The State And Future Of Arizona's Golf Industry

The Arizona Republic's Russ Wiles uses the Waste Management Open as a reason to consider the state of Arizona's $3.9 billion golf industry. The story is lengthy and contains some very good info if you're in the industry (thanks reader John for the link).

The questions and answers posed by Wiles are many of the same you've heard by now: things aren't too bad right now and even encouraging where facilities have made some adjustments, but the industry certainly isn't growing and the all-important M's don't want to participate in something taking four-five hours.

Nearly two-thirds of active players are 40 or older.

Participation among minors "has been declining for several years, as younger generations opt to play other sports or engage in other activities," said IBISWorld.

Also, it takes a lot of time to play golf well — not just in spending what can easily be five-plus hours for a round of 18 holes, but in the years of practice it takes to become reasonably skilled.

"As an industry, we need to find ways to have a one- or two-hour experience," said Gurnow. That's in addition to other ways the industry might appeal to newcomers.

This was interesting and a huge issue on the jobs front if the only answer is another TopGolf (not that there's anything wrong with TopGolf!).

Labor tops the list on the expense side, including for clubhouse/golf-shop staff and course-maintenance workers. Water and other utility costs were next,then course-maintenance supplies/services, general-administrative expenses and food/beverage outlays.

The highest number of Arizona golf-course jobs are in course maintenance — estimated at 5,000 positions in the 2014 report, followed by food/beverage workers (2,300), golf-shop personnel (1,780) and administrative staff (1,040).

Why? The NGF's Inaugural List Of Golf's 100 Best

I'm not sure I'm buying Erik Matuszewski's explanation for the National Golf Foundation's new list highlighting 100 companies, but I'll give the Forbes--yes that Forbes--writer the benefit of the doubt since I can't think of any other reason the NGF needs to get in the rankings business.

But the scope of the overall golf economy – a $70 billion business -- runs far deeper.

It’s why the National Golf Foundation has released its inaugural list celebrating the top 100 businesses in golf, a platform that in some ways is the golf biz equivalent of the popular top 100 course rankings. The NGF GOLF 100 was created by the NGF to recognize the most successful, innovative and influential companies and organizations in the game, across a wide variety of categories.

“This new tax bill will really hurt golf.”

Golf course operator and former PGA of America President Ted Bishop opines for MorningRead.com on the Tax Cuts and Jobs Act's elimination of a the 50-percent tax deduction for business expenses.

Bishop says the golf industry changed for the worse when that deduction went from 100% to 50% and sees the problems continuing with the move to zero percent. He says this to President Donald Trump, who signed the bill into law:

Regardless of golfers’ political-party affiliation, the fact that a president who owns and operates golf clubs signed the legislation into law Dec. 22 was no Christmas gift for a struggling industry and is rich only in irony

Bishop isn't the only one seeing problems. There is this from Linda Rogers (R), Indiana State Senate candidate, a former president of the National Golf Course Owners Association.

“When the business write-offs for golf were cut to 50 percent in the 1990s, that was the start of the decline of the golf business, in my opinion,” she said. “This new tax bill will really hurt golf.”

We Are Golf head Steve Mona was unavailable for comment but there was this from Jay Karen, the chief executive officer of the National Golf Course Owners Association:

“No one has measured the scope of business golf spending, nor the behavioral changes that might occur with the removal of the deductibility,” Karen said. “Despite the chance for a negative impact, my hope is the effect will be marginal, at best.”

What Will The Texas Rangers Get Out Of Golf Course Deal?

I don't ask that in a hostile way, it's just curious that the Texas Rangers are lending their name and merchandise might to a city of Arlington golf course in what could be a fascinating deal.

But after reading Mark Kazlowski's Dallas News story, I'll be intrigued to hear what's in it for them given this:

When it reopens this summer after a major makeover, Chester W. Ditto Golf Course will be called Texas Rangers Golf Club.

Mayor Jeff Williams said this will be the first golf course with a Major League Baseball team's name attached.

Under the 36-year promotional and licensing agreement unanimously approved by the city council Tuesday, the Rangers give the city the right to use its brand on the golf course, which is about three miles from Globe Life Park and the entertainment district.

The Rangers are not paying to put their name on the course. The city will retain all revenue from golf course merchandise sold with Rangers logos, and the Rangers will market the golf course at the stadium during games.

Maybe it's just good community karma, but it'll be interesting to see if this becomes a model in other cities for major league teams. I could certainly see some benefits for a struggling course to become the official home of the local team, complete with theme events and other touches (oh yes, you know the team-logoed bunker is happening).

Will Tax Bill's Elimination Of Golf Business Expenses Have Impact?

Josh Sens of Golf.com does a nice job reporting on the potential impact of changes to deductions ushered in with the new tax laws. In a nutshell, the golf industry may take a hit.

Noting the irony of President Donald Trump trumping the on-course relationship-building he has done against Congress' view that deducting business entertainment was a loophole, Sens explains:

To many in the golf world, the new rule is disappointing, but not surprising. Jay Karen, CEO of the National Golf Course Owners Association, was among those who saw it coming. In late November, as the tax bill was taking shape, Karen and representatives from three other golf industry groups penned a letter to Congress, pleading with lawmakers to preserve the 50 percent business-entertainment deduction. Doing away with it, they wrote, would hurt "small business owners of golf courses across the country" while dampening the myriad business dealings that take place "every day of the week across thousands of courses."

