Why GOLFPASS May be the Worst Thing for Golf Courses Since the Bartered Tee Time

Posted By on Feb 21, 2019 | 44 comments

While there are promising indicators and progressive things happening in golf that cause me to be quite bullish about the long term prospects of our industry, the business of running golf courses in America – by and large – has been a slog for the past 15 years. The supply and demand curve has been moving in the wrong direction since before the Great Recession. Most experts agree the number of course closures will continue to far outpace course openings for the next decade. If you compare the average price of a round of golf ($38 according to We Are Golf) to the change in Consumer Price Index, golf is arguably cheaper than it has ever been. Pellucid Corp reports that 39% of golf courses in America operate in the red. Despite the challenges, I do not believe there is a macro, existential crisis (there are over 14,000 golf courses generating an $84B impact on the American economy). However, this is our current climate. It’s still a great business, but it is hard to succeed.

While the economic pie of rounds and revenue seems to shrink, one can’t help but notice the prosperous rise of Online Tee Time Agencies (OTTAs). With too many courses and not enough golf being played, the supply and demand plight naturally causes downward pressure on the price of golf, thereby creating conditions incredibly challenging for the typical golf course operator. Golfers can find affordable golf in every market in the United States. It’s a buyer’s market, plain and simple.

The OTTAs in golf claim to serve both the supply side (primarily through technology and marketing services to golf courses) and the demand side (primarily through easy booking of tee times for golfers). However, from my observation, their value is heavily weighted towards the needs and desires of the golfers – the aggregation of tee time options at multiple golf courses, all on one screen. I don’t believe golf courses need the marketing services of OTTAs to meet the natural demand for golf in our marketplace, nor do I think they stimulate incremental demand for golf. But that’s me. Unfortunately, despite the positive contributions to the game of golf from the parent companies and organizations affiliated with the OTTAs, the dominating push by the OTTAs to sell the lowest priced tee times, which conditions golfers to favor those times, is an albatross around the necks of the golf courses who provide the inventory.

Why “FREE GOLF” is detrimental to the health of our industry

If you are among the audience or followers of NBC, NBC Sports or the Golf Channel, you’ve likely seen the recent launch of the new GOLFPASS program. GOLFPASS is Golf Channel’s investment in the subscription model of services for their golfing customers. Leveraging the celebrity of Rory McElroy to give it serious fuel, GOLFPASS offers golfers one free round of golf every month, access to subscriber-only golf content, 400+ hours of instruction, travel credit at golf resorts, and more – all for as little as $99 for an annual subscription, or $9.99 per month.

As a subscription service, there’s actually a lot of value packed into GOLFPASS. It reminds me of Amazon Prime.  For the low fee of $12.99 per month, Prime subscribers get free, two-day shipping on over 100 million items, exclusive access to favorite moves and shows, unlimited access to millions of songs, unlimited photo storage, free online gaming, and more. Compared to when free shipping was the only benefit, it’s easy to see why consumers are so attracted to the value package.  Looking at GOLFPASS, there’s a lot of value packed into the offer.  It will no doubt increase engagement in golf, and that is a good thing for all of us concerned about retaining interest and involvement in the golf economy. Although GOLFPASS marketing doesn’t appear to single out the free round as the primary feature (as free shipping has been the primary feature of Amazon Prime since the beginning), I cannot help but be fixated on the free golf. But I am biased, because I represent the supply side of the industry – the golf courses around the United States. Free golf is the fatal flaw for all the golf courses now inextricably and unwittingly involved in the program.

This Tweet was removed by GOLFPASS. It’s an example of the gluttonous posture towards golf courses.

Let’s attempt to follow the dollars and see what is happening. Joe Mulligan gives his Visa card number to the Golf Channel as a new GOLFPASS subscriber, and the Golf Channel bank account increases by $10 per month – automatically (and exponentially, of course) – while Joe likely forgets over the next four years that his card is even being charged. Isn’t that the little secret of the subscription model – that the seller benefits from the “breakage”? Meaning, if Joe doesn’t actually – or frequently – use the benefits being offered, the Golf Channel still gets Joe’s regular monthly payment. Many companies – even golf courses themselves – are moving in this direction.  Nevertheless, score one for the Golf Channel!

Joe gets his first monthly promo code from GolfNow and goes to GolfNow.com to book his free round of golf in the Orlando market, and claims his “Hot Deal” (free round promo codes can only be used on the bartered tee times, and only Mon-Thur after 12:00 pm). If the Golf Channel is lucky enough, Joe got his buddies to sign up for GOLFPASS, and they all sign up for the 12:08 p.m. tee time on Monday. Joe and his buddies enjoy their round of “free” golf, go home, and hope to do it again next month after GolfNow emails the next promo code. Score one for Joe and his buddies!

