San Diego’s Golf Economy
A Report by the National University System Institute for Policy Research
By Kelly Cunningham
and W. Erik Bruvold
Few economic sectors in San Diego County have achieved more success than the golf industry. The region ranks among the top golf travel destinations in the world. San Diego is home to 90 public and private golf courses, several of which rank in various “top 100” lists, and a number of the largest golf equipment manufacturers are located in the county. San Diego’s Torrey Pines Golf Course annually hosts one of the PGA tour’s most popular events and was the site of the 2008 U.S. Open, the second highest attended in Open history.
All told, in 2008 golf-related activities in San Diego County generated more than $2.6 billion in revenues and accounts for approximately 26,900 jobs. Average income for golf-related jobs in San Diego was $39,700.
Size of San Diego’s Golf Economy
During 2008, golf-related activities in San Diego generated more than $2.60 billion in revenues. This makes golf larger than our legal services sector ($2.3 billion), aerospace ($1.8 billion), agriculture ($1.6 billion), or software industry ($1.6 billion).
The average income from golf related jobs is $39,700. This number is significantly boosted by 6,700 jobs directly tied to golf equipment manufacturing and distribution, which pays an average wage of $62,100. Average annual income for both golf course operations and related hospitality jobs is impacted by the fact that some of these jobs are seasonal and/or part time. In comparison, San Diego’s overall average wage is $46,300.
San Diego’s golf industry is divided into five main segments: 1) golf equipment and related manufacturing, 2) operations of courses and driving ranges, 3) golf-related travel, tournaments and charitable giving, 4) merchandising and retailing, and 5) miscellaneous services such as instruction and consulting.
In this report we measure golf’s footprint on the San Diego economy in two closely related ways. We first examine the industry’s size by overall revenues and employment in the aforementioned five segments. In the second part of the report we discuss golf’s economic impact on San Diego – identifying the “new dollars” the industry brings into the local economy and the associated indirect and induced impact as these dollars circulate. Readers should keep this distinction in mind as they examine the report.
Equipment Manufacturing
Thirty-two golf equipment and related product manufacturers are located in the San Diego region, locally employing 5,100, and accounting for $1.85 billion in revenues. Another 43 wholesalers of golf equipment also have a presence in San Diego, with sales totaling $42 million and employing 303 workers.
To arrive at this number we gathered sales and employment data from Manta.com, Dun & Bradstreet, corporate annual reports, and corporate Websites. In cases where no sales data was available, we calculated an estimate using reported employment numbers and sales-per-employee for the industry. The final estimates were then compared against data from the U.S Census Bureau and the California Employment Development Department (EDD).
Facility Operations
San Diego County is home to 90 golf courses. According to research by WeatherBill.com, between 350 and 357 “Golf Playable Days” are recorded per year in San Diego, the most among any of the nation’s “golfing communities.” Golf courses primarily derive revenues from greens fees, range fees, memberships, golf cart rentals, and spending on food and beverages. This revenue, in turn, supports a host of suppliers including golf equipment manufacturers, food and beverage providers, and turf grass equipment and maintenance providers.
In 2008 San Diego golf courses and driving ranges/practice facilities in San Diego County had total estimated revenues of $407.2 million and employed approximately 4,600 full-time equivalent workers.
To derive this estimate we first gathered data from several national golf organizations and business databases to determine the number of courses in the region. Sources included the National Golf Foundation (NGF), the PGA of America, Dun and Bradstreet, Manta.com, the U.S. Census Bureau, and the San Diego Convention and Visitors Bureau. The full list of golf course and practice facilities in San Diego County is found in Appendix A.
Next we determined average 2008 per-course revenues. We began by categorizing courses into the principal categories used by the PGA of America: private, daily fee/semi-private, resort, municipal/military, and driving range/practice facilities. Given the small sample from the PGA Facility Operations Survey for San Diego County, we utilized their average revenue figures for Southern California, making a slight adjustment upward to account for findings that showed slightly better performance by San Diego operations in some segments. We also adjusted the estimates to reflect the verified number of holes at each golf course.
Based upon these estimates, golf course operations in San Diego generated $402.4 million revenues. Another 13 stand-alone practice facilities and driving ranges had revenues of $4.7 million.
