Friday, September 19, 2008

Golfonomics: The ball game that became the richest sport on earth

Even in the turbocharged world of 21st-century sport, where footballers change hands for £30m, tennis stars can win £700,000 with a single shot, and Formula One is a billion-pound industry, it's no contest. How did a game originating in medieval Scotland become the most lucrative of them all? As the Ryder Cup tees off, Jonathan Brown takes stock of a global phenomenon

Friday, 19 September 2008

Golfers have long sought to explain exactly what it is about hitting a small ball around a field with a long stick that proves quite so compelling, why it arouses such strong passions. As far back as 1916, just two decades after the inaugural 18-hole regulation course opened in the United States, and as the game was poised on the brink of its first wave of popularity, it fell to the leader writers of the notoriously sober and high-minded New York Tribune to explain what all the fuss was about.

"Golf," thundered the newspaper that once claimed Karl Marx and Friedrich Engels as its European correspondents, "is, in part, a game; but only in part. It is also in part a religion, a fever, a vice, a mirage, a frenzy, a fear, an abscess, a joy, a thrill, a pest, a disease, an uplift, a brooding, a melancholy, a dream of yesterday, and a hope for tomorrow."

Nearly a century on, with the game enjoying near-total global sporting dominance, a new accolade must be added to this list: golf is also big, big business.

This weekend, the old and the new golfing worlds square up to do battle at Valhalla Golf Club, in Louisville, for the 37th Ryder Cup. Appropriately enough, the psychodramas enacted on the manicured greens of Kentucky by the game's most gilded stars – excluding sport's soon-to-be first billionaire Tiger Woods, who is still recovering from a mid-season knee operation – will be taking place just a decent drive away from Fort Knox.

Yet, in one of the game's many sublime contradictions, this, perhaps the most keenly contested event in golf's modern sporting calendar, is being fought out for nothing more than national pride and the honour of holding aloft the trophy named after a long-dead seed salesman from Walton-le-Dale, Lancashire, who enjoyed hitting a ball in his spare time.

This weekend, the Americans will be trying to stave off a fourth successive defeat at the hands of a foe they once vanquished with embarrassing regularity in an event that became a potent symbol of American sporting power in the post-war world. The serial failures of recent years have left some wondering why it is that the American team, despite boasting two of the world's top three richest sportsmen among its number – Woods and Phil Mickelson – appear to have lost their grip.

One suggestion is that without the allure of a multimillion dollar purse, the incentive is simply not there. Considering the depth of national pride, that seems an unlikely explanation. Yet few would argue that, for those intending to spend the next few days slumped before the action unfolding on Sky Sports or the Golf Channel, to understand what modern golf is really about it is necessary to appreciate the sheer scale of what one economist has already labelled Golfonomics.

So, while the Americans might no longer be able to field a team of golfers with the requisite putting and driving skills to outplay an equivalent number of Europeans over a three-day period, the game in the United States remains an economic behemoth that dwarfs its Old World rival. According to the most recent valuation, golf grosses an annual $76bn (£42bn) for the US economy, which means that it outstrips both the film and the recorded music industries as well as all other major spectator sports – baseball, basketball and American football – combined.

About two million people are employed directly in the game, working at one of the 16,000 18-hole courses, one of the 1,900 driving ranges, one of the 1,392 mini-golf courses, or in related industries. Each year, Americans reach into their pockets to spend $6.2bn on a golf-related product, whether it be a $45,000 set of personalised gold and platinum-plated Honma clubs, or just to buy a new set of Titleist Pro V1 golf balls. They fork out $860m on golf magazines and $65m on books telling them how to improve their game. The total spend equals $25 for every man, woman and child from West Quoddy Head to Amatignak Island.

The game's overall contribution to the larger economy, when the "multiplier effect" of wages in related industries (including those beyond the traditional "golf cluster" of tourism, real estate and media) are included, is of an all together different magnitude – weighing in at an estimated $195bn a year, a sum greater than the gross domestic product of a small European country such as the Czech Republic.

But the first study of its kind, released this week by the KPMG Golf Advisory Practice, suggests that Europe is narrowing the gap, not just on the course but in economic terms too. "While our report shows that golf in the region is still smaller than America, the game is booming here, especially golf tourism and real estate," the report's author, Andrea Sartori, said yesterday. "You can look at it from many different angles, but ultimately one finding stands out – that one person in every thousand in Europe is employed in the golf economy," he added.

While still only one-third the total scale of the US market, golf in the European zone – which now includes Africa and the Middle East as well – is now worth €53bn ($42bn) each year, powered in part by the phenomenal growth in the value of the golf real-estate market, which has seen revenue from on-course homes now outstripping that brought in by conventional green and membership fees by five to one. In 2006, a total of 18,000 new golf villas, apartments and houses were completed, mainly on the sun-blessed Mediterranean fringes. Such property enjoys a 30 per cent premium compared to homes with no direct access to the first tee, even amid the credit crunch. In addition, 160 new courses and 100 major expansion programmes were finished.

