The Pennsylvania Golf Economy Full Report

THE PENNSYLVANIA GOLF ECONOMY FULL REPORT

This report was commissioned by GOLF 20/20 for the Golf Alliance of Pennsylvania and prepared by SRI International

The Pennsylvania Golf Economy

Published January 2016 through an agreement with

CONTENTS

STUDY OVERVIEW ...... 1 ANALYTICAL FRAMEWORK ...... 2 A. Golf Industry Cluster Definition ...... 2 B. Data Sources ...... 3 THE SIZE OF PENNSYLVANIA’S GOLF ECONOMY ...... 6 A. Core Industries ...... 6 B. Enabled Industries ...... 10 GOLF’S ECONOMIC IMPACT IN PENNSYLVANIA ...... 13 DETAILED METHODOLOGY & DATA SOURCES ...... 15 A. Golf Facility Operations ...... 15 B. Golf Facility Capital Investment ...... 18 C. Golf-Related Supplies ...... 19 D. Associations, Tournaments & Charitable Giving ...... 23 E. Real Estate ...... 24 F. Golf-Related Hospitality/Tourism ...... 25 G. Golf’s Economic Impact ...... 27 WORKS CITED ...... 30

Acknowledgements This report was prepared by SRI in agreement with GOLF 20/20, the Golf Association of Philadelphia, the Tri-State Section of the PGA, the Philadelphia Section of the PGA, the Pennsylvania Golf Association, the Pennsylvania Golf Course Owners Association, the Mid-Atlantic Section of the Golf Course Superintendents Association of America, and the Philadelphia & Vicinity Club Managers Association. In addition, support for this report comes from the following allied national golf organizations: CMAA, GCSAA, LPGA, NGCOA, PGA of America, PGA TOUR, and USGA.

The Pennsylvania Golf Economy study was conducted by Jessica Avery, Katherine Johnston, Jennifer Ozawa, Daniel Querejazu, and Peter Ryan at SRI International with contributions from individuals representing the the the Golf Association of Philadelphia, the Tri-State Section of the PGA, the Philadelphia Section of the PGA, the Pennsylvania Golf Association, the Pennsylvania Golf Course Owners Association, the Mid-Atlantic Section of the Golf Course Superintendents Association of America, and the Philadelphia & Vicinity Club Managers Association.

ACRONYMS

CMAA Club Managers Association of America GAP Golf Association of Philadelphia GCBAA Golf Course Builders Association of America GCSAA Golf Course Superintendents Association of America GPGCSA Greater Pittsburgh Golf Course Superintendents Association LPGA Ladies Professional Golf Association MAAGCS Mid-Atlantic Chapter of the Golf Course Superintendents Association of America NGCOA National Golf Course Owners Association NGF National Golf Foundation PAGA Pennsylvania Golf Association PAGCS Philadelphia Association of Golf Course Superintendents PGA The Professional Golfers’ Association of America PGO Pennsylvania Golf Course Owners Association PSWGA Pennsylvania State Women’s Golf Association PVCMA Philadelphia & Vicinity Club Managers Association USGA United States Golf Association WGAP Women's Golf Association of Philadelphia WGAWP Women's Golf Association of Western Pennsylvania WPGA Western Pennsylvania Golf Association

STUDY OVERVIEW

Home to 665 golf facilities and with the U.S. Open Championship returning to Pennsylvania once again in 2016—golf in the “Keystone State” is a key industry contributing to the vitality of Pennsylvania’s economy. Golf brings visitors to the state, spurs new residential construction, generates retail sales, and creates demand for a myriad of other goods and services around the state.

In 2014, the size of Pennsylvania’s direct golf economy was approximately $2.3 billion. This is comparable to revenues generated by other industries in the state, such as medical equipment and supplies manufacturing ($3.5 billion), agricultural crops ($2.6 billion), and breweries ($1.3 billion).

Size of Pennsylvania’s Golf Economy in 2014 by Industry Segment ($ millions) CORE INDUSTRIES Golf Facility Operations $1,291.6 Golf Course Construction and Capital Investment $110.7 Golf-Related Supplies (retail margin and manufacturing exports) $112.8 Major Golf Tournaments and Associations $14.8 Total Core Industries $1,529.9 ENABLED INDUSTRIES Real Estate $40.6 Hospitality/Tourism $755.0 Total Enabled Industries $795.6 TOTAL GOLF ECONOMY $2,325.4 Note: Column may not sum due to rounding of individual estimates.

When the total economic impact of Pennsylvania’s golf-related activities is considered, the golf industry generated $4.8 billion of direct, indirect and induced economic output, and nearly 56,000 jobs with $1.4 billion of wage income in 2014. The continued health and growth of the golf industry has a direct bearing on future jobs, commerce, economic development, and tax revenues for a large number of Pennsylvania’s communities and industries.

This report is the result of an effort by SRI International and GOLF 20/20, in collaboration with key golf stakeholders in several states to bring consistency to the measurement and reporting of golf’s economic impact across states. Historically, no comprehensive, standardized framework was employed in state- level studies. The framework and methodology for estimating the size and impact of the golf industry varied with each study. This made it difficult to monitor a state’s golf industry growth over time and to make state-to-state or regional comparisons. This report describes and analyzes Pennsylvania’s golf

industry estimating the both the size of the total golf industry and the total amount of economic activity in other sectors supported by the game of golf. Such analysis will assist Pennsylvania golf industry stakeholders in raising awareness of the impact of golf to state and local policymakers.

ANALYTICAL FRAMEWORK

Current economic studies of the golf industry in different states emphasize various factors and outcomes. For example, one may focus largely on the turf industry, while another might examine the impact of sports and recreation-related tourism more broadly. Ideally, one would want to include all the key activities and industries that are enabled by and benefit from the game of golf. To meet this goal, SRI has developed a standardized economic impact framework that can be employed to measure a comprehensive set of golf-driven industry components. This state-level framework draws on the conceptual model of the golf economy developed in SRI’s 2000 national-level The Golf Economy Report and the 2005 state-level The Virginia Golf Economy Report.

A. GOLF INDUSTRY CLUSTER DEFINITION

To arrive at economic impact, one must first estimate the size of the golf economy in the state. This entails mapping out where the golf industry begins and ends, and then estimating the size of each of these industry segments. We divide the golf industry cluster into two main categories: (1) core industries and (2) enabled industries (see figure below). The golf industry cluster begins with the golf facilities themselves and with those other core industries that produce goods and services used to operate facilities and to play the game: golf equipment and golf apparel manufacturers, golf course architects and course builders, turf maintenance equipment and service providers, and club management services. The game of golf further enables a number of other industries, such as golf- related tourism and real estate development.

