THE FLORIDA GOLF ECONOMY

Transcription

1 THE FLORIDA GOLF ECONOMY FULL REPORT This report was commissioned by GOLF 20/20 for the Florida Golf Impact Task Force and prepared by SRI International

2 The Florida Golf Economy Published January 2015 through an agreement with

3 CONTENTS STUDY OVERVIEW... 1 ANALYTICAL FRAMEWORK... 2 A. Golf Industry Cluster Definition... 2 B. Data Sources... 3 THE SIZE OF FLORIDA S GOLF ECONOMY... 5 A. Core Industries... 5 B. Enabled Industries GOLF S ECONOMIC IMPACT IN FLORIDA DETAILED METHODOLOGY & DATA SOURCES A. Golf Facility Operations B. Golf Facility Capital Investment C. Golf- Related Supplies D. Associations, Tournaments & Charitable Giving E. Real Estate F. Golf- Related Hospitality/Tourism G. Golf s Economic Impact WORKS CITED Acknowledgements This report was prepared by SRI in agreement with GOLF 20/20, the Florida Chapter of the Club Managers Association of America, the Florida Golf Course Superintendents Association, the Florida State Golf Association, and the North Florida and South Florida Sections of The PGA of America. In addition, support for this report comes from the following national allied organizations: CMAA, GCSAA, LPGA, NGCOA, PGA of America, PGA TOUR and USGA. The Florida Golf Economy study was conducted by Steven Deitz, Katherine Johnston, Jennifer Ozawa, Daniel Querejazu, Peter Ryan, and Elizabeth Tennant at SRI International.

4 ACRONYMS CMAA FLCMAA FGCOA FGCSA FSGA GAF GCBAA GCSAA HFTP LPGA NGCOA NGF NFPGA PGA SFPGA USGA WGF Club Managers Association of America Florida Chapter of the Club Managers Association of America Florida Golf Course Owners Association Florida Golf Course Superintendents Association Florida State Golf Association Golf Association of Florida Golf Course Builders Association of America Golf Course Superintendents Association of America Hospitality & Financial Technology Professionals Ladies Professional Golf Association National Golf Course Owners Association National Golf Foundation North Florida Section of The Professional Golfers Association of America The Professional Golfers Association of America South Florida Section of The Professional Golfers Association of America United States Golf Association World Golf Foundation

5 STUDY OVERVIEW With 1,103 courses, 524 golf communities, and numerous championship golf events, golf in Florida is more than just an enjoyable pastime it is a key industry contributing to the vitality of local communities and the state economy. In 2013, the size of Florida s direct golf economy was approximately $8.2 billion, making it comparable in size to other important industries in the state, including hotels and motels ($14.2 billion), agricultural products ($8.3 billion), medical equipment and supplies manufacturing ($6.5 billion), and amusement and theme parks ($5.4). 1 Golf brings visitors to the state, drives new construction and residential development, generates retail sales, and creates demand for a myriad of goods and services. When the total economic impact of these golf- related activities is considered, Florida s golf industry supported approximately $11.0 billion of total economic impact, over 132,000 jobs, and $3.6 billion of wage income in This report represents the second study estimating the impact of the golf industry on Florida s economy. SRI conducted a previous economic impact study for the base year The economic recession, which began at the end of 2007 and ended officially in 2009 nationally and in 2010 in Florida, has had lingering effects on the performance of Florida s different golf industry segments. In particular, Florida s golf real estate segment followed trends in the state s overall housing market, peaking in 2005 and then bursting and triggering three years of negative GDP growth in the state (2008 through 2010). 2 Although Florida s real estate market was already in decline at the time of the previous study in 2007, new home construction and sales prices continued to decline due to an oversupply of housing and the state s high unemployment rate (which peaked at 11.4 percent in the first quarter of 2010). 3,4 Since 2011, Florida s economy has begun to recover and pick up steam. From 2007 to 2013, SRI finds that Florida experienced a decline in golf residential and new course construction, as well as a decline in the number of professional tournaments played in Florida (due to declines in corporate sponsorship). However, growth in golf facility operations, golf- related tourism, and golf- related manufacturing outweighed declines in other sectors; as a result, Florida s $8.2 billion golf economy grew (9.2 percent) in nominal terms between 2007 and In real terms, when adjusted for inflation, this represents a marginal decrease of 0.4 percent from 2007, when the estimated size of the golf economy was $7.5 billion. Looking forward, Florida s golf industry is poised to regain more ground as economic conditions continue to improve. 1 U.S. Census Bureau, 2007 Economic Census, Geographic Series: Amusement & Theme Parks (NAICS 71311), Medical Equipment & Supplies Manufacturing (NAICS 3391), and Hotels (except casino hotels) & Motels (NAICS 2111) revenues adjusted to 2013 dollars using the GDP deflator. U.S. Department of Agriculture, Economic Research Service (2013), Top Commodities, Exports, and Counties, Florida State Fact Sheet. 2 U.S. Bureau of Economic Analysis. Regional Economic Accounts: GDP by State. 3 Existing home sales bottomed in 2008, and the median sales price of existing homes bottomed in 2011 according to Florida Realtors data. 4 Office of Economic & Demographic Research. Florida Economic Outlook, July

