Economics of Golf - SmartAsset

When you think “golf” do you think of executives doing business on the links or wealthy retirees? If so, you might have a good reason for associating golf with money. The sport is big business, from the manicured courses to the televised competitions. Below we’ll dive into more about the economics of golf. Whether you’ve earned money from golf or from a different route, consider making sure you invest it wisely for the long term by working with a financial advisor.

What Golfers Spend

A survey from Zippia shows that over 25 million people have played golf in the last year, which is 8.1% of the U.S. population and the golf industry’s market size is over $84 billion. Another survey shows that Baby Boomers spend an average of $1,908 on golf equipment, while members of Generations X and Y combined have an average equipment spend of $1,262. 25% of Boomers reported taking a golf trip in the previous year, while 9% of Generations X and Y cohort said the same.

To get a sense of what a golf trip costs, take the readership of Links Magazine, a golf publication, as an example. According to a Links report, Links readers have average annual spending on golf travel of $3,965, out of a total spending on all travel of $10,560. 52% of the Links readers surveyed said they planned to take between 4 and 9 golf trips in the next three years. If you’re going to play golf a lot then you may want to make sure it fits your budget.

Golf Spending, Then and Now

Even 100 years ago, people were writing articles about the cost of playing golf. A 1915 issue of The American Magazine listed the cost of the initiation fee at an exclusive golf club as $5,000. According to the SmartAsset inflation calculator, that’s the equivalent of $144,292 in today’s dollars.

The 1915 article totaled typical costs for a year of golf including an initiation fee, annual dues, balls, clubs, car fare and caddie pay at $182.50. That’s about $4,228 in today’s dollars. Of course, minus the one-time initiation fee the average cost of a year of golf in 1915 would be about $120, or $3,463 in 2023 dollars.

According to The American Magazine, more money was spent on golf than on any other sport in 1915. The magazine marveled at the “130,000 acres of our most valuable soil” given over to the game of golf, “which has grown with such amazing rapidity that it has been hard to keep pace in the way of course building.” As we’ll see, the growth in golf has slowed somewhat since the heady days of 1915.

The Masters

The Masters is a major golf tournament held in August, Georgia every year where professionals compete for the right to be champion and wear the coveted green jacket. For golf lovers, the Masters is a highlight of the year. The Masters is expected to generate around $142 million in revenue this year, with a profit of nearly $30 million. The Master’s revenue has had a 10% growth rate since 1997.

Want a badge that will get you into all four competitive rounds of the 2023 Masters? You’ll pay $450, though prices reach into the thousands for tickets on the secondary market.

The PGA Championship

There is a lot of money in all of the major championships and the PGA Championship isn’t any different. The winner of the 2022 PGA Championship, received $2.7 million in prize money. But he wasn’t the only one to get an income boost from the championship. Even the person who finished 70th took home $24,500. Here’s what the top 20 finishers got for their trouble in 2022:

1st: $2,700,000
2nd: $1,620,000
3rd: $1,020,000
4th: $720,000
5th: $600,000
6th: $516,250
7th: $475,000
8th: $436,600
9th: $400,000
10th: $371,250
11th: $343,750
12th: $316,250
13th: $291,250
14th: $278,750
15th: $266,250
16th: $253,750
17th: $241,250
18th: $228,750
19th: $216,250
20th: $203,750

When one of the major golf championships increases its “purse” (the total amount of prize money given away to the players who place), the other tournaments tend to follow suit.

Golfing and the Housing Industry

Those who love golf usually want to live as close to a golf course as possible. This has a measurable impact on the housing market in the U.S. Research firm SRI estimates that 19,152 new golf community homes were constructed in 2011, with total golf residential construction spending of $3.1 billion. Homes in golf communities tend to be larger and pricier than the average property. This means they cost more to build – and that’s good news for the construction sector.

However, the past few years have seen a dip and there may be a change of how people are thinking about the value of their home. With house prices up everywhere, many people aren’t prioritizing things like living on a golf course. It will be interesting to see if those prices normalize or continue to increase in the coming years.

Golf’s Millionaires

Being a successful professional golfer can be highly lucrative. There are at least 14 golfers on the PGA tour who have won $10 million without even winning a tournament. That’s not the only place these golfers earn, though. Many earn even more money through sponsorships. According to Golf Digest, golf’s biggest names together earn more than $400 million in off-course sponsorship deals.

There is now the extra layer of the LIV Golf and how it impacts the number of golf millionaires today. LIV is backed by a Saudi Arabia investment firm and the premise is to make more money for all the players on tour. Every tournament gives out a large purse for players in the individual competition and for team competition. Many players are also paid millions just to participate in the tournaments in order to lure them away from the PGA Tour.

In general, golf stars tend to more or less follow the 90/10 rule. 90% of their earnings come from off-course deals, while only 10% come from golf winnings. For example, Tiger Woods’ golf winnings come to just 12% of his total career earnings as a golfer.

Is Golf in Trouble?

Golf as a sport may retain its associations with big money, impeccably manicured courses and pricey equipment, but golf seems to be struggling financially. Golf has had fewer and fewer players over the past decade. According to Pellucid, the number of U.S. golfers is down 24% in 2016 from its 2002 peak. The Pellucid report found that in 2013 alone, golf lost 1.1 million players. This number has continued to decline today.

To play 18 holes of golf, or even 9, you need plenty of time and Americans are time-scarce. According to the Bureau of Labor Statistics Time Use Survey, the average American male spends 0.44 hours participating in sports, exercise and recreation on weekends and holidays.

That drops to 0.36 hours on weekdays. Women spend an average of 0.23 hours participating in sports, exercise and recreation on weekends and holidays, and just 0.20 hours on weekdays. Now consider that a traditional 18-hole round of golf can take around four hours and you’ll see why Americans aren’t playing golf as much as they just don’t have time.

The Bottom Line

If your dreams of retirement involve hours spent on the green, don’t panic. Golf should be around for a while and there are always courses in other countries you can visit if you get tired of the options here at home. If you’re on a budget and want to save money on golf equipment, consider buying second-hand equipment and playing on public, municipal courses. Golf doesn’t have to be about luxury – it can be about getting out in the fresh air and getting a little exercise.

Tips for Managing Your Finances

To ensure you’re setting yourself up for the golf retirement you’re dreaming of, consider working with a financial advisor. An advisor can help protect your money and help you grow your wealth. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
It’s important to estimate what your return might be before making any investment. You can use SmartAsset’s free investment return calculator to help you do just that.