A Satellite Account for GOLF. in the Republic of Ireland

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1 A Satellite Account for GOLF in the Republic of Ireland

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3 FOREWORD Golf plays a positive role in the social and sporting life of Irish society. Golf clubs and members have long known this through their direct involvement with the game but until now we have been unable to quantify golf s economic impact in the Republic of Ireland. In 2016, a report was published in the United Kingdom that detailed the contribution of golf to the UK economy. Following the publication of that report, the Confederation of Golf in Ireland in conjunction with The R&A decided to commission a similar piece of research that would provide specific measures of the economic impact golf has in the Republic of Ireland. Taken together, these findings provide a clear economic picture for the island of Ireland. A Satellite Account for Golf in the Republic of Ireland is the title of today s report, which is the result of work conducted by the Sport Industry Research Centre (SIRC) at Sheffield Hallam University. Professor Simon Shibli, Head of SIRC and author of the report, is to be complimented for his ability to produce such a quality piece of research on this scale. The figures contained within this report demonstrate how valuable the game of golf is for the Irish economy. Ireland is a home for people in thrall with the game. As a result, businesses and communities thrive. This study highlights the benefits that accrue when golf is supported by the public and private sectors. Not only is golf a fun and healthy activity, it provides employment right across the island of Ireland. In this regard, golf is unique. As our economy continues its recovery, the Republic of Ireland is ideally placed to take full advantage of the many opportunities golf has to grow even further. Already, Ireland is renowned for the quality of its golf courses. Combined with our reputation for world class hospitality, there is no doubt that the golf in Ireland has an exciting future. In Ireland, golf is much more than just a sport. REDMOND O DONOGHUE Chairperson, Confederation of Golf in Ireland A Satellite Account for Golf in the Republic of Ireland / 1

4 ABOUT THE R&A Based in St Andrews, The R&A runs The Open, elite amateur events, international matches and rankings. Together The R&A and the USGA govern the sport of golf worldwide, operating in separate jurisdictions but sharing a commitment to a single code for the Rules of Golf, Rules of Amateur Status and Equipment Standards. The R&A governs worldwide, outside of the United States and Mexico, with the consent of 152 organisations from amateur and professional golf and on behalf of over 30 million golfers in 138 countries. The R&A is committed to working for golf and supports the growth of the sport internationally and the development and management of sustainable golf facilities. For more information about The R&A visit ABOUT CGI The Confederation of Golf in Ireland (CGI) is an organisation, created by the Golfing Union of Ireland (GUI), Irish Ladies Golf Union (ILGU) and the PGA (Irish Region) to help advance the sport of golf on the island of Ireland, for the future. The CGI complements the work of the associations as well as providing a necessary combined approach to certain key strategic areas in the future development of golf in Ireland. The CGI is a unique response to the current challenges and opportunities confronting golf in Ireland, as it is one organisation that will represent all golfers on the island of Ireland be they young or old, male or female, amateur or professional, north or south of the border. For more information about the CGI visit 2 / A Satellite Account for Golf in the Republic of Ireland

5 TABLE OF CONTENTS LIST OF FIGURES & TABLES 4 EXECUTIVE SUMMARY 5 1. INTRODUCTION The Project Positioning the Research Participation in Golf Research Aims Report Structure METHODS The Model Output Impacts MAPPING THE GOLF INDUSTRY CONSUMER SPENDING GROSS VALUE ADDED EMPLOYMENT TURNOVER SPORTING CONTEXT CONCLUSIONS 26 APPENDICES 28 A Satellite Account for Golf in the Republic of Ireland / 3

6 LIST OF FIGURES & TABLES TABLE 1.1: Golf Participation 10 TABLE 1.2: Golf Club Membership 10 TABLE 1.3: Sport Participation, RoI, at least once a week 11 TABLE 3.1: Economic Sectors with strong associations with Golf 15 TABLE 4.1: Summary of Consumption 16 TABLE 4.2: Golf Consumption, Republic of Ireland - In Context 17 TABLE 5.1: Summary of GVA 18 TABLE 5.2: Golf GVA, Republic of Ireland - In Context 19 TABLE 6.1: Summary of Golf Employment (FTEs) 20 TABLE 6.2: Golf Employment, RoI - In Context 21 TABLE 7.1: Direct, Indirect and Induced effects on GVA and Turnover 22 TABLE 8.1: The Golf Economy in Context 23 TABLE 8.2: Public Sector Earnings from the Golf Industry 24 FIGURE 8.1: Republic of Ireland GDP at Constant Market Prices ( m) 25 TABLE 8.3: Growth in GDP, constant (2014) market prices, RoI 25 TABLE A.1: Mapping of the Golf Industry through examination of the SIC 2007 codes 28 TABLE A.2: Golf Sector Consumer Spending, TABLE A.3: Golf Sector Gross Value Added, TABLE A.4: Golf Sector Employment, 2014, Full-Time Equivalent 32 TABLE A.5: Golf Sector Employment, 2014, Number of People 33 TABLE A.6: GVA and Turnover, Enhanced by Indirect (I) and Induced (II) Effects 34 4 / A Satellite Account for Golf in the Republic of Ireland

