Golf Economics

My 6 year old and I went to the Empire Driving Range yesterday afternoon. It was an extremely hot day and we looked like lobsters being baked. My son's face was flushed red and so was mine. But we had to go and do our drives. It was the first time in about 3 weeks that I actually went to the driving range and boy, did my balls go haywire. My son was trying out the new kids golf set that I got for him from Surabaya. He hit about 50 meters and mine I think at most went about 100 meters (those that actually went that far). Some of course went a few inches at most. We envied those golfers that managed 200+ meters.

During the intervals, cooling down when the last 10 balls only went a few inches, I was working out how much a driving range and a golf course actually makes. I worked out that a driving range is really a money making venture. When you think about it, a golf range comprise of about a couple of acres of land, lots of fourth hand golf balls, mats, and a roof. I mean that's not really that much cost to making one once you have the land handy. In Japan, they don't even have the land but just use netting to keep the balls from going outside the driving range.

A quick check on the internet shows that there are plentiful number of driving ranges in the US (approximately 16,000 total, 3,000 of which are off-course or stand-alone ranges). However according to the US sports economists, the business has long been characterized by lackluster revenue and low profits. This is in spite of the 20 million users generating 100 million visits as of 1999). Through information from ForeCast Golf, shows the median range generates less than $500,000 in annual revenue and approximately $55,000 in profit. Wow. That's the US version. I don't know if you can translate that to local market. But it is kinda profitable when you think about it even if the US don't think so.

It maybe is a different matter for golf courses. But recently when I was waiting for my bags in Korea after a flight from Kuala Lumpur through Kota Kinabalu, all I see are every other Korean with a golf bag. Half of the plane must have consisted of golf players of both sexes. The other half are shoppers with bulging shopping bags. You can hear the cash registers ringing here. Maybe with the slowly increasing number of tourists coming over here from Korea and Japan, it is high time for us to start considering building more driving ranges and for that matter building more golf courses. After a while, they do want variety and golf tourists get awfully tired of playing at the same golf courses over and over again. And the 5 that we have here currently are not enough.

Distance does not seem to matter too. In Surabaya, some of the golf courses were about a couple of hours drive from Surabaya and they still attract golf players. Even if we build all our new courses in Seria and Tutong, they will still be less than an hour away! If you build it, they will come. I don't know about you. But I do think someone better work out the economics of golf range and golf courses here and see whether these will be better investments than any smelting or methanol plants.


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