How can some 500 PGA of America professionals losing their jobs be a good thing?
That's precisely what is on the corporate hands (corporations are people, too) of Dick's Sporting Goods, as they terminated all of the PGA of America golf professionals in over 500 locations throughout the United States. It was a business decision, motivated by multiple quarters of slagging equipment revenue -- revenue, not sales.
Dick's is selling about the same number of drivers -- the highest-margin club in the bag -- as last year, seeing just a 2 percent drop in volume. However, they're selling for 16 percent less than a year ago. That $299 or $399 price tag on those drivers may be what manufacturers hope to fetch for these clubs, but they're not the market price.
"We are selling drivers in our stores this spring for $99 that were approximately $299 20 months ago," said Dick's CEO Ed Stack on a May 20 earnings call where he foreshadowed drastic changes in how the company approaches golf apparel, which accounts for 15 percent of their sales.
An ESPN report pegs the bulk of Dick's problem on overbuying equipment from TaylorMade-adidas Golf, which released four drivers last year. The equipment did not move quickly at MSRP, meaning it lingered, clogging up Dick's balance sheet. While the clubs were eventually sold, many at one-third their asking price, the drivers didn't move quickly enough. Apparently, 500 employees were easier to move off the balance sheet.
At a micro-level, this is terrible for the 500 hard-working people trading scorecards for pink slips. At a macro-level, this move is the manifestation of a recognition that the golf equipment churn just isn't working.
TaylorMade-adidas Golf waived the white flag in its most recent quarterly earnings, admitting a 34 percent drop in golf revenue was directly connected to the wholesale repudiation of their retail model. If you've paid attention in 2014, you've noticed fewer equipment launches from the industry's giant manufacturer -- and for good reason. There's a revenue component and a marketing component, the latter being that, as the golf population shrinks, there are fewer people to convince on each new technological advance.
To use another disingenuous piece of corporate speak, this right-sizing is a good thing. It's a recognition from the industry that a smaller golfing population means a pickier, more price-sensitive population. While green fees are beginning to tick back up, it came after a significant correction and a conditioning for many golfers to flock to the cheapest green fee. That never happened in golf equipment, but it may be taking shape now.
While the golf industry deals with the reality of market forces, this flock of layoffs is an opportunity to re-examine the role of the golf course to the golfer.
I'm sure you're scratching your head at that one, but here goes nothing.
Dick's took a gamble in 2007 that bringing PGA of America professionals into its retail shops would help its business, particularly in connecting with customers, helping them find and be fitted for high-priced equipment. The golf experiment didn't work, with the pros clearly having little impact on sales when pit against bigger market forces. But PGA of America pros shouldn't be working at big-boy sporting goods stores. They should be working at golf courses.
Yes, there's more supply than demand for PGA pros. There are fewer golfers and fewer courses, so less need for the 27,000 men and women of the PGA of America. But, the role of a pro and the golf facility come into focus as supply of both tightens.
The golf course isn't just a place to play golf, but it's been billed that way for far too long. Much of that is the industry's fault, not positioning facilities as more than an 18-hole course to pass through in four or five hours. But the many acres of a golf facility are so much more than a golf course. It's a practice facility. It's a social hub. It's a restaurant. It's a bar. It's a lot of things.
The golf facility needs to evolve to be compatible with how people live their lives. They're more family-focused; the days of men disappearing all weekend to play golf are finished. Attracting families means offering more than golf.
As more people move into cities, golf courses, which are largely suburban, can be lifestyle beacons, escapes from the hustle, bustle and crowding of urban environments. In other words, I'm advocating for the democratization of the country-club lifestyle.
Build pools and tennis courts. Have craft beer on tap in the bar -- one that doesn't look like a dive, but more like that gastropub you and your spouse keep talking about going to someday. How about a playground or some other green space for other outdoor activities? Why not a stage for the occasional concert or play? Just as Dick's made a mistake in how it allocated retail space to golf, golf is making a mistake in how it allocates its considerable land. Transitioning many golf facilities from pure golf to -- using a real estate term -- more of a mixed-use makeup could make a golf course a place to spend a free day as a family. The country-club-for-a-day model could well be a great thing for golf, but it's a concept that can't work everywhere and shouldn't be applied at places where pure golf is perfect, be it a high-volume municipal course or an exquisite resort like Bandon Dunes.
PGA of America professionals are so much more than club fitters or sweater folders. They're trained to run businesses from end to end. Relegating them to a sporting goods store may have meant a steady paycheck, but it was a dead-end job with little opportunity to evolve the profession.
However, if how we view the golf facility changes, then the role of the PGA professional changes, too. It creates opportunities for pros to become full-fledged businesspeople, running multi-faceted operations that could position them for exciting careers in the game or as a small business owner later in life. It makes the profession of golf professional into a gateway to entrepreneurial endeavors. That sounds like a job anyone would want to do and, combined with a refreshed way of viewing the golf experience, a job in demand.