More courses closed in 2007 than opened
The National Golf Foundation reported that more golf courses closed in 2007 than opened, a copy of what happened in 2006. Below is their press release.
CLOSURES OUTPACE OPENINGS IN 2007
NGF has identified 113 golf courses, in 18-hole equivalents, that opened for business in the U.S. in 2007. During the same period, there were 121.5 golf course closures, resulting in a net negative of 8.5 courses. This year’s story is much the same as 2006 when the number of closures outnumbered openings by 26.5.
“The development business has run full circle,” says NGF vice president Greg Nathan. “Developers are now being more prudent about the decision to build, and are doing more due diligence on where to build, and at what price point.”
Closures
Many courses close because of higher and better economic use of land, rather than business failure. Courses may be sold to developers when the underlying land has greater commercial real estate value than cash flow value as a golf course. In these cases, the land may have been unwittingly warehoused by the original owner, then sold by the owner’s heirs as a favorable exit strategy.A disproportionate number of closures were “non-traditional” facilities – either stand-alone 9-holers or short courses (executive or par-3). In 2007, they accounted for 43% of total closures but only 20% of total U.S. supply.
Five-year trend
Looking at the past five years combined, there have been 678.5 openings vs. 491.5 closures for a net positive of 187 courses, or a modest 37.4 per year. That equates to less than three-tenths of a percent of total supply being added per year. In other words, the overall number of golf courses is virtually unchanged from five years ago.Looking Ahead
While it’s too early to forecast 2008 openings, given the number of courses currently under construction, we expect the number of new courses built in 2008 to be similar to 2007.
This is not shocking given the over supply of golf courses in most areas of the country. It’s also not surprising given the current real estate market. I would predict this trend continuing for another 2 or 3 years at least. I would also expect the number of course closings to decline and the number of new courses openings to steeply decline.
The reason for the number of closings declining is that land development is slowing tremendously. Many courses that close end up as re-development projects. Those won’t happen as often, taking pressure off courses to sell.
The reason for the steep decline in new courses is similar to the decline in course closings, only at a much larger scale. The majority of new golf courses are associated with a residential development. With residential development at extreme lows, that translates to less demand for golf courses – a lot less.
It’s sort of odd how simple “economics” takes so long to catch up with the golf industry and especially golf courses. Many courses which are still open are extremely over priced. When will the prices for golf, and the number of golf courses open and opened be in line with the economics of the people paying for it?
The current situation of course closures outpacing new course openings is not surprising. There was a surge in golf popularity due to the “Tiger Effect”. At least 50% of those who started as a result of Woods’ fame are no longer playing the game.
I wish more golf courses would invest in running junior programs, there is a real untapped market there and could lead to more future customers.
[...] Consider that city infrastructure projects are opening up more and more places to ride, while according to the National Golf Federation, “NGF has identified 113 golf courses, in 18-hole equivalents, that opened for business in [...]
During the past past years golf is big and I love it but the money has put it out of site $$$ People who played golf all the time have stopped playing lately or have only played once a week. But even once a week each day of golf 4 times a month about 180.00 to 300.00. The courses are just asking to much and you can not even walk any more you have to ride, they are just pushing you in and pushing out RIDE RIDE so there’s a other 20.00 !!! One more to buy the golf clubs and even a putter $$$ !!! Golf a good game with the friends was nice but now it is just becoming not the thing to do it has just PRICED it self out. Kids and the house and all the other things is it !!! Now you watch it on TV. All sports have gone the same way $$$$$. You can not even go watch a game with out spending 100. to 150. Tickets and food and parking !!! So the CLUBS just stand there. NO MONEY !!!
I was a golfer for years, but I only golfed occasionally, also because of the cost. One day a co-worker took me disc golfing. I ridiculed it until I tried it, now my clubs are sold. I am a disc golfer now and I will never stop. It’s the same game with a lot more fun and it’s practically free.
The unfortunate thing about golf is that so many people that play the game are rude obnoxious jerks. I don’t know why golf attracts these people, but every time I’ve played golf I’ve encounters some a-hole who thinks everyone else is beneath him. The golf shop staff is typically arrogant and rude and the rangers are even worse. No matter how much I like the game itself the people at the golf course ruin it. Why would anyone pay money to a place that treats you like crap? No wonder so many people are selling their clubs.