See how the monthly promo code reduced the price from $38 to $0. Price integrity be damned!

While incurring the costs associated with Joe’s round of golf, the golf course received no income and attracted customers whose primary motivation was to pay as little as possible. One can make an argument that the golf course scored by receiving some marketing and technology benefits (among other possibilities) from GolfNow in exchange for no-revenue, bartered tee times. And some might argue that Joe and his buddies are going to buy some hot dogs and beer while on property. But I think that is a dubious position (more on that later). So for argument’s sake, I say the golf course scored zero.

No matter the deal or the no deal between golf courses and GolfNow, the last thing our industry needs is major corporate media promoting free golf to the masses on the back of golf course owners and operators. OTTAs are already adept at peddling rounds of golf at 20-80% off the rates of adjacent tee times on the tee sheet. Do golfers now need free golf in order to play? Is it hyperbolic to think the only natural progression after free is that golf courses will one day have to pay golfers to play their courses?

GolfNow’s first Tweet after the media launch of GOLFPASS. Notice the emphasis on FREE golf.

If GOLFPASS is wildly successful, it could very well mean millions of rounds of free golf being played all across the land, while golf courses continue to bear the burden of the significant fixed and variable costs needed to keep the golf courses running. The shrinking effect on the bottom line will be harmful at best and devastating at worst, leading to greater struggles and possibly more closures of good golf courses. How would this ultimately good for the golfer? How is this good for anyone in golf, including employees that work at golf courses and vendors that partner with golf courses? What about the housing development adjacent to those courses now offering free golf? Are they looking forward to viewing fallow land out their back windows?

Why bartered golf is the kryptonite weakening our industry

We cannot separate the danger of free golf from the fact that over 6,000 golf courses willingly provide the bartered inventory to allow this to happen. Barter itself is not an evil concept. As a method of exchange, it dates back to ancient times. If bartering involves the fair trading of goods or services between two willing parties receiving comparable value in the exchange, there is no problem. However, a “haze of ambiguous value” clouds the entire barter economy in golf, thereby preventing course operators from truly understanding what they are giving up in this exchange.

OTTAs that offer barter to golf courses as a compensation option are not evil per se. OTTAs, like GolfNow, capitalized on an incredibly clever business concept that was once much more discreet in nature. Before the meteoric rise of GolfNow as we know it today, the lowest-demand tee times were once peddled only through vehicles like email, where a golfer couldn’t easily compare the discounted rounds against all the other rounds in an aggregated view.

When the bartered round of golf was made the centerpiece of the relationship in an online environment, which included handing over partial or total control of pricing to the OTTAs for those rounds of golf, the OTTAs found themselves sitting on a treasure trove of inventory over which they had partial or total price control (certainly the fatal flaw operators have made over the years in these dealings). The decade around the Great Recession only made the conditions more conducive to build this treasure trove, because they were offering services for no cash-out-of-pocket. There might be nothing more seductive to a cash-poor business that runs below 50% occupancy than free technology and marketing. Thus, the permeation and influence of the OTTAs spread like a viral infection in our weakest moments. Some argue that the bartered inventory did nothing more than create new, virtual golf courses that compete directly against the very ones that supply them with their inventory. Research from the Golf USA Tee Time Coalition reveals that 47% of golf courses participating on OTTAs believe they are in direct competition with their OTTAs (an additional 26% are on the fence). Unfortunately, Coalition data also reveals that golf courses that barter don’t appear to be ready to give it up. While more than half of golf courses do not agree that barter should be a payment option in our industry, 86% of those who barter would prefer it to continue. These relationships are complicated, to say the least, and wrangling back control of pricing and inventory is going to be its own slog.

The ORCA Report, which has approximately 700 public golf courses sharing performance data every month, yields one of the most important data points in our industry and helps to remove the haze: Barter Opportunity Cost. BOC indicates what income a golf course might expect to earn had they sold those bartered rounds on their own (at an average price based on the price sold of adjacent tee times). Early insight into ORCA data coming from nearly 400 golf courses engaging in barter reveals an average of $37,000 in BOC for 2018. I recognize that golf courses participating in barter might not sell all of those tee times on their own, and OTTAs are not getting full price for those rounds. But this certainly gives you an indication of what the recapture could be if golf courses employed better marketing and price controls.

One real course example of Barter Opportunity Cost in 2018 – nearly $90K.

