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Whether you’re a club member, a golf club, an equipment manufacturer, a holiday company, a tournament host, a TV company or a professional golfer, the chances are you are going to be affected by the economic slowdown that is currently engulfing the world.
Houses on golf resorts are proving hard to shift in Europe, thanks to a weak pound and an over supply of property
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Some club members are clearly going to have a hard time justifying their annual subs to their partners when renewals come around next year – especially if they’ve lost their jobs – while casual green fee players will also have to think more carefully about how often they shell out for their hobby. As a consequence, golf clubs are going to have to work harder to retain what members they have, as well as trying to market themselves for visitors and attract what might be in grave danger of becoming a thing of the past – the corporate golf day. Expect to see even more clubs dispensing with joining fees, while ‘limited time only’ seven-day memberships at five-day rates could be an offer some find too good to refuse.
Specialist golf holiday companies, already bearing the brunt of increased airline fuel costs and recent tour operator collapses, are bracing themselves for a bleak winter, a time when UK golfers traditionally head off in their thousands to warmer golfing climates. Add to that the recent freefall of the pound against the dollar, and that cheap golf break to Florida might not look so tempting when you’re exchanging your hard earned pound for 25% fewer dollars than you were just six months ago. The euro also remains strong, making the traditional resorts in Spain and Portugal also seem a tad pricey, on top of their already over-inflated green fees.
The knock-on affect for the second home market in these same countries has already turned into a full blown crash, with many who bought off plan already sitting on paper losses, while others hoping to get out are left with almost unsellable villas and apartments.
Golf equipment sales look set to stall as the crunch takes control
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With fewer rounds being played at home and aboard, equipment companies will be among the first to feel the brunt of any belt-tightening exercises, with ball sales expected suffer an immediate drop off (on top of a wet summer), closely followed by hardware. All the major brands have recently unveiled sizeable new ranges for the 2009 season, all of which cost plenty in R&D and promotion, and they will be hard pushed to recoup their outlay if hands stay in pockets in the New Year.
One man paying close attention to the market trends is Eddie Reid, managing director at UK buying group TGI Golf, whose business supplies equipment directly to golf professionals. “We hear that the Americans have deserted the courses in Ireland and the rest of Europe,” he said. “They are already struggling, as are golf equipment manufacturers.”
High street golf retailers are already making drastic cuts to stave off complete freefall, with JJB Sports, purveyor of Slazenger equipment and many top end brands, shutting down over 80 stores nationwide and slashing over 1,000 jobs. Buyouts look certain to continue, with conglomerates swallowing up smaller outfits, as witnessed in the recent purchases of Cleveland by Srixon and Ashworth by TaylorMade Adidas.
JJB Sports is closing stores and cutting jobs
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Indeed, next year’s trading conditions seem especially hard for club companies on the basis that most regular golfers have already bought a 460cc driver of some description (and perhaps a new or second-hand set of irons and a jazzy putter), and the equipment that’s coming out now seems to have moved on little in terms of performance from what came before.
The flipside for consumers is that the second-hand and ‘nearly new’ market is currently enjoying something of a glut right now, with last year’s models, or even this season’s, already being heavily discounted by online retailers as they seek to clear the decks for 2009. So if you’re in the market for some nearly new kit, now could be a great time to bag yourself a deal, or deal yourself a bag.
But what of the professional game, the one that feeds down buying trends to us humble mortals? Tiger Woods’s absence has already created a vacuum which other players - Harrington excluded – are finding hard to fill, especially when it comes to TV ratings.
Tiger’s absence has resulted in a 35% drop in viewing figures for golf on TV
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Broadcasters in the US are already feeling the advertising pinch, with Woods’s enforced lay off over the last six months leading to a sizeable drop (-36%) in audience figures, while many households in the UK will have to question whether the monthly £40 subscription for Sky Sports and the extra £15 for Setanta is worth the investment, especially with rising household bills to contend with.
Few of us will shed a tear for the financial fortunes of professional golfers, but it looks a distinct possibility that prize funds will at best remain static in 2009, and some tournaments might be in danger of falling by the wayside if title sponsors aren’t forthcoming. There are still rather a lot of ‘To be Announced’ tournaments on both tours for 2009, which must be a slight worry now that the Far East seems to have also caught a financial cold from the West.