Overall, the number of European courses and players, still overwhelmingly drawn from the high income brackets, has doubled since 1985. The PGA European Tour, which now plays everywhere from Kazakhstan to Abu Dhabi, is continuing to conquer new territory and spread the golfing gospel.

According to Guy Kinnings, European managing director of golf for IMG (the leading sports management company, representing golfers such as Tiger Woods), the game is defying the current mood of economic gloom.

"The figures that are competed for, and the figures that are involved within the golf business, have grown hugely and certainly golf itself is probably as strong as it has ever been as a global property," he told the BBC Radio 4 documentary Putting for Profit, which sought to explain the rapacious growth of the golf money-making machine.

In 1988, Curtis Strange of the USA became the first golfer to win $1m in a season. In 2007, 158 players did that – such is golf's trickle-down affect from the very top players. Their wealth reflects the growing value of the sport. The reasons, Kinnings says, are various – but helping it merrily along is the much-vaunted "Tiger factor".

The phenomenal success of the 32-year-old one-man brand from Cypress, California, real name Eldrick Tont Woods, has brought unprecedented new interest in the game and helped to shake off the old image of middle-aged white men in plus fours and diamond-patterned tank-tops clinching deals over drinks at the 19th hole.

So pervasive is Tiger's appeal that in the USA, the television ratings for Padraig Harrington's recent victory in the PGA Championship were 55 per cent down on the previous year, when Woods won it. His no-show at Valhalla is already worrying advertisers and TV companies who spent millions bidding to secure the latest round of broadcast rights for the major tournaments.

Shaun McGuckian is the editor of GolfPunk magazine, a publication that quickly identified the game's changing demographic, with its penchant for "bunker babes" and features on playing golf in war zones. He believes golf has successfully transformed itself over the past 15 years, turning from an atrophied extension of the old-boy network, which often deliberately excluded potential new players, into a game that has begun to think and act like a multinational business.

"What has changed is the cost – that is the bottom line," McGuckian says. "What you had in the early 1990s was an expensive sport. Starting from scratch, there were membership fees at a club, and a signing-on fee, whatever that was for. Then you needed your kit, which isn't cheap, and then lessons to get up to a certain standard. This could all easily add up to £2,000 or £3,000. Now, we are looking at a much more competitive market where the cost of getting started is much, much lower."

As a result, while golf was once something you took up when the siren call of middle age could no longer be ignored, today players are as likely as not to pick up a putter in their early twenties or even younger (children of six play at some private schools in London).

Events such as the World Series of Golf – modelled on poker, whereby the winner is decided not by completing 18 holes in the lowest number of strokes, but by winning bets on each hole in much the same way as poker players do– has helped to transform the stuffy image. "So many people insisted they would never like it," McGuckian says, "but once they have tried it, there they are, down the range with bleeding hands and seven missed calls on their phone. Our touchstone has always been to demonstrate how much fun golf can be."

Another key to golf's success has been opening the sport to women – sometimes achieved only by prizing the fingers of old bufferdom off the clubhouse door through the courts.

But it has borne fruit. This year's Women's British Open at Sunningdale enjoyed prime-time television coverage and attracted 144 players from around the world, looking for a share of the £1m prize fund. Not that there is any shortage of famous female role models currently working on their handicaps – not least Hawaiian-born Michelle Wie, who has blazed a trail by playing alongside men in professional tournaments. Halle Berry is a devotee, as are Cameron Diaz and Jennifer Alba. Even Pamela Anderson has hosted her own "bikini golf" charity tournament.

Looking good on the course has, of course, become as important as perfecting your swing. Traditional clothes manufacturers such as Pringle are more than happy to cater for changing tastes. Young men can now model themselves on Justin Timberlake, himself a keen golfer, while sporting Puma military-style golf caps, skinny ties and the latest in trendy golf shoes and accessories. "It has been really important to the young people who have taken up the game not to look like a camel on the golf course," McGuckian says. "Who wants to spend £1,000 and then go out and look like the beige monster has just thrown up on you?"

But, as Europe expands, so the rest of the world is catching up fast. China, naturally enough, is leading the charge. Golf was officially scorned under Mao as bourgeois folly, but the Great Leader's successors – and, more importantly, the burgeoning middle classes they have created – are enjoying the first fruits of disposable income and growing leisure time and have taken to the game with typical zeal. Half a dozen Chinese golfers are now competing in the top flight. There are plans to build hundreds – possibly thousands – of golf courses in China over the next five years.

Taking pride of place just now is the Mission Hills complex in Shenzhen, near Hong Kong, where membership can set you back a staggering £187,000. It was opened in 1994 – 10 years after the first course opened in the country – and now boasts 12 layouts designed by the some of the world's greatest golfers, such as Jack Nicklaus, Greg Norman and this year's captain of the European Ryder Cup team, Nick Faldo. The resort styles itself as the centre, not just of Chinese golf, but of world golf, and is being marketed as a prime holiday destination.

