The good news is that, despite the floundering economy, the number of rounds played on Colorado public golf courses in the first two-thirds of 2009 remained almost unchanged compared to the same period last year.
The flip side, however, is that green-fees revenue hasn’t kept pace with rounds played, meaning the times have been even tougher than usual for course operators this year — and things weren’t exactly rosy to begin with.
Those are the findings of a rounds and revenue survey of Colorado public course operators that was shared at a meeting held earlier this fall. The survey, which compared rounds and green-fees revenue from January through August 2009 to the same period in 2008, includes data from 70 public golf facilities around the state, with the numbers broken down regionally.
For those courses, the total number of rounds played during the first eight months of this year (2.237 million) was almost identical to 2008. However, green-fees revenue dropped 1 percent overall, and nine courses suffered the double whammy of seeing that revenue drop while actually adding rounds played.
Maintaining the same amount of play was encouraging given the recession, but prominent golf executives around the state continue to be concerned about the financial viability of course operators.
The current situation “is keeping everybody very lean,” CGA executive director Ed Mate said. “The golf business is not very healthy. We’re down from “˜not very good to start with.’ If the golf industry were a human being, it would be in the doctor’s office.”
Pointing to a situation at one metro Denver course, Colorado PGA executive director Eddie Ainsworth noted, “It concerns me when rounds are up 9.8 percent and (green-fees) revenue is down 5.4 percent.”
And the problem goes well beyond the figures in the rounds and revenue survey, which doesn’t reflect the overall financial challenges course operators often face. While people are still playing golf, they’re often spending less on merchandise as well as food and beverage, and they’re walking more instead of renting a cart.
“In talking to course operators (the survey) is probably an understatement of how tough a year it was,” Mate said. “Just based on feedback, not any data, I’ve heard everywhere from 10 to 20 percent down in merchandise, with food and beverage similar, and cart utilization is down. People are still playing rounds, but they’re being very careful about how they”˜re spending money, and maybe playing a cheaper course.”
And Ainsworth believes the spending trends are even more pronounced at private courses.
Ainsworth, for one, sees this as a potentially crucial time for course operators. In an attempt to spark business during challenging economic times, many are offering significant discounts or other deals. Ainsworth questions that approach, believing it will hurt the industry over the long haul.
“We have to be very careful of discounting ourselves right out of business,” he said. “This (economic downturn) is short-term stuff. Once you program the customer to look for discounts, you won’t be able to charge what you need to charge to maintain the conditions and take care of staff members properly. My biggest fear is all the discounting that’s going on will hurt a lot of golf operations. I don’t believe discounting is the way to go. We need to come up with a smarter way.”
In an attempt to do just that, one of the top agenda items at next week’s PGA of America annual meeting in New Orleans is brainstorming about best business practices with other PGA professionals around the country. Eight or nine members of the Colorado PGA will attend the annual meeting, then on Nov. 16 the Section will host a business planning session at Pinehurst Country Club in Denver, where similar topics will be discussed.
While the rounds and revenue survey shows that many public courses are struggling, there are certainly exceptions. For instance, two courses that had no extenuating circumstances that might skew the numbers reported increases in green-fees revenue of more 10 percent from 2008 to 2009, with one of those seeing a jump of almost 16 percent. Though combined green-fees revenue dropped 1 percent for the 70 courses, about half of those facilities actually saw their green-fees income increase.
Also, 17 courses reported their green-fees revenue increased in 2009 even while their rounds played dropped. One, in northern Colorado, had rounds decrease by 20 percent while green-fees revenue remained virtually unchanged.
“We have people out there managing their budgets well,” Ainsworth said.
Conversely, four courses — all in the Denver metro area — saw green-fees revenue drop more than 10 percent in 2009.
While the recession has certainly exacerbated the financial problems faced by some course operators, the challenging situation long preceded the current economic turmoil and likely will be there after the business environment improves.
One of the long-term problems is that despite the number of rounds played in the Denver metro area remaining fairly flat for many years (1.8 million to 1.9 million per year), there have been many new courses built in the last 20 years. For instance, one spike saw 50 courses open in Colorado during the five-year period from 1997 through 2001. Essentially that means that while the pie isn’t getting any bigger, there are more people taking a slice of it.
“The additional supply hurts (course operators); it hits the bottom line,” Mate said. “In the last 10 years especially, the average course is barely hanging on (financially).”
Though courses going out of business has been a bigger problem in other areas of the country, it’s very seldom happened in Colorado. The economy being marginally better in this state than elsewhere helps in that regard. Another factor is that many Colorado public courses are run by municipalities or recreation districts rather than private ownership groups.
“They can afford to stay in business even if they’re not making a profit,” Mate said. “They’re out there for the community to enjoy. We’re fortunate not to have any (course) closings so far to speak of.”
And nowadays the building of new courses, both in Colorado and around the U.S., has slowed to a crawl. The only 18-hole course to open in Colorado in 2009 was CommonGround in Aurora, and that was built on the same site as Mira Vista, which was closed in 2007 to make way for the construction of CommonGround.
The dramatic slowing of new course development “is a good thing in my mind,” Mate said. “Somebody smarter than me said that the first rule in getting out of a hole is to quit digging.”
Courses in the Denver metro region made up the majority of the facilities surveyed for the rounds and revenue report. Those metro-area courses reported a 0.6 percent increase in the number of rounds played in 2009 compared to last year, and a 1.8 percent decrease in green-fees revenue.
A survey compiling public-course data for all of 2009 will be conducted in January.