We detail these industry segments and estimate their size in the following section. Having defined the core and enabled golf industries, it is possible to estimate the size of each industry segment and to total them for an overall estimate of the size of the golf economy. Multipliers can then be applied to calculate the ripple effects of these economic activities in terms of: (1) impact on total state economic output and (2) impact on total state employment. However, this process is complicated by the fact that, while most of these industries produce golf-related goods and services, the firms themselves may not limit their activities exclusively to the golf industry. For example, Nike produces golf shoes, but also running, tennis, basketball, and other shoes. Therefore, in general, our approach is to include only those firms and sales that are directly attributable to the game of golf. In so doing, we use a number of different estimation techniques to ensure that our final estimates are reasonable and robust.

Moreover, additional data challenges and location factors make estimation more difficult at the state- level than the national-level. For example, many of the major golf equipment manufacturers have production facilities in just a few states. Similarly, several of the major golf association headquarters are located in Florida. The presence of such firms, associations, or a number of well-known courses will change the size of golf’s economic impact in the state considerably. Therefore, one should consider the size of the golf economy and the game’s economic impact in the state in relation to the size of the overall economy and other major industries in that state.

B. DATA SOURCES

SRI developed its framework for measuring state golf economies based on a broad set of existing sources and data. Although there have been several state-level impact studies conducted in the past by numerous golf constituencies, few have used a similar methodology, resulting in very different estimates depending on the golf economy elements included. A great deal of data is collected on the golf economy by many organizations on a regular basis. For example, government agencies, national golf associations, and national associations in the enabled industries collect data on different industry

elements periodically—annually, every few years, or every five years. In addition, these data are based on a relatively consistent set of inputs by large numbers of constituents. Therefore, the principal challenges involve acquiring the data, inflating or deflating the estimates for the proper target year, and then combining them to represent the entire golf economy in the target year. The core and enabled industry indicators and data sources we have identified are as follows:

State Golf Economy Indicators and Data Sources

Indicator Primary source Cross-validation source Golf Facility Operations # of golf course facilities by type PGA Facility Database, multiple years NGF Facility Database, multiple years; state (2008-2014 data) golf associations; 2012 Economic Census Avg. revenues by type of facility SRI Pennsylvania Golf Survey (2015) 2012 Economic Census; PGA Facility Operations Survey, multiple years (2008-2013 data); National Golf Foundation; Golf Alliance of Pennsylvania # of rounds by facility type 2015 PGA Operations Survey (2014 National Golf Foundation data) Golf Course Capital Investments Avg. capital investment by type of GCSAA Compensation Survey National Golf Foundation; Golf Alliance of facility (2011 data) Pennsylvania # of golf courses under construction National Golf Foundation NGF Construction database; Golf Alliance of in current year (2014 data) Pennsylvania Avg. cost of construction per new Golf Course Builders Association of Golf Alliance of Pennsylvania; interviews with course America golf course builders in state Golf-Related Supplies Golf-related manufacturing exports Company annual reports; SEC filings; Company interviews; Golf Alliance of interviews Pennsylvania Golf equipment National Sporting Goods Association PGA Facility Database (2013 data) (2013 data) Golf apparel National Sporting Goods Association PGA Facility Database (2013 data) (2013 data) Golf media Book Industry Study Group/ 2012 Economic Census Association of American Publishers (2013 data) Associations, Tournaments & Charitable Giving # of major state-level golf State counterparts of national golf Golf Alliance of Pennsylvania associations associations Annual expenditures/budgets State golf associations IRS Form 990 # of major tournaments held in Golf Alliance of Pennsylvania PGA TOUR, LPGA state Visitor attendance at tournaments, Major golf associations State tourism agency; national golf tournament revenues associations; state golf associations Revenues raised through charitable National Golf Foundation Sampling of golf professionals and club golf events (2011 data) managers to identify # of tournaments and average amount raised Real Estate # of residential golf courses under National Golf Foundation Online research construction

# of lots per course Real estate development site plans; Real estate agents interviews with real estate developers Avg. construction costs per home Interviews with real estate Real estate agents and real estate premium developers Hospitality/Tourism # of golf travelers or # of golf- Tourism Economics; Longwoods State department of tourism/recent related trips to the state International; U.S. Travel Association surveys/studies Avg. spending per traveler or per National Golf Foundation (2003 State department of tourism/recent trip data); Online Research surveys/studies

THE SIZE OF PENNSYLVANIA’S GOLF ECONOMY

SRI’s estimates of the size of each of the six golf industry segments and the overall golf economy in 2014 are presented in the table below. SRI estimates the total size of Pennsylvania’s golf economy in 2014 was approximately $2.3 billion. This estimate is comprised of $1.5 billion in core industries and an additional $795.6 million in enabled industries, as illustrated in the table below.

A. CORE INDUSTRIES

Golf Facility Operations

At the center of any golf economy lie the golf facilities—the largest component in terms of revenues. The revenue that flows through a golf facility comes primarily from green fees, membership fees, golf cart rentals, lessons, and associated spending on food and beverages. This revenue, in turn, supports a host of supply sectors including golf equipment and apparel designers and manufacturers, food and beverage providers, and turfgrass equipment and maintenance service providers. Pennsylvania’s 665 golf courses, 78 stand-alone ranges, and 75 miniature golf facilities generated $1.3 billion in revenue in 2014. Pennsylvania Golf Facility Revenues in 2014 ($ millions) Golf Facilities $1,242.1 Practice Ranges & Alternative Facilities $49.5 TOTAL1 $1,291.6 Note: 1 Golf facility revenues exclude on-course merchandise sales, which are included in the Golf-Related Supplies industry segment.

Golf is a sizeable industry even when compared to other popular revenue-generating sports. For example, all other professional spectator sports in the state combined are only twice the size of golf. Football, baseball, basketball, hockey, and soccer generated revenues of $2.76 billion in 2014.1

Golf Facility Capital Investments

Golf facilities generate economic impacts beyond operational revenues through investments to upgrade and maintain facilities and infrastructure, and through the construction, expansion, and renovation of courses. These investments create employment in the construction and maintenance industries and often involve the purchase of significant amounts of equipment and supplies from companies within the state. SRI’s estimate of Pennsylvania’s golf facility capital investments is divided into two segments: (1) capital investments at existing facilities and (2) new course construction, including major renovations. Together, Pennsylvania’s golf facilities made $110.7 million worth of capital investments in 2014: $74.5 million of investments at existing facilities and $36.1 million in investments in major course renovations and rebuilds.

Pennsylvania Golf Facility Capital Investment and New Course Construction in 2014 ($ millions) Golf Facility Capital Investments1 $74.5 New Course Construction $36.1 TOTAL $110.7 Note: 1 Only the New Course Construction category is included in the economic impact analysis, because it represents new economic output or activity. Golf facility capital investments are typically financed through golf facility revenues, so including both Golf Facility Capital Investments and Golf Facility Operations in economic impact analysis would result in double-counting.

