Golf and Sports/Recreation and Sports Business and Golf & Travel Guide

Do golf and business still mix?

March 12, 2011

With business budgets tightening and corporate culture changing, golf isn’t the oft-used tool for corporate sales, executive networking and teambuilding it was a decade or more ago.

The shift has left golf course operators working to fill tee times for non-primetime weekdays slots—those typically booked by businessmen and women—and trying new tactics to lure corporate types back in larger numbers.

Golf course operators nationwide reported that revenue from business-related uses declined by 15 percent in the last decade and by nearly 25 percent since the 1980s, according to the National Golf Foundation, a trade group based in Florida.

Midwest golf courses—including those Indiana and Michigan—have suffered even steeper declines from corporate types due to the turbulence in the U.S. automotive sector, local golf course managers said.

Golf course operators said patrons using golf for myriad business reasons—including corporate-driven charity outings—counted for as much as one-third of their business through the 1990s, but that is now down in many cases below 20 percent.

Stinging culture shift

“There’s been a decline in that segment for several reasons,” said Milt Thompson, who is the president of a local sports marketing firm and co-owner of The Trophy Club golf course in Lebanon. “I still see some business-to-business opportunities on the golf course, but a lot of the young executives don’t use the sport the way their older predecessors did. I suppose there’s been a culture shift.”

The golf industry is grappling with how the exit of millions of Baby Boomers from the workplace will affect the sport, Thompson said. On the one hand, the retiring masses should have more leisure time. But, their Gen X and Gen Y counterparts may be less apt to hold corporate functions on the links.

“That’s one of the big unknowns,” Thompson said. “How much of this downturn is related to the economy, and how much of it is a culture shift? The part related to the economy is likely to come back. With a culture shift, it may not.”

Thompson thinks course operators need to start doing a better job reaching out to a younger, more diverse audience.

“The game has to be grown in general,” Thompson said. “As the corporate decision makers change, we have to start appealing to more young people and minorities.”

Jon Stutz, golf pro at Purgatory Golf Club in Noblesville, said the decline in corporate business has been accelerated in the last five years.

“What I see is a lot of companies still entertaining on the golf course, but it’s on a little smaller scale,” Stutz said. “Companies used to regularly bring out parties of 80 or 100 players, now it’s more like 12 or 16. Certain industries, like medical that used to be a really big piece of business for us, have really cut back.”

Another thing that has shrunk the corporate golf crowd more recently has been the downsizing of conventions and other business meetings here, golf operators said.

“The loss of corporate headquarters has hurt, and convention groups seem to have scaled back quite a bit in the last three or four years,” Stutz said.

Local golf club and course operators estimated that convention-goers accounted for about one-third of business-related revenue as recently as 2005, but now account for about 20 percent.

Corporate business is still a major driver, Stutz said, with the Saturday before the Indianapolis 500 still registering as the biggest day of the year for many central Indiana courses. “That’s a huge day for corporate entertaining,” he said. 

With the corporate downturn, weekday business has taken the biggest hit—by far.

“Weekends are still really strong for us,” Thompson said. “But what about Wednesday morning at 10 o’clock? That’s the niche that corporate golf really filled. Now courses are scrambling to fill those with discounted rates and other specials. It’s really hurt the bottom line for a lot of courses.”

Dealmakers still like golf

Many business-types still think golf is a valuable sales and networking tool, said Mike David, executive director of the Indiana Golf Office, the organizing and sanctioning body for golf in Indiana.

“I think the corporate budget crunch is the biggest issue right now,” David said. “I’ve never heard anyone say it’s not a valuable tool to do business.”

Despite the recent economic swoon, David said his organization has helped organize recent outings for a variety of firms from construction contractor Shiel Sexton and Pepsi Co. to Butler University.

“Courses have to be more aggressive in selling the virtues of golf from a corporate perspective,” David said. “Course operators have to get out in front of businesses to sell their services. The day of build it and they will come are long gone.”

In fact, David said, a golf course construction boom from about 2000 to 2007 has added to the dilemma, putting as many as a dozen central Indiana courses in dire financial straights.

“The number of courses in this area increased, and the number of golfers didn’t,” David said. “If anything, there’s been a decrease in the number of rounds played.”

Despite the economic turbulence, Zak Brown, who runs Zionsville-based Just Marketing International, still believes entertaining with golf is a worthy expense.

“I would never cut back on the golf budget,” Brown said. “I would never tell any [JMI employee] they couldn’t golf with a client. It’s just so valuable. When else are you going to get to spend four-and-a-half hours with a client? It’s as good as quality time with a client gets.”

Brown estimates it costs about $400 for two or three people to play a round of golf.

“It’s no more than a nice dinner and a bottle of wine,” said Brown, who has memberships at Crooked Stick Golf Club and Meridian Hills Country Club.

Time is money

For some companies, it’s as much about the investment in time as money.

“Companies are so lean now, I just don’t have a half-day to play golf on a Tuesday, even if it’s free,” said Dave Grande, owner of ProSource of Indianapolis, a Castleton-based flooring dealer. “I love to play golf, but if I’m gone, there’s no one in the office to do the work I don’t, so I’m in here making it up on a Sunday.”

Grande, who formerly sold industrial fasteners and worked with automotive and other large manufacturers, said 10 or 20 years ago, playing golf with clients, vendors and other associates was much more common. Though he still see’s the value in hitting the course with business sources, he’s not sure the business golf outings are going to regain their past popularity any time soon.

“With certain sectors, especially in automotive, entertainment, it was a big, big thing,” Grande said. “Things now have changed.”

Media attention on corporate spending during this economic downturn certainly hasn’t helped the golf industry.

“It’s tough when companies are making decisions on cutting employees,” said Purgatory’s Stutz. “Things seen as extravagant expenses are hard to justify.”

The cutback in corporate golf comes at a time when the business in general has struggled to keep its head above water.

“The same things that keep companies from golf have also taken a bite out of leisure golfers,” Indiana Golf Office’s David said. “Primarily, it’s about the expense and the time it takes to play.”

The number of golfers from 2007 to 2010 has declined almost 10 percent, according to the National Golf Foundation. The most recent NGF figures also show private-club memberships have fallen from 3 million in the early 1990s to 2.1 million in 2010.

Golf rounds played in 2010 compared to 2009 were down 3 percent—and another decline is being forecast for 2011, according to Golf Datatech, a Florida-based research group.

Charlie Morgan, the market manager for Emmis Communication’s local radio cluster, said golf is still used in his industry, but with the wobbly economy, “it has to be done more strategically.”

“I know we’ve made some significant deals on the golf course, so we haven’t cut it completely out of the budget,” Morgan said. “Golf can mean four or five hours of quality time with clients, but since the investment in terms of time and money can be significant, we try to pick our spots to maximize the return on those outings.”•

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