7 EXECUTIVE SUMMARY Introduction The R&A together with CGI commissioned the Sport Industry Research Centre (SIRC) at Sheffield Hallam University to produce a study to evaluate golf s economic value to the Republic of Ireland for the year Developed nations use an internationally standardised framework known as the System of National Accounts (SNA) to report the economic scale of specific industries. Sport generally and golf specifically, are not recognised as industries within this framework. Consequently, the economic activity of sport and golf is diluted within the National Accounts, in broadly classified industries such as: recreation; arts and sport; manufacturing; construction; and hospitality. In the Republic of Ireland the golf participation rates are: 3.3% on a weekly basis; 4.5% on a 4-weekly basis; and 7.9% on an annual basis. There are 281,000 adult golfers in the Republic of Ireland, of whom 160,000 participate regularly, at least once in 4 weeks. Nation 4-weekly Regular Adult 12-monthly Occasional Participation Rates Golfers Participation Rates Adult Golfers Republic of Ireland 4.5% 160, % 281,000 Northern Ireland 4.0% 59, % 103,000 Ireland 4.4% 219, % 384,000 Methods The method we use to identify golf s contribution to an economy is the production of a Satellite Account for golf. The Satellite Account technique was developed by the United Nations to measure the size of economic sectors that are not defined as industries in their own right within the System of National Accounts. Notable examples of where Satellite Accounts have been used previously include tourism and sport. The approach enables industries to be analysed from four perspectives. Consumer expenditure; Gross Value Added (GVA); Employment, as number of employees and full-time equivalent jobs; and Turnover. A Satellite Account for Golf in the Republic of Ireland / 5

8 The analysis is consistent with the Vilnius definition of sport, which articulates the consensus reached at European Union level as to how the sport industry is defined in statistical and economic terms. Key sources of information include: Annual financial statements of golf businesses and clubs filed with Companies Registration Office; Analysis of various associations finances through annual financial statements; The Input-Output Tables for the national economy; and Annual financial statements and existing surveys to inform decisions on consumer spending. Key Findings Consumer spending Consumer spending on golf in the Republic of Ireland was found to be 379 million which is equivalent to 107 per adult, corresponding to 0.4% of the total economy. Important elements of this spending are 94m (25%) spent on members fees and 46m (12%) spent on food and beverages, mostly within clubs. This is complemented by spending on golf equipment 39m. The pattern of consumer spending identifies the Republic of Ireland s network of some 325 affiliated golf clubs as the most important element of its golf economy. Gross Value Added (GVA) 1 The Gross Value Added of the golf industry in the Republic of Ireland was 202 million in 2014 with the largest single area being the activities of golf clubs, including food and beverage operations and recreational golf at 89m (44%). The GVA analysis also highlights golf s important relationships with the retail industry, notably: golf equipment, clothing and footwear ( 21m); tourism and accommodation in golf resorts ( 25m); and the construction and real estate industries ( 15m). We found that the majority of GVA can be linked to wages and salaries, illustrating the capacity of the golf economy to generate employment. Employment The golf industry provides employment for 5,050 full-time equivalent jobs which are carried out by 6,800 different people when adjusted for part-time workers. Golf clubs are the most significant employers in the sector (1,740 FTEs, 34% of total). Other notable levels of golfrelated employment can be found in golf equipment and sportswear (640 FTEs); services (470 FTEs); management and administration (410 FTEs); tourism and accommodation (580 FTEs); construction (340 FTEs) and real estate (190 FTEs). To put these figures into context, golf employment is 0.3% of the total employment in the Republic of Ireland, or the equivalent of 1 in 300 jobs. Employment is reinforced by relatively strong multipliers in sectors that are important to the golf industry, such as construction (1.59). The part-time nature of some jobs is linked to the strong ties that the clubs have with local communities and the variety of employment opportunities that are available. Golf is therefore well positioned to help regenerate local economies in response to new investment. Turnover Turnover, or the total economic activity associated with golf is comprised of: direct effects such as the operation of golf clubs; indirect effects such as supply chain activity; and induced effects which are the increased sales within the economy from household spending of the income earned in the golf industry. Turnover generated from these effects, together with the associated GVA are as follows: GVA Turnover ( million) ( million) Direct Indirect Effects Induced Effects Total GVA measures the contribution to the economy of each individual producer, industry or sector in the Republic of Ireland, in this case the golf industry. 6 / A Satellite Account for Golf in the Republic of Ireland

