The golf course building boom of the 1990s is a distant memory, and the industrys suffering a major hangover caused by too many courses and too few golfers. Now, thousands of acres of fairways and greens are being plowed under. What happened?Photograph by Samuel Solomon.
IT'S EARLY APRIL in Florida, the perfect time of year to get in a few rounds of golf. But Ron Baker is too busy to think about playing golf right now. Instead of filling out his scorecard, the general manager of Raintree Golf Resort in Pembroke Pines is printing out his résumé.
After more than two decades of providing golf for thousands of patrons every month, Raintree is a few weeks away from being reduced to a pile of rubble.
"I've had a lot of good memories here," Baker says. "I haven't landed anywhere yet, and our regulars are very disappointed that we're closing, but that's how it is in this industry." Last year, Raintree was rezoned for development. What once was a clubhouse will soon be commercial real estate. What once was 123 acres of golf course will soon be a residential neighborhood.
And what once was a thriving golf community is now part of a sobering trend in the industry: There are more courses closing than there are opening.
"We used to have anywhere from 3,000 to 5,000 golfers a month," says Baker, who's been with Raintree for 17 years. "But those numbers have been down about 15 percent over the last 10 years because of the increase in golf courses. Our owners saw an opportunity to get out and increase their dollar amount five times by selling the land. It was the smart thing to do."
In the 1990s, more golf courses were going up than were shopping malls. As popularity for the game grew in a time when the economy was soaring, a new market emerged in the industry. No longer was golf exclusive, available only to the executive making half a million dollars a year. The sport, as Golf.com Top 100 instructor Mike Adams explains, took on a new image: Golf was considered cool.
"Everyone wanted to be like Tiger Woods, just like everyone wanted to be like Michael Jordan," he says. "Plus, you had celebrities like Jordan and Steven Tyler playing golf, and that brought a whole new feel to the game."
In 1996, the year that Tiger Woods made the leap from amateur to professional, participation among junior golfers (ages 12 to 17) jumped from 1.8 million to 2.4 million. Furthermore, the number of adults playing golf increased by nearly two million people from 1990 to 2000.
Eric Affeldt, president and CEO of Club-Corp, one of the largest private golf club developers in the world, believes retiring baby boomers also played a vital role in the barrage of golf courses in the 1990s. Statistics at the time suggested that retirees were inclined to play more golf as their work lives slowed down. In response to those stats, builders increased the development of realestate- related courses.
"It's hard not to argue that a home around a golf course is prettier than a home not around a golf course," Affeldt says. "If you've got the land, it tends to enhance the value of the home. Thus, you had a lot of people building homes on golf courses, not specifically for golf but to enhance residential real estate."
The sudden influx of participation, coupled with the demographics of baby boomer retirees, opened the eyes of course owners and venture capitalists everywhere, and they subsequently opened their pocketbooks for new greens. In 2000, at the height of the boom, there were nearly 400 course openings. Last year, there were 119.
"It's typical in any business to have cycles of expansion and contraction," says Jim Kass, research director for the National Golf Foundation. "You look at what was happening in the 1990s - the demand was there, the stock market was strong, and people were confident in spending money."
Golf course owners were spending money, but not solely on the private countryclub resort that's been synonymous with the golf business for so long. "Pay-for-play" courses, as golf course designer Thomas Fazio calls them, became the haute couture of the industry.
But the supply quickly outgrew the demand. Now countless numbers of pay-for-play golf courses, public and semiprivate, are being bought and deconstructed by those interested in the underlying land."
You look at the patterns, and there always seem to be highs and lows," says Fazio, who's been in the course-design industry for nearly five decades. "The difference in the '90s was that golf was coming out of a recession in '92. From '92 to September 11, we had tremendous growth.
"Then September 11 hit, and we still had growth, but the economy was down," he says. "People weren't traveling, and clubs were empty. What happened is we had this growth not because of golf only, and we created an oversupply. Now we're in the shakeout period."
Of the 146 golf courses that closed in 2006, almost all were public courses whose greens fees were less than $40. Golf courses designed to accommodate everyone, regardless of socioeconomic standing, fell by the wayside.
In essence, golf course owners and venture capitalists created a disconnect between the sport's widespread popularity and the number of courses being played. Golf participation continued to rise, but not at the staggering rate of the previous decade - and, more importantly, not at the rate that golf insiders projected.
"You can make a lot of analogies," Affeldt says. "In the fast-food business, there [are] hundreds of thousands of fast-food restaurants, and it doesn't mean that fewer people are eating fewer hamburgers if a hamburger restaurant closes."
Affeldt believes the reason why so many public courses are going under boils down to the combination of real estate and operation. He says too many people were enamored with the concept of golf without understanding the combination of those two factors.
"Maybe they were good businesspeople but picked the wrong location and lost," Affeldt explains. "Or maybe they were good real estate people but bad businesspeople, and they had a nice piece of dirt that would be better suited for some other purpose."
Golf continues to gain popularity; more and more people are hitting the links and watching the game than ever before. Golf course designer William Amick, who attended the practice round at this year's Masters, referred to the warm-up as a "frenzy."
"Almost too many people were there, if you ask me," he says. "We in the industry like to see more people watching and more people playing - that's what drives us to build. From that standpoint, golf is healthy."
Still, insiders predict that there will be at least one more year of negative net growth in the industry before the supply matches the demand. Course owners and designers don't view the reduction in courses as a detriment to the industry, though. They purport that the weeding-out process will bring the industry back into balance, and the number of courses remaining will be more accommodating once the market levels.
"I would say it's coming back to the norm," Affeldt says. "The industry went through an overbuilding cycle, and now the pendulum is swinging the other way. I actually view the decrease as a positive, not a negative."
Fazio's seen the number of prospective courses drop considerably during the recent slide. Whereas there used to be three, sometimes four, prospective greens being introduced each week less than five years ago, now there is only one. He insists that the decline has had no effect on the number of his projects but admits negative growth isn't the most reassuring piece of data he's seen within the golf course industry.
"We in America look at everything from a financial side, and I think there is a leveling out," Fazio says. "But that leveling out means that we will have closings. The question is, will we have more? And I think we probably will because of the oversupply."
Now hundreds of golf course owners are bailing out of the oversaturated market, trying to lick their wounds after having overestimated the demand. For Sale signs mark the once luscious greens and fairways that signified the industry's unabated exuberance in the 1990s. Bulldozers are replacing golf carts, sandboxes are replacing sand traps, and freeways are replacing fairways.
For Baker, the soon-to-be ex–general manager of Raintree Golf Resort, the hard part isn’t finding new employment but finding new employment while trying to explain to the disappointed Raintree patrons why they’ll soon have to find another course. He asks them to play the owner role for a minute. He implores them to make an objective decision. And inevitably, most of them do end up agreeing that selling was the smart thing to do, no matter how difficult it is to see their beloved links fall victim to the golf course binge of the 1990s.