The Wall Street Journal-20080119-WEEKEND JOURNAL- Sports -- Golf Journal- The Patient Is Stable- Pessimism aside- the PGA Show finds the game in decent health

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WEEKEND JOURNAL; Sports -- Golf Journal: The Patient Is Stable; Pessimism aside, the PGA Show finds the game in decent health

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Orlando, Fla. -- It's possible, attending the PGA Merchandise Show here year after year, to come away with negative vibes about the economic health of the golf industry. As the largest annual gathering of people in the golf business (club pros, retailers and manufacturers primarily, but not consumers), the show is naturally also the largest gathering of golf hand-wringers.

"Golf rounds are flat!" is one tranche of worry usually addressed each year in a smorgasbord of symposia. Among the standard answers offered: better teaching, better clubs, better fitting, better access and faster play.

Another source of pessimism is the statistics showing that golf newcomers drop out of the game as fast as they sign up. And then there's the emotional impact in recent years of lackluster show attendance and the absence of some of the industry's highest-profile manufacturers. Titleist hasn't shown up since 2002, TaylorMade's equipment division (although not its Adidas apparel sibling) stayed home again this year and Ping, after five years of nonattendance, came this time only as part of a PGA of America initiative on custom club fitting.

Put it all together and it's no wonder the bars are full nightly. (People don't drink at other trade shows, do they?)

But dig beneath the numbers and an alternative version emerges: golf as reasonably healthy and surprisingly stable. Golf's economic growth overall was 4.1% between 2000 and 2005. That might not be the kind of sexy industry Wall Street loves, but for everyday golfers it's not the worst state of affairs -- nor is it for most of the people who make their living from the game.

"At least golf's nothing like tennis, which went off the cliff in the 1980s," said Mark King, chief executive of TaylorMade-Adidas, one of the top two U.S. equipment makers (with Callaway). Nor is it like autos or steel. When I asked Mr. King on Thursday what his view of the golf business was, he answered, "Fantastic!" and appeared to mean it.

"Golf is growing. We have the world's most popular athlete in Tiger Woods. Interest has never been higher. And other industries are increasingly using golf to drive their own business," he said, citing real estate and tourism.

Mr. King, a scratch golfer who has been with TaylorMade-Adidas for more than 25 years, was holding court from the large, poshly outfitted Adidas booth on the exhibition-hall floor. "I love the PGA Show," he said, "but for TaylorMade [the company's golf-equipment side], it really didn't make sense to keep spending a couple of million dollars for a big booth anymore. It does for Adidas. Look around, they're writing apparel orders like crazy here. But for equipment, we took a close look and realized we were better off spending those same dollars elsewhere."

I heard similar explanations from other equipment companies, even some that were at the show this year. Pete Samuels, director of communications at Ping, said his company figured that it got more bang for the buck bringing in customers to tour its Phoenix factory than in staffing a big booth at the show. He said Ping was happy to be back at the show this year, albeit in a limited capacity, as way of supporting the industry and of renewing contacts.

New business models are also behind the change. Retail stores and golf-course pro shops no longer buy a season's worth of inventory in one shot, as in the old days. Most of them now buy only a few clubs for display and demo purposes, custom-fit their customers and then order the actual clubs from the factory, set by set.

So why the undercurrent of pessimism about the golf industry? Joe Steranka, chief executive of the PGA of America, which presents the show, suggests that the industry's outlook became a bit skewed starting in the 1990s. Many well-known golf businesses were gobbled up by investor-owned companies, which focused on short-term earnings.

"You can't grow an avid golfer in a quarter," he said. "For a while there, I think some in the industry lost sight of what the game needed for its long-term good."

Around 90% of all golf facilities are independently owned, he pointed out. In other words, golf is primarily an entrepreneurial industry -- and it's not a particularly volatile one. A golf course that's been around for 100 years, he noted, has in all likelihood supported 50 or 60 jobs for 100 years. For any business, that's quite an accomplishment.

"Some of our members have been in business for 50 years or longer," Mr. Steranka said. "They've had some up and down years, but generally they've made a nice life for themselves and earned a good living." Poorly paid young assistant pros may quarrel with that last point, but at least they get to spend a lot of time outdoors.

On Thursday the PGA of America, in concert with a number of other major golf organizations (including the PGA Tour), announced the results of a new golf economic-impact study. Unlike previous studies, this one calculated both the direct and indirect impact of golf: what players and courses spend on clubs, balls, fees, mowers, fertilizer, golf travel and the like, but also the number of indirect dollars and jobs required to support the people who work directly in the game.

The two numbers that jump out are the total economic value of golf in the economy -- $195 billion in 2005 -- and the number of jobs that the game generates: about two million.

The possible looming recession may have only a minor effect on golf, argues Mr. King at TaylorMade. For one thing, more and more baby boomers are entering their prime golf-playing years. "The fact is that when people can't afford bigger vacations or fancier cars, they still make smaller purchases for recreation," he said. "Sometimes it means they even play more golf than they did when times were better."

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