Death of Golf

July 25, 2016

Transcript:

TED: COMING UP NEXT ON "ARIZONA HORIZON." HEAR HOW CHANGING DEMOGRAPHICS AND LIFESTYLES ARE IMPACTING THE STATE'S GOLF INDUSTRY. AND WE'LL DISCUSS PRIVACY CONCERNS REGARDING THE "POKÉMON GO" CRAZE. THAT'S NEXT ON "ARIZONA HORIZON."

"ARIZONA HORIZON" IS MADE POSSIBLE BY CONTRIBUTIONS FROM THE FRIENDS OF ARIZONA PBS. MEMBERS, YOUR PBS STATION. THANK YOU!

TED: GOOD EVENING AND WELCOME TO "ARIZONA HORIZON." I'M TED SIMONS. THE DEMOCRATIC NATIONAL CONVENTION KICKED OFF TODAY WITH CONCERNS THAT THE RUSSIAN GOVERNMENT HACKED DEMOCRATIC PARTY NETWORKS AND LEAKED INTERNAL PARTY EMAILS TO WIKILEAKS, AN ANTI-SECRECY WEBSITE THAT RELEASED THE 20,000 PARTY MESSAGES JUST DAYS BEFORE THE START OF THE CONVENTION. FBI AND OTHER U.S. LAW ENFORCEMENT AGENCIES INCREASINGLY SUSPECT RUSSIA MIGHT HAVE BREACHED THE NETWORK TO INFLUENCE THE ELECTION IN FAVOR OF DONALD TRUMP WHO HAS PRAISED RUSSIAN PRESIDENT VLADIMIR PUTIN AND SUGGESTED PUTTING AN END TO NATO.
TED: THE LEAKED EMAILS ARE CAUSING MUCH INTRO PARTY CONFLICT AT THE CONVENTION THEY SHOW AN EFFORT BY DEMOCRATIC PARTY LEADERS AND STAFFERS TO UNDERMINE THE CAMPAIGN OF BERNIE SANDERS IN FAVOR OF HILARY CLINTON.
TED: GOLF IS BIG BUSINESS IN ARIZONA. BUT IT'S A BUSINESS THAT IS CHANGING FOR A VARIETY OF REASONS AND THOSE REASONS ARE CHANGING THE IMPACT OF THE STATES ECONOMY AND REAL ESTATE INDUSTRY IN A VARIETY OF WAYS. JOINING US NOW IS MIKE SUNNUCKS OF THE "PHOENIX BUSINESS JOURNAL," WHICH RECENTLY PUBLISHED A SERIES OF ARTICLES DEALING WITH THE LOCAL GOLF INDUSTRY. GOOD TO SEE YOU. THE REPORT WAS ENTITLED "THE DEATH OF GOLF."
MIKE SUNNUCKS: GOLF IS A BIG BUSINESS IN THIS STATE. IT'S LIKE 3.2 BILLIONS DOLLARS AND 600,000 PEOPLE PLAY GOLF HERE ANNUALLY. WE'RE ONE OF THE BIG GOLF STATES WHERE PEOPLE GO TO PLAY GOLF AND IT'S ONE OF THE REASONS THAT THE SUPER BOWL COMES HERE, THE FINAL FOUR. THE FOLKS THAT ORGANIZE THOSE THINGS AND ATTEND THEM, PART OF THE REASON THEY LIKE ARIZONA GOLF, AND THE SPORT AS AN INDUSRTY AS AN ECONOMIC DRIVER FACES BIG CHANGES.

TED: I KNOW SOME INCLUDE FOR A LOT OF GOLFERS IT TAKES TOO MUCH TIME AND TOO EXPENSIVE AND HASN'T SEEMED TO HAVE CHANGED.

MIKE SUNNUCKS: THE RECESSION HAD AN IMPACT. IT CUT DISCRETIONARY INCOME. PEOPLE ARE SPENDING DIFFERENTLY AND YOU PLAY GOLF, IT TAKES A LONG TIME TO PLAY AND PEOPLE ARE LOOKING -- HAVE A LOT OF DIFFERENT ENTERTAINMENT OPTIONS AND THE WAY HOUSEHOLDS AND FAMILIES SPEND MONEY HAS CHANGED. AND THERE ARE THINGS WORKING AGAINST GOLF IN TERMS OF ITS ECONOMIC IMPACT AND GETTING PLAYERS AND NEW PLAYERS INTO THE GAME.

