The Economics of Everyday Things - Bowling Alleys (Replay)

Episode Date: March 4, 2024

Once America’s favorite recreational activity, bowling has been in the gutter for decades. But some surviving alleys are resetting the pins. Zachary Crockett laces up. SOURCES:Mike Leong, owner of Bel Mateo Bowl.Devon Stewart, head coach of Florida State University bowling team, C.E.O. of Bowl Connect, and consultant with the Hansell Group. RESOURCES:"Cornhole and Bowling Are the Sports Most Americans Played Last Year," by Mallory Newall, Johnny Sawyer, Charlie Rollason, and Tyler Ivey (Ipsos, 2023)."Overview of the Bowling Industry," by The Hansell Group (2022)."How Bowling Alleys Made a Comeback," by Justin Fox (Bloomberg, 2019)."New Look Keeps Bel Mateo Bowl Thriving," by Curtis Driscoll (The Daily Journal, 2017)."Inside the Ugly Road Bowlmor Took to Make Bowling Cool," by Gabrielle Fonrouge (New York Post, 2017)."The (Short) History of the National Bowling League," by Bob Johnson (United States Bowling Congress News, 2015). EXTRAS:"Is It Harder to Make Friends as an Adult?" by No Stupid Questions (2023).

The sounds you're hearing probably evoke a certain image. Monograms shirts, shoe spray, the anguished groan of a 710 split. More than 45 million Americans bowl each year. It's still one of the country's most played sports. But bowling isn't what it used to be. Organized leagues have been in decline for decades. Many of the country's bowling alleys have been replaced by high-rise condos and office space.

And the establishments that remain have had to get creative to keep their businesses out of the gutter. People would say, wow, when they walk in, bowling has become cool again. For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Crackin. Today, bowling alleys. In the 1960s, bowling experienced a golden age. Professional bowlers were national heroes who earned more than NFL stars. Bowling alleys were a critical part of America's social fabric.

The Poor Man's Country Club, as one trade publication put it, there were more than 12,000 of them. I remember that they were crowded with a lot of men that were smoking cigarettes and cigars. That's Mike Leong. He started bowling in 1966, and he was hooked from the start. I think my first league average was around 144, which was not that for an 11-year-old kid. By the time I was 15, I was already a 200 average player. We were bowling people for money, you know, two or three bucks a game, which back in pre-1970 was a lot of money.

Leong soon developed an interest in the legitimate business side of bowling. Over the years, he took on jobs at shops and alleys and worked his way into management at a company that owned four bowling centers. But by the early 2000s, bowling was in a tough spot, right at the intersection of two trends. The sports popularity was going down. The value of urban and suburban land was going up. And a bowling alley has a big footprint. The bowling crowd started to thin out a little bit.

The property for a large lot like that just got too valuable and most of them all became housing. Eventually, only one of those four bowling centers remained, Belmattale Bowl, a 24-lane alley just south of San Francisco. When the owner put it up for sale in 2013, Leong said, why not? I did go over the numbers with a few trusted friends and we decided, oh, well, you know, if we really put our nose to the grindstone, we might be able to make a living out of it. Now bowling in 2013 was a far cry from bowling in the 1960s. The number of Americans in bowling leagues had plunged by 75%, and less than a third of those 12,000 bowling alleys were still in operation.

Part of the problem was that young people just weren't interested in bowling. Leong decided to figure out why. He started asking teenagers and 20-somethings what it would take to get them into the alleys. His first piece of feedback? He needed to get with the times. I wanted to make Belmeteo a place that was going to be very clean and very modern compared to the old 1960s, 70s look that it had. So we started with the women's restroom

and put $50,000 into it. I think the next thing was automatic scoring. The scoring system that we purchased was, you know, a quarter million dollars. We added laser lights with fog machines. We updated our music system, a new carpet, new paint all over new side walls. We pretty much went through the whole building.

