When the economy was strong, baby boomers fueled a bull market in golf play, golf course construction, and golf equipment.
But the lack of attention to building the next generation of golfers is coming home to roost. It’s not a pretty picture.
"Young people entering the game after high school, 18- to 30-year-olds are down 35% in the last 10 years," said Mark King, recently named president of Adidas North America. "So I don't like where the game looks like it's going."
The next age bracket of golfers (25-44), long considered the demographic sweet spot of golf consumer spending, is not much better — down 26% since 1990.
Just as troubling is the number of people who are quitting golf. Half the 400,000 people who abandoned the sport in 2012 were under the age of 35, according to the National Golf Foundation.
All this is hitting the golf business right between the eyes.
Callaway Golf (NYSE: ELY) shares are down 10% year to date. Adidas (OTC: ADDYY) — maker of TaylorMade golfing equipment — recently fired 15% of the golf division's global workforce after it disclosed that golfing sales fell 27% in the first half of 2014.
And Dicks Sporting Goods (NYSE: DKS) fired more than 500 PGA golf pros from its stores last month as it struggles to manage falling golf revenue and profit declines.
What’s Wrong With Golf, and How Can We Fix It?
The best way to answer this may be to describe how I was introduced to golf: as a caddie at Westmoor Country Club in Milwaukee, just like my father in his day.
I caddied three to four times a week during the summer, but the big day was Monday, when caddies could play for free at the club.
On other days, I played at public golf courses that had very low junior rates. This led to a job at a private club, where I did everything from cutting grass to working in the pro shop to picking up balls on the range.
When I wasn’t working, I was playing golf for free, and later I joined my high school and eventually my college golf teams.
A lot has changed since then. Golf fees are a lot higher, and junior rates are largely extinct — even at public golf courses. A lot of private clubs have gotten rid of caddies, since electric golf carts are more profitable and don’t cause trouble. Buying good equipment to get started is also a lot more expensive.
Here is my prescription for the sport of golf, as well as the golf business and related stocks. Golf needs emergency care in three areas: flexibility, price, and time.
The sport needs a massive outreach to junior golfers, and this means bringing back robust caddie programs. This will put money in the pockets of young golfers, get golfers out of carts and walking (the way the game should really be played), and create the next wave of golfers.
Courses should be more junior-friendly, setting up off-peak times for low junior rates and evening parent/junior programs. Cincinnati offers a great model whereby a junior plays for free with a paying adult.
Move Away From One-Size-Fits-All Pricing Model
Right now, golf is tied to the traditional tee off on the first hole and finish on the eighteenth. This takes up four and a half to five hours of time — sometimes longer.
Why not offer the option of two hours with a cart and let golfers find holes on the course to play as much as they can within a time frame?
There are often gaps on the course that can be filled by these “roving” golfers. Creating fee structures friendlier to players with the time for only for nine or even six holes of golf will encourage more involvement.
Make Golf More Time Sensitive
In our fast-paced society, not many wish to spend five to six hours playing a round of golf on the weekend. We need more par 3 and executive-type courses where juniors and beginners can learn the game and play faster.
There is a market for nicely groomed golf practice facilities where players can spend an hour or two honing their skills or where beginners can learn the game.
The golf business is changing, but there are profits to be made by companies that adapt.
Until next time,
Carl Delfeld for Wealth Daily