As I've done a few times previously, a few stories related to the business side of our game have hit simultaneously, so let's throw them all together and see if we can make any sense of it.
Third Party Aggregators - Adam Schupak takes an interesting look at the growth of third part retailers of tee times, principally industry leader Golf Now. Alas, it's in the dreaded digital magazine format, so I can't overwhelm you with poignant excerpts. Well, except for this one via Shack:
Multiple industry observers with knowledge of Golf Channel operations say GolfNow has become the network’s profit center.No one disputes that third party tee-time providers have created valuable tools, but the trend has become one of the most polarizing subjects in golf, a disruptive force blamed for negatively impacting the value proposition of a round of golf.
There's lots of MBA-speak to be found on this subject, notably that last bit above. Translating into colloquial English, negative impact on the value proposition of a round of golf means that they sell them too cheaply. But like many things, a value proposition is in the eye of the beholder, and I'm guessing that the actual players don't feel their VP has been negatively impacted...
Golf Now booked some 15 million rounds last year, a mere 5% of the 300 million rounds played at public courses last year, so the upside is readily apparent. And iif you find it strange that a golf network would be the industry leader, the No. 2 player in the industry is now the PGA Tour. Yeah, not sure I'd like that if I were toiling on tour, but we can agree it's fitting given the number of times I've compared them to No. 2....
The obvious comparison is to the travel industry, which share the defining attribute of perishable products that are worth zero if not consumed. Yet the golf industry has not been overtaken by online booking as have the airlines, which is attributed to the older demographic of golfers. Perhaps, though I'd bet there are other reasons as well...
But the next sentence in that excerpt above cites price erosion in the Dallas and Phoenix markets, and seems to want to, though it stops short of, laying the blame on Golf Now. I'm going to perform a public service and channel my inner Hayek (Friedrich, not Salma) and speculate that the price erosion was caused by supply exceeding demand.... I know, you can thank me later.
The third-party bookers can certainly help a struggling course fill its tee sheet, but they will also inevitably enhance the market efficiency due to the freer flow of pricing information. But none of these golf course are making thheir times available at the point of a gun, so the complaints seem whiny.
What seems to be the flash point of this whining are the so-called barter times. I don't fully understand the contractual arrangements, but Schupak's piece includes a reference to one course being a premium partner with Golf Now, receiving certain benefits in return for giving Golf Now two barter tee times that they can do with as they please. And a sidebar to the piece documents a lucky gent that paid $3.76 for his round of golf.
If this subject is of interest, it's worth listening to Jay Karen, who represents golf course owners, make a completely unconvincing case to Gary Williams here. As a bonus, Karen spouts lots of Millennial nonsense, for instance were you aware that Millennials require craft beer for their swing juice? But his case seems to rest on the premise that we can repeal the laws of economics and, well, good luck with that, Sir.
Topgolf Goes VR - From some of the press you'd think that Topgolf is the only growing business in the golf universe, pretty amusing considering that according to their CEO they're not even in the golf industry. But they're getting closer now for sure:
Topgolf has now entered the realm of virtual reality, and it has officially captured the world’s largest digital golf audience. The entertainment company, which attracted 8 million people to its 24 venues in 2015, has acquired World Golf Tour (WGT), a gaming company that has more than 14 million players across its online, social and mobile platforms.
“Scale in terms of aggregating audience matters to all of our potential partners,” said Topgolf Co-Chairman Erik Anderson. “We can now engage golfers across worlds, both virtual and real.”
But Topgolf’s acquisition of WGT is about more than capturing a large audience -- the Topgolf experience will soon become enhanced with WGT’s technology. Right now, games are played in dartboard style, but with WGT’s resources, golfers will soon be able to “play” an array of golf courses from their favorite Topgolf venue. Bandon Dunes, Shadow Creek, Chambers Bay and other tracks could appear on the screens at each Topgolf bay, and instead of merely trying to hit targets, golfers could virtually feel what it’d be like to approach the 7th green at Pebble Beach.
OK, I get it, but not without reservation. Topgolf is in the business of selling food and beverage, and the golf is just sort of a delivery system. It would seem to make sense to keep it simple, one guy or gal shooting at one target, that sort of thing. But maybe their CEO can explain it to me:
“Topgolf has always signified so much more than a golf entertainment venue,” said Anderson. “We envision ourselves as a global sports lifestyle brand where people go to have the best times of their lives with golfing, gaming, food and beverage, music, apparel, digital content and much more.”
Why didn't you say so sooner? Now I see the light....
Wounded Warriors - Professional golf has strongly embraced the military, including close ties to The Wounded Warrior Project. Shack has some good background here, including the tie-in to the PGA Tour's Birdies for the Brave and a major contribution from Jordan Spieth.
No doubt this support of veteran's groups such as WWP is genuine, but this charitable giving business isn't as easy as it seems. The N. Y. Times commits an actual act of journalism with this report:
But in its swift rise, it has also embraced aggressive styles of fund-raising, marketing andpersonnel management that have many current and former employees questioning whether it has drifted from its mission.
It has spent millions a year on travel, dinners, hotels and conferences that often seemed more lavish than appropriate, more than four dozen current and former employees said in interviews. Former workers recounted buying business-class seats and regularly jetting around the country for minor meetings, or staying in $500-per-night hotel rooms.
The organization has also spent hundreds of thousands of dollars in recent years on public relations and lobbying campaigns to deflect criticism of its spending and to fight legislative efforts to restrict how much nonprofits spend on overhead.
Here's some quantification of the issues:
About 40 percent of the organization’s donations in 2014 were spent on its overhead, or about $124 million, according to the charity-rating group Charity Navigator. While that percentage, which includes administrative expenses and marketing costs, is not as much as for some groups, it is far more than for many veterans charities, including the Semper Fi Fund, a wounded-veterans group that spent about 8 percent of donations on overhead. As a result, some philanthropic watchdog groups have criticized the Wounded Warrior Project for spending too heavily on itself.
I take a modest amount of pride in that I've been giving for several years to the Semper Fi Fund. It's a difficult, time-consuming job to scrutinize the practices of your business partners, and seems especially inappropriate when applied to charities. But the perverse incentives are readily apparent, and we'll see if the Tour takes action to distance themselves.
But this is no doubt a sin of omission at worst. There is an alleged charity with which the TTour is associated, one that serves as little more than a political slush fun and holding pen for political operatives. That could ultimately blow up in Commissioner Ratched's face, though more than likely I don't have that kind of luck.
If you're unclear as to my refernce, just think back to last week's Tour event. That sound you hear is a lightbulb appearing over certain heads...