The slumping economy hasn't forced Las Vegan Michael Schroeder to ease up on his twice-a-week golf habit.

But when Schroeder hits the links these days, it's clear to him that plenty of locals have pared their tee times. Playing one Summerlin course in mid-February, Schroeder, an air traffic controller, saw 12 other golfers on a property that can tee off 40 people an hour.

And the courses Schroeder plays have slashed greens fees. It cost him $54 to play at Angel Park Golf Club in late February, down from $145 during flush economic times a couple of years ago. In Sun City Summerlin, greens fees on the Highland Falls and Palm Valley courses dropped to as little as $35 or $40, with perks including free sodas and balls. Overall, it's a great time to be a local golfer, and a not-so-great time to be a course operator.

 

"They need you here. They want you here," Schroeder said. "They used to have high prices, and they never tried to have deals for local people because they wanted the tourists more."

Golf courses nationwide feel today's pain, as a years-long greens-building binge runs smack into a dwindling base of golfers. In the 1990s and early 2000s, developers built 5,000 golf courses, bringing the country's total to 16,000 courses. The growth happened as the number of regular golfers dropped more than 7 percent. The recession has amplified courses' woes. As operators seek to survive, locals could increasingly find themselves welcome on once-private courses, and they'll also enjoy more value for their golfing dollar, industry watchers predict.

Kris Strauss, sales and marketing director for Arizona-based OB Sports Golf Management, said numbers from the National Golf Foundation show a 9.8 percent decline in the number of rounds played locally from 2007 to 2008. At OB's local courses, which include Angel Park, Legacy and Aliante golf clubs, play is down anywhere from 2 percent to 9 percent. OB officials have noticed an especially steep dropoff in play among tourists, Strauss said, while rounds played by locals have fallen only slightly.

Business is also off at Bear's Best and Canyon Gate Country Club, two courses that Texas-based ClubCorp USA operates. Rounds played at Bear's Best have decreased about 10 percent, said Chuck Feddersen, ClubCorp's regional vice president. At Canyon Gate, a private club with an initiation fee of $10,000 and monthly dues of $690, membership resignations have jumped more than 20 percent, though rounds played have held steady as members eschew travel and stay close to home to golf, Feddersen said.

Despite those numbers, experts say Las Vegas is better off than many markets. The city's developers didn't overbuild courses to the extent their counterparts in other markets did, mostly because scarce water makes development difficult, or even impossible, said Colin Hegarty, president of Dallas consulting firm Golf Research Group. The drought forced the Las Vegas City Council to stop course development four years ago.

With no new courses in nearly half a decade, Southern Nevada has maxed out at a little more than 60 golf courses marketwide. At nearly 2 million residents and close to 40 million visitors a year, the region is actually undergolfed based on population per 18 holes, Hegarty said.

John Walsh, editor of Golf Course Industry magazine, agreed that the desert's water shortage helped Las Vegas avoid an overbuilt golf sector.

But no market is immune to two key trends affecting courses nationwide, Hegarty said.

First is that long-term chronic drop in the number of golfers, and second is an acute recession that's left consumers with fewer discretionary dollars for recreation of any kind.

No one's studied why the number of regular golfers declined from 27 million in 2000 to 25 million today, though analysts blame everything from rising greens fees to fewer corporate golf outings for the falloff.

And then there's the recession. Thanks to job loss and salary cuts, Americans have less money to spend on leisure pursuits. Plus, plummeting home prices and tanking stock markets generate a reverse wealth effect that has nervous consumers clamping their wallets shut.

Fixed operating expenses mean any drop in customers can devastate a course's bottom line. It costs the same to run a course whether you have one duffer or 10,000, so even a 5 percent drop in rounds played can wipe out a club's profit, Hegarty said. Rising water prices have tightened the pinch on local courses, too.

Exclusive resort courses will likely suffer the least, Hegarty said, because tourists plan to spend and are willing to shell out dollars for greens fees on well-known courses. Shadow Creek, for example, has some of the world's most expensive greens fees, with charges coming in at more than $1,000 a round. But it's every golfer's dream to play the course, Hegarty said, so the club can charge what it wants.

