Saturday, February 25, 2012

Commentary: Golf's Supply & Demand

"Commentary:  Golf's Supply & Demand"
By Sean & Stef Mysel
2/25/12

Special Thanks to the Golf Gal Blog

For this edition of the CrossGolfPros Blog we're going to bring out the economics...don't worry I'll keep it interesting, just want to feel like this B-School investment can come out and play sometimes.  This morning, my wife and I were discussing a blog entry on the Golf Gal Blog, which is listed above.  In this article is a discussion about golf's ever decreasing sales of rounds and increasing of receivership worldwide.  Why is this happening, well it's a simple matter of the age old economics law of supply and demand.

Think about this comment from the Daytona Beach News-Journal, "From 2000 through 2010, the supply of golf courses nationally increased by 492, but the number of golfers declined by 1.7 million."   During the Tiger Years if you will, the golf course industry delivered to us hundreds of new courses and in return, the market delivered, well nothing.  Why is this?  Demand for playing golf has decreased and it has to do largely with the industry simply ignoring what the consumer has been complaining about for years.  Golf is too slow, too hard and too expensive.  In return, as mentioned in GolfGal's blog some courses have raised rates and KPMG reported that half of golf courses spend no money in enhanced marketing.  I know this to be true because I was an assistant GM at a course for one of the biggest management companies in the country and we spent not a dime on advertising.  Zero, nada, ghost.   So back to supply and demand.

If there is an abundance of supply and no demand, how do we change this?  What will prompt golfers to come back.  Well go back to the great triad of complaints...too slow, too hard, too expensive.  Well, we have to let our egos go and lock them away for a while.  As a teacher, I often hear colleagues talk about what they are worth. I'm worth $125 an hour or $200 an hour.  Problem is if you are only teaching a few lessons a week, very few people agree with you.  I charge $40 an hour...I know way too cheap right?  Problem is that I believe our goal is to make golf accessible not feel like you have to climb over barbed wire to get quality instruction.  The next closest rate is $60 per hour.  In reality, there's a great supply of golf teachers, but not much demand of their services and therefore, we made the decision to keep the rates down.  Say what you want, but people feel like improving their game is doable.

I don't believe the game itself is flawed or terrible, in fact it's a tremendous experience and everyone should have a chance at it.  It's up to us in the golf industry to try and help.  Earlier I mentioned that I worked at a golf course, well one month we went rogue while the boss was away.  I changed afternoon rack rates for weekends where we had almost zero demand to $26 including a cart.  The result, those zeros on the tee sheet turned into an extra $5,000 in revenue.  Revenue gained through creating demand for something that was in great supply.  I got yelled at, written up and threatened with termination, but we made an extra $5,000.  Trust me, I didn't lose sleep over it.