A Call for Co-Operation: How Golf’s Equipment Manufacturers Can Save Municipal Golf… and Themselves!
Golf’s original equipment manufacturer (OEMs) spend about $3B combined on selling, general, and admin (SGA) expenses every Year.
The “Big 3” golf equipment manufacturers alone (Callaway, TaylorMade, Titleist) spent about $600M each on SGA expenses (sales, general, and administration, including advertising and marketing expenses) in 2020, using publicly available data from Callaway and Acushnet (parent company of Titleist and Footjoy) [note: I’m assuming that TaylorMade’s expenses were in a similar ballpark].
That was between 30-40% of total revenues spent on selling activities and roughly 12x what they each spent on R&D (research and development). If you’re wondering why a new driver costs $500 and not under $100 (cost of actual raw materials and manufacturing), that’s why.
In contrast, consider Tesla’s branding model in the auto industry. Below is a chart from the Visual Capitalist which shows the difference in Tesla’s marketing and R&D expenditures versus the competition…
…yet Tesla is the fastest growing auto brand and one of the fastest growing brands in the world. You don’t need to spend billions on paid advertising attempts to convince consumers that you’re worth purchasing. You just have to create value toward a meaningful purpose, sell consumers on “why” you do what you do, and then authentically do it. If it’s impactful and true, the message will spread itself in an interconnected world.
So what if golf’s OEMs took a different approach to their advertising model? What if they each agreed to convert 1% of SGA expenses toward creating shared value aligned with a meaningful purpose of healing people and planet while attracting new golfers into the game? Including the SGA expenses of not only the Big 3 OEMs but others like PING, Cobra, Cleveland, etc. Based on Cleveland’s public data of spending $148M on SGA in 2020, I’ll assume (conservatively) that each of these other manufacturing brands spends an average of about $200M on SGA expenses. Doing some simple math, we can estimate that the golf equipment manufacturing industry spends at least $3B on combined selling activities.
Here’s a mystery for you: is that $3B really helping these brands massively differentiate themselves from one another and create a truly segmented market? Or – and here’s my rhetorical question – do they all basically use this net expense to craft eerily similar messaging about how they’re “#1” or “best in the game”, which ultimately sounds the same to the average consumer?
How Golf’s OEMs Can Spend $30M a Year to Sustain the Game, the Planet, and Themselves
An opportunity remains for these brands to differentiate themselves based on genuine social impact rather than performance. As it stands, the USGA and R&A have imposed equipment standards that specify limits for club manufacturing and ultimately prevent performance improvements from altering the balance of the game and continuing the trend of lengthened driving distance and course layouts/yardages. Each brand offers radical innovation as a selling point, but each brand is limited by the same equipment rules, and the governing bodies have put them under fire for harming the sustainability of the game. It makes more sense for these brands to work together on reducing advertising rivalry while doing something to grow the size of the pie rather than one’s respective share.
So, we propose the idea that golf’s equipment manufacturers pledge to reduce advertising expenses and reinvest that money together in the grassroots health of the game, and specifically, the health of its municipal access points.
Let’s say that 1% could come from advertising in particular (rather than OEM staff or sponsored pro golfers). That’s 1% of $3B, or $30,000,000. So, the question is, how could golf invest $30M to grow its shared resources and improve the all-around sustainability of the game? My definition of sustainable growth is growing oneself while growing the resources upon which personal growth depends. Upon what resources does golf depend most? Healthy people, healthy communities, and a healthy planet.
In particular, golf relies on access points of affordable entry into the game, and that’s where municipal golf comes in. What if golf (at least in the US) could allocate $30M across roughly 2,500 municipal golf courses? A better question could be, HOW would we spend $30M as an industry if our goal was to heal people and planet while supporting the lifeblood of participation upon which economic growth of the game and industry depends?
Doing some even simpler math, golf would have to attract about 200 new players per year in order to make up for a $30M investment. That sounds implausible, but it’s truly not when you consider that the lifetime value of a new participant in golf is greater than that of any other sport. Assuming that the average (semi-avid) golfer spends $300 on equipment each year and plays golf for an average of 50 years. That’s a lifetime value of $15,000 per player to the equipment manufacturer (not including net present value or discount rates, for all you finance nerds ;).
Boiling it down, I’ll propose one last question:
How can golf spend $30M a year to attract at least 200 new (avid/hooked) golfers per year?
Here are three avenues to consider:
#1 – Make golf regenerative
In the past 15 months or so, we have researched many concepts (and profitable ideas currently in practice) surrounding the design of golf courses to maximize land-use efficiency while providing a tangibly net positive impact on the carbon cycle, the water cycle, and biodiversity (just to name a few overarching possibilities). We’ve learned and shared that biochar, for example, can save 40% in water consumption and other inputs. Floating hydroponic beds can be an affordable way to add character while healing the water quality of ponds and lakes. Going a few steps further, a golf facility can host “edible” operations ranging from rice paddies to aquaculture (e.g., oyster farms) and even agroforestry.
