walls because no seats were available. I took that as an indication that people are looking for good information to help them cope with the industry’s seemingly perpetual stagnation.

(For those who missed the PGA Show presentation, Koppenhaver and Lindsay are offering webcast replays during this month’s Golf Industry Show. The webcasts are free, will run from noon to 1 p.m. CST on Feb. 25 and Feb. 26, and are limited to 100 concurrent participants. Registration is required; if you’re interested, go to pellucidcorp.com to reserve a spot. You can thank me later.)

In the spirit of being more positive, Koppenhaver estimated that course revenues grew 3.1 percent last year, after a 1.2-percent decline in 2013. The improvement appears to have been driven largely by higher food-and-beverage sales. Golf fees were basically flat last year – still a positive sign after a 3.1-percent decline in that category in 2013. Golf fees at resorts are holding steady, but lagging at municipal courses.

“We’re seeing a little bit of pricing power come back into the industry,” Koppenhaver said.

But that’s pretty much where the good news ended.

There’s a wealth of data and analysis in the presentation, but the key takeaway for me remains the same: Our industry has too many golf courses and too few golfers.

We continue to see progress, if that’s the correct term, on the supply side. The total inventory of U.S. courses has dropped each year since 2006, and the decline has accelerated the past four years, with an average of 137 closings since 2011. That might seem like a lot, but Koppenhaver estimated that the industry is still “about five years away from getting any kind of equilibrium.” In other words, his best estimate is that another 700 courses need to close based on declining consumer demand.

And that’s the bigger problem. For all of the industry rhetoric about “growing the game,” there’s little or no evidence that we’re doing that.

Consider that in November 2000, PGA Tour commissioner Tim Finchem, normally the most cautious of men, set the fanciful goal that by 2020, there would be 50 million American golfers playing 1 billion rounds annually. In 2000, about 518 million rounds were played in the U.S., and there was some reason for optimism given that rounds had grown 15 percent over the previous decade. But that was the high-water mark. In 2014, about 451 million rounds were played in the U.S., bringing us back to the 1990 level.

Perhaps most troubling is that the pipeline is drying up. The data indicates the biggest participation declines in 2013 (the most recent data available in this category) were among ages 7-17 (9.6 percent) and ages 18-34 (8.4 percent).

“We’re just not relevant to millennials,” Koppenhaver said.

The total number of golfers is down to an estimated 23 million, from nearly 30 million in 2000. The decline is being driven by men giving up the game and, it seems, people who played infrequently.

The rare demographic group that is growing is golfers 65 and older. That’s an affluent demographic, but not one with a lot of legs.

So try as he might to offer some upbeat news, Koppenhaver had to level with his audience, most of whom operate courses.

There’s nobody out there who’s going to save us,” he said. “We have to save ourselves.”

There you have it, ArrowCreek owners. To “protect our property values” our board and has spent nearly 18 months plotting to invest in a sick, dying, hobby. That is their “vision” to “control our own destiny.” (These quotes are from Board and committee leaders.) I say, “prove how this plot protects anything!”