6 ANALYTICAL FRAMEWORK Economic studies of the golf industry in different states emphasize various factors and outcomes. For example, one may focus largely on the turf industry, while another might examine the impact of sports and recreation- related tourism more broadly. Ideally, one would want to include all the key activities and industries that are enabled by and benefit from the game of golf. To meet this goal, SRI has developed a standardized economic impact framework that can be employed to measure a comprehensive set of golf- driven industry components. This state- level framework draws on the conceptual model of the golf economy developed in SRI s 2000 national- level The Golf Economy Report and the 2009 state- level The Florida Golf Economy Report. A. GOLF INDUSTRY CLUSTER DEFINITION To arrive at economic impact, one must first estimate the size of the golf economy in the state. This entails mapping out where the golf industry begins and ends, and then estimating the size of each of these industry segments. We divide the golf industry cluster into two main categories: (1) core industries and (2) enabled industries (see figure below). The golf industry cluster begins with the golf facilities themselves and with those other core industries that produce goods and services used to operate facilities and to play the game: golf equipment and golf apparel manufacturers, golf course architects and course builders, turf maintenance equipment and service providers, and club management services. The game of golf further enables a number of other industries, such as golf- related tourism and real estate development. We detail these industry segments and estimate their size in the following section. Having defined the core and enabled golf industries, it is possible to estimate the size of each industry segment and to total them for an overall estimate of the size of the golf economy. Multipliers can then be applied to calculate the ripple effects of these economic activities in terms of: (1) impact on total state economic output and (2) impact on total state employment. However, this process is complicated by the fact that, while most of these industries produce golf- related goods and services, the firms themselves may not limit their activities exclusively to the golf industry. For example, Nike produces golf shoes, but also running, tennis, basketball, and other shoes. Therefore, in general, our approach is to include only those firms and sales that are directly attributable to the game of golf. In so doing, we use a number of different estimation techniques to ensure that our final estimates are reasonable and robust. Moreover, additional data challenges and location factors make estimation more difficult at the state- level than the national- level. For example, many of the major golf equipment manufacturers have production facilities in just a few states. Similarly, several of the major golf association headquarters are located in Florida. The presence of such firms, associations, or a number of well- known courses will change the size of golf s economic impact in the state considerably. Therefore, one should consider the 2

7 size of the golf economy and the game s economic impact in the state in relation to the size of the overall economy and other major industries in that state. B. DATA SOURCES SRI developed its framework for measuring state golf economies based on a broad set of existing sources and data. Although there have been several state- level impact studies conducted in the past by numerous golf constituencies, few have used a similar methodology, resulting in very different estimates depending on the elements of the golf economy included. A great deal of data is collected on the golf economy by many organizations on a regular basis. For example, government agencies, national golf associations, and national associations in the enabled industries collect data on different industry elements periodically annually, every few years, or every five years. In addition, these data are based on a relatively consistent set of inputs by large numbers of constituents. Therefore, the principal challenges involve acquiring the data, inflating or deflating the estimates for the proper target year, and then combining them to represent the entire golf economy in the target year. The core and enabled industry indicators and data sources we have identified are as follows: 3

8 State Golf Economy Indicators and Data Sources Indicator Primary source Cross- validation source Golf Facility Operations # of golf course facilities by type PGA Facility Database, multiple years ( data) Avg. revenues by type of facility PGA Facility Operations Survey, multiple years ( data) # of rounds by facility type 2014 PGA Operations Survey (2013 data) Golf Course Capital Investments Avg. capital investment by type of GCSAA Compensation Survey facility (2011 data) # of golf courses under construction National Golf Foundation NGF Facility Database, multiple years; state golf associations; 2007 Economic Census 2007 Economic Census; National Golf Foundation; state task force National Golf Foundation National Golf Foundation; state task force NGF Construction database; state task in current year (2013 data) force Avg. cost of construction per new Golf Course Builders Association of State task force; interviews with golf course America course builders in state Golf- Related Supplies Golf- related manufacturing exports Company annual reports; SEC filings; Company interviews; state task force interviews Golf equipment National Sporting Goods Association PGA Facility Database (2013 data) (2013 data) Golf apparel National Sporting Goods Association PGA Facility Database (2013 data) (2013 data) Golf media Book Industry Study Group/ Association 2007 Economic Census of American Publishers (2013 data) Associations, Tournaments & Charitable Giving # of major state- level golf State counterparts of national golf State task force associations associations Annual expenditures/budgets State golf associations IRS Form 990 # of major tournaments held in State task force PGA TOUR, LPGA state Visitor attendance at tournaments, Major golf associations State tourism agency; national golf tournament revenues associations; state golf associations Revenues raised through charitable National Golf Foundation (2011 data) golf events Real Estate # of residential golf courses under National Golf Foundation construction # of lots per course Real estate development site plans; Avg. construction costs per home and real estate premium Hospitality/Tourism # of golf travelers or # of golf- related trips to the state Avg. spending per traveler or per trip interviews with real estate developers Interviews with real estate developers VisitFlorida, Bonn Marketing Research Group National Golf Foundation (2003 data); Online Research Sampling of golf professionals and club managers to identify # of tournaments and average amount raised Online research Real estate agents Real estate agents State department of tourism/recent surveys/studies State department of tourism/recent surveys/studies 4