Golf-Related Supplies

Pennsylvania golfers spend significant sums on golf balls, golf clubs, golf apparel, and golf media (books, magazines, DVDs, software). The economic value that accrues to a state comes from the production of these golf-related goods, as well as retail sales of such items. Pennsylvania is home to a handful of small companies that produce custom golf clubs and golf accessories, golf car seats, and prefab miniature golf courses, e.g., George Izett Golf; Dead Solid Golf; Backspin Seating; Lomma Championship Miniature Golf Courses; Mini Golf, Inc.; etc. Pennsylvania is also home to the headquarters of Smithco, a manufacturer of turf maintenance equipment, as well as specialized golf bunker rakes, sweepers, dedicated spray vehicles, and utility vehicles. The value of such products that are sold in Pennsylvania is already captured in the retail portion of the Golf-Related Supplies and Golf-Related Operations segment. However, the

1 Latest available data is from the 2012 Economic Census of the United States. U.S. Census Bureau (2014). Pennsylvania: 2012 Economic Census: Arts, Entertainment, and Recreation: Geographic Series, Released November 2015.

proportion of production that is shipped to customers in other states and countries is not. In 2014, SRI estimates that the value-added shipment of these products generated $4.4 million.

Pennsylvania Manufacturers’ Value-Added Exports of Golf-Related Products in 2014 ($ millions) TOTAL $4.4

On the retail side, Pennsylvania retailers and golf facilities earned approximately $108.3 million on the sale of an estimated $263.8 million of golf equipment, golf apparel, and media. In total, the Golf-Related Supplies segment contributed $112.7 million in revenues to the Pennsylvania economy in 2014.

Pennsylvania Retailers’ Net Revenues on Consumer Purchases of Golf-Related Supplies in 2014 ($ millions) Total Retail sales purchases margin Golf Equipment (retail margin) $182.2 $74.8 Golf Apparel (retail margin) $80.6 $33.1 Golf Media (retail margin) $1.0 $0.4 TOTAL $263.8 $108.3 Note: This includes on-course and off-course purchases of golf equipment, apparel, and media. Column may not sum due to rounding.

Associations, Major Tournaments & Charitable Giving

Associations and Major Tournaments

Numerous associations represent the game of golf in Pennsylvania. The largest golf associations include the Golf Association of Philadelphia, the Tri-State Section of The PGA, the Philadelphia Section of the PGA, the Pennsylvania Golf Association, the Western Pennsylvania Golf Association, the Greater Pittsburgh Golf Course Superintendents Association, and the Philadelphia Association of Golf Course Superintendents. The state is also home to several women’s golf associations, such as the Women's Golf Association of Philadelphia, the Women's Golf Association of Western PA, and the Women's Central PA Golf Association, as well as several youth golf associations, such as The First Tee of Pittsburgh, which introduces youth to the game and values of golf, along with Pittsburgh Youth Golf Foundation.

In 2014, Pennsylvania hosted one major professional golf tournament, the Constellation SENIOR PLAYERS Championship, a Champions Tour event. The winner gains entry into the following season's Players Championship on the PGA Tour. This annual tournament was held at Fox Chapel Golf Club in

Pittsburgh in 2012, 2013, and 2014. In the past, Pennsylvania has hosted the U.S. Open, one of golf’s four majors, along with the Masters, the Open Championship, and the PGA Championship. Pennsylvania last hosted the U.S. Open in 2013 at Merion Golf Club in Ardmore and will host again in 2016 when the U.S. Open returns to Oakmont Country Club. The U.S. Open typically generates over a hundred million of economic impact2, but is not included in this analysis because it falls outside our base year of analysis, 2014. In addition, Pennsylvania’s Lancaster Country Club hosted the U.S. Women’s Open in 2015.

In 2014, SRI estimates the combined expenditures of the Pennsylvania golf associations and the Champions Tour event (excluding the tournament purse and costs for TV broadcasting) generated $14.8 million of expenditures.

Pennsylvania’s Major Golf Tournament & Association Revenues in 2014 ($ millions) TOTAL $14.8

Charitable Giving

Pennsylvania’s golf industry makes substantial contributions to a variety of charities. At the championship level, the Pennsylvania Constellation SENIOR PLAYERS Championship generated $500,000 in grants to local Pittsburgh charities that support programs to educate and enrich the lives of young people and make housing more affordable for families. Examples of specific benefiting charities include the YMCA of Greater Pittsburgh, EconomicsPennsylvania, The First Tee Pittsburgh, the Extra Mile Foundation, The Woodlands Foundation, The Pittsburgh Promise, Habitat for Humanity, and Tickets for Kids Charities.3 When help in Pennsylvania over various years, the U.S. Open and U.S. Women’s Open raise even more significant sums of money for local charities.

Less recognized is the larger amount of money, in aggregate, raised by the numerous local charitable events hosted by Pennsylvania golf facilities each year. These events raise anywhere from $1,000 to $100,000 or more per event, depending on the type of facility. Pennsylvania facilities host 15 to 20 events, on average, annually. Beneficiaries of these events include various cancer research and support organizations, Wounded Warriors, affordable housing and homeless shelters, scholarships and education-focused foundations, humane societies, etc. For example, the 2014 Wesley Spectrum’s Annual Golf Invitational hosted by Frosty Valley Golf Links raised $60,000 in net proceeds to support Wesley Spectrum’s diverse range of autism, behavioral health, education and family support services for

2 Heitner, Darren (2015). “U.S. Open: A $140 Million Bump for Chambers Bay,” Forbes, 15 June 2015. http://www.forbes.com/sites/darrenheitner/2015/06/15/business-of-golf-2015-u-s-open-championship/ Accessed 16 December 2015. 3 Constellation SENIOR PLAYERS (2014). “Constellation donates $500,000 to charities for 2014 SENIOR PLAYERS Championship.” 23 June 2014. http://energy.constellation.com/seniorplayers/updates/constellation-donates- 500000-to-charities-for-2014-senior-players-championship Accessed 16 December 2015.

over 5,000 children and families in Western Pennsylvania. The 6th annual Emerald Foundation Golf Outing at Stonewall’s North Course in Elverson, PA, raised over $85,000 to support educational and children’s programs, disease-related research, and support to those suffering from various illnesses.4 Chambersburg Country Club raised $50,000 for hospice services provided by Lutheran Social Services through the 34th Annual Hospice Golf Tournament.

Golf course owners, operators, and golf professionals are happy to serve as access points for annual fundraising by local service organizations. In total, SRI estimates that the amount of charitable giving attributed to the game of golf in Pennsylvania was $131.9 million in 2014.

