New Investment and New Ideas for Golf, Going Forward

   As seen in Golf Business July/August 2023   

By David Gould, Contributor, Golf Business

A company or industry performing poorly over a string of fiscal quarters or even years will need to hit the reset button and brainstorm energetically. Then again, a highly satisfying multi-year hot streak—such as golf has enjoyed—also can trigger strategic plans and forecasts with around-the-corner innovation as their theme.

Covid-era success for golf courses and golf companies is naturally the big story, but even as green-fee and merchandise revenue have roared along, there are other developments, trends and fresh thinking emerging. Some of these next-new-things may well have surfaced even if there had not been a tee-sheet-filling virus. Then again, many of them likely got help from golf’s ascent on the wings of social distancing, work-from-home and other pandemic-delivered advantages.

The macro factors that take in Federal Reserve Bank policies and Department of Labor jobs reports are influential across the economy, golf included. But the viewpoint of industry-watcher and SEC filings-reader Jared Doerfler (his Perfect Putt golf blog, delivered every Monday, is loaded with hard financial data) tells of a general bullishness on golf.

“Vista Outdoor acquiring the Foresight launch monitor company at a valuation of $470 million should have gotten a lot of attention,” says Doerfler. “Puttshack receiving an investment of $150 million from such a prominent group as BlackRock is likewise newsworthy.” Seeing the Callaway-Topgolf merger run out to a $2 billion transaction likewise turned the heads of people who, like Doerfler, follow these things. He adds that “TaylorMade’s deal with Popstroke is another case where a newer golf enterprise received extremely high market valuation.”

Investment and ROI both matter greatly to an industry’s future. Indoor off-course simulator play has surged, along with the technology that drives it—even as Topgolf’s outdoor almost-golf product sails along. The long-moribund new-course construction business has seen new life breathed into it. Electric golf push carts have grown significantly in popularity. The world of golf teaching and coaching—connected closely to the performance-measuring tech we associate with TrackMan, Foresight and others—looks to be reinventing itself, with Invited (formerly ClubCorp) leading the charge toward a re-envisioned, engagement-based deployment of golf professionals.

More people taking their first swings than ever previously—thanks to the accessibility of indoor simulator golf—is all to the good. More people finding game-improvement and swing improvement within reach is also an industry positive, something that indoor-golf leader Five Iron Golf strives in spirited fashion to make happen.

“If you read National Golf Foundation reports and blogs, you’ll see them using the term ‘shot euphoria,’ which is such a real phenomenon and to the best of my knowledge is a term that originated at Topgolf,” says Jared Solomon, Five Iron Golf CEO and a co-founder.

The brand Solomon helped launch in New York City is now in alignment with Topgolf Callaway, which holds a substantial minority investment in Five Iron, but Solomon is hardly boosterish about alt-golf as compared to the game’s original 18-hole outdoor setting. Indeed, the Five Iron Golf model leans hard toward whatever has proven valuable at the game’s finest clubs and courses. In tandem with that outlook is Five Iron’s decor and atmosphere, borrowed from the urban, hip hop ambience that makes non-golfers feel so at home.

“We think every day about people—and that’s most people, statistically—who have never had the chance to put a club in their hands,” explains Solomon.  “We’re not really doing anything revolutionary. The sport of golf sells itself, as long as the environment allows non-golfers to feel what it’s all about and understand how great it is.”

Looking at “celebrities everywhere” identifying with golf as their “lifestyle sport,” Solomon feels some satisfaction in having helped golf open its doors.

“Seeing the TaylorMade golf bags dripping graffiti at the U.S. Open made us feel all the more like we had understood something,” he explains, recalling how “the mahogany and green look” was passed on by his designers in the pre-launch days. “This industry has looked at people who weren’t brought up in the game and said, ‘you aren’t golfers.’ The Five Iron concept is to usher them in, serve them a beverage and tell them they weren’t golfers previously, but that’s about to change.”