9 THE SIZE OF FLORIDA S GOLF ECONOMY The table below presents SRI s estimates for the size of each of the six golf industry segments and the overall golf economy in 2007 and SRI estimates the total size of Florida s golf economy in 2013 was approximately $8.2 billion, up from $7.5 billion in There were notable declines in Golf Course Construction, Golf Tournaments, and Golf Real Estate. Balancing these declines were growth in Golf Facility Operations, Golf- Related Supplies and Hospitality/Tourism. CORE INDUSTRIES Size of Florida s Golf Economy in 2013 and 2007 by Industry Segment ($ millions) Golf Facility Operations $4,111.8 $3,449.4 Golf Course Construction and Capital Investments $220.4 $352.9 Golf- Related Supplies (retail margin and manufacturing exports) $215.2 $206.1 Major Golf Tournaments and Associations $374.2 $377.0 Total Core Industries $4,921.5 $4,385.4 ENABLED INDUSTRIES Real Estate $1,086.3 $1,382.4 Hospitality/Tourism $2,154.0 $1,705.1 Total Enabled Industries $3,240.4 $3,087.5 TOTAL GOLF ECONOMY $ 8,161.9 $7,472.9 Note: Column sums may not sum due to rounding of individual estimates. Numbers also have not been adjusted for inflation but are expressed as nominal dollars. A. CORE INDUSTRIES Golf Facility Operations Golf facilities are the lifeblood of Florida s golf economy, and the largest component in terms of revenue. Golf facility revenue comes primarily from green fees, membership fees, golf cart rentals, lessons, and associated spending on food and beverages. This revenue, in turn, supports a host of supply sectors including golf equipment and apparel designers and manufacturers, food and beverage providers, and turfgrass equipment and maintenance service providers. Florida s 1,103 golf courses, 93 stand- alone ranges, and 79 miniature golf facilities generated $4.11 billion of revenue in This represents an increase over the 2007 total revenue of $3.45 billion ($3.78 billion in 2013 dollars when adjusted for inflation). 5

10 Florida Golf Facility Revenues in 2013 ($ millions) Golf Facilities $4,041.6 Practice Ranges & Alternative Facilities $70.1 TOTAL 1 $4,111.8 Note: 1 Golf facility revenues exclude on- course merchandise sales, which are included in the Golfer Supplies industry segment. Golf is a sizeable industry, but even more significant when compared to other popular revenue- generating sports. For example, Florida golf facilities generated revenues comparable to all other spectator sports in the state combined football, baseball, basketball, hockey, and soccer. These five other sports generated revenues of $2.55 billion in 2007 (latest available year for this data), or $2.8 billion in 2013 inflation- adjusted dollars. 5 Golf Facility Capital Investments Golf facilities generate economic impacts beyond operational expenditures through investments to upgrade and maintain facilities and infrastructure, and through the construction, expansion, and renovation of courses. These investments create employment in the construction and maintenance industries and often involve the purchase of significant amounts of equipment and supplies from companies within the state. SRI s estimate of Florida s golf facility capital investments is divided into two segments: (1) capital investments at existing facilities and (2) new course construction. Together, Florida s golf facilities made $220.4 million worth of capital investments in 2013: $184.5 million of investments at existing facilities and $35.9 million for the construction of new courses or course rebuilding projects. By comparison, Florida s golf facilities made $352.9 million in total capital investment in 2007, which included $189.3 million of investments at existing facilities and $163.6 million for the construction of new courses. (When adjusted for inflation, these figures are $387 million for total capital investments: $207.6 million at existing facilities and $179.4 million for the construction of new courses in 2013 dollars.) The significant decrease in total capital investments from 2007 to 2013 reflects a substantial decline in new course construction, while investment at existing facilities also declined slightly over this period. 5 U.S. Census Bureau (2010). Florida: 2007, 2007 Economic Census, Arts, Entertainment & Recreation Geographic Series. 6

11 Florida Golf Facility Capital Investment and New Course Construction in 2013 ($ millions) Golf Facility Capital Investments 1 $184.5 New Course Construction $35.9 TOTAL $220.4 Note: 1 Only the New Course Construction category is included in the economic impact analysis, because it represents new economic output or activity. Golf facility capital investments are typically financed through golf facility revenues, so including both Golf Facility Capital Investments and Golf Facility Operations in economic impact analysis would result in double- counting. Golf- Related Supplies Florida golfers spend significant sums on golf balls, golf clubs, golf apparel, and golf media. The economic value that accrues to a state comes from the production of these golf- related goods, as well as retail sales of such items. Florida is home to a number of companies that design and manufacture golf apparel, custom and high- end golf clubs, golf cars and golf accessories, e.g., Perry Ellis, the designer and producer of PING and other golf brands; Golfweek magazine, produced by Turnstile Publishing Company; Easy Picker Golf Products; Masterfit Golf; and Diversified Golf Cars, etc. 6 SRI s Golf- Related Supplies estimate is comprised of two segments: a retail margin estimate that captures the value associated with the sale of golf products in Florida, and a value- added exports estimate that captures Florida production that is shipped to other states and countries. In 2013, SRI estimates that the value- added, out- of- state shipment of golf- related products generated $38.7 million, up from $28.5 million in 2007 (or $31.3 million in inflation- adjusted dollars). This increase is due primarily to revenue growth by some of the larger companies, as the global economy has recovered post- recession. TOTAL Florida Manufacturers Value- Added Exports of Golf- Related Products in 2013 ($ millions) $38.7 On the retail side, Florida retailers earned approximately $176.5 million on the sale of $436.8 million of golf equipment, apparel, and media. By comparison, in 2007, Florida retailers earned approximately $177.6 million (or $194.7 million in 2013 dollars when adjusted for inflation) on the sale of $446.3 million (or $489.4 million in 2013 dollars) of golf- related merchandise, representing a slight decrease from 2007 to Overall, the Golf- Related Supplies segment (consisting of value- added exports plus 6 Notably, Florida is home to the Golf Channel, which is owned by the NBC Sports Group division of NBCUniversal. SRI was unable to find verifiable information about the economic activity supported by the Golf Channel s Florida operations, and thus was unable to include it in this economic analysis. 7

