A Global Game, A Global Industry

Australia & Asia Pacific; Golf Industry

Presented by Max Garske; Chief Executive Officer, PGA of Australia

Presentation Outline

• Overview Australian Golf Industry
• Key findings of Australian Golf Industry Report
• Overview of the Asia Pacific region
• Economic and other impact issues
• Conclusion

Overview of Australian Golf Industry
• Australia is a comparatively small golfing nation in global terms
• 1.25 million golfers
• 1,700 golf courses
• Strong and significant player in the Asia Pacific golf scene
– Punches above its weight in global terms
Source: Ernst & Young and PGA of Australia


Key Findings -2004 Australian Golf Industry Economic Report
• Australian golf economy $US2.2 billion*
• $US1,700 per golfer
• Significant employment 23,000 direct jobs
• Two jobs created for every 100 golfers
• Many more are employed in industries indirectly
associated with golf
* Based on Australian to US dollar exchange rate of $0.89
Source: Ernst & Young and PGA of Australia


Key Findings -Australian Golf Industry
-compared with other Australian industries
• Free to Air TV $US3.9 billion
• Golf Economy $US2.2 billion
• Horse and Dog Racing $US1.52 billion
• Book & Other Publishing $US1.31 billion
• Radio Services $US780 million
• Creative Arts $US670 million
Source: Ernst & Young and PGA of Australia


Australian Golf Economy Contributors
• Direct industries contribute $US1.71 billion or 81%
• 19% from associated industries
• Golf Facilities account for 54% or $US1.13 billion
54% Golf Facilities
10% Golf Course Investment
11% Golf Equipment & Supplies
6% Associations, Charities, Endorsements &Tournaments
3% Real Estate
16% Hospitality & Tourism
Source: Ernst & Young and PGA of Australia

Australian Golf Economy Contributors
• Direct industries contribute $US1.71 billion or 81%
• 19% from associated industries
• Golf Facilities account for 54% or $US1.13 billion
54% Golf Facilities
10% Golf Course Investment
11% Golf Equipment & Supplies
6% Associations, Charities, Endorsements &Tournaments
3% Real Estate
16% Hospitality & Tourism
Source: Ernst & Young and PGA of Australia

Overview of the Asia Pacific Region
-Golf Course Distribution
•Australia – 1,700
• China (incl H.K) -311
•India –31
• Indonesia -100
• Japan -2,500
• Malaysia – 256
• New Zealand – 336
• Philippines – 80
•Taiwan – 35
• Thailand – 200
• Singapore – 14
• South Korea – 200
* As of January 2006 Source: PGA of Australia

Overview of the Asia Pacific Region
-Golf Course Distribution
•Australia – 1,700
• China (incl H.K) -311
• India –31
• Indonesia -100
• Japan -2,500
• Malaysia – 256
• New Zealand – 336
• Philippines – 80
•Taiwan – 35
• Thailand – 200
• Singapore – 14
• South Korea – 200
* As of January 2006 Source: PGA of Australia

Overview of the Asia Pacific Region
• Estimated total courses in Asia Pacific – 6,000
• Number of golfers -in excess of 6,000,000
– Dependant upon the definition of “golfers”
• Mature golf markets – Australia, Japan, Malaysia, Myanmar, New Zealand, Taiwan, Thailand and Singapore
– Account for 80% of total golf courses in Asia Pacific Region
Source: PGA of Australia

Overview of the Asia Pacific Region
• Hot spots include -South Korea and China
– South Korea expected to double number of courses by 2016 to 400.
– 40 % current growth rate of golf course construction in China
• Countries such as India, Indonesia and Vietnam have potential dependant upon:
– Strength of economy
– Availability of suitable land
– Cultural issues
Source: PGA of Australia


Conclusions for Asia Pacific Region
• Based on the trends from the three golf economy reports we can assume:
– That the size of the Asia Pacific golf economy would be similar to that of Europe and in time perhaps the USA
– As the quality of local players improves so to will consumer demand
– Asia Pacific will experience strong growth of facilities and players over the next 10 to 20 years based on current trends.
Source: PGA of Australia; European Golf Industry


Presented by Sandy Jones
Chief Executive, PGA of Great Britain & Ireland
Chairman, PGAs of Europe

Golf in Europe
• Golf directly contributes an estimated $US19.9 billion to the European economy;
• This region of the world comprises more than 6,300 golf courses with Great Britain and Ireland accounting for nearly 50% of the supply;
• With an estimated 4.1 million registered golfers, the golf economy has a value of $US 4,846 per golfer.

Source: Sports Marketing Surveys, PGA of Great Britain
& Ireland and KPMG Ltd.


Golf Economy Contributors
51% Existing Facilities
8% Golf Equipment
1% Golf Events
5% Advertising & Media
4% Course Construction & Renovations
19% Direct Employment
12% Tourism

Existing golf facilities account for 51% or $US10 billion of the total golf economy in Europe. Roughly $US3.9 billion of the economy is attributed to the employment of 120,000 full time jobs.

Source: Sports Marketing Surveys and PGA of Great Britain & Ireland.

Impact from Existing Facilities
• Golf facilities realized $US7 billion in gross income in 2006 exclusive of golf instruction
• Golf instruction represented an additional $US405 million
• The gross annual income for golf courses averaged $US1 million; $US194,000 average for
golf ranges

• Annually, golf facilities host 3 million rounds
• Typical course:
..Hosts 24,000 rounds of golf per year
..Employs and average of 14 people on a full-time basis
Source: Sports Marketing Surveys, PGA of Great Britain & Ireland and KPMG Advisory Ltd.


