Golf is an important part of Arizona’s economy and a defining component of the physical landscape of many of its cities and towns. Golf facilities support jobs and income for the state economy, indirectly support other Arizona businesses that serve and supply the facilities, drive tourist spending by attracting visitors from outside the state, and support sales by retailers offering golf equipment and merchandise to Arizona golfers. Additionally, golf facilities exert a positive effect on the value of residential real estate in their proximity. Meanwhile, golf courses require inputs year-round to maintain playable and attractive conditions for golfers on the facility’s turfgrass and other landscape surfaces. Major inputs include irrigation water, fertilizer, and other agricultural chemicals. Conservation efforts at golf facilities aim to balance the use of natural resources with the economic viability of the courses.
This study provides an estimate of the economic contribution of the golf industry to Arizona’s economy in 2014, examining the following components:
- Golf facility operations (operations spending, jobs, and other contributions)
- Golf-related tourist spending
- Golf-related business revenues
This report uses a variety of metrics to describe the golf industry’s contribution to the Arizona economy. These include sales (output), value added (GDP), labor income (employee compensation and proprietor income), jobs, and state and local taxes. It’s important to note that many of these economic metrics are interconnected and, therefore, cannot be added together. Furthermore, while sales (output) is an easily-interpreted measure of economic activity, value added (also known as gross state product) is the best reflection of an industry’s contribution to the state economy.
The contribution of the golf industry to Arizona’s economy goes beyond the direct effects of facility revenues, tourist spending, and golf-related business sales. The businesses providing those goods and services also require inputs of goods and services in order to operate, many of which are supplied by in-state suppliers. Those local businesses in turn require their own production inputs. These rounds of business-to-business transactions of providing inputs are known as indirect effects. Additionally, incomes (wages, salaries, and profits) generated for individuals employed directly by the golf industry are used to purchase household needs, such as rent or mortgages, doctor visits, and groceries. This spending produces rounds of household-to-business transactions, known as induced effects. Because of these indirect and induced multiplier effects, the economic contribution of the golf industry in Arizona is considerably greater than indicated by direct sales and tourist spending.
Other effects of the golf industry are not best measured using regional economic contribution analysis. These effects include the influence of golf courses on residential real estate values and natural resource use and conservation. The study provides an update to a 2004 estimate of residential real estate premiums attributable to frontage on and proximity to golf courses, and provides a snapshot of golf water use and conservation and management practices at Arizona golf facilities in 2014.
Findings
Arizona’s golf industry had a total estimated economic contribution of $3.9 billion in sales (output) to the state economy in 2014. This includes the direct, Executive Summary8 Contribution of the Golf Industry to the Arizona Economy indirect, and induced effects of golf course operations ($2.5 billion), golf tourism ($1.1 billion), and golf-related businesses ($347 million).
Economic contribution
- Golf facility operations generated a direct contribution of $1.1 billion in sales to the state economy in 2014, directly supporting an estimated 18,695 full- and part-time jobs. Including multiplier effects, the total contribution was $2.5 billion in sales, $1.4 billion in value added (gross state product), and approximately 29,500 full- and part-time jobs. An estimated $72 million in state and local taxes was directly supported, including $39 million in direct state and local sales tax revenues. An estimated 11.6 million rounds of golf were played in Arizona in 2014.
- Golf tourism, both golf travelers and golf spectators, attracted an estimated $598 million in spending from out-of-state visitors in 2014, for a total estimated impact of $1.1 billion in sales and approximately 10,500 jobs. Direct sales tax impacts were estimated at $32 million in 2014. Roughly a third of rounds played in Arizona in 2014 were by out-of-state and out-of-country visitors.
- Golf-related businesses, such as equipment and apparel retailers, practice ranges, and golf cart dealers, had estimated annual sales of $270 million, for a total estimated contribution of $347 million in sales, approximately 1,800 jobs, and directly-supported sales tax revenues of $6.5 million
Residential real estate premiums
- Hedonic studies have shown that frontage on and proximity to golf courses is associated with a sales price premium for residential real estate.
- Residential real estate premiums associated with all homes ever built in golf course communities in Arizona were estimated to be nearly $2.1 billion.
Water use
Survey results
- Statewide use—According to survey results, Arizona golf facilities used an estimated 167,397 acre-feet (AF) of irrigation water in 2014, occupying a total of 45,000 acres for the golf courses, of which 32,000 acres was turfgrass.
- Use of effluent—Statewide, according to survey results from this study, an estimated 35% of golf water use was effluent in 2014. This percentage from the survey is somewhat higher than estimates from water resource agencies (see below).
USGS statewide data (2010)
- Statewide use—In 2010, 130,116 AF of self-supplied freshwater was used to irrigate golf courses, accounting for 1.9% of Arizona’s total freshwater withdrawals. This figure includes groundwater and surface water, but excludes effluent.
- Use of effluent—Statewide, 49,488 AF of reclaimed wastewater was used for golf course irrigation in 2010, accounting for 28% of golf’s total statewide water use.
- Share of statewide use by source—In 2010, golf irrigation accounted for 3% of state groundwater withdrawals and 1.1% of state surface water withdrawals, but 34% of state reclaimed water use for irrigation.
ADWR Active Management Area (AMA) data
- Share of statewide AMA use—According to Arizona Department of Water Resources (ADWR) data, golf water use represented 3.5% of total AMA water use in Arizona in 2014.
- Breakdown of golf AMA use by source—In 2014, groundwater represented 48.1% of AMA golf water use, surface water, 10.9%, CAP, 14.6%, and effluent, 26.3%. Whereas some AMAs rely on a varied mix of water sources, others rely heavily on one or two sources, such as effluent or groundwater.
- Use of effluent—Use of effluent by golf facilities in AMAs was 33,977 AF in 2014, an increase of 27% since 2004.
- 10-year trend—Between 2004 and 2014, ADWR reported a net increase of 24,736 AF of golf facility water use in Arizona’s AMAs, with all types of water use increasing. During that time, the number of facilities in Arizona’s AMAs also increased, from 239 facilities to 252 facilities.
Conservation practices
- 51% of respondents reported performing irrigation audits for their golf course irrigation systems, and among respondents conducting irrigation audits, 95% made adjustments to their irrigation systems, for an average
irrigation water savings of 19.5 AF of water per facility per year. - 31% of respondents reported having removed turfgrass in the past 5 years. Another 39% reported having a partnership with conservation organizations, the most common of which was Audubon International.
Methods
This study relies on the results of a statewide survey of golf facilities per- formed between April and August of 2016. In order to capture all components of golf facility operations, the survey was directed at three key staff positions at each facility: General Manager/Director of Club Operations, Head Golf Professional/Director of Golf, and Golf Course Superintendent/ Director of Agronomy. The survey response rate was 44% for General Managers, 26% for Golf Professionals, and 45% for Superintendents. With some unusable responses having been submitted, the usable response rate was 42% for General Managers, 25% for Golf Professionals, and 39% for Superintendents. Unbiased estimates were calculated from the survey response data using scaling and an expansion factor. Survey data were complemented with secondary data on golf business establishments, golf tourism, real estate, and golf water use from a variety of sources. The economic multiplier effects of the golf industry were estimated using IMPLAN 3.1, the premier input-out- put model used for regional economic impact analysis.