12 retail margin) grew from $206.1 million in 2007 (or $226 million in 2013 dollars when adjusted for inflation) to $215.2 million in Florida Retailers Net Revenues on Consumer Purchases of Golf- Related Supplies in 2013 ($ millions) Total purchases Retail sales margin Golf Equipment (retail margin) $309.9 $125.2 Golf Apparel (retail margin) $125.6 $50.7 Golf Media (retail margin) $1.3 $0.5 TOTAL $436.8 $176.5 Note: This includes on- course and off- course purchases of golf equipment, apparel, and media. Column does not sum due to rounding. Associations, Major Tournaments & Charitable Giving Associations Numerous associations represent the game of golf in Florida. The national headquarters of The Professional Golfers Association (PGA) of America, the PGA TOUR, the Ladies Professional Golf Association (LPGA), the World Golf Foundation (WGF), and the Executive Women s Golf Association (EWGA) are located in Florida, among others. State- level affiliates of the national golf associations include the North Florida and South Florida Sections of the PGA, the Golf Association of Florida, the Florida Golf Course Superintendents Association, the Florida Chapter of the Club Manager s Association of America, and the Florida Chapter of the National Golf Course Owners Association. Other major golf associations include the Florida State Golf Association and regional seniors and junior golf associations. Looking to the future of the game, Florida hosts multiple chapters of The First Tee, a development organization that introduces the game of golf to young people. In 2013, Florida golf associations generated over $1.2 billion of expenditures to support association operations, tournaments, and others activities. SRI estimates that approximately $287.6 million of this economic activity stayed in Florida. In 2007, SRI estimated expenditures by Florida associations to be $251.9 million (or $275.8 million in 2013 dollars when adjusted for inflation) most of the increase in the 2013 estimate is attributed to growth in the large, national- level associations with headquarters in the state. 8

13 Major Tournaments Florida is a heavyweight in terms of the number of major golf championships hosted each year. In 2013, Florida hosted eleven major tournaments: seven PGA TOUR events, one LPGA Tour event, two Champions Tour events, and one Web.com Tour event. The PGA TOUR events were THE PLAYERS Championship at TPC Sawgrass, the WGC Cadillac Championship at Trump National Doral, the Honda Classic at PGA National Golf Club, the Valspar Championship at Innisbrook Resort and Golf Club, the Arnold Palmer Invitational at Bay Hill, the Tavistock Cup at Isleworth Golf & Country Club and the Franklin Templeton Shootout at Tiburón Golf Club. The LPGA Tour event was CME Group Tour Championship at Tiburón Golf Club. The two Champions Tour events were the Allianz Championship at Broken Sound Club and the ACE Group Classic at TwinEagles. The Web.com Tour event was the Web.com Tour Championship at TPC Sawgrass. Altogether, the eleven golf events in Florida generated approximately $86.6 million in 2013, excluding the tournament purse and costs for TV broadcasting. In comparison, the 20 major tournaments in 2007 generated $125.2 million (or $137.1 million in 2013 dollars when adjusted for inflation). Tournament- related revenue is down due to the fact that the number of professional tournaments hosted by Florida fell from twenty major golf championships in 2007 to eleven in Florida s Major Golf Tournament & Association Revenues in 2013 ($ millions) Associations Major Tournaments TOTAL $287.6 $86.6 $374.2 Charitable Giving Florida s golf industry makes substantial contributions to a variety of charities. All the major PGA TOUR, LPGA Tour, Champions Tour, and Web.com Tour events that are played in Florida raise significant funds for charities and organizations. For example, THE PLAYERS Championship generated $7.1 million for local charities in THE PLAYERS Championship donations have totaled nearly $60 million since the event moved to Ponte Vedra Beach in Another PGA TOUR event, the Honda Classic in Palm Beach Gardens, donated $2.13 million to 125 different charitable organizations, with the Nicklaus Children's Health Care Foundation being the main beneficiary. The ACE Group Classic, a Champions Tour event, has donated over $3 million to various charities in the past 20 years, including the American Red Cross, the Alzheimer's Support Network, Big Brothers/Big Sisters Southwest Florida, Make- A- Wish Foundation, and many others. When totaled across all facilities, charitable golf events organized at the local level also generate significant contributions for charitable organizations across Florida. For example, the Southwest Chapter 9