TED: IN THE REPORT, AS FAR AS CONSUMER SPENDING, 25% OF GOLFERS DRIVE 80% OF THE SPENDING. IT'S A HARDCORE GROUP KEEPING THIS AFLOAT.

MIKE SUNNUCKS: IT IS AND IT'S A WEALTHY GROUP. YOU SEE THE FOLKS THAT SPONSOR GOLF TOURNAMENTS, THE BIG BANKS AND AUTO COMPANIES AND LUXURY CARS-IT'S A GOOD DEMOGRAPHIC. THOSE ARE THE PEOPLE BUYING THE EXPENSIVE HOUSES HERE IN ARIZONA, THEY NEED TO HAVE A SKI HOUSE AND BEACH HOUSE AND SOMETIMES A GOLF HOUSE. THE FOLKS THAT ARE PLAYING- IT'S A SELECT GROUP. IT'S INTERESTING, I THOUGHT MAYBE -- I TALKED TO THE GOLF FOLKS IN THE INDUSTRY, YOU WOULD SEE A LOT OF GROWTH OVERSEAS, BUT IT'S NOT. HALF OF THE GOLFERS IN THE WORLD ARE IN THE U.S., AND 25 MILLION AND ABOUT 7 MILLION ARE DRIVING MOST OF THE SPENDING AND THOSE ARE THE GUYS THAT HAVE A LOT OF MONEY AND GO PLAY PEBBLE BEACH AND GO TO THE MASTERS AND SPEND A LOT ON CLUBS AND HAVE MEMBERSHIPS AND THE CHALLENGE IS TRYING TO GROW IN NUMBER.

TED: AND THERE WASN'T MUCH OF A CHALLENGE WHEN TIGER WOODS WAS AT THE TOP OF HIS GAME. HE ATTRACTED AN AWFUL LOT OF NEW GOLFERS AND WITH THE RECESSION, SEEMS THAT WAS A FACTOR. HE'S NOT AT THE TOP OF HIS GAME AND ATTRACTING THOSE FOLKS ANYMORE.

MIKE SUNNUCKS: TIGER AND NICHOLSON-BOTH PRETTY WELL KNOWN, THAT DREW YOUR NON-EVERYDAY GOLFERS INTO THE SPORT. WATCHING IT ON TV AND THE MAJORS AND THOSE FOLKS HAVE GONE AWAY BECAUSE OF THE ECONOMY BECAUSE OF THE DEMOGRAPHICS, AND MAYBE THE TV RATINGS TO WATCH TIGER AND PHIL AREN'T THERE ANYMORE. THE SPORT WAS PROPELLED BY HAVING, ESPECIALLY TIGER, OUT THERE AND NICHOLSON BECAUSE EVERYDAY FANS WOULD WATCH THE MAJORS WHEN THEY WERE IN IT.

TED: I WANT TO GET TO THE REAL ESTATE ASPECT HERE IN A MINUTE BUT YOU TALKED ABOUT DEMOGRAPHICS NUMEROUS TIMES. THERE ARE SIMPLY MORE BOOMERS THAN GEN-XERS. THE BOOMERS ARE MOVING THI S WAY AND THE GEN-XERS THE SLACK WON'T BE PICKED UP UNTIL THE MILLENNIALS COME AROUND. ARE THEY EVEN INTERESTED IN GOLF?

MIKE SUNNUCKS: 20 MILLION LESS GEN-XERS THAN BABY BOOMERS. THE BABY BOOMERS MAKING A LOT OF MONEY. THAT WAS WHEN TIGER WAS OUT THERE TOO,THAT WAS IN THEIR PRIME EARNINGPERIOD. THEY WERE SPENDING MONEY AND GOLF WAS ONE OF THE THINGS THEY SPENT IT ON. NOT A LOT OF GEN-XERS. THAT'S GOING TO HIT A LOT OF INDUSTRIES NOT JUST GOLF. SEEING RETAIL AND CAR SALES, ALL GOING TO HAVE TO DEAL WITH IT AND MILLENNIALS COME ALONG AND THERE'S NO GUARANTEE THEY WANT TO PLAY GOLF OR WANT TO LIVE ON GOLF COURSES. THEY LIKE URBAN LIFESTYLES AND GOING OUT TO EAT AND DIFFERENT SPENDING PATTERNS. MAYBE IF THEY GET INTO THE 40S AND 50S, MAKE MORE MONEY, MAYBE THEY'LL FOLLOW SUIT IN TYPES OF THE REAL ESTATE THEY BUY AND MAYBE THE INTEREST, INCLUDING GOLF. AND DOESN'T LOOK LIKE THEY'RE AS INTERESTED IN GOLF AS THEIR FOREFATHERS.