9 These figures should be treated with a degree of caution as they are in effect measuring a continual recirculation of the same money. The more robust figures are consumer spending, direct GVA and employment as these measures eliminate any double counting and can be reconciled to the System of National Accounts via a transparent audit trail. The sporting context The value of the golf economy in the Republic of Ireland has been estimated in terms of consumer spending, GVA, and employment. Measure Golf Golf as % of the (2014) RoI s economy Consumer spending 379 million 0.4% GVA 202 million 0.1% Employment 5,050 FTEs 0.3% The Satellite Account shows that golf is a very effective industry for generating employment. Although the industry generates 0.1% of the national GVA, it creates 0.4% of employment (in terms of employees) or 0.3% in terms of FTE. This implies that the golf industry can be used as a device to generate further employment, especially during times of economic downturn. Golf s contribution to taxation The economic activity associated with golf leads to positive outcomes for Central Government in the form of taxation receipts. The golf Satellite Account model indicates that taxation in the form of, corporation tax and Value Added Tax, collectively contributes 93 million per year to Central Government. This corresponds to 331 per adult golfer in the Republic of Ireland. Conclusion The Satellite Account for Golf shows the effectiveness of the industry to generate employment and underlines its integration with the general economy and its ties with the local communities that place it in an ideal position when policies for local regeneration are implemented. The fact that its share of national employment exceeds its share of GVA, illustrates that the golf economy can be used to create jobs, especially in times of economic downturn. Following the recent CSO figures of unprecedented economic growth (26% in 2015), the golf industry is well placed to benefit both in terms of increasing participation and its contribution to the wider economy. Measure Republic of Ireland Northern Ireland Ireland Consumer spending 379m 161m 540m GVA 202m 76m 278m Employment 5,050 FTEs 1,630 FTEs 6,680 FTEs A Satellite Account for Golf in the Republic of Ireland / 7

10 1 INTRODUCTION 1.1. The Project Following the publication of the report A Satellite Account for Golf in the UK in March 2016, The R&A together with the Confederation of Golf in Ireland (CGI) commissioned the Sport Industry Research Centre (SIRC) at Sheffield Hallam University to produce a similar study to quantify golf s economic value to the Republic of Ireland. The primary focus of this study is the contribution of golf to the economy in the Republic of Ireland. However, reference is also made to the golf economy of Northern Ireland from the earlier UK study. Taken together, the Republic of Ireland study and the Northern Ireland data from the UK study, enable an estimate to be made of golf s importance to the island of Ireland. Hence, throughout the report there are three geographical reference points used: the Republic of Ireland (RoI); Northern Ireland (NI) as a home nation within the United Kingdom; and the island of Ireland, that is RoI and NI, which we refer to hereafter as Ireland. Developed nations use an internationally standardised framework known as the System of National Accounts (SNA) to report the economic scale of specific industries. Sport generally, and golf specifically, are not recognised as industries within this framework. Consequently, the economic activity of sport and golf is diluted within the National Accounts, in broadly classified industries such as: recreation; arts and sport; manufacturing; construction; and hospitality. The method we use to identify golf s contribution to an economy is the production of a Satellite Account for golf. The Satellite Account technique was developed by the United Nations to measure the size of economic sectors that are not defined as industries in their own right within the System of National Accounts. Notable examples of where Satellite Accounts have been used previously include tourism, sport, and the environment. The approach enables industries to be analysed from four perspectives. 1. Consumer spending, which is defined as the spending of individuals and households on golf-related goods and services. 2. Gross Value Added (GVA), the building blocks of the National Accounts, which is defined as the profits plus wages within an industry, less an adjustment for taxation and subsidies. GVA is usually more than 90% of Gross Domestic Product (GDP), which is the most widely reported measure of the scale of an economy. 3. Employment, which is reported as (a) full-time equivalent jobs (FTEs) where for example two people working half-time is equal to one FTE, and (b) actual employees, which is the number of different people who occupy those jobs. 4. The fourth, less commonly used measure is turnover, which captures the revenue flows associated with a given level of GVA. For example, in order to generate 1,000 in wages and profits it might be necessary for a business to have a turnover of around 1,800. Indirect and induced measures of turnover are estimated by applying a multiplier to the direct measure, as explained in Section 7. This report presents the results of our Satellite Account for the economic importance of golf in the Republic of Ireland. Where relevant, the results of our previous research 2 are used to provide further context and to aggregate upwards to an island of Ireland basis Positioning the Research The study of the economic importance of golf is not new. Various previous studies across the world have attempted to measure the scale and nature of the golf industry at national level. The original of these reports was published in the USA in 2002 entitled The Golf Economy Report. Subsequent studies have attempted to be consistent with this report by using similar methods, notably The Australian Golf Industry 2 A Satellite Account for Golf in the UK, The R&A/SIRC; March / A Satellite Account for Golf in the Republic of Ireland