14 of the PGA raised over $50,000 in its annual Tournament of Charities event at Pelican Reserve. 7 Beneficiaries included Southwest Florida Addiction Services, PGA Art Soderholm Scholarship Fund, 1 st Tee of Naples/Collier, and others. The 5 th Annual Melting Pot Golf Classic, held at Carrollwood Country Club, raised $98,744 for St. Jude Children s Research Hospital. 8 The Kings Point Golf for the Cure Tournament has raised over $200,000 for the Susan G. Komen Foundation since The Panhandle Charitable Open has donated over $400,000 to charities such as Child Guardians, Inc., Gulf Coast Kid s House, Council on Aging of West Florida, ARC Gateway, Big Brothers Big Sisters of Northwest Florida, Independence for the Blind, American Cancer Society, and Covenant Hospice. The tournament is hosted at the Marcus Pointe Golf Club. 10 The South Florida GCSA hosts an annual golf tournament to support the National Center for Missing and Exploited Children, which has raised over $550,000 over the past 30 years. 11 Every year, Florida golf clubs host a number of charitable events like these. Golf course owners, operators, and golf professionals serve as access points for annual fundraising by local service organizations. In total, SRI estimates that the amount of charitable giving attributed to the game of golf in Florida was $383.4 million in 2013, up from $312 million in TOTAL Florida Golf Industry s Charitable Giving in 2013 ($ millions) $383.4 B. ENABLED INDUSTRIES Real Estate Real estate developers use amenities to attract new home buyers, and golf is a key amenity in many parts of the state. The development of new homes in golf communities in Florida followed the rise in the national real estate market, which peaked in 2005 in terms of new home starts, and suffered from the financial crisis and recession of In 2013, Florida s housing market was picking up steam, albeit not to the level of new home construction prior to the recession. Some developments had over 100 new homes constructed, such as Lakewood Ranch in Manatee County; Pelican Preserve in Fort 7 Southwest Chapter PGA, 34th Anniversary of the Southwest Chapter PGA Tournament of Charities, content/.../tournament- of- Charities- Booklet.pdf. Accessed January 19, Melting Pot Golf Classic, Invitation to 5 th Annual Melting Pot Golf Classic, Accessed January 19, Kings Point Golf for the Cure, The 9 th Annual Golf for the Cure, Accessed January 19, Panhandle Charitable Open, Welcome to the Panhandle Charitable Open: A Premier Charity Golf Event, Accessed January 19, th Annual SFGCSA Golf Tournament to Support the National Center for Missing and Exploited Children Accessed January 30, U.S. Census Bureau (2014). Building Permits Survey: Florida,

15 Meyers; Providence in Davenport; River Strand Golf and Country Club in Bradenton; and Treviso Bay in Naples. Examples of other golf community developments with a more modest number of new homes (25 or fewer) constructed in 2013 include: Southern Hills Plantation in Brooksville; Audubon Country Club in Naples; Palmira Golf and Country Club in Bonita Springs; and the Estuary at Grey Oaks in Naples. SRI estimates new golf- related real estate construction generated $541.0 million in 2013, down from $805.5 million in 2007 (or $882.0 million in 2013 inflation- adjusted dollars). Furthermore, in 2013 there were an estimated 524 golf communities (including properties on golf resorts) in Florida, and SRI estimates the golf premium associated with the sale of real estate in these developments to be $545.3 million, down from $ million (or $631.7 million in inflation- adjusted dollars) in The premium is the additional amount a buyer is willing to pay for a home or property located on a golf course or within a golf community. Florida s Golf Real Estate Revenues in 2013 ($ millions) Golf- Related Residential Construction $541.0 Realized Golf Premium $545.3 TOTAL $1,086.3 Note: Numbers may not sum due to rounding. The sale of existing homes is considered a transfer of assets rather than new economic output, so the golf premium that is realized in the sale of an existing home is not included in the economic impact analysis. Golf- Related Hospitality/Tourism Across the country, golf has enjoyed increasing popularity among travelers, whether it is the primary motivation for a trip or is connected to other recreational time spent with friends, family, or business colleagues. Golf is an important tourism segment in Florida, alongside key traveler activities such as beaches, theme parks, and outdoor recreation. Florida s golf courses and resorts help the state attract conferences and business meetings, and both amateur and professional golf tournaments draw people to courses in different parts of the state. The Visit Florida website features golf as one of the major activities available in the state ( us/golf.html). In 2013, SRI estimates golf- related tourism spending in Florida was $2.15 billion ($1.90 billion from domestic visitors and $0.25 billion from international visitors). This is based on the following estimates of golf trips and associated expenditures by Florida residents and non- residents: (1) an estimated 2,699,427 day trips with average golf trip spending of $66 per person; (2) an estimated 3,578,310 domestic overnight trips with average trip spending of $482 per person; (3) an estimated 664,155 international overnight trips with average spending of $379 per person related to golf. 13 The average 13 All trips refer to person- trips which simply means the count of the total number of people taking a trip. Therefore, 2,673,932 day trips should be interpreted as 2,673,932 people who took a day trip. Trips include people traveling to Florida from out of state, as well as people traveling within the state more than 50 miles from home. 11

16 length of a domestic overnight trip in Florida is 4.4 days, significantly longer than other states, and international trips typically exceed 10 days. SRI s estimated $2.15 billion golf tourism spending in 2013 represents an increase in real terms relative to golf- related tourism spending in 2007, which SRI estimated at $1.71 billion (or $1.87 billion in 2013 dollars, when adjusted for inflation). The growth in golf- related tourism spending is consistent with the overall growth in visitor spending in Florida, as the economy recovered from the recession of Tourism trips growth in Florida has been relatively strong over the last several years (with estimated annual growth in overnight trips ranging from 1.7% to over 6% each year since 2010), and growth has been especially robust for international trips (with annual growth rates ranging from 5.7% to over 15% since 2010). These trends have driven strong growth in golf overnight and day trips in Florida over the same period. In fact, VisitFlorida's data show that an increasing number of tourists to Florida are playing golf during their trips, resulting in golf tourism growth rates that are higher than the growth rates for tourism in general. Florida Golf- Related Tourism Expenditures in 2013 # of golf domestic day trips 2,699,427 Average travel $ per golf domestic day trip $66.17 # of golf domestic overnight trips 3,578,310 Average travel $ per golf domestic overnight trip $ # of golf international overnight trips 664,155 Average travel $ per golf international overnight trip $ Total Note: Numbers may not sum due to rounding. $2.15 billion 14 Total tourism spending in Florida grew from $65.5 billion in 2007 (or $71.8 billion in 2013 dollars) to $76.1 billion in Source: VisitFlorida, facts/research/. 12

