Wimbledon and the World Cup are over, now the sporting spotlight switches to golf. The 147thopen championship runs from 19 to 22 July at Carnoustie in Scotland, reputedly one of the game’s toughest courses.
Tiger Woods will be there, playing in his first open championship since 2015 after recovering from back surgery. In 2007, Jack Nicklaus said: “I’ve always regarded Carnoustie as the hardest of all the championship venues.”
But while fans will lap up the action on the course, others may well ponder the business of golf, and even think about investing in golf.
Increasingly popular investment
Until recently, the simplest way to do this was to trade the shares of , the sports clothing and equipment group. True, Nike meets the needs of people engaged in many different sports, but its golf equipment division was world-renowned, not least as a result of its association with stars including Rory McIlroy and Michelle Wie.
However, it announced a pull-out from golf equipment two years ago, although it continues to make footwear and apparel for golfers.
Demand from private investors for both championship and non-championship courses was robust, said Savills, adding: “The scarcity of high-end stock on the market combined with the weakening of the pound since the EU referendum has further boosted demand from overseas investors for ‘middle market’ golf course hotels.”
The mention of hotels brings us to a key feature of the economics of investing in golf. The courses themselves, other than the very best-known, are rarely very profitable. Green fees are under constant downward pressure, not least because there are more than 2,500 courses in the UK, of which about 540 are in Scotland.
In England alone, about 750,000 people are members of 19,000 clubs.
Trump accounts in the rough
In other words, a course that puts up fees or membership subscriptions is likely to find its customers going elsewhere. This is not a climate conducive to big profit margins.
Packaged up with a hotel or holiday village, however, a golf course becomes a more attractive asset. It enhances the overall appeal of the venue, provides an additional income stream and encourages guests to stay on site rather than spend their money in a nearby town or other destination.
Perhaps unsurprisingly it has been estimated that golf courses cover at least 0.5% of the land area of Britain. Figures such as this make a golf course a potentially attractive property play for investors – provided they can navigate their way round the UK’s tough laws on change of use for land.
Finally, no discussion of the business of golf would be complete without a mention of the world’s best-known golf-course owner, President Donald Trump. On 13 July, Bloomberg reported that his Turnberry course in Britain lost $36.1 million in 2016.