Nina Caldwell
Golf courses and clubs are closing at a notable rate, with nearly 1,200 courses closing in the past 10 years, according to the National Golf Foundation. While closures are an inevitable part of any industry, golf course closures can be particularly impactful on communities, often resulting in the loss of a community hub and green space. There are various reasons for golf course closures, including clubs competing in the same market segment, resistance to change from members and leadership, and the property being repurposed for a higher and better use.
| Characteristics | Values |
|---|---|
| Number of golf courses closed in the past 10 years | 1,200 |
| Number of golf courses closed in the past 5 years | 700 |
| Percentage of golf courses closed in the past 10 years | 7.4% |
| Percentage of golf courses closed in the past 5 years | 4.7% |
| Reason for closure | Higher and better use of property |
| Impact of closure | Loss of community, impact on public services |
| Avoidance strategy | Proper market positioning, reinvestment |
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What You'll Learn
- Investor-owned clubs and courses close when the property has a higher and better use
- Golf courses are closing, but this isn't a reflection of golf's popularity
- Member-owned clubs close when membership resists change
- Competition in major markets has increased due to a 20-year course-building boom
- Golf course closures impact the community in several ways
Investor-owned clubs and courses close when the property has a higher and better use
Investor-owned golf clubs and courses may close because the property has a "higher and better use". This is a reflection of the micro-economies and customer needs that drive change, especially in relation to supply and demand.
In the past 25-50 years, many private golf clubs have changed from being member-owned to investor-owned. During the golf recession of the 2000s and the subsequent great recession, many private clubs experienced declining membership and revenues, as well as increased debt. As a result, some were forced to sell to management firms and investors, such as ClubCorp, Concert, Kemper, and ARCIS.
Investor-owned clubs are driven by profit, and if the property has the potential for more lucrative development, the club or course may be repurposed. This can have a significant impact on the community. If the property is not developed, it may become an eyesore, and the community loses a recreational space and a focal point. If the property is developed, public services may be impacted, with increased traffic, a need for additional school capacity, and more infrastructure requirements.
In some cases, golf clubs and courses close because they fail to adapt to changing market demands. For example, some clubs may resist adding practice facilities, kids' activities, and fitness facilities, which are now considered essential by many potential members. This can lead to a decline in membership and, ultimately, the closure of the club.
It is worth noting that golf course closures are not necessarily a reflection of the popularity or health of the sport. The supply of golf courses in the US is exceedingly high, with nearly 16,000 in total. As such, closures may be inevitable as businesses come and go in every industry.
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Golf courses are closing, but this isn't a reflection of golf's popularity
Golf is a sport that is primarily played locally, and micro-economies and customer needs drive changes in the industry. The surge in golf course construction over the past two decades increased competition in many major markets, leading to improvements in the quality and pricing of golf experiences. Consequently, some less desirable courses were forced to close due to their inability to adapt or keep up with the market demands.
Additionally, the closure of a golf course can often be attributed to a ""higher and better use"" of the land. In other words, the land on which a golf course is situated may be more valuable for commercial or residential real estate development. This is especially true in areas with high land values, where the profit from selling the land outweighs the revenue generated by the golf course.
Golf course closures can also occur due to a variety of operational factors. For instance, member-owned clubs may resist necessary changes, such as investing in practice facilities, kids' activities, or fitness centres, which can lead to declining membership and eventual closure. Furthermore, golf courses, like any other small business, may face financial challenges, ownership transitions, or difficulties finding buyers, all of which can contribute to their closure.
While the closure of a local golf course can be impactful on the community, it does not signify a decline in the popularity of the sport. Golf continues to thrive, as evidenced by recent surges in participation and play, and the U.S. alone boasts nearly 16,000 golf courses, exceeding the number of Starbucks or McDonald's locations. Therefore, it is essential to understand that golf course closures are influenced by a multitude of economic, competitive, and operational factors rather than solely by the sport's popularity.
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Member-owned clubs close when membership resists change
Golf courses, especially member-owned clubs, often close because the membership or club leadership resists change. While the specific circumstances vary from club to club, there are certain fundamentals that few clubs can survive without. For instance, practice facilities, kids' activities, and fitness facilities are now considered essential by many potential members. However, some clubs resist investing in these amenities to avoid spending money, which can lead to declining membership and, ultimately, closure.
