Just back from GIS 2018, which I determined might be a good place to expand my understanding of the cost, potential savings and necessity for renovations of the primary components of a golf course.
The primary components of a golf course that wear out over time generally include greens, tees, bunkers and irrigation systems. All have varying periods of useful life. As appraisers, we often encounter situations where these components are in various levels of disrepair. Because of the general lack of understanding of their useful lives, not only are the levels of repair or replacement required different, but their impact on value is challenging to assess.
In a recent blog on this general topic, I touched on the irrigation systems and cart paths. At GIS, I decided to learn all I could about bunkers. It’s not unusual for us to visit a course or club considering a bunker renovation. After visiting with several of the bunker system providers, I’ve learned that it’s not a simple endeavor.
There are several options for modern bunker systems. The goal of each is to prevent washouts, enhance drainage and reduce maintenance costs. When a course tells us they’re considering a bunker renovation, or better yet planning one, I learned we need to ask some specific questions. First of all, do they plan to use one of the modern bunker systems? These include, among others “Better Billy Bunker”, Matrix Bunker, Z-Line Bunker, Bunker Solution and Capillary Bunker. Some of these use concrete, an asphalt like product, gravel or some other “hard” but porous substance to promote drainage and stabilize the sand (especially vertical bunker faces) from washout during rain events. Others use a fabric or rubber based liner, often with a synthetic turf-like surface to stabilize sand and Channel water to a traditional trench-type drainage system. These include Bunker Solution, Z-Line and the previous generation and no longer prominent Bunker Wall.
Which is better? According to architect Tripp Davis, a prominent renovator and restorer of classic golf courses and designer of new ones, the answer depends on the type of bunkers. Flatter bunkers may do better with the “softer” products while those with more vertical sand faces may benefit more from the “harder” systems. To the appraiser, once the best (physical) solution is determined, we’re interested in 3 things. What is the cost? What are the savings? How long is the payback period? Of course, in calculating the payback period, you’ll also be calculating the savings in maintenance realized from avoiding the inevitable recovery from significant rain events, flooding and resulting washouts, plus one would presumably benefit from overall improved drainage.
Another benefit is the increased time between necessary bunker renovations. Most of the system providers have 10 year warranties, compared to bunkers without such systems, which often require major overhauls in as little as 5 years.
Predictably, most of the providers (hard and soft) suggest a similar cost ranging from $1.35 to $1.50 per SF, plus installation. Installation can often be done, at least partially by the maintenance staff, which if contracted might bring the total cost to $2.00+/- per SF. Accordingly, another question we need to ask as appraisers, is how much bunker Area (SF) exists?
Determining whether a bunker renovation is necessary, or feasible depends on a number of factors. Sometimes, clubs will use a bunker renovation to give the course a “facelift” but may ignore other more significant problems. What level of golf experience is expected by the members or patrons? How important are the bunkers to that? How often does the course experience significant rain events and washouts? How are the bunkers currently performing? At some clubs, members simply want fewer bunkers, which might minimize the impact of poor bunkers. It’s not unusual for bunker renovations to cost as much as $500,000 or more, so a thorough economic analysis is warranted to make the right decision as to if, and how it should be done.
Whether a bunker renovation adds value to a course or not depends largely on how a prospective buyer may view the bunkers, or if the bunkers might discourage golfers from joining or playing the course. If the buyer concludes (as he might for negotiating purposes) that replacement is necessary, he’ll build that expected cost into the offer price. If there’s evidence that the condition of the bunkers is discouraging membership or play, the renovation becomes a necessity. The more complex bunker systems are typically found at more upscale, private clubs. In these cases, there’s likely not much added value, except as it might relate to reduced maintenance. Since the assumption is that the course is already desirable, it might be difficult to find additional value from new bunkers. Each situation is different and every club has different priorities.