Global economic recession and golf industry
Golf has badly been affected by the recent global economic recession. There has been a decline in club memberships, lack of funds for new golf course developments and a steep slump in tourism that has always played its role in boosting golf.
Prior to the recession, selling golf club memberships was relatively easier. People affiliated with the sport were earning money.
Moreover, managements of courses had multiple sources to reel in a steady flow of cash to pay dues of the golf clubs.
Following the economic slump, everything has changed and people avoid joining clubs as fulltime members.
As a result, the revenues generated by clubs are on the decline and they are struggling to survive in tough market conditions.
Now, officials are more susceptible and forced to offer huge discounts to their customers in order to attract them.
Quite simply, club owners should understand now that the party is over and they will have to survive on low revenues compared to the past.
There is an oversupply of the golf clubs in the market, creating high competition. People do not have much money to spend on the front fees charged by the golf clubs.
Therefore, most of the clubs around the world abolished the upfront initiation membership fee, which is actually a major source of revenue for many clubs.
Moreover, there is a huge decline in the number of memberships at the moment. People are ending their memberships with clubs and are not being replaced by anyone else.
The competition is so high that clubs often fail to meet the breakeven point.
Another challenge faced by the golf industry is the lack of spectators entering golf courses. There was a time when people travelled across continents to watch their favourite players displaying their skills in the field. Now people avoid travelling and
save their money.
Therefore, for many countries, the brunt is being borne in terms of slump in tourism, especially in the USA and European countries.
Apart from golf clubs, even the elite governing bodies of the golf, the Professional Golfers Association (PGA) and Ladies Professional Golfers Association (LPGA), are facing financial problems and sponsorship defections.
Recently, both the Tour officials decided to change their schedules and reduced the number of tournaments played in the season.
The season-ending event of the LPGA Tour, LPGA State Farm Classic, came to its end after 36 years at Springfield.
The tournament’s management committee told that the title sponsor, State Farm, withdrew its support from the event, and it failed to attract any other sponsor for the elite tournament.
This is just one example. There are many other tournaments that were closed just because there were no sponsorship deals and funds.
Consequently, the prize money offered in many tournaments is also decreasing and companies do not offer large sponsorship deals due to the lack of spending on marketing operations.
After so many problems being faced by the golf industry, the boom in golf course construction appears to have subsided now as well.
Due to such high competition, investors avoid investing money in the golf course business and many of the elite golf clubs are forced to shut down.
However, there is one region that has somehow benefited from this recession, and that is Asia.
The flow of economy during the recession moved to the Asian continent and China is the country which capitalised on the situation.
Chinese officials have begun construction of several courses. Golf course designers like Rick Jacobson and Jack Nicklaus are also focusing on the Chinese golf industry.
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