advice from a fake consultant

out-of-the-box thinking about economics, politics, and more... 

Tuesday, August 26, 2008

On Economic Forecasting, Or, Notes From The Golf Tournament

Once a year the professional golf community comes to visit my neck of the woods, in the form of the PGA’s Champion’s Tour.

It’s an event that changes the character of the community in several ways: spectators swell the size of the town, there’s a media focus that usually doesn’t exist…and an actual, no kidding, traffic jam might develop—on a weekend.

It’s a great economic barometer, as well. Despite the efforts of the Professional Golfers Association (the PGA), there is a lot more of an upper-income demographic attending the tournament than there is a Happy Gilmore kind of crowd.

Which brings me to the point of today’s examination: what can we learn about the state of the economy from the perspective of the tricklers, as opposed to how it looks from the point of view of the trickled upon?

The PGA’s Senior Tour has become the Champion’s Tour, these past few years, and it makes two stops in the Pacific Northwest: the JELD-WEN Tradition, which is played at the Crosswater Club, Sunriver, Oregon; and the tournament I attend, the Boeing Classic, played at TPC Snoqualmie Ridge, Snoqualmie, Washington, under lovely weather…at least on the first two days of the event. For those with a 9:00 AM tee time Sunday, it was the same, but by the end of that day the weather was more like Scotland—in the 60’s, windy, and a spattering of rain.

Spectators enter the course and immediately pass through a gauntlet of exciting commercial opportunities presented from E-Z UP booths (the “Expo Village”)…but this year the Village was missing roughly half of the booths, leaving it looking, sadly, a bit more like the Expo Dorp.

The remaining Villagers seemed a bit dispirited—perhaps because they were not giving away tons of golf tchachkes this year. In years past I personally had picked up boxes of crayons, the ubiquitous rainbow (not) Slinky ©, mini first aid kits, and some very cool tool-box shaped mint tins. A couple of years ago The Girlfriend successfully putted the big golf ball and won a sleeve of Nike Ignite balls and a subscription to Golf Digest….but even the Golf Digest booth is missing this year.

The granola bar booth was still giving away their product…but other than General Mills, no other sponsor seemed to be doing the giveaway thing.

This was especially striking as one left the Expo Hamlet and entered the Cadillac exhibit. In years past the Cadillac presentation was impossible to ignore: first, because of the large number of comely women selected to divert potential customers to see the displayed wares (at least 8, maybe even 10 last year)…and secondly, because of the high quality of the tchachke.

If you were willing to spend roughly 10 minutes and fill out a “contact card” you could leave with a lovely fleece Cadillac blanket—and in the previous three years I think I grabbed two myself…and one of those is still floating around here somewhere.

But this year, it was a bit different.

I did not see any Cadillac giveaway items, and at 1:00 PM on Saturday there seemed to be no comely women…and barely any potential customers.

In fact, I’d estimate the crowd at roughly half that of last year, which, on Saturday of 2007, was estimated to be 18,000. There are a few places on the course where I was able to compare—for example, there was very little crowd density at the 14th green, as opposed to last year when it was difficult to walk the cart path there because of the crowding. There was moderate difficulty navigating the 9th green and 10th tee complex, but nothing like years past…and even the (incredibly close) 10th tee bleachers had available seats, even though many golfers had yet to pass that point.

The 18th green “Hospitality Village” seemed to be less crowded than years past as well, but I was not given enough access to the sponsor’s spaces to be fully certain of that comment. Call me 80% certain instead.

It was possible to easily “see through” the crowd that followed Tom Kite, and I’d be surprised if his “walking crowd” was larger than 300 people.

There were no lines for concessions or restrooms…and the racks in the “tour shop” tents seemed to be full of clothing hangers, and the racks of hats seemed nearly full as well. Less than 10% of those on the course seemed to be carrying bags of things they’re bringing home from the tournament. I did not see large numbers of guests wearing hats from the course or the event.

My ticket reads “Weekly” and “Complimentary”—and that might be the biggest problem for those seeking to make a buck on this enterprise. Virtually all the tickets I saw were either “Complimentary”, “Member-Complimentary”, or had a sponsor’s logo of some kind. I would be willing to bet that less than 25% of the tickets I saw were “sold” tickets…however, some “Complimentary” tickets might be tickets sold to corporate clients…and “Hospitality Village” tickets certainly are sold to corporate clients.

So what can we make of all this?

It could easily cost a family of four $400 for tickets, snacks…a few drinks for Mom and Dad, sodas for the kids…hats for the kids, a shirt or jacket for Mom and Dad…gas…you know, a weekend golf outing.

If my numbers are correct, on Saturday alone roughly 2,000 families that came last year chose to stay home this year—and I’m not the only one who sees Tour revenue as flat at best. In fact, it appears that revenue growth from 2006 to 2007 consisted almost exclusively of bringing in more corporate money, not growing the number of fans “passing through turnstiles” with paid admissions.

Put it all together, and it appears that even the predominantly high-income families that would normally pack up the kids and get out to the course for Tournament weekend…normally a “not to be missed” event…are not willing to make the trek this year—at least not unless the boss is buying the tickets.

I often buy gas at Costco; and waiting in the big line we still see a substantial number of large vehicles filling the tank—and I suspect that for many families the disposable income that would have paid for the golf outing is now buying gas.

Something to think about if you’re a Democrat running against the Bush economy.

Barry Commoner, a quarter of a century ago, famously explained that the environment, the economy, and energy policy are inextricably linked…and it now appears that the PGA Tour—and lots of local families--would likely agree.


Baht At said...

I'm sorry but golf just triggers irrational hatred in me.

For some strange reason I view anyone who plays the game as the sort of wanker who would join the freemasons.

jmb said...

Good heavens Baht at is visiting everyone today!

I wondered why your sidebar photo had suddenly been replaced by Curtis Strange.

Interesting post. Sorry that is a cliche but it is. Question is, has the bottom been reached? Maybe the new president can turn things around, maybe not.

Anonymous said...

I think your observation draws the correct conclusions..

fake consultant said...

now, mr. cannot stay too angry at a game that is designed around three trips to a cocktail lounge and officially sanctioned off-road driving, can you?

(and in fairness to the golfers, "tiger woods golf" has made me appreciate what actual golfers do more than i did before.

jmb: as to a guess is that the rest of the year--and likely the first half of next, or beyond--will be tough times for the us market.

this is for four reasons:

--price of oil--for automotive fuel and for heating--is going to remain very, very high, and it is unlikely to ever come back down, at least not in any significant way.

--the us housing market is overbuilt, and more or less a year's worth of inventory is sitting around unsold. until that oversupply is reduced, housing prices will remain depressed.

--lack of credit is making it tough to move those unsold houses...and not unlike a "chicken and egg" kind of situation, we do not know if the housing market or the credit market will pull up the other.

--credit cards. as yet they are not an economic "emergency", but they will be--eventually. this could prevent recovery, retard recovery, or create its own "follow-on" recession, depending on timing.

and mr. mutley: thanks so much...and i'm just hoping i'm not understating the depth of the problem. i note on the beeb today that uk housing prices declined almost 2% last month--and while we may be a leading indicator of europe's future, my suspicion is that the lack of overbuilding will limit the damage.

that is, as long as fuel costs are manageable.