Peter Ryan, Ph.D

Peter Ryan, Ph.D.SRI InternationalSRI International

Golf’s Economic ImpactGolf’s Economic Impact

Key Contributors:Key Contributors:

• GOLF 20/20GOLF 20/20

• The Virginia Golf CouncilThe Virginia Golf Council

• Major golf associations and organizationsMajor golf associations and organizations

• Government agenciesGovernment agencies

• Related professional associations Related professional associations

• SRI InternationalSRI International


Importance of State Golf Alliances:Importance of State Golf Alliances:• Define the scope of the golf industryDefine the scope of the golf industry

• Identify data sources and validate estimatesIdentify data sources and validate estimates

• Provide context for data interpretationProvide context for data interpretation

• Use economic impact results, in their own Use economic impact results, in their own organizations, to improve the golf industryorganizations, to improve the golf industry

• Serve as enablers/influences for positive use of Serve as enablers/influences for positive use of economic impact results outside of the golf industryeconomic impact results outside of the golf industry

• Influence governmental and organizational policy Influence governmental and organizational policy related to the golf industry related to the golf industry


The Challenge—Develop a Framework to:The Challenge—Develop a Framework to:• Illustrate and communicate the full scope of the golf industryIllustrate and communicate the full scope of the golf industry

• Create a context for golf’s economic impact in a state Create a context for golf’s economic impact in a state (relative to other industries and consumers of natural (relative to other industries and consumers of natural resources)resources)

• Employ multiple data sources and measures to captureEmploy multiple data sources and measures to capturethe industry from both internal and external perspectivesthe industry from both internal and external perspectives

• Enable replication over time, within state, and across statesEnable replication over time, within state, and across states—“compare apples to apples”—“compare apples to apples”

• Stay cost effective, in part, by evaluating and using dataStay cost effective, in part, by evaluating and using datafrom golf and non-golf organizations collected on regular from golf and non-golf organizations collected on regular cyclescycles


The Approach:The Approach:• Meet and collaborate with state alliance to Meet and collaborate with state alliance to

identify/validate economic estimatesidentify/validate economic estimates

• Identify multiple indicators for each industry Identify multiple indicators for each industry segmentsegment

• Use both primary and secondary sources to Use both primary and secondary sources to reach “consensus estimates”reach “consensus estimates”

• Estimate economic activity directly related to Estimate economic activity directly related to the golf industrythe golf industry

The Golf EconomyThe Golf EconomyThe Golf Cluster

Core Industries

Golf FacilityOperations

• Green fees, memb. dues• Food & beverage• Lessons, schools, camps• Rentals

Golf Course Capital Investment

Infrastructure Improvements

Course Renovations Clubhouse

Renovations

New Course Construction

Equipment / Golf Car Purchases

IrrigationInstallation

Golfer Supplies (on and off course)

Soft Goods Hard Goods

ApparelBooks &

Magazines

Media, Tournaments, Associations & Charities

Tournaments

CharitiesPlayer Endorsements

Associations

Television

Enabled IndustriesHospitality/Tourism

Air Travel

Entertainment

LodgingFood &

Beverages

Car Rental Real Estate

Related ResidentialConstruction

Real Estate “Premiums”

Source: SRI International (2002).

The Golf Cluster

Core Industries

Golf FacilityOperations

• Green fees, memb. dues• Food & beverage• Lessons, schools, camps• Rentals

Golf Course Capital Investment

Infrastructure Improvements

Course Renovations Clubhouse

Renovations

New Course Construction

Equipment / Golf Car Purchases

IrrigationInstallation

Golfer Supplies (on and off course)

Soft Goods Hard Goods

ApparelBooks &

Magazines

Media, Tournaments, Associations & Charities

Tournaments

CharitiesPlayer Endorsements

Associations

Television

Enabled IndustriesHospitality/Tourism

Air Travel

Entertainment

LodgingFood &

Beverages

Car Rental Real Estate

Related ResidentialConstruction

Real Estate “Premiums”

Source: SRI International (2002).


