Golf Business Monitor

Golf rocks tennis' TV audience in US

I was surprised to read in the latest edition of The Economist (June 11th 2011) that in US people prefer to watch golf over tennis. I started to check worldwide ranking of US tennis players where I had to realize that there is no US tennis player in the TOP5 in the ATP ranking (men). Although Rafael Nadal, Wiliams sisters and Roger Federer are playing very well it will not attract sufficent size of audience in the US. It is no brainer to say no advertiser will consider to sponsor such tournament where his brand cannot get sufficient exposure.

But why golf is getting bigger viewership in televisions? Why beneficial to sponsor a golf tournament in the US? Especially when we know golf is more expensive to broadcast than other sports (networks need an army of cameras covering an immense outdoor space) If we check from taxation point of view then it is easier to understand the situation (I still have not found on www.irs.com the right answer). Since Deane Beman (headed PGA Tour between 1974 and 1994) corporates can account for golf tournaments as charities. I cannot believe that the US Tax Authority can be fooled so easily. Such PGA Tour event sponsorship is arround 7-8 million USD, but at the end the exposure will worth up to 55 million USD. Thus the cost of 1 GRP is even cheaper (+ add quantity, agency and other special discounts that advertisers get)

Still why Americans prefer to watch golf? I have couple of answers:

1. More successful American players: Tiger Wood, Phil Mickelson, Bubba Watson, Jim Furyk etc.
   
2. Winning Ryder Cups
3. Our society is still chasing such nobel values of honesty, integrity, respect, confidence, responsibility, courtesy, preseverance etc what golf is standing for. Well, some of these values have not seen in the last to years from Tiger Woods, but these values that we really esteem.

The current business environment is/was not in favour of PGA Tour's business model thus total direct revenues fell from 486 million USD to 461 million USD between 2008 and 2010.

Golf participation in Europe 2010

Those who are familiar with the golf industry they know that KPMG prepares from year to year a survey about golf course development and golf participation trends. 2010 is not an exception. ;) Since the last decade of the 20th century the pace of golf course building and participation is much slower that worsen in the past five years. Last year there was in fact a 4% decrease in the number of golfers in Europe's largest golf market: UK&Ireland.

 
KPMG tries to keep up the illusion that it is still lucrative to invest in golf industry. He does not mention the current economic climate that recently hit Ireland. Ireland is now asking for EU financial help, just like Greece, Spain and Portugal. You can imagine what will be next year when you try to play in Spain and Portugal...prices will reach the sky and people will abandon this lovely sport.

KPMG also forget to mention other curcial factors that I mention in my previous post, namely golf course owners' lack of relevant management knowledge and education.

Two other interesting facts from this survey: in Germany is the highest ratio of female golf players. In Turkey is the highest ratio of junior golfers.

Golf shaft opitimization by Titleist and Mizuno

Just like online content, golf shafts are also becoming more personalized and optimized to our needs. Within a year two well-known golf equipment manufacturers Titleist and Mizuno came up with golf shaft optimizers. Chris McGinley, vice president of marketing worldwide for Titleist golf clubs says "The key to maximizing a player's ability to get fit properly......It allows us to improve a player's strengths while we identify and address weaknesses." (from Global Golf Post, June 14, 2010) I will not buy this marketing bla-bla!! It is the minimum that the golf clubs and golf shafts are optimized to my golf play. It is also a mutual interest that our golf shafts are optimized. If you have success in your golf play you will play more, but if you have too many double bogeys or even worse you will start to look for a new hobby. :( Not to mention if you want to increase your share of wallet at your customers golf shaft optimization could be a good start and solution. To increase your share of wallet, the first thing you should do is to find out what factors influence purchasing behaviors among your customer base. I am not sure that most of us is ready to pay for golf shaft optimization 4,100 USD (2 day session at Titleist).

Unfortunately, we still have to wait a little, when golf shaft optimization will be a free service like air-conditioner is free feature in you car. At this moment only Titleist provides such services in Europe (UK/England, Ireland, Scotland).

