Where is the Cash Flow in #Golf?

Associations

 Associations such as the USGA, Golf Course Superintendents Association of America and the PGA of America update members on new golf rules, along with providing job and retirement benefits, certifications and other services. The rules can be serious or, to observers, quizzical. A new rule coming courtesy of the USGA and the Royal & Ancient Golf Club in St. Andrews, Scotland, bans players from anchoring a putter to the belly, chest or any other part of the body. Anchoring, the governing bodies say, may give some players an advantage and also threatens to supplant traditional strokes. The ban is set for Jan. 1, 2016; it may be delayed for amateurs until 2024. Revenue from professional associations was $554 million in 2011, up from $464 million in 2005, according to SRI.

Revenue of Professional Golf Associations: $554 million

Endorsements

Big-name golfers rake in vast sums from licensing fees on such things as video games and clothing. The really big cash comes from corporate endorsements and bonuses. Phil Mickelson brought in about $45.3 million in 2012 and Arnold Palmer $36 million in endorsements and licensing fees, according to Golf Digest. Tiger Woods (at far right) lost a number of endorsements following his 2009 scandal but came back in 2012 with a total of $86.1 million. All told, golfers received $320 million in endorsements in 2011, the latest data available, up from $265 million in 2005.

Endorsements: $320 million

Golfing for a Cause

Tiger Woods’s World Challenge golf tournament, to be held in December at the Sherwood Country Club in Thousand Oaks, California, has not yet announced a 2013 sponsor. In the past, when companies such as Chevron sponsored the tournament, the proceeds were used for education and college scholarships. In many tournaments around the country, golfers pay fees to play in fundraising tournaments, and the net proceeds are passed on to the charity. In 2011, about 143,000 events were attended by 12 million people and generated $3.9 billion, according to the National Golf Foundation.

Money Raised for Charity: $3.9 billion

Traveling the Greens

Traveling is a way of life for many casual golfers who spend vacations attending major tournaments at famous courses such as Pebble Beach Golf Links, TPC Sawgrass and Bethpage Black. At Pebble Beach, the views and the greens are awe-inspiring, and so is the expense. Suites at the Lodge at Pebble Beach run $2,000 per night. Golfers made more than 155 million golf-related trips in 2011, says SRI, spending an average of $177 per person on such things as lodging and car rentals. The result: Golf travel accounted for $20.6 billion in sales in 2011, up from $18 billion in 2005.

Golf Tourism: $20.6 billion

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First published in Bloomberg

Show me the Money in golf

Golf Clubs

Americans spent $3.5 billion on golf clubs, balls and bags in 2011, according to SRI. Phil Mickelson won this year's British Open playing with Callaway golf clubs, among others, including the Callaway X Hot 3Deep Fairway Wood ($180) and Callaway Hex Chrome balls ($30 for a pack of 12). Callaway, of course, is endorsed by Mickelson. Extremely wealthy and status-conscious golfers could spring for the Five Stars, made by Honma, a Japanese club manufacturer that makes its 14-piece set of custom clubs from platinum and gold, for $32,000.

Golf Equipment: $3.5 billion

Golf Carts

How would you like a golf cart that skims across water and travels at up to 50 miles per hour, carrying four passengers and two golf bags? The space-age hovercraft golf cart makes its debut July 27 at the Windy Knoll Golf Club in Springfield, Ohio. Originally created as a promotional tool for champion Bubba Watson, course officials at Windy Knoll bought two of the carts at $58,000 each. During this year's British Open, Mercedes released a concept for its own futuristic cart. This one is operated with a joystick and has solar panels on the roof to charge the battery (and an iPhone docking station, of course). High-tech golf carts may be just what the golf cart business needs, after suffering a 29 percent decline in sales during the recession. In 2012, revenue started to rebound, with sales up 6.4 percent, to $625.2 million, according to market researcher IBISWorld.

