ECONOMY: Downturn weakening attendance at local golf courses

By ZACH FOX - Staff Writer | Wednesday, August 27, 2008 6:52 PM PDT ∞

Softness in the economy has started to show up on the links: Public golf courses across North County are reporting a drop in customers, and a major Carlsbad golf company soon will lay off 9 percent of its local work force.

On the other hand, private golf courses are reporting that attendance is steady, suggesting that only middle-to lower-income golfers are cutting back on play.

"Anybody that is still traveling and coming to a destination point is still golfing. ... Our clients are more local. Instead of seeing people three times a week, we're seeing them once a week," said Jennifer Marsh, facility manager at the Oceanside Municipal Golf Course. She estimates that activity has declined 15 percent from a year ago.

Nationally, golf activity through May dropped 2.2 percent compared to the same time a year ago, according to Golf Datatech, a research company based in Florida.

In Tustin, officials have eliminated a golf course from the redevelopment plan for the old Marine Corps helicopter base. In making the decision, planners cited an overall decline in golfing and surplus of courses.

That could cut into the sales of premium golf balls by Callaway Golf, a major producer of clubs and golf balls based in Carlsbad, according to a report by Wedbush Morgan Securities, a Los Angeles investment research firm.

By October, the company will eliminate 164 jobs; about 1,800 workers are employed by Callaway in Carlsbad, said Michele Szynal, a company spokeswoman. Worldwide, Callaway has about 3,200 employees.

Most of the eliminated jobs will be in the company's manufacturing, warehousing and distribution divisions, she said.

She said the layoffs have nothing to do with weaker sales, which declined 4 percent in the second quarter from a year ago.

"It's more of a need to be more flexible to adequately supply our international markets," Szynal said, pointing to increased levels of automation in the company's manufacturing. "As a matter of fact, sales internationally are quite robust."

Despite slower sales in the second quarter, Callaway's first-half sales are at a record level, according to security filings, and net income increased as the company cut costs. But fewer golfers, combined with expectations for slow sales of a new club launched this year, led Wedbush Morgan analysts to downgrade its recommendation on Callaway's stock from "buy" to "hold" in June.

Another golf club company based in Carlsbad, Sonartec, shut its doors earlier this year, filing for bankruptcy in April.

At North County's golf courses, managers attributed fewer golfers to weakness in the economy.

"The spending money people used to have is gone, and people are not spending as freely as they used to," said Philip White, director of instruction at the Vineyard at Escondido.

But several courses are reporting that they have bucked the national trend. Indeed, the Golf Datatech report showed golfing in San Diego County was down only 0.4 percent from a year ago.

New golf courses and steady numbers at high-end, private courses appear to have balanced out the loss of golfers at public courses such as Vineyard.

"We're not seeing any change," said Tony Pistillo, director of public relations for Four Seasons Resort Aviara in Carlsbad, which operates its own golf course. "The folks who can afford to stay at a Four Seasons Resort are not changing their golf behavior."

Also tightening bottom lines at golf courses are rising water and gasoline bills. That strain is especially hurting courses where attendance has not kept up with expectations, such as Oceanside's public links.

Carlsbad's new course, the Crossings at Carlsbad, opened last August and is short in golf revenue, with greens fees $300,000 short of projections, according to the city.

While the course's restaurant has exceeded expectations, the city still plans to subsidize the course this year.

Fewer-than-expected golfers "is a direct result of the economy," said Jeff Perry, general manager of the golf course. "The larger groups are not doing the corporate events you see when the economy is doing well."

Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at nctimes.com/blogs/minding_your_business.