Code Blue for Diamondhead?

Potential ticking time bombs,says Chris Monti of Bobby Weed Golf Design.

Perfect storm,warns Tom Stine, co-founder and former publisher of Golfweek magazine.

Code Blue,declares David Hueber, former VP of the PGA Tour and CEO of the National Golf Foundation.

These top golf executives are depicting the plight of residential golf communities such as Diamondhead.  For several years now, business, sports, and academic journals have posted warnings about golf’s decline, and the latest bulletins are still bleak. This is a composite of what they say, followed by conclusions we can draw about impacts — for which we should already be planning.

The Outlook

The National Golf Foundation reports that golf has hit an unprecedented slump, likely to remain for a long time to come.  Some 400,000 people quit the game in 2013, part of an downhill slide in players for 20 years now.   160 golf courses shut down last year, the 8th in a row that more closed than opened, and some 1,500 to 2,000 courses are expected to fold over the next 10 years.

abandoned gc 1Experts give multiple reasons:  younger generations are not interested in golf; retiring boomers unexpectedly took up other pastimes that cost less and allowed more family involvement; Tiger Woods’s troubles left the game without a major American champion; and, most cited, the game is too expensive, difficult, and lengthy for the average golfer on today’s courses.

As for the future, the NGF predicts a slow, barely noticeable increase in players and a moderate increase in rounds, but no growth in revenues.  Competition among courses, they say, will trigger “aggressive” undercutting of fees to attract bargain hunters.

Residential golf communities in saturated markets or areas without large demand are most vulnerable.  Many developers built around courses to sell real estate regardless of whether there were enough players to support them.  Sales of lots were used to subsidize maintenance costs that often substantially outpaced revenues brought in by the course.  Running an economically viable golf course as a going concern was never the developers’ goal, and most had an “exit plan” to unload it on someone else once they sold enough real estate.

Whether a residential or any other course can survive now will depend heavily on local market conditions, NGF research says.  A key component for course owners hoping to avoid the wave of shutdowns is having access to 4,000 or more golfers within a 10 mile radius or to a transient but consistently large set of golfers as in popular hotel/resort areas.

A failing golf course poses a serious crisis for its community.  It is a major liability, causing property value depreciation and community destabilization.    Florida communities hit by course closures have seen weed-choked, vermin-filled fairways, radical drops in home values, and increases in crime.

Some reactions made matters worse.  Hard hit by closures, Florida allowed POAs to create mandatory golf/country club memberships, thereby transferring maintenance costs from players to all home owners. These mandatory memberships created a moral hazard, according to research – once in place, POA members had little or no protection from board and staff who tended to maximize their own personal interests while home owners were forced to pick up the tab.  They also created a great deal of litigation.

Proactive changes, on the other hand, have improved some communities.  By reducing course size, irrigation and chemical use, they have better aligned maintenance costs with revenues while also increasing sustainability.  By repurposing closed course areas into walking and biking trails, community farms, outdoor concert venues, water features, shopping, parks, and playgrounds, they have created amenities more attractive to today’s home buyers than the habitual golf course and tennis court compound.

Some course owners are experimenting with innovations to the game in hopes of attracting more players.  Fifteen-inch holes, Foot Golf, Time for Nine, and Hack Golf are all efforts to keep courses alive by growing the game.  Foot Golf, played with a soccer ball, is the biggest success so far and has been credited with financially saving some struggling courses in England.

The final curtain comes if a course must actually close.  Then, reports show, it’s down to three choices:  return it to the wild, sell it to developers to build on it, or repurpose it for some other use.