Thoughts on inflations and possible recession on golf?

[Kansas King]

The world is potentially on the brink of Russia invading Ukraine. Gas prices are up and may go up farther with an invasion. Inflation is high across the board and as us golfers know, it's probably even higher with golf related items and green fees. What's the tipping point for golf?

Does a market downturn hit golf hard? Does continued inflation start to eat into golf? 

What event would need to happen in this country to knock the golf economy down a peg?

My personal observations about golf as of recent is that it's obviously on a hot streak. People are spending more money on equipment, green fees, and golf events than anytime in the last decade. Private investment in golf is also hot. We have new courses being built again, new equipment manufacturers, establishments like TopGolf being built, and so on. 

Is all the advancement in the golf economy being supported by cheap capital as a result of low interest rates and a huge Fed balance sheet?

I'm curious if anyone here has any perspectives on golf and what would slow down the current hot streak we're on. 

[Middler]

Recessions hit almost all businesses, including golf - nothing new this time. There are other factors, Covid lockdowns brought people in/back to golf and other outdoor activities, that was a big part of growth in the last two years. Prices will find a new equilibrium as always…this time isn’t fundamentally different.

[Tom the Golf Nut]

My personal thoughts on the matter. Covid has caused a lot of changes. Business's have allowed people to work from home with flexible hours. People were avoiding, large gathering places like restaurants, bars, going to the movies, bowling leagues, sporting events, and such. So golf, hiking, and camping took off. Once the businesses pull most everyone back into the office there will be a slight decline in golf. These same people will start going back to their old habits / hobbies.

On top of this, pricing has increased and still climbing on your day to day essentials. Gas, groceries, internet, cell plans, home repair materials, especially lumber and steel. These increases will leave less money in your pocket to play golf. This will cause some others to drop out of the golf environment over time. 

Who knows what the latest political stuff going on right now will affect. But lets not go there!

Truckers made a big impact in the supply chain. Many truckers took early retirement because they didn't want to deal with covid and traveling. The ports are backed up because they can't offload. And the truck's aren't there to haul it off. 

The golf industry as a whole took advantage of the influx of golfers. Supply and demand. Greens fees increased and courses squeezed more tee times in. Used equipment held more of its value and the people getting into or back into the game picked it up. New equipment went up in cost thus increased sales price. As long as everyone gets excited about the latest and greatest releses on equipment and runs out to buy that new $700.00 driver, the industry will keep on increasing the sales price. 

[hckymeyer]

I think short term we will continue to see higher prices.  Combination of inflation and supply shortage due to raw materials and shipping logistics.  I've already seen Titleist is not doing the buy 3 dozen get 1 dozen free for balls this year.

The boom of people playing more and used equipment prices will also continue for a bit.  Lack of other things to do because of covid and increased discretionary spending because there was nothing else to do and nowhere to travel is still there, but as inflation continues to rise that will slowly go away.

Long term I think we are in a bubble and it will burst.  Much like the Peloton company golf is in a covid boom and eventually the ship will right itself.  As people leave golf we will see an influx of used clubs on the market and those prices will come back down.  If less demand the supply will catch up and hopefully we will see a return to normal (ish) pricing.  I doubt things will every get cheaper, but hopefully will increase as a slower pace for stay stagnant for a while.

Anyway that's my .02  Probably about what my opinion is worth.

[Kenny B]

Operating costs at golf courses will certainly go up this year.  I imagine that the pricey courses may be more out of reach for this old duffer.  I may even have to reconsider my membership at my muni next season.

Yesterday I received this email from the McCall, ID City Council.  I've played golf there several times and I am still on their mailing list.  Weather permitting their season is April 1 - October 31 and green fees are $40-45 walking.

The McCall Golf Club is a 27-hole course laid out over 136.56 acres. In one season we use 3300 gallons of diesel and 1600 gallons of gas for mowing operations. In one season we apply 11 tons of fertilizer, 3 tons of grass seed, and 100 tons of sand. We use between 450,000 and 650,000 gallons of water for irrigation each night. The Golf department employs 3 full time employees and up to 15 seasonal workers to care for the course.

The McCall City Council will consider setting new rates for the 2022 golf season at their February 24^th council meeting.  The Council’s practice is to adjust rates by the Consumer Price Index, or inflation rate, each year. The federal CPI for this year’s adjustment is 7%.  The Council will also take into consideration justification for applying the 7% CPI adjustment based on the costs for specific golf course maintenance items which have dramatically increased over the past year.  In preparation for the 2022 golf season, our suppliers have increased their prices for the following items: Fertilizer – 62% increase; Fuel – 40% increase; Chemicals – 20% increase.  The Golf department is in competition for seasonal staff like every business in McCall. Our starting pay is very low at $13 per hour when compared with other local businesses which are paying entry level workers $18-$20 per hour.  A wage increase to $16 per hour is proposed to ensure we have the number of persons needed to adequately prepare and maintain the course for play each day. 

[GolfSpy AFG]

It's already been said, but in general economic phenomena like recession/inflation impact all industries pretty similarly.  Inflation essentially means your disposable income doesn't go as far as it used to, so you can't afford as much as you could have pre-inflation.  Golf will be impacted like anything else, but I do think the "COVID bump" is real and enduring...once markets eventually correct we'll still find the industry as a whole healthier than it was pre-COVID.  

[RickyBobby_PR]

16 hours ago, Middler said:

Recessions hit almost all businesses, including golf - nothing new this time. There are other factors, Covid lockdowns brought people in/back to golf and other outdoor activities, that was a big part of growth in the last two years. Prices will find a new equilibrium as always…this time isn’t fundamentally different.

This

[GolfSpy AFG]

5 minutes ago, Riverboat said:

Definitely a possibility, but I think this boom is destined to be much shorter, with smaller lasting results, than the tiger boom. I never underestimate the laziness of most people. Granted, you can ride a cart to play golf, but even that is much more exertion (not to mention more expensive) than the purely sedentary activities that many will return to. Playing even a relatively low exertion sport like golf is much tougher than sitting on a bar stool or seat in an arena or on a couch with buddies, watching others exert themselves and drinking. 

Just like with the tiger boom, I'll feel sorry for those who return to their past practices, shortening their lifespan and missing out on the satisfaction of actually doing something themselves. But I have to admit some part of me will be relieved that the courses are less crowded and prices better. I just hope the ones who quit are the ones who insist on sharing their music with everyone on the course. I won't miss them at all. 

Sure, I don't disagree that some who dabbled in the game likely won't become lifelong golfers, but there is also a strong possibility that we retain some, particularly at the junior levels which should be cause for some excitement.  I guess time will tell...

[RickyBobby_PR]

11 minutes ago, Getoffmylawn said:

Sure, I don't disagree that some who dabbled in the game likely won't become lifelong golfers, but there is also a strong possibility that we retain some, particularly at the junior levels which should be cause for some excitement.  I guess time will tell...

I think the junior level will be where the growth stays. With drive, chip and putt now along with first tee, things like top golf I see lots of younger kids at the range.

The juniors are getting into a lot of things these days, I’ve seen an “explosion” of juniors getting into powerlfiting at the early/pre teen age groups