If the golf industry can show a little wisdom in combination with a hint of vision, it can avoid making the same mistake my home state of California is now making in failing to take strategic advantage of COVID’s unexpected bounty.
Anticipating as much as a $54 billion deficit, California instead realized a $78 billion surplus and set about spending it on a whole host of things that will be very difficult to cut back once the bounty turns first to stasis followed at some point by deficit. Instead of paying down some of the state’s whopping pension debt obligation or adding to the state’s rainy-day fund or investing in desperately needed water storage infrastructure – the sorts of investments that pay multiplier dividends in the out years – California has elected to commit most of its newfound monies to programs and line items that will likely cost more money over time without bringing corresponding financial value. Great societal value in many cases to be sure, but not financial value as normatively understood.
Golf’s COVID bounty is not so much short-term cash as it is an increased recreational market share that it hopes to retain to the greatest extent possible and parlay into a baseline that amounts more to a quantum leap than an accretion. But to the degree to which it too seems to be investing in programs and extant line items as opposed to those investments that might put it in better position once the bounty recedes, golf seems to be following the pattern of California in failing to recognize that one-time bounties don’t do much of anything to cancel the long-term challenges and problems that were firmly in place pre-bounty. Of course, golf is no match for California when it comes to strategic myopia, and to compare the two would be as unfair as it would be inaccurate.
The game’s long-term challenges are all a function of the same inescapable fact about the game of golf – “inescapable” so long as golfers continue to consider the 18-hole experience to be its predominant offering. A regulation golf course requires a lot of land in urban/suburban settings where competition for that land from other needs, recreational, residential, and commercial, is fierce and becoming fiercer with each passing day – land that requires inputs whose costs continue rising much faster than the CPI (e.g., water), reducing the size of the game’s available market. And the land, like all land, is geographically fixed. Golf courses cannot pick up and move to another state or move portions of their operations to jurisdictions with less expensive labor or less onerous regulatory structures.
And unlike so many other businesses tied to the land, (e.g., agriculture) golf is also a use of land fixed to a very narrow and specific activity. When water is scarce, farmers can fallow certain crops in favor of water consumptive crops that fetch greater returns, as California’s almond growers have been doing with increasing regularity, or they can substitute a less water consumptive crop for another that requires more of the stuff to keep their enterprises going during droughts.
Unlike many businesses that can change what they make or sell through re-tooling, rebranding, or extending geographical reach, golf is golf. A golf business is stuck where it is, and unless it is a world class resort whose market is indeed the world, it is pretty much stuck marketing to golfers within a certain radius of its property, rendering the exercise a de facto zero-sum game in competition with other golf properties in the same orbit. Yes, they can all try to entice non-golfers to the game and convince extant golfers to golf more, but that’s really a job above any individual golf property’s pay grade. They’re dependent upon the game’s national leadership organizations for that bit of marketing heft, and the fact that it took a pandemic to move that needle tells you all you need to know about the efficacy of past campaigns.
So, what’s a landlocked industry supposed to do? Or more specifically, what might golf do with some of its COVID bounty in terms of mitigating some of the ill effects of the existential challenge posed by its encumbrance of more land than the nation’s non-golfers believe its value proposition merits or entitles it?
Simple market forces have already conspired to reduce the golf stock in most of America’s large cities to two classes of facility: Private club and municipal. And in the nation’s 2nd largest city Los Angeles, which now contains only one daily fee facility, those private and municipal golf facilities are completely dependent upon the state keeping certain laws in place that if repealed would lead to the demise of many of them in fairly short order. Tax private clubs to some higher and better use than open space, and many of them would need to sell to avoid onerous property tax bills. Repeal the California Park Preservation Act, and California cities could solve their pension debt problems by simply selling their municipal golf properties (parks too) to the highest bidders. Lest you think either possibility is far-fetched, ask any New Yorker about the possibility of taxing their golf club per a highest and best use standard, ask Malcom Gladwell what piqued his anger about a certain tony West Los Angeles country club, or ask any Californian about what Assembly Bill 672 proposed to do in this legislative session regarding the Park Preservation Act, the California Environmental Quality Act, and the state’s municipal golf courses. The answer you’ll get in all three cases is as simple as it is troubling: The culture no longer believes that golf merits the land it encumbers; it wants to compel other uses of it through legal and political means.
This notion is alive and well in the political ether of many American cities and states. What’s in the ether gets reported in the media, becomes part of public consciousness, and ends up in the laws and regulations that govern. Golf would be wise to invest more than the paltry few dollars it does now to tackle all three manifestations of this cultural animus – a three-pronged strategy involving the creation and wide dissemination of a story capable of buttressing the game’s societal value proposition for and to the 93% of the population that doesn’t play golf, the funding of the basic research necessary to reduce water and pesticide use, and the creation of advocacy organs capable of defending the game’s interests in the halls of legislatures, regulatory agencies, and editorial boards.
Otherwise, golf will find itself right back where it started before COVID provided its bump – struggling with little success to overcome a challenge that really does merit the appellation, “existential.”