Written evidence submitted by the R&A

Digital, Culture, Media and Sport Select Committee Inquiry: Impact of COVID-19 on DCMS Sectors - sport evidence from The R&A on behalf of the UK Golf Industry

The R&A and the UK Golf Industry

The R&A is the world governing body for golf, a responsibility shared with the United States Golf Association (USGA), working collaboratively, but in separate jurisdictions. The R&A’s territory is worldwide including the United Kingdom and the USGA has primacy in the United States and Mexico. In the face of the COVID-19 pandemic The R&A, working with the All-Party Parliamentary Group for Golf, assembled a coalition of UK-based golfing bodies. The objective was to ensure that the industry acts as one and in lockstep with government regulation while working to protect an important national asset, the sport of golf. There are more than 3.1 million golfers in the UK and with a number of targeted initiatives such as The R&A Women in Golf Charter, a growing number of women and girls are choosing to play and find employment in the sport.

The organisations working together in response to COVID-19 are: The R&A, the Professional Golfers Association (PGA), PING, the UK Golf Federation, Syngenta, The Belfry, the British Golf Industry Association (BGIA), IMG, England Golf, Wales Golf, Scottish Golf, Golf Ireland, the British and International Golf Greenkeepers’ Association (BIGGA), the Golf Course Managers Association (GCMA) and the All-Party Parliamentary Group for Golf (APPGG). 

Golf in the UK  

In 2016, golf was the first sport to meet the government’s ‘Sporting Future’ economic impact reporting challenge with the publication of a Satellite Account for Golf. The research was commissioned by The R&A from the Sport Industry Research Centre (SIRC) at Sheffield Hallam University. The Satellite Account technique was developed by the United Nations to measure the size of economic sectors that are not defined as industries in National Accounts. The UK has a Satellite Account for Sport, commissioned by DCMS from SIRC.

In order to better understand the impact of COVID-19, not just on professional sport, but on the entire golf industry The R&A commissioned a recalibration of the 2016 Satellite Account data to deliver detailed estimates for the size of the UK golf sector in 2019.

Key findings:

• 2019 consumer spending on golf was up from 2016 to £4.6bn (9.3% of all sport).

• 2019 Gross Value Added* (GVA) was up from 2016 to £2.1bn (4.5% of all sport).

• 2019 Full Time Equivalent (FTE) employment remained in excess of 50,000.

• 2019 tax take (taxes and business rates) was up from 2016 to £1bn.

*Gross Value Added = GDP + subsidies - taxes

Question 1. What has been the immediate impact of Covid-19 on the sector?

The sport shut down with all recreational golf halted and many amateur and professional events cancelled or postponed. Golf’s oldest major championship, The Open scheduled to be played at Royal St George’s in Kent (16-19 July 2020) was cancelled. The AIG Women’s British Open, to be contested at Royal Troon in Ayrshire (20-23 August 2020), is still under extensive planning as to options to play Behind Closed Doors, should that be possible at the time.

Importantly, the golf industry published early guidance on Essential Maintenance for Golf courses. It set out a reduced maintenance regime for greenkeeping, limiting activity on the course while protecting workers, jobs and securing the playing surfaces at golfing facilities.

The guidance was systematically cascaded throughout the golf industry and validated in contact with DCMS and in direct communication with the devolved administrations.

The four nations have emerged from lockdown at different times, in England on 13 May; Wales 18 May; Northern Ireland 20 May; and Scotland 29 May 2020. But in the first six weeks the researched economic impact (23 March to 3 May 2020) was immediate and universal.

Key findings:

• Six-week lockdown consumer spending on golf fell by 85%.

• Six-week lockdown GVA is down 65%.

• Six-week lockdown employment (FTE) fell by 60%.

• Six-week lockdown tax take (taxes and business rates) down 79%

• Six-week lockdown found 98% of golf clubs lost income averaging £90k per club.

Question 2: How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?

Access to the Secretary of State, the Sports Minister and Department officials has been straightforward and purposeful. Industry’s contacts with the APPGG Chair and the Chair of the DCMS Select Committee have also been helpful. However, earlier consultation on the staging of large-scale professional events would have been beneficial.

Unquestionably, the greatest financial assistance to the golf industry has emanated from HM Treasury with the creation and implementation of the Coronavirus Job Retention Scheme (CJRS). A survey of UK golf clubs conducted by the Sport Industry Research Centre revealed the importance of the scheme.

Key findings:

• 98% of golf clubs furloughed staff.

• 78% of golf club staff were furloughed.

• 72% of staff across the UK golf industry were furloughed or 36,350 FTE employees.

• CJRS has been worth £14.8m a week to the golf industry during lockdown.

In the survey of UK golf clubs 35% of 550 respondents reported difficulty in accessing government support, mainly associated with qualification for the Retail, Hospitality and Leisure Grant.

Question 3: What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?

The bounce back from COVID-19 for golf will be a slower incline than for the economy as a whole. This assertion is based on the interconnected nature of the golf industry. Golf facilities rely on bars, catering, retail and accommodation for their profitability and whilst there has been a return to play at reduced capacity, ancillary facilities such as bars and restaurants remain closed.

In the wider economy the Office for Budget Responsibility (OBR) forecasts UK GVA in Q2 2020 down 35%. The Bank of England forecast a 30% reduction in GVA over the same period. The Q2 2020 GVA forecast for golf by the Sport Industry Research Centre is down 60%.

In the longer term, the annualised impact of Covid-19 on the economy for 2020 is estimated to be a reduction in GVA of 12.8% by the OBR and 14% by the Bank of England. By contrast the SIRC estimate for the golf industry is a reduction in GVA of 34%, more than twice the most pessimistic estimate for the economy as a whole. This adverse outcome for the golf industry is attributable to its connections with the tourism, accommodation and hospitality sectors which are all experiencing disproportionately negative impacts.

