Golf Courses in 2013 had their challenges. Of biggest impact were poor weather conditions, especially compared to the wonderful weather of 2012. We all knew play was going to be down, right? Well it was and nobody should be surprised.Â
NGF 2013 Calculations
- Nationally- All       -4.8%
- Nationally- Publics      -3.6%
- Nationally- Privates   -9.4%
- Indiana                      -8.8%
- Cleveland, Ohio          -10.9%
- Columbus, Ohio      -6.6%
- Cincinnati, Ohio      -7.8%
- Kentucky                    -7.4%
2012 was a freak year, so comparisons must average out our results to see the overall trend. And when you do that you see that rounds played is on a continued upswing. That is the good news. If your course is able to make money right now then you will have opportunity to make more in the next few years.
However, the growth is slow. Market growth is not going to be enough to save a golf course still losing money. Courses in that unfortunate situation will have to make operational changes. In most cases they need to attract more golfers. It’s really doubtful they can find any more cost reductions.
2013 Profitability
According to Golf Course Industry magazine, here’s the breakdown of profitability in 2013;
- Made money   42%
- Broke Even    28%
- Lost Money    30%
Looking at the positive, 70% of golf courses did not lose money last year! That is an improvement. 10% of courses report revenues higher than pre-recession levels.
NGF reports that 14 new courses opened and 157 courses closed in 2014. Here’s the breakdown;
                    Openings      Closings          Totals                                        Â
- All Courses    14                   157             14,564
- All Public      8.5                  151             10,704
- Fee Public        8                     144             8,410
- Muni Public    0                      7                2,294
- Private            5                      6                3,975
Since 2006 there has been a cumulative loss of 643 golf courses. That’s Total Courses + Openings – Closures.
Looking back at previous years there appears no trending to support better performance between the types of courses. All are in similar predicaments. Except, it appears private courses are recovering slower than publics as a group. You can, however, find data showing that some privates are experiencing very fast growth.
The economic factors are still positive for continued golf growth. More good will happen than bad in 2014. Looks like we can count on some growth unless weather mucks it up for us.
Weather Predictions
As of right now Weathertrends360.com is predicting about the same weather for our region as last year. Southern Kentucky is showing better conditions. So perhaps weather is not going to help us, but hopefully it won’t be worse. (I hesitate to ask how it could be worse because it could be.)
NOAA is predicting higher than normal temperatures all year except for September. And normal rainfall. We’ll see who the better predictor is!
Overall Budgets See Improvement
Budgets are reportedly improving. Many courses are shaking off the recessionary blahs and investing in their infrastructure and marketing. Money is being spent on stuff that brings in and keeps golfers. Obviously the golf course is some of that stuff! After putting off investment in turf equipment and irrigation systems for 6 years, courses are making plans.
One fast growing expense is payroll. Most courses are still not back up to their pre-recession staffing levels, especially for the course maintenance teams. But employee costs are growing. Taxes and insurance lead the way. Much of the budget increases are being used up for staff expenses.
Golf Course Industry magazine started a new budget category this year called “Salary Increase to Keep People”. Having gone so long without raises, many golf course employees are getting picked off by other businesses on faster recovery paths. Courses are responding by increasing pay.
New Investments
Turf care equipment is the asset investment of choice. Many fleets now consist of aged equipment well beyond what used to be considered normal lifespans. Behind labor costs, investment in turf equipment is the second largest spending growth.
Oddly enough, irrigation improvements are still on hold. Few superintendents say they are actively seeking improvements. Even though they admit their system is worn and unable to do the job they want. Could it be the weather has folks thinking irrigation improvements can be put off a little longer? Or is irrigation just held in low regard?
Those who are doing irrigation improvements are first looking at nozzle replacements, next at sprinkler replacement, and third at central control system upgrades.
There is an air of pessimism among Superintendents. Many have been promised new assets for many years, even well before the recession started. Having seen promises repeatedly broken superintendents are wondering if this really will be the year they can get some new stuff.
Cash is the issue. There is no magic box of money showing up via UPS next week, nor any week ever. Cash will not be more available any time soon. Financing is the answer. Otherwise, a course will find itself with a 20 year old fleet of dilapidated equipment and a 30 year old irrigation system held together by duct tape. Profitable operations are impossible at that point.
Explore your financing options! There’s a lot of money sitting on the sidelines waiting for a productive investment. Low interest rates make this the time to borrow.
The golf industry is on a slow growth road for a long time. Not so bad, at least you plan around it. A year from now the numbers will be a little more positive.
