Is it Time to Rethink Maintenance Budgets?

For this month’s article I’m going to step outside the clubhouse and tackle the green grass issue of course maintenance. In May’s article, I briefly touched on the concept that golf course maintenance is an integral part of overall golfer satisfaction and should be considered part of customer service. I suggested that maintenance “staff training” is as critical to the success or failure of your golf course as the training of your counter staff. I also showed you our Consumer Survey results that seem to confirm the importance of golf course conditions.

Almost ten years ago, I wrote an article on golf course maintenance and have had it posted on my website for quite awhile. In January 2011, I received a call from the Golf Course Superintendents Association of America asking for my permission to use the article as a handout at the Golf Industry Show in February. I was surprised that such an old article would be of interest, but when I went back and re-read it, I smiled when I saw how much of the content still applies, including a reference to a cold and wet spring of ten years ago and increasing fuel prices – both of which were huge factors as we start 2011.

In talking with my friends at Fore! Reservations, we decided to give you an updated version of that article. Don’t let the starting point of almost 12 years ago fool you, or the reference to a study I did 20 years ago either – there is still a huge variation in maintenance costs and many good examples of how smart golf course operators are making use of good management practices to deliver excellent playing conditions on limited budgets.

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In the December 1999 issue of Crittenden Golf Inc, a panel discussion brought out some interesting points regarding golf course maintenance. In light of current economic conditions and a later than usual spring in the Midwest and Northeast, the need to control expenses may finally get its due among golf course owners, managers and superintendents.

My experience has shown that 40% - 60% of the overall expenses of operating a typical daily fee or semi-private golf facility relate to turf maintenance. While the 1999 article in Crittenden stimulated some indignant responses to charges of “empire building” in the maintenance area, Dr. Michael Hurdzan posed a very cogent question, “If you get a superintendent for $50,000 and he’s taking $800,000 to maintain it (the golf course), aren’t you better off paying $100,000 for a superintendent that can do it for $400,000?” The answer is very simple math – about $350,000 better off.

Another good question to raise would be, is it really possible to have that large of a variation in maintenance costs? This leads to a multitude of other questions, but there can be a tremendous difference in maintenance costs with no discernable difference in visual imagery and playability for the average golfer. I would also add that there are two fundamental “truths” that should be considered to put this issue into proper context:

1. A typical 18 hole golf course is generally comprised of relatively similar areas: 3 acres of greens, 4 acres of tees, 35 - 40 acres of fairway and 50 - 60 acres of rough. I know this is a generalization and there are variations, but not enough to warrant the big differences in maintenance costs.
2. A relatively similar equipment fleet is being used to perform most maintenance tasks. Yes, I know there are some variations along with age and condition issues, but again not enough discrepancy to account for the cost differences.

In 1991, Edgehill studied the maintenance expenses of more than 15 Private Clubs in a major metropolitan area. The variation in maintenance costs were over 35%. While this may not be the 50% variation outlined by Dr. Hurdzan, it was interesting to note that two courses widely acclaimed (nationally and locally) for their course conditions were in the lowest quartile of maintenance expenses, with costs that were 25% below the highest budget.

When I talked to the CEO of one of our leading commercial turf distributors about the superintendents at the two well conditioned courses mentioned above, he attributed their success in producing superior conditions to:

A. Solid basic and simple agronomic principles
B. Careful attention to staff selection and training
C. Time and task management

As I followed maintenance expenses in the 1990’s, the trend in maintenance costs generally increased well in excess of the increases in the Consumer Price Index. The trend was to see green fees increase at a similar rate. While this was good for revenues in the short term, it also obscured the need to control expenses for many golf course operators. There are also some other factors:

1. Higher labor costs
2. Higher equipment prices
3. More man/hours used

Another item to note is that there will be further pressures on expenses due to increases in oil prices. The increase in oil prices will not only increase fuel costs that are normally only 3% - 5% of the typical budget, but will also increase the cost of most fertilizers and chemicals that are significantly larger budget items.

Then there is the question of competition and the number of golf courses that have been added in the last two decades. In the United States, we have added 35% to golf course capacity since 1990. While it is true that basic demographics relating to the aging of the “baby boom” generation will support some additional golf capacity, it will not absorb all the capacity that has been built. This has created a very competitive environment for golf course operators over the last decade and maintenance is definitely a factor when golfers do their competitive analysis of which courses they choose to play.

With stagnant rounds and declining revenues over the last three years, the necessity to decrease expenses is a situation facing virtually every golf course in the US. Although my data sources suggest that maintenance budgets have not been cut as much as golf operations and other general and administrative areas, there have been maintenance expense reductions at most of the courses I have worked with over the past few years.

Since I visit a number of courses every year, I get to see “the good, the bad and the ugly” on a regular basis. I visited one course that was in great condition and another facility four miles away that was in “average” condition; the course in “average” condition was spending $300,000 more in maintenance. I can’t count how many great layouts I have seen ruined by sloppy maintenance that could have easily been avoided. On the flip side, I have also seen many examples of excellent conditions and attention to detail on relatively modest budgets.

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When I originally wrote this article, I did a search of the USGA Green Section Archives and the recaps of the GCSAA Annual Conventions to see what had been written about maintenance expense management. To find helpful information, a superintendent has to go all the way back to a 1983 article titled Controlling Golf Course Maintenance Costs - An Owner’s View (USGA Green Section, January/February, 1983) or a 1988 article, Required Maintenance Versus Available Labor - Are You Adequately Staffed? (USGA Green Section, July, 1988). As a side note, the 1983 article was written by N.B. Giustina, whose son operates Tokatee Golf Club in Oregon and happens to be a long-time customer of Fore! Reservations. If you only read one more article on golf course maintenance, read Mr. Giustina's.

It’s very clear that superintendents have not gotten a lot of help from industry organizations on intelligent cost control and they aren’t getting much help from equipment manufacturers either. Let’s look at equipment for a minute. A new fairway mower with a 10’ cutting width costs approximately $50,000 today. A mower with the same width cost $20,000 in 1991. This 150% increase in the cost of ownership is way beyond the increase in the CPI over that period. Is this new mower worth the extra money? Its productivity is identical. Do its blades and bed-knives need less maintenance? Even if you ascribe a 7 Year useful life, this new mower is costing about $29/hr vs. $12/hr in 1991. A look at walking greens mowers paints a similar picture. Fortunately, the hourly wages paid to the operator have not increased by the same margin.

I don’t begrudge superintendents for their need for adequate budgets in a lot of cases, but when was the last time a superintendent went to an owner or general manager with the comment - I think I can do as well or better with less.

As Mr. Giustina pointed out in his article, owners and general managers need to make sure they are properly using their equipment and manpower assets wisely. Creating time study data for training as well as setting and measuring employee performance standards should be required of every superintendent. This will also help the superintendent evaluate different equipment options and their relationship to man/hours needed to perform various tasks.

In the end, the golf course that can produce quality playing conditions at the lowest relative cost will have a competitive advantage over courses that simply reduce costs and accept that course conditions are going to suffer. When I visit “the good, the bad and the ugly” and then dig into the budgets using time study methods and equipment evaluation, 90% of the problems we see are related to poor staff training, lack of proper equipment maintenance and poor supervision. I am also usually able to find a good number of “un-accounted” man hours of labor. These problems can all be fixed without adding costs and very often can lead to reducing expenses and improving course conditions at the same time.

Conversely, when I see good course maintenance and budgets that are under control, I usually find a superintendent that is basically following the steps laid out in Mr. Giustina’s approach that recognizes the importance of delivering quality conditions as an integral part of customer service. I encourage all of you to share this article with your superintendant and take a closer look at your maintenance practices to determine if you are truly operating this component of your business to your best ability. I’ll return back inside the clubhouse to further examine Internet reservations, email marketing and marketing partnerships in the next few articles this fall.

Stuart Lindsay

"Lindsay, a lifelong Milwaukeean, has made a career of a seemingly
thankless task: Helping businesses and individuals understand the
inner workings of the golf industry. He began delving into golf course
economics while with Deere & Co., and continued after founding
Edgehill Golf Advisors in 1989. The work combines his naturally
analytical mind with his passion for golf." - Golfweek, April 2008

This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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Edgehill Golf Advisors
10134 N. Port Washington Road
Mequon, WI 53092
Telephone: 262.241.7088
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