Golf was just working its way out of the rough when the pandemic hit. After an initial shock last spring, the sport is poised for its best year since Tiger Woods was at the height of his popularity two decades ago. There is still plenty of green for investors to aim for.
Rounds played in the U.S. fell by 8.5% in March and a whopping 42% in April compared with a year earlier, according to the National Golf Foundation, as many courses were closed. But the socially distanced nature of the sport led to a furious rebound. By last month, rounds played were 37% higher and up handsomely for the entire year, even with the spring lockdowns. Even though other parts of their business such as clubhouse dining remain depressed, golf courses find themselves in far better financial shape than a few years ago.
Back in 2016, a quarter of public golf courses surveyed by the NGF said they were in “poor” or “very poor” financial condition—slightly worse than in the aftermath of the 2008-09 financial crisis. By last year, only 8% of public courses reported similar conditions. The proportion reporting that they were in “good” or “great” shape had doubled.
Stock-market investors have few, if any, opportunities to benefit directly from courses’ reversal of fortune, but there are other parts of the golf business that depend on financially healthy fairways.
The handful of stocks that give investors exposure to the sport have delivered strong returns after an initial pandemic shock. Equipment and apparel maker Acushnet Holdings , known for brands such as Titleist and FootJoy, has edged the S&P 500 by 14 percentage points in the past year. Golf Galaxy owner Dick’s Sporting Goods has beaten the market by 32 percentage points. Equipment seller Callaway Golf , which lost three quarters of its value in the first weeks of the Covid-19 bear market, has rebounded, beating the market by 13 percentage points. Along the way, Callaway gained even more exposure to the sport by merging with driving-range operator Topgolf.