Here is Mizuno's shaft optimizer software in action:

Golf Salary & Benefits Study 2010

After a big break I am back. I hope you forgive me for such delay. Recently I came across with Club Managers Association of Europe (CMAE)and and executive recruitment specialist, Colt Mackenzie McNair's new findings about golf salaries and benefits study (2010). The survey focused on Golf Clubs and Resorts.

Here are the main findings of the study:

• A degree-level education or professional qualification was not a prerequisite of a senior role and only 50% had either of these. It seems to me that time stopped in the golf industry in the last 60-70 years or we are not in such a bad condition if we can afford such luxury. By reading Colt Mackenzie McNair's job positions I had different impression...
• Salaries reflected the caliber and experience of the respondents. 40% of the respondents said their earnings excessed 60,000 Euros annually. Both in UK and Ireland the bonus schemes were almost the  same and it was not unusual to have bonuses above 10,000 Euros.  In these countries the  basic salary was much lower unlike in Germany or in Scandinavia. The question and challenge of every employer to find the right ratio of  basic salary and bonuses. Do we consider the market situations and economic climate? Or whether the employee will be able to earn satisfyingly?
• Amongst other employees, Golf Course Managers (green-keepers) earned the highest salaries, with a third paid in excess of 50,000 Euros per annual. 
• Cca. 60% of Club House Managers/F&B Managers/Stewards and Membership Managers/Administrators earned less than 30,000 Euros annual.
• On average, over 90% of golf clubs perceived a need for training staff. Scandinavian golf courses received much more trainings than their British partners. This finding proves me that there are managers who do not recognize the importance of on-the-job trainings (also as part of a motivation system).Do you know that it is cheaper to retain qualified employees than find somebody to replace them? 
• Nearly 75% of the golf clubs (who participated in the survey) had a gross annual revenue under 2 million Euros. The situation is even worse in the US, where golf course revenues (median) fell by 5.1%. 
• Surprisingly 2009 was stronger than 2008 for many golf clubs in Europe from membership and visitors fee. At the same time in the US it fell by 4.6%.
• In spite of these sad facts staffing levels has not changed between 2008 and 2009. One in 5 increased their numbers of employees in this period. How is it possible? I am sure it has not happened in CEE region.

Death of the Hungarian golf champion

The Hungarian golf community was shocked by the murder of Krisztina Fodor. Krisztina (pronounce it as Christina) the Hungarian golf champion was murdered/butchered by his husband (according to the police) 4 days ago in her home. Yes, butchered is more proper to say as per the way she was killed. Krisztina was my virtual friend on Facebook. She was one of the big hopes of the Hungarian golf community...

If you want to see her Facebook profile: http://www.facebook.com/profile.php?id=100000563701600&ref=ts. Her husband's Facebook profile was removed (i guess by the police). In the next video from YouTube - you will see Krisztina (blond lady in green T-shirt):

  Her blog's URL is: http://krisztinafodor.com/galeria.html. Here you can see some of her photos.

Is Russia viable for a golf business opportunity? - part 3

As I promised in my previous post, now Lyne Tumlinson, the former director of Career Services at Golf Course Superintendents Association of America (GCSAA) will share with us below what kind of golf business opportunities are in Russia.

More features of the Russian world view that affect potential for the golf industry:

• About "rules". Russian culture is tradition and "high context", which can affect social benefits of golf. Here in US, golf is both a popular game/sport and and an important business networking tool. In Russia, relationship-building traditionally takes place in intimate settings and public networking is often only for the show. What social/economic role will the golf course take in Russia?

• Everything in Russia is expensive these days and start-up expenses of golf course - building/maintenance equipment, golf turfgrass seed, plus need for professional golf course management to maintain and keep the golf course running - do not bode well for affordable play to attract still-developing middle class clientele.

So far, golf course development in Russia is for top member of new Russian society with reputation for elitism - showy consumption of luxury, with corresponding price tag. A proper golf business plan can overcome this for Russian middle class, only if start-up costs can be recouped.

