GOLF CONSENSUS: Tee Times Getting Harder to Find?

April 21, 2014

Golf is a pretty expensive sport to play. Between equipment, green fees, and even memberships, the costs can ramp up pretty fast. So like any other leisure time activities that are economically sensitive, golf participation will roll with the economic times . The late 90’s and 2000’s saw a boom in the development of golf courses and golf/residential communities. The financial crisis/real estate crash of 2007-08 put that a severe dent in the business of golf. If you lost your job, one of the things that will gather dust pretty fast is your golf bag.

“…During the housing boom, golf course prices climbed as buyers bet on surging property values rather than the fundamentals of the business, according to Jeff Woolson, executive vice president and managing director at real estate company CBRE’s (CBG) golf division. In 2005 and 2006, many housing developers used loans to build residential communities with courses. “But these developers didn’t know how to run a golf course,” says Chris Balestrino, principal at Park Place Equity, which lends money to real estate investors. “So not just did they struggle with a tapering demand for houses, but they also had the burden of running a business they knew nothing about.”…”

It appears that after many years of despair, the business of golf may be starting to get its mojo again. A slowly rebounding economy may have a lot to do with it. The past few years has seen a rash of golf courses go bankrupt, but the rate appears to be slowing down. Values of golf properties appears to be on the upswing again. On top of it, people are digging out their clubs and playing more rounds.

“…Course owners and real estate investors are betting on a comeback following a downturn that was “by far the toughest ever in the industry,” says Charles Staples, co-founder of Fore Golf Partners, which has 12 courses in Florida, Virginia, and Maryland. Club memberships and rounds played are on the rise again. Prices for U.S. golf courses climbed 57 percent in 2013, according to Steven Ekovich, vice president for investments at Marcus & Millichap’s National Golf & Resort Properties Group (MMI). Among operational, regulation-length golf courses with at least 18 holes valued at $250,000 to $75 million, the average sale price was $4.25 million last year. While that’s still below the 2006 average of $7.33 million, it’s up from the market low of $2.7 million reached in 2012….”

If it starts becoming harder to get a decent tee time at your local course, it may be a sign that people are feeling more confident in their financial position to spend a meaningful part of their disposable income on some fun times.