TED: LET'S TALK ABOUT THE IMPACT ON THE REAL ESTATE MARKET IN PARTICULAR. GOLF COURSES, THEY USED TO DESIGN COMMUNITIES AROUND A GOLF COURSE. ARE THEY STILL DOING THAT?

MIKE SUNNUCKS: NO, THERE'S 340 GOLF COURSES HERE. THAT'S MORE THAN ENOUGH. PROBABLY TOO MANY. THERE'S TONS OF GOLF COURSES ACROSS THE COUNTRY AND AS DEVELOPERS DEVELOP THINGS, IF YOU LOOK AT FLORIDA OR CALIFORNIA, YOU KNOW, THEY HAVE THE WATER TO RELY ON AND ARIZONA, MAYBE THE MOUNTAIN, MAYBE THE DESERT, BUT THE GOLF WOULD DEFAULT BIG EMENITY TO BUILD AROUND, YOU LOOK AT NORTH SCOTTSDALE, CAREFREE, CAVE CREEK, THOSE OUTLINE AREAS IT'S ALL BUILT UP IN TERMS OF NUMBER OF HOUSES. HOUSING TASTES ARE CHANGING, PEOPLE WANT TO LIVE IN OLD TOWN AND CENTRAL PHOENIX, IN ARCADIA, THERE'S STILL PLENTY OF GOLF COURSES NEARBY BUT THE APPEAL OF THOSE OLD SUBURBAN DESERT VIEWS, IT'S NOT THERE AS MUCH. THE EXCEPTION IS THE SUPER WEALTHY. THE FOLKS I MENTIONED BEFORE THOSE WHO HAVE A BEACH HOUSE, THYE'RE STILL COMING HERE THEY'LL LIVE HERE TWO OR THREE MONTHS OUT OF THE YEAR, NOT RIGHT NOW, AND PLAY GOLF. THEY'RE STILL OUT THERE. BUT I DON'T KNOW IF THERE'S ENOUGH BUYERS OUT THERE FOR THE CHURN OF GOLF PROPERTIES HERE IN THE STATE.

TED: AND FOR GOLF PROPERTIES ALREADY HERE, THE RESALE MARKET, I IMAGINE SOME GO FAST BUT IF THEY DON'T, IT COULD BE A BLOODBATH OUT THERE.

MIKE SUNNUCKS: THERE ARE SOME THAT SIT THERE. SOME GO FAST BUT PEOPLE WANT -- THEY DON'T WANT THE SQUARE FOOTAGE. THEY WANT TO DOWNSIZE AND WANT HIGH QUALITY FLOORING AND AMENITIES BUT THE HOUSES BUILT IN THE '90S, SPRAWLING, BIG SQUARE FOOTAGE, ARE THERE GOING TO BE ENOUGH BUYERS? THERE MIGHT NOT BE. THAT WILL BE A CHALLENGE FOR THE REAL ESTATE MARKET WHICH HAS RELIED ON GOLF.

TED: INDEED, I KNOW THE STORY, TOO. LISTINGS AND TOO FEW BUYERS AND THE HIGH PRICE POINT AND THE SELLERS ARE STUBBORN. IF YOU ARE A GOLF NUT AND YOU BOUGHT A GOLF PROPERTY, YOU PROBABLY THINK THAT PROPERTY IS WORTH A HECK OF A LOT MORE THAN OTHERS.

