MARKET INTELLIGENCE FOR GOLF S STAKEHOLDERS. Somewhat positive 29%

Transcription

1 DASHBOARD MARKET INTELLIGENCE FOR GOLF S STAKEHOLDERS EXTRA Fall/Winter 2016 IN THIS ISSUE A View from the C-Suite Industry Execs Weigh-in on the State of the Game....1 The Changing Face of Junior Golf Golf Participation: A Slight Dip Tempered by Strong Positive Indicators...4 Americans Want to Play Golf Let s Invite Them!...5 What s the Purpose of a Golf Business?....6 Golf Facility Supply Update...7 A View from the C-Suite Industry Execs Weigh-in on the State of the Game Everyone is entitled to an opinion, but they re not all worth a listen. That truism applies to everything from politics to business. And it s certainly true in the golf industry, where there seem to be as many viewpoints on the state of the game as there are missed three-footers. Neutral To bring some perspective and expertise to the discussion about golf s future, the NGF went to those who know best, top executives across the industry s many business categories, and asked for their perceptions and sentiments on the Very negative 1% health of the game. Their responses were both enlightening and encouraging. A total of 72 executives from some of golf s leading companies were interviewed, some online and some by phone. Half of the 9% Somewhat negative Executive Perceptions of Golf s Image 29% respondents were from businesses who sell to consumers/golfers (B2C), 40% were from businesses that sell to facilities (B2F), the rest from associations and other concerns. They were asked to view golf through two lenses: overall perceptions about the state of the game, and perceptions about the state of the business. First, the game. Industry insiders Somewhat positive believe that golf is seen in a positive light by the general public: 61% said golf s image is either somewhat or very positive. 44% 17% Only 10% thought golf has either a Very positive somewhat or very negative image. A few respondents made the point that golf s image is somewhat polarized, divided between players and fans who can t get enough and non-players who don t think much about golf or just don t get it. But the number who think golf s image is very negative is tiny (1%). Q. How is the game of golf perceived overall, among the U.S. population (golfers and non-golfers alike)? Is its public image generally positive or negative? (Continued on page 2) NGF Dashboard Extra Fall/Winter 2016 Toll Free (888)ASK-4 NGF 1

2 (A VIEW FROM THE C-SUITE, Continued from page 1) Asked if golf will become more popular in the next three-tofive years, sentiment was a little less optimistic. Eliminating the extremes, no one thought golf would be much more or much less popular. Slightly more than half said the game s repute would remain about the same, while slightly less than half said it would become more popular. A generally optimistic outlook, but with no assurance of improvement. When pressed for examples of what could hurt or temper golf s popularity, the executives pulled no punches, with many responses echoing key issues in society today: If the game wants to appeal to younger people, golf must be more accepting. Meaningful progress is long overdue in creating ethnic and gender diversity. Elitism [in golf] is undeniable. Will a slightly more favorable opinion of golf help the game grow? Most of the executives were conservative in their expectations for growth over the coming three-to-five years. About half think both the number of players and rounds will stay about the same. The other half is biased towards growth, with those predicting growth in both players and rounds outnumbering the pessimists three to one. Those who anticipate growth offered a number of reasons: More rounds from Baby Boomers The influence of more young players on Tour Success attracting Millennials to the game More women golfers Positive reinforcement from big-stage events such as the Ryder Cup and the Olympics Popularity and image are somewhat ephemeral, but budgets are real. And when asked about delivering on their financial projections, golf s executives have a very positive outlook. This year, three out of four budgeted for growth. And one out of four budgeted for significant growth. Even more telling, 90% are somewhat or very confident that they ll deliver against their plans. Over a longer horizon, expectations for growth remain generally optimistic. Again, three out of four executives are looking for growth, with slight growth slightly outweighing the chance for moderate or significant growth. ( Slight is defined as 1-3%; moderate as 4-6%; and significant as greater than 6%.) Worth noting is that sentiment among B2F companies is marginally more positive than among B2C concerns, which could mean more health on the course/club side, a welcome sign for the entire industry. The final questions asked of the executives were about their plans for future investment, both for Fiscal Year 2016 and over the next three-to-five years. In both cases, overall sentiment was optimistic, with 62% having increased investment