Pennsylvania’s Golf Industry’s Charitable Giving in 2014 ($ millions) TOTAL $131.9

B. ENABLED INDUSTRIES

Real Estate

Real estate developers use amenities to attract new home buyers, and golf is a key amenity in many parts of Pennsylvania. While very few new golf courses have been constructed in recent years, there were still a number of developments with some notable construction in 2014 (ranging from 10 to 40 new homes), such as The Links at Raven’s Claw in Limerick, Applecross in Downington, The Links at Gettysburg in Gettysburg, and Penn National in Fayettsville. Many other golf community developments had a handful of homes constructed in 2014. They include golf communities such as Olde Bulltown Village at French Creek Golf Course in Elverson and the Village of Banbury at Totteridge Golf Course in Greensburg, among others.

New golf-related real estate construction generated $25.5 million in 2014. Furthermore, there were an estimated 58 golf communities in Pennsylvania, and SRI estimates the “golf” premium associated with the sale of real estate in these developments to be $15.1 million. The premium is the additional amount a buyer is willing to pay for a home or property located on a golf course or within a golf community.

4 “Emerald Foundation golf outing raises more than $85,000 for numerous charitable causes,” 20 October 2014. http://www.teamemerald.com/news/annual-foundation-golf-outing-raises-85000 Accessed 17 December 2015.

Pennsylvania’s Golf Real Estate Revenues in 2014 ($ millions) Golf-Related Residential Construction $25.5 Realized Golf Premium $15.1

TOTAL $40.6 Note: Numbers may not sum due to rounding. The sale of existing homes is considered a transfer of assets rather than new economic output, so the golf premium that is realized in the sale of an existing home is not included in the economic impact analysis.

Golf-Related Hospitality/Tourism

Across the country, golf has enjoyed increasing popularity among travelers, whether it is the primary motivation for a trip or is connected to other recreational time spent with friends, family, or business colleagues. Golf is a sizeable tourism segment in Pennsylvania, alongside key traveler activities such as historical and cultural sites, outdoor recreation, events and festivals, and food and attractions. Pennsylvania’s golf courses and resorts help the state attract conferences and business meetings, and both amateur and professional golf tournaments draw people to courses in different parts of the state. Pennsylvania hosted the U.S. Open in 2013 and the U.S. Open returns to Pennsylvania again in 2016.5 The U.S. Open is one of the four major golf championships. The Visit PA website6 features the state’s golf courses among the many sporting and recreational activities available in the state.

In 2014, SRI estimates golf-related tourism spending in Pennsylvania was $755.0 million. This is based on the following estimates of golf trips and associated expenditures by Pennsylvania residents and non- residents: (1) an estimated 2,422,550 day trips with average golf trip spending of $68 per person and (2) an estimated 859,266 overnight trips (average length of two nights, three days) with average trip spending of $686 per person.7 Pennsylvania has a larger number of total tourism day trips and golf day trips as compared to other states, due to its close proximity to New Jersey, New York, Maryland and Northern Virginia, which have higher income and golf tourism spending patterns.

5 The U.S. open was hosted by Merion Golf Club in Ardmore, Pennsylvania in 2013, and will be played June 16-19 at Oakmont County Club in Oakmont, Pennsylvania in 2016. 6 See http://www.visitpa.com/pa-golf-sports. 7 All trips refer to “person-trips” which simply means the count of the total number of people taking a trip. Therefore, 2,422,550 day trips should be interpreted as 2,422,550 people who took a day trip. Trips include people traveling to Pennsylvania from out of state, as well as people traveling within the state more than 50 miles from home.

Pennsylvania Golf-Related Tourism Expenditures in 2014 # of golf day trips 462,411 Average travel $ per golf day trip $79.56 # of golf overnight trips 297,540 Average travel $ per golf overnight trip $722.40 Total $251.7 million Note: Numbers may not sum due to rounding.

GOLF’S ECONOMIC IMPACT IN PENNSYLVANIA

Golf’s impact on Pennsylvania’s economy includes both the direct effects of economic activity in the core and enabled golf industries, as well as the indirect and induced (or multiplier) effects on other industries in the state economy. In economics, the idea of the multiplier is that changes in the level of economic activity in one industry impact other industries throughout the economy. For example, a fraction of each dollar spent at a golf course is, in turn, spent by the golf course to purchase goods and services for golf course operation—these are indirect effects. In addition, golf course employees spend their disposable income on personal goods and services, and this stimulates economic activity in a myriad of other industries—these are induced effects.

Therefore, golf’s total (direct plus multiplier) economic impact includes both the direct employment and wage income of those employed in golf-related industries, as well as the secondary employment and wages supported in other sectors of the economy through subsequent purchases of goods and services by golf industry businesses and employees.

In 2014, the $2.3 billion Pennsylvania golf industry supported:

§ A total economic impact of $4.8 billion for the state of Pennsylvania, including the indirect and induced economic impacts stimulated by golf sector activity; § A total employment impact of nearly 56,000 jobs; and § Total wage income of $1.4 billion.

Golf’s Impact on Pennsylvania’s Economy in 2014 INDUSTRY DIRECT INDIRECT INDUCED TOTAL TOTAL TOTAL ($ millions) OUTPUT JOBS WAGE ($ millions) INCOME ($ millions) Golf Facility $1,291.6 $2,699.5 33,838 $822.5 Operations Golf Course Capital $110.7 $88.8 647 $27.8 Investments* Golf-Related $112.8 $230.1 2,388 $69.6 Supplies Tournaments & $14.8 $34.8 323 $10.9 Associations Real Estate ** $40.6 $62.6 456 $19.6

Hospitality/Tourism $755.0 $1,670.0 18,298 $491.0

TOTAL $2,325.5 $4,785.8 55,950 $1,441.3

Note: To calculate golf’s total economic impact, SRI subtracted from the direct golf economy impact of $2,331.6 million the portion of capital investment that is investment in existing facilities ($74.5 million of $110.7 million) and the portion of real estate that is the realized golf premium associated with the sale of real estate in existing developments ($15.1 million of $40.6 million). This is because: *Golf course capital investments —Only new course construction has an indirect and induced economic impact. Other types of facility capital investment are typically financed through facility revenues and, therefore, are omitted to avoid double counting. **Real Estate —Only golf residential construction has an indirect and induced impact. The golf premium associated with golf real estate is considered a transfer of assets rather than new economic activity.

DETAILED METHODOLOGY & DATA SOURCES

A key challenge in this study was to identify reliable state-level data sources and to develop methodologies for measuring the size of industry components for which cross-state estimates do not exist in straightforward metrics, e.g., golf real estate and off-course purchases of golf apparel and equipment. This section describes each of the core and enabled industries included in the golf economy and SRI’s approach to measuring each of these segments.

A. GOLF FACILITY OPERATIONS

For this industry segment, we analyzed the number of golf facilities and average facility revenue data to derive a total facility operations estimate. Revenues for this segment include: annual or monthly membership fees, green fees, range fees, and golf car rental fees; purchases of golf apparel and equipment in pro shops; golf lessons; tournament entry fees; consumption of food and beverages; etc.

