This month Old Mutual Private Equity bought a 70% stake in MoreCorp, the parent company of South Africa’s largest retailers of golf and cycling equipment, The Pro Shop and Cycle Lab. It also houses affiliate businesses such as golf driving ranges and cycling parks.
According to Jacci Myburgh, head of Old Mutual Private Equity, the asset manager sees potential for both sports in South Africa. This despite a reported decline in golf in the US due to changing lifestyles and incomes.
“Yes, in the US golf has in recent years been declining. But in Asia and China, for instance, it has grown quite aggressively in recent years. So I guess we look at South Africa and see both some emerging-market characteristics and some emerged-market characteristics,” he highlighted.
“But I think golf has to adapt to people’s faster pace of living… The golf courses specifically and the golf clubs have to think about how they can adapt to people’s modern lifestyles. And we think that will happen. We don’t think the game is going to die.”
He added that golf has historically gone through cycles of popularity, often linked to the emergence of a popular sports hero.
“For instance, when Tiger Woods was at his prime, golf was an incredibly popular sport in the US. Then, with his decline, you can see some declines in the numbers as well.”
The Pro Shop, started 39 years ago, has 14 stores across South Africa, many of which deploy the megastore concept, giving it the largest market position for golf equipment and accessories in the country.
“We don’t see golf declining rapidly in South Africa and we don’t see it growing incredibly. We see it as kind of in a steady state – and there is potential for the emerging consumer in South Africa to start taking up the game over the next five or 10 years.”
Cycling on the up
Cycling as a sport, on the other hand, has seen much faster growth. In January, Moneyweb reported that South Africa has one of the highest per capita spend on cycling equipment in the world.
And with enthusiasts typically paying a lot more for quality bicycles and equipment than golf clubs, the industry is proving a strong cash-generating business. Old Mutual has identified growth particularly amongst higher-income consumers.
“We believe the cycling market is even bigger than the golf market in South Africa.”
Myburgh, who took up cycling about two years ago, said he was attracted to the sport due to its time flexibility and outdoor appeal.
“You can go out at 6am, be back by 9am, and start your day – and it does not take too much time away from the family. It keeps you fit, it is a nice time with your friends, and you get out in nature and see beautiful parts of the country. So I think it has a lot of appeal,” he added.
MoreCorp bought Cycle Lab in September 2013 and Myburgh said the plan is to deploy and expand the same megastore format as with The Pro Shop.
“Cycling is a really popular sport in South Africa and it has grown a lot. We don’t see it continuing to grow at the same pace that it has been, because it’s has been off the charts. But we believe it has potential to keep on growing – definitely.”