Roundup: Day After New Year's Non-Dump Golf News

The folks in golf were fine tuning their press releases over the holidays to hit us on January 2nd with news. Far from a Friday news dump, it's (mostly) nice to see the announcements and moves. Expect more this week.

Golfweek.com is a great source as is the relaunched Forecaddie, your longtime friend in print now finding its way online and on Twitter. Follow!

In the meantime...

Taylor Made unveiled two new drivers, an M3 and M4. They twist, David Dusek reports for Golfweek.

Sean Foley is in at Golf Channel, Michael Breed is out and headed to SiriusXM, among many plays. The Forecaddie explains.

Adidas is rolling out a sleek looking new shoe for a limited run, to be worn this week at Kapalua by Dustin Johnson. Brentley Romine reports.

Dylan Dethier at Golf.com on Adidas renewing with several players, including Sergio Garcia whose turned to Callaway for clubs and a ball and Xander Schauffle, who Golf Central reported is also headed to Callaway for equipment needs.

Dusek on Callaway signing Garcia.

The Forecaddie on Garcia going all in with 14 clubs, including the exceptional art deco-infused new Atlanta putter by Odyssey and Sean Toulon.

I guested on Callaway's Ship Show pod with Jeff Neubarth while Harry Arnett and Amanda Balionis were away, so we had the fun of asking Sergio about his new deal.

No mutiny here! @JeffNeubarth and I comandeered the ShipShow to talk to @TheSergioGarcia about signing with @Callawaygolf. Don’t worry, @HarryArnettCG @Amanda_Balionis will be back soon.https://t.co/KpNjByZYpb

— Geoff Shackelford (@GeoffShac) January 2, 2018

Is This The Future? Bighorn Opens 79,000 Square Foot, $70 Million Clubhouse

The future of Coachella Valley golf may tell us if post-Baby Boomer generations can or will buy second homes, and if they'll do it in a place synonymous with retirement.

We've already seen signs of reinvention in the region, with the golf course no longer valued as a selling point. Making Bighorn's bet on a new clubhouse--all 79,000 square feet--another intriguing form of desert reinvention. Or, is it overkill?

Robb Report's Rebekah Bell paints quite the picture of the gleaming new structure.

Made from Champagne-painted fascia, steel, concrete, glass rails, and limestone floors imported from Peru, the clubhouse is a playful mix of fanciful swoops and curvaceous elements. “The clubhouse is built on curves,” says Carl Cardinalli, president of Bighorn. “There are very few right angles to be found throughout the entire building. Visually, there is a striking acknowledgement that the radial patterning reflects the signature Bighorn sheep’s valiant horns.”

Right!

More pertinent to Coachella Valley concerns, the Desert Sun's Larry Bohannan considers the thinking of Bighorn's R.D. Hubbard and asks if "the beauty of a clubhouse sell memberships to a private country club? Can that same clubhouse somehow assure an extended life span for that club?"

“Since we announced the new clubhouse (at the start of 2016), and we just had a (rendering) and the like, we have sold 56 membership in that time,” Hubbard said. “Absolutely it has paid off. But I anticipate this year, this golf season will be by far the biggest payoff for new members. We’ve got so many prospects who are waiting to see what it is going to be.”

The reaction of members Monday was positive both in terms of the building, estimated at $70 million when construction began, and what it means for the future of Bighorn.

“This was R.D.’s vision, and he put together a great team and pulled it off,” said James Gagan, one of the original investors in the group led by Hubbard that bought Bighorn in 1996. “When people see this clubhouse, what it offers, everyone will want to be a member – if they can afford it.”

Or, if they can afford it and therefore the ability to build their own trophy home, is this really where they will spend that much time compared to the golf course?

AP: "Lawmakers add $4 million for tiny Wisconsin airport near golf course"

Thanks to KLG for Scott Bauer's AP story on $4 million in state funding going to Wisconsin's Rapids' Alexander Field near Sand Valley Golf Resort.

Bauer's story implies that a $25,000 donation by golf developer extraordinaire Mike Keiser was the difference in Governor Scott Walker reversing a budgetary decision not to fund the airport renovation.

Bauer writes:

That donation was three weeks after Gov. Scott Walker released his budget without funding for Wisconsin Rapids’ Alexander Field. Keiser has given at least $65,000 to Walker and Wisconsin Republicans since 2012.

“It sure looks like Mr. Keiser’s campaign contributions to Scott Walker and Republicans teed up millions in taxpayer-funded improvements to help bring corporate jet ferried golfers to his Wisconsin courses,” said Mike Browne with the liberal advocacy group One Wisconsin Now. “Meanwhile, the rest of us will continue to have to deal with crumbling roads and bridges and delayed projects as these same Republicans take a budget mulligan and refuse to fix the state transportation funding crisis.”