Major capital outlays are driving the company into an expansion mode that for the first time includes franchisee partners. The locations where you’ll run into Five Iron Golf won’t be just the major U.S. cities—Shelby Township, Michigan has an up-and-running outpost where the same high-touch service, super-serious coaching and clubfitting, along with the no-pressure invitation to swing, has attracted a big following.

Coaching and improvement matter, according to industry players like Golf Genius, which is building out a coach-and-train product called Golf Coach 360. The company’s phenomenal success in tournament management has every possibility of being extended through this in-development product. One of its premises is that golf has nowhere near optimal alignment between its customer-developing efforts and its improvement-supporting efforts. In a recent report to members of Proponent Group, which is partnered with Golf Genius and serves some 400 teaching professionals, founder Lorin Anderson shared proprietary survey data that spoke to this out-of-sync scenario.

“The percentage of Proponent Group coaches who are prominently featured on their facility’s website is at 66 percent overall, which is actually down nine points from 75 percent in our survey from five years ago,” reported Anderson. “It always seems odd that a golf facility wouldn’t strongly encourage the people who patronize it to get better at the very game the facility is selling,” Anderson observes. “It’s one of golf’s operational mysteries for sure.”

Greengrass golf would do well to examine this oddity, what with the off-course version’s ability to continually add the swing tech customers lean toward. Mike Aldrich brings this up in his discussions with greengrass course managers throughout much of the western United States, which he covers as a Player Engagement Consultant for the PGA of America. Aldrich is charged with knowing the state of golf operations at a deep enough level that he’s able to help PGA professionals make the greatest possible contribution to success at their golf facilities.

More than Aldrich ever would have predicted, this means tracking the off-course, tech-driven side of the business closely and analytically. As golf expands its appeal beyond the traditional audience, the pie chart of consumer spending on golf experiences (and products) can and should get larger. But it’s still going to be divided into wedges and slivers. Techno-golf indoors will keep adding sophistication and slickness, with virtual-reality elements that may allow people to “play St. Andrews on the simulator with a breeze and a mist, without having to put goggles on,” Aldrich says. Indeed, Five Iron Golf, for all its bent toward traditionalism, currently is getting set to add VR for the first time.

Of course, there’s tech on the greengrass side, too, in the form of Toptracer Range and TrackMan Range, plus the chance to build sim bays in underused sections of a clubhouse. Nonetheless, beating the entertainment-golf emporiums at their own game isn’t realistic strategy. Aldrich, in his consulting work, trains the greengrass operator’s gaze on a point of overlap between indoor and outdoor golf, at a shiny object that’s been integral golf for centuries, and that’s improvement. The connection in golfers’ minds between enjoying golf more and playing more skillfully is rock-solid, and the connection in their minds between shotmaking improvement and a skilled coach at their side is likewise a strong one.

“So investing to capture customer loyalty and a share of what golfers spend,” says Aldrich, “means investing in people, not just hardware and software.” Having done it all as a PGA professional himself, and in particular having run an instruction business that was before its time in correlating lesson-taking with money-spending, Aldrich is the right guy to have “Engagement” in his job title.

In my role as a Player Development Professional, I did the tracking to show the economic impact of my activity at a mid-level club in the Nashville market,” he asserts. “Member attrition there measured 16 percent overall versus less than 2 percent among my coached students.” This approach is being preached really throughout the industry now, with Invited leading the way in redeploying golf professionals toward engagement with pods of members. The results are powerful.

Another investment trend of note is growth in consumer purchases of motorized golf pushcarts and pullcarts. That’s the conclusion arrived at by Technavio, a global market research group. The UK-based company, which recently published an in-depth study of motorized pushcarts, tracked steady product improvements and increased consumer interest during Covid-19. So-called “premiumization” is occurring so rapidly in the category that its forecast is for a sales increase of $112 million through the 2025 golf season. Compound annual growth was forecast at a rate of 3.6 percent in that period.