11 Economic Report (2008). However, the robustness of these studies is limited by a disclaimer within the Australian report explicitly stating that measures which are out of scope include: An aggregate industry output the market value of goods and services produced by an industry, often measured by industry turnover; Value added the market value of goods and services produced by an industry, after deducting the cost of goods and services used (i.e. based on the summation of wages and profits); and Industry employment the number of people directly employed by the industry, expressed in terms of full-time equivalent employees and actual heads. The only method by which these measures can be quantified with any degree of accuracy is by producing a Satellite Account for Golf, which has never been attempted before in the Republic of Ireland. In Europe we have found three studies similar to the American and Australian reports: KPMG: The Value of Golf to Scotland s Economy (2013); SMS: The Economic Value of Sport on the Economy of England (2014); and SMS: The Economic Impact of Golf on the Economy of Europe (2013). None of these studies used the Satellite Account methodology, although the KPMG report on the value of golf in Scotland does include some of the indicators utilised in this report. Without using the Satellite Account approach, there is a tendency to aggregate revenues in different industry sectors which leads to double counting. For example, the money that golf clubs spend on construction will appear as income for the golf clubs from members subscriptions and then also as income for the construction industry in the form of payments for building works. The only satisfactory way to solve the double counting problem is to consider the value added associated with the production process, which is essentially an analysis of profits and salaries. The only report that successfully negotiates the double counting problem by creating a Satellite Account is The R&A s A Satellite Account for Golf in the UK (2016). This report measured the scale of the UK Golf industry in terms of Consumer Spending, GVA, Employment and Turnover. It demonstrated that the economic value of the golf industry is determined primarily by the level of participation in the sport. Finally, the multiplier effects were estimated using what are known as Type I and Type II multipliers to evaluate the indirect and induced effects respectively. This report for the Republic of Ireland has been prepared so that it is methodologically consistent with our UK study. The approach of the current study is transparent and replicable, using both official statistics and the annual reports and financial statements of companies that operate within the golf industry. We have placed considerable emphasis on the economic activity of recognised golf clubs to capture accurately the existing patterns of income and expenditure through audited summaries of business transactions. Some of these were kindly provided by clubs themselves, others were sourced from the Companies Registration Office (CRO) Participation in Golf Golf is consistently shown to be one of the most popular participation sports in Ireland according to three national level surveys: the Irish Sports Monitor (ISM) for the Republic of Ireland, providing weekly sport participation rates; the Quarterly National Household Survey for the Republic of Ireland, providing 4-weekly and annual sport participation rates; and SAPAS for Northern Ireland, providing 4-weekly and annual sport participation rates. On the basis of all three surveys we can conclude that in the Republic of Ireland the golf participation rates are: 3.3% on a weekly basis; 4.5% on a 4-weekly basis; and, 7.9% on an annual basis. The latter is not available for 2014, but can be derived from the ratio between the various measures from previous years. For example, typically the annual participation rate is just below twice the 4-weekly rate. With a measured 4-weekly rate of 4.5% we would expect an annual rate below 9%, and thus our derived figure of 7.9% would pass a test of reasonableness for being within acceptable bounds. Table 1.1 presents a comparison of the 4-weekly and annual participation rates and participant numbers in the Republic of Ireland, Northern Ireland, Ireland overall and the UK. It is clear that the Republic of Ireland has the highest level of regular (4-weekly) participation at 4.5%, which equates to around 160,000 regular adult golfers. These golfers are a subset of a larger set of 281,000 occasional adult golfers who play golf at least once a year. As Table 1.1 shows, the population of adult golfers in Ireland is 384,000 adults. A Satellite Account for Golf in the Republic of Ireland / 9

12 Table 1.1: Golf Participation Nation Adult 4-weekly Regular Adult 12-monthly Occasional Population Participation Golfers Participation Adult Golfers Rates Rates Republic of Ireland 3,558, % 160, % 281,000 Northern Ireland 1,468, % 59, % 103,000 Ireland 5,026, % 219, % 384,000 UK 52,418, % 1,554, % 3,883,000 Sources: SIRC, QNHS, SAPAS. The finding that golf participation rates in the Republic of Ireland are higher than the UK as a whole is important for two key reasons. First, the economic impact of the golf industry, related directly to participation, will be relatively high. Second, if we compare the Republic of Ireland with the disaggregated scores for the four UK home nations, we find its participation rates of 4.5% for 4-weekly participation and 7.9% for annual are second only to the home of golf, Scotland, which has participation rates of 7.0% and 17.5% for these measures respectively. Golf participation statistics in the Republic of Ireland can be compared with number of golf-club members, often the source of all associated golf volunteering. Data from the Golfing Union of Ireland reveals that there are 189,000 club members in Ireland, as categorised in Table 1.2. This is confirmed further by ISM data, showing that in the Republic of Ireland 7.7% and 2.1% of males and females respectively are golf club members, which is equivalent to 174,000 adults (including non-affiliated members). Table 1.2: Golf Club Membership Men Women Total Adults Boys Girls Total Members 130,000 36, ,500 19,000 3, ,000 Source: GUI. As Table 1.2 shows, a sizeable majority of adult club members are males (78%). The totality of adult GUI club members in the Republic of Ireland (166,500) is approximately the same as the number of regular golf participants (160,000). Taking into account the ISM findings, we can conclude that around 60% of the total adult golf participants (281,000) are members of a golf club. The remaining 40% of participants make use of public golf courses such as Silloge Park and Stepaside Golf Course. Based on a combination of the participation and club membership data, we can conclude that in the Republic of Ireland, around 4.7% of the adult population are golf club members. This is nearly one in twenty adults and compares very favourably with England where the corresponding score is around one in one hundred adults. Analysing golf participation patterns is important because they form the basis of consumer spending, especially on membership fees, inbound golf-tourism, golf equipment and sportswear, which in turn are known to be the major economic components of the industry. Table 1.3 positions golf alongside other sport activities in which people participate in the Republic of Ireland. Information is taken from ISM and it therefore reflects weekly participation. It can be seen that golf is the fifth most popular sport activity after swimming, running, football and cycling. As is the case in the UK, golf can be confirmed as the number one partner sport in the Republic of Ireland, ahead of tennis, badminton, table tennis and squash. 10 / A Satellite Account for Golf in the Republic of Ireland