Member-owned clubs, historically the predominant model for private golf and country clubs, have faced challenges in recent years due to their resistance to change. The golf recession of the 2000s and the subsequent great recession of the late 2000s led to declining membership and revenues for many of these clubs. As a result, some member-owned clubs were forced to sell to management firms and investors, leading to the emergence of "'for-profit' clubs".
The culture of exclusivity that often characterizes member-owned clubs can also contribute to their resistance to change. This "stuffiness" can be off-putting to potential members and guests, who may prefer the more vibrant and casual "buzz" found at investor-owned clubs. The perception of secrecy that surrounds some member-owned clubs can further contribute to their resistance to adapting to changing market demands.
To remain competitive and avoid closure, reinvestment and correcting deferred maintenance are crucial. Clubs that reinvest in their facilities and amenities have a much better chance of survival. Proper market positioning is also critical, as clubs must understand their advantages and disadvantages relative to other golf opportunities in the marketplace. While golf course closures can be impactful on the community, they are often inevitable due to local competitive pressures and the lucrative opportunity to sell the land for development.
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Competition in major markets has increased due to a 20-year course-building boom
Golf course closures are a multifaceted issue influenced by various factors, including market dynamics, economics, and changing trends in the golfing industry. According to the National Golf Foundation, nearly 1,200 courses closed in the past decade, with more than 700 closing in the last five years. This can be attributed to several reasons, and one significant factor is the 20-year course-building boom that increased competition in major markets.
During the 20-year expansion cycle before 2006, the U.S. golf course supply grew by 44%, driven primarily by real estate sales. This building boom led to a significant increase in the number of golf courses available, especially in major markets. As a result, competition intensified as golf clubs and courses competed for the same market segment. This heightened competition had several effects on the industry.
Firstly, it drove up the quality of golf offerings and increased price competition. Golf clubs needed to enhance their facilities and services to remain attractive to customers. This included investing in practice facilities, kids' activities, and fitness centres, which became essential for retaining and attracting busy members with limited time and new golfers. Golf clubs that failed to reinvest and adapt to changing demands often struggled to survive in the competitive landscape.
Additionally, the increased competition led to a shift in pricing strategies. Some golf clubs chose to compete based on price, lowering dues, fees, and pricing. While this strategy might have provided temporary relief, it often resulted in a decline in quality and membership, ultimately impacting the club's long-term viability. This is evident in the case mentioned, where a premier golf course chose to compete on price, leading to a decline in quality and membership, and eventually resulting in the club's closure and subsequent development.
The 20-year course-building boom contributed to the complex dynamics of the golfing industry, and its impact extended beyond the mere availability of more golf courses. It reshaped the competitive landscape, influencing pricing strategies, quality standards, and the overall experience offered by golf clubs and courses. As the industry continues to evolve, adapting to changing market demands and embracing technological advancements, such as entertainment golf venues, will be crucial for golf clubs to maintain their relevance and competitiveness in major markets.
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Golf course closures impact the community in several ways
In some cases, golf courses may be left vacant and unmaintained after closure, becoming eyesores that can impact home values in the surrounding area. This can be particularly true if the golf course is allowed to become dilapidated and nature is allowed to take over. The community that once formed around the golf course may disperse, with relationships evaporating.
However, there are also examples of golf courses being repurposed for the benefit of the community. In some cases, cities have turned closed golf courses into public spaces, such as nature trails or bike paths, which can have a positive impact on property values and provide recreational opportunities for residents.
The closure of a golf course can also be indicative of broader market dynamics and economic factors. For instance, increased competition from other golf courses in the area or a failure to adapt to changing customer needs can lead to a decline in membership and financial viability. In some cases, golf course closures may be due to mismanagement or resistance to change from leadership.
Overall, golf course closures can have a range of impacts on the community, from social and economic effects to changes in the physical landscape and local ecosystem.
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Frequently asked questions
There are various reasons for golf courses closing down, including competition, a lack of investment, resistance to change, and the property being used for a higher economic purpose.
When a golf course closes, it can impact the community in several ways. The land may be redeveloped for commercial or residential use, which can impact public services and increase traffic. The community that the golf club served may lose its focal point, and relationships may suffer.
Not necessarily. While golf course closures are inevitable, they are not necessarily a reflection of the sport's popularity. There are nearly 16,000 golf courses in the US, more than Starbucks or McDonald's locations. There were also fewer course closures in 2023 than any year since 2004.
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