Tee-Off Times_2011_MarApr

Page 11

March/April 2011

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Walmarts of Golf By Tom Schwark, owner of Sycamore Hills Golf Course in Macomb and chair of the MGCOA Government Affairs Committee

Walmart always has a hard time when they try to open a new store, especially when it is in a new community. Their prices are so low that they end up putting many small local retailers out of business. The result is that local retailers try to stop a Walmart from opening in their community. Imagine the outcry from golf course owners if there was a golf Walmart that could come into a community and underprice all the local golf courses and put them out of business. It would be far worse than competing against municipal golf courses. Fortunately for our industry, no one has been able to figure out a way to build a good golf course, cheaply, and undercut everybody else in price, while still remaining profitable. However, that hasn’t stopped some golf course owners from trying to be golf’s Walmart. The problem for them is that they cannot reduce their cost enough to maintain their margins, or the quality of their golf course. Costs of fuel, power, fertilizer, and chemicals continue to rise year after year, yet some golf course owners continue to lower their prices to try to increase revenue. It’s a recipe of madness and failure. I’ve seen owner after owner drop their green fees and initially experience an increase in revenue, only to find revenues drop even more in the long run. Why? Nearby golf courses will drop their price to win back the golfers they lost, and the only winners are the golfers. All the golf course owners lose. Once prices are dropped, it is even harder to raise them again. I’m cautiously optimistic about Michigan golf this year. Instead of layoffs and losses in the auto industry, we are seeing profits and bonuses. Tens of thousands of employees for GM and Ford will be getting bonuses of $4300 and $5000 respectively in March and April which will result in hundreds of millions of dollars being added to the Michigan economy. This will have a ripple effect in our state which will give a boost to all businesses including golf courses. However, I remain fearful of price erosion. If our industry is to remain viable, we need to stop cutting prices. Golf has certainly become affordable and play isn’t going to increase just because it costs a buck less. There are different levels of golf courses in terms of quality and conditions, and those courses will have different levels of pricing. However, there are comparable courses in most areas and to be competitive, those courses must have comparable pricing. It is time now to stop this Walmart mentality with our green fees and begin the long road back to economic health for our industry.

Legislative Bulletin


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