13 Table 1.3: Sport Participation, RoI, at least once a week Swimming Running Cycling Football Golf Weights Gaelic Football Rugby Hurling 9.4% 8.5% 5.9% 5.9% 3.3% 2.9% 2.6% 1.4% 1.7% Sources: SIRC, QNHS, SAPAS. Participation studies 3 have shown that golf has been more affected by the recent global economic downturn in terms of membership and participation than cheaper sports such as jogging and road running. In the case of golf, the major variable by which participation is affected is free time. Pressure on incomes has caused many people to increase their working hours in order to maintain their standard of living, which in turn constrained the amount of time available for participation in sport and leisure. Although the issue of free time is relevant to sport in general, it is more pronounced for golf where it typically takes three to four hours to negotiate an 18-hole course Research Aims The aim of this research is to quantify the economic importance of golf in the Republic of Ireland by following the Satellite Account methodology (as developed in the EU) and to map the golf industry against standard economic categories (National Accounts) in order to: Outline the economic groupings in the National Accounts in which golf-related economic activity is found; Estimate consumer spending on golf (using the Vilnius definition 4 categories in sport); Estimate the GVA of golf overall and within each relevant industry sector; Estimate the employment attributable to golf overall and within each relevant industry sector; Estimate turnover for the golf industry based on direct, indirect and induced effects; and Contextualise the research relative to the Republic of Ireland s wider economy and our previous research on the golf industry in the UK Report Structure The remainder of this report is structured as follows: Section 2 outlines the methods; Section 3 identifies the Standard Economic Categories associated with golf in the Republic of Ireland; Sections 4 to 6 provide estimates for consumer spending, GVA and employment; Section 7 presents an estimate of the golf industry s turnover together with the indirect and induced effects; Section 8 summarises the economic impact of golf and positions it within the context of the Republic of Ireland s economy; and Concluding comments are presented in Section 9. Finally, the appendices include detailed tables relating to: The Standard Industrial Classification mapping of the golf industry; Consumer spending; Gross Value Added; The two definitions of employment; and An estimation of the indirect and induced effects on GVA and turnover A Satellite Account for Golf in the Republic of Ireland / 11

14 2 METHODS 2.1. The Model This research uses the SIRC model for assessing the economic importance of sport, which has been used extensively in the UK 5 and more widely in Europe 6. It uses as its basic input, where possible, relevant economic variables from official statistics. The model divides the sports economy into six sectors which are analysed separately to ensure that there is no double counting. A brief overview of the six sectors is presented below. 1. Consumer spending by individuals or households. This is golf-related expenditure on goods and services such as: clothing; footwear; equipment; and golf tourism activities. 2. Commercial golf which relates to equipment manufacturers and retailers, golf management companies, real estate and construction. Also included in this sector are media services such as television, publications and events. 3. Commercial non-golf consists of the suppliers involved in the production of golf-related goods and services. This sector includes commercial companies that do not provide a direct golf product per se, but which assist production via the supply of inputs or revenue. For example, energy companies provide inputs that enable the operation of golf facilities; and sponsors enable major golf events to take place. Golf-related betting also falls within this category. 4. Clubs and the voluntary sector include all affiliated clubs and non-profit making organisations such as governing bodies, other associations and charities. Identifying the income and expenditure flows of clubs was a particularly important component of this research. Clubs are also economically important for their provision of food and beverage services either integrated within the operation, or as a separate entity. 5. Public sector identifies the monetary flows to central and local government in the form of taxes and rates. Central Government contributes towards golf via the grants distributed through Sport Ireland and it receives funds associated with VAT and company taxation. 6. Imports and exports adjust the data in order to take account of all transactions with economies outside the Republic of Ireland. The model is deliberately structured to avoid double counting. The only aggregation which takes place is for profits, wages and jobs per sector, which in turn generate the Gross Value Added and employment estimates. Our analysis is consistent with the Vilnius definition of sport, which articulates the consensus reached at European Union level as to how the sport industry is defined in statistical and economic terms. The research presented in this report uses the seven key sources listed below as its basic inputs / A Satellite Account for Golf in the Republic of Ireland

15 1. Examination of the commercial sector through the annual financial statements of golf-related businesses filed with the Companies Registration Office Ireland (CRO). 2. Analysis of clubs finances through their annual financial statements, also filed with CRO. 3. Analysis of various associations finances through their annual financial statements (e.g. CGI). 4. The trade of goods as reported by the Central Statistics Office (CSO). 5. Audit Bureau of Circulations (ABC) data for the readership of magazines. 6. Annual financial statements and existing surveys to inform decisions on consumer spending. 7. The Input-Output Tables for the national economy, together with average earnings data provided by the CSO. As an extension to the initial direct economic impact, the indirect and induced effects on GVA and turnover are also calculated. All multipliers used, are based on the latest Input-Output Tables provided by CSO Output Impacts The principal component of the Satellite Account deals with the direct demand for golf in terms of consumer spending, GVA, and employment. To complete the model, the overall economic impact of golf combines three different types of effect, which reflect the way in which expenditure filters through an economy. Direct impact the immediate net change in economic activity in the sectors of the economy that service golf, such as tourismrelated provisions. Indirect impact industries that create direct impacts depend on the supply of goods and services by other industries, which have to change their outputs to meet demand. These inter-industry transactions of intermediate goods and services represent the indirect impact, or supply chain, and originate mainly from the non-golf commercial sector, for example food and drink supplies to clubhouses. Induced impact employees within industries positively affected by the direct and indirect impacts of golf may see their disposable incomes increase and as a result spend more on domestically produced goods. This leads to increased local expenditure and final demand. Overall, the current methodology provides an evaluation of the golf industry in terms of consumer spending, GVA and employment using an approach that is transparent and can be reconciled to the National Accounts of the Republic of Ireland. A Satellite Account for Golf in the Republic of Ireland / 13