this year and 76% expecting to increase their investment in the near future. Since investments are tied closely to business growth, this indicates a positive outlook for both the near and longer terms Again, some of the executives comments expose challenges in the industry and are food for thought for anyone concerned with the game s future. For instance: We do indeed have a customer-service problem in golf. The industry is not getting aggressive in embracing the 2016 lifestyle it s too scared to be bold, fun, casual. Society and technology have changed exponentially in the last 10 years and those trends are linked to the decline in participation in golf and other sports. All organizations must commit to growing the game as priority #1, not #17. It s only natural that golf s business leaders are an optimistic group, as they must plot a positive path for their brands and employees. But, from reading the verbatim quotes above, they re not the type to duck golf s challenges either. n MORE COMFORT. MORE POWER. MORE VERSATILITY. MORE CONTROL. Simply Superior. THE WORKMAN GTX. It s simple, you need a vehicle that can adapt to the wide-ranging diversity of your golf course. With hundreds of options, choice of gas or electric power, two or four seats and loads of attachment points for endless customization, the new Workman GTX delivers with room left in your budget TORO.COM/GTX 2016 The Toro Company. All rights reserved. 2

3 The Changing Face of Junior Golf At NGF s 2016 Golf Business Symposium, NGF presented our latest findings on the junior golf market, a segment that is bigger and more diverse than many observers realize. And a group that should give us reasons to be optimistic about the game s future. Today, the number of junior golfers defined as individuals between the ages of 6 and 17 who played at least one round of golf in the past year is nearly 3 million. Twenty years ago, in 1995, the number of junior golfers was also nearly 3 million. However, to assume nothing has changed is to miss a much more interesting story. Between 1995 and 2004, thanks in part to the presence and resonance of Tiger Woods, the number of junior golfers shot up, reaching a peak of 4.1 million. But beginning in 2005, and due largely to the global economic crisis, golf participation in this set fell steadily, bottoming out in 2011 at 2.4 million. Since then, we ve seen healthy growth of 25%, back to 3 million in But more important than the overall number is the demographic make-up of those 3 million kids. Because in key areas, golf is making very important inroads MM MM 6% 29% % Non-Caucasian Junior Participation Trend Number of Junior Golfers (MM) 17% % Female 32% 57% 67% % HH $75K+ Females In 1995, girls made up only 17% of all junior golfers. Today, they total one third. To put that into perspective, the overall proportion of female golfers (age 6+) has hovered around 20 percent for as far back as NGF has tracked participation. Girls are getting, and accepting, the message that golf can be both welcoming and fun. This would seem to be the result of increased visibility of the LPGA and its young stars, as well as innovative programs like LPGA Girls Golf and possibly longer-term effects of Title IX. Non-Caucasians Similar to the growing proportion of junior girls who played in 2015, the number of non-white juniors has grown as well. Twenty years ago, only 1 out of 17 junior golfers was non-caucasian. Today, that number is nearly 1 out of 3. That s an impressive rise and speaks to the broader appeal of professional golf, the power of institutions like The First Tee, inclusive programs across the country, and demographic changes in the U.S. population. Lest you think these two shifts in demographics also reflect shrinking economic power, today two-thirds of all junior golfers come from households making $75,000, a rise of nearly 20% from 20 years ago. More diversity has come with more spending power, and points toward a future golfing population that far more accurately mirrors the country s population. Starting Younger And there s another trend that could prove beneficial to the industry in the years to come. Today s junior golfers are coming to the game younger. There are 50% more junior golfers under age 12 than there were in This is a good sign because research shows that the age of introduction positively affects the level of engagement. In NGF s recent Millennial research, we found that Millennials who started playing before age 14 are nearly twice as likely to become Core golfers (those who play 8 or more rounds a year and account for more than 90% of total rounds and spending). Golf s efforts to attract more demographically diverse youngsters seems to be working, and with more kids picking up golf at a younger age, there is hope that this next generation of golfers will remain committed to the game throughout their lifetime. There s also a much stronger level of enjoyment among Millennials who start golf early: Four out of five say they enjoy the game very much (that s 20% higher than among those who