Key findings:
 

• 2020 forecast consumer spending on golf of £5.2bn is estimated down £2bn to £3.2bn (-39%) due to COVID-19.

• 2020 forecast GVA of £2.3bn is estimated down £800m to £1.5bn (-34%) due to COVID-19. 

• 2020 forecast employment (FTE) of 50,668 is estimated down 10,988 to 39,680 (-22%) due to COVID-19.

In the short and medium term, a continuation of the CJRS with a degree of tapering will greatly assist the golf industry. A review of the Retail, Hospitality and Leisure Grant giving golf clubs with a rateable value greater than £51k access to the scheme will render valuable support. Golf clubs that operate sustainably, with relatively modest retail and hospitality revenue streams, are excluded from receiving government assistance because of the high rateable value associated with a typically 60-hectare site. The grant scheme targets support for businesses like golf clubs, but the rateable value qualification means they are treated unfairly relative to the rest of the sector.

In the long-term, government and its arm’s length agencies’ support of the promotion of golf tourism will be essential to rebuild a sector where the UK has a known competitive advantage.

In terms of self-help, The R&A has launched a £7m COVID-19 Support Fund including £4m to be administered in the UK by the four National Associations: England Golf, Scottish Golf, Wales Golf and Golf Ireland. The National Associations themselves waived or allowed golf clubs to defer their affiliation fees, which has assisted with short term cash flow issues.  Clubs themselves have engaged in self-help by using reserves, where they have them; making increased use of volunteers; and collaborating with neighbouring golf clubs.

Question 4: What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?

The golf industry has received invaluable support from DCMS and the arms-length bodies. There are however some important lessons that can be learnt in the unfortunate event of a ‘second spike’ or indeed future pandemics.

• Golf delivers quantifiable economic and social benefits, in line with government policy for sport. These researched benefits should be realised at the highest level of policymaking in the UK so that golf is valued and protected for its all-round contribution to the economy and to the mental health and physical wellbeing of a significant population. 

• There is no ‘one size fits all’ approach to helping an industry, as demonstrated by the anomalies surrounding Retail, Hospitality and Leisure Grants based on rateable values, which excluded a significant number of golf clubs from valuable help. Rather than binary decisions, a tapered approach would have proved more inclusive.

• Golf is a highly interconnected industry. Although a limited amount of playing golf is now permitted, the industry will only return to its previous levels when all of its component parts are functioning fully. Addressing this issue will require a more granular approach to support an industry than the broad-brush approach adopted.

• Golf is a fixed cost and perishable business that is difficult to flex. For a given level of output, such as opening hours, costs are essentially fixed and the only logical business strategy is to generate income. The income that has been lost since lockdown is lost forever and hence golf may experience longer-term economic scarring. The return to play on 13 May 2020 in England and thereafter Wales, Northern Ireland and Scotland, is a damage limitation exercise as golf facilities work their way back towards being financially viable.

• The golf industry has shown unity of purpose and considerable leadership during an emergency. The speed with which safe return to play protocols were developed, implemented and accepted are an indication of strong governance and innovation within the sport. These are traits that bode well for the golf industry and its leaders to work effectively with DCMS and its networks.

• There is some evidence to support the view that DCMS needs to review the GREAT Britain and Northern Ireland Campaign support it gives to major sport events as the rebuild process of international visitor confidence get underway.

Question 5: How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?

The golf sector will reassess its resilience in economic and social terms in relation to a persistent COVID-19 effect and other threats. Golf is well organised and is a prime candidate to be a leading instrument of government policy in this area and a reference point for other sports.

There are strong grounds for optimism that recreational golf can grow even in a period defined by social distancing with typically 96 players spread over 60 hectares. As the risks of viral transmission are reduced by social distancing and by being outdoors, there is an opportunity for golf to attract new participants to a sport that is not only healthy and enjoyable but also safe.

The challenges for professional sport, if mass gatherings are prevented, are more significant. The Open Championship in 2019 at Royal Portrush attracted spectator admissions of 237,000 people. While the Women’s British Open is smaller, it is one of women’s golf’s five major championships and can represent an ideal opportunity to test crowd management protocols as professional sport moves from being Behind Closed Doors to being genuine spectator events again. The Open with a sell-out crowd delivers an economic benefit to its host economy in excess of £100m. The AIG Women’s British Open, now under the rights ownership of The R&A and with a new title sponsor, is set to become one the leading events in women’s sport.   

Key findings:

• Sporting Future encourages self-sufficiency and there is an opportunity for golf to be positioned as a pilot for other sports, with some initial funding support from government.

• Digital innovation such as cashless clubs, online booking, dynamic pricing, e-marketing and social media development can by primed with DCMS investment in golf as a reference sport.

• Golf is evidenced as an appropriate sport in the World Health Organisation race to tackle physical inactivity, contributing to the prevention of a range of non-communicable disease including heart disease, stroke, diabetes and cancer of the breast and colon. Cross government support for social prescribing golf and funding for ongoing research on strength and balance to reduce the incidence of falls will serve to stimulate targeted participation growth for vulnerable groups.

• The researched social impact of golf is estimated to be worth £1.8bn per annum in the UK. The benefit to mental health, ‘subjective wellbeing’, is estimated at £1.4bn with £0.4bn assessed as the value to physical health and wellbeing. The initial period of lockdown (23 March to 3 May 2020) led to no golf being played and the loss of mental wellbeing benefits derived from playing approximates to £27m a week.

NB. All research data cited in this submission can be made available to the Committee from its originating source on request.

Martin Slumbers

Chief Executive

The R&A

9 June 2020