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The golf course has been one of Western Europe’s better job factories. The continent now has some 6m golfers, who spend an average of $1,700 a year each on their addiction. This $10 billion golf industry is already bigger than wine-making – and it accounts for roughly 150,000 jobs. A biggish course can employ 50 people directly – to say nothing of the architects, construction staff, equipment suppliers, clothing makers, golf writers and other hangers on.

Recently, this success story has run into the rough. Part of the problem is over-expansion. In 1992 alone, 255 new golf courses opened in Western Europe, nearly 6% of the total ever built there. Once open, few golf courses actually close: running costs are far smaller than building costs. But many keep going courtesy of their bankers. “A lot of people have had their fingers burned in the golf boom,” says Michael Ford of Golf Enterprise Europe, a publishing company. In Britain, Compton Holdings, which as backed by Peter Alliss, a golf commentator, and was developing a dozen or so courses, recently went bust.

Although the recession is partly to blame, so are the course designers. The continent relative beginners have been confronted with punishingly difficult courses, where woods and lakes swallow up their balls. Some 93% of French golfers have a handicap of 16 or more – ie they hack. These failed Faldos want easy courses, near cities, nine cheap-and-cheerful holes rather than 18 dear-and-difficult ones. France is now embarked on a programme to build 100 golf courses where green fees are around FFr100 ($12). In America, whose golf industry is twice as big as Europe’s. four in five new courses are the easier kind Joe Public wants, at an average green fee of $24 a go.

Another problem is that most European golf courses are owned by individual developers. In America and Japan bigger firms dominate. Now these outsiders are invading Western Europe. Japanese firms already own several smart new clubs around London as well as the Penha Longha club in Portugal, which boasts five villages, 26 greenkeepers (for 18 holes) and an irrigation system controlled by satellite. Membership is a pinch at $36,000.

As America’s home market matures – it had 14,375 courses at the end of 1992, 18 holes for every 22,000 golfers, compared with 18 for every 84,000 in Europe – big firms are turning their eyes to Europe. For example, Club Corporation International is the world’s largest golf-club operator, with revenues of $850m in 1993: Jim Maser, the head of ClubCorp Europe, says he has been “nosing around for a year and a half trying to learn the markets”. He expects his first deal this year, with Britain, France, Spain and Italy his targets. American Golf Corporation has just bought four British courses from the defunct Compton Holdings. The big airline companies and hotel chains will not be far behind.

With the prices of golf clubs still falling and much of the hard work already done, profits are there to be had. “It’s not the first, or even the second owner of a golf course who makes the money,” argues Colin Hegarty of the Golf Research Group. “It’s the third owner.” Bad luck for the entrepreneurs who first sent in the bulldozers. But good for the army of workers who earn a living from the appetite for hitting a ball into a hole with a stick.

The development of high-tech, top-quality golf clubs has inspired a vast new industry of imitators – but now the leading manufacturers, angry at being ripped off, are fighting back. PETER HIGGS reports on the battle.
Most weekends during the winter Derek loads his van and heads for a hotel somewhere in the south of England.

He operates on the fringes of the law, risking criminal prosecution and civil writs.

Twice he has been fined for unauthorised advertising, and has received writs and threatening letters from major companies.

Yet the 30-year-old wheeler-dealer will not be deterred, adamant that he entitled to make a living.

For Derek trades in golf club copies, selling clubs which are near replicas of the top brand names but, at £150 a set, cost a quarter of the price.

He is the front line of a multi-million pound counterfeiting industry which has rocked golf.

It is a world-wide issue which has grown dramatically in Britain over the past few months. Now the campaign to stamp out the problem, involving private investigators, undercover agents and specialist lawyers, is being stepped up.

“The public are being conned,” said one leading manufacturer. “They’re confused by being offered clubs which appear to be the real thing when they’re not.”

Escalating costs of the top brands have enabled copies to thrive. The fact that they trade on the image of the leading brands without using the same materials or precision construction angers the manufacturers, who feel their ideas are being stolen and their reputations damaged.

