Freeman

ARTICLE

Fore: Watch Out for Government Golf!

There Is No Justification for Government Involvement in the Golf Business

AUGUST 01, 1997 by RAYMOND J. KEATING

Mr. Keating, this month’s guest editor, serves as chief economist for the Small Business Survival Foundation, and is the author of New York by the Numbers: State and City in Perpetual Crisis (Madison Books, 1997).

Politicians love invoking sports metaphors in speeches almost as much as they relish doling out subsidies to professional sports like baseball, football, hockey, and basketball.

Political rhetoric is sprinkled with such sports-laced phrases as playing defense or going on offense; protecting a lead; throwing a Hail Mary pass; long shots versus favorites; fumbling legislation; the political line-up; winning by a nose; hitting a home run; playing hardball; and, of course, three strikes and you’re out. At times, economists use such metaphors as well.

But other than the standard par for the course cliché, which is used in general conversation, golf rhetoric stands neglected in political and economic discourse. Such neglect is rather peculiar for several reasons.

First, golf is quite popular among politicians and economists. For example, as Shepherd Campbell and Peter Landau note in their book Presidential Lies, all but four U.S. presidents since William H. Taft have enjoyed the game of golf with varying degrees of success and enthusiasm. According to the authors, Presidents Kennedy, Ford, Eisenhower, Franklin D. Roosevelt (prior to contracting polio), Bush, and Reagan generally possessed the best games, though Clinton, Nixon, Taft, Harding, and Wilson ranked as serious devotees. FEE founder Leonard Read was a better-than-average golfer who occasionally used golf anecdotes in his writings. But the golf metaphor stays as rare in politics and economics as a double-eagle on a par 5.

Second, golf terminology would seem to lend itself to the ups and downs of the political world. For example, birdies, bogies, eagles, hooks, slices, buried lies, the rough, traps and bunkers, the left-to-right fade, the right-to-left draw, the yips, the dreaded shank, and of course, gimmes, would seem to offer a wealth of metaphoric opportunities.

Third, the actual manner in which golf is played should provide metaphorical grounds as lush as any fairway at Pebble Beach. More than any other sport, golf should appeal as a rhetorical tool for free-market economists. After all, the PGA Tour golfer stands as a model of the rugged, individualistic entrepreneur. Don’t let those manicured greens and whispering television announcers fool you. Market judgment on the tour is swift and unequivocal. In few other sports is compensation on a week-to-week basis so closely tied to performance. When a player labors in a slump lasting a few weeks during the baseball season, for example, he still gets paid. In golf, a severe slump means missing the cut, and not getting paid at all. On the other hand, winning or finishing in the top ten at a tour event translates into a tidy profit.

On the PGA Tour, big bureaucracies do not exist. Each golfer’s support staff is largely limited to a caddy. Some pros might have an instructor and an agent as well. The golfer is a lean and mean sole proprietorship.

In addition, the ever-varying terrain of the golf course should serve as a sound metaphor for changing conditions in the marketplace. From course to course and hole to hole, the market changes and shifts, requiring planning, creativity, and innovation.

Market economists could also use golf to point out the woes of the welfare state. For example, in golf a gimme means taking a short putt without actually putting the ball into the hole—i.e., a gimme is something for nothing. The entire welfare state is built on the concept of gimmes.

Also, amateur golf subscribes to the handicap system, whereby players are given a certain number of strokes per round based on skill levels. The worse your game, the more strokes you are granted. This handicap system supposedly allows golfers of varying abilities to compete together.

However, what the handicap really amounts to is welfare for noncompetitive golfers, i.e., a subsidy for bad golf. The handicap is a crutch for golfers lacking the necessary ability, drive, and hard work it takes to actually compete and excel.

Still, politics and economics are disciplines as barren of golf references as Scottish links are of trees. Unfortunately, government is certainly not absent from the business of golf.

The Business of Golf

I have written in these pages before about government’s extensive involvement in professional sports, particularly through the ownership and financing of stadiums and arenas. Golf is a little different in that government is almost completely, and refreshingly, absent on the PGA Tour, but is quite pervasive at the amateur level.

Currently, only one of the 43 PGA Tour stops each year is played on a municipal golf course. The Buick Invitational of California takes place at the Torrey Pines Golf Club, owned by the city of San Diego. Otherwise, the tour has been blissfully free of government golf courses.

However, a rather dramatic change will occur in 2002. The venerable U.S. Open—one of golf’s four majors—will be played on the Black Course at Bethpage State Park in New York.

Not only will it be the first municipal course to host the U.S. Open, but Bethpage State Park also ranks as the largest government golf complex in the nation. Indeed, Bethpage represents what is wrong with amateur golf, and what could go wrong with professional golf.

