Indoor Golf Meets Proposed Legislation

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Hey Golfers —

A few weeks ago, United States Representatives Brian Fitzpatrick and Jimmy Panetta introduced the BIRDIE Act. Technically speaking, the duo are cosponsors of H.R. 7228, named “Bolstering Intellectual Rights against Digital Infringement Enhancement Act”.

The BIRDIE Act sounds like a better name. At its core, the BIRDIE Act proposes to extend copyright protection to golf courses.

There is a long history of Copyright law in the United States, but it generally hasn’t protected golf courses. In the mid-1990s, Pebble Beach and Pinehurst sued Tour 18, an 18-hole golf course in Humble, Texas, with replica golf holes. Tour 18 won the lawsuit. 

But that was nearly thirty years ago. A lot has changed in the golf industry, most notably indoor golf. And that is exactly what the BIRDIE Act is targeting — golf simulators. 

The golf simulator industry is booming. Over 6 million golfers played golf on a simulator in the United States last year. According to NGF, off-course golfers totaled 18.5 million last year, an increase of 19% versus 2022.

Two off-course golf companies recently announced several new locations.

I’ve shared a similar chart below. It highlights the explosion of golf simulator growth.

The above chart shows the worldwide trend for the search term “golf simulator near me” from 2004 to the present.

Here are the last five years.

  • 2019 — 30

  • 2020 — 34

  • 2021 — 66

  • 2022 — 85

  • 2023 — 100

Search interest has tripled since 2019. The United States has the highest region of interest, followed by Canada and the United Kingdom.

Point being — the golf simulator business is doing exceptionally well. And lawmakers want to protect golf courses. And I will note that the sponsors of the BIRDIE Act are bipartisan.

Golf simulators typically pay a royalty to golf courses to add their golf course to its library. If a location has three simulators — they would have three separate licenses and pay three sets of royalties to the golf course.

This isn’t an issue. The issue is when golf simulators create a golf course and use a different name to skirt the royalty fee. A hypothetical example of this would be a simulator company creating a Pebble Beach replica and calling it ‘Monterey Links’.

For some golf courses — the loss of revenue from simulator royalties is material. EA Sports was rumored to pay tens of millions for exclusive rights to Augusta National.

If a simulator company were to create an Augusta National replica under a different name — this would violate the proposed BIRDIE Act.

I chatted with the CEO of a golf simulator company to better understand the impact on the industry. Here is what he said.

The BIRDIE Act won’t impact our company. We pay royalties and do not have counterfit golf courses in our library. We have built our own golf courses and added them to our library.

If a simulator company has replica courses in its library under a different name — the BIRDIE Act could impact them. 

It boils down to the fact that a golf simulator company must pay royalties to a golf course to be featured in its library. Replica golf courses have the potential to violate the proposed BIRDIE Act.

The same CEO told me the BIRDIE Act will have a material impact on smaller golf resorts and courses, as royalties will go straight to the bottom line.

This begs the question. Is there a market for virtual golf course designers? If a golf simulator company designed the best virtual golf course and had exclusive rights, would it increase the organization's value?

I believe it would. But it needs to have a viral effect built into it to happen.

It will be interesting to see how this unfolds. I generally don’t see this having a negative long-term impact on the golf industry.

The only scenario in which I can see a negative outcome is one in which a golf simulator company will need to pay a material amount of royalties it hasn’t in the past, which will impact its bottom line and, ultimately, its valuation.

Have yourself a great Monday. Talk to you next week!

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