A Sunny Scenario

by Victor Williams

We-Ko-Pa's Cholla course is one of dozens of must-plays in the Valley of the Sun.

Next time you fly into Phoenix’s Sky Harbor airport, if you’re in a window seat, fix your gaze on the landscape below as it becomes closer and closer. In every direction you’ll see the telltale ribbons of green surrounded by shades of Sonoran brown, hundreds of golf holes representing every business model there is — fully private, semi-private, resort and fully public. The Valley of the Sun’s ever-expanding environs are to a golfer what a jewelry store is to an inveterate shopper: Where does one start, and where does it end? And we could add, “Where does all the water come from?” and “Are there enough of me to go around?”

All are valid and salient questions as America’s oversupply of golf courses begins its “correction” phase, to cop a Wall Street term. Nearly six years after 9/11, the industry as a whole is still digging out of a slump in new and continuing “regular” players, even as finger-crossing developers continue to scarf up land and hire the Fazios, Weiskopfs and Crenshaws of the world to design them the Next Great Track. And nowhere are the vagaries of the golf business’ singular supply-and-demand climate on clearer display than right here in the heart of the Sun Belt. Over the past decade, scores of new courses have come on line from Prescott and Flagstaff in Arizona’s northern mountains to Tucson in the south. Right in between sits the scorching megalopolis of Phoenix-Scottsdale with its bulging inventory of golf product and the upscale resorts and residential developments to go with it. The past two years have seen a definite slowdown in openings; most of those have come on the private fronts (The Golf Club at Scottsdale, for instance), or on the outskirts of town as part of a Native American casino product (such as the outstanding new Crenshaw-Bill Coore Saguaro course at We-Ko-Pa, reviewed in the Spring 2007 issue of FG Magazine). A few older public courses have been upgraded or redesigned to stay competitive. And there isn’t a lot of activity on the immediate horizon — and rightly so, says one expert.

“There’s still 40 to 50 too many golf courses, so it’s going to take a while to absorb them,” says Tom Patrick, vice president of SunCor Golf, which operates seven resort and residential-based courses in Arizona and Southern Utah. “Once it absorbs them, the only area to go is where there’s water, and that’s down between Phoenix and Tucson. Until that happens, there won’t be too much new golf. We haven’t built a new course in four years. The last one was Stoneridge in Prescott.”

That said, SunCor is gearing up for the next, biggest-ever wave of customers. “We’re looking at some significant developments for 2008 or 2009, mostly because of the housing market. But the golf market is getting better — revenues are going up, discounting is going down, and that’s strictly supply and demand.”

Patrick paints a rosy picture based on hard demographic numbers. While the past decade’s frenetic building boom far outpaced growth in the game in general, the biggest portion American history’s most populous generation — born between 1946 and 1964 — nudged ever closer to retirement. Still, most of them were and are still in the job market, some still have kids at home or in college, and all have seen their leisure time chopped to bits by technology, suburban sprawl, other activities, whatever. When the golfing contingent of that population does manage to get away, they tend to shop around and sample as many courses in a given region as they can. With aggressive pricing in the desert’s overstuffed birdie buffet, who wouldn’t?

That means a lot of space on the region’s macro-tee sheet, a problem Patrick sees less of these days. “When you have 10 courses built every year for 10 years, that wreaks havoc in your turnaround numbers,” he says. “When we built Sunridge Canyon [in Fountain Hills] 10 years ago, it was booked 45 days out. After 9/11, that went away, but now it’s coming back to where we’re booked two, three, four, five days out now. That’s been the last year and a half.”

While the actual number of golfers nationwide remains flat between 25 million and 27 million, according to the National Golf Foundation, and those traveling to Phoenix-Scottsdale will follow suit, the numbers of those coming to stay and play out their golden years will go way up. “The Baby Boomers are starting to retire. We haven’t really seen the beginning of the influx of people coming to the state. So I see a big increase in revenues, a slight increase in rounds, which means absorption is getting better.”

Though it’s not really considered a year-round golf destination because of the summertime’s furnace-like heat, Arizona is the West’s de facto golf business bellwether. Big-time developers know its climate, profitable real estate pricing, broad variety of golf product and easy fly-in access from cold-weather cities like Seattle, Denver, Chicago and Minneapolis put it right in a well-heeled snowbird’s wheelhouse. Conversely, cooler golf-rich destinations like San Diego are an hour’s flight away when the days get long and the locals get overcooked. Over the next 10 years, Patrick says, those factors will dovetail into a healthy economy for existing golf operators.
“The National Golf Foundation has done a study that says when you’re 30, you play one time a month, at 40 it’s two times, at 50 it’s three times, at 60 it’s eight times and at 70 you can play a dozen,” he says. “So the rounds are going to go up over the next eight to 10 years. If you’re in the business, you’re golden. After that, you’re going to have to re-think it, because 28 percent of the population will be retired, and then what?”

If current trends are any indication, that “what” means architects, builders and investors heading overseas to capitalize on burgeoning golf markets from Southeast Asia to Eastern Europe. According to a recent New York Times article, 75 percent of all current golf course construction is taking place overseas, and FG conversations with Jack Nicklaus, Tom Fazio and other architects back that up. English-speaking countries like the United States, Great Britain and Canada are flush with courses. For Arizona and the rest of the Southwest, that’s probably a good thing. For golfers looking for ever-new fairways to traverse, it’s time to get caught up on the riches already there. And wait for the next big building wave, somewhere down the desert road. FG