Daily Flogging: Northen Trust Open's rebound proves pro golf's model works

Friday February 5th, 2010

John Paul Newport in The Wall Street Journal
Advance ticket sales were up 35 percent
and hospitality sales -- that would be those big tents used for
corporate entertaining -- are up 50 percent. The golf isn't bad, either. Phil
Mickelson, Padraig Harrington and Steve Stricker are in the field. ... The company attracted "millions of dollars" in
new business as a result of last year's event and
couldn't accommodate all the ticket requests it received from clients
wishing to attend this year.
The Northern Trust Open's mini-resurgence in a still-dicey economic
environment may be something of a special case. The sponsoring
company's clients, primarily high-net-worth individuals, would
presumably not be the types to be dissuaded from enjoying a golf
tournament by populist ranting about the game's supposed elitist
values.
Last week at the PGA Merchandise Show in Orlando, a coalition of
golf organizations opened another front in the perception wars. The
group, called "We Are Golf," represents club pros, course
superintendents, course owners and club managers, and aims to convince
U.S. policy makers in Washington that golf is an important,
job-creating industry that ought to be supported, not denounced. "Right
now, it's considered politically risky to raise your hand in Washington
and say that you support the golf industry. That shouldn't be," said
Joe Steranka, chief executive of the PGA of America, one of the
coalition partners.
Golf's politically toxic status is a long time in the making. ... Among the figures golf
leaders like to trot out is that 70 percent of rounds played in the U.S. are
on public courses and that the median cost per round in 2008 was $28.
Most golfers don't wear fancy pants. But the We Are Golf initiative's central point is that golf is
responsible for roughly two million jobs in the U.S. paying $61 billion
in wages.

It's a great point that golf, which became cool during the 1990s, turned and became politically incorrect when the stock market and the world economy tanked and spending on luxury items (like exclusive country club memberships) went out of style. Coincidentally, this happened about the same time the Democrats took over the White House and gained serious control of Congress. The Democratic party has never been viewed as pro-business. Funny, as Newport points out, how the Northern Trust case has all the makings of a success story despite the politicos' uninformed interference a year ago. Who says politics and golf don't mix? For the good of the game, it appears, politics and golf have to start mixing and mixing better.
The same can't be said for the golf industry overall. Tony Dear of Cybergolf.com wonders on Cybergolf.com if there's "A light at the end of the Tunnel?" He discusses how the talk at the recent PGA Merchandise Show was that golf may have turned the corner against the recession, but asks whether that optimism was based on fact or wishful thinking. The jury is still out, based on some unflattering numbers.

With
a national unemployment rate reaching 10 percent by December last year,
and nearly 16 million Americans out of work, 2009 was, as predicted, a
fairly miserable year all-round. And though golf has, historically,
been in the enviable position of being among the last industries to
arrive at the point of recession but one of the first out, it would be
wildly inaccurate to say the game hasn't suffered.
One
only need look at statistics released recently by golf research company
Golf Datatech of Kissimmee, Fla., to see just how badly the game is
feeling it. One of several depressing figures the company published was
the 10.5 percent by which dollar sales for golf equipment (balls,
woods, irons, wedges, putters, shoes, gloves and bags) at "green grass"
(on-course) stores plummeted in 2009. The situation was worse at off-course stores. Last year,
just under $1.6 billion worth of golf equipment was sold on Main Street--11.5 percent less than in 2008, and roughly 18 percent less than in
2007. Driver sales were down 17 percent in '09 compared with a year
before, fairway wood sales dipped 22 percent in just six months from
June '08, and 30 percent fewer hybrids were sold in July of '09 than in
January of '08. Every other piece of equipment (except wedges) reported
a double-digit loss compared with 2008.
Among the manufacturers hit the hardest was Callaway, whose
annual net sales dropped 15 percent, from $1.1 billion to $951 million. Gross profits fell alarmingly from
$487 million to $344 million, a 29 percent reduction which, the company
says, could be attributed in part to "heavy discounting in the
marketplace." 
With sales figures like Callaway's, the
number of rounds played in the U.S. down from 2008, more
golf courses closing than opening, and influential manufacturers like
TaylorMade and Nike choosing not to exhibit, showgoers probably had
little hope the 2010 event would amount to much. But golfers and the
golf industry appear capable of making the best of a bad situation, so
instead of empty aisles, a visible lack of innovation, a load of dreary
speeches about how desperate things had become, and an impending sense
of doom, there was, in fact, a palpable sense of resilience and
expectation in the corridors and halls of the OCCC that was somehow
missing in 2009.

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