China’s government ordered the closure of 111 golf courses this week—more than one-sixth of all the courses in the country. At first blush, it would appear to be very bad news for the future of the sport.
But PGA Tour sees a silver lining to this news.
PGA Tour marked China as its No. 1 international growth market for golf in 2013, when it chose Beijing as the spot for its first office outside the US. In 2014, PGA Tour launched PGA Tour China Series, a feeder tour (with the same four-round, stroke-play events that Americans know) from which the top Chinese golfers can graduate to the Web.com Tour, and from there to the PGA Tour. (Marty Dou, heading to the Web.com Tour this year, is a popular example.) The series held 12 events in its first year and in 2015, 13 last year, and aims for 14 this year (the schedule is not yet out). In other words: China is becoming a feeder for pro golf.
But then this week, the bad news: 111 courses shuttered, out of 683 that existed. Another handful closed voluntarily.
There has been a ban on building new golf courses since 2004 because of water and land conservation concerns, but developers built them anyway, often labeling them as something other than a golf course, or through paying bribes. That ban is still in place. Now more than 100 have been snuffed out. Greg Gilligan, PGA Tour’s lead man in China, acknowledges, “It would be a fallacy to say closing 100+ courses is great. But on the other hand, they’ve now legitimized 496 golf courses. It’s a good foundation for the sport, and it portends good things for the future.”
A good foundation for the sport… huh? Look at it this way, Gilligan argues: nearly 500 courses have been left alone and are now operating above board. And 500 legitimate courses is better than 700 questionable courses. “A very small number of the courses had legitimate registration and licenses,” he says. “I’ve had people tell me there were as little as 11 out of 700 that had a clear and unassailable platform for operating as they were.”
Another bit of optimistic thinking: this latest review could be a sign that clearer, better policy is coming on the right way to open new courses, in the eyes of officials. “What’s likely now is that the government will identify the proper way to build and license a golf course, instead of what has happened, which is the local wink-and-a-nod. And that would allow the sport to get more popular. If there are more legitimate courses, someone will create courses for the mid-market… they don’t all have to be these unattainable, super-expensive pleasure palaces.”
Estimates vary greatly for how many recreational golfers China has, but fall between 800,000 and 1 million—less than a tenth of one percent of China’s population, and a fraction of the 24.1 million who play in the US, according to the National Golf Foundation. It is still a rich person’s game, but if it could get even a little bit more mass market, the number could grow quickly.
Of course, it’s in Gilligan’s interest to spin the news this positive way, because PGA Tour has made such a big bet on China. (And Gilligan is in charge of PGA Tour China Series.) You’re never going to hear PGA Tour officials sounding alarms and saying the end is nigh for golf, even as the bad news rolls in for the US equipment business. (In the last year, Adidas announced it wants to sell off TaylorMade; Nike gave up on golf equipment completely; and retail chain Golfsmith filed for bankruptcy.)
But in case Gilligan’s explanation prompts skepticism, there are additional signs that golf in China is healthy. First, a Chinese female golfer, Shanshan Feng, scored a bronze medal at the Rio Olympics last summer, where Olympic golf returned for the first time in 112 years. Gilligan says that was treated as a major milestone in Chinese golf circles. And shortly after the Rio Olympics, the General Administration of Sport of China announced its new five-year plan for sports, and included golf for the first time, another positive. The sport has obvious appeal to Chinese luxury brands as sponsors.
Finally, despite the closure of courses, the country is not on a crusade against golf, though many major media outlets have erroneously framed it that way. This week the Associated Press reported that China’s latest crackdown included “telling members of the ruling Communist Party to stay off the links.” That claim is not quite true, says Gilligan, though it is something Western media has continued to repeat. “That’s never been the case,” says Gilligan, who runs PGA Tour China Series. “The reality is the policy says that party members should not have things like fitness club memberships or golf club memberships if doing so would be in violation of party rules or discipline. What that means is they are not okay if they got them through illicit means, like as a gift or through the use of corrupt funds. It doesn’t say they aren’t allowed to play golf.”
Indeed, the CCDI (Central Commission for Disciplinary Inspection), the Communist Party’s anti-corruption watchdog arm, even clarified on its website last April that it has no problem with golf as a sport, only with party officials holding VIP club memberships obtained through corruption. Other golf insiders say that Communist Party officials holding golf club memberships is certainly frowned upon, even if not explicitly prohibited.
When we talk about the health of golf, it’s important to distinguish between the professional level and the amateur level. At the pro level, golf is flying: NBCUniversal has seen a rise in viewership for golf both on NBC and on Golf Channel, especially among millennials. Some attribute it to daily fantasy golf contests from DraftKings (and soon, from FanDuel).
But recreational golf is in some trouble. Anyone who denies that isn’t being honest. Total rounds of golf played fell in 2013 and 2014, though it rose slightly for 2015. Total recreational golf participation dipped from 24.7 million in 2013 and 2014 to 24.1 million in 2015. For the past few years, more courses have closed in the US than opened. But many developers (like President Donald Trump, who owns 17 courses) have attributed it to simple over-building and pointed abroad as the source of the sport’s future.
While China has a fraught history with golf (Mao Zedong did ban it in 1949, then the ban lifted in the 1980s), it is not the dire danger zone for the sport that some have reported. PGA Tour, for one, has high hopes.
Is China crucial for the sport’s future? No, argues Gilligan. “But if you think about future growth of the game, you can’t do anything but look to China first.”
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.