Happy New Year to our faithful subscriber base, here’s to wishing you a productive and prosperous 2017. Stuart and I are in the midst of preparation of the State of the Industry presentation that we’ll be presenting during the PGA Show later this month and we have enough of the facts by now to offer this “preview” into what the key headlines and supporting storylines will be for the year 2016 in the operational side of the golf industry (excluding the media elements of tours, tournaments, equipment sponsorships etc.).
As the headline suggests, we didn’t make a lot of headway toward growth in the industry in 2016 but we held our own in many measures and, in a few, the rate of decline slowed slightly. While this isn’t in and of itself cause for celebration, we know that it’s the more common precursor to positive results vs. the more sensational (and rare) “hockey stick” reversal of fortune which some of the trade associations and industry cheerleaders have been predicting since as early as 2007. I’m being serious here, I was cleaning out historical documents in my office over the holiday break and I found numerous trade articles I had clipped of various industry gatherings and leaders quoted in ’05, ’07, ’08 and ’09 saying, “I think the worst is behind us and by 2010 we’ll see a healthy industry returning to the performance of the 1990s” (I’ll refrain from naming names and publications but some number of people and publications remain active in the industry while others have fallen by the wayside). That said, we are where we are and rather than trying to predict where golf will be in 2020, let’s focus on what happened in 2016 and what it might suggest for the upcoming year in performance and trends:
• Utilization Rate – Played Rounds will be up marginally (less than 2%) which will slightly trail Available Rounds (~+2%) producing flat Utilization for the 3rd consecutive year. If this continues, we’ll soon be able to build a predictive model for future demand by simply creating and applying accurate weather forecasts (a challenge in and of itself).
• Average facility velocity (annual rounds per adjusted 18-hole equivalents) – Will be up marginally (~2%) due to continued net (fractional) supply reduction coupled with the marginal gain in rounds.
• Consumer base and participation rate – Continuing to decline at a concerning rate in both the absolute (golfers, ~4%) and relative (participation, less than 8%) as population grows and we shrink. There are some interesting undercurrents here regarding who’s staying vs. leaving and how that’s changing the rounds contribution pattern (not favorably) while we’ll address more fully in the State of the Industry.
• Golf consumer equipment sales – Will take it on the chin in ’16 with declines in $$ sales of 5-10% after appearing to stabilize in ’15. This decline will be the worst annual performance since ’09 if that tells you anything and which also explains the significant changes in manufacturers and retailers positions this past year.
Noticeably absent in the above is any indicator of facility revenue performance which unfortunately went bye-bye with the decision in late ’15 to discontinue the PerformanceTrak program. We’re hopeful that there will be some 2.0 version of revenue tracking in ’17 and beyond as it’s an important industry health metric. To be meaningful and actionable however, it will require more and more consistent participation than the previous version which gave us needed visibility but quite often had some mathematical inconsistencies when studied from an analyst’s perspective. In my opinion, it will require a broadly collaborative effort to get it robust and right but it can be done.
For our subscribers, read on for the supporting facts and color commentary. For our Executive Summary recipients, you can get the rest of the story one of three ways (all can be previewed and purchased at Pellucid’s website (a href=”www.pellucidcorp.com”>www.pellucidcorp.com):
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