Segments of the Golf Economy:Segments of the Golf Economy:

Size of Virginia’s Golf Economy in 2005 by Segment ($ million) Core Industries

Golf Facility Operations Golf Course Construction and Capital Investment Golfer Supplies (retail margin) Major Golf Tournaments and Associations Total Core Industries

Real Estate Hospitality/Tourism Total Enabled Industries

TOTAL GOLF ECONOMY


Economic Impact:Economic Impact:• Direct Impact:Direct Impact: New economic activity (production, New economic activity (production,

employment) linked to provision of golf products and services employment) linked to provision of golf products and services

• Indirect Impact:Indirect Impact: Increase in regional production of goods and Increase in regional production of goods and services that supply golf courses and related industriesservices that supply golf courses and related industries

• Induced Impact:Induced Impact: Increase in consumer spending enabled by Increase in consumer spending enabled by employment in core and enabled golf industries employment in core and enabled golf industries

• Multiplier effects:Multiplier effects: The idea that the impact of new golf activity The idea that the impact of new golf activityon consumer spending will disproportionately exceed the direct on consumer spending will disproportionately exceed the direct impact (witnessed in indirect and induced impacts)impact (witnessed in indirect and induced impacts)

• RIMS II:RIMS II: Regional Input-Output Modeling System, U.S. Dept. Regional Input-Output Modeling System, U.S. Dept.of Commerce, Bureau of Economic Analysis (Inter-industry of Commerce, Bureau of Economic Analysis (Inter-industry linkages)linkages)


The Message:The Message:• The golf industry makes a substantial The golf industry makes a substantial

contribution to economic activity in the statecontribution to economic activity in the state

• Employment—full- and part-time jobsEmployment—full- and part-time jobs

• Wages—labor incomeWages—labor income

• TaxesTaxes

• Golf has many benefits—recreational,Golf has many benefits—recreational,social, economicsocial, economic

• The golf industry is a responsible steward of The golf industry is a responsible steward of the environment the environment

David NormanVirginia Golf CourseVirginia Golf Course

Superintendents AssociationSuperintendents Association

Context of Virginia StudyContext of Virginia Study

2002 Drought2002 Drought


First Virginia Golf Summit Established January 2003First Virginia Golf Summit Established January 2003

• Resulted in collaboration among 5 golf organizations Resulted in collaboration among 5 golf organizations to study golf’s economic impactto study golf’s economic impact


• Need to present systematic information Need to present systematic information about the relevance and impact of the golf about the relevance and impact of the golf industry to policy-makers in Virginiaindustry to policy-makers in Virginia

• This type of information is vital to the future This type of information is vital to the future success of the golf industrysuccess of the golf industry

Potential Uses of StudyPotential Uses of Study

• Build credibility and recognition of industry as Build credibility and recognition of industry as significant business sector in the statesignificant business sector in the state

• Define the range of core and enabled Define the range of core and enabled industries associated with golfindustries associated with golf

• Articulate for policymakers golf’s employment Articulate for policymakers golf’s employment and revenue-generating contributionsand revenue-generating contributions

• Create economic context to understand the Create economic context to understand the use of land and water resourcesuse of land and water resources

Size of Virginia’sGolf Economy Size of Virginia’sGolf Economy

Size of Virginia’s Golf Economy in 2005 by Segment ($ million) Core Industries

Golf Facility Operations $707.5 Golf Course Construction and Capital Investment $69.8 Golfer Supplies (retail margin) $42.0 Major Golf Tournaments and Associations $15.3 Total Core Industries $834.6

Enabled Industries Real Estate $427.4 Hospitality/Tourism $329.9 Total Enabled Industries $757.3

TOTAL GOLF ECONOMY $1,591.8

Golf’s Economic ImpactGolf’s Economic ImpactMultiplier Impacts on State Economy ($ million)

Industry Direct Indirect & Induced TOTAL

Golf Facility Operations

$1,449.9

New Golf Course Construction $55.6

Golfer Supplies $88.1

Major Tournaments and Associations $32.8

Real Estate $783.8

Hospitality/Tourism $678.5

TOTAL $1,591.8 $1,628.9 $3,088.7

Golf’s Economic Impact Golf’s Economic Impact

Golf’s Impact on Virginia Employment and Earnings in 2005

Industry Employment Earnings Golf Facility Operations 22,301 $460,299,500 New Golf Course Construction 473 $16,603,620 Golfer Supplies (retail) 982 $25,704,000 Major Golf Tournaments and Associations 463 $11,310,680 Golf Real Estate 6,669 $233,960,100 Hospitality/Tourism 9,301 $200,514,045

TOTAL 40,189 $948,391,945

Economic Impact and Useof Natural ResourcesEconomic Impact and Useof Natural Resources

Virginia golf courses account for only 2.2 percent of Virginia golf courses account for only 2.2 percent of total turfgrass acreage in the state total turfgrass acreage in the state

Source: National Agricultural Statistics Service, Virginia Agricultural Statistics Service (2000). Virginia’s 2004 Turfgrass Industry, “2004 Turfgrass Acreage” table

Economic Impact andUse of Natural ResourcesEconomic Impact andUse of Natural Resources

Virginia golf courses account for four-tenths of one percent Virginia golf courses account for four-tenths of one percent (0.4%) of the ground and surface water consumed in the state(0.4%) of the ground and surface water consumed in the state

Golf courses are included in commercial and accountedfor 0.4% of total water consumed.

Source: Department of Environmental Quality, Commonwealth of Virginia (2005). Status of Virginia’s Water Resources, http://www.deq.virginia.gov/regulations/documents/StatusofVirginiasWaterResourcesReport2005.pdf


Virginia golf courses Virginia golf courses generate high economic generate high economic returns from per acre returns from per acre water use (examples)water use (examples)

Virginia Water Usage and Economic Returns Comparisons

Average water usage

Golf course 4,170 gallons/acre/day

Home lawn 3,879 gallons/acre/day

Grapes 3,879 gallons/acre/day

Corn, grain 2,521 gallons/acre/day

Magnitude of irrigated acreage

Home lawns 1,048,000 acres

Corn, grain 330,000 acres

Golf course 36,900 acres

Grapes 1,900 acres

Revenues per acre

Golf courses $18,480/acre

Grapes $2,453/acre

Home lawn (supplies and service) $1,687/acre

Corn, grain $189/acre

The Virginia golf The Virginia golf industry supports industry supports turfgrass turfgrass research and research and improvements in improvements in efficient water efficient water use and use and integrated pest integrated pest management management (IPM)(IPM)


Economic Impact and Use of Natural Resources—SummaryEconomic Impact and Use of Natural Resources—Summary

• Golf courses use significant amounts of water Golf courses use significant amounts of water during summer months to support businessduring summer months to support business

However:However:• Scale of water use on a statewide basis is Scale of water use on a statewide basis is

significantly less than other industriessignificantly less than other industries• Golf generates greater economic returnsGolf generates greater economic returns• The golf industry continues to be a responsible The golf industry continues to be a responsible

partner in finding scientific and regulatory partner in finding scientific and regulatory solutions to the state’s water challengessolutions to the state’s water challenges

Golf’s Economic Impactin Virginia—Summary Golf’s Economic Impactin Virginia—Summary

• Golf is big business in VirginiaGolf is big business in Virginia

• Golf makes significant contributions to Golf makes significant contributions to many segments of the Virginia economymany segments of the Virginia economy

• Collaborating with a state golf alliance Collaborating with a state golf alliance enhances the entire industryenhances the entire industry

• Golf is a responsible steward of the Virginia Golf is a responsible steward of the Virginia environment and its natural resourcesenvironment and its natural resources

• GOLF 20/20 is a key resource for the GOLF 20/20 is a key resource for the Virginia Golf CouncilVirginia Golf Council

Documents

Peter Ryan, Ph.D