Golf course foreclosures or near foreclosures continue to dominate the headlines. Without question, they have fueled sales and helped more than a few management companies grow fat.
Almost three years after the economic collapse, one would think that most poorly performing courses would have worked their way through the system. But economic indicators are confusing:
The home market, which led to the development of many golf courses, continues to decline. In the U.S., unemployment remains high and the consumer confidence index has only inched up slightly. But there is good news — U.S. GDP grew by 5.6 percent in the fourth quarter, productivity is rising and inflation is very low.
So what does that mean for the golf industry?
Consumer confidence is probably the figure that matters most to golf courses. When consumers feel they have extra money, that they are safe, they will spend more discretionary income on things like memberships, travel and golf rounds.
Indeed, travel has rebounded. But golf rounds are off, and membership sales continue to struggle. Many now fear that the U.S. economy is sliding into a double dip recession.
Whether that technically happens or not, the private club industry will still struggle. Tax changes made in the Clinton years and demographic shifts have led to a new age for private clubs. And many are not adapting in time to fend off foreclosure.
It would be foolish for courses to hold out hoping that an economic recovery brings peace to their bottom line. Golf’s problems extend beyond that.
In the long run, it is good for the industry to get rid clubs that don’t adapt and replace them with owners or board of directors who will make the necessary changes. But it still would be better if clubs started making changes before they get foreclosed on.