For course owners and operators, both public and private, heightened golfer enthusiasm for a gadget first introduced long ago appears to bring some unintended consequences. Purchasing one of the more deluxe models is a financial commitment on either side of $1,000 in many cases, one that suggests a decided move away from riding. (Purchase of a non-motorized pushcart or pullcart wouldn’t make such a strong statement about planned behavioral change.) For greengrass facilities of all types, there’s some cart revenue erosion built into a shift like this. At private clubs, there’s also an operational challenge, as outside services workers get called upon to help with the tricky process of folding the units into their transport configuration or diagnosing mechanical problems, across many brands and models.

In some ways the influx of new and returning—or perhaps “reactivated”—players takes existing business activity and spreads it to newly addressable consumers. But that can involve an education process. In the category of club sales, lots of Covid newbies create a gear-sales opportunity throughout the industry. When researchers at Golf Datatech published the 2023 version of their annual report on custom clubfitting in the U.S., they included an alert or at least a reminder to manufacturers and golf facilities about this addressable market.

In the section of the new report containing data on golfers who have never been fit, these off-the-rack club buyers are presented as victims of an “inferiority complex,” evidenced by their expressed belief that they’re “not good enough” to warrant customization of their gear. This is an old issue in the custom-fitting world but its relevance had faded in recent decades, as most experienced golfers repeatedly saw evidence that custom clubs aren’t just for accomplished players. (Indeed, the awareness spread that not being good enough was partially about having clubs that don’t fit.) It’s a good investment, Golf Datatech’s study suggests, to target strong messaging to those who haven’t given up that notion or haven’t been around to see custom-fitting become commonplace—money well spent, according to company partner John Kryznowek, in part because there are so many of these newly arrived folks.

“Given the overwhelming satisfaction of golfers who recognize performance gains from custom fitting,” says Krzynowek, “the industry can do a better job in promoting the experience, both on and off course, and sway those players who have never been fit for their equipment” says Krzynowek.  “Custom fitting is good for golfers and good for business” and his group’s operating numbers bear that out.

One metric recently generated by Golf Datatech outside of its custom-fitting research is a roughly six percent year-over-year increase in golf glove sales. It’s coincidental with an even larger rise in sales of golf balls, but the latter is heavily driven by aggressive promotional pricing, of the sort not practiced during the pandemic, when supply-chain issues caused a shortage of premium balls.

And so that leaves a bump in glove sales that isn’t attributable to higher rounds played, nor to any notable product improvement. Where logic points is toward the amped-up numbers for off-course play in the sim bays, both commercial and, by extension, residential. “The golf glove you play 18 holes with is the same glove you bring to Topgolf or Five Iron Golf,” Kryznowek muses, “so that’s a reasonable connection to make.” The glove, of all the merchandise in any shop or big-box golf stores, is indeed the universal product for inside or outside use.

For a course owner, some ventures that ride in on a wave of new golf investment will seem distantly related to day-to-day golf operations. They’re relevant simply given how they prove the attraction of the game to younger business people immersed in the tech economy and eager to combine two passions—entrepreneurship and golf. If this weren’t a significant feature of today’s golf economy, there would be no such thing as LoopGolf, a digital mobile app that "solves the problem of coordinating, scoring and settling of on-course wagers,” according to Matt Rum, co-founder of the Northern California startup firm.

As a former Division 1 college basketball player, Rum naturally would bring a stronger-than-average competitive zeal to his golf outings, but he and his colleagues think there’s plenty such people out there. Meanwhile there are surely recreational golfers who would be more keen on money matches if keeping track of who’s up and who’s down weren’t such a distraction.

Either way, even for golfers who don’t imagine they’d ever set up a LoopGolf account, it's a fun venture simply to talk about and a tribute to the passion felt by people—and let’s just say business people—for golf, that someone would think to invent this app and bring it to market. In doing just that, Rum and his partners have attracted investment from prominent and successful financial-tech entrepreneurs, including the founders of companies like Acorns, Sendoso, Green Dot and Embed. If you’re just hearing about them now, you’re likely to hear more in the future.

This article was featured in the July/August edition of Golf Business magazine. 

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