All golf courses, and particularly those that see large numbers of rounds played each year, will have to cope with some degree of deterioration over time. Areas that tend to show signs of wear and tear first are: those that are receive the most foot traffic, like tees, greens, and bunkers; the mechanics of the course, such as irrigation and drainage systems, and; like any public building, the clubhouse.
All of the elements of a golf course have different lifecycles, ranging from one-to-three years for mulch to up to 30 years for greens (for more details, download the ASGCA Life Cycle Chart at www.ASGCA.org/free-publications).
At a presentation at the Golf Industry Show (GIS) in Texas, US, in February 2015, Jeffrey Brauer, ASGCA Past President and owner of golf design firm Golfscapes, highlighted that those courses that were built during the boom of the 1980s, or earlier, are now generally beyond the point at which their elements can reasonably be expected to last.
But would the necessary renovation work deliver a return on investment? Referencing an independent 2014 report by the National Golf Foundation (NGF) and golf course consultants Sirius Golf Advisors, Brauer explained to GIS attendees that renovation work does appear to deliver positive financial results.
The report covered financial results for many of the 19 public golf courses that have been renovated in the Dallas-Fort Worth (D-FW) area in Texas since 2000, and Brauer also added details for a renovation handled by his firm. Eight of the projects could be considered ‘major’ renovations, where an average of almost $5 million had been invested to fully renovate and rebrand their facilities. For these courses, annual revenues were boosted from an average of $939,000 per year before renovation to $1,600,125 in the first year of reopening, then $1,485,709 the following year.
Brauer’s presentation also summarised financial data for four courses where ‘minor’ work had been done—an average of $445,000 for projects such as turf, green and tee improvements. At these courses, average annual revenue increased from $1,168,000 before renovation to $1,517,500 in the first year of reopening and $1,378,250 by the second year.
Figures indicated that return on investment (ROI) for both major and minor renovations was highest the first year after the courses reopened, due to the initial ‘buzz’ surrounding the new developments. The results dipped into a more sustainable pattern in the second year, but the ROI figures remained overwhelmingly positive.
“The fact that the nine extensively renovated courses and the four with minor enhancements improved average revenues by 63.7% and 23.3% respectively after two years shows that well planned renovations can certainly boost the finances of golf courses,” said Brauer. “While the survey only covered the first two years after the reopening, NGF confirmed that even the courses that were renovated ten years ago have generally maintained their new revenue levels.”
So this evidence suggests that renovating a municipal golf course brings financial success. But choosing the right time to renovate a course is rarely easy, not least because of the disruption caused while the work is being done.
According to Brauer, owners should look for tell-tale signs: clubs may be regularly losing members, they may have been forced to lower prices to attract more players, or—nowadays—they notice poor reviews and ratings on consumer websites. “A noticeable drop in the number of visitors suggests that the course no longer meets their expectations, whether this is due to worn out greens, damaged bunkers, or simply the fact that a nearby course offers newer and more exciting holes,” he explained. “Owners should also consider renovating their courses if their staff are spending an increased amount of time fixing problems, rather than carrying out simple everyday maintenance tasks.”
To ensure revenue growth, owners need to identify the enhancements that will help to boost the appeal of the course and create real value for their customers, while lowering future maintenance and operational costs.
“Owners should invest in the facilities that customers will want to pay for, rather than overspending on superficial or less important upgrades,” explained Brauer. “If members have complained about the condition of the greens and the bunkers, these areas should be prioritized during the renovation.
The NGF and Sirius Golf Advisors report strongly suggests that facilities that have undergone a total makeover to improve their image also need to rename, reposition and rebrand the facility in the market place. “Rebranding makes it more viable to raise prices,” says Brauer. “Golfers expect to pay more for a better product, and if achieved it accelerates the return on investment.”
Re-opening a newly renovated course also provides the ideal opportunity for owners to overhaul and improve all aspects of the business. Brauer explains: “A new design and improved conditions will certainly attract play, but owners should also update and improve operational processes, find new ways to manage maintenance costs, and restructure or retrain teams to enhance customer service. Quickly falling back into old habits can negate other improvements.”
“Renaming after minor or infrastructure renovations is less common, but in any renovation, it is essential that owners market and advertise when the course reopens to showcase new improvements in conditions and service.”
“While the bigger D-FW renovation projects drove a greater rise in total revenue, the NGF and Sirius Golf Advisors’ report showed the four courses that underwent minor renovations also successfully increased revenues, by an average of $210,250. And while it could be tempting to completely redesign the course, it could be equally lucrative to simply replace a drainage system or the turf on the greens. Sometimes, it pays to fix just what needs fixing on an otherwise solid course.”
Brauer has found that you must do nearly everything right and spend reasonably to achieve best results. He notes the report showed that projects spending the least on clubhouse improvements (under $200,000) provided the highest ROI.” It also means minimizing lost revenues by properly timing your renovation to meet grassing dates. Or paying for more sod to shorten grow-in time. “On average, the major D-FW renovations took seven months to complete, giving your customers a chance to play different courses in the interim, so the owners need to work hard to ensure they return,” said Brauer.
It starts with establishing a clear business plan outlining financial possibilities and targets for repairing, replacing and redesign that will help to generate a positive ROI and increase revenue. “Every proposed renovation needs its own specific economic analysis and, since 2006, most golf course renovations and master plans have been preceded by an overall business plan,” said Brauer. But the experience and expertise of a golf course architect is critical to help arrive at the right decision.
According to Brauer, the consistency of increased positive rounds, revenues and ROI results in the NGF and Sirius Golf Advisors report are vrey encouraging for anyone considering a major renovation, particularly in large and vibrant areas where the public golf market is similar to that of DF-W. “Course owners will agree that while renovations can be challenging, they are often a less risky strategy than doing nothing at all.”
For more information on how an ASGCA member can assist in your renovation project, download ‘The Golf Course Remodeling Process: Questions & Answers’ from www.asgca.org/free-publications