Source: The Denver Post
Talk about a crisis of privilege: There may be too many places to play golf along the Front Range.
Golf course managers are scrambling to get the word out to developers: Stop building courses.
With forecasts for an extra 2 million people in population within the next two decades, the apparent saturation of courses here likely will give way to more building. But for now, with rounds of golf at stagnant levels, city planners and economic advisers are warning that adding golf courses means taking on significant financial risk.
"The formula is that a developer comes in, has a piece of ground, wants to put homes on it and thinks adding a course will add value," said Ed Mate, director of the Colorado Golf Association.
"At some point, golf just isn't going to make any sense anymore," Mate said. "You're going to have to think of something else. Otherwise, you're just going to have a lot of fallow fields out there."
A study that tracked 41 metro-region golf courses from 1999 through 2003 found that average use dropped 19 percent. Managers raised fees about 19 percent to make up the difference, but during that time, seven more courses went in.
Plans for at least three more are in the works, including a course to be built next year near Denver International Airport. A principal for the High Point project says that because the course would accompany a new hotel conference center, out-of-town visitors would help offset the local stagnant market.
"Developers are charging on," said Dennis Lyons, who runs Aurora's golf courses and who conducted the study of 41 courses.
The result is good for consumers. Most courses are offering discounts in an array of package deals, such as two-for-one specials and free food and drink.
The crux of Lyons' "Market Realities of Golf" report is that the overall number of rounds played has remained flat or sagging the past five years.
In 1999, golfers played about 1,983,000 rounds, Lyons said. Last year, they played 1,851,500.
The trend is a national one, Lyons said, adding that it's much faster to name markets that aren't saturated than to name markets that are.
And although the popularity of golf, at least as a TV spectacle, has increased, the National Golf Association said rounds were up only 2.5 percent nationwide for the first six months of 2004.
Experts say there are 239 golf courses in Colorado. About 190 of them them dot the Front Range. Roughly 75 percent of the state's courses are open to the public.
"There has been an almost exponential increase in golf courses over the last 20 years," Mate said.
Golf's total revenue in Colorado was estimated to be $560 million in 2002. An impact study suggests golf adds $1.2 billion to the state's economy annually.
"This is a meaningful industry," Mate said. "It's not just a ho-hum recreation. ... It's a huge recreational component of our state."
The growth has been heady at times.
When Lakewood opened its Fox Hollow Golf Course in 1993, players poured in, said Bill Jewell, who runs the city's golf courses.
"We got slammed," Jewell remembers.
But the city lost money - almost $203,000 - when it opened Homestead at Fox Hollow in 2002.
"That's the difference between then and now," Jewell said. "The last three years have been pretty eye-
opening for everybody. For us right here, in this area, another golf course would be too much."
A consultant to developers in Colorado who studies golf course feasibility says he has been neutral on new courses of late.
"As a stand-alone business, golf is tight right now," said Peter Elzi, a principal at THK Associates Inc., in Parker.
But some private building within new communities could still occur, Elzi said, referring to "pockets of opportunity."
But taking advantage of those far-flung opportunities means being honest about the debt load, Elzi said.
"In today's market, it's hard for a daily fee to truly support 100 percent of the cost, so someone has to put cash into it," Elzi said.
In Aurora, Lyons has seen that dynamic firsthand.
The city added Saddle Rock Golf Course in 1997 at a cost of $7 million and Murphy Creek Golf Course in 2000 at a cost of $8 million. If not for the success of older courses, paying debt service would be difficult, Lyons said.
Before debt service, expenses cut revenue to $2.1 million in 2001 and down to $1.2 million last year.
"We have tightened the belt, if you will," Lyons said.
But few are overly worried.
As long as the population increase actually occurs, golf courses will rebound, experts say.
"It doesn't take too many years of population growth to correct what may be an oversupply," Elzi said. "The next three to four years are going to be very competitive, but we're not doom and gloom."