16 3 MAPPING THE GOLF INDUSTRY Constructing a Satellite Account involves a direct search through Standard Industrial Classification (SIC) codes to identify companies that are in any way associated with golf. This is like a form of forensic accounting and was conducted by using the annual reports, financial statements, and associated four-digit SIC codes filed with CRO. A full list of the entire four-digit SIC codes found to be directly related to the golf industry can be found in the Appendices (see Table A.1). An important observation about this initial analysis is that the golf industry spans numerous industrial sectors and SIC codes as shown in Table 3.1. Golf-related businesses operate in 49 different SIC codes of the National Accounts. Golf has a particularly strong integration with: Section L: Real Estate Activities, with golf-related businesses found in 63% of the SIC codes in this sector; Section I including Accommodation and Food Service Activities (50%); and in Section R: Arts, Entertainment and Recreation, golf activity is found in 40% of SIC codes. 14 / A Satellite Account for Golf in the Republic of Ireland

17 Table 3.1: Economic Sectors with strong associations with Golf Group Percentage of SIC codes associated with Golf Section L: Real Estate Activities 63 Section I: Accommodation and Food Service Activities 50 Section R: Arts Entertainment and Recreation 40 Section N: Administrative and Support Service Activities 26 Section S: Other Service Activities 16 Section M: Professional Scientific and Technical Activities 14 Section J: Information and Communication 12 Section G: Wholesale & Retail Trade; Repair of Motor Vehicles & Motorcycles 11 Section P: Education 9 Section K: Financial and Insurance Activities 6 Section F: Construction 5 Section C: Manufacturing 1 Golf s extensive interaction with the economy as a whole suggests that there will be relatively high values for the multipliers used subsequently to compute indirect and induced effects. This initial analysis provides the basis for the headline indicators of: consumer spending; Gross Value Added; and employment, which are presented in turn in the next three sections. In the course of this research all publicly available club accounts were examined. In addition, significant input was provided by other bodies such as: Confederation of Golf in Ireland (CGI); Golf Club Business Association of Ireland; Golfing Union of Ireland (GUI); Irish Ladies Golf Union; Golf Course Superintendents (GCSAI); and PGA (Irish Region). A Satellite Account for Golf in the Republic of Ireland / 15

18 4 CONSUMER SPENDING Consumer spending on golf in the Republic of Ireland was found to be 379 million as shown in Table 4.1 which is equivalent to 107 per adult, a figure which is highly comparable with the equivalent UK average. A more realistic way to contextualise consumer spending is on the basis of those who play golf. Using this method, each adult golfer in the Republic of Ireland spends an average of 1,350 per annum on their sport. Table 4.1: Summary of Consumption Expenditure Type Spending ( million) Percentage Members Fees Food and Beverages in Clubs Golf Equipment Retail / Hire Green Fees Accommodation Tourism (Agents & Overseas) 28 7 Driving Ranges and Lessons 22 6 Golf Clothing & Footwear 21 6 Live Events 13 3 Golf Betting 11 3 Other 31 8 Total Northern Ireland 161 Ireland / A Satellite Account for Golf in the Republic of Ireland

19 Members fees, a category which also includes joining fees, is by some margin the greatest volume of consumer spending at 94 million or 25% of the total consumer spending on golf. The elements of consumer spending associated with the network of clubs, are strongly linked to golf participation. Golf participation can be seen to be a catalyst for economic activity in other sectors because of the additional expenditure golfers make on equipment, clothing, footwear, food and drink, tourism, betting, lessons and events. It is evident that the golf economy is a function of participation in the form of some 160,000 regular adult golfers (see Table 1.1) and a similar number of club members (see Table 1.2). Downstream impacts in sectors that benefit from golf participation such as equipment, clothing and footwear are therefore highly dependent on the sport s participation levels. In addition to increasing participation in golf for individual physical and mental health benefits, there are also strong arguments for the wider economic benefits of the sport. Finally, Table 4.1 shows that Northern Ireland s consumer spending on golf adds up to 161 million ( 129m), bringing the total for the whole of Ireland to 540m ( 107 per adult), with no meaningful variation in the spending patterns of adults in the Republic of Ireland ( 107) and Northern Ireland ( 110). Golf is prominent in the consumer spending figures for sport overall, mainly because of the expense involved in club membership fees and golf equipment, which tends to be greater than the participation costs of other sports. In the UK, golf was found to be 14% of the UK s sport economy; however no study on the economic impact of sport has been commissioned in the Republic of Ireland since for a direct comparison with sport in general. As shown in Table 4.2, golf is responsible for 0.4% and 17% of the Republic of Ireland s total and sport 8 consumer spending respectively 9. Other than membership fees, consumer spending on golf is also influenced by the operation of restaurants and bars, golf equipment and green fees, with each category associated with at least 10% of golf s consumer spending. Accommodation in golf resorts and golf-related tourism are also important, contributing 10% and 7% respectively to the sport s consumer spending. Spending on food and drink as a share of total spending, is significantly higher in the Republic of Ireland than in the UK, which suggests greater integration of bars and restaurants within clubs. We have also noticed many restaurants and bars in golf clubs actively promoting themselves beyond golf to the wider community as locations for Sunday lunches, wedding receptions, and other religious celebrations such as first holy communions. Table 4.2: Golf Consumption, Republic of Ireland In Context Golf Consumption 379 million Golf as a percentage of Consumer Spending 0.4% Golf as a percentage of Sport Spending (est.) 17.0% The sport percentage is an update of the 2008 figure and should be treated with caution. 9 A Satellite Account for Golf in the Republic of Ireland / 17

20 5 GROSS VALUE ADDED The Gross Value Added of the golf industry in the Republic of Ireland was 202 million in 2014 with the largest single area being the activities of golf clubs, including food and beverage operations and recreational golf at 89m (44%) as shown in Table 5.1. The GVA analysis also highlights golf s important relationships with the golf equipment and retail industries ( 21m), tourism and accommodation in golf resorts ( 25m) and the construction and real estate industries ( 15m). Table 5.1: Summary of GVA Sector GVA million Percentage Clubs / Food Services / Recreational Golf Accommodation / Tourism (Agents) Golf Equipment / Sportswear Construction / Real Estate 15 7 Services (Advertising, Agencies, Insurance, Other) 13 7 Golf Betting 10 5 Management and Administration 10 5 Live Events 6 3 Wholesales 5 2 Associations / Charities 3 2 Other 5 3 Total Northern Ireland 76 Ireland / A Satellite Account for Golf in the Republic of Ireland

21 The economic value of golf clubs is central to the golf economy with considerable benefits in terms of the development of retail business and tourism. Most food and drink businesses are an integral part of the club network providing significant income and employment. Around 60%-70% of the GVA generated by golf relates to the activities of golf clubs directly or indirectly, through income generated via participation and construction. A significant part of golf s GVA (7%) is associated with construction and golf-related real estate. The routine nature of ongoing maintenance works (almost 85% of total construction/repairs in clubs), coupled with high indirect demand multipliers for construction indicates that growth in golf has a positive impact on the economy as a whole. Furthermore, the Republic of Ireland has a growing service sector (including advertising, and insurance) and management activities linked to golf, which contribute 7% and 5% respectively to golf s GVA. Information Technology services associated with golf are increasingly important. Table 5.1 also shows that Northern Ireland generated 76 million ( 61m) of golf related GVA, bringing the total for Ireland as a whole at 278m. In Table 5.2 below, it is apparent that golf s GVA corresponds to 0.1% and 9% of the overall and sport GVA respectively for the Republic of Ireland 10. It is noteworthy that a single sport such as golf is actually measurable within the context of an entire nation s economy given that all sport tends to be around 2% of the economies of developed nations. Table 5.2: Golf GVA, Republic of Ireland - In Context Golf GVA 202 million Golf GVA as a percentage of Total GVA 0.1% Golf GVA as a percentage of Sport GVA (est.) 9.0% When we examine the nature of golf s GVA, we find that 75% is associated with wages and salaries, which in turn compares favourably with the economy as a whole (52%). The significance of this finding is that it illustrates the underlying capacity of golf to generate employment and to stimulate economic growth. If golf participation can be increased, the economic benefits could be substantial within the context of golf and the economy of the Republic of Ireland more widely. 10 The sport GVA represents an update of the 2008 report and should be treated with caution. A Satellite Account for Golf in the Republic of Ireland / 19

22 6 EMPLOYMENT Expenditure on wages and salaries in golf-related businesses is the basis for deriving the amount of employment in each sector. The headline figures for full-time equivalents (FTEs) in the key employment sectors are shown in Table 6.1. The golf industry provides employment for 5,050 full-time equivalent employees and these roles are carried out by 6,800 different people when adjusted for part-time workers. Golf clubs are the most significant employers in the sector (1,740 FTEs, 34% of total) which equates to an average of just over five full-time employees per club. Other notable levels of golf-related employment can be found in golf equipment and sportswear (640 FTEs); services (470 FTEs); management and administration (410 FTEs); tourism and accommodation (580 FTEs); construction (340 FTEs) and real estate (190 FTEs). To put these figures into context, golf employment is 0.3% of the Republic s total employment, or the equivalent of 1 in 300 jobs. This figure compares favourably with the UK (1 in 500 jobs) and in part provides evidence that in relative terms golf is a more important employment provider in the Republic of Ireland than it is in the UK. Table 6.1: Summary of Golf Employment (FTEs) Employment Type FTEs % Employees % Clubs / Operations / Recreation 1, , Golf Equipment / Sportswear Services Management and Administration Tourism Accommodation Construction Real Estate Other Live Events Golf Betting Travelling - Agents Food Services Associations / Charities Magazines / Books / DVDs Total 5, , Northern Ireland 1,630 2,230 Ireland 6,680 9, / A Satellite Account for Golf in the Republic of Ireland