The story also notes this, which suggests the plans were in place for 2021.

The state Department of Transportation had planned to pay for the airport upgrades in 2021, but it would be moved up to this year to meet the demand caused by the added air traffic due to the golf course, Krug said.

Taylor Made And PXG Escalating Patent Squabbles

There are plenty of juicy details in Mike Stachura's GolfDigest.com story on Taylor Made's counterclaim against PXG, including the TM effort to get most of PXG's current line off the market.

The claim comes after PXG sued Taylor Made in September with one group of lawyers who have since withdrawn from representing PXG.

From Stachura's report:

PXG subsequently has brought in new lawyers for its case and its original lawyers withdrew in October. The new PXG lawyers include Brian Lacorte, an intellectual property lawyer with the Ballard Spahr firm based in Phoenix.

TaylorMade’s lawyers, from the Washington, D.C.-based intellectual property litigation firm Sterne, Kessler, Goldstein and Fox and the Phoenix-based Beuss, Gilbert, also requested that PXG’s case be dismissed for “failing to plausibly allege” that the P790 irons “practice even a single claim of the asserted patents.”

2017: Year "Ultra-Premium" Became Part Of The Golf Industry

In David Dusek's year-end equipment industry wrap for Golfweek, he considers the role PXG and other influences have had in convincing golfers to buy more expensive equipment.

Dusek writes:

“PXG has livened the ultra-premium market again, and all the other guys are (upset) because that used to be their golfers,” said Tom Olsavsky, Cobra’s vice president of research and development. “So now they are saying, ‘We can do that as good as (PXG) can,’ and we’re seeing them offer expensive irons and expensive drivers. Fifteen years ago that was the after-market business, and they made tons of money because it was a better product and people were willing to pay for it.”

In 2017, Callaway released the Epic and Epic Pro irons priced at $2,000 for an eight-club set, as well as the Epic Star driver, which retails for $700 and was previously available only in Japan. Xxio brought the $850 Prime driver to the U.S. market and said there was plenty of demand for it, while Titleist re-released the C16 iron set for $2,700 and debuted the J.P. Harrington line of custom-fit wedges for $500 each.

It will be interesting to see if 2018 brings more of these clubs into the bags of professionals and what impact that has on in the industry. So far PXG is the only brand to have players using these ultra-premium clubs, but could we see the others start having players adopt the pricey stuff?

Wally Uihlein Shifts To The Get-Off-My-Lawn Phase Of His Career: USGA Has No Evidence Of Escalating Costs

In a letter to the editor, Acushnet CEO Wally Uihlein railed against the USGA claims of cost increases in golf due to distance advances. Be careful what you wish for Wally!

Dylan Dethier at Golf.com reports on the response to Brian Costa's story Saturday.

"Is there any evidence to support this canard…the trickle down cost argument?” Uihlein wrote. “Where is the evidence to support the argument that golf course operating costs nationwide are being escalated due to advances in equipment technology?"

Let's see, off the top of my head there are studies underway on multiple fronts, golf course operators who can point to increased insurance costs due to safety issues and the simple common sense wave realizing the absurdity of an expanding footprint.

"The only people that seem to be grappling with advances in technology and physical fitness are the short-sighted golf course developers and the supporting golf course architectural community who built too many golf courses where the notion of a 'championship golf course' was brought on line primarily to sell real estate," he wrote.

Easy there Wally, short-sighted developers sell golf balls too.

And his jab at Bridgestone did not note the irony of his letter's intent, which would be a similar commercial motive, no?

"Given Bridgestone’s very small worldwide market share and paltry presence in professional golf, it would seem logical they would have a commercial motive making the case for a reduced distance golf ball," Uihlein wrote.

BTW watched this the other night and really is a special film. Warning, bad language! Racially insensitive comments!

Update on Monday, November 20, 2017 at 09:13 PM by Geoff

**Thanks to reader JB for Brian Costa's follow up on Uihlein's reply, which ran under a headline titled, "Titleist CEO Blasts Push for Reduced-Distance Golf Ball" and subheadline, "Wally Uihlein issues forceful rebuttal against USGA plan to explore creating different sets of ball regulations for different players."

Bridgestone CEO: Standardize The Ball For Pros

We'll ignore all of the business motives momentarily and just take in the first-ever CEO suggestion of a tournament ball in golf.

The comment came during a Golf.com interview with Ryan Asselta where Bridgestone CEO Angel Ilagan said the time has come.

"As it relates to the Tour...there needs to be something to standardize [the ball] because the guys are hitting it way too long," Ilagen says.

This marks the first time the chief executive of a ball company has called for a dialed-back ball. 

And he offered this:

"I think there is an option to have a ball that is played on Tour, and a ball that is played casually," he said, adding that he gives a standardized ball a 50-50 chance of appearing on Tour in the near future.

There is the very reason possibility Bridgestone has made such a ball, perhaps even for the governing bodies to use in their studies and that it could be the basis for a competition ball concept.

That said, the standardized ball concept mentioned by Ilagan would not be relegated to one manufacturer, meaning brands with more market share and golfer loyalty would still be likely leaders in what sales there are for such a ball.