Nor do the most exclusive private clubs feel too much pain, Walsh said, because anyone who could afford $50,000 to $100,000 to join a golf club probably has enough cash to hang on to his membership during a temporary downturn. What's more, clubs that command such initiation fees typically have decent cash positions and can survive tougher times.

Rather, it's the mid- and low-priced private clubs, where joining expenses run $2,000 to $8,000, that will hurt the most, Walsh said. And Hegarty said "low-end" daily fee courses aimed at the "man on the street" will falter as water grows pricier.

But low-cost courses could get a boost during the recession, as cash-strapped players flee expensive greens fees and find affordable refuge in public courses, said Jerry Sager, senior managing director of golf-course construction lender First National of America in New Jersey.

Consumers will see courses and clubs adapt to economic travails in several ways.

For many semiprivate and public operators, the first response is often reducing greens fees.

Both OB Sports and ClubCorp have taken that step. Depending on the tee time and the course, OB Sports now charges locals $35 to $54 to play a round that might have cost a tourist $100 to $155. On Wednesdays at Aliante, OB Sports offers lower twilight fees, usually reserved for the end of the day, all day long. At Bear's Best, ClubCorp has shaved 10 percent to 20 percent off its greens fees.

But smarter operators don't merely join the race to the fee bottom, Walsh said. Studies show golfers care less about cost than they do about value, so savvy operators will think more about how to improve the golfer's experience -- say, through offering a free round for every four rounds, or lowering prices on food and apparel inside the clubhouse.

Managers at both OB Sports and ClubCorp say they're focused on adding value for golfers.

OB Sports guarantees golfers booking online the best rates and tee-time options. At its Legacy Golf Club, the company rolled out a text-messaging service that alerts regulars to golf specials on slower days. And it bought buses so it could offer free transportation to visitors staying on the Strip. The rides have allowed OB Sports to rein in fee reductions for tourists, Strauss said.

"If you compete only on rates, you'll lose every time," he said.

For ClubCorp, deep discounts would make it tough to offer the kind of atmosphere executives want to deliver, so the emphasis is on "improving the experience with different programming rather than getting down in the mud and fighting a price war," Feddersen said.

Memberships at Canyon Gate now also include membership in Bear's Best, for example. Canyon Gate also offers free lessons to members, as well as happy hour specials and "dollar days," which features a rotation of $1 menu items. At Bear's Best, some weekday tee times come with all-you-can-eat free food and beverage service, and some promotions included a free margarita, a sleeve of balls or a T-shirt with a golfer's first round.

One adjustment that's not in the cards for Canyon Gate is a conversion from private club to public course, Feddersen said. But it's a change Feddersen and other observers said could happen more often in coming years, as ailing private clubs look to expand their universe of players to include the general public.

"I think nationally, private clubs are going to have a challenging time in this economic climate, no matter what market they're in," Strauss said. "You will definitely see more private clubs offering more unaccompanied guest play and open-guest policies, and more private clubs will open to outside groups and golf outings to drive their revenues as members resign in hard times."

Courses and clubs are also streamlining maintenance to trim operating costs. Instead of mowing fairways or edging bunkers every day, for example, operators might perform such routine tasks two or three times a week, Walsh said.

And where housing developments link to golf courses, residents will sometimes buy and manage a struggling course themselves. That's the case in Sun City Summerlin, where residents own the golf courses and split their profits -- and losses -- among the community's 8,000 homes. Sun City Summerlin residents have debated in online forums whether to close the Highland Falls and Palm Valley courses, which annually lose around $300 per home, or about $2.5 million communitywide, according to a recent e-mail a resident sent to the Review-Journal. But Schroeder, the golfer, said he's heard of no pending closure at either course, both of which he plays regularly. Shutting down the courses would launch lawsuits from residents who were promised golf-course frontage when they bought their homes.