Number of golf course facilities. Many golf organizations track the number of golf facilities in a state: The National Golf Foundation (NGF), The PGA of America, and state/regional golf associations, among others. The U.S. Census Bureau also surveys golf facilities as business establishments in its Economic Census every five years. However, these organizations’ calculations of the total numbers of golf facilities in each state, by type of facility, are not always consistent with each other due to: (1) absence of data for courses which are not members (e.g., The PGA tracks those courses with a PGA member) or for particular subsets of courses (e.g., municipal facilities and golf resorts are not tracked by the Census), (2) facility closures and openings, and (3) inconsistency in the classification of courses, especially resorts.

In some surveys, golf facilities are allowed to self-classify. In others, the surveying organization classifies the facility based on specific criteria. This can mean the difference between a small number of resorts (e.g., a figure that includes five-star accommodations located on or adjacent to an 18-hole course) or a much larger number of resorts (e.g., three-star hotel accommodations located near a daily fee golf course). Similarly, a resort with two 18-hole golf courses could be counted as two golf facilities or as one depending on the reporting organization. Fortunately, the variation in the number of facilities caused by these data collection methods are very small, and thus do not materially impact the overall analysis. The table below presents slightly differing estimates for the number of golf course facilities in Pennsylvania in 2012 or the latest available year.

Table 1 Estimates of Total Number of Pennsylvania Golf Facilities by Type, 2012-14

2012 Economic 2014 NGF3 (# of 18- Census1 (# of 2014 PGA2 2014 NGF3 hole equivalent facilities minus (# of facilities) (# of facilities) courses) resorts & munis) PRIVATE 142 212 178 178.5 PUBLIC 420 435 485 455 Daily fee/semi- 381 private Municipal Military 54 University RESORT 18 35 40.5 TOTAL 562 665 663 633.5 Sources: 1 U.S. Census Bureau (2015). Pennsylvania: Arts, Entertainment and Recreation: Geographic Area Statistics: 2012 Economic Census of the United States. 2 Professional Golfers’ Association of America (2015). Facility Database. 3 NGF (2015). Total Facility Supply Tables 6-14, Golf Facilities in the U.S., 2015 edition, pp.6-14.

The total number of Pennsylvania golf facilities in 2014 reported by The PGA of America and NGF fall within a very narrow range, 665 and 663, respectively. This is down from an estimated 699 facilities in 2002.8 Between the PGA and NGF data, there is some variation in total numbers of facilities by type of facility. SRI conducted further research to validate the breakdown of facilities by type with the support of the Golf Alliance of Pennsylvania. SRI analysis of golf facility lists provided by Golf Alliance of Pennsylvania members indicates that the PGA breakdown of facilities by type is the more accurate of the two. Data from the Golf Alliance of Pennsylvania showed that Pennsylvania had 78 golf ranges in 2014.

Average revenues per facility. Facility revenue includes membership dues (where applicable), green fees, cart rental fees, and associated spending on food and beverage. The SRI team collected average revenue data from a variety of sources. Here again, the data challenge was that average facility revenues will vary significantly depending on: (1) the number of holes (e.g., a 9-hole course versus an 18-hole course) and (2) the type of facility—whether a golf course facility is private, daily fee, resort, municipal, etc.

The U.S. Census Bureau collects revenue data for golf course facilities as part of its Economic Census of all U.S. establishments every five years. Whereas facility surveys conducted by private sector

8 National Golf Association (2002). The Economic Contribution of the Golf Industry to the Pennsylvania Golf Economy. Jupiter, FL: August 2002.

organizations are often based on lower response rates (less than 30 percent), all establishments are required by law to respond to the Census Bureau survey. However, the Census Bureau data has several limitations. Many types of facilities are not included in the survey: (1) resort facilities, (2) municipal and military facilities, (3) stand-alone driving ranges, and (4) golf facilities without payroll. The latest 2012 Economic Census contains revenue, payroll, and employment data on 12,193 golf facilities broken down by state. This provides a robust estimate with which to compare other available golf facility revenue data.

The PGA collects revenue data for all 50 states on an annual basis through its Annual Operations Survey. The latest available data are from 2014, but the PGA has annual data going back to 2005. In addition, PGA revenue data are broken down by type of facility for categories for which Census data are not available—namely, resorts, municipal courses, and military courses. Average revenue data from the Census (latest available 2012), The PGA (2012-2014), and the SRI Pennsylvania Golf Survey (2015) conducted on behalf of the Golf Alliance of Pennsylvania are presented in the table below.

Table 2 Pennsylvania Golf Facilities: Average revenue by type of facility, 2012-14

Private Public: Municipal/ Resort Ranges Miniature Daily Fee/ Military/ Golf Semi-Private University SRI 20141 $3,249,632 $1,432,957 $1,360,146 X X X PGA 20142 $3,568,319 $2,188,300 $1,181,588 X X X PGA 20133 $3,060,313 $1,285,905 $1,151,400 $2,933,333 X X PGA 20124 $3,617,996 $1,265,125 $1,594,000 $2,996,160 $400,000 X Census 20125 $3,517,204 $1,076,629 X X X $194,413 Note: Red bolded values are an average of Pennsylvania and neighboring states, due to low response sample. Sources: 1 SRI Pennsylvania Golf Survey in partnership with Golf Alliance of Pennsylvania. 2 Professional Golfers’ Association of America (2015). 2014 Operations Survey. 3 Professional Golfers’ Association of America (2014). 2013 Operations Survey. 4 Professional Golfers’ Association of America (2013). 2012 Operations Survey. 5 U.S. Census Bureau (2015). Pennsylvania: Arts, Entertainment and Recreation: Geographic Area Statistics: 2012 Economic Census of the United States.

Because of low response rate to all of the facility surveys, except for the 2012 Economic Census, SRI used an average of 2014 PGA and 2015 SRI Pennsylvania Golf Survey responses to calculate average revenue for privates and municipal/military/university facilities. We used the 2014 SRI data for daily fee average revenue, because the 2014 PGA data appears to be an outlier compared to previous years and the 2012 Economic Census data. For resorts, ranges and miniature golf facilities, SRI used the latest available data from the 2013 PGA survey, the 2011 PGA survey, and the 2012 Economic Census, respectively. Note that the 2013 PGA average revenue for resorts is the reported average for

Pennsylvania and neighboring states. We adjusted the average revenue for inflation to 2014 dollars for all three types of facilities.

To calculate golf facility operations revenues, SRI subtracted average on-course merchandise sales from the average golf facility revenue estimates because on-course merchandise sales are included in the Golf-Related Supplies industry segment. SRI then multiplied these adjusted average golf facility operations revenue estimates by the respective number of golf facilities. Overall, SRI estimates that Pennsylvania’s 665 golf courses, 78 stand-alone ranges, and 75 miniature golf facilities generated $1.2 billion of revenue in 2014.

