When Bobby Jones first saw the hallowed Old Course at St. Andrews, he thought it looked more like a freshly used battlefield than a fairway. Sandy, exposed, and unkempt, the earliest Scottish golf courses were built on worthless tracts of “linksland” thrown to the peasants after King David I could find no better use for them. Put a trap down, they were told. Catch a rabbit. Instead, they dug holes in the ground and came up with golf. Few could have foreseen the bastardized bonanza that would spread across American soil nearly eight hundred years later. Out went the razed dunes and in came the manicured azaleas. A game that was once the exclusive domain of Scottish peasants suddenly became the preferred playground of the Gilded Age’s glitterati. (Mamie Fish, wife of the Illinois Central Railroad president, set the example for 1890s country clubs when she threw a dinner party for her dog, who arrived donning a $15,000 diamond collar). Yet golf wasn’t satisfied with converting just the rich and famous. Over the course of a century, golf would see not one, not two, but three building booms until every American with two hands and a good stride could pick up a golf club, and the country became “one vast golf course.” Its character changed, as Herbert Warren Wind described it, from an “occult Scottish passion into a universal pastime … pursued wherever grass sprouts, and sometimes, where it doesn’t.” Our first love might have been baseball, but our first marriage was to golf. And it seemed, for one glorious century, like it would last.
But then the papers got served. Somewhere in the early 2010s, golf courses began to shutter. The number of rounds played dropped off a cliff. Forecasters took to describing the game in funereal terms, asking not if but when. Earlier this month, CNN even placed golf in the same niche hobby category as doing puzzles or baking bread. Is it really that bad? This issue, after golf saw its first breath of life in nearly a decade, we spoke with Ralph Little, an industry veteran and golf aficionado who’s been in the business since 1986, to get his read on the market. He currently manages Littlestone Management, a boutique golf management company that redevelops distressed golf assets, and he has personally facilitated the redevelopment of six golf courses.
A Glut of Housing Courses
“Golf is not a funeral, though both can be very sad affairs,” –Bernard Darwin
Golf’s first mistake was overdevelopment. From 1985 until 2000, the number of golfers ballooned from 20 million to 30 million, inspiring the National Golf Foundation’s foolish call for developers to “build a course a day for 10 years.” Tiger Woods’ dazzling entrance onto the scene only served to further encourage the golf development craze, particularly across the Sunbelt. “The overbuilding came because of residential home-builders building courses to sell homes in Texas, Florida, and the Southeast,” said Little. “A lot of those courses were only viable with subsidies from the developer. At some point those developers pulled the plug, and many of these properties became distressed.” A demographic plateau exacerbated the problem, and by 2016 roughly a quarter of public golf courses reported financial distress (as compared to 14% of private clubs). Within the past decade, over 800 golf courses closed across the United States, a trend the NGF attributes to “a continued correction in supply and demand… after an unsustainable 20-year period of growth in which the U.S. golf market added more than 4,000 new facilities and increased overall supply by 44 percent.” Today, after an incredible year for golf thanks to social distancing measures, the NGF optimistically reported that less than 1 in 10 golf courses (public or private) were distressed. Little cautions that this is unrealistic given the variety of demographic, cultural, and cost challenges golf still faces. “The demographic shift alone is troubling. The population of golfers has shrunk by almost 20% since the year 2000. Something like over 10% of the population could once be classified as golfers — now that’s down to 8%, and it’s probably an even worse scenario given the increasingly flexible definition of ‘golfer.’” And that says nothing of the aging problem. Golf was never the realm of spring chickens and today just 35% of golfers are under thirty-five. “At one club, we lost nearly a dozen senior members to COVID,” said Little. “That’s significant. If it’s not COVID, it’s something else. A skewed older membership model puts a small-town course at risk.”
The Global Anti-Golf Movement
Ironically, golf’s bucolic setting is the source of many of its current headaches. How does a pastoral sport that involves hitting a ball by yourself invite international controversy? It’s easier than you think. After Augusta National’s ethereal landscape first appeared on national television in the 1950s, modern courses were designed to mirror the same unnatural beauty, a feat only achieved through vast quantities of water, chemicals, and maintenance costs. Pollution is so extensive at some courses that it can affect their resale value. “You have to assess environmental conditions before buying,” advised Little. “The ground is polluted with heavy metals and arsenic from fertilizers and so-forth. The older the course, the deeper it’s sunk into the soil.” Golf’s ecological troubles inspired a Global Anti-Golf Movement, based in Japan, whose manifesto resists golf’s “elitist and exclusive resort lifestyle,” and calls for the instant conversion of all golf courses into public parks or affordable housing. This isn’t just a liberal revenge fantasy: developers have tried all manner of conversions, but in many places, it’s illegal. In some states, such as Florida, even minor character alterations can get shut down. “Places will say, ‘we want to be an Audubon golf course, let’s put some bird houses out there,’” said Little. “But in many Florida-based cities and master planned communities, the codes are prohibitive.” Some states require such intensive land-use amendments that Little has seen it take anywhere from two to seventeen years before a property is approved for a new usage. “The number of consultants who have to be hired just to get your application together is rather daunting,” said Little. “Environmental engineers, traffic consultants, not to mention attorneys. The time horizon can be extensive.”