Visitor Travel
Visitors who play golf during their trip to San Diego spent an estimated $191 million in 2008 on goods and services, such as lodging, dining and non-golf entertainment. This is in addition to their direct spending at the region’s golf courses which is estimated at $64.1 million. In addition, there is another $25.8 million in economic activity resulting from major golf tournaments. Approximately $30.3 million flows to area charities as a result of events hosted at area golf courses.
To arrive at our estimate that visitors who play golf in San Diego spend an estimated $191 million on off-course goods and services and an additional $64.1 million at area golf courses, we began with the visitor surveys conducted for the San Diego Convention and Visitors Bureau (ConVis). They found that in 2008 approximately 1.4 million visitors to San Diego participated in golf activities. Nearly all (96 percent) of these were overnight visitors, spending an average of $816 per person during their trip and staying a median of four nights.
However, not all of this spending is attributable to the sport of golf. Some visitors are likely to engage in other leisure and/or business activities during the rest of their visit to San Diego. While economic estimates of the impact of tourism do not usually attempt to disaggregate spending, we felt that a conservative approach required us to separate out the spending that could be directly attributed to golf from the other spending done by these “multi-purpose” travelers.
To do this we used the National Golf Foundation’s “Golf Travel in the U.S.”, which estimated golf travelers spend an average of 30.9 days away from home during the course of a year and play an average of 6.9 rounds during this travel. Given this ratio, we allocated 22.3 percent of spending to golf-related purposes.
Finally, a portion of visitor expenditures are already captured in our estimates for golf facility operations. We used national figures for revenue per round and conservatively estimated that each of the 1.4 million visitors who engaged in golf play an average of one full round during their visit.
Tournaments
San Diego facilities host numerous golf tournaments nearly every week of the year. Economic studies on the largest of these measure sales, attendance, and economic impact from the events. The most prominent of San Diego’s annual golf tournaments is the Farmers Insurance Invitational (formerly Buick Open) held the last week of January at Torrey Pines Golf Course. San Diego State University’s Center for Hospitality and Tourism Research, found total spending for the event in 2008 was $28.4 million, with 37 percent of the nearly 147,500 gate attendees coming from outside of the region. The researchers estimated that the attendees accounted for 24,491 hotel room nights.
In addition, the Callaway Golf Junior World Golf Championships brings thousands of youngsters and their families to compete at twelve San Diego area courses each year. Total attendance at the events range between 4,000 and 5,000 with a conservatively estimate for direct economic impact of at least $863,000. The Nationwide Tour Championship held at Barona Creek Golf Club is also reported to have an annual $2.0 million impact.
Our estimate of total tournament revenue in 2008 includes annual events for which there is specific data on attendance, spending and the percentage of attendees that come from outside of the region. Thus it does not include, for example, the 2008 U.S. Open at Torrey Pines in 2008. Also not included are the National Association of Intercollegiate Athletics (NAIA) Women’s Golf National Championships held in 2007 and 2008 at the Lake San Marcos Resort & Country Club, the recently announced LPGA Classic to be held March 25-28, 2010 at the La Costa Resort and Spa, or the 2009 LPGA Samsung Invitational. Based upon data for other LPGA events, we estimate the LPGA Classic in Carlsbad will have an approximate $5 million impact.
Charitable Events
Numerous charities hold golf tournaments events throughout the year and many derive a substantial amount of their revenue from the difference between the green fees charged by hosting golf courses and gross event income.
The National Golf Foundation and SRI calculated that the economic value of the charitable fundraising done at golf courses throughout California was $324.3 million in 2006. They derived this figure from national studies examining the number of charitable golf outings and events held; discounted fees, services and staff time for the events; as well as actual charitable giving associated with professional golf tournaments. Based upon the ratio of golf rounds played in San Diego to the statewide total, we estimate the charitable giving generated from golf events is $30.3 million.