B. GOLF FACILITY CAPITAL INVESTMENTS

To calculate golf facility capital investments, SRI collected data on two major types of investments: (1) capital investment at existing facilities and (2) new course construction and major course renovations.

Pennsylvania Golf Facility Capital Investment and New Course Construction in 2014 ($ millions) Golf Facility Capital Investment1 $74.5 New Course Construction and Rebuilds $36.1 TOTAL $110.7 Note: 1 Only the New Course Construction category is included in the economic impact analysis, because it represents new economic output or activity. Golf facility capital investments are typically financed through golf facility revenues, so including both Golf Facility Capital Investments and Golf Facility Operations in economic impact analysis would result in double-counting.

Investment at existing facilities. Golf facility capital investments include improvements to greens and tees, repaving of cart paths, purchases of new turf maintenance equipment and irrigations systems, and renovations of the clubhouse, pro shop, and maintenance buildings. Ordinary maintenance expenses are not included. SRI examined golf facility capital investment data from two data sources: The Golf Course Superintendents Association of America (GCSAA) and SRI’s Pennsylvania Golf Survey. The GCSAA data comes from golf facility capital budget questions included in its 2012 Compensation Survey. The data is state-level and includes the mean, median, and standard deviation of capital expenditures (which excludes maintenance expenses). SRI’s 2015 Pennsylvania Golf Survey was a statewide survey of all golf facilities in the Pennsylvania. The survey collected data for 2014 on annual revenue, capital investment, and net proceeds from charitable events by facility type.

After review of both data sets, SRI used the SRI Pennsylvania Golf Survey data in our capital investment calculation. The data indicate that, on average, Pennsylvania daily fee facilities invested an average of $79,357, municipal facilities invested an average of $137,895, and private facilities and resorts invested an average of $160,139, for a total capital investment of $74.5 million.

New course construction and major renovations. The NGF’s Golf Facilities in the U.S. series is the only national source for estimates of the number of new golf courses under construction in each state. In 2014, NGF reported there were no new golf course openings and no new courses under construction in Pennsylvania. SRI confirmed this with the Golf Alliance of Pennsylvania. The Golf Alliance and SRI research identified nine major course renovations or course rebuilds in 2014.

To calculate the total expenditures related to the major course renovations and reconstructions, SRI used the data from the Golf Course Builders Association of America. The GCBAA Course Construction Costs by State 2011 survey found that major course renovations in Pennsylvania cost an average of $3.8 million. SRI cross-referenced the GCBAA data with capital expenditure data from the 2015 SRI Pennsylvania Golf Survey and online research about major course renovations in 2014. We adjusted the GCBAA data to 2014 dollars using the GDP deflator. In 2014, SRI estimates that investment in major course renovations and rebuilds in Pennsylvania totaled $36.1 million.

C. GOLF-RELATED SUPPLIES

This section explains SRI’s methodology for calculating Pennsylvania manufacturers’ exports (out-of- state and overseas shipments) of golf apparel, turf maintenance equipment, and accessories. We also detail our methodology for calculating the retail margin for on-course and off-course purchases of golf equipment, golf apparel, and golf media.

Manufacturing Exports. The economic value created by golf-related supplies consists of two components: (1) value-added production, including design, and (2) retail sales margin. On the manufacturing side, we are concerned with the value-added production of golf-related equipment, apparel, and media. This is the value of the company’s wholesale revenue minus the cost of production inputs, and this value-added production is attributable to the state in which the golf club or golf mower is manufactured. We began by conducting database research to identify manufacturers of golf-related products in the state. Pennsylvania is home to several small producers of custom and high-end golf clubs, golf cars and golf accessories, turf maintenance equipment, prefab miniature golf courses, e.g., George Izett Golf; Dead Solid Golf; Backspin Seating; Lomma Championship Miniature Golf Courses; Mini Golf, Inc.; etc. We estimated the value added of these companies’ out-of-state shipments of golf merchandise in 2014 using the U.S. Census Bureau’s Annual Survey of Manufacturers statistics.

Pennsylvania Manufacturers’ Value-Added Exports of Golf-Related Products in 2014 ($ millions) TOTAL $4.4

Retail Margin. On the retail side, the economic value is derived from the margin the retailer makes from the sale of the golf club, i.e., the net revenues accruing to retailers after covering the cost of purchasing the golf equipment or apparel from the wholesaler/producer.

To calculate this margin, we first estimate total sales of golf apparel and equipment at the state level and then apply the requisite retail margin percentage for economic impact analysis. In our national-level study for GOLF 20/20, SRI was able to collect national sales data from a number of sources: (1) the NGF, (2) the National Sporting Goods Association (NSGA), (3) Golf Datatech, and (4) the Census Bureau. Unfortunately, the relatively small sample size for the majority of these surveys do not allow for publication of reliable state-level estimates by these organizations. However, each year, the NSGA conducts a 100,000-household consumer panel survey for its annual The Sporting Goods Market publication. SRI uses these data in conjunction with the PGA’s golf facilities data for each state to derive state-level estimates of golf equipment and apparel sales.

For example, in 2014, NSGA reported total U.S. off-course and on-course purchases of individual golf clubs to be $657 million. The NSGA survey found the Middle Atlantic region accounted for 12% of these purchases, or $78.8 million. Within the Middle Atlantic region, one can estimate Pennsylvania’s share of purchases by creating a rounds- or courses-based weight. Using either approach yields similar weights, since the number of rounds played is highly correlated with the number of 18-hole equivalent courses in a state (r=0.93). SRI used the number of 18-hole equivalent courses in each state, as it was easier to verify than estimated number of rounds played. Pennsylvania represents 38% of total 18-hole equivalent courses in the Middle Atlantic region, so this weight was applied to the region total ($78.8 million) to estimate $30 million of individual golf club sales in the state of Pennsylvania in 2012. Further, retail margins on final sales suggest that 40.4%, or $12.1 million, of total sales was retained in the Pennsylvania economy. (See graphic below.)

Pennsylvania On-Course and Off-Course Golf Equipment & Apparel Purchases in 2014 ($ millions) Category Calculation Estimate Golf club sets Middle Atlantic region’s sales $202.1 PA’s courses-based weight 38% PA’s share of sales [1] $76.8 Golf apparel Middle Atlantic region’s sales $212.2 PA’s courses-based weight 38% PA’s share of sales, [2] $80.6 Golf balls Middle Atlantic region’s sales $98.5 PA’s courses-based weight 38% PA’s share of sales, [3] $37.4 Golf clubs Middle Atlantic region’s sales $78.8 PA’s courses-based weight 38% PA’s share of sales, [4] $30.0 Golf bags Middle Atlantic region’s sales $75.5 PA’s courses-based weight 38% PA’s share of sales, [5] $28.7 Golf shoes Middle Atlantic region’s sales $24.4 PA’s courses-based weight 38% PA’s share of sales, [6] $9.3 TOTAL Sum of [1] to [6] $262.8 Retail sales Multiply TOTAL by 40.4% $106.2 margin Source: National Sporting Goods Association (2014). The Sporting Goods Market in 2013, Mt. Prospect, IL: NSGA. Adjusted for inflation into 2014 dollars using the appropriate GDP deflator.

