Industry Perspective – Matthew Galvin of Morningstar Golf

Matt Galvin is a golf industry presence. His company, Morningstar Golf is a team of experts in their respective disciplines related to golf management and operations.  Prior to forming Morningstar Galvin was a principal with an owner and operator of high quality golf courses and country clubs with properties from New York to Florida.  He also served in several project management positions of increasing responsibility for the nation’s then-largest owner and operator of golf courses, American Golf Corporation, and its sister company, National Golf Properties.  He was instrumental in the company’s growth from 47 courses to 111 courses in three years, representing investments in excess of $300 million.

I recently had the opportunity to pose some relevant questions to Matt about some current issues in the golf industry.

First and foremost on my mind was the sustainability of the golf participation spike precipitated by the COVID pandemic. Galvin shared that “At both private clubs and public courses we experienced 20%+ growth in 2020. That held strong through June 2021, when we started seeing a decline of between 5% – 20% over 2020 levels. This “give-back” was expected. But our average rates and membership fees are holding strong and are much higher than 2019. With COVID we did not raise rates, but eliminated specials and discounts. Rates are holding firm at the higher levels.” When I asked who those golfers were, Galvin said there were many new faces, often from former golfers returning to the game, at daily-fee courses, about 50% of the increase. 40% were existing customers playing more and only 10% from new golfers. The increase at the private clubs he manages were largely from daily-fee golfers joining a club for the first time.

Galvin perceives that the “race to the bottom” on pricing is over (for now at least) as golf courses now have pricing power. That said, he feels it would only take one operator to send prices tumbling again. Twilight rates have now been pushed back to times when finishing isn’t possible.

Galvin said that at his clubs he realized that they had a limited window to lock people into the club. Robust sales at private clubs with initiation fees helps. At daily fee courses they focused on building deeper connections with golfers to get them back when they again have more options – travel, etc. We also made sure to capture as much customer data as possible from the influx of the new faces we saw in 2020 and 2021. Galvin still sees time and money as the biggest obstacles to creating new golfers. He is focusing on engaging the customer with incentives and promotions aimed at retention.

We all know about labor shortages and supply chain issues impacting all businesses. As it relates to golf, Galvin says: “Many places are reducing hours or services, at least in the F&B areas. As far as labor costs go, we are raising pay across the board and will increase pricing for greens fees, cart fees, dues, etc. The customer has to eventually cover the costs.” As a comparison, 2 years ago he was paying unskilled labor $12 per hour while now it’s $18 per hour.

Galvin manages one club in the United Kingdom. I asked him whether he sees American golfers becoming receptive to the playing conditions experienced the UK to help make golf more affordable and in some cases more environmentally friendly. He responded that “from an owner’s perspective, I’d love to save money and not use the expensive chemicals in the US that are banned in the EU and UK. However, in the UK they don’t have our combination of heat and humidity, so the affordability issue from saving on maintenance chemical inputs is not significant. Americans still want their courses looking like what they watch on the Golf Channel each week. UK golfers are more hardy when it comes to playing in the rain, wind, etc. I’d like more American golfers to follow that.

Galvin is focused on trying to attract more kids to golf. At some clubs they offer kids free golf after 3:00 PM (with a paid adult) and kids and grandkids under 24 are included with private memberships. He observes an increase in kids accompanying their grandparents to the golf course.

There are all “flavors” of management companies in the market. Having experienced quite a variety, I asked Galvin his thoughts on the advantages and disadvantages of the larger and smaller firms. He indicated that the large firms are quite skilled at implementing company-wide systems and policies while (in his opinion) being less skilled at daily engagements with customers. That said, Galvin says it all comes down to the onsite team and how they’re hired and trained. He feels that smaller firms have an advantage with the interaction of senior management and onsite staff being more frequent and closer.

Galvin’s advice to member-owned clubs is to engage strong leadership. He says (what most of us know) that management by committee almost never works. That leadership could be in the form of a GM/COO or a board chairperson. At clubs with financial challenges management/leadership by committee issues are usually amplified.

Galvin is especially keen on municipalities taking a more business-like approach to their golf facilities. Many that are run by municipal employees are not only under-managed but also, due to reduced pricing have a competitive advantage. He says those that retain third-party management and to a greater degree those that are leased to third parties often exhibit more business-like characteristics and compete on a level playing field.

Having been in the industry since the boom days of the 1990’s, I asked Galvin if he thought golf had the potential to grow again to a point where new course development returned in the next 10-20 years. He answered: “I hope that developers and banks have learned their lessons and that new construction will only be supported by strong demand. I don’t see golf growing to the mass appeal that some hoped it would in 1980 – 1990. There’s nothing wrong with having “only” 25 million US participants. It does not have to be elitist, but it also does not need to try to be everywhere and for everyone.”