OTTAs do anything they can to monetize those bartered rounds, including the use of discount codes, gift cards, and now subscription. They’ve moved from gluttony (who remembers the rap video at the GolfNow sales meeting about selling boatloads of trade time?) to desperation (free): both deadly sins in business. All this on the backs of golf course owners and operators. I am gravely concerned that price abdication by golf courses and the prolific offering of heavily-discounted and free golf will grease the already-slippery slope towards struggle and possibly more course failure. What the golf industry desperately needs are these OTTAs to emulate the restaurant industry’s OpenTable, which facilitates no discounts or free meals. The OTTAs should have no influence on price. Let the courses compete on their own merits, and just give the world frictionless, beautiful aggregation and ease of booking – and get out of the way.

Each bartered round sold that strengthens the OTTA simultaneously weakens the golf course. The parasite-host relationship is not symbiotic.

Later this season, NGCOA will publish a guide for course operators interested in understanding the details of barter. This resource will take a comprehensive look at the economics of barter in our industry, services offered in exchange for barter, prices that can be paid for such services, tips for negotiating healthy contracts, and more tools and knowledge to help course operators calculate the cost-benefit equation. The manifestation of GOLFPASS and marketing of free golf should cause course operators everywhere to take a fresh look at their dealings. At the very least, explore what the pay-to-play options are, and calculate your BOC. Talk with your neighbors. Have you gone on and off barter and have a positive story to tell? Please share it with us. Course owners and operators: we have to stop whistling past the graveyard and end this race to the bottom.

Jay Karen
Chief Executive Officer
National Golf Course Owners Association


  1. Excellent Article and your points are exactly what every operator and management company needs to understand. Well done Jay!

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    • The article is well written but the tee time for trade boat sailed long ago. The truth is the course owners (NGCOA members) want it that’s why 6,000 of them do it. I gave that fight up a year ago.

      As for Golf Pass, it’s an idea the NGCOA or PGA should have thought of first, just like online tee times. The FREE rounds are merely the barter the courses gave GN anyway, so nothing much changed. In fact GN will make less revenue. If the courses themselves were proactive, they could sell them something or at least get their emails but sadly most are not and that’s the real problem!

      The NGCOA should come up with a real marketing program themselves and stop promoting sponsors who steal their clients emails!

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      • Andrew
        Agree with your basic thoughts here. BUT…Do not believe the owners “want it”. They want help marketing and keeping their doors open any way they can. Unfortunately most do not see the long term business play by Golf Now and the way that play slowly erodes their income. No new rounds create just discounting the current inventory. GN is very good at selling to owners and using a disguised bully pulpit to instill the thought/fear that if you are not in these programs you will not be competing.
        Most do not have or are afraid to spend the dollars needed to hire marketing experts.
        We can not blame GN for a great business plan. The blame is on the owners for following it.

        GN is not losing income with this program. I believe these are rounds they can not sell so why not give them away and build more loyalty to their site.

        Agree with your last point. Finding the dollars and right partners is a hard one but should be done.

        This is only my opinion and we know everybody has one.

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    • IS NGCOA just figuring this out? Every $500 driver, golf cart, irrigation system manufaturer, equipment company is making their profit on the backs of owners who can’t charge a fair price. Someone needs to come up with a system that eliminates all barter…..

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      • @MikeYoung. I’d like to speak with you and get your feedback on something that addresses your comment. You can ask JK about us as what you will find online is purposefully miss directional for now. Lblaylock@findagame.io

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  2. Many of the courses participating in the ORCA report have used the data in the report to change their relationship with GolfNow. They reduce the cost of barter, while maintaining their exposure on GolfNow. It’s not difficult.

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  3. I know of no other industry that has sold out it’s equity like to golf industry. First it was with discount cards like the cancer card or lung Association etc. and then which was a OTTAs. The fact that we can’t control the pricing is killing the golf business. I actually have members who will go online and buy the barter times because it’s cheaper than buying a cart at the counter and they have eventually dropped their membership completely. This has to stop!

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      • Then they will suffer as the golf industry has Andrew. A few years ago and it may still be that one golf course closed every 48 hours in this country. Pretty sad!

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  4. Jay,

    Very well thought out and presented. We experimented with the koolaid for a while. We did about every combination offered and learned every trick, were victims of many. This can be a very complicated issue when it comes to an actual market and working with fellow competitors. To keep it short, we learned how to properly use the tool then beat them at their own game. With the help of some very smart NGCOA members/veterans/leaders, as well as industry partners, we were able to kick the habit. We had a well thought out game plan and executed it. We were skeeered to death to make the leap but in the end we converted the GN database to become our loyal customers. We even converted the nonpaying hot deals to paying customers. I have always said GN is only providing the gun, it’s the operators pulling the trigger. If you use the gun correctly you can put food on the table. If not you can starve. We have been off the program for years now and have never looked back! Not only have our rounds went up every year but the most important stat, revpar has gone up significantly.