23 Some sectors rely heavily on part-time employment, notably: clubs; tourism; accommodation; food services; retail; and live events. In live events, for example, employment of 150 FTEs translates into 250 different people working within the sector, which is the equivalent of each employee working on a 0.6 FTE basis. Similarly clubs rely on considerable part-time resources, with 2,780 employees corresponding to 1,740 FTEs. Table 6.1 shows that golf in Northern Ireland generates 1,630 FTEs with a head count of 2,230 employees. Taken together, Ireland as a whole generates 9,030 golf-related jobs, which correspond to 6,680 full-time equivalents. To put golf employment into a wider perspective it is useful to examine the relationship between GVA and employment as shown in Table 6.2. Table 6.2: Golf Employment, RoI In Context Golf Employment FTEs 5,050 Golf Employment Actual 6,800 Golf Employment (FTE) as a percentage of Total Employment 0.3% Golf Employment (Actual) as a percentage of Total Employment 0.4% Golf GVA as a percentage of Total GVA 0.1% Overall, golf accounts for 0.1% of GVA and all things being equal the industry would be expected to account for a similar percentage of jobs. The fact that the actual figure is much higher, at between 0.3% for FTEs and 0.4% for employees indicates that golf is an effective industry for job creation. It also means that the golf industry can be used to generate employment when it is needed, especially at times of recession and austerity. The ability of the Republic of Ireland s golf economy to generate jobs compares favourably with the UK, where golf corresponds to 0.2% of UK employment. Employment is reinforced by relatively strong multipliers in some sectors that are important to golf such as the construction industry (1.59). The part-time nature of some golf-related employment is linked to the strong ties that the clubs have with their local communities. Clubs are therefore well positioned to help regenerate local economies in response to new investment. Notable examples of such investment include the proposed plans for Trump Doonbeg in the Republic of Ireland and Lough Erne in Northern Ireland. A Satellite Account for Golf in the Republic of Ireland / 21

24 7 TURNOVER Turnover, or the total economic activity associated with golf is comprised of: direct effects such as the operation of golf clubs; indirect effects such as supply chain activity; and induced effects which are the increased sales within the economy from household spending of the income earned in the golf industry. The indirect effect is of economic importance because it measures the production of inputs required in order to satisfy the direct demand for golf. These inputs will be sourced from the commercial non-golf sector. For example, a golf club may commission a construction company for works, which cause it to place orders down the supply chain for the required inputs such as building materials and labour. When the first direct and indirect cycles of demand are completed, some households will have higher incomes as a result of the increased economic activity. If these households continue to spend on golf, a further induced effect will be created. The sum total of direct, indirect and induced effects can be said to be a measure of the economic activity associated with golf. To measure economic activity, GVA is first translated into turnover by using the latest Input-Output Tables from the Central Statistics Office. The second stage of the process is to apply multipliers on the basis of the Product-by-Product Matrix in the National Accounts. Although previous research has often emphasised the strength of sectors like sport to produce significant economic results, it should be noted that in a relatively small economy such as the Republic of Ireland, the multiplier effects will be less pronounced than in a larger economy such as the UK. Table 7.1 shows the detailed derivation of the three effects. The direct GVA and turnover are presented at 202 million (see Table 5.1) and 397m respectively. The multiplier effects are derived for each economic sector and can be seen in Table A6 of the Appendix. These provide a subsequent stimulus in the supply chain (indirect effects) and in household incomes (induced effects). As the direct economic activity circulates through the economy, it is possible to make an estimate of the total economic activity associated with an industry. For golf our estimate for total direct, indirect and induced GVA is 275m and for turnover the corresponding figure is 546m. Table 7.1: Direct, Indirect and Induced effects on GVA and Turnover GVA ( million) Turnover ( million) Direct Indirect Effects Induced Effects Total The figures in Table 7.1 should be treated with a degree of caution as they are in effect measuring a continual recirculation of the same money. It is legitimate to say that golf provides a stimulus for some 546 million worth of economic activity. However, the more robust figures are consumer spending, direct GVA and employment as these measures isolate golf s specific contribution to the economy without having to consider the effect of the size of the economy and any leaks that may appear in the circulation process. Furthermore, these measures eliminate double counting and can be reconciled to the System of National Accounts via a transparent audit trail. Finally the golf industry incorporates some economic sectors with very high multipliers; among them the construction sector with an indirect multiplier of 1.59 and membership organisation services with an indirect multiplier of The latter is the largest multiplier value found not just within the subsectors of the golf industry but the economy as a whole, showing the substantial returns that investment in sport generally, and golf specifically, can yield. 22 / A Satellite Account for Golf in the Republic of Ireland