Once upon a time the sport of golf was regarded as being the domain of the rich and connected. It was notoriously difficult to become a member of many of the most exclusive clubs and was regarded as much as a social as a sporting activity.
But over the years the sport has opened itself up to be far more inclusive. So today an estimated 30 million Americans play on a reasonably regular basis across the country’s 16,000 courses.
Naturally, there do remain quite a number of these that remain exclusive enclaves for the wealthy, but the vast majority are open to most people.
The knock on effect of this has been the explosion in the amount spent on golf equipment across the world. Calculated at $7.48 billion in 2022 it is set to grow at a rate of 5% a year going forward.
This increasing interest in the sport has also had the effect of making many investors look at it for its potential and there are several direct, and not quite so direct ways, that this can be achieved.
Stocks
Golfing stocks are fast becoming a recognized asset class in their own right. Covering a broad range of businesses, they offer great growth potential whether it’s a company making golf equipment and clothing such as Nike or Calloway or the operators of the golf courses themselves.
There are even specialist golf-course design companies, some of which are listed on the various stock exchanges around the world. Gaining a big contract can mean that their value suddenly and dramatically increases.
One element to be wary of, however, is the same for all investments. There’s the risk that any money put into stocks can end up being worth less than the original amount – and that’s why this kind of investment should be regarded as a medium to long term one.
Golfers
As any aspiring golfer will tell you, it’s an expensive business being on the tournament circuit, especially when you’re just starting out. There are travel costs to be paid, accommodation, a caddy’s salary and tournament entry fees on top. Once a golfer is established and starts to attract sponsorship deals this becomes less of an issue, but the early days are tough.
An increasingly popular solution is to invest a fixed amount, which can be as little as $250, with one of the several agencies representing talented newcomers to the sport.
In exchange, they agree to give back a percentage of any winnings they make to be distributed amongst investors. So, if you find yourself backing the next Tiger Woods or Lilia Vu before they really make it big, some very good returns could be on their way.
Betting
A more direct way to benefit from a player’s success is to bet on them directly. If you get in early enough before a tournament starts, and the field is wide open then you’re likely to get the very best odds.
Even this year’s favorite Scottie Scheffler is at +450 in this year’s Master’s odds, a very decent price that you’ll be hard pressed to find in any team sport.
And, The Masters being the tournament that it is, there is often a big surprise on the way. The first major of the season that’s played in April has had winners of odds like +5000 in the past, such as when Bubba Wilson won in 2012. Going back to 2008 Trevor Immelman stunned the golfing world by winning even though he was the longest of long shots at the odds of +15000.
Resorts and real estate
We’ve already talked about investing in the stocks of companies involved in designing golf courses. And, while actually buying a golf course or resort is beyond the reach of individuals, real estate is a possibility.
A number of golfing resorts around the world have properties for sale either to own outright or as a form of time-share. The rental income from these can be quite considerable, especially if there is a tournament taking place on the course. Similarly, properties in the vicinity of the courses can attract premium prices when the event is taking place and golf fans flock to the area.
For an idea of the sort of increase that can be possible, hotel prices in Paris during the forthcoming Olympics are a good case in point.
Franchising
Last, but not least, there is the opportunity to profit from golf-related franchising. By buying in to an established business you will receive many benefits in the form of marketing and other support, leaving you to make a success of thing.
With all these opportunities for investment, turning golf into gold should be a reasonably simple affair. And the perfect time to tee off is right now.
HedgeThink.com is the fund industry’s leading news, research and analysis source for individual and institutional accredited investors and professionals
