Golf's growth in popularity is much bigger than a pandemic story
- The biggest round of golf to be played this weekend will be at the Ryder Cup, but rounds played are up across the country since the pandemic began.
- More than 24.8 million people played golf in the U.S. in 2020, up more than 2% year-over-year and the largest net increase in 17 years.
- Golf equipment and apparel has seen massive growth, with golf brands like Callaway and Titleist notching record sales.
- Golf is also moving beyond the typical 18-hole course, and more consumers are playing the sport at entertainment venues like TopGolf or on virtual simulators.
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Golf surged in popularity in 2020 by nearly every metric, as people sought out the socially distanced outdoor activity amid the pandemic.
More than 24.8 million people played golf in the U.S. in 2020, up more than 2% year-over-year and the largest net increase in 17 years, according to the National Golf Foundation. The sport also saw the largest percentage increase in beginner golfers and youth golfers since 1997 — the year a then-21-year-old Tiger Woods won his first major championship at the Masters.
Now almost two years since the pandemic first hit the U.S., and even as other activities have opened back up, golf has continued to grow in 2021, providing long-standing golf brands like Callaway and Titleist a boost. It has also elevated companies looking to capitalize on the changing demographics and trends within the sport.
Golfers continue to flock to courses
For many in the golf industry, it was unclear if the growth seen in 2020 was a function of the pandemic or a new inflection point for the sport.
Through the end of July — the peak of golf season in the U.S. — the number of rounds played in 2021 was up 16.1% compared to 2020, according to data from the NGF. While the July-specific figures were down 3.1% compared to 2020, a month in which nearly all golf courses had been reopened following pandemic closures in certain states, the 2021 numbers are significantly higher than previous year averages.
While those increases are being mainly driven by older, already passionate golfers — the average number of rounds played by golfers grew to 20.2 in 2020, an all-time high since NGF started tracking that statistic in 1998 — younger golfers, and especially female players, saw significant upticks.
"New participants are increasingly younger; they're hooked on the game and they want to get better," David Maher, CEO of golf conglomerate Acushnet Holdings, said on the company's second-quarter earnings call with analysts in August. "A lot of the energy is coming from avid dedicated players who are simply playing more and consistently; more juniors, more women, more younger [players], and more families."
The number of female golfers grew 8% in 2020, the largest uptick in five years, according to NGF data. Forty-four percent of people who played a round of golf on a course in 2020 were under the age of 40, and nearly the same amount of people in their 30s played golf as those in their 60s, according to NGF data.
Golf equipment companies seeing growth in sales
That increase in new golfers has been a boon for Acushnet, which owns golf brands like Titleist and FootJoy.
Acushnet's second-quarter net sales in the U.S. grew 117.1%, fueled by a 98.1% increase in Titleist golf ball sales and a 111% increase in Titleist golf club sales. Over the first half of its fiscal 2021, sales in the U.S. have been up 75.2%.
Callaway, which owns several golf equipment and apparel brands including its eponymous line of balls, clubs, and other equipment, has also seen growth.
Earlier this month, the company raised its financial outlook for its third quarter as well as for the entirety of 2021, citing overperformance of its brands as well as mitigation of some supply chain disruptions.
"More people are joining golf courses, [there are] more entrants into the game, more consumers and we think the long-term trends are going to be quite attractive," Callaway CEO Chip Brewer said on CNBC in June. "The market is going to be larger coming out the pandemic than coming in."
Dick's Sporting Goods, which sells golf products in its stores as well as golf-specialty retailer Golf Galaxy, has pointed to the sport as one of its growth drivers in recent quarters.
"We've continued to see consistent growth in the golf business," Dick's Sporting Goods CFO Lee Belitsky said on the company's 2022 second-quarter earnings call with analysts on August 25. "The golf business has remained very strong for us."
While the company does not break out the performance of Golf Galaxy stores in its earnings report, CEO Lauren Hobart said that the "golf business has been tremendous at both Dick's and Golf Galaxy."
The company has "invested in talent and elevated the in-store service model to become trusted advisers for golf enthusiasts of all levels," Hobart said, and it recently opened its first next-generation Golf Galaxy prototype store outside of Boston. At that location, the Golf Galaxy Performance Center, golfers can not only buy golf products, but take lessons, practice in hitting bays, and have custom club fittings.
In May, South Korean private equity firm Centroid Investment Partners acquired TaylorMade Golf for $1.7 billion, the largest acquisition in the golf goods industry to date. TaylorMade, which produces clubs, balls, and apparel, was sold to KPS Capital Partners by Adidas in 2017 for $425 million.
"The industry is currently experiencing high demand, increased participation with strong long-term opportunities around the world," Jinhyeok Jeong, founder and CEO of Centroid Investment Partners, said in a press release at the time of the transaction. South Korea is the third-largest market for golf in the world behind the U.S. and Japan.
Overall, golf equipment sales have slowed in recent months, according to NPD data — sales across June, July and August 2021 are down 2% compared to 2020 after the first half of 2021 doubled what was seen in 2020. However, the June, July and August 2021 sales numbers are up 50% compared to those months in 2019.
NPD Group senior industry advisor Matt Powell said more consumers are expected to embrace healthier living post-pandemic, and that will include an increase in outdoor and sporting activities, which should benefit golf.
However, it is still unclear how the supply chain issues plaguing other industries will impact golf equipment, which could limit growth.
Executives from both Acushnet and Callaway cited the ongoing supply chain issues in Vietnam as potential road bumps ahead. Acushnet and Callaway both declined to comment for this article.
"There are inventory issues but when we look at most of the categories that we track we've seen business start to plateau," Powell said. "But, [golf sales] are resetting at a new higher level and while we're not getting massive growth, it's a much bigger business than it was two years ago."
Golf expanding beyond the course
The rise of interactive golf experiences that go beyond the typical 18-hole course has also helped golf grow, especially to new audiences.
The growing popularity of TopGolf, which now has 70 locations across six countries after launching in China earlier this month, has been one of the main drivers. While the actual golf experience mirrors what can be found at a driving round, TopGolf aims for a more social and gamified experience along with drinks and food.
Callaway, which previously owned 14% of TopGolf, merged with the company in March, paying $2.66 billion to acquire the remaining portion.
TopGolf reported that it had $1.1 billion in revenue in 2019 and that it had a 30% growth rate since 2017. Callaway said that TopGolf generated $325 million in revenue in the second quarter, while same venue sales were in the 90th percentiles compared to 2019 levels.
Virtual trainers, both used for entertainment purposes as well as high-level golf training, have grown as well.
Full Swing, which produces golf simulators for commercial, residential, and entertainment venues, was acquired by investment company Bruin Capital for a reported $160 million in July. While the simulators can be used for other sports as well, the golf functionality is used by PGA Tour pros like Woods and Jon Rahm, who is currently ranked No. 2 in the world and is starring for the European team in the Ryder Cup.
"In the early advent of the off-course gamification of golf, I think there was a misinterpretation of what the impact would be on the actual game of golf and participation," said David Abrutyn, a partner at Bruin Capital. "It's been proven that it's an entry point for golf and the more people you get swinging a golf club or experiencing the sport at an entertainment venue, the greater ability it has to drive participation in the sport."
In addition to the 24.8 million people who played a round of golf on a course in 2020, another 12.1 million participated in an "off-course golf activity," which includes driving ranges, venues like TopGolf, or indoor simulators like the ones Full Swing produces.
The increasing blend of the traditional sport of golf with technology and other forms of entertainment is a good harbinger for the sport moving forward, Abrutyn said.
Golf's biggest events have had more viewers tune in this year. In April, the final round of The Masters averaged 9.45 million viewers on CBS, up 69% from 2020. In May, the last day of the PGA Championship averaged 6.58 million viewers, a 29% year-over-year increase. And in June, the final round of the U.S. Open averaged 5.7 million viewers on NBC, up 76% from 2020.
The sport is also seeing coverage expand in new ways. The PGA Tour is working with Netflix to create an episodic documentary series, which will likely be modeled on "Drive to Survive," the popular Formula 1-focused series that has driven new fans to the motorsport. NBA star and passionate golfer Stephen Curry recently signed a deal with Comcast NBCUniversal to work on a host of projects, one element of which will include creating content around the Ryder Cup for NBC Sports' Golf Channel.
"A lot of people have tried golf and realize it's perhaps not as hard as they maybe thought, and that's creating an entirely new generation of golf fans, especially in the younger demographics, that will now be fans and engaged in the sport," he said. "That's particularly exciting for anyone involved in the business of golf."
Disclaimer: CNBC parent company NBCUniversal is the broadcast partner of the Ryder Cup.
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