started later) and 85% say they are very likely to continue playing as they get older. Perceptions of the game are a strong indicator of enjoyment, frequency of play, volume of spending and likelihood to continue playing. NGF s Millennial research showed that those who start younger have more positive perceptions about the game and fewer negative ones than those who picked up the game later. They strongly agree that golf is a good form of exercise, a great family activity, time well spent, a good way to enjoy the outdoors, even cool. Those younger adopters disagree more strongly with assertions that golf is dull or boring, bad for the environment, elitist and exclusionary, or is an old man s sport. Millennials introduced 15+ Millennials introduced 14 or younger Golf is a good form of exercise Positive Perceptions Golf is a great family activity Golf is cool Golf is time well spent Golf is a good way to enjoy the outdoors The industry should be encouraged by what we re learning about the youngest golfers. Golf s efforts to attract more demographically diverse youngsters seem to be working, and with more kids picking up golf at a younger age, there is hope that this next generation of golfers will remain committed to the game throughout their lifetime. Still, we ve only scratched the surface in terms of truly understanding today s juniors. We need to delve more deeply into these positive signs, which is why the NGF will soon begin an in-depth study, the largest of its kind, on the Centennials (those born since 1997). You ll be hearing more about the study, and our findings, in the months to come. n NGF Dashboard Extra Fall/Winter 2016 Toll Free (888)ASK-4 NGF 3

4 2015 Golf Participation: A Slight Dip Tempered by Strong Positive Indicators Twenty years after Tiger Woods stepped before a microphone in Milwaukee on Aug. 28, 1996, and with the words Hello, World, touched off the most meaningful golf industry growth since Arnold Palmer and President Eisenhower jump-started it 40 years earlier, there are reasons to be confident about the stability of the game. While the latest NGF participation numbers show a slight dip in 2015 to 24.1 million (over the age of 6 who played at least once) from 24.7 million the two previous years, numbers remained strong in several crucial areas: among committed golfers, beginning golfers and in the number of people interested in taking up the game. While the total drop in golfers from 2014 to 2015 was within the national study s statistical margin of error, the results do suggest that a slow leak in overall participation Number of Golfers in the U.S. (People age 6+ who played at least one round of golf, in millions) persists. However, NGF analysis continues to show Total Golfers Committed 1 Golfers that attrition is confined mainly to those who never really got into the game About 80 percent 1- People who indicate golf is a favorite activity or one of several ways they like to spend their recreational time of all golfers, or 20 million of the 24.1 million, make up a committed base who accounted for 94 percent of all rounds played and equipment spending in Play among this group drove an overall increase in rounds played of 1.8% versus 2014, as reported by the National Rounds Played Coalition (comprised of NGF, Golf Datatech, PGA of America and NGCOA). The twenty-somethings like Jordan Spieth, Jason Day, Rickie Fowler, Lexi Thompson and teenager Lydia Ko appear to be resonating. Beginners numbered 2.2 million in 2015, which compares favorably to the all-time high of 2.4 million in 2000, at the peak of Woods success when he won three major championships. And the biggest group of beginners in 2015 were Millennials. Interest in playing golf is at an all-time high with an estimated 37 million nongolfers saying they are interested in taking up the game. And roughly 20 percent may already be making their first moves. In addition to the 24 million people who played golf on a golf course last year, another 7 million took part in the game at a driving range, a TopGolf facility or on an indoor golf simulator. Golf s overall reach is impressive. An estimated 81 million *, including 62 million non-golfers, watched golf on TV in 2015 while 27 million read about the game in traditional or electronic media. One out of three Americans about 95 million played golf on a golf course or alternate venue, watched on TV or read about it in The interest is there. The challenge is to activate more of the people who are interested in playing, and retain a higher percentage of those who do give golf a try. Getting more beginners to enter the game through structured introduction programs like Get Golf Ready is key to improving retention. While participation growth remains difficult to achieve, with the recession in the rear view mirror and an exciting new wave of young players in front of us, there are good reasons to be optimistic about future growth if emphasis continues to be placed on converting more beginners into committed golfers. n *81 million is consistent with Nielsen viewership statistics for Americans watching PGA TOUR broadcasts for a minimum of 15 minutes. 4