The possibilities are endless, and the roughly 150 acres of a typical golf operation can provide so much more than a game. Under the right design conditions, a golf course can meet essential survival needs and mimic the circular flows of nature, in which waste doesn’t exist – only mutually supportive flows and symbiotic relationships.
#2 – Make golf inclusive
Here’s a missed opportunity if ever there was one: just over half the US population are women and the US projects to become “minority white” in about 25 years... so when will golf’s participation reflect these demographics and what exactly is the plan to do so?
We’ve seen that the rapid growth of off-course venues like Topgolf and Drive Shack reflects an ability to invite non-golfers into play. While public data are currently unavailable to prove this next point, I’m willing to bet that the demographics of staff at these venues mirror the more equitable participation demographics that they attract. The same (or inverse) is probably mirrored in on-course golf – mostly white male participants, mostly white male staff. If golf operations develop a culture based on shared purpose and belonging while driving genuine positive impact, then they attract a more diverse and wider pool of talented applicants. Then they might develop an organizational culture that reflects the golf culture we all want to see.
#3 – Make golf fun
The culture of golf also strays far from its original intentions, in many cases. Golf was a game played in Scotland by lower-middle class landholders, drinking spirits and using crooked sticks to hit rocks into rabbit holes. Personally, I fell in love with the game (most likely) because it taps into the primal instincts of using a tool to launch a projectile toward an intended target. It’s primal and psychological. Every golf shot requires focus, self-mastery, and devotion to the present. YET, the minutes and hours in between shots (where we can say most of the golfing experience actually lives) are where connection and appreciation can thrive. So golf provides an interplay of opposites - Intellect and feeling. Power and gentleness. Solitude and connection. Nature and civilization.
Needless to say, I love the game as it’s traditionally played, but there are so many shiny distractions competing for our attention in the 2020s, especially if you’re younger and more tech-savvy. We have to get innovative, as many are already doing. Combined with the previous two points on inclusivity and regeneration, making golf more fun means not only bringing more joy and play into the game, but more deep level connection and sacred meaning – connecting with ourselves, with nature, and with our communities.
Concluding Thoughts
I don’t mean to sound like Robin Hood or chastise golf’s equipment manufacturers for following the flows of a disconnected capitalist system. Their advertising rivalry behavior is only rational… at least, within the context of the short-term and the rules by which global capitalism is currently played. Nevertheless, a hugely unexplored and untapped value remains. This thought piece aims to articulate that value as a strategic business opportunity, not merely a moral obligation.
Here are some final caveats. Our more specific proposal is a mutual pledge to reallocate 1% of SGA expenses (from advertising) toward projects and opportunities that grow interest, participation, and the holistic health of the game. Reallocating advertising expenses could create some winners and losers. For example, broadcasting partners could lose out on ad revenue streams. However, building a more regenerative, inclusive, and fun industry together would also invite new non-endemic sponsors to fill that supposed void of any lost ad revenues for broadcasters, so a broader mindset is required.
1% of SGA expenses per year, or $30,000,000, could be spent in an infinite number of more productive ways. Currently, it’s devoted toward convincing consumers that buying the latest driver, irons, or golf balls will improve driving distance, lead to lower scores, and supposedly, improve their lives. What really influences consumers to buy a brand’s golf club? Probably the performance of the club itself in ball-flight simulators and modern club-fittings, not the brand messaging, which is basically the same among all competitors anyhow!
The last major question here would obviously be: who gets that $30M per year? One proposal is municipal golf. As there are 2,500 facilities in the US alone, it makes little sense to distribute that evenly among all. That would be just $12,000 per facility in the US -- hardly enough to drive meaningful change. To make a much greater impact, I’m imagining a scenario in which all of these facilities compete in an open design challenge every year. The top ten proposals are then each awarded a $3M grant to carry out projects designed to maximize regeneration, inclusivity, and fun within their respective communities.
Here are a few shifts in the golf equipment sector that Driving the Green would love to see:
A shift in branding strategy from “best in the game” to “best for the game”
A shift in time horizon from “next quarter” to “next quarter century”
A shift in the definition of sustainability from public relations “obligation” to embedded, strategic “opportunity”
Sustainable value creation in business, as in nature, means the alchemy of waste into life-supporting conditions. In doing so, a yearly $30M investment invites new participation in golf and possibly even new talent into the growing millennial and Gen Z workforce upon which OEMs will depend for sustained innovation.
The municipal golf course makes the most sense for this kind of life-supporting investment, being the affordable access point to so many, especially in urban environments with greater need for healing green space, ecosystem services, and affordable public recreation. Golf’s wealthiest organizations (the OEMs) can help the game meet essential needs and build thriving resilience to last through future global crises and recessions.
This literal grass-roots investment isn’t merely the right thing or the meaningful thing to do, it’s an economically rational investment in the resources upon which sustainable equipment growth depends over the long run.
