Ups and downs par for the course for golf industry

A golfer at the first tee of the DuPont Country Club

By Jim Finnegan
Special to Delaware Business Times

While the golf industry (both nationally and here in Delaware) continues to show signs it may have weathered the economic storm that rolled in around 2007, the landscape looks a lot different now than over a decade ago – when Tiger’s star illuminated the sport, and new golf courses were being built at a record pace.

Like many businesses since the recession, golf has been impacted by several external events: less disposable income for leisure activities, less time to play the game (especially a problem for attracting millennials to the sport), less television excitement and media buzz to entice new players, and fewer people overall playing the game.

All those losses have resulted in more golf-course closings and “for sale” signs on area fairways.

Golf in Delaware has not been immune to these factors, as once-thriving courses throughout the state have closed in recent years, including Brandywine Country Club (Wilmington), Three Little Bakers (Pike Creek), Hercules Country Club (aka Delaware National, Wilmington), Old Landing (Rehoboth Beach, and Marsh Island (Lewes).

The new reality for many golf courses is the greater potential for green being generated by the land underneath the courses than the players on it, which is why most of these now-defunct golf properties are in various stages of real estate development, zoning approval or litigation to change the zoning.

Cavaliers Country Club (Newark) is continuing to operate through the end of 2017 as a golf club, but a proposal in the works to turn the course into real estate seems imminent (Pennsylvania-based Carlino Commercial Development has put forth a plan for a mixed-use development).

Nearby Newark Country Club recently flirted with selling its property for development as well, but zoning opposition from the town council made that option more difficult, and they have now decided to re-commit to their golfing operations.

According to Bill Barrow, the Executive Director of the Delaware State Golf Association (DSGA), “when you have 100-plus contiguous acres of land, like many golf courses, these properties become prized possessions for developers and real estate professionals, especially in northern Delaware.”

“When the demand for golf went down after 2007, the focus turned to other ways to make money and selling became a more attractive alternative,” Barrow added.

Even the grand dame of Delaware golf is up for sale – the venerable DuPont Country Club (Wilmington). The nearly century-old landmark, which has hosted many prestigious national golf events through the decades, was officially put up for sale in February. But the good news for golf enthusiasts is that the sale is contingent on the new owner continuing to operate the property as a golf club.

According to DuPont spokesman Gregg Schmidt, “leaving the hospitality business was the right path for the company, our employees, members and customers.” DuPont finalized a sale of its Hotel du Pont property earlier this year in keeping with that strategy. Despite the pending sale, the organization is still committed to the property as a golf course.

“We recognize the importance of the club to the community and have made maintaining the property as a club a requirement,” Schmidt noted. “We expect that the DuPont name will remain with the property, and that any potential buyer will further enhance the offerings of the club.”

Despite the doom-and-gloom picture these closures and sales seem to paint, what the golf industry has been going through is par for the course, according to Greg Nathan, Chief Business Officer of the National Golf Foundation (NGF).

Overgrown section of the Delaware National Country Club, formerly owned by Hercules

“The cumulative 6 percent reduction in national supply (golf course closures) during the past decade pales in comparison with the 44 percent growth in new courses during the 20 years prior to the start of the contraction in 2006,” Nathan noted.

Likewise, the NGF’s data for the state of Delaware reflects much better numbers here than for the rest of the country (during that same span as many new courses were built as those that were closed, while nationally most states lost more courses than they built).

The trend is also reflective of other industries that took a hit during the recession, and with the inevitable downsizing and correction that took place, those that survived were leaner and more profitable. The auto industry closed hundreds of dealerships nationwide a decade ago, and the contracted industry is one of the most economically resurgent business sectors. (A similar parallel can be drawn within most segments of the housing industry).

“Certainly, fewer golf courses tends to benefit the courses that remain,” acknowledged Jeff Robinson, Director of Hospitality Operations for Forewinds Hospitality (his company operates two golf courses in state for the Division of Parks and Recreation – Deerfield and Garrisons Lake Golf Club).

“Some more streamlining of golf course inventory may be required for further sustainable growth. But what we as operators do in the pro shops, on the lesson tee, on the tee sheet, and in our dining venues are equally impactful on our success,” he added.

The DSGA’s Barrow has witnessed the boom in golf as well as its inevitable contraction since 2008-2009, and now his organization’s membership numbers have seen modest gains and stabilization, as well as an increase in the amount of play by the group’s members.

“If April is any indicator, our rounds played and posted which we can track through our system, are up 17 percent over last year,” Barrow noted.

Perhaps the most positive indicator for golf in Delaware is there are still new courses being built, as evidenced by the proposed expansion of the Plantation Lakes Golf and Country Club in Millsboro. The plans for an additional nine-hole layout and a new clubhouse to accompany the existing nine-hole course are currently moving through the final design phase.

“Clearly buyers are attracted to golf course properties, and consider it a vibrant part of their lifestyle, whether they are golfers or not,” commented Cindy McAuliffe, the Director of Field Operations for Lennar Homes, the real estate developer that oversees the facility. With plans for upwards of 2,000 new homes throughout the golf course community, McAuliffe agrees that things there are “going very well.”

“People want to play golf ““ it’s undeniable,” Forewind’s Robinson admits. “But the cost and time required, unsurpassed roadblocks as recently as a season or two ago, are being overcome by those courses and management teams willing to invest the time and energy to do so.”