Golf growth in China makes sense: dollars and cents

China will soon become the largest economy in the world. It has one of the planet’s most dynamic middle classes, and already the largest mobile market on the planet. Now add the fact that video content is rapidly moving from traditional television and cable to mobile devices.

What does that mean for golf in the United States?

That question must have occurred to the PGA TOUR because they now have PGA TOUR CHINA, joining their existing expansions into Canada and Latin countries. It means more than just a fan base growth with the discretionary income to golf. There can also be enhanced video programming to connect dots of profitability to that very same king of the mobile market.

Golf associations are part of the same video movement that has motivated Google, Apple, Samsung, inter alia to acquire or pursue smaller tech and content provider companies. The goal is to achieve more vertical integration; to put each essential component of the digital content spectrum under one conglomerate. As a result, the organization can more autonomously become a content provider. Economies of scale are achieved and in an industry that is entirely scalable.

How scalable? The golf organizations with acute acumen for economic opportunities are attempting to derive lessons from their industry’s history. It shows us that golf in Asia has an accelerated timetable for the expansion of the sport. The explosive trajectory is evident from examining post-World War II growth of the game in that part of the world.

Consider the growth of golf in Japan. From about 1945 to today the sport grew to have between 5 to 8 % of its population self-identifying as golfers. The US currently has similar percentages. It’s a good golf market. In fact, Japan has been estimated as high as the second largest golf market on the planet.

Now consider the history of golf in Korea. It was not until the 1988 Olympics that this now very emerging market “discovered” golf with a nationalized purpose. Now it has achieved the vicinity of 5% of its population claiming the sport. The salient point of course is that the golf critical mass in Japan took 70 years to develop, whereas it only took a 9-iron more than 30 years for Korea to achieve that 5% golfer threshold.

That history tees up the China opportunity. China has over 1.3 billion people. With a worldwide population of just over 7.3 billion, we see that China has about 1 out of every 7 people on the planet. You don’t have to do the math to know that getting 5-10% of China to golf is scalable.

So like other companies, PGA TOUR can see China as part of its global market, and part of its enhanced video presence in the mobile device industry. The organization has already recently added digital scoring so you can track scores of tournaments in real time. Later this summer they will generate video content for PGA Tour Live, allowing viewers to follow select golfers through rounds on Thursday and Friday, not otherwise traditionally aired. As golf grows in China so will eyeballs and content across all media platforms.

But of course the China opportunity is part of synergistic economics. It takes the interaction of several things, not just video content, to make a bigger financial imprint than any one activity can do alone.

Creating golf heroes brings part of that acceleration to the country. Korea’s growth did not occur just because of the Olympics. But the Olympics took Korea from a closed regime to having more open markets. So the government can then realize various benefits in goodwill, tourism, infrastructure improvements and trade. The growth of golf was part of that dynamic. Only then did the great Korean players emerge. Now over 40 Korean women are part of the LPGA, with champions in US golf tournaments. They became heroes back in Korea that fuels growth of the game back home.

Despite a myriad of differences between China and the comparative cultures above, the commonalities compel a conclusion that China is a viable emerging market for golf with dividends to be realized sooner than later.  China, like Korea, has issues with opening its markets. Yet it too has a government that has seen the economics of Olympics as a net benefit. There are signs of the Chinese government taking golf seriously as part of its overall economic plan. Indeed, there is now a China Golf Association, headquartered in Beijing. It is Exhibit A to a private sector growth of the game or no less than a public private partnership. 

The government has also sought to regulate golf course developments, imposing a soft moratorium since 2004. That moratorium has not stopped the creation of new courses, as perhaps the country is more concerned with ordering which developers will build the courses, not simply eliminating all future courses.

A pipeline of elite players from China will also likely follow as happened in Korea. The economic advantages are again predictable. The elite players, spawns more competitive play among players, thereby enhancing the value of associated media rights. The synergy so created puts more revenue-sticks in the bag.

Yet industry executives are not publicly portraying golf in China as the next Golf Rush.  Golf associations are understandably cautious about making grandiose profitability projections. It’s “too early for that”, says PGA Tour’s Chief Marketing Officer Ty Votaw.  But clearly the significant resources allocated to date speak louder than words and tell us they believe the future rewards from the investment in China far exceed the present risk.