Next week the PGA and NGCOA start golf’s “business season” at their concurrent Merchandise Show and Golf Business Conference in Orlando. Aside from the usual questions of attendance, activity and predictions of the new year’s prospects, the COVID impact, more specifically golf’s ability to sustain the surge in membership and play continues to be a burning question. In 2020, according to NGF, golf rounds nationally were up approximately 15% nationally. That trend continued in 2021, albeit at a slower pace of 4-5%. Through October of 2022, NGF reports that rounds were down (YTD) 2.4% from the 2021 pace.
Can we maintain these levels of play? How much is from existing golfers playing more frequently versus the development of new golfers? Nobody really seems to know and for each person you ask you’re bound to get a different answer.
Along with Ryan Rafter of HILCO RE, I’ll be presenting a session at the NGCOA Golf Business Conference, entitled “Golf Property Dispositions & Acquisitions — Planning Your Path With Precision” where we’ll explore and discuss dispositions and acquisitions as well as the current market environment and issues to be concerned with.
Among the questions we’ll ponder are what market trends are with respect to Revenue Multipliers, cap rates, interest rates and course closures. We’ll discuss the various methods of marketing a golf property for sale and the tools used and of course valuation and pricing in the current market environment. The due diligence process, dealing with capital improvements and preparation to buy or sell will be discussed.
Inherent in our discussion will be the big question looming over the golf industry relating to the long-term sustainability of the COVID surge in golf. Can clubs continue the rapid increases in pricing which have seen numerous private clubs exceed six-figure entrance fees? Are $300+ green fees at top courses here to stay? Will environmental and economic sustainability issues impact the conditioning and maintenance costs at many golf courses now spending in excess of $1-$2 million annually for golf course maintenance? Will access to water for irrigation, now already a costly challenge in many western states, become a challenge in the Midwest, Southern and Eastern states?
What will be the impact of climate change on golf courses in the various climatic regions and how will that effect the buying and selling of golf courses and clubs. Will member-owned clubs continue the trend of selling out to professional management firms seeking to preserve the long-term viability of their clubs?
Will the culture of golf evolve to a point where it looks more like America and will the game become less of a status symbol and more an “everyman’s” game like in Scotland & Ireland?
In order to avoid the closure of more courses and see more development, golf needs to broaden its appeal and grow in the long term. These issues will all impact the future of buying and selling golf properties. I hope you’ll come to our session if you’re in Orlando next week and hear our perspective.