Golf courses adjust to harsher economics and changing demographics
Of all the cultural phenomena that marked the bubble era of 1980s Japan, none was more economically significant than the rise of golf. Despite its relatively small land area, Japan boasts the third largest number of golf courses in the world — 2,442 as of 2008, which accounts for 7 percent of the earth’s total (the U.S., number one, has 50 percent, with the U.K. a distant second with 8 percent).
The majority of these courses were built before 1990, when land prices were at their highest. However, what really demonstrated the profligacy of the time wasn’t so much the insane number of courses in a country where 70 percent of the land is mountainous, but the practice of investing in golf memberships. The “bubble,” of course, refers to the artificially high valuation of real estate and securities during this time, a situation that extended to almost anything that attracted investment, including golf memberships, which could be brokered as if they were stocks or bonds. Many people who had no interest at all in golf as a pastime bought golf club memberships simply as an investment.
As with all investments made during a bubble period, people who bought them got burned. According to the Kanto Golf Membership Trading Industry Association, the average price of a golf club membership in the seven prefectures that make up the greater metropolitan area in and around Tokyo rose from ¥5 million in 1980 to almost ¥50 million in 1990 and then dropped to ¥2.5 million in 2003. The price spiked briefly in 2006 at ¥5 million before plummeting to ¥1.45 in early 2012. However, it has risen slightly since then and is now around ¥1.8 million.
The drop in price of golf memberships mirrors the drop in “participation,” according to Tokyo Shimbun. Over the last 15 years, the number of people nationwide who play golf at all has declined from 15.4 to 9.2 million, a decrease of 40 percent. On the other hand, the number of average days that a golfer plays a year has increased during the same period from 22.1 to 28.5. The reason for this seeming contradiction is the age of the average golfer, which has gone up.
During these 15 years, very few people under the age of 59 have taken up golf, while the people who have golfed on any kind of regular basis have been playing more, probably because they have more free time owing to retirement. The number of “light golfers,” meaning those who play less than 10 days a year, has decreased markedly. So even if the number of golfers has gone down, those who continue to golf play more often. If the golf industry isn’t happy with this development it’s because they know that this cross section of dedicated golfers will soon be too old to play at all. Thus the so-called 2015 Problem — 2015 being the year when boomers start turning 70 — is worrying the golf industry more than others.
This shift is also worrying local governments, which levy a golf tax on users that averages about ¥800 per round but can go as high as ¥1,200 per round depending on the prefecture. These revenues are dropping because golfers under 18 and golfers over 69 are exempt from the tax (disabled people, too). The golf course association knows that the demographic is aging because they can see that the percentage of tax-exempt players is getting larger and know that teens aren’t taking up golf.
Another development indicated by tax-exemption statistics is that more older golfers are playing closer to home. Tax-exempt players make up 12 percent of all players in Ibaraki and Tochigi Prefectures, 14 percent in Chiba, 15 percent in Gunma and 18 percent in Saitama. But in Tokyo and Kanagawa the portion is 25 percent. As one association executive told Tokyo Shimbun, in the past many players traveled far from home to play because it was cheaper, but older players don’t have to worry as much about cost and will play the more expensive courses in Tokyo and Kanagawa, where more people, including seniors, live. Another aspect to consider is that competition among golf clubs has been heating up for years, so those courses may not be as expensive as they used to be.
Aside from membership fees, which can run the gamut from ¥60,000 a year to ¥3.2 million or more for a lifetime, green fees vary widely. The cheapest is about ¥5,000 without a caddy or cart; with both you can expect to pay ¥10,000. And if you play mornings or weekends expect to pay ¥6,000-¥10,000 more. Weekday and afternoon starts are much more reasonable, and some courses even offer discounts for “twilight play,” which sounds as if the back nine is going to take place in the dark. Golf club rentals start at ¥3,000. But the main means of making money for golf courses these days is the perks: catering and such. Many clubs offer 18 holes plus lunch, or special tables with a good view of the course for a little extra. The fact is, golf courses are going out of business all the time, so they have to find some way to squeeze whatever customers they already have.