Money woes take toll on golf courses

There’s no escaping a rough economy, even on a golf course.

Faced with declining memberships and rounds of play, golf clubs and public courses are cutting staff and their hours of operation.

In September, coastal Georgia’s exclusive Sea Island, once called the best golf resort in the nation by Golf Digest, laid off 500 employees.

Last week, Lt. Gov Casey Cagle told a group of local mayors “the state of Georgia isn’t going to be in the golf business and the hotel business much longer.” Some of the state’s course will be privatized and others will be sold, Cagle said.

If the economy gets worse, some courses may have to close permanently, industry experts warn.

“In the depression of the 1930s, 30 percent of the nation’s golf courses closed,” said Whitney Crouse, Chief Executive Officer of Affiniti Golf Partners Inc. “We have a bunch teetering but they haven’t closed yet.”

Cherokee Run Country Club in Conyers filed for bankruptcy on Tuesday. According to federal court documents, the club owes more than $2.9 million to various creditors.

Gold Creek, a 354-acre golf and tennis facility in Dawsonville, shut down in August after the company that owned it went bankrupt.

The problems extend to the residential golf communities. Last May, Newton County filed tax 34 liens against Golfside Development Group, the company that developed Covington Place, a residential community wrapped around Indian Creek Golf Course in Covington. Records show that Newton County filed liens in May against 34 residential lots for unpaid taxes.

Bryan Raines, Indian Creek’s general manager said he wasn’t aware of the liens. “It’s been pretty ugly in the golf business,” said Raines. “There’s no serious trouble [at Indian Creek], but we’re definitely down.” Overall revenues for the golf club and related housing construction has dropped roughly 20 percent since July, Raines said.

Memberships are steady, Raines said. But the gain of 30 new members in the first half of 2008 shrunk in the second half when 16 members quit and five others were put on list of financial inactive members.

Affiniti’s Crouse said the current financial threats facing golf course developments in Georgia were, in some respects, inevitable.

“It’s a result of all this overbuilding, a byproduct of the [golf construction industry’s] irrational exuberance in the 1990s and early 2000s,” Crouse said.

Since 1990, there have been 150 golf courses built in Atlanta, Crouse said.

Industry experts say the golf courses most endangered by a free-falling economy are 18-hole facilities located along the frontier of metro Atlanta and in rural Georgia.

That’s because the populations of such communities are too small to sustain them in a bad economy. And golfers who live closer to downtown Atlanta have had second thoughts about making the trip to play on them during periods of soaring gas prices.

One of them is Tim Floyd of Stone Mountain. The avid golfer is part of a small group of friends who, every weekend would drive as a far as Opelika to play on a different course. In recent months, Floyd’s “Mulligan Group” has been sticking closer to home.

“It started when the price of gas shot up,” said Floyd, as he whacked a bucket of balls at the Stone Mountain Golf Course practice range. “Now it’s all the uncertainty about the economy.”

Floyd, a 55-year-old construction procurement consultant, said the group liked to play at Reunion Golf Club in Braselton and the Lion Golf Club in Bremen. The Mulligans don’t make those trips anymore, Floyd said.

Dominic Stephens, the golf pro at nearby Smoke Rise Golf & Country Club in Stone Mountain, could use their business.

Stephens said sales of new golf memberships at the club have flat-lined since September, when the current Wall Street crisis started. Smoke Rise, a member-owned club of roughly 400 people, is down between 20 to 30 members since the start of the year.

“We’ve got people whose businesses are failing,” Stephens said. “The next step for them would be to cut an extra expenditure or two. You start getting people who play two times a week switching to two times a month.

“You multiply that across the board, and it can really hurt,” Stephens said.

Anticipating a prolonged economic downturn, some private clubs have taken steps to protect themselves.

Earlier this month, Joe Guerra, president of the holding company that owns Canongate Golf Clubs, wrote members about the foundering economy’s affect on its 19 courses as well as on the golf industry as a whole.

“Many members have been forced to resign or reduce their use of the clubs due to job loss or other financial hardships,” Guerra wrote. “We don’t expect to see a recovery in the near future and in the meantime must react in order to protect your ongoing membership value.”

That includes closing 11 of Canongate’s course for one day each week and continuing membership rates at their current levels through 2009.

While Guerra assured members that said the Canongate courses are relatively good financial health, “we know of multiple clubs that may be forced to close permanently as a result of the difficult times,” he wrote.

Industry experts say older, more established golf clubs will likely survive the downturn.

Rick Burton, the director of golf at East Lake Golf Club in Atlanta, said there’s been no noticeable decline in the number of rounds played at the course.

But sales in the golf shop and restaurant declined somewhat, and a major corporate Christmas party booked at the club was canceled recently, Burton said.

“Our bookings for the spring are good,” Burton said. “Whether that’s because people are optimistic things will turn around by then, I don’t know.”

The effect of the economic downturn has been more pronounced at East Lake’s public course next door, the golf director said.

Revenues are down 15 percent at Charlie Yates Golf Course, said Burton, who’s contemplating cutting part-time staff to help make up for the shortfall.

Crouse said the economic downturn isn’t all bad news.

“For golf owners, it’s the worst time,” said Crouse. “If you’re the consumer, there are more courses to play on for cheaper.

“If you’re the golf course player there are now clubs you can join that once cost $20,000 that now cost $2,000,” Crouse said.