Golf’s almost unique relationship with the banking industry is a double-edged sword when it comes to the financial support of its tour events, with HSBC, RBS, Barclays, JP Morgan, UBS and Merrill Lynch being among the biggest spenders in the sponsorship game. None of them will be exempt from the slowdown, and although many are committed to long term tie-ins with specific events, it’s going to be hard for a bailed-out bank or a car maker that is laying off part of its workforce to be seen spending tax payer and shareholder money on feathering the nests of professional golfers.
Although under pressure, financial institutions remain committed to supporting golf throughout the world
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Industry magazine Sports Business Journal recently reported that 25% of America network advertising time comes from the financial sector, while nearly one-third of all events sanctioned by the PGA Tour are sponsored by banks, investment firms, credit card companies or financial consultancies.
While The European Tour draws it sponsors from a slightly wider net, it is up to its neck in a wad of freshly-injected cash from Dubai-based property company Leisurecorp, which is backing the recently-launched ‘Race to Dubai’ to the tune of £40 million. It’s hard to imagine that for all its wealth, Dubai will not take a hit in a global recession, especially as the supply of second homers from all over the world begins to dwindle.
But despite these harbingers of doom, golf’s special bond with the corporate world, and its wide fan base across age groups, puts it in a stronger position than some other sports to ride out the current financial crisis.
Not surprisingly, golf executives are optimistic that golf will rebound when Woods returns and stressed that most financial companies will remain involved in the long term. “Golf and financial institutions are tailor-made for one another,” says Gary Stevenson, a spokesman for the Wasserman Media Group, which consults on sponsorship deals with FBR, Northern Trust and Wachovia on the PGA Tour. “While there may be companies that come and go, I think the sport of golf and financial institutions will be bedfellows for a long time.”
However, with providers of prize funds feeling the heat, professional golfers are clearly going to have to work harder for their sponsorship deals, while appearance fees and prize funds may shrink in real terms, taking inflation into account. Staff rostas (headline players paid for club contracts) look sure to be cut to the bare minimum, with only the fittest surviving.
From a player agent’s perspective, the crisis will be most visible in terms of endorsements. Andrew Witlieb of Goal Marketing, which looks after the interests of Jim Furyk, said: “I’ve been doing this for 15 or 16 years, and this is the worst year yet. You look next year: you’ll see the fewest new deals you’ll ever see.”
Crown Sports Management’s Mac Barnhardt, who looks after Davis Love III and Ryder Cup star Boo Weekley, says that he and his colleagues will have to work hard to keep the income levels up. “The dollars are coming down a little bit. I think you’re going to have to get more regional and more creative with prospective endorsement deals. I think it’s going to get tough. Getting long-term commitments is tricky, because there is so much instability right now.”
ISM’s Chubby Chandler, who looks after Lee Westwood, Darren Clarke and a host of other European Tour stars, is equally jittery: “The knock-on affect of American banks is hitting everywhere.”
This is one reason why many American players are allegedly thinking about “jumping ship,” so to speak, over to the European Tour next year, at least in a limited capacity, in an effort to diversify the reach of their brand, as well as to play courses with a more player friendly set up (i.e. less rough).
Among those committed to more events overseas include Vijay Singh and Robert Allenby, although raising the minimum number of qualifying events to 12 may have scuppered the hopes of Phil Mickelson joining that group. Fed Ex runner-up Camilo Villegas, who shares an agent at IMG with Sergio Garcia, is also rumoured to want to expand his horizons, while America’s Ryder Cup hero Anthony Kim looks destined to become a globe trotting star of the future, although I imagine his UK appearances will still be limited to the Open.
But hey, cheer up. There’s still a lot to be hopeful about. The great golf courses of the world were still there when I last looked, and although the media would have you think otherwise, the sky has yet to fall on our heads. An indeed, as I look out the window, all I can seem is blue skies ahead. So put your clubs in the boot, leave your waterproofs behind and forget the stresses of the world with a relaxing round of golf. It beats working.
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