golfsupply2012

Industry Update February 2012

U.S. Golf Supply – Market Correction Continued in 2011 NGF recorded 19 new openings and 157.5 course closures in 2011, in terms of 18 hole equivalents (18HEQ), resulting in a net reduction in supply of -138.5. Net closures represent less than 1% of facilities and remain a necessary part of the natural market correction that has been taking place since 2006, gradually helping to balance supply and demand.

OPENINGS CLOSURES 19.0 157.5

TOTAL 2011 Daily Fee Municipal Private

14.0 14 0 2.0 3.0

120.0 120 0 11.5 26.0

NET CHANGE -138.5 -106.0 -106 0 -9.5 -23.0

PUBLIC

CLOSURES 157.5

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18‐Hole Equivalents (U.S.) ‐ as of Dec 31, 2011

OPENINGS 19.0

Key points – broader context

TOTAL 14,791.0

Number

% of total

Number

% of total

Number

% of total

16.0

84%

131.5

83%

10,591.5

72%

Daily Fee

14.0

74%

120.0

76%

8,324.5

56%

Municipal

2.0

11%

11.5

7%

2,267.0

15%

PRIVATE

3.0

16%

26.0

17%

4,199.5

28%

Real Estate

8.0

42%

35.5

23%

3,549.5

24%

Public: Fee <$40 Public: Fee <$40

75 7.5

39%

102 0 102.0

65%

4,922.5 4 922 5

33%

The six years of net decline since 2006 represent a cumulative reduction of 358.5 courses (2.4%) in 18HEQ For the preceding 20 years (1986-2005), supply grew by 4,567 18HEQ In the year 2000 alone, there was a net increase of 362 courses

Key points - 2011 •

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Courses tied to real estate (RE) accounted for more than 40% of openings, disproportionate considering RE courses represent 24% of total supply 65% of closures (102 of 157.5) were public courses at a sub-$40 price point 40% of the facilities that closed were 9h l holers, outt off sync with ith th the 27% off national supply they represent

NGF Golf Course Supply Index The NGF Golf Course Supply Index remained at 83 in 2011. The index tracks the ratio of golfers to golf courses. The baseline value of 100 represents the average number of golfers per course (18HEQ) for the five years prior to the U.S. course building boom that began in the 90s.*

NGF Golf Course Supply Index

During the 1991-2011 period covered in the chart, 18HEQ supply grew by 30% with only a 6.5% increase in golfers during that time.

The index can be viewed as a measure of how busy courses are, or how difficult or easyy it might g be to arrange a tee time. A value of 83 means that courses are 17% less crowded than they were 20 years ago.

*This index represents the ratio of golfers-per-course (18HEQ) with the baseline of 100 (the green line) equal to the average for the five years 1986-1990

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March 12, 2012 2011 Openings/Closures: Supply-side Market Correction Continues NGF recorded 157.5 golf course closures in 2011 versus 19 openings, measured in 18-hole equivalents (18HEQ). As in recent years, closures were disproportionately lower priced public facilities, including a large number of 9-hole courses.

The net decline in the number of courses in the U.S. was 138.5 (less than 1% of 18-hole equivalents or 18HEQ) in 2011 – the sixth straight annual drop in golf course supply.

According to NGF, since the market correction in golf course supply began in 2006, there has been a cumulative net reduction of 358.5 golf courses (18HEQ), which represents a drop of 2.4% off the peak supply year of 2005.

The slow reduction in the number of golf courses, which we expect to continue for several years, does not mean that the game of golf has suddenly become less popular.

Those of us close to the business understand that the market correction that began in 2006 was overdue – that growth in the number of golfers and rounds played over the past 20+ years was not nearly sufficient to support all of the courses that were built. Since 1991, the number of 18HEQ in the U.S. has grown by 30%, outpacing golfer growth of 6.5% during that span. Naturally, some courses and clubs have been forced to close, while many others are financially struggling.

“The cumulative reduction in course supply over the past six years has been quite modest, and pales in comparison to the net increase in facilities that occurred over the two decades prior to this recent pullback,” says Joe Beditz, President and CEO of the NGF. “In 2000 alone we gained 362 courses, and over the 20-year period from 1986-2005, we added more than 4,500 courses (18HEQ.) The slow correction that is now occurring is very much overdue and necessary, to help return the golf course business to a more healthy equilibrium between supply and demand.”

The NGF “Golf Course Supply Index” tracks the ratio of golfers to golf courses. The baseline value of 100 represents the average number of golfers per course (18HE) in the U.S. for the five years 1986–1990. The index can be viewed as a measure of how busy courses are likely to be, or how difficult or easy it might be to arrange a tee time. The NGF Golf Facility Supply Index was at 83 in both 2010 and 2011. Essentially, an index value of 83 means that courses are 17% less crowded than they were 20 years ago.

“The supply correction is likely to continue for the foreseeable future,” according to Beditz, as post-recession demand continues to be soft, and most markets remain oversupplied. This gradual reduction in courses represents a natural re-balancing of the market. The outlook for golf remains slightly positive – with a stabilization of demand likely in the near term, and slow growth likely in the longer term.”

To help you respond to any media requests you may receive, or queries from within your own organization, here are some highlights and speaking points: •

There were 157.5 closures and 19 openings in 2011 for a net supply reduction of 138.5 golf courses (in 18-hole equivalents). This represents less than 1% of supply.

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Course closures continue to be disproportionately lower-priced public facilities, including a large number of 9-Hole courses.

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Since the “correction” in supply began in 2006, there has been a cumulative reduction of 358.5 18HEQ. That’s only 2.4% of the U.S. course total prior to the decline.

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In 2000 alone, we added 362 courses, more than the entire recent cumulative sixyear reduction.

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Since 1991, the number of 18HEQ in the U.S. has grown by 30%, outpacing golfer growth of 6.5% over that span.

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The current correction in supply is overdue, and necessary to help restore a more healthy equilibrium between supply and demand. The correction is likely to continue for the foreseeable future. According to NGF’s “Golf Course Supply Index,” the ratio of golfers to golf courses is still 17% below where it was 20+ years ago.