And here rests the other central plank of the game's phenomenal expansion. It is estimated that there are up to 20 million global golf tourists currently lugging their clubs through airport check-ins around the world. Some destinations have transformed themselves off the back of the game. Take Myrtle Beach in South Carolina; this sleepy former railroad town, blessed with a benevolent climate, sees its permanent population of 30,000 souls swollen each year by 13.8 million visitors lured there by the balmy autumn days and the 100 golf courses.

It estimated that there are 35,000 golf courses worldwide, a figure that's growing all the time, and in some remarkable places. In Cambodia, a country that's striving to shed its "killing fields" and sex tourism image, is the Angkor Golf Resort, where players can pay up to $380 a day to stay at a luxury colonial-style hotel and fire balls through the indigenous coconut groves alongside golfers such as the King of Malaysia, a regular on the Faldo-designed 18-hole course. When the allure of golf palls, you can visit the 12th-century Angkor Wat temples a few miles away. Four more clubs are due to be completed by 2010. In a sign of just how much has changed in the region, one straddles the border with former enemy Vietnam.

But, in the global dash to scoop up the $1.3trn of sports tourism dollars, nowhere can match what's going on in the oil-rich kingdoms of the Arabian Gulf. In Dubai – which already hosts two big international tournaments – golf is generating profits at three to four times the rate in Europe and the United States. Tiger Woods is building his first course there for a reported $40m fee, a figure that shrewdly includes a share of the return on the 197 palaces, mansions and villas surrounding the $1bn project. The course, with its 30,000 imported trees and grass specially grown to survive the desert heat, will be the centrepiece of a huge theme-park complex (known as Dubailand) being built on a stretch of barren land flanking the city.

Woods is not the first major player to seek out the millions on offer to those chosen to design courses in the region. An 18-hole course designed by Colin Montgomerie was launched in 2006, and another by Ernie Els opened earlier this year. Greg Norman, Sergio Garcia and Vijay Singh are all working on courses scheduled to open within the next 12 months, and so is Pete Dye, one of the most influential of golf course architects.

Yet, for all the sunshine on offer in the Middle East, the real honeypot for serious golf travellers remains the home of the sport itself – Scotland. There is some evidence that a similar game was played in 11th-century China and in the Netherlands, but golf as we know it took shape from the days of Mary Queen of Scots onwards, on the weather-lashed fairways at Musselburgh and, of course, at St Andrews, where early players first negotiated the treacherously undulating terrain of the now fabled links.

The allure of playing golf in its homeland – and the money it will make – has been recognised by the American tycoon Donald Trump, a man whose extravagant comb-over hairstyle has proved particularly hazardous while posing for pictures in the stiff North Sea breezes at the site of his planned course at Balmedie in Aberdeenshire.

But Trump's plans for the "world's greatest" golfing complex, complete with 18-hole links course, academy and – of course – 950 lucrative timeshare flats, hotel and chalets, all set along a three-mile stretch of high dunes and scrubland, have ignited one of the most explosive rows to hit Scotland in recent times. The project's future hangs in the balance.

The billionaire, who was expected to close a deal on a $28m course in New Jersey this month, has been playing hardball with the Scottish planning authorities, who have been considering objections to his scheme raised by the RSPCA and the Ramblers Association, among others. A month-long planning inquiry is due to report at the end of October.

The Australian entrepreneur Brian Keating, who has created a new links course on the Mull of Kintrye at Machrihanish, is no stranger to environmental demands. After a successful career as a telecoms executive, he decided to create a new £30m course on the west coast of Scotland. He plans to fly in guests from Glasgow – 25 minutes away by seaplane – and is expecting strong interest from Scandinavian golfers whose own courses are snowbound from October to April and who might enjoy the experience of close-season play alongside seas warmed by the Gulf Stream.

Keating has been required to comply with strict rules in order to get the go-ahead, as the area is protected as a site of special scientific interest, or SSSI. He must add no seed or turf and must "mow" the fairways by natural means, which in this case means grazing sheep.

But for him, it is all worth it. "There are millions of people travelling the world looking to play interesting courses. We call it discovery golf. For many players outside the UK, a links course is an exciting place to play – they have never seen yellow grass, a course with no trees or buggies, or a course which is totally different between morning and afternoon. There are too many golf courses at the moment, but put it this way – the world has all the chardonnay it can drink, but nowhere near enough of the finest champagne."

Golf in numbers

1744: first golf club founded, in Scotland

$76bn: gross annual value of golf in the USA each year

$6.2bn: sum Americans spend on

golf products each year

158: number of male pro golfers to win $1m or more in 2007

$769m: Tiger Woods's earnings in 10 years to 2007, according to 'Golf Digest' magazine

160: new golf courses in Europe in 2006

$45,000: cost of the world's most expensive set of golf clubs, in gold and platinum, by Honma of Japan

16,000: 18-hole courses in the USA

€53bn: annual value of golf in Europe (including Africa and Middle East)

35,000: golf courses in the world

$6.5m: Vijay Singh's 2008 winnings, top of the US PGA money list

18,000: new golf villas and apartments built in Europe in 2006

£1m: prize fund at 2008 Ricoh Women's British Open


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