5 Americans Want to Play Golf Let s Invite Them! There were 24.1 million golfers (people who played at least one round of golf on a golf course) in 2015, a slight drop from the 24.7 million who played the year before. Among those who played were 2.2 million beginners, people trying golf for the very first time. The number of beginning golfers has been on the rise of late. It s not surprising. Interest in playing golf has been rising as well and is at an all-time high with 37 million non-golfers saying they are very or somewhat interested in taking up the game. Millions of People, age 6+ The number of beginning golfers has been rising in recent years, and is approaching the all-time high of 2.4 million that was reached at the height of Tiger Woods visibility and popularity. Saying you are interested in playing golf is one thing; taking action is another. But in addition to the 2.2 million beginners who actually played on a golf course last year, another seven million non-golfers either visited a driving range, enjoyed the hospitality of a TopGolf facility, or played golf on an indoor golf simulator. Some of these seven million are surely destined to become this year s beginners. NGF considers only those 37 million who say they are very or somewhat interested in playing golf now as the primary pool of prospects for golf. There are many more another 47 million who say they are a little interested in playing. Some may end up trying it, but probably not anytime soon. Millions of People, age Beginning Beginners Golfers Number of people taking up golf for the first time 2.4 Interested Non-Golfers Q. How interested are you in playing golf now? Very Interested Somewhat interested Still, 37 million very or somewhat interested non-golfers should be more than enough to get your attention. That s 1.5 prospects for every existing golfer, and the pool from which the majority of the 2.2 million beginners were drawn last year Most of those beginners were encouraged to start playing not by someone in the golf business, but by a family member or golfing friend. Or they just decided on their own, maybe because they ve watched golf on television and thought to give it a try, or because they saw an advertisement for Get Golf Ready. Interest in playing golf has been rising as well and is at an all-time high with 37 million nongolfers saying they are very or somewhat interested in taking up the game. But just think about how many more of those 37 million interested non-golfers we might turn into beginning golfers if we made a more proactive effort at the community level to invite them. If we marketed and sold our player development programs more aggressively. Granted, most golf courses do not have large marketing budgets. The typical golf course may allocate one to two percent of their gross revenues towards these efforts. And virtually all of those marketing dollars are used to target current golfers for the purpose of increasing a golf course s own market share. That leaves very little or nothing to spend on inviting all of those interested nongolfers to join the fun. How could we extend more invitations than we do now? One idea is for golf courses to join forces to develop joint marketing programs for beginners. The concept is called co-opetition. The notion is for competitors in this case golf course operators to jointly fund and deliver player development programs in their community. Co-opetition The word co-opetition comes from the joining of the words cooperation and competition. It is used to describe the strategy of competitors coming together to solve a common problem, or create a joint opportunity. Ray Noorda ( ) is credited with inventing the concept and putting it to work in 1983 when he was forming his software company, Novell. The concept and use of the word was popularized by a pair of business school professors from Harvard and Yale. In 1996 Adam Brandenburger and Barry Nalebuff published Co-opetition. Since then much has been written about the use of the idea in various industries and business environments. It continues to be a very commonly employed strategy in the computer industry. Competitors working together? Why not? Any new golfers created in the local market would play the vast majority of their rounds right there at home. And therefore all of the golf courses in the market would benefit from the newly created golfer business in proportion to their existing market share. As the saying goes, a rising tide lifts all boats. Reversing golf s slow participation decline is going to require some intelligent innovation in the game itself, and in the way the game is marketed and promoted. We can t afford to wait for people to come to us. If golf participation is going to start growing again we need to proactively invite more people to try, and then convert more of those trials into commitment. Americans really do want to play golf. So let s invite them! n NGF Dashboard Extra Fall/Winter 2016 Toll Free (888)ASK-4 NGF 5