17 GOLF S ECONOMIC IMPACT IN FLORIDA Golf s impact on Florida s economy includes both the direct effects of economic activity in the core and enabled golf industries, as well as the indirect and induced (or multiplier) effects on other industries in the state economy. In economics, the idea of the multiplier is that changes in the level of economic activity in one industry impact other industries throughout the economy. For example, a fraction of each dollar spent at a golf course is, in turn, spent by the golf course to purchase goods and services for golf course operation these are indirect effects. In addition, golf course employees spend their disposable income on personal goods and services, and this stimulates economic activity in a myriad of other industries these are induced effects. Therefore, golf s total (direct plus multiplier) economic impact includes both the direct employment and wage income of those employed in golf- related industries, as well as the secondary employment and wages supported in other sectors of the economy through subsequent purchases of goods and services by golf industry businesses and employees. In 2013, the $8.2 billion Florida golf industry supported: A total economic impact of $11.0 billion for the state of Florida including the indirect and induced economic impacts stimulated by golf sector activity; A total employment impact of over 132,000 jobs; and Total wage income of $3.6 billion. 13

18 Golf s Impact on Florida s Economy in 2013 INDUSTRY Golf Facility Operations Golf Course Capital Investments* Golf- Related Supplies Tournaments & Associations Real Estate ** Hospitality/Tourism DIRECT ($ millions) INDIRECT INDUCED TOTAL OUTPUT ($ millions) TOTAL JOBS TOTAL WAGE INCOME ($ millions) $4,111.8 $5, ,992 $1,918.5 $220.4 $ $26.3 $215.2 $ ,309 $98.1 $374.2 $ ,559 $195.9 $1,086.3 $1, ,661 $395.9 $2,154.0 $3, ,303 $994.6 TOTAL $8,161.9 $11, ,532 $3,629.3 Note: Columns may not sum due to rounding. To calculate golf s total economic impact, SRI subtracted from the direct golf economy impact of $8,161.9 million the portion of capital investments that is investment in existing facilities ($184.5 million of $220.4 million) and the portion of real estate that is the realized golf premium associated with the sale of real estate in existing developments ($545.3 million of $1,086.3 million). This is because: *Golf Course Capital Investments Only new course construction has an indirect and induced economic impact. Other types of facility capital investments are typically financed through facility revenues and, therefore, are omitted to avoid double- counting. **Real Estate Only golf residential construction has an indirect and induced impact. The golf premium associated with golf real estate is considered a transfer of assets rather than new economic activity. 14

19 The following table compares changes in the golf industry s direct and total economic impact on the Florida economy in 2007 and In 2007, the golf economy was $7.47 billion, buoyed by strong golf course capital investments and golf real estate. In 2013, the direct golf economy expanded to $8.16 billion due to significant growth in golf facility operations, golf- related supplies and the hospitality/tourism sectors. However, new golf course construction and golf- related residential construction industry segments with relatively larger economic and employment impacts declined during this period. The table shows this dichotomy, where direct economic impact has grown, but total golf output, employment, and wages, have declined. Golf s Impact on Florida s Economy in 2013 and 2007 Core and Enabled Industries 2013 ($ billions) 2007 ($ billions) Direct Economic Impact $8.162 $7.473 Total Output Impact $ $ Total Jobs Impact 132, ,377 Total Wage Income Impact $3.629 $

20 DETAILED METHODOLOGY & DATA SOURCES A key challenge in this study was to identify reliable state- level data sources and to develop methodologies for measuring the size of industry components for which cross- state estimates do not exist in straightforward metrics, e.g., golf real estate and off- course purchases of golf apparel and equipment. This section describes each of the core and enabled industries included in the golf economy and SRI s approach to measuring each of these segments. A. GOLF FACILITY OPERATIONS For this industry segment, we analyzed the number of golf facilities and average facility revenue data to derive a total facility operations estimate. Revenues for this segment include: annual or monthly membership fees, green fees, range fees, and golf car rental fees; purchases of golf apparel and equipment in pro shops; golf lessons; tournament entry fees; consumption of food and beverages; etc. Number of golf course facilities. Many golf organizations track the number of golf facilities in a state: the National Golf Foundation (NGF), The PGA of America, and state/regional golf associations, among others. The U.S. Census Bureau also surveys golf facilities as business establishments in its Economic Census every five years. However, these organizations calculations of the total numbers of golf facilities in each state, by type of facility, are not always consistent with each other due to: (1) absence of data for courses which are not members (e.g., The PGA tracks those courses with a PGA member) or for particular subsets of courses (e.g., municipal facilities and golf resorts are not tracked by the Census), (2) facility closures and openings, and (3) inconsistency in the classification of courses, especially resorts. In some surveys, golf facilities are allowed to self- classify. In others, the surveying organization classifies the facility based on specific criteria. This can mean the difference between a small number of resorts (e.g., a figure that includes five- star accommodation located on or adjacent to an 18- hole course) or a much larger number of resorts (e.g., three- star hotel accommodation located near a daily fee golf course). Similarly, a resort with two 18- hole golf courses could be counted as two golf facilities or as one depending on the reporting organization. Fortunately, the variation in the number of facilities caused by these data collection methods are very small, and thus do not materially impact the overall analysis. The table below presents slightly differing estimates for the number of golf course facilities in Florida in 2013 or the latest available year. 16

