The Pellucid Perspective - July 2012 - (Page 2)

STATE OF THE INDUSTRY More golfers say “good-bye” in 2011 Decline particularly troubling in view of population growth By Jim Koppenhaver he 2011 golf consumer franchise survey results are in and tallied and I have to say it’s not a pretty picture. We shed almost 2 million golfers or 7% in 2011, an acceleration in both the size and rate of decline in the golfer base from the previous year’s loss of 1% and an acceleration vs. the 5-yr annual attrition rate of 1%. Golf ’s consumer base now stands at the threshold it crossed in 1990 during its growth trajectory. An inconvenient truth not pointed out among the industry eternal optimists is that back in 1990 the population was 25% smaller than today, which means in participation (i.e. relevance to the total potential participant universe), we’ve declined from being a sport of choice to nearly 11% of the population to today’s level of under 9% of the population. This disturbing trendline in the consumer base begs two obvious questions; who are we losing and why? While we don’t have the depth and breadth of knowledge concerning the causal factors for the decline in golf as in other industries which track this as standard requirements (i.e. the major stakeholders invest in this and actively participate in the shaping of the annual research), the annual surveys conducted by the National Sporting Goods Association (NSGA) and the Sporting Goods Manufacturers Association (SGMA) tell us something about who we lost at a very topline level. First, from the NSGA survey which Pellucid licenses and modifies (i.e. trending, smoothing etc.) for use in our State of the Industry report and our Golf Local Market Analyzer, we get the following: • Size – the consumer base declined by 1.9M golfers or 7% • Frequency – increased by half a round (3%) to 22 • Play Rate – decreased to 1.9 rounds/capita/year (5%, • • • • T • 3.5M people joined the game in 2011 after not playing • The majority of these were former (they had previously in 2010 quit) or “lapsed” (they just didn’t get out and play in 2010) golfers at 2M • 3.9M golfers left the game in 2011 vs. 2010 rounds/golfer/year combines population growth, golfer change and frequency change) Gender – The bulk of the decline was males Age – The largest departing age group was 18-34 Income – The largest declining group was the $75K+ cohort Involvement – We lost similar amounts of Casuals (2-9 rds/yr) and Involveds (10-39 rds/yr) From the SGMA survey (reported previously by NGF, which participates in this recreational research consortium across multiple sports), we see the following decomposition of the ebb and flow of golfers entering and leaving the game resulting in the annual net loss of golfers (they’re only reporting a net loss of 0.4M for 2011 based on their survey, that’s why the below accounting won’t tie out to Pellucid’s numbers): On the surface this would appear to support my argument from all the way back to 2001 when I entered the industry when I said, “Player development should start with those closest to the sport.” In other words, I argued that we should first reach out to the former golfers because they already knew the sport, had most likely made the initial equipment investment and that we should try to connect with the PGA TOUR fan base who were, by their viewing behavior, expressing interest in the sport. While the size of each of these universes is unknown and debatable, we can reasonably estimate both and they’re not small “pools” of people to go after. The PGA TOUR claims they have a fan base of 100M (they don’t mention if that’s worldwide or US but let’s just go with that). If we assume that the vast majority of golfers (call it 25M) are also PGA TOUR fans, that’s a potential universe of 75M “converts” to playing the game. Pellucid’s research in the early 2000s put the golf fan base (via survey, included TV watching, event attendance, read about in magazines or newspapers regularly) at around 45M which, again assuming the vast majority of current golfers are included, would put the “convert” pool at about 20M. Looking at formers, the NGF estimates that there are roughly 30M former golfers out there (if we’ve been shedding on average 3M/yr since they started tracking this back in 2000, that would probably suggest either a conservative or reasonable estimate), the majority of whom, with the potential exception of those 75+ or the absolute exception of those deceased, are more likely prospects than our traditional “hug a non-golfer” target we’ve pursued as an industry since the inception of Golf 20/20. Adding insult to the injury of us collectively (Pellucid included) presiding over an unprecedented decline in the golfer base since its apex of 30M in 2002, is the fact that this is occurring in the face of the most expansive player development effort ever undertaken in the industry. This combination of events would strongly suggest that a) We don’t have the right programs or b) We haven’t been able to scale them enough to impact the “unmanaged scenario” at the national level or c) The declining interest in golf is such an unstoppable trend that it would have ravaged the industry without the buffer of our player development efforts. It’s quite possible that the right answer is “all of the above,” but I would suggest that it’s more influenced by a) July 2012 2 The Pellucid PersPecTive

Table of Contents for the Digital Edition of The Pellucid Perspective - July 2012

The Pellucid Perspective - July 2012
Contents
More golfers say “good-bye” in 2011
A victory for municipal golf
Golf ’s new frontiers in faraway places
A range of possibilities
Weather impact, flat June closes out spectacular 1st half
Steel City or Iron City, Pittsburgh is a hard golf market
Lowe Enterprises joins Suncadia Resort ownership group
The First Tee: It’s not all about golf

The Pellucid Perspective - July 2012