Sales of Golf Carts: $625.2 million

Green Fees

The grass had better be greener at the Shadow Creek golf course in Nevada. The course, designed by Tom Fazio and built by Steve Wynn, known for high-end casinos such as the Bellagio in Las Vegas, has greens fees of about $500, according to Golf.com. That price, the highest in the nation, includes limousine transport to and from the course as well as your personal caddy. Such expenses, along with member dues, money spent on food and beverages and golf lessons, are big drivers of the golf economy. The country’s 15,751 golf courses, 1,000 stand-alone ranges, 1,366 miniature-golf facilities and 415 golf schools generated $30 billion in revenue in 2011, according to SRI.

Golf Operation Revenues: $30 billion

Tournaments

If you want to watch the Masters Tournament in person next year, start saving. This year, tickets topped out at $4,486 for all four days of the contest. A one-day pass, depending on the day, ran $1,215 to $1,786. The Super Bowl, by contrast, costs about $1,210, according to TiqIQ, a ticket seller. Once you're in, things are considerably cheaper. A pimento cheese sandwich ran $1.50, and a beer was $3. Major golf tournaments, run by associations such as the PGA of America, the PGA Tour, the United States Golf Association (USGA) and the Ladies Professional Golf Association (LPGA) generated $1.2 billion in 2011. That includes fees generated by selling broadcast rights to tournaments, corporate sponsorships of events, spectator ticket sales and merchandise, according to SRI.

Tournament Costs: $1.2 billion

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First published in Bloomberg

How big is the golfing economy?

The Greens Economy

Golf remains a big moneymaker. Some 26 million U.S. golfers helped the industry generate $69 billion in revenue in 2011, according to the latest data from market researcher SRI International. While that's down from $76 billion in a 2005 SRI study, it tops revenue from such professional spectator sports as baseball, basketball, football and hockey combined, according to the Census Bureau. Add in the spillover effect on industries such as tourism, and the golf economy expands to $177 billion. So before watching British Open replays/putting in your living room/snorting derisively, take a moment to marvel at the greens economy.

The Golf Economy: $69 billion

The Fairway

The U.S. has nearly 16,000 private and public courses, according to the National Golf Foundation. One of the showiest and most expensive to construct was Los Angeles’s Trump National Golf Club, where visitors to the pro shop can buy 1.7 fluid ounces of Donald J. Trump's Success Cologne for $60. The course was designed in 2002 by Pete Dye (whose "ability to combine physical beauty with severe punishment earned him the nickname Marquis de Sod," according to time.com) and cost $264 million, according to Trump National. In 2011, SRI says, more than 75 construction projects were under way, contributing $515.8 million to the economy, and nearly $1.6 billion in investments in existing courses.

Course Construction and Investments: $2.07 billion

Greens Homes

Many golf courses are designed with homes right off the greens. Since the housing bubble burst, more than 500 courses have closed as revenue from home sales and residents dried up. Now there are signs of a resurgence. Steven Ekovich, a managing director at Marcus & Millichap Real Estate Investment Services, says demand for golf homes is rising to the point that developers are reducing course sizes and building more homes on the remaining land. SRI's Jennifer Ozawa says golf residential construction, which was $3.1 billion in 2011, continues to increase. It tracks new U.S. home construction, she says, which was up 20.5 percent in June compared to a year ago. In the aggregate, SRI estimates buyers in 2011 paid a premium of $1.6 billion over comparable housing for the benefit of living by the links.

Golf Real Estate Construction and Sales: $4.7 billion

Before Tee-Off

Players spend a lot of money on golf clothing, bags, DVDs and other golf paraphernalia (fancy hitting a Jetstreamer Exploding Golf Ball, for $4?). In 2011, Americans spent $2.1 billion on golf supplies. Of this, $1.6 billion went to apparel, especially for such brands as Greg Norman Collection and Tuttle Golf. While a good golf bag can be had for as little as $30 at golfsmith.com, the world's most expensive golf bag is the Louis Vuitton Damier Geant Golf Bag, according to most-expensive.com, and costs more than $9,000. Presumably it's carried by a caddy while its owner walks the greens in $1,500 custom golf shoes.

Golf Clothing and Accessories: $2.1 billion

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First published in Bllomberg.com