Retail Merchandising
The U.S. Census Bureau’s 2007 Economic Census showed nearly $3.4 billion was spent on golf equipment throughout the nation. Additional spending for golf related purposes include sales of apparel, shoes, and media (books, magazines and video/ DVDs). Golf cart sales and rentals constitute another important segment. To calculate this figure we allocated a share of golf equipment and apparel sales reported for the state of California from SRI International’s “The California Golf Economy Report”. This report estimated merchandise sales in California to be $385.6 million. To calculate San Diego’s portion of these purchases, we took the ratio of annual rounds of golf played in San Diego compared to the annual number of rounds played state-wide. Using that methodology, we estimate off-course golf equipment and apparel sales in San Diego are $35.5 million.
For the calculation of the economic impact of merchandising, we want to understand the value-added by San Diego retailers to the goods which they sell. Using SRI’s estimate of retail margin on final sales of golf equipment, we estimate that approximately $14.2 million in golf-related retail sales were retained in the San Diego economy.
It should be noted that sporting goods sales in San Diego have stood up relatively well through 2008. While taxable retail sales overall in San Diego decreased 1.7 percent in 2007 and another 6.8 percent in 2008, sales among sporting goods stores in the county increased 3.6 percent between 2006 and 2008. Although not all sporting goods sales are golf related, it is reasonable to assume golf-related merchandise did not vary significantly from overall sporting goods sales recorded between 2006 and 2008 (after adjusting for inflation).
Other Golf-Based Businesses
A number of ancillary businesses are directly connected to the golf industry in San Diego, including companies involved in training, management and consulting services, event planning, construction, design, and architectural firms. Using data from Dun and Bradstreet and Manta.com we estimate the economic impact from these firms to be $29.2 million.
Golf and New Dollars to the Region
Golf’s economic impact in San Diego is a combination of both discretionary spending by existing residents (that in the absence of golf would arguably shift to other forms of consumption) and activities which bring “new” dollars into the economy.
Direct Impact
To estimate the size of the parts of the golf industry bringing new dollars into the region, we first calculated the value-added by golf manufacturers as total value for shipments less their cost of materials. In 2008 this indicates $1.23 billion in economic impact to San Diego.
Spending by golf-related visitors is conservatively estimated at $191.0 million, plus an allocation of another $64.1 million of spending by visitors at area golf courses. Estimated visitor spending for the region’s major tournaments also generated $15.6 million. This does not include the estimated $73.6 million that came into the region as a result of hosting the 2008 U.S. Open.
All told, “new” dollars brought into the region in 2008 from golf related spending totaled $1.5 billion, about 0. 9 percent of San Diego’s $169.3 billion Gross Domestic Product (GDP).
Indirect/Induced Impact
Companies and facilities involved in the golf industry purchase goods and services from other companies. These purchases are considered the “indirect” impacts of the golf sector. Furthermore, workers directly employed in the golf sector spend a percentage of their income within the region, creating additional economic activity and employment. These effects are considered “induced” impacts.
Together, the indirect and induced impacts comprise the multiplier impact from the golf economy. Multiplier values vary based on the unique characteristics of San Diego’s economy and by the nature of the industry. Industries with more extensive linkages with other industries in the local economy have a greater multiplier effect on final economic activity relative to the initial or direct effect. Conversely, economies and industry sectors dependent on a large share of imported supply have smaller multiplier effects.
Using Regional Input-Output Multipliers (RIMS II) for San Diego derived by the U.S. Bureau of Economic Analysis, we calculate that the various aspects of the golf industry in San Diego have final demand multipliers ranging between 1.91 and 2.06. Cumulatively, the new dollars golf activities bring in had an indirect and induced impact in 2008 of $1.41 billion. Thus the total direct, indirect, and induced impact in 2008 of the new dollars golf brings into the San Diego economy was $2.93 billion, 1.7 percent of GDP, and another nearly 18,300 jobs due to golf spending.
We can use the same approach to calculate the direct, indirect and induced impact of the golf related activities engaged in by San Diego residents. As noted above, there is good reason to believe that in the absence of golf this spending would shift to other forms of consumption. The direct impact of this spending is $410.8 million. Using RIMS II, we calculate the indirect and induced impact to be $382.3 million.
The total direct, indirect, and induced economic impact of golf in San Diego County during 2008 therefore is $3.7 billion, accounting for 26,900 jobs in total, and 2.2 percent of the region’s 2008 GDP.