Golf Equipment
• The golf equipment business is estimated at $US1.6 billion with a large portion of these sales going through shops at golf courses

• Equipment spending on a per golfer basis is
estimated at $US393 for 2006
Source: Sports Marketing Surveys and PGA of Great Britain & Ireland


Golf Course
Construction/Renovations

• An average of 83 golf courses are built each year in Europe
• At a cost of $US5.2 million per course, new course development accounts for $US430 million in impact
• Golf course and facility improvements represent an additional $US323 million for 2006
Source: Sports Marketing Surveys and PGA of Great Britain & Ireland


Golf Tourism
• The golf tourism industry is valued at $US2.4 billion and accounts for 10.8 million hotel nights
• $US2.1 billion is attributed to the European market while $US290 million is generated by
non-European tourists, the majority of which target the UK
• Key factors that encourage golfer visitations include:
• Good weather
• Trophy courses
• A different culture
Source: Sports Marketing Surveys and PGA of Great Britain & Ireland

Advertising & Media
• This represents a $US1.0 billion business in Europe with the majority ($US774 million) from sports channel subscriptions
• Golf magazines account for $US116 million of this industry segment with monthly circulations of golf magazines estimated at 15 million.
• Dollars spent on advertising account for the remaining $US129 million
Source: Sports Marketing Surveys and PGA of Great Britain & Ireland


Professional Golf Events
• An estimated 30 million adults watched 3,700 hours of golf coverage on European TV in 2006

• With 72 events staged over 300 days, golf on TV is growing at a significant rate

• The cost of staging the events and prize monies is estimated at $US258 million
Source: Sports Marketing Surveys and PGA of Great Britain & Ireland


Golf’s Contribution to the European Economy*

Existing Facilities $US 10,002,660,000
Employment 3,870,000,000
Golf Equipment 1,612,500,000
Course Construction &
Renovation 752,070,000
Golf Tourism 2,354,250,000
Advertising and Media 1,019,100,000
Professional Golf Events 258,129,000
Total Direct Impact $US 19,868,709,000
Total Impact w/ multiplier $US 39,737,418,000
* Based on Euro to US dollar exchange rate of $1.29
Source: Sports Marketing Surveys and PGA of Great Britain & Ireland


The U.S. Golf Economy
Presented by Joe Steranka
Chief Executive Officer, PGA of America

U.S. Golf is Big Business
The U.S. Golf Economy Compared with Other Industries’ Sales ($ billions)
Furniture and home furnishings (retail) $74.1
Electronics and appliances (retail) $70.2
Golf (including core and enabled industries) $62.2
Motion pictures and sound recording $57.8
Amusement, gambling and recreation $55.9
Mining (except oil and gas) $51.6
Source: SRI, Golf 20/20 and The PGA of America

Spotlight on America’s $62B Golf Economy
• Golf Fees
• Merchandise/Retail Sales
• Capital Spending
• Professional Tournaments, Charities & Associations
• Real Estate
• Tourism

Golf Fees
Golf facilities in the US generated an estimated $20.5 billion in revenues in 2000
($US millions) ($US millions) ($US millions)
Green/Guest Fees $5,739
Membership Dues & Fees $7,379
Food & Beverage sales $4,919
Golf lessons, rentals and
other services $2,459
Total $20,496
Roughly 40% or $8.2 billion in revenues goes toward facility payroll
Source: SRI and Golf 20/20

U.S. Golf Course Typical course:
• Hosted an estimated 36,300 rounds of golf in 2000 (now averaging 33,300 rounds)
• Employs and average of 17 people on a full-time basis and 40 people in total
Source: SRI, Golf 20/20, The PGA of America and NGF


Merchandise/Retail Sales
Consumers spent an estimated $6 billion on golf merchandise and publications in the US in 2000 ($US millions)($US millions)($US millions)
Equipment $4,096
Apparel $989
Books, Magazines $897
Total $5,982
Source: SRI and Golf 20/20


Capital Spending
Golf course capital spending on renovations and construction totaled $7.8 billion in 2000 ($US millions) ($US millions)($US millions)
Existing Facility Capital
Investment $5,646
New Golf Course Construction $2,166
Total $7,812
Source: SRI and Golf 20/20


Professional Tournaments, Charities & Associations
This portion of the golf economy represents $4.5 billion dollars including an estimated $3.2 billion generated for charities in 2000 ($US millions) ($US millions)($US millions)
Charities $3,200
Spectator Golf Tournaments – PGA, PGA TOUR, LPGA & USGA $871
Player Endorsements $255
Associations $167
Total $4,493
Source: SRI and Golf 20/20


Real Estate
Golf has a direct affect on golf-related residential construction and nearby housing values with an estimated value of goods and services of $9.9 billion
$9,904 Total $1,504Real Estate Premium
$8,400 Golf-related Residential Construction ($US millions)($US millions)
Source: SRI and Golf 20/20 Real Estate

Golf has a direct affect on golf-related residential construction and nearby housing values with an estimated value of goods and services of $9.9 billion
$9,904 Total
$1,504 Real Estate Premium
$8,400 Golf-related Residential

Construction ($US millions)($US millions); Source: SRI and Golf 20/20

Tourism
Golf-related travel expenditures amounted to an estimated $13.5 billion in 2000, including travel to play golf or to watch tournaments ($US millions) ($US millions) ($US millions)
Tournament-related Travel $435
Personal Golf Travel $13,044
Total $13,479
Source: SRI and Golf 20/20


Key Findings
-Comparison of Golf Industry Surveys

USA 2000 Europe 2006 Australia 2004
Total Golf Economy: $US62.2 billion; $US19.9 billion; $US2.2 billion
Number of Golfers: 25,400,000; 4,100,000; 1,282,000
Value per Golfer: $US 2,400; $US 4,800; $US 1,700