The Bethpage golf center on Long Island has been decades in the making. In 1929, the state of New York bought the Lenox Hills Country Club. Three more courses were added in the 1930s, courtesy of the renowned golf architect A. W. Tillinghast and federal taxpayers through FDR’s Works Projects Administration. Another course was added in the 1950s. (In total, New York State owns 17 golf facilities which include 23 18-hole courses.) Bethpage is the big dog of government golf centers.

However, the government body with by far the largest number of golf courses under its control is the U.S. federal government. The feds own more than 300 golf courses, with some 230 under the Department of Defense (DoD). The DoD asserts that it needs these golf courses for morale purposes. Of course, there is no reason that members of the military cannot play on the same golf courses the rest of us do. The federal government claims it makes money on its golf courses, but outside groups have noted that when properly accounting for all costs, these courses lose about $60 million per year.

Across the nation, according to the National Golf Foundation, there are a total of 15,703 golf courses, of which 4,746 are private clubs, 8,416 are privately owned courses open to the public, and 2,541 are government owned. In 1996, 850 courses were under construction or being expanded, including 115 municipal golf courses. At construction costs ranging from $3-$10-million per course, taxpayers are on the hook for a considerable sum—at least $345 million—for courses under construction.

In the end, there is no justification whatsoever for government involvement in the golf business. Even if one subscribes to the idea of market failure, certainly none of the criteria for such failure—i.e., monopoly, public goods, external costs, or inadequate information—exist in the case of golf courses. The only reasons for the existence of government golf courses are patronage (another opportunity for politicians to dole out jobs), special-interest pressures (some golfers want cheap golf, courtesy of the taxpayers), and government revenue (politicians believe they can make money with golf facilities).

In reality, affordable golf, played on well-maintained, high-quality golf courses, can be and is provided by the private sector. Note that 54 percent of all golf courses in this country are privately owned and open to the public.

Meanwhile, government golf courses usually are not as well kept as private facilities, and lose money just as often as they make money. In either financial instance, the private sector should prevail. If a municipal course makes money then why not shift it into the private sector of the economy? If it loses money, the private sector will either turn it to profitability or find a better use for the land and other resources.

In certain aspects, though, private golf courses operate at a disadvantage with government courses. Government facilities can artificially drive down the price of a round of golf, and also fall back on the taxpayers when losses are incurred.

As an answer to government golf woes, many argue that the operations of municipal golf courses should be contracted out to the private sector. While a step in the right direction—examples abound of private golf course management firms turning around government golf facilities—this is but a small step.

Full-scale privatization is the only answer to government golf courses. In an era when rhetoric about smaller government can be heard from many corners, continued government ownership and construction of golf courses is a sobering development. This is a simple issue: the private sector is more than capable of building, owning, and operating golf courses in an efficient manner.

Indeed, privatization of municipal golf courses is a win-win scenario. The resulting government revenues can be used to retire outstanding government debt (the privatization of all government golf facilities across the nation in theory could generate more than $10 billion—probably far more). The golf business would be invigorated by enhanced competition, and golfers would see real benefits in terms of higher quality for their golfing dollar. After all, in the private sector incentives exist to better serve the customer, while in government incentives promote big budgets and more employees.

Another reason exists to get government out of the golf business as quickly as possible, and it brings us back to the professional level. The United States Golf Association’s (USGA) decision to bring the U.S. Open to a municipal course in 2002 should serve as a warning sign. As noted earlier, the PGA Tour for the most part plays on private-sector golf courses. If government continues building golf courses, it may not be too long before the professional golf tour starts demanding that governments finance new courses for their tour events, or even demand funding for the events themselves. In the case of Bethpage’s Black Course, the USGA will be investing about $2 million of its own funds in course improvements and upgrades. How long before that equation is reversed, though (as in the case in other sports), and the USGA or PGA Tour start asking government for such investments, under the threat of otherwise moving their golf tournaments elsewhere?

As a free-market golfer, I want to see golf course privatization occur for another reason. I get depressed hearing about the two greatest golfers of all time—two of my personal heroes—getting involved in government golf. Jack Nicklaus’s golf course design firm, for example, is laying out four new courses in various Tennessee state parks, and Arnold Palmer’s firm—Arnold Palmer Golf Management—is under contract to operate the Presidio Golf Course in California for the U.S. Department of the Interior.

Right now, the golf and government mix means extensive government involvement in the golf business, and the underutilization of golf metaphors by elected officials and economists. It’s time to reverse this situation. What we need are more golf metaphors and fewer government golf courses.

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August 1997

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