Rising Costs and Stagnant Revenues
One looming cost on the horizon is the $15-dollar minimum wage that many states plan to implement in the near future. Florida, for example, recently amended its constitution to increase the minimum wage to $15 an hour in 2026. “A lot of the golf industry is minimum wage,” said Little. “Manual labor, wait staff, assistant professionals, etc. Most of them are paid at the low end of the wage scale. If you push most of your bottom half up a boost, the guys who are one level above $15 dollars an hour will expect to make more as well. That’s a big change to a club’s P&L without any increase in revenues.” Insurance is another rising cost to contend with. Health insurance, once optional, is now mandatory, and “regular insurance is so expensive as to be meaningless because the deductibles are so high,” said Little. “Where once we had to clear a $50,000 wind deductible, we now face $800,000 deductibles. In other words, we are really self-insured.” Operators have tried to reduce their maintenance costs by creating more natural areas on existing courses, but the best intentions aren’t always viable. “A lot of stuff we put down on the course gets more expensive every year,” said Little. “Certain insecticides that were effective are now illegal and less effective than more expensive options. You see places try mow-and-go: no contours or varying degrees of grass. Roughs are barely longer than the fairways. But then municipal codes will come out and say, ‘that grass is too long, you have to mow it.’” And raising prices simply isn’t an option. “How can you raise membership fees when most younger players already think it’s too pricey to come out?” said Little. “You have to set the entry price according to the market.”
Golfing No Longer Matches My Yoga Pants
Another challenge for golf is the changing consumer desires among younger generations. Golf doesn’t do much for the cause of a competitive calorie counter on a tight timeline. It is a mentally stimulating sport with the added bonus of a good walk and a great view: that doesn’t necessarily sit well with more metric-focused Millennials.
“When I first started, golf followed a predictable formula,” said Little. “Sixty-year-olds played twice as much golf as fifty-year-olds, fifty-year-olds played twice as much golf as forty-year-olds, and so on. That no longer holds. People work more or enjoy doing other things. Riding bikes. Going to the gym. Cross-fit. Whoever heard of cross-fit twenty-five years ago? Golf has a lot of new competition that is tamping down interest.” Cultural clashes are also coming to a head. Country clubs once marketed themselves as a genteel respite from all manner of vulgar and uncouth behaviors. There was a certain comfort in the uniform, the formality, the seclusion. But, as New York’s beloved social critic Fran Lebowitz routinely complains, younger generations have no interest in good manners, much less good style. “All these clothes you see the people wearing, the yoga clothes — even men wear them! — it’s just another way of being in pajamas,” says Lebowitz. “I have to say one of the biggest changes in my lifetime is the phenomenon of men wearing shorts. Men never wore shorts when I was young. There are few things I’d rather see less, to tell you the truth. I’d just as soon see someone coming near me with a hand grenade.”
As a result, most clubs have capitulated by allowing jeans, no jackets, and no ties. Cell phones are slowly creeping their way in, with designating talking areas being marked along the grounds. For obvious reasons, flip flops are still considered hazardous apparel, and it may take a few more closures before portable speakers and flagrant selfies fully rear their head.
Can Golf Engage a Younger Population?
Will the links survive? Yes, but they probably won’t look the same or operate on such scale. Some hope that gateway products and shorter course models will tempt new demographics to give the game a try. “If a round of Topgolf and beers will get people interested, I’m all for it,” said Little. “On my courses, we’re looking to sell 6-hole loops. ‘Come out and play 3-holes,’ we tell people. It complicates people playing 18-holes, but can be done with a little coordination.”
And, in a society with a 24/7 workload and deteriorating social ties, younger generations could do well to borrow a few habits from the sport. Little admits that he too used to dismiss the sport because his own father played. Then one day he got bored and decided to tee up a ball in his front yard.
“I was thirteen and my frontal cortex hadn’t developed yet, so hitting a golf ball through a residential neighborhood seemed like a good idea,” said Little. “That ball went a mile. And that’s the magic of golf: it offers the promise of perfection. Other sports — those athletes are so far above the realm of mere mortals. But in golf, they’re not so different than you and I. There is that occasion when you hit a perfect iron, or roll in a thirty-foot putt just as well as a pro. For a few moments a weekend, you can be Tiger Woods.”
About Colbeck: Colbeck is a strategic lender that partners with companies during periods of transition, providing creative capital solutions to meet their evolving needs. You can reach the team at inquiries@colbeck.com.