Monday, March 9, 2009

What Other Bloggers are Saying: Part 2

This week, two posts piqued serious interest, both of which are shared, with discussion, below. On Mr Business Golf, Scot Duke, laid out the various problems facing the game of golf. His discussion was thorough, but lacking answers to the questions he posed. In an attempt to expand the discussion and offer a few solutions to topics he brought up (and some he did not), I responded with some viable options, but also with other questions. Many of the issues brought up created paradoxically aligned stances of the status of the game. I hope for the sake of quality discussion that I hear more from Mr Business Golf on the matter. Next, on In Between 18, which I found for the first time this week, Mr. Goodman responded to the criticism that Northern Trust, a financial institution that received TARP money (parodied bottom left) from the US Government, received after hosting their annual PGA Tournament at Riviera Country Club (pictured right). I took the opportunity to rant and rave here, not at the author at all, but at the critics. The topic has been hitting a nerve, and I welcomed the open door Mr. Goldman provided to publish my thoughts.

“Issues Hurting Golf”

Comment

Given the invitation, here are a few solutions and a few rebuttals to the discussion of what ails the game of golf. Business golfers, yes, “drive the cart” for the industry. Always have; always will. The industry over-invested in “the ‘C Suite’ executives who carry the Corporate Checkbook on the corporate jet,” creating too many ultra-luxurious golf getaways for only those that can pay top dollar. Corporate retreats and outings to golf courses fall under this category as well. What affects those executives right now is not what generally affects the everyday golfer, but a fear of being labeled frivolous. This is only a cyclical issue; as soon as the economy rights itself and TARPees repay the Government, no one will even notice such trips. As for these same corporations, like Northern Trust, getting smashed for sponsoring a golf tournament, once again, corporate image is the culprit. The media is quick to jump to conclusions without understanding the need for such a company to generate exposure and quality advertising outlets through the PGA tour and its attendees. These things, like the others, will pass as the country rights itself. As for the issues affecting the non-Business Golfers, the industry needs to adjust.

Too slow, too costly, too hard, and not worth it; these are the arguments, right? In response to the pace of play issue, especially concerning the assertion that “greed and bad management of golf course operations” contributing to the problem, two opposing issues emerge. First, if the course plays slowly because the management stacks fivesomes every eight minutes apart, does that mean bad things for the game? It sounds like too many people want to be out on those courses. Economically, the management could earn the same amount per group by limiting to foursomes only, spacing them out every twelve minutes and charging 20-25% more per round. The courses that have “bad management” are clearly the ones that employ the low-cost, high volume approach to profit. Here is the conflict: does golf want more people on the course and slower rounds for low prices, or fewer people on the course and faster rounds for higher prices? The everyday golfer needs to understand this trade-off between courses, as they are clearly diversified to target each golfer’s needs. Either pay more, or stop complaining about the 6 hour round. Until golfers are attracted to Executive courses, where one can play shorter, but sometimes challenging holes and half the price for half as long, they will still face this dilemma.

Thank you for the post, but I really would like to hear your solutions.

“Noble and Perhaps Unnecessary”
Comment

The incident you bring up is utterly appalling. Arguably, Northern Trust did not even need the TARP money they received, and probably would be better off now without it. You are right, Northern Trust has nothing to be ashamed of except poor timing,” the media and critics within the Government should be ashamed for their lack of understanding of simple business practices. If one does not even take into account the penalties and broken relationships the bank would have suffered from pulling out of their sponsorship deal with the PGA Tour, the reasoning for keeping the tournament should still be crystal clear. A company like Northern Trust, that derives a large amount of its revenues from everyday individuals, like those that attend and watch golf tournaments on TV, needs to advertise. Truthfully, commercial banks offer nearly identical products. People choose one over another on perception and location. Northern Trust sponsors this golf tournament to reach people and build their business. Furthermore, it would have been a really bad signal to investors about the status of their business had they pulled out.

Additionally, any PGA tournament also boosts the economy of the area in which it is located. Whether fans are traveling to area and staying in local hotels to see Phil Mickelson play or just buying a few beers on the course, golf tournaments bring large revenues. By hosting their tournament, Northern Trust provided jobs to servers, parking attendants, coordinators, are all the other people involved in the production. Does the media understand this when the criticize Northern Trust for wasting taxpayer money on frivolity.

2 comments:

  1. Malcolm,
    I enjoyed reading your post on the sport of golf and its relationship to the hurting economy this week. As an industry that is probably not particularly recession-proof, it is easy to dismiss the economic downturns that clubs and courses are currently experiencing and it takes sincere interest and work to discover the reasons for and solutions to this issue. I myself do not know a whole lot about golf, having only played for a very short amount of time when I was much younger (and failing miserably when I did so), and this post explained a lot about the business to me that I previously had no knowledge of.
    Your opinion that businesses should not cease funding golf tournaments is a bold one that flies in the face of critics of companies like AIG and even Northern Trust, as you discuss here. It is most likely true that individual Americans do not completely understand the rationale for and importance of these sponsorships, and despite their perceived unimportance you make a good point by explaining that they generate a great amount of revenue for both the sponsors and the locale’s economy. I applaud you on your ability and courage to promote such an opinion. Your proposed solutions to the problems that golf as an industry is currently experiencing are also strong and logical, and your conveyance of certainty reassures the reader that this too, shall pass-something most Americans need these days. Lastly, your breakdown of the economic approach course/club owners are taking towards the problem is intelligent and makes sense to the otherwise uninformed reader, and places some deserved responsibility on the consumer to accept the current situation and the consequences it carries. In discussing a relatively upscale industry, you are not afraid to knock down walls with your accusations and solutions.
    In the way of constructive criticism I have only a couple of small points to make. Your post seems a bit rushed-something that comes to the surface in a few grammatical and compositional errors. The post is in no way illegible, but when speaking with such authority it might be worthwhile to proofread more carefully. Secondly, and again from a layman’s point of view, it might help to include a few supporting links in your arguments to better explain your solutions for club and course owners.

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  2. Strong post, Malcolm. There's no question that financial institutions that have received TARP money - like Northern Trust - are in the limelight. AIG is simply an exclamation point on the subject. As someone who has worked in marketing from the television side, I know how important it is for corporations to reach as many potential customers as possible. Television still provides the biggest bang for the buck - whether it's as effetive as targetted advertising online is another issue. The point is this: if every company taking taxpayers' money was forced to abandon "frivolous" marketing programs like sponsoring PGA tournaments, then all the car makers would have to drop out along with all the financial corporations. Abandoning PGA tournaments often means abandoning effective TV advertising; that can only translate into a further erosion of business at a time when America and the rest of the world is struggling to climb out of deflation and looming depression. It's often noted that the U.S. political system runs on perpetual re-election, so politicians on Capitol Hill are acutely aware of what their constituents are saying. Hence, they attack when they should consider.

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