It seems as though there's been a good bit of bad news for the golf industry of late.  Nike is leaving the equipment sector, Golfsmith is talking bankruptcy and the reports of course closures continues, seemingly at a greater rate.  What does all this mean?  A recent article in the Washington Post suggests that golf is dying, despite its much heralded return to the Olympics this week.  It depends who you talk to.
Just yesterday, I visited my friends at Izett Golf, a custom clubmaker and fitter in Ardmore, PA.  While Nike's troubles may have been tied to the Tiger Woods phenomenon and the casual golfer, the folks at Izett indicate that their customers (avid, serious golfers) are as enthusiastic as ever.  Golfsmith's problems are apparently the result of unfavorable retail leases, which are not uncommon in the age of internet shopping as the face of retail evolves.  Most importantly, we continue to see reports of golf course and club closures as the market continues its correction, and some member-owned clubs either have or are considering a transfer to investor ownership.  It's not the serious golfers we need to worry about.  Casual golfers represent the industry's profit.
As suggested in the article, some see golf as "aspirational" (Donald Trump) and not "populist".  As a result the game isn't sustaining participation, especially among casual and new golfers, that represent the difference between growth and continued decline.  All of us in the golf course industry are trying to predict where the balance of supply and demand will occur.  Does the industry need to take a longer look at itself?  
I wrote a few months ago that my 22 year old, athletic and fun-loving daughter has no interest.  Just the other day, a fellow member at my club encountered me to advise and police my partner in a casual club event that he needed to tuck in his shirttail and possibly change his shorts.  Are the time-honored traditions of our grand old game killing it?  The last thing I want to be is part of the member police.
Some clubs now have music piped into the practice area and in golf carts, others have food and beverage service on the range and in 2014 the Wall Street Journal told of two venerable and prestigious clubs in the northeastern US that now allow push carts, once shunned at private clubs and considered to be only for the "muni" crowd.
Traditions are great, but if golf is to grow, some traditions may need to be compromised in the interest of the economic health of the game.  
Last evening, I embarked on an evening nine-holes and decided to use my 1982 vintage golf clubs.  All you need to know about how golf has changed is to go play with a persimmon/steel driver, blade irons and a putter with no perimeter weighting.  Equipment, if nothing else has made golf easier and targeted the masses.  If the rest of the game doesn't evolve with it, the advances in equipment and increased cost of courses and maintenance have been for naught. It's not your father's golf anymore.
Washington Post Article
Having been privileged to participate in quite a few golf property sale transactions as a broker, among the things I've learned is that getting to the finish line can sometimes be an ordeal.  How can this be avoided?
In some cases it can't.  In many others, there are simply issues that go unrecognized or unattended until closing, when a 30 minute session can turn into an all day panic fest.
Many golf properties today have debt levels at or approaching the value or sale price of the property, and especially when combined with closing costs, sometimes the seller isn't prepared to close.  In a buyer's market this can be a challenge.  
Golf courses are complex properties, and for a sale to progress smoothly both buyer and seller need to be prepared.  For the seller, this means having all permits and licenses in order for a smooth transfer and dealing with any loan payout or possible shortfall early on.  Comprehensive equipment schedules, inventory and memberhsip information (if applicable) are essential to ensure that the buyer knows what is being purchased.  It's difficult at best to predict a lender's appetite for discounting the payoff of a loan, and often the strategy is to wait until the last minute to accomplish this goal.  However, alternative sloutions should be considered and planned for so that the deal can close.  
An organized seller, possibly with the assistance of a broker will use checklists to ensure that each of the critical components has been addressed and all the necessary documentation is available.  This streamlines the process significantly.  Golf Property Analysts employs an Advance Preparation Checklist that we use with each of our sellers to ensure that all appropriate and relevant information has been requested and compiled.
Closings are typically handled by lawyers and title agents.  They can make mistakes.  I've seen one lawyer (for the bank) actually bring the wrong file to closing and then learn that the bank had modified the terms of an assumption to something unsatisfactory to the buyer.  Documents need to be  distributed and reviewed PRIOR to closing and disbursements ready to go.
Mandatory membership is a sticky issue.  Since many golf amenitized communities age quickly (people buy when they're older), they often wish to leave the club as their health precludes golf, tennis and other activities. Accordingly, many communities have established mandatory membership policies which are deisgned to preserve the health of the club, often after many of the residents have already joined with no obligation to continue membership for an extended period of time.
An interesting case in South Carolina (Callawassie Island Club) is making its way through the court system now with members wanting to resign club membership currently holding the upper hand based on the latest court ruling. This will be an interesting one to watch as more and more clubs age and encounter similar challenges.  Some of the questions to ponder include the impact on the club's value and resulting tax assessment, how the club rejuvenates membership from outside the community (if necessary) and the impact on surrounding property values of the changing economics of the club.  The Callawassie case is profiled in the article from The Island Packet linked below.
In another case where GPA is serving as an expert witness, an investor-owned club has been forced into bankruptcy, partially due to a member enforced restriction that precludes the club from hosting functions and events not sponsored by members.  This is an issue for both member-owned, 501-C3 not-for-profit clubs which are required to minimize outside revenues to preserve their tax exempt status as well as investor-owned clubs who may have a contractual obligation to members precluding the marketing of the club for non-member sponsored, outside events.
Callawassie Island Article
GPA has recently been retained for the following assignments:
  • (MD) - Appraisal of private club in connection with pipeline easement
  • (PA) - Private Club market, facilities and cash flow analyses for the purpose of long range planning
  • (PA) - Appraisal of Daily Fee Course for ad valorem tax assessment appeal
  • (Mid-Atlantic) - Consulting with private club member group on club options for possible transfer of ownership
  • (CA) - Appraisal of Private Club for bankruptcy matter
  • (GA) - Appraisal of daily-fee golf course for possible disposition.
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