 

MacGregor Golf is Back

I was really happy to read today on The Golf Wire that the iconic golf equipment brand MacGregor Golf is returning with a new, revamped lineup of premium golf equipment. For those who are not familiar with the history of this iconic golf equipment brand, here is a brief history of MacGregor Golf:

It is a 113 years old golf equipment brand. MacGregor Golf, which was based in Albany, Ga., claims that more majors (59) were won with MacGregor Golf clubs than with clubs made by any other company. Many of those majors were accounted for by Jack Nicklaus. Unfortunately Jack Nicklaus sold the company in the 1980s. More recently, MacGregor Golf was associated with Greg Norman, making The Greg Norman Collection apparel line. Greg Norman acquired partial ownership of MacGregor Golf several years ago, but when Greg Norman switched to playing TaylorMade golf clubs recently many saw the writing on the wall for MacGregor Golf.

To have a positive end of the story last year, Golfsmith acquired MacGregor Golf and turned it to a so called "house brand". Just to understand the popularity of MacGregor Golf in the 1980s and 90s that we could see it in the movie of Caddyshack:

Now here are my doubts about the future of MacGregor Golf. When we are thinking about the future, for how many of us will be relevant the history of this golf equipment brand? Do we really care what was in the past? How many of us will afford a  premium golf equipment (especially in light of the declining number of rounds on golf course)? Is Golfsmith able to give a significant communication support for this golf equipment brand?

Is Russia viable for a golf business opportunity? - part 2

As I promised earlier, Lyne Tumlinson, the former director of Career Services at Golf Course Superintendents Association of America (GCSAA) is keep on writing about golf business opportunities in Russia.

Before you grab you kluchi and head for the Aeroflot ticket counter, you should factor key historical and cultural points into you golf business plan. Check the features of the Russian world view that affect potential for the golf industry to grow into a phenom in Russia:

• Lack of understanding of private property in Russia historically led to very different understanding of rule of law than in the West: both ownership and law are "flexible", with implications for stable ownership of golf property, golf course etc.
• A growing season is less than 4 months in most locations will affect profits of the golf property; meanwhile, the tradition of "slash and burn" agriculture completely depletes soil nutrients in a given number of years will not work for golf turfgrass.
• Zakon (Russian Law) is often defined by the phrase "it depends" - on who you are and who you know. What implications here for the Rules of Golf?
• Russians' love of outdoor recreation includes strolls in the park, enjoying fauna and flora - a potential positive for public golf course development.

More about golf business challenges and opportunities will be in part 3. Till then here are two photos about a typical Russian golf course in the early 90s. The first 3 who write me which golf course is on the picture, I will be ready to talk about his golf business. :)

 

Is Russia viable for a golf business opportunity? - part 1

As I promised in my previous post, former director of Career Services at Golf Course Superintendents Association of America (GCSAA), Lyne Tumlinson will be my first guest writer here on Golf Business Monitor. So please find below Lyne's first writing about golf business opportunities in Russia.

The Russian Golf Association a couple of years ago touted plans to build 500 golf courses in Russia by 2018. The economy quickly put a dent in that idea as the worldwide recession slowed the pace of new golf course development, while Russian golf courses already in place are now suffering from lack of proper golf course management. A strong case may be made for growing golf business in Russia:

wide expanse of land, growing middle class for public golf business, and a new class of capitalist "biznesmeni" with wealth not seen since the tsarist aristocracy. Reported prediction from KPMG show current international golf industry at $90 mil worldwide; aggregate golf market vol approaches $2 mil in Russia, even at its elementary stage of golf business development. Before you grab your "klutchi" (key in Russian, but also means golf clubs) and head for the Aeroflot (Russian national airlines) ticket counter, however, you should factor some key historical and cultural points into your golf business plan.

Lyne will continue to talk about the Russian golf industry in the next posts.

GCSAA on Golf Business Monitor

After 10 months of blog writing, I am really excited to have my first guest writer. Former director of Career Services at Golf Course Superintendents Association of America (GCSAA), Lyne Tumilson will be my first guest writer here on Golf Business Monitor. She will share her experience in human resource management and personal branding in the golf industry.

Personal branding is more than a career development tool, it is a self-improvement process, where one of the positive outputs is moving higher level in your organization. It helps you excel in your work or if you are unemployed than to find easier a new job.