A recent survey by the Golf Research Group revealed that copies are the best-selling irons in Britain. In sales of woods, copies are second behind Callaway.
The imitation clubs are manufactured in Taiwan – where six offenders were recently jailed – and mainland China. Once they reach selling points around the world, the deception takes several forms.

Counterfeiting, in which clubs are sold as if they are top brands, is the most serious. California-based Callaway have set up a special unit, “The Callaway Police”, and spent $3million to root out the conmen, gaining considerable success in America, Japan and Malaysia.

In Britain, where counterfeiting is a criminal offence which could lead to prison, the car boot salesmen and Sunday traders use a ploy of ‘passing off’.

The clubs, known as ‘knock-offs’, are slight variations but carry similar names, appearance and logos to the top brands. The Callaway Big Bertha metal driver, for example, sells for around £250 compared to the Canterbury Big Bursar at £70.

The makers retaliate by taking civil action, claiming infringement of their trademarks and clubhead design. And the writs are flying.

Callaway, whose top player is European No.1 Colin Montgomerie, issued writs against nine British companies this month. Cobra Golf followed with eight writs against UK distributors. Ping, Taylor Made and Lynx are also putting up a fight.

In the past two years Cobra, makers of Greg Norman’s clubs, have spent £150,000 in Britain pursuing 11 successful lawsuits.

The most common copies of King Cobra clubs, which cost up to £950 a set, are King Snake and Lady Viper (at about £150 a set).

“The average golfer is being misled into thinking that these clubs are direct copies of the real thing and will perform the same and last as well. They don’t,” said Peter Thompson-Smith, managing director of Cobra Golf UK.
“Some are even told that the clubs are made by Cobra, which is not only untrue but likely to prove costly if the clubs need repair.”

The discount club merchants claim, however, that the big companies are adopting bully-boy tactics to hit their business.

Robert Rata, whose company Rata and Rata specialises in the cheaper range at 42 stores, has received writs for copying but denies that he sells imitations.

“A golf club is a golf club,” said Rata. “The big companies say that we are ripping them off, but they are ripping off the public by charging such massive prices.”

But on Friday, lawyers for Taylor Made golf clubs issued a statement that Rata and Rata had agreed to remove copies of Taylor Made clubs from their shelves and promised not to put them on sale in the future.

Meanwhile , the big guns’ failure to present a united front is hindering their campaign. An approach by Cobra to join forces with Callaway to fight the counterfeiters was snubbed because they are rivals.

And as Sunday salesman Derek explained: “If I get a writ from one manufacturer, I stop selling those copies and move onto another one.”

Neither the Professional Golfers’ Association (PGA), whose members sell the stock, nor the R&A, who run the game, want to be involved.

Derek, meanwhile, will be out there today, doing business as usual.

A nationwide survey of golf courses has revealed that although the game is not as dominated by private members’ clubs as previously thought, the membership of these clubs is overwhelmingly male adults.
A telephone survey of every golf course in the UK by the Golf Research Group has revealed that 34% of the nation’s 2,407 courses are proprietary.

Looking at the golf members, only 14.7% were women compared with 22% in Continental Europe. Junior UK members account for a further tiny 7.4% of the membership.

Other findings show that:

Midweek 18 hole green fees average £17.84

Average subs at private courses work out at £348 and £390 at proprietary facilities.

The average course has 529 members, which projects to 1.17 million golf members in the UK.

On top of this there are almost two milion pay-and-play golfers who are not members of a club.

Average turnover of newly built clubs is rising by a healthy 31% to £776,000.

Sales of golf properties were at record levels last year, with 42 courses sold.

Total spent on these purchases was around £80 million making the average price of a course £1.9 million.

A director of Golf Research Group, said this type of money being put into golf is a major sign of investor confidence in the industry.
But he added: “on a bluer note it should be remembered that these new courses are going for 40p in the pound on their original development cost. Projecting this up, of the £2.5 billion spent on golf development in the 1990’s, 60% is likely to end up being lost.

“We are also seeing the emergence of golf chains. Will this be the McDonaldisation of UK golf? Probably not. While it is inevitable that chains will grow in the coming decade, today they account for just 2% of UK courses and in the US where chains have been developing for 20 years they account for just 5%. Growing golf chains is a slow business. One thing is for sure – the chains will be great for golf as they will set new standards in product quality.”

Hambros takes a swing at French golf

HEV, the venture capital arm of the Hambros banking group, has moved into the sports and leisure business with the FFrl30m (£13.6m) acquisition of Blue Green, the largest golf course owner in Europe.

HEV is paying a fraction of the FFr2bn reportedly spent by the French stateowned bank Credit Lyonnais, Blue Green’s previous owner, acquiring and developing the 29 golf courses, seven hotels and various property assets during the late 1980s and early 1990s.

HEV has bought Blue Green which operates mostly in France but also in Belgium, from CDRL the French agency responsible for disposing of the assets of Credit Lyonnais following its recapitalisation by the government.

Although Blue Green – which is forecast to have sales of FFr210m this year – came to dominate the French golf landscape by the end of the last decade, overcapacity in the commercial golf course market, insufficient demand and poor management in the 1990s meant the business was loss making.

However, with the number of golfers growing by 8 per cent a year in France, HEV is confident it can turn Blue Green into a profitable enterprise. “We are buying an asset that is cash flow break-even in a market showing steady growth as golf in France catches up with the rest of Europe,” said Jeremy Hand a director of the investment business.

HEV – which has £333m of funds under management – has installed a new management team to run Blue Green, led by Alain Beja former chief executive of Cobra Golf Europe.

While disposals of some of the company’s courses are likely, HEV may also add to its portfolio at a later stage.

The French golf market is underdeveloped compared to many other European countries.

According to the just-published European Golf Report by the Golf Research Group, the London-based consultancy, France has 273,000 golfers, compared to 3.1m in the UK. With 489 courses, up from just 200 10 years ago, there are simply not enough golfers in France to go around.

The number of people playing rounds of golf on municipal courses in the United Kingdom has declined dramatically over the last six years, according to a report from the Golf Research Group.

Since 1991, there has been a 30 per cent drop in municipal rounds and it seems that less golf is being played at private and proprietary clubs as well. While 520 new layouts have been opened for play in the UK since 1990, a 28 per cent increase in supply, the research suggests there are no more people playing the game than seven years ago.

In 1991, an average of more than 65,000 rounds were played at Britain’s 234 municipal layouts, 37,000 at proprietary courses and 30,000 at private clubs while last year those figures were down to around 50,000, 35,000 and 25,000. Proprietary courses have fared least badly because their newer greens and tees are constructed to improved modern standards.

The report, UK Municipal Golf, also looks at what the successful municipal courses have been doing during the last few years and is available for £245 from the Golf Research Group.

A new report based on a telephone survey of every golf course in the UK has just been published by the Golf Research Group.
A total of 2,407 courses were found and 34% were proprietary. The average course had 529 members which projects to a total a 1.17 million golf members in the UK. Almost two million are thought to play golf on a daily fees basis and are not members of a club. 14.7% were women and 7.4% juniors, although the LGU report their membership stands at more than 218,000.

Searches of company accounts showed that 76% of the newly built courses continue to be in financial danger (520 have been opened in the 1990’s) which is an improvement on two years ago when 88% were found to be in danger.

Sales of golf properties were at a record level last year with 42 courses sold for a total of £80 million. Colin Hegarty, of the Golf Research Group, said: “Certainly this type of money being put into golf is a major sign of investor confidence in the industry. On a bluer note it should be remembered that these new courses are going for 40p in the pound on their original development cost. Projecting this up, of the £2.5 billion spent on golf development in the 1990’s, 60% is likely to end up being lost.”

The report highlights the emergence of golf chains (see graph) which now account for 2% of UK courses.