There was a time when Ron Molina wouldn't think twice about dropping $1,000 for an afternoon of networking with potential clients on one of L.A.'s upper-crust golf courses.
But a few months ago, Lexmark International, which employs Molina as senior executive of sales, put an end to networking golf games in an effort to trim costs.
"You have to have an incredible business justification to take someone out for golf," said Molina, who used to be out on the links at least once a month as part of a foursome for lunch, drinks and 18 holes. "But it's better than laying off people."
Lexmark, which designs and manufactures computer printers, is typical of companies around Los Angeles trying to trim expenditures as the slow economy cuts into revenues. While such belt-tightening helps sustain bottom lines, it is putting L.A.'s high-end golf courses into the rough. "Corporations are being more judicious about how they spend their money, and golf is not a necessity," said Frederick Chin, a real estate and golf industry expert at Ernst & Young. "What I have noticed over the last six to nine months is that corporate functions, such as the perks for salespeople, or corporate tournaments, are being cut or reduced."
American Airlines, for example, will reduce this year by 30 to 40 percent its corporate sponsorship of golf tournaments in the area, said Bill Kramer, the airline's managing director of passenger sales for the West Coast.
American has had a tough time getting corporations to sign up for its annual Flagship Charity Golf Tournament, which will be held at the Wilshire Country Club in September. "We'll be off 10 to 15 percent from last year," Kramer said, noting that 80 golfers had signed up by the end of July, down from 92 last year.
Country clubs also are feeling the pinch, as businesses try to save money by reducing their catering costs for tournaments.
Staff members at the private Mountaingate Country Club in Brentwood have noticed that the once-big lunchtime barbeques that were once popular are being replaced by skimpier fare, such as boxed lunches.
"Companies are backing off on the food they purchase for the golfers in their tournaments, and little touches like that," said Diana Morehead, the club's director of catering. "Most companies before would host an open bar, which costs a couple thousand dollars, and now they are making it a cash bar."
Meanwhile, the number of golfers playing on private links around L.A. has thinned noticeably in recent months, as executives spend more time trying to keep their businesses on track during the slowdown.
The Wilshire Country Club, for example, is experiencing a 5 percent decline in the number of golfers. "It started when the economy started to slow down," said club general manager Matt Allnatt. "Even when it's a bad day on the stock market, you can see it on the golf course."
The decline in corporate business comes at a time when growth in the sport has leveled off despite the popularity of Tiger Woods and higher television ratings.
"The golf market has been stagnant over the last three years, in terms of participation," said Tom Stine, co-founder of Golf Datatech, an independent golf research company in Florida. "And the market has been pretty flat over the last two years in California."
The National Golf Foundation estimates there are 2.5 million to 3 million golfers in California, nearly 10 percent of the population.
One of the problems is a dearth of affordable courses, mainly due to the lack of available land. Any land near the coast is costly and requires layers of government approval from entities such as the California Coastal Commission, local planning commissions and city councils, adding years to the development process.
"Historically in Los Angeles, we have had a lack of land. So all the golf courses have done fairly well," said Greg Gotthardt, a real estate and golf expert at Ernst & Young.
Over the past year, more than 500 golf courses have been added to the U.S. supply. But Los Angeles County has seen only a handful of new courses in recent years.
The newest ones include Ocean Trails Golf Club in Rancho Palos Verdes (which only has 15 holes after three holes fell into the ocean two years ago), Rancho Vista Golf Course in Palmdale, Robinson Ranch in Santa Clarita and the Cascades Golf Club in Sylmar.
The only course now under construction is TPC of Valencia, which is part of a housing development.
That said, high-end courses still have a rough time attracting golfers during the week. Avid golfers who don't belong to a private country club are more apt to book tee times at city- and county-owned courses that charge as little as $25 for a round of weekday golf, which is booked solid from sunup to sundown. "There is plenty of demand for low-priced golf," Chin said.
"I think the interest in golf is quite high, and there is a good deal of latent demand for the sport," noted Mike Hughes, president of the National Golf Course Owners Association. "But the golf industry just has to find a better way of introducing people to the game and getting them to stay interested."
For reprint and licensing requests for this article, CLICK HERE.