How will golf fare in the credit crunch?

Published 08/10/2008 21:20:31

Many sports will feel the pinch in the credit crunch, and golf is no exception. Golf is such a high-spend sport, even for amateur players, that it will surely be hit hard. Golf courses, equipment manufacturers and tournament organisers will all have to change their strategy or risk bankruptcy in the coming years.

Much of the success of the European tour hinges on cash injected from Leisurecorp - a Dubai-based company which has earmarked $10m for this season's Dubai World Championship in November. This has acted as something of a buffer for the tour but could be merely papering over the cracks - Dubai is in a unique situation economically, nowhere else in the world is such spending taking place.


Tour Events


So what about other sponsors on the tour? Many events on the European tour schedule are still looking for a sponsor. Most of these also take place in Europe - surely a sign that the tour is heavily dependent on Leisurecorp's millions.

PGA Tour events are already losing sponsors: "We had six to eight sponsors that went away abruptly, some who had been with us for years" said tournament director Ray Stosik. The general feeling is that whilst there is still money to spend, sponsors don't want to commit and are naturally playing things safe.

Things are even more grim on the LPGA tour - two events were cancelled even before the stock market crash: the Fields Open in Hawaii and the Ginn Tribute in South Carolina.

Many events are protected by long term contracts already signed with sponsors - things could look a whole lot different in 2010 when a lot of these expire.


Business Threats


Already there is news that Donald Trump's £1 billion golf resort in Scotland has been put on hold. The slowdown of the property market has meant such a venture simply isn't financially viable at the moment.

But it's not just big projects facing doom and gloom - even turf manufacturers are facing up to decreased demand .  Foul winter weather aside, golf courses simply cannot afford to pay for the services of groundsmen or replace the turf as often as in previous years. This vicious circle is completed when players feel the course is below standard and maybe even take their memberships elsewhere.

An industry has been built around selling second homes at golf resorts in places like Spain, Portugal and Dubai and that will dry up.” - Dr Andrea Sartori, golf economy mogul.


The Tiger Factor


A lot of money in golf can be attributed to the status of Tiger Woods - he's in an elite band of sportsmen that transcend their chosen sport and are recognised as global superstars. Woods earns more in endorsement revenue than the rest of the top five players in the world do total - over $100 million in 2008, that's not even taking into account prize money.


“The reason we want Tiger back is because he drives the game of golf"- Phil Mickelson, World number 3.


Without Woods, events struggle to sell tickets and TV companies struggle for viewers. His comeback in '09 will undoubtedly produce a spike in both - there will be tremendous interest to see how he fares. So this could cover up some of the potential lost revenue.



Brighter Outlook?


Some feel that golf will be able to ride out the global economic recession with minimal fuss: "Long term, sports is going to be a leading area for companies to invest their sponsorship or advertising dollars because people want to experience a sports event as it happens," said PGA of America CEO Joe Steranka.

"You look at golf, not just because we have a great fan base plus a 28-million-person participation base, we also have people who have a stronger emotional connection.

"I think golf will be one of the best genres in entertainment."


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