Sand trap: Sour economy snags golf courses
INDIANAPOLIS (AP) Saddlebrook Golf Course took a look at the bottom line and decided it was time to cut some deals, offering a two-year membership for nearly 80 percent off the normal daily rate.
In neighboring Illinois, greens fees at the Greenview Golf Club in Centralia are down from $35 a round to $23, which includes a cart.
The struggling economy has buried many golf courses in a financial sand trap, forcing owners to offer deep discounts to keep players and recruit new members. Others are putting up ``for sale'' signs or seeking new financing to stave off foreclosure.
``Nobody's making a living,'' said Greenview owner Tom Wargo, the 1993 Senior PGA champion and 1994 Senior British Open champion.
Indeed, with the economic meltdown affecting even such sports superpowers as the NFL and NASCAR, it's understandable that recreational golf is hurting.
Golf has always been a pricey pastime. The median rate for a round of 18 holes at a public course is about $40, and private club memberships can run well into the thousands of dollars.
Now throw in a recession and a tough situation for the nearly 16,000 public and private courses in the United States becomes even worse, said Mike David, executive director of the Indiana Golf Office, the umbrella group for the state PGA and other golf programs.
``It's not that there are fewer people playing,'' he said. ``The problem is they're not playing enough rounds.''
The National Golf Foundation reports golfers played about 498 million rounds in 2007. That number dropped about 8 million, or 1.6 percent, through the end of November, the most recent month surveyed, said Jim Kass, research director of the Jupiter, Fla.-based foundation.
The result is that more golf courses are closing than opening, a sharp change from as recently as 2001, when 252 more courses opened than closed.
The National Golf Foundation says 113 courses opened and 121 closed in 2007, and 2008 - for which it did not have final numbers - was on track to post the lowest number of openings in two decades.
More hazards may be on the horizon.
Developers of a $500 million golf and wine resort in Yakima, Wash., filed for bankruptcy protection in November, just two months after breaking ground on the project, and Georgia's exclusive Sea Island, once called the best golf resort in the nation by Golf Digest, laid off 500 employees last fall.
Northgate Golf Course in Reno, Nev., considered one of the best new courses in the country when it opened 20 years ago, announced in January it would close because it's losing money. Once a site for U.S. Open qualifying, Northgate stands to lose $530,000 in the current fiscal year, according to the Reno-area tourism board that operates the course.
Kathy Bissell, national golf course sales director for Coldwell Banker Commercial in Jacksonville, Fla., said buyers can still be found - and financing obtained - for courses that are priced correctly.
``But what we see a lot of are courses that don't have an appropriate level of net operating income for the price the owner would like to have,'' Bissell said.
That's where courses like Saddlebrook hope to make the difference.
The 17-year-old course on Indianapolis' northwest side still gets most of its revenue from public play, including a number of Indianapolis Colts, who like its proximity to the NFL team's headquarters. The course is offering a two-year membership with unlimited play Monday through Friday for $198. Normally, it's $26 a day, or $475 for one year, said Drew Breeden, the assistant pro at the Indianapolis club.
``It's a different way of approaching membership,'' he said.
It's also a lot cheaper than many private clubs, which don't charge greens fees but often require initiation fees and monthly dues. Those clubs, too, are seeking new ways to boost revenue.
The Sagamore Club, a Jack Nicklaus-designed course in the northern Indianapolis suburb of Noblesville, started with about 150 members in 2003. Membership has more than doubled since then but has remained fairly flat in the past year, even as operating costs have soared, said Scott Van Newkirk, senior vice president of Arizona-based Troon Golf, which operates Sagamore.
``The industry has been stagnant for a number of years. The demand for memberships has not been what it has been in the past,'' Van Newkirk said.
The club is trying to bring in more capital by offering shares of ownership to its members, and potential members are being offered reduced initiation fees.
Wargo, owner of the Greenview club in Illinois, wants out of the business. His course is on the market for $1.9 million.
``Golf's not in a good position right now, even though we have the No. 1 recognized athlete in the world (Tiger Woods),'' he said. ``It's not helping the business at all.''
Dick Sills, general manager of the Indianwood Golf & Country Club in Indiantown, Fla., doesn't expect that to change anytime soon.
His business was down 18 percent through November, and the course has cut its fees in hopes of enticing more golfers.
``It's down, but it's not as bad yet as it might get. I think it will get worse,'' he said.
In the long haul, that may be bad news for golfers, giving them fewer playing options. But Chicago doctor Larry Stone, an avid golfer for 50 years, sees at least one benefit from the recession.
``You can walk onto most of them at any time except Sunday morning,'' he said.