In 20 years, no aspect of golf has changed as much as the financial stakes associated with various parts of the game
By: Ben Wright
In 1988 Curtis Strange became the first player to amass $1 million or more in a
single season, while Jack Nicklaus topped the career money list by passing
the $5 million mark. I could never have imagined then how downright puny those
figures would appear 20 years later. But golf and money go hand in hand like
swimming and water, whether it’s the staggering sums pros make these days,
drivers that retail for $600 or the growth of the golf real estate market.
Strange’s 1988 total would have landed him in 84th place on last year’s
list, which Tiger Woods led with close to $11 million. Woods only has himself to
thank. Following his smashing 1997 Masters victory, television rights fees from
American networks doubled to $400 million. In 2001 they more than doubled again
to $850 million. These fees have contributed to the rise in purses. For
example, total prize money at the 1988 Players Championship was $1.25
million; this year it will be more than $9 million.
For the rest of us who
have to spend money to play instead of being paid to do so, the sums are
just as staggering. According to the National Golf Foundation, we spent $25.3
billion in 2002, the latest figure year, on equipment and green fees, double
what it was in 1989. The equipment craze began in earnest in 1991 with the
Callaway Big Bertha driver, the first oversize club. At 190cc and $199, the Big
Bertha was about 20 percent larger than a persimmon driver and cost twice as
much. Sales skyrocketed, from $4.8 million in 1988 to $255 million in 1993.
But just how much were golfers willing to spend on a new driver? The answer:
a lot more. The all-titanium 290cc Biggest Big Bertha cost $399 when it came
out in 1997, pushing company sales to $849 million.
Callaway’s competitors were keeping up. Acushnet, which produces Titleist, Cobra
and FootJoy products, has seen its sales grow from $293 million in 1988 to $1.4
billion last year.
But the biggest change in golf economics since 1988 has
been the billions spent on the real estate that surrounds 80 percent of new
courses. This trend begat the rise of the brand-name architect: To sell houses,
it helps to have names like Nicklaus, Tom Fazio and Greg Norman in brochures,
and their fees have climbed to multi-million dollar heights associated with
Hollywood stars. But leave it to Woods to raise the bar for architects as well.
He is receiving eight-figure fees for his first two courses, one in Dubai and
the second at the Cliffs at High Carolina.
The Cliffs Communities are the
perfect example of the explosion in golf real estate. Starting with 3,500
acres and one 18-hole community that opened in 1991, developer Jim Anthony now
looks over eight communities comprising more than 20,000 acres in North and
South Carolina’s Blue Ridge Mountains. In 1991 the average home sale price at
the Cliffs was $58,000; today it’s $771,000.
Of course, what goes up must
come down, or at least the revenues in the aforementioned golf industries could
not continue to grow at the rate they once did. As the business world likes to
say these days, flat is the new up. But it’s been one hell of a ride!