Golfers flocked back to tee boxes this spring and early summer, with U.S. courses enjoying a half-billion-dollar jump in revenue. Compared to 2019, rounds played in June were up 13.9%, and there are signs that the game is drawing in lots of newcomers under 17. That’s great for the sport, but it may be some time before the pro tours and gear makers see the benefit of the rebound.
“The explosion of golf since May, when most of the states opened up, has been extraordinary,” said Greg McLaughlin, CEO of the World Golf Foundation, an organization backed by seven international professional tours, including the PGA, LPGA and Masters Tournament. “We went through a period where January and February were tracking tremendously, year-over-year, then March and April dropped dramatically. With May and June rebounding we’re basically flat for the year.”
Rounds were up 15% on the year by the end of February, before the closure of golf in 16 states put the game down as much as 15% on the year at one point in April, according to data provided by McLaughlin’s group.
Statistics from a separate golf promotional organization, the National Golf Foundation, show courses themselves saw a $520 million revenue rebound this spring and early summer. U.S. golf courses generate about $34 billion in revenue from course operations in a typical year. The losses from course closures in the early spring totaled $1 billion to links operators, the NGF said.
Perhaps most encouraging, interest among young golfers is seeing a big uptick. A third golf supporting organization, the non-profit Youth on Course, says rounds played by children between ages 6 and 17 leapt almost 88%, to 56,191 in June, and is up year-to-date by 77% compared to 2019. There are signs newcomers are increasingly girls, compared to past trends, while non-whites made up about a quarter of new, young golfers too, according to a Youth on Course spokesperson.
A broadening player base portends well for the pro tours’ fan base in the long run, but it may be some time before the payoff comes. As Sportico reported last month, Fox handed its U.S. Open rights to NBCUniversal, along with $364 million to help pay the broadcast rights for the six-and-a-half years remaining on the U.S. Open contract. The network prefers to cut golf to save cash to support its NFL programming.
The golf-playing wave also may not be enough to help ball and club makers, at least in the eyes of Wall Street. Yesterday, Titleist maker Acushnet Holdings shed 6% from its stock price after announcing that a new driver, planned to launch in August, won’t be introduced until November because of supply-chain issues stemming from COVID-19. Analysts on the earnings call also seemed concerned with indications that new and returning golfers aren’t opening their wallets, buying used and discount gear rather than paying up for top-of-the-line equipment.
Acushnet CEO David Maher told analysts the historical connection between spending on equipment and rounds of golf played seems to be the same. NPD Group, which tracks consumer purchases, reported that golf equipment sales rose 51% by dollar volume in June compared to 2019. Acushnet’s presentation indicated its June sales rose about 25% over June 2019. Shares of Acushnet finished trading down $2.36, to $36.98, Wednesday.
That raises the pressure on Callaway Golf, which reports its earnings after the close of trading in New York today. Potentially working in Callaway’s favor: It has a habit of meeting or beating Wall Street analyst expectations. The company has missed earnings estimates only once in the past 12 quarters, according to data from Morningstar. Acushnet has missed estimates nine of the past 12 quarters, including the most recent period.
Callaway is expected to report earnings per share of three cents, according to data compiled by Koyfin, a stock market data website. That would represent a 92% drop compared to the same quarter last year—greater than Acushnet’s earnings drop of 90%—but meeting or missing investor expectations usually affects share prices more.
Near-term travails in equipment sales, which are more beholden to the drop in retail activity due to the pandemic, still shouldn’t take the shine off of strong golf-laying figures.
“The elite game, the PGA Tour, has played for eight weeks, and that’s probably given impetus for individuals to go out and try it too, not just core golfers but the more occasional golfer too,” said World Golf Foundation’s McLaughlin. “Disposable incomes may not be quite as generous as they had been,” he later added, but equipment sales have been “better than what was expected three months ago. That’s a positive thing.”