Inside the Numbers: Course Count, Market Corrections, and Continuing Trends

 As seen in Golf Business September/October 2022 

By Scott Kauffman, Contributor, Golf Business Magazine:

Since the onset of the coronavirus outbreak in Spring 2020, U.S. golf facility owners and operators have been one of the few positive beneficiaries of the pandemic, realizing unprecedented growth in nearly all facets of golf. 

Indeed, from increased rounds and gross revenues in the municipal and daily-fee sectors, to growing waitlists and higher initiation fees on the private club front, the revitalized golf industry is back on its feet after a seemingly stagnant state of business affairs since the financial crisis of 2008. And by most accounts, the far-healthier golf industry is shaping up to have another fine fiscal performance in 2022.

Yet another sign indicating golf business stability – at least for owners and investors of the underlying golf property – is the strengthening nature of the golf real estate asset class itself. At least that’s one way to interpret the latest figures released by the National Golf Foundation showing the fewest number of facilities closed last year – 130.5 measured by 18-hole equivalents – since 2010. 

Meanwhile, with 13 new facilities opening in 2021, resulting in a net reduction of 117.5 facilities, NGF now counts 14,033 overall U.S. facilities open for business, or 13,257 18-hole equivalents. Most notably, the rate of closures last year represented less than a one percent decline in the overall number of 16,035 courses. 

So last year’s net reduction in course supply, an annual occurrence dating to 2006, when, for the first time in six decades, more courses closed in America than opened (146 vs. 119.5), is further evidence the “natural and gradual market correction of the supply/demand imbalance appears to be abating and/or stabilizing at best,” according to the NGF.

It is certainly a welcome sign from the aftermath of the golf development boom of 1990-2005, when 3,206 new facilities opened for a compound annual growth rate of 1.5% per year. That led to a U.S. peak supply of 16,057 18-hole facilities in 2004.

Today, after 16 consecutive years of net reduction in new course supply, there are approximately 12.6 percent fewer facilities to play. 

In a mid-year NGF update last July, this decisive downward trend in course closures that began in 2020 continued through the first half of 2022, as the NGF golf-facility database team discovered that just under 50 18-hole equivalent facilities shut down, a 25 percent decline from 2021.

Moreover, continuing another long-term trend based on NGF data, more than 90 percent of 2022 closures have been daily-fee public courses, and just over half were 9-hole facilities. About 75 percent of the courses projected to close were on the modest end of the market with peak greens fee under $40. 

While the total number of 2022 closures is subject to change, based on results of second-half verifications, the NGF notes, the Jupiter, Fla.-based research group projects 2022 totals to be 95 18-HEQ. If that prediction holds up, the number of course closures in 2022 represents a 66 percent drop from the peak closures mark set in 2019 when 275 U.S. facilities were closed and converted to alternative forms of mostly residential/commercial real estate uses.

So that begs the question: Has the golf industry’s supply imbalance issue finally reached a point of equilibrium? 

For longtime golf real estate broker Steven Ekovich, senior managing director of Marcus & Millichap’s Leisure Investment Properties Group, the answer is emphatically yes. Considering his group already closed approximately 14 deals or $80 million in golf properties year-to-date through September, Ekovich says LIPG is having an “incredible year” and hasn’t been this busy with activity since 2010-11 when his team was consumed with numerous lenders’ “REO” or real-estate-owned properties in the aftermath of the ’08 financial crisis.

“We’ve never seen a market as good as this except for before the Great Recession,” Ekovich adds. “I’ll give you an example. I put a $10 million property on the market recently and within four days, it was under contract at list price. Yes, it was in the southeast and had some real estate upside, but it hasn’t been like this for awhile. 

“In general, let’s call it during the 2012-2019 timeframe, we would put something on the market; market it for 60-90 days and then you were lucky to get three good buyers. But normally just two good buyers. Now, we’re having six to nine good buyers on a listing, so what’s happened is Covid totally opened up the perfect storm for owners and made all of these courses hanging on by their fingernails healthy again.”

And with golf now the national media darling after years of being bashed in the press, Ekovich says, “All these people from different walks of life have decided they want to invest in golf, and it’s put pressure on the existing golf buyers and driven up multiples.”

In other words, course brokers and owners are making more money these days at closing. 

“About three to four years ago the Pellucid Report and the NGF both thought we had six to eight years before we got into supply and demand balance,” Ekovich adds. “I will tell you that we are beyond supply and demand balance. There is more demand than there is supply. … 

“That’s allowed owners to take territory in terms of raising dues and initiation fees at private clubs and raising green fees at public courses. …. So that tells you there’s more demand than supply and we’re back healthy again.”


Scott Kauffman is a contributor for Golf Business | This article was featured in the latest edition of Golf Business Magazine.