As many of you are well aware, golf courses today face a surmounting set of challenges. Costs are rising and revenue is decreasing. Player attrition is still a major concern for the game of golf, and courses are fighting not just the economy, but rising restrictions and laws concerning water usage, chemicals and labor. While there are signs that the game of golf might be picking back up, the fact is that more golf courses closed than opened in 2014 for the ninth straight year, according to the National Golf Foundation. Knowledge is always power, and this couldn’t be any truer at such a precarious time for the industry. So let’s start with the numbers and what we know already.
In January, Golf Course Industry Magazine released their annual State of the Industry Report. Across the country, the top concerns superintendents have about the future of golf are lack of new players, speed of play, a saturated market and water pricing/availability. When looking at their biggest budget challenges, labor costs rank number one, followed by equipment replacement, benefits (healthcare, etc.) costs, chemical spending and budgeting enough salary to avoid layoffs.
budgetChallengesThe National Golf Foundation reports the number of golfers has been holding steady for the past three years, with the number at 24.7 million in 2014. The problem is this number is still down from 2010 (26 million) and 17% off the peak in 2005 of 30 million (Golf Digest). Less players means less rounds of golf and less rounds of golf translates to less revenue for courses.
Declining revenue meets increasing costs in several areas, specifically water, chemicals and labor. The cost of municipally supplied water has increased an average of 25% over the past five years alone. While many courses are turning to effluent (reclaimed) water sources where available, this presents another set of cost concerns for the irrigation systems that must be designed specifically to be used with this harsher water. Reclaimed water often requires filtering or special chemicals to remove suspended solids or to address pH or salt-related issues that can affect turfgrass (Superintendent Magazine). Fungicide spending is also on the rise, ranking as the number one budget line item for superintendents.
When it comes to labor, the “employer mandate” section of the Obamacare health reform act, which sets the definition of a “full-time” employee at just 30 hours, and therefore requires a business to also supply these employees with health insurance, has driven costs up as well.
While 45% of superintendents reported a 1-9% increase in operating budget between 2014 and 2015, this still leaves 51% reporting “no change” or even a decreased budget (Golf Course Industry Magazine).
Another challenge facing golf courses is the increased restrictions, namely on water supply. In California, specifically, the State Water Resources Control Board requires golf courses and other commercial properties that rely on an “independent source of water supply” to limit irrigation to two days a week or achieve a 25% reduction in water use (The Desert Sun). According to the GCSAA, fertilizer restrictions are catching on across the country as well, and in places like New York and San Francisco the use of chemical pesticides has become severely restricted, and in some cases banned completely in the past decade.
Of course it is not all doom and gloom, it simply means behaviors and mentalities need to change, and most operators need to manage more with less. The good news is leading golf course managers are now using actionable analytics to adjust to this challenging environment since no one’s career is secure enough to arbitrarily shut off water and chemicals applications and hope for the best!
Business intelligence platforms are having an enormous impact in the agricultural markets where key operating inputs are very similar (water, soil, fertilizers, pesticides, etc), and with Mother Nature playing a significant role in the overall outcome. Although the challenges are serious, it is a positive sign to see strong leaders change behaviors to address this era of smart golf course management.