In all, Leong says he spent over a million dollars on the retrofit, more than what he'd paid for the business. His mission has been to build a bowling alley free of all the typical bowling alley stigmas, right down to the smell. Our center has a couple of air fresheners that are on all the time. We change our smell three or four times a year. And so, for instance, going into summer,

we have like a very ocean-y summer breeze scent when you walk in the door. Bowling alleys used to get about 70% of the revenue from leagues, organized groups of bowlers who meet two to three times per week to compete. It was a reliable income stream. But now, those leagues only make up around 30 to 40% of an alley's business. Bowling was pretty cool in the 60s, maybe even in the 70s. It wasn't cool in the 80s and 90s and maybe even 2000. But the centers that have survived

are very friendly towards the younger generation. Today's successful centers have to cater to what they call open play. Recreational bowlers, usually on the younger side, who just want to rent a lane for an hour or pay by the game. In the daytime, you'll see a lot of kids that are aged anywhere from five to ten years old having birthday parties. You'll see a lot of families. And then in the evening, you'll see a lot of 18 to 22 year olds. Belmeteo Bulls Metamorphosis is just a small part of a larger trend going on in

the bowling alley business. Super fun music playing, sound effects, projector screens with music videos, right? A fully interactive and immersive bowling experience. I've seen those offerings increase in centers across the board. That's Devin Stewart, and you could say he is a bowling nut. Where do I begin? Bowling has been a gift to me that has never stopped giving. I became fascinated with all the laughter, the fun, the joy that was happening in the

room. It's a rare thing, a modern day to experience. I'm guessing you're a guy who's bowled a few three hundreds in your life. I have my share. Stewart is the head coach of Florida State University's bowling team. He's the CEO of Bowl Connect, a recruiting company for the bowling industry.

And he's a consultant with the Hansel Group, which has brokered the sale of more than 500 bowling centers across America. He says that bowling alleys have managed to shed their old school reputation. And as a result, the remaining centers have become a hot commodity. I have more buyers than properties to sell, which is actually a strangely good problem to have.

The biggest buyer is a company called Bolero. Over the past decade, Bolero has gone on a bowling alley buying spree, snapping up more than 300 centers across the country. The company guts its alleys and installs neon lights, flat-screen TVs, and glow-in-the-dark lanes. It serves roasted lamb and artisanal $15 cocktails. Its mission is to make bowling cool again. And it's working. Bolero has more than a billion dollars in annual revenue.

In recent years, its parent company acquired the Professional Bowlers Association and the Bowling Center Operations of longtime industry giants AMF and Brunswick. Bolero has helped usher in a new generation of bowling alleys with a radically different business model. At these establishments, bowling is no longer the kingpin of the business. Half the revenue might come from food and drink sales. And there are other ways for customers to spend their money, too. Proprietors are figuring out ways to maximize dollars per square foot, and that number is

getting higher and higher. 30 years ago, there were centers that had 70 or more bullet lanes, but now they'll have laser tag, where the lanes used to be, or it'll be a 24-lane center that will have 16 standard lanes, and then they'll feature an eight-lane party room.

Some even do go-karts, mini-golf, adjacent to their facilities, batting cages. Library providers have gotten very imaginative to increase revenue. Mike Leong says that big companies have offered to buy out Belmattale Bowl, but he's not sold on the idea. The new model is made so that the person that wants to come bowling can't because they have to wait an hour. They don't have enough lanes. So what do you do? You sit at the bar and you have a drink or you eat.

I have an allegiance to bowling. At Belmeteo Bowl, bowling is still the main attraction. All of the other ancillary income things that happen in a center, at least for me, are to keep people happy in the center while they're bowling. I do about 20% of our revenue through the bar. The snack bar is probably only about 8% of the revenue. So they're not making a lot of money. The other ancillary things like the arcade, very small income generator, even the pro shop that we rent. I almost give it to them for the cost of electricity.

Running a bowling alley comes with some rather unique costs, broken pins, oil, and, as it turns out, a lot of stolen shoes. That's coming up. A lot of Belmeteo bulls costs are just typical boring business expenses. Liquor licenses, taxes, utilities. 15% of Mike Leong's revenue goes to pay the rent, and a little under 30% goes to the staff. But there are other expenses that are specific to the sport, like liability insurance. To protect against, well... People sticking their heads in the wall return or trying to throw the wall really hard and injuring themselves.

You know, kids, you get their hands smashed. If a ball's coming up, it's kind of part of the business. Leong has about 150 bowling balls at his center. He buys them wholesale for $30 each and replaces them every few years. He also needs a lot of bowling pins. Pin costs are now up to about $18 a pin and you're putting 21 pins in every machine. And usually I would say our center changes pins out once a year. We'll multiply that by 24 lanes, and Leong is looking at about $9,000 worth of pins per year.

But he is able to re-troop a little bit of that cost by selling his used pins. We sell a lot of them to people at gun ranges. They like to blow them up for some reason. Shoes are another recurring up for some reason. Shoes are another recurring cost for Leong. On the higher end, they run around $40 a pair wholesale. And he has to restock them far more than he'd like to. We have to reorder shoes probably three times a year.

Rarely is it because the shoe breaks. It's probably more because somebody wanted that shoe and took it home. Is that a common problem people just walk out with the shoes on? That's one of the problems that comes along with bowling being cool now is that people don't mind having a 12 on the back of their shoe. Another surprisingly high cost? Oil. Most of today's bowling alleys have swapped their wood lanes for melamine. That's a hard plastic surface that needs protection. The oil is

dispensed in a very specific pattern several times daily by a machine that kind of looks like a Roomba. An alley like Leong's might call for $250 worth of oil each day. Changes in the materials used to build lanes and bowling balls have been mostly driven by economics. The new models are cheaper and easier to maintain. But they've come with a strange side effect. Bowling has become a lot easier. In short, the new balls and the oil patterns dramatically improve accuracy.

50 years ago, amateur bowlers in the US bowled around 800 perfect games per year. That's a score of 300 or 12 strikes in a row. Today, it happens more than 50,000 times a year. When all those pins fall, a machine called a pin setter picks them up and puts them back in place. Leong's machines are from the 1960s. If one were to break, it would set him back tens of thousands of dollars. So his most critical expense is his full-time mechanic.

He's very, very good, and he's kept those things running. Those machines and several hundred moving parts in them, it's much more difficult than looking under the hood of a car. One of the difficulties of running a bowling center is having a mechanic who can troubleshoot when your machine goes down. It's just not something that there's a lot of people doing. Mechanics who are familiar with these complicated contraptions are becoming an extinct breed. So much so that the United States Bowling Congress, the national governing body of bowling,

recently approved a new simpler machine called the string pin setter. It uses pins attached to strings that lift them back up into place. All of these seismic changes and costs mean that most bowling alley operators have had to raise their prices. It's not something they take lightly, but Leong says it's necessary to keep the lights on. When I was a kid, we were bowling for a quarter of a game. Now it can be as much as $15 a game, depending on what time you come bowling. I've had customers complain to me that, you know, my God, you've raised the prices. But if I don't keep those prices up, it's real simple.

We'll just go out of business. For true bowling buffs like Devin Stewart, the price of a couple games is inconsequential. I remember how excited I was just as a young person getting to walk through the doors of Bowling Center. For me, it was a refuge. You can bowl a 28, you can bowl a 228. It doesn't matter. I just think it's really, really beautiful that people are having fun again

For the economics of everyday things I'm Zachary Crockett This episode was produced by Sarah Lilly with help from lyric Bowditch and mixed by Jeremy Johnston Interesting how beer and bowling have always had kind of a symbiotic relationship. Yes, yes. I am scared to be in the presence of such athletes and the guys choking down the hot dog and drinking the beer. The hidden side of everything.