Though no local operators or national industry experts said they know of any pending course closures in Las Vegas, Sager said he believes some courses that lack cash reserves could shut down. And those closures would happen in every segment of the sector, though some resort courses will "do well" if they have enough working capital to sustain lower levels of use, he said.

Schroeder, who frequents Red Rock Country Club in addition to Angel Park and Sun City Summerlin's courses, said he hasn't heard any new rumors of local courses closing down, or even changing from private or semiprivate clubs into public courses. But he said it wouldn't surprise him if some local clubs had to close.

"It's incredible how empty the courses are," he said.

Still, Las Vegas has much going for it, Hegarty and Walsh said.

On top of being slightly underserved, Las Vegas is truly a golf destination, with some of the world's most famous -- and successful -- courses. Local resort operators say their golf courses make up the "most effective tool" they own for bringing in a steady stream of guests, Hegarty said.

Walsh agreed the city's status as a golf destination will help it weather industry problems affecting the rest of country. Southern Nevada also hosts a greater variety of consumers than other cities enjoy, and its moderate climate makes it a year-round golf market.

"The recession will affect everyone, and there will be more closures based on operational issues. But I think that probably will not visit Las Vegas so much," Walsh said. "Las Vegas has so many deals. People can stay there for a pretty cheap price."

It's water, rather than the economy, that could provide the fatal blow for some courses.

"Las Vegas got itself on the map as a place you think about for golf," Hegarty said. "Just stand at the airport and watch all the golf clubs coming through on the luggage carousels. Forty million tourists generate a tremendous number of rounds. But the major issue is water. It dominates everything else. It won't be lack of demand that will close courses in Las Vegas. It will be not being able to get water at a rate people can pay."

Contact reporter Jennifer Robison at jrobison@review journal.com or 702-380-4512.

Veering off course

Today's sour economy hasn't forced any major changes in local golf-course ownership or operation, but clubs in Las Vegas haven't been immune to questionable management, overeager revenue forecasts and other travails that can affect golf courses even in healthy economies:

Stallion Mountain Country Club closed without warning in July, after several years of controversy and an ownership change. Major local golf-course operator Walters Golf bought the club in 1997 and owned it until more than 20 investors bought it from Walters in 2006 for $24 million. Walters improved the clubhouse and courses, but club members took over the course after Walters Golf said it would shutter two of the club's three courses and build homes on the greens to pay off bank loans.

With advertised rounds costing as little as $19, the municipal Craig Ranch Golf Course in North Las Vegas has long been popular with locals looking for an affordable alternative to Southern Nevada's bumper crop of pricey greens fees. But the course suffered financially, failing to turn a profit between 2001 and 2005. So city officials decided to convert the course, now 54 years old, into a 132-acre regional community park with the potential for features including an amphitheater, a dog park, a skate park and kids' play areas. The conversion is continuing.

Between its January 2003 opening and June 2005, the $22 million Boulder Creek Golf Course in Boulder City lost $3 million, thanks to sales that fell below projections and expenses that exceeded expectations. The 27-hole course also left roughly $1 million in unpaid water bills. The course, which the city of Boulder City owns, didn't fare well under private management: Boulder City took operations over from Triad Golf Management in March 2004. The city considered turning the course back over to private management in early 2005, but the city continues to operate the course today. Residents voted in 2004 and 2005 to forbid surrounding residential development that could have raised as much as $17 million to help pay the course off. City officials in 2006 gave the nod to a 70-room hotel and time-share project designed to boost the number of golfers using the course. The golf club is still open.

A city auditor found in 2005 that Durango Hills Golf Club, a city of Las Vegas-owned course managed by IRI Golf Group of Arizona, lost $2.8 million between 2003 and 2005, though forecasts showed it posting $1 million in profit in its first two years. Officials blamed the income shortfall on estimates that the course would host 72,000 rounds of golf a year; it actually brought in less than 30,000 rounds annually in its first two years. Experts said Durango Hills' lack of a driving range hurt the number of rounds it could attract. The course also suffered from other issues, including a work-force turnover of 100 percent and employee theft. The course is still open, and IRI still manages it.

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