6 What s the Purpose of a Golf Business? The purpose of business is to create and keep a customer. Peter F. Drucker Creating Committed Golfers Last year 2.2 million people who had never previously laid hands on a club played their first round of golf. In fact, based on NGF s annual studies of golf participation, it is estimated that over the past five years alone 10 million people have tried golf for the first time. This is pretty compelling evidence that the allure of golf remains strong. A steady stream of new customers, such as the one golf enjoys, is something that most businesses would be overjoyed with. New customers help to renew the existing customer base and provide the basis for continued growth. And so long as a business is taking in more new customers than it is losing, it will grow. Despite a steady stream of beginners over a long period of time, the number of golfers has been slowly declining for the past 12 years. We must ask ourselves, are we doing everything we can to keep as many beginners in the game as possible? It may surprise many to know that fully one-third of the U.S. population over the age of six have tried golf at some point in their life. That s 98 out of 294 million people, including the 24 million who played last year, giving us a marginal retention rate of 25 percent. If you adjust for those no longer able to play because of poor health or lack of means, the percentage still playing goes up to 30 or 35. But it would be incorrect to say that golf s customer retention rate is 30 or 35 percent. Because most people who have tried golf never really became golfers. Lapsed Participants Q. When you did play golf, how often did you participate? Played only a few times ever Played occasionally (1-7 times/year) Played regularly (8+ times/year) 62% 25% 13% Most people who tried golf but no longer play never played more than a few times. Only 13 percent of former players were core golfers before quitting. People who successfully navigate golf s barriers to entry usually stay in the game for a long time. Golf becomes part of their life and they find a way to fit it in with the other activities that vie for their attention, time and money. They become committed golfers, who enjoy the game enough to know that they will still be playing years into the future. These are the customers golf needs to create and keep, as the famous management consultant Peter Drucker would say. Why don t more of the people who try golf become committed golfers? Part of the answer is that the beginner s experience just isn t rewarding enough. Many would-be golfers never reach the point where, like a beginning skier, they make it down the mountain for the first time without falling, and can t wait to get back up to the top. Lack of comfort and competence are the real culprits in new golfer attrition. Without both, golf is no fun. And how can we expect people to keep playing if it isn t fun? Research among people who have tried golf but stopped playing has told us: 1. They didn t feel particularly comfortable being around the golf course they felt like they didn t belong there, or weren t particularly welcome. Maybe the environment was a little intimidating. 2. They didn t feel comfortable playing with others, especially strangers. First tee jitters are real as real as the fear of public speaking. 3. They didn t feel they played well enough to enjoy the game. They weren t living up to their own expectations, however inflated those expectations may have been. 4. They hardly, if ever, experienced shot euphoria, which happens when you hit a shot that feels so good you just know you re going to come back and play again. In a nutshell, lack of comfort and self-perceived competence are the real culprits in new golfer attrition. Without both, golf is no fun. And how can we expect people to keep playing if it isn t fun? What s the answer? For many it would be structured beginner programs, which provide a better-managed customer on-boarding experience. The PGA of America s Get Golf Ready is a good example. But there are many other successful programs developed by golf professionals and educators that are also effective. The problem isn t the lack of programs, it s that not enough of our beginners are coming into the game through these programs. Many beginners are simply unaware that programs exist for them that they can learn with others like themselves. Local advertising for beginner golfer programs is almost non-existent. NGF research shows that half of core golfers (those who play 8+ rounds annually) wouldn t know where to send a friend interested in taking up the game. The first-year retention rate of people going through structured programs like Get Golf Ready has been shown to be 75 percent or higher. And after five years as many as half continue to play. If only these programs were mandatory! Structured programs help to ease beginners into the game. They help manage a beginner s expectations. They make sure that people experience shot euphoria early and often, even if it is by making a 10-foot putt, or getting the ball airborne with a wedge. They get people comfortable being around the golf course and playing with others. (Continued on page 7) 6