Golf media. Similar to golf equipment, golf media’s economic contribution to the state economy has two components: value-added production and the retail sales margin. On the production side, the economic impact created by the publication of magazines or books is attributable to the state in which the magazine or book is published. On the retail side, the economic impact is derived from the margin the retailer makes from the sale of golf media, i.e., the net revenues accruing to retailers after covering the cost of purchasing the media from the wholesalers/producers. For golf magazines, we identified national golf publications with the largest circulations and the state in which they are published—no national golf magazines were published in Pennsylvania in 2014. Similarly, no major publishers of golf books are located in the state. However, we calculated a weight to estimate the percentage of book retailers’ sales attributable to the sale of golf books in stores. Total retail golf book sales in 2014 were estimated to be $979,091 with a retail sales margin of $395,553. Golf videos and DVDs are more difficult. In SRI’s previous national-level study, we were not able to identify a source with data on the annual

sales of golf-specific videos/DVDs. In the case of this current state-level study, this category was also omitted due to the absence of a reliable data source.

Pennsylvania On-Course and Off-Course Sales of Golf Books in 2014 Category Estimate Pennsylvania retail book sales1 $489,545,477 Golf books as % of total book sales 0.2% Total retail golf book sales $979,091 Retail sales margin $395,553 Note: 1Adjusted for inflation into 2014 dollars using the appropriate GDP deflator. Sources: Pennsylvania retail book sales data from the 2012 Economic Census. Estimated percentage of golf books among total book sales derived from Book Industry Study Group/Association of American Publishers (2013), BookStats 2013, and SRI International (2013), The 2011 Golf Economy Report, Arlington, VA: SRI International.

D. ASSOCIATIONS, TOURNAMENTS & CHARITABLE GIVING

Associations. SRI gathered association revenue data for the largest national, state, and regional golf organizations from these organizations’ 990 income tax filings. These include the Golf Association of Philadelphia, the Tri-State Section of The PGA, the Philadelphia Section of the PGA, the Pennsylvania Golf Association, the Western Pennsylvania Golf Association, the Greater Pittsburgh Golf Course Superintendents Association, and the Philadelphia Association of Golf Course Superintendents. Also included are women’s, senior, junior, and smaller regional golf associations.

Major Tournaments. In 2014, Pennsylvania hosted one major golf championship. We subtracted the tournament purse and cost of television broadcasting from total tournament revenues to

estimate the direct event-related spending that remained in the state. Accommodation and tourism- related expenditures from this event are captured in the Hospitality/Tourism segment of the report.

Pennsylvania’s Major Golf Tournament & Association Revenues in 2014 ($ millions) TOTAL1 $14.8

Charitable Giving. Overall, SRI estimates that the amount of charitable giving attributed to the game of golf in Pennsylvania to be $131.9 million in 2014. This estimate is derived from a 2011 national study9 of charitable monies raised by golf facilities and validated by SRI’s 2015 Pennsylvania Golf Survey, which included questions about charitable golf events. The national study is based on the number of golf facilities that hold charitable golf events, the average number of events held by each facility, and both the net proceeds and in-kind fees, services and discounts donated during charitable golf events. It also includes the charitable giving associated with professional golf tournaments. Charitable giving is not included in economic impact estimation because it is a direct transfer of income. Nevertheless, it is an important golf industry contribution to the state.

Pennsylvania Golf Industry’s Charitable Giving in 2014 ($ millions)

TOTAL $131.9

E. REAL ESTATE

In analyzing golf-related residential real estate, SRI collected data on two components: (1) new golf- related residential construction and (2) the “golf” premium associated with the sale of golf community homes.

Pennsylvania’s Golf Real Estate Revenues in 2014 ($ millions) Golf-Related Residential Construction $25.5 Realized Golf Premium $15.1 TOTAL $40.6 Note: Numbers may not sum due to rounding. The sale of existing homes is considered a transfer of assets rather than new economic output, so the golf premium that is realized in the sale of an existing home is not included in the economic impact analysis.

9 National Golf Foundation (2011). The Charitable Impact Report.

Golf-related residential construction. For this industry segment, SRI conducted research and interviews with golf real estate developers to arrive at estimates of the number of courses with active real estate development, the size of the development, the number of homes under construction in a given year, and the average construction costs per type of home (i.e., townhouse, condo or single family home). The number of courses with active development was derived from new course openings over the past five years and online research to identify golf communities that are still building out. Construction values varied considerably depending on such factors as the location of golf communities within the state, the proportion of townhouses versus single-family homes and overall real estate market conditions (e.g., high-growth metro regions versus more rural parts of the state).

SRI estimates that approximately 10 golf communities were under development, to varying degrees, in Pennsylvania in 2014. Developments ranged from the 650-unit Applecross development in Downington to the 200-home Links at Gettysburg development being undertaken by four different builders. Multiplying the total number of units under construction in each golf community by their average construction cost, and summing all of these values yielded a total 2014 golf-related residential construction figure of $25.5 million.

Realized golf premium. The “golf” premium is the extra value a homeowner can expect to receive on the sale of a housing unit located in a golf community that is above and beyond the premium associated with a home’s other features or amenities (e.g., square footage, fixtures, landscaping, etc.). Through industry interviews, SRI arrived at a conservative estimate of this premium of $25,000 per unit in 2014. Multiplying the approximately 58 existing Pennsylvania golf communities by the average number of housing units per golf course, we arrive at a total of 23,200 golf community homes. SRI estimates that in 2014, the home turnover rate (percentage of homes sold relative to the total housing stock) was 2.6 percent in Pennsylvania. Therefore, the realized golf premium was calculated by multiplying the home turnover rate by the total number of golf community homes by the average golf premium per unit. SRI estimates Pennsylvania’s golf real estate premium was $15.1 million in 2014.

F. GOLF-RELATED HOSPITALITY/TOURISM

Although a large and critical golf industry segment, there are no national sources of state-level golf tourism data. SRI calculates a state’s total golf tourism revenues by collecting data for two types of figures: (1) the annual number of golf-related trips and (2) average spending per trip.

