Is Golf In Trouble Again or Is This More Media Sensationalism?
When Golfsmith filed bankruptcy and Nike declared it would stop selling golf equipment the media decried this is more evidence the golf industry is in trouble. Well, is this true and are we in trouble? First, anyone watching the presidential debates knows the media for the most part, has become a dishonest perpetrator of creating news not reporting it. I have a friend whose cousin works at CNN and she and another person’s sole job is to spend 10 or more hours a day digging up dirt on Trump. This is not about politics, but it is about the media’s rush to sensationalism in their ardent chase for rating that runs so deep and pervasive, they are willing to print anything without due diligence or say anything on the thinnest of speculation.
As the largest golf course brokers in the country with golf courses for sale, we have to understand and dissect the news to discern what is fact and what media sensationalism. When one really looks at Nike, which did $700M in golf revenue from both soft and hard goods, only about $60M, less than 10% was from equipment. When Tiger went, so did Nike’s equipment line. When you are in business and you have to spend money in R&D and advertising to compete, vs. just putting your logo on clothing, (which has little R&D and doesn’t need advertising just to sustain itself), you can see why the best business decision for Nike was to get out of a highly competitive, highly intensive R&D product line that cost big to promote it. Nike is doing what any good company would do. Punt, vs. being backed up on your own 20 yard line.
Now we turn ourselves to Golfsmith. They were doing fine, then they bought by Canada’s largest golf retailer who over-leveraged themselves to buy the stores. The financial news is replete with stories of hundreds of companies that over-leveraged themselves and went bankrupt. So golf has not gotten worse over the last few years, the facts are it has been generally, albeit slowly returning to health. However, there are circumstances beyond the industry’s performance that drove these two golf firms to have difficulties.
At the Leisure Investment Properties Group of Marcus & Millichap, we as brokers of golf courses for sale have some of the finest research available. In addition, the National Golf Foundation the preeminent golf research association provides great objective information. As golf course brokers the data supports that we as an industry have stabilized golf’s participation since 2012.
TopGolf, Get Golf Ready, Golf 2.0, USGA9, First Tee, PGA Junior League, the Tour’s “Young Guns” (Spieth, Mcllroy, Day, Fowler), reduction in functionally obsolete courses, conversion of courses to homes, and little new golf development should all result in keeping golf on an even keel and create steady, albeit slow growth. It will be interesting to dissect the year end data, but we still believe the worst is behind us. We may have a back slide for a period or two in the next few years, but overall, our market is healthier today than it was three years ago when we hit the proverbial bottom.
If you are interested in golf courses for sale or are thinking of selling and are looking for a golf course broker, we can help. We are the largest golf course broker in the country and inventory of golf assets that are pre-underwritten, well priced and in excellent locations. Contact Sekovich@marcusmillichap.com for more information.
Published October 19, 2016
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