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Golf industry on downswing as pricey pastime loses players

Now that winter's icy grip has at long last lost its hold, the sounds of that great spring pastime, golf, have returned. But beside the honking of geese and cursing after shanked shots, another sound wafts over the still damp greens and fairways.

That's the gnashing of teeth and drumming of fingers by everyone from course operators to equipment makers wrestling with falling participation rates, a failure to attract large numbers of young players and a growing aversion to the hefty costs and lengthy playing times associated with the sport.

Participation has been on a steady slide since well before the Great Recession of 2008-09.

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Golf held up remarkably well in earlier tough economic times, because the often affluent people attracted to the ancient game refused to give up one of their few respites from the daily litany of dismal economic news and market mayhem. But this time around, the decline has been accelerating, which effectively makes golf one of the last victims of the financial crisis.

In the U.S., an estimated five million fewer people play the game at least once a week than a decade ago. A similar measure in England shows a 16-per-cent drop in the same period.

In Canada, the number of occasional golfers is down 17 per cent and those classed as playing infrequently have plunged 49 per cent, according to a 2012 study.

Combined, the two categories still total 4.2 million, compared to 1.1 million avid or frequent players.

"People had a reshuffling of priorities," which led them to cut back on a wide range of non-essential entertainment expenses, including golf, says marketing consultant Keith McIntyre, chief executive officer of KMAC Group in Burlington, Ont. "It's not the cheapest game in the world."

Not even the golf industry's strenuous efforts to tout its considerable economic importance while lobbying for better tax treatment can change the facts on the course. It's an expensive game that can be a tough sell to all but the most dedicated – or skilled – players.

Although costs vary widely, the average round on a public course can run $60 to $80, while memberships at pricier clubs can reach as much as $50,000, with stiff annual charges on top of that, which can put a dent in anyone's bank account.

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On Wednesday, leading U.S. voices from across the industry gathered in Washington for National Golf Day, an annual U.S. lobbyfest that involved 120 congressional meetings in a single day. In Canada, golf lobbyists are waging a similar, if lower-profile, battle for what they regard as fair tax treatment that will put them on a par with such tax-deductible forms of entertainment as hockey or concert-going.

With or without tax breaks, though, companies have scaled back spending on entertainment. Mr. McIntyre's corporate clients often used to host golf tournaments. "There are almost none now."

A study of the sport's impact on Canada's economy by the National Allied Golf Associations in 2009 concluded that it accounted for an estimated $11.3-billion worth of gross domestic product. It found that the combined direct revenues of $4.7-billion produced by golf courses, driving ranges and the like nearly matched the total of all other sports and recreation facilities.

An updated version coming soon is expected to show that the industry's overall economic impact "will be up a little bit," said Dan Pino, director of corporate communications with Golf Canada. The number of rounds played will likely be down, as they are elsewhere in the developed world. "Exactly how many is hard to say. But it's still a big driver in the economy."

Still, when Dick's Sporting Goods Inc. posted weaker-than-expected results for its latest quarter, the big U.S. retailer had no trouble naming golf as a key culprit.

"After a very challenging first quarter in golf last year, we expected some further headwinds and only modest improvement, but instead we saw a continued significant decline," CEO Edward Stack proclaimed.

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Dick's doesn't expect any improvement this year for a category that typically accounts for about 10 per cent of its total sales and as much as 25 per cent in a normal second quarter, the sport's busiest shopping season. So far this quarter, golf revenue hasn't climbed above the low teens.

One problem is aggressive discounting by manufacturers to move merchandise in a slow market. But Mr. Stack also noted that dedicated golfers have been slow to adopt pricey new technology introduced by manufacturers such as Adidas Group's TaylorMade unit, whose decision to pump out new models annually and slash prices on the older clubs disrupted the entire market.

Adidas's profits nosedived 34 per cent in the first quarter, partly because of steep declines in TaylorMade sales. Rival Callaway Golf Co. has warned that the glut of product and heavy discounting could bite into earnings. Its share price has plunged nearly 20 per cent in the past month.

"People are holding off [purchases] and waiting for the discounts, because they know that the quality of the products is not going to change drastically," Mr. McIntyre said.

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About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More

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