21 Table 1: Estimates of Total Number of Florida Golf Facilities by Type, Economic Census 1 (# of facilities minus resorts & munis) 2007 PGA 2 (# of facilities) 2013 PGA 3 (# of facilities) 2013 SRI 4 (# of facilities) 2013 NGF 5 (# of facilities) PRIVATE PUBLIC Daily fee/ semi- private Municipal Military University RESORT TOTAL Sources: 1 U.S. Census Bureau (2010). Arts, Entertainment and Recreation: Geographic Area Series: Summary Statistics: Economic Census of the United States. 2 Professional Golfers Association of America (2008). Facility Database. 3 Professional Golfers Association of America (2014). Facility Database. 4 SRI estimate is based on analysis of facilities lists provided by the taskforce. Due to differences in categorization across facility lists, the ratio of private facilities to resorts is inferred from 2013 PGA numbers, and uncategorized (or ambiguously categorized) facilities were divided proportionally across private, public and resort facility counts. 5 NGF (2014). Total Facility Supply Tables 6-14, Golf Facilities in the U.S., 2014 edition, pp The PGA and NGF total golf facility estimates, as well as SRI s analysis of facility lists provided by taskforce organizations, all fall within a relatively narrow range. The PGA s estimate (1,116 facilities) reflects slightly higher numbers of facilities for each category type: private, public, and resorts, compared to NGF s 1,048 facilities. SRI estimates that there were approximately 1,103 golf facilities in operation during 2013, a decrease from 1,119 facilities in 2007 (based on PGA data). SRI s 2013 estimate is based on analysis of facility lists provided by taskforce organizations, and is consistent with the decrease in facilities observed in the NGF data (from 1,060 in 2007 to 1,048 in 2013). 15 Average revenues per facility. The SRI team collected average revenue data from a variety of sources. Here again, the data challenge was that average facility revenues will vary significantly depending on: (1) the number of holes (e.g., a 9- hole course versus a 18- hole course) and (2) the type of facility whether a golf course facility is private, daily fee, resort, municipal, etc. The U.S. Census Bureau collects revenue data for golf course facilities as part of its Economic Census of all U.S. establishments every five years. Whereas facility surveys conducted by private sector 15 The temporal trends in NGF facility data, informed by records of course openings and closing, are considered to be a reliable estimate of facility dynamics. 17

22 organizations are often based on lower response rates (less than 30 percent), all establishments are required by law to respond to the Census Bureau survey. However, the Census Bureau data has several limitations. Many types of facilities are not included in the survey: (1) resort facilities, (2) municipal and military facilities, (3) stand- alone driving ranges and (4) golf facilities without payroll. The latest 2007 Economic Census contains revenue, payroll, and employment data on 12,193 golf facilities broken down by state. This provides a robust estimate with which to compare other available golf facility revenue data. The PGA collects revenue data for all 50 states on an annual basis through its Annual Operations Survey. The latest available data are from 2013, but the PGA has annual data going back to In addition, PGA revenue data are broken down by type of facility for categories for which Census data are not available namely, resorts, municipal courses, and military courses. Table 2: Estimates of Florida Golf Facilities Average Revenues by Type, NGF Census PGA PGA PGA PGA (2009) 1 (2007) 2 (2007) 3 (2011) 4 (2012) 5 (2013) 6 Private facility $3,277,000 $6,544,237 $4,636,880 7 $4,744,347 $4,898,072 $6,041,050 8 Daily fee facility $1,457,700 $2,635,633 $2,208,575 $2,343,986 $2,112,160 $2,401,280 Resort facility X X $4,659,208 $6,040,553 $3,486,088 $7,969,929 Municipal/military/ university facility $1,269,100 X $1,908,777 $1,678,404 $1,666,553 $1,753,783 Driving range $400,000 X X X X X Miniature golf X $373,949 X X X X Sources: 1 NGF (2010). Operating & Financial Performance Profiles of 18- hole Golf Facilities in the U.S., 2010 edition. 2 U.S. Census Bureau (2010). Arts, Entertainment and Recreation: Geographic Area Series: Summary Statistics: Economic Census of the United States. 3 Professional Golfers Association of America (2008) Operations Survey. 4 Professional Golfers Association of America (2012) Operations Survey. 5 Professional Golfers Association of America (2013) Operations Survey. 6 Professional Golfers Association of America (2014) Operations Survey. 7 The private facility revenue was estimated by SRI using a weighted average of the 2007 Clubs: Florida Trends in Private Clubs survey (McGladrey & Pullen, LLP, 2008) estimate for private clubs with concessioned pro shops ($5,678,000) and the PGA estimate for private facilities ($3,933,311). 8 The private facility revenue was estimated by SRI by an average of the 2007 U.S. Census Estimate adjusted for inflation ($7,175,908 in 2013 dollars) and the 2013 PGA estimate for private facilities ($6,041,054). Average revenue data from the Census (2007), NGF (2009), and The PGA (2007 & 2013) are presented above. After review of reported average revenue data and in consultation with the task force, SRI calculated total facility revenue for traditional facilities using the 2013 PGA survey data, with the exception of private facilities. Private facility revenue for 2013 was estimated using a weighted average 18