7 (WHAT S THE PURPOSE OF A GOLF BUSINESS, Continued from page 6) Golfers are a stubborn lot. Why else would they put up with the frustrations that come with the game? Most play in spite of their ability, not because of it. But beginners who have yet to become hooked, who haven t experienced shot euphoria, aren t likely to continue. They are not interested in paying money to embarrass themselves in front of friends and family, let alone strangers. If golf participation is going to grow we need to very actively invite more people to give the game a try, and then convert more of those trials into commitment. Stay tuned to future issues of NGF Dashboard for ideas on how to do just that. n Trust Golf Facility Supply Update Supply Correction Continues its Gradual Move Toward Equilibrium Retains Trajectory Similar to Recent Years As of year-end 2015, the United States had 15,204 facilities with 14,288.5 open and operating 18-hole equivalent (18-HEQ) courses, according to the NGF s 2016 Edition of its annual Golf Facilities in the U.S. report. The final 2015 count showed a net reduction of courses, or a 1% contraction from golf course stocks and flows included the permanent closure of 177 (18- HEQ) courses, and the opening of 17 new ones (up from 11 in 2014). Other supply and demand movement comprised courses that either closed temporarily for renovation or re-opened from one, and a small number that unexpectedly emerged from prolonged closures to entertain golfers again. It is important to note that the cumulative reduction in golf course supply since the trend started in 2006 represents only a 5% pull back from the high-water mark set that year, which pales in comparison to the 40% growth that occurred in the two decades preceding In large part due to that unprecedented expansion, the U.S. is home to roughly 45% of the world s courses and remains the world s best supplied golf market with a great variety of options in nearly every city. Daily fee, lower-priced and 9-hole courses continue to be the segments that are disproportionately represented among the closures. Roughly two-thirds of the (18-HEQ) courses that closed in 2015 had greens fees of $40 or less. NGF continues to view the net reduction in U.S. courses as a natural economic response to overbuilding, said NGF s Chief Business Officer Greg Nathan. We expect the walk back toward equilibrium to remain slow and continue for several more years. Unfortunately, some will continue to view this gradual supply reduction as a negative when, in fact, it is a healthy rebalancing of supply and demand. For the second consecutive year, golf course renovation and reconstruction was the largest source of course development activity in the United States. More than 90 (18-HEQ) courses reopened from renovation in 2015 (roughly half of them closed and then reopened during the 2015 calendar year). A total of 17 new (18-HEQ) courses opened during the year. NGF s outlook for 2016 is in line with recent years. It expects to see approximately 15 to 25 new course openings and 50 to 100 major renovations. Closings are expected to remain in the 150 to 175 range. n It s why Quail Hollow is counting on us for their first major. The PGA Championship is coming to Quail Hollow in 2017 for the first time ever and Superintendent Keith Wood and his crew have overseen a massive renovation on this pedigreed layout in Charlotte. They also have brought John Deere along for the run up to the championship. I love the way that the John Deere mowers perform. I love the cutting units, especially the reel technology, says Keith. For a championship performance on your own course, contact your John Deere Golf distributor today and ask about our A Model mowers. Trusted by the Best 9009A TerrainCut Rough Mower JohnDeere.com/GOLF NGF Dashboard Extra Fall/Winter 2016 Toll Free (888)ASK-4 NGF 7

8 If you work in golf, the NGF works for you. NGF is the most trusted and preeminent provider of golf market research, insights and direct marketing services for organizations that rely on accurate and timely information to support their businesses. Join NGF. Be a knowledge leader NGF BOARD OF DIRECTORS VICE-CHAIRMAN CHAIRMAN SECRETARY/TREASURER DAVID ABELES President & CEO JOE LOUIS BARROW, JR. CEO JOE BEDITZ President & CEO CHIP BREWER III President & CEO BILL BROWN, JR. Group Vice President BILL GOLDEN President PETER HILL Chairman & CEO SARAH HIRSHLAND Senior Managing Director of Business Affairs DICK SULLIVAN President & CEO These industry leaders ensure that NGF s members and clients are getting the best thinking in the game. NGF members have access to detailed information on the subjects covered in these articles and more. Contact us for more information or to become an NGF member. 1(888)ASK-4NGF member@ngf.org This publication nor any part thereof may be published or reproduced without written consent of the NGF.