We live in a cost conscious society. It’s not unusual for the value of a certain good or service to be overlooked because of its cost. Warren Buffett was once quoted as saying “cost is what you pay and value is what you get.” For the most avid golfers, the increase in the cost of playing will likely be absorbed, at least to a point. However, for the industry to thrive, golf needs to grow and that typically means that value has to exist, especially for the casual and less frequent golfer. Among the reasons golf has thrived in the COVID era is that the decline in the number of golf courses for the decade preceding COVID has made tee times and memberships more precious. Many think the COVID surge will subside and participation potentially negatively impacted.
Golf courses take several years to plan, get approved, and develop and even with the recent surge, the few new developments being pursued are largely in the upscale private segment, often at eye-popping levels of entrance fees and dues. Renovations have become (in some cases) prohibitively expensive as not only have costs increased but many clubs choose to renovate with upgraded irrigation, high tech bunker rebuilding and complex (USGA) green construction. Is there a better way that costs less and helps keep the golf surge going?
Among the trends I’ve observed (especially in the private club segment) is what I call the “space race”. Every club seeks to outdo the rest and it sometimes seems as though the highest renovation cost is a badge of honor. With higher interest rates increasing the cost of the substantial debt many clubs incur, the impact on club finances can be injurious, if not fatal. In fact, several prominent management companies have made their intentions clear seeking to acquire clubs drowning in debt from over eager renovation projects once economic fortunes turn south.
Last year, I questioned the sustainability of the cost of golf in this article. Last week, I listened to a most interesting episode of “Fried Egg Golf” podcast featuring golf course architect and owner Mike Young of Mike Young Designs discussing ways to manage golf course construction and renovation costs that can be helpful to all golf courses, especially those with limited budgets and in competitive markets. Since we are often called upon to examine the feasibility of renovation projects, Mike’s comments, as an architect, builder and owner were of considerable interest. I had the chance to pose some specific questions to Young.
While Mike focused on affordable daily-fee golf his concepts apply to private clubs as well, especially those in secondary markets or with limited revenues that can uniquely benefit from some of the cost saving concepts Young describes. These include intelligent bunker design, irrigation systems that may be more moderate but still functional, California or sand green construction versus USGA greens and the use of drought resistant Turfgrass varieties, all of which are cost-effective but provide quality playing surfaces and can result in lower maintenance costs. We’re currently advising a private club in a secondary market on master planning that needs to value-engineer their projects and can benefit from these measures.
Among the interesting concepts Young addressed is that the “top 500” courses (out of approximately 14,000), those often capable of investing in the most elaborate irrigation, most modern bunker construction and USGA green construction may only represent 10 million (20,000 rounds per course) of the 525 million+/- rounds played in the US each year. The rest of the courses/clubs need to accomplish their projects more cost-effectively.
As an example, the cost of a USGA spec green can be 2 to 4 times as much as a sand or California green, according to Young and California green proponent Dr. Mike Hurdzan. The cost of Better Billy Bunker of Capillary Concrete Bunkers are also considerably more than “low tech” installations, and while the modern systems may have greater endurance and desirable features, Young suggests that bunker placement to avoid collecting ground water and design having the low point away from the back of the bunker can provide adequate performance for less money.
I asked Young: What are the most prominent things preventing golf from being more affordable? He said, “Clubhouses, edges, overwatering, and thinking that more bunkers make you a better golf course.” What’s clear is that golf doesn’t need to be Uber costly to have intriguing design and provide quality playing surfaces and good conditions. I’ve been privileged to play and belong to clubs with big budgets and small. In many cases, the small budget clubs were more than adequate and economical to boot.
IMHO, a big part of the challenge is golfer expectations. Many affluent American golfers travel each year to Scotland and Ireland at considerable expense and return raving about the experience despite the course presentations which differ considerably from the most prominent American clubs. The color may be a bit brown versus our emerald green carpets and greens, while true and smooth are typically a bit slower than the American clubs which tout their often 12’+ stimpmeter readings.
The cost per hole of one American club’s maintenance I’m familiar with exceeds $120,000 ($2.2 million/18 holes) versus another in Scotland I’m familiar with at $33,000+ per hole ($600,000/18 holes). Both are highly rated courses. I know of other examples where golf course maintenance budgets exceed $3 million for 18 holes. Depending on the # of rounds hosted, it’s easy to see why the cost of golf is spiraling like so many other things. While I most certainly don’t advocate “cheap” maintenance or substandard conditions, given our experiences abroad it sometimes seems like overkill that could be moderated “for the good of the game”.