23 of the 2007 U.S. Census estimate adjusted for inflation and the 2013 PGA survey data. 16 Driving range revenues were calculated using 2011 PGA survey data, which estimated the national median revenue figure for golf ranges in 2011, and average miniature golf facility revenue was calculated using the 2007 Census data adjusted for inflation. Although a more recent Economic Census was conducted in 2012, this data has not been publicly released at the state level yet. The PGA s reported average private facility revenue has grown in real terms from 2007 to 2013; PGA reported average private facility revenue of $4.91 million in 2013, up from $3.93 million ($4.31 million in 2013 dollars) in SRI estimates private facility revenue in 2013 to be $6.04 million, based on an average of the inflation- adjusted 2007 U.S. Census statistic ($7.12 million in 2013 dollars) and the PGA s 2013 estimate. For 2007, SRI used a weighted average ($4.64 million) of average private facility revenue from a private clubs 2008 survey by McGladrey & Pullen ($5.68 million) and the 2007 PGA estimate ($3.93 million). Reported average daily fee facility revenue was $2.4 million in 2013, representing an increase from $2.21 million 2007 (equivalent to $2.42 million in 2013 dollars, indicating that revenue remained relatively steady in real terms). Reported facility revenue for muni/military/university facilities of $1.75 million in 2013 represented a decline from 2007 ($1.91 million, or $2.09 million in real terms). This decline is likely due to poor recovery of municipal facilities since the economic recession of The PGA data shows a large variation in reported average facility revenue for resorts from 2007 to The significant fluctuation in average revenue may be due to the small sample size in the PGA s Operations Survey. The 2013 reported average revenue of $7.97 million for Florida resorts represents a significant increase from 2007 ($4.66 million, or $5.11 million in real terms.) To calculate golf facility operations revenues, SRI subtracted average on- course merchandise sales from the average golf facility revenue estimates because on- course merchandise sales are included in the Golf- Related Supplies industry segment. SRI then multiplied these adjusted average golf facility operations revenue estimates by the respective number of golf facilities. Overall, SRI estimates that Florida s 1,103 golf courses, 93 stand- alone ranges, and 79 miniature golf facilities generated $4.11 billion of revenue in This reflects a real increase since 2007, when facility operations revenue totaled $3.45 billion for the 1,119 facilities (or $3.78 billion in 2013 dollars when adjusted for inflation). This increase in facility operations revenue from 2007 to 2013 is driven by higher reported average revenue for private and resort facilities in 2013 compared to As discussed above, the PGA survey data is annual and therefore an important indicator of trends over time, but the PGA survey also has relatively low response rates. The U.S. Census estimates for private facilities are more reliable, but the most recent year available is The sizable gap between private facility revenue estimates from the two data sources suggests that the PGA estimates may be too low due to downward response bias. We therefore take the conservative approach of averaging the inflation- adjusted 2007 U.S. Census and 2013 PGA survey estimates. 19

24 B. GOLF FACILITY CAPITAL INVESTMENTS To calculate golf facility capital investments, SRI collected data on two major types of investments: (1) capital investment at existing facilities and (2) new course construction. Florida Golf Facility Capital Investment and New Course Construction in 2013 ($ millions) Golf Facility Capital Investment 1 $184.5 New Course Construction $35.9 TOTAL $220.4 Note: 1 Only the New Course Construction category is included in the economic impact analysis, because it represents new economic output or activity. Golf facility capital investments are typically financed through golf facility revenues, so including both Golf Facility Capital Investments and Golf Facility Operations in economic impact analysis would result in double- counting. Investment at existing facilities. Golf facility capital investments include improvements to greens and tees, repaving of cart paths, purchases of new turf maintenance equipment and irrigations systems, and renovations of the clubhouse, pro shop, and maintenance buildings. Ordinary maintenance expenses are not included. SRI examined golf facility capital investment data from two sources: NGF and the GCSAA. The GCSAA data comes from golf facility capital budget questions included in its 2011 Compensation Survey. The data is state- level and includes the mean, median, and standard deviation of capital expenditures (not maintenance expenses). The NGF s 2010 Operating and Financial Performance Profile presents national estimates of capital expenditures (and also breaks out maintenance expenses separately) at: (1) daily fee facilities (average revenue of $1,457,700, with 69.6% of daily fee facilities making average capital improvement investments of $131,700); (2) municipal facilities (average revenues of $1,269,100, with 70.2% of municipal facilities making average capital investments of $189,300); and (3) private facilities (average revenues of $3,277,000, with 82% of private facilities making capital investments of $410,400). After review of both the state- level and national data sets, SRI used the GCSAA s data for Florida in our capital investment calculations. The data indicate that, on average, a Florida golf facility invested approximately $167,257, for a total capital investment of $184.5 million. Capital investment at existing facilities is lower relative to 2007, when Florida s total golf facility capital investment was $189.3 million (or $207.6 million in 2013 dollars when adjusted for inflation). New course construction. The NGF s Golf Facilities in the U.S. series is the only national source for estimates of the number of new golf courses under construction in each state. In 2013, NGF estimated that there were two new 18- hole equivalent golf course openings in Florida and that four were under construction. After consultation with the Florida Golf Alliance, SRI used the NGF estimated number of 20