Number of golf-related trips. SRI defines a “golf trip” as a Pennsylvania resident or non-resident traveling 50-plus miles to, through, or within the state to a unique destination and playing golf while at this destination. Golf-related trips include both overnight and day trips. This figure includes trips to Pennsylvania golf resort destinations, golf outings while on vacation or business travel, as well as trips by

Pennsylvania residents to play golf courses in other parts of the state. People also travel to watch amateur and professional golfers compete in tournaments played in Pennsylvania.10

The Pennsylvania Office of Travel, Tourism & Film (Visit PA) provides overall tourism figures for the Commonwealth of Pennsylvania each year, including number of visitor trips and visitor expenditures. Based on 2013 data compiled by Tourism Economics, SRI estimates that there were 193.6 million domestic person-trips in Pennsylvania in 2014, and an estimated 34% of these trips were overnight trips.11 SRI estimates that approximately 1.3% of overnight visitors and 1.9% of day trip visitors play golf while on a trip in Pennsylvania. By applying these percentages to the estimated total number of Pennsylvania person-trips in 2014 (193.6 million), SRI estimates that there were approximately 860,000 golf overnight trips and 2.4 million golf day trips made in Pennsylvania in 2014, totaling 3.28 million golf trips.

Note that the total number day trips and golf day trips is higher than other states of similar size, due to Pennsylvania’s close proximity to New Jersey, New York, Maryland and Northern Virginia. Many of Pennsylvania’s golf courses are an easy day trip from these sizable populations, which also have higher than average income levels and boost the level of golf-related tourism spending in Pennsylvania.12

Average spending per golf trip. SRI estimates that average spending per golf trip in Pennsylvania in 2014 was $68 per person per day trip and $686 per person per overnight trip (average length of two nights, three days). This includes spending on accommodation, local transportation, food and beverage, entertainment, gifts, and so on. Green fees and cart fees are not included as they are already captured in the Golf Facility Operations revenues. To estimate average golf trip expenditures, we conducted online research of Pennsylvania golf packages and relative price levels in Pennsylvania vis-à-vis the rest of the country. Multiplying the total number of golf trips (day and overnight) by average spending per golf trip (day and overnight), SRI found that golf-related tourism spending in Pennsylvania totaled $755.0 million in 2014.

10 Pennsylvania hosted one major golf championship in 2014, the Constellation Senior Players Championship (one of five majors on the PGA Champions Tour). In 2014, the tournament was played at Fox Chapel Golf Club in Pittsburgh. Pennsylvania also hosted the U.S. Open in 2013, and the U.S. Women’s Open in 2015. The U.S. Open will return to Pennsylvania again in 2016. 11 Tourism Economics (January 2015), The Economic Impact of Travel in Pennsylvania: Tourism Satellite Account Calendar Year 2013, http://www.visitpa.com/sites/default/master/files/pa-visitor-economic-impact-2013-final.pdf. According to Tourism Economics, there were 189.8 million domestic person-trips in Pennsylvania in 2013 (125.0 million day trips and 64.8 million overnight trips). Since the 2014 tourism data for Pennsylvania are not yet available, SRI estimated a 2014 figure for domestic person-trips in Pennsylvania by comparing PA historical tourism data with U.S.-level historical and forecast data available from the U.S. Travel Association (https://www.ustravel.org/sites/default/files/page/2010/12/ForecastSummary.pdf) 12 See Longwoods International (December 2014), Pennsylvania’s Annual Traveler Profile 2013 Travel Year, (http://www.visitpa.com/sites/default/master/files/pdfs/2013PennsylvaniaAnnualTravelProfile_Final.pdf). In 2013, 29% of all day trips in Pennsylvania originated from New Jersey and New York. Looking at major urban source markets, 19% of all day trips in Pennsylvania came from New York City.

Pennsylvania Golf-Related Tourism Expenditures in 2014 # of golf day trips 2,422,550 Average travel $ per golf day trip $68.22 # of golf overnight trips 859,266 Average travel $ per golf overnight trip $686.34 Total $755.0 million Note: Numbers may not sum due to rounding.

G. GOLF’S ECONOMIC IMPACT

The impact of golf on a state’s economy includes both the direct impact of the sector itself (its core and enabled industries), as well as the indirect and induced (or multiplier) impacts that are supported by golf industry employment and expenditures.

Direct economic impact. The direct economic impact of golf is simply the size of the golf industry cluster within the state economy in terms of revenues. The “state golf economy” can be calculated by adding together the size of each of the core and enabled industries calculated in the sections above:

Direct Impact of the State Golf Economy + Golf Facility Operations

+ Golf Course Capital Investments + Golf-Related Supplies + Associations, Major Tournaments & Charitable Giving Core Industries + Golf Real Estate

+ Golf Hospitality/Tourism Enabled Industrie s = Size of State Golf Economy

Indirect/induced economic impact (multiplier impact). Golf course facilities and the companies that provide goods and services to the golf industry, in turn, purchase goods and services from other companies. These purchases are considered the “indirect” impacts of the golf sector. Furthermore, the employees directly employed by the golf sector will spend much of their incomes in the region, creating more spending and more jobs in the economy. These impacts are considered “induced” impacts. Together, the indirect and induced impacts make up the multiplier impact of the golf economy.

Multiplier values vary from region to region, based on the unique characteristics of the state’s or region’s economy. Industries with more extensive linkages to other industries within the local economy will have a greater multiplier effect on final economic activity relative to the initial, direct effect. Conversely, economies and industry sectors dependent on a large share of imported supply will have smaller multiplier effects. For this study, the RIMS II multipliers (Regional Input-Output Multipliers), calculated by the U.S. Bureau of Economic Analysis, were used to calculate the multiplier impact of Pennsylvania’s golf economy.

Golf’s Impact on Pennsylvania’s Economy in 2014 INDUSTRY DIRECT INDIRECT INDUCED TOTAL TOTAL TOTAL ($ millions) OUTPUT JOBS WAGE ($ millions) INCOME ($ millions) Golf Facility $1,291.6 $2,699.5 33,838 $822.5 Operations Golf Course Capital $110.6 $88.8 647 $27.8 Investments* Golf-Related $112.8 $230.1 2,388 $69.6 Supplies Tournaments & $14.8 $34.8 323 $10.9 Associations Real Estate ** $40.6 $62.6 456 $19.6

Hospitality/Tourism $755.0 $1,670.0 18,298 $491.0

TOTAL $2,325.5 $4,785.8 55,950 $1,441.3

Note: To calculate golf’s total economic impact, SRI subtracted from the direct golf economy impact of $2,331.6 million the portion of capital investment that is investment in existing facilities ($74.5 million of $110.7 million) and the portion of real estate that is the realized golf premium associated with the sale of real estate in existing developments ($15.1 million of $ 40.6 million). This is because: *Golf course capital investments —Only new course construction has an indirect and induced economic impact. Other types of facility capital investment are typically financed through facility revenues and, therefore, are omitted to avoid double counting.

**Real Estate—Only golf residential construction has an indirect and induced impact. The golf premium associated with golf real estate is considered a transfer of assets rather than new economic activity.

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