Valley Golf on Upswing
The San Fernando Valley golf business is looking a lot like Payne Stewart when he won the U.S. Open on June 20 in Pinehurst, N.C.
Stewart got stuck in the rough on the last hole of the championship, clinging perilously to a one-stroke lead, but he recovered to win the Open with a dramatic putt to save par.
The Valley golf business recovery has been more gradual and less dramatic, but it mirrors the same up-and-down nature of the game.
Golf got off to a great start in the early 1990s, before the regional economy soured. But business fell off so sharply during the recession that private courses were discounting memberships.
Besides the recession, according to membership director Dave Karch of Braemar Country Club in Tarzana, the Valley golf business also suffered from the 1994 Northridge earthquake and from tax law changes that prompted corporations to reduce reimbursements for executives’ initiation fees and monthly dues.
But like a golfer fighting back after a poor front nine, the business has climbed back steadily from these setbacks, thanks to the economic recovery and a boost from young golf champ Tiger Woods, whose popularity has generated new interest in the sport.
“All of the private clubs in the Valley are really flourishing right now,” Karch said.
The price of a top-level membership at Braemar, which peaked at $20,000 in the early 1990s, has climbed back to $15,000, after sinking to about $8,500 during the recession. Members also pay monthly dues of $385.
Karch said the club no longer needs to solicit new members with an aggressive marketing program, as it did just a few years ago. Two years ago the club was losing 19% of its members annually, but that figure has dropped to 8% and is sinking.
Besides boosting membership fees, Karch said, golf’s growth has enabled the club to reduce its membership to 1,000 from a peak of 1,300 several years ago. Having fewer members even though paying higher fees keeps members happier, Karch said, because it means speedier play.
“We have purposely reduced our membership. A lot of clubs have done this,” Karch said. He said improved economic times have enabled Braemar, which has 36 holes, to spend $4 million on course improvements in recent years.
At El Caballero Country Club in Tarzana, the price of a membership has climbed to more than $60,000 after drifting to about $40,000 during the recession, said Tom Bernsen, general manager. Bernsen said the club limits its membership to 500 and has “a good balance” between people wanting to join and existing members who want to retire and sell their membership or transfer out of the club.
Bernsen explained that during slow times in the private club business, there aren’t always potential new members waiting to join, meaning members who want to retire or transfer out have a hard time finding buyers for their memberships.
The improved economy has also enabled El Caballero to make some improvements that weren’t possible during the recession, Bernsen said. Although the club offers tennis and other activities, golf “is usually the first thing potential new members ask me about.”
Membership prices and the golf business in general throughout the Valley “pretty much have paralleled the real estate market,” according to Jim Swieter, general manager at Porter Valley Country Club in Northridge. Club membership prices peaked at about $20,000 in the early 1990s and then slipped to about $10,000 before climbing back to their current level of $15,000, Swieter said.
Porter Valley has been reducing the number of golf members, which now stands at about 630 and will probably be cut to 620, he said.
“If you have too many golf members, it’s hard for them all to get tee times,” Swieter said.
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Golf’s good fortune is less clearly illustrated at the Los Angeles city courses in the Valley, where revenue increased substantially from $5.6 million in 1995 to $6.9 million in 1997 but dipped to $6.1 million in 1998. The Valley has four of the city’s seven 18-hole golf courses: Encino, Balboa, Hansen Dam and Woodley.
The 1998 dip in rounds played resulted from flooding at the Encino and Balboa courses that restricted play, according to Pete Frey, golf operations coordinator for the city of Los Angeles Recreation and Parks Department.
Frey said golf’s rising popularity doesn’t boost revenues as much at city courses as at private clubs because the city tries to keep green fees low. Green fees are $18 during the week and $23 on weekends at the city courses, compared with rates typically several times higher at privately owned courses open to the public.
But Frey said the game’s growth and the Tiger Woods influence are clearly reflected elsewhere in the city’s golf programs.
“Our junior programs are full. That’s a definite result of the Tiger Woods phenomenon,” Frey said. “We have about 600 kids in our junior programs, and about 300 of them are in the Valley.”
“Tiger Woods has had a dramatic impact on the game, especially at family-oriented clubs like ours,” Karch said. “A lot more women and kids are playing the game. One reason the business has improved is that there is so much family involvement now.”
Tournament director Annie Barker at Knollwood Country Club in Granada Hills, an L.A. County-owned golf course, agreed with Frey that the city and county-owned courses don’t reflect the ups and downs of the economy in the same way as prices of private club memberships.
The number of rounds played at Knollwood holds steady every year at about 100,000 to 110,000 regardless of what’s happening with the economy, Barker said. She said the number is more likely to rise or fall on the basis of weather.
Like the city, the county tries to keep its golf rates low. Knollwood green fees are $20 on weekdays and $25 on weekends.
More courses are on the way. Among the 18-hole layouts planned in the Valley are the Cascades Golf Club at the Cascades Business Park in Sylmar, a course on the grounds of Pierce College and one in Tujunga.
The Cascades course, developed by Honolulu-based Royal-Clark Development Co. and being built by Calabasas-based Environmental Golf Inc., is scheduled to open in September.
The Pierce College course is part of a proposal pending before the board of the Los Angeles Community College District, and Tujunga course developer Foothills Golf Development Co. is awaiting a stream-bed alteration permit required by the California Department of Fish and Game for its Red Tail golf course and equestrian center.
Mark Armbruster, an attorney representing Foothills Golf, said the developer was slated to begin arbitration Monday in its bid for the Fish and Game permit.
The Cascades course will be privately owned and open to the public, according to Tom Clark, a principal of Royal-Clark based in the company’s Beverly Hills office. Clark said the company believes a new club will do well not only because of the rising popularity of golf but because “Los Angeles and the San Fernando Valley are among the most underserved areas of the United States in terms of golf holes per capita.”
Clark cited a report by Economic Research & Associates, a West Los Angeles research firm, that showed the greater San Fernando Valley has a population of 208,000 per regulation-size 18-hole golf course and Los Angeles County has a population of 220,000 per course.
By contrast, the population per course is 68,000 in Ventura County, 131,000 in Orange County, 77,000 in San Diego County, 78,000 in the Inland Empire (Riverside and San Bernardino counties).
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Big Green
Revenue generated at Los Angeles city golf courses in the San Fernando Valley:
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Revenue from Valley courses
1998: $6,144,530
1997: $6,924,155
1996: $6,466,843
1995: $5,637,431
1994: $6,107,872
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Revenue from all city golf courses
1998: $15,223,347
1997: $15,658,806
1996: $15,380,538
1995: $14,083,728
1994: $14,458,291
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Source: L. A. Recreation and Parks Department
Play’s the Thing
Number of rounds of golf played at Los Angeles city golf courses in the San Fernando Valley:
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Golf course 1998 1997 1996 1995 1994 Balboa 88,153 93,974 79,363 81,924 82,024 Encino 86,964 111,940 106,755 76,110 108,054 Hansen Dam 104,304 108,169 104,369 99,844 94,157 Woodley 100,052 111,154 106,150 105,908 110,292
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Source: L. A. Recreation and Parks Department