    Again, if the tool is used correctly it can help a property. Unfortunately most just set it and forget it and call it a marketing plan.

    Thank you to the NGCOA family for helping each other out. Thanks for the education opportunities. We are quantifying this years conference and it has already tripled what we paid, including all expenses and we have an entire season to go.

    Jay, keep on preaching there are still operators to be saved!

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  5. Really sad to see what the golf courses have done to position themselves to eventual doom.
    Expenses continue to go up, while incomes continue to go down. The perfect formula to failure for their business.
    Stand strong and think long term. Unfortunately, most management companies out there staff their facilities with managers who are underpaid and desperately need their bonus, which force these managers to think only on an annual basis.
    The PGA really is only focused on growing the game now and really only recognize instruction these days, so they aren’t in the position to assist, if they even knew how to.
    What a mess we’ve created.

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  6. Jay,

    Great article that all owners and operators should read with the intent to understand. I laughed when I read the announcement about GOLFPASS as I imagined operators tripping over themselves to be a part of this new marketing “opportunity”.

    A successful business has to control its inventory; from distribution, to pricing to allocation modelling. Controlling your customer relationship (and thus data) is also part of the solution but unfortunately it takes more work and effort than many are willing to commit. For those willing to do the heavy lifting in an effort to control their destiny and manage their own brand, the rewards can be significant.

    The following simple facts should be considered by all:
    1) Rounds of golf played on a macro level are the same with or without barter, so why have it? (Unless you prefer trading down to overpay for technology and “marketing”)
    2) Gross revenue for operators (macro level ) increases without barter. Obviously sine all rounds played are now PAID rounds.
    3) The barter slice of the revenue pie (no longer available to course owners) far exceeds the value provided by OTTAs to operators
    4) If no one participated in barter, OR…… if everyone participated in barter, all ownership slices of the pie would be the same relative to each other……..only with barter, their slices would all be proportionally smaller

    That our industry ever let this happen is a shame. A well capitalized , large corporation with many brilliant MBAs calling the shots figured out how to fleece an industry of under educated business people (owners and operators alike).

    Unfortunately it may be too late to repair the damage done to the industry, but that does not mean that we should stop attempting to help educate our competitors.

    Appreciate your efforts and all that you do Jay, please keep going!


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  7. i am waiting to see billboards that say ebt approved hotdogs $28 golf free.

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  8. We have a couple courses in travel destinations that each receive on average 24-30 rounds per day, all at full rack rate from GN site. We trade one hot time per day in afternoon that is sold for no less than 50% of posted rates for that period. We also don’t include cart in the trade time so allows for additional income opportunity for our courses. We have found traveling players use GN to search for golf like most of us use Expedia or other sites to search for hotels or cars. I couldn’t imagine going to Orlando and searching individual hotel or car rental company sites… Who has that kind of time. I am curious, since we often hear comparisons between golf and hotel industry, how do hotels pay for similar marketing on Expedia, etc. is it trade or commissions. our courses are realizing good (non discounted) income from GN site so I don’t see the merit to stop using them. As it is not likely OTTAs are going away since they (like all online booking companies in society) are very user friendly, I am curious if NGCOA has any recommendations other than not to use them. Thanks for the discussions.

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    • Ken, where are your courses located. Are they owner managed?


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      • Southeast Florida and Northern California and they are operated by us under long-term leases.

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  9. Pleasant stuff! I like to peruse the data that you have imparted to us. I need to get more updates to expand my insight.

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  10. Looks like a better initiative for me, but I think not for too long though, been in an organization of transportation, Golf is the only thing that keeps us rockin’, please find better options.

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    • Me too, but when things gotten wrong, just remember this.
      To cancel an upcoming tee time, go to your “Upcoming Reservations” page. Click “Modify Players or Cancel” on the reservation that you would like to cancel. Select the number of players you wish to remove from your reservation and a reason, and click “Submit Cancellation.”

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  25. Rory McElroy?
    I get to play outside of my zip code. Pay for buckets, swag, Scotch and tip well. Love GolfPass. Before online I clipped ads from the sports section of whatever town I was in. Called for twilight deals and often replayed. As a golfer I do consider the rest of the property and staff. I get at least one round now when I can’t typically afford to play regularly. I don’t connect to this article. And am , in fact going to save the anniversary $25 bucks for the annual today over my previous monthly recurring. Not all Golf Nuts can go all out in such an expensive game!

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