MIKE SUNNUCKS: ABSOLUTELY. THERE'S ALWAYS THAT PSYCHOLOGY WITH PROPERTY OWNERS. YOU SEE THAT IN COMMERCIAL BUILDINGS AND GOLF COURSES, YOU SEE THAT ALL ACROSS DIFFERENT CATEGORIES. YOU BOUGHT SOMETHING AND YOU HAVE AN EMOTIONAL ATTACHMENT AND YOU SEE WHAT THE GUY DOWN THE STREET GOT DURING THE BEST TIME POSSIBLE AND THAT STICKS IN YOUR HEAD AND IT TAKES A WHILE FOR THE FOLKS TO COME OFF THOSE PRICES. THERE ARE GOLF COURSE PROPERTIES THAT SELL RIGHT AWAY BUT THERE ARE SOME THAT SIT OUT THERE BECAUSE THE PRICE DOESN'T MATCH THE DEMAND.

TED: AS FAR AS GOLF COURSESTHEMSELVES, ARE WE GOING TO SEE MORE CLOSURES? NOT MUCH IN THE WAY OF NEW COURSES BEING BUILT. ONE OR TWO, MAYBE?

MIKE SUNNUCKS: IT'S REALLY EXPENSIVE TO DEVELOP A COURSE. NOT EVEN TALKING ABOUT THE UPKEEP WITH WATER. ARIZONA IS PRETTY FRIENDLY. OTHER PLACES LIKE CALIFORNIA, IT'S HARD BECAUSE OF THE REGULATION. YOU SEE A COUPLE COURSES OUT THERE, ONE DOWN IN SOUTH PHOENIX WHERE IT'S BEEN CLOSED, AND THERE'S A FIGHT BETWEEN THE DEVELOPER AND THE NEIGHBORS BECAUSE PEOPLE BOUGHT AROUND A GOLF COURSE AND THAT'S BEEN CLOSED. THE RAVEN, A NICE COURSE BY SOUTH MOUNTAIN, THE NEW OWNER TALKED ABOUT MAYBE CUTTING IT DOWN TO NINE HOLES AND CUTTING IT IN HALF AND BUILDING HOUSES THERE BECAUSE THE LAND IS VALUABLE AND IT'S JUST YOU FACE COMMUNITY OPPOSITION, ZONING AND IN SOME OF THESE AREAS, THESE GOLF COURSES ARE USED FORFLOOD WATER AND STORM WATER AND IF YOU'RE BUILDING STUFF ON THERE, WHAT HAPPENS TO THAT? YOU'LL SEE SOME MORE OF THAT IT'S AN EXPENSIVE KIND OF APPROPRIATION TO DO THAT BECAUSE YOU'VE GOT TO GO THROUGH THE COURT SYSTEM AND YOU HAVE NEIGHBORS FIGHTING BUT I THINK YOU'LL SEE MORE OF THEM PUSHING FOR THAT.

TED: THE REAL ESTATE INDUSTRY IN PARTICULAR, BUT JUST THE GOLF INDUSTRY IN GENERAL, ARE THEY FACING FACTS HERE? DO THEY UNDERSTAND THE PROBLEM OR IS THERE --

MIKE SUNNUCKS: NO, I THINK THEY DO. I THINK THEY UNDERSTAND THAT THINGS ARE CHANGING. FOLKS ARE TALKING ABOUT SMALLER COURSES AND TOP COURSE IS AN AMUSEMENT TYPE THING, RINKS AND PARTIES AND STUFF AND LOOKING AT THAT, LOOKING AT MAKING COURSES SHORTER AND TALKING ABOUT MAKING THE BALL BIGGER AND THE HOLE BIGGER, IT'S NOT EASY TO PLAY, ONE GUY SAID IT'S A HARD SPORT. THE BALL IS SMALL AND HARD TO HIT. AND THE CULTURE AROUND GOLF, OF COURSE, YOU GO OUT THERE, IT'S A FRAT BOY, AND THE GUYS WHO PLAY GOLF A LOT DON'T HAVE PATIENCE FOR THE NOVICES WHO HOOK THE BALL OR TAKE A LONG TIME AND I THINK FOLKS IN THE INDUSTRY ARE AWARE AND IT'S WHETHER THEY CAN GET ENOUGH CUSTOMERS AND PLAYERS TO GO ALONG.

TED: INTERESTING STUFF. THANKS FOR BEING HERE. WE APPRECIATE IT.

MIKE SUNNUCKS: ABSOLUTELY.