From general managers to superintendents, hard decisions are having to be made due to rising prices across the board. How could that affect the bottom line — and you?
In the face of continuing demand for golf amidst the pandemic, the price for keeping up keeps rising — that is, if you can get the supplies at all these days. Between fluky weather, supply chain back-ups, a labor shortage and growing demand for certain basic products, the cost of doing business is going up and the delays in receiving supplies are getting longer. Budgets have to adjust accordingly. Facility managers and course superintendents have to be more flexible than ever.
“Oh my goodness, it’s crazy right now,” said irrigation consultant Paul Granger, president of Aqua Agronomic Solutions in Lebanon, N.J. He referenced one installation job that had an agreed-upon price of $1.7 million in January 2020 that is now priced at $2.1 million. “Any plastic pipe has gone up 30 percent,” he said. “Saddles and fittings are up 45 percent. It takes 16 weeks to get pipe — if you can get it at all.”
With the golf course industry seeing a spate of renovations and restorations under way and course architects busier than in the last two decades with modest-sized projects (not new courses), planning and budgeting need to anticipate cost hikes and delivery delays like never before. “Demand is at a peak,” Granger said. “It’s the worst I have seen in my entire career.”
Course architect Bill Bergin, ASGCA, has eight renovation projects in construction across the Mid-South and Midwest, all of them bid out last year under more or less predictable terms, with the winning bid a little less than he had planned. Not so for the four contracts he’s about to bid now for construction next year. “I’ve never been as uneasy; I just don’t know for certain what to expect. I’m warning my clients to expect the numbers to come in at 10 to 15 percent higher than I had planned.”
Bergin attributes the higher-than-anticipated costs to a variety of factors.
“Irrigation is up 15 percent,” he said. “General labor used to be $10 to $12 per hour and now it’s $13 to $15 per hour. Drain pipe. Grass seed. Trucking costs.”
Rising seed costs effect everyone, even those who, like superintendent Jeff Johnson at Minikahda Club in Minneapolis, are not doing major regrassing. His normal budget of $4,000 a year for seed is likely to take a 30 percent hike. The price boost gets more expensive for places like Desert Forest Golf Club in Carefree, Ariz., where director of agronomy Todd Storm will see a hike in his seed budget from $75,000 to $125,000.
Why the jump in seed prices? As explained by Leah Brilman, director of product management and technical services at DLF Pickseed in Corvallis, Ore., it has to do with a combination of reduced seed yields, increased demand and skyrocketing transportation costs. “Drought in the Pacific Northwest followed by extreme heat did a lot of damage to the seed crop,” Brilman said.
This was compounded by significant drought in Minnesota and Manitoba, where seed crops are also cultivated. The result was what Brilman calls “a bare cupboard.” That led to wholesale price hikes of 50 percent and more. Compounding the crop shortages was a dramatic hike in transportation costs. A standard 45,000-pound truckload of seed from Oregon to the East that might have run $4,000 a year ago now costs $12,000.
It’s not as if reduced crops one year will result in increased crops the next. Growers can’t just ramp up production in new or expanded fields on the basis of market fluctuation. The likelihood is the industry will see reduced supplies and increased prices for the foreseeable future.
For courses undergoing major renovation projects, the costs will fall variously on the club or the construction firm, depending on the terms of the contract and which party is primarily responsible for purchasing materials. Across the country, bunker sand availability has become an issue, with supplies in the Mid-Atlantic and Northeast becoming difficult due to industry consolidation and transportation costs in some cases exceeding the cost of the sand itself.
At the Eau Claire (Wis.) Golf and Country Club, Duininck Golf is completing a $1.1 million renovation of the nearly century-old golf course, following a master plan by architect Kevin Norby, ASGCA, that includes 40 bunkers, a new green, 43 tee boxes and cart paths. In an effort to reduce costs, Eau Claire superintendent Nick Peinovich has taken to switching the grassing plan, opting for turf type tall fescue on bunkers instead of Kentucky bluegrass.
What really worries him, though, is that with his hands full with the renovation, he has not had time yet to get to his early orders for 2022. The concern is not misplaced, given the likely price hikes on everything from fertilizer and fungicides to top-dressing sand.
Hardware, too, is seeing big price hikes, which is what worries superintendent Matt Ayer at the Country Club of Mobile in Alabama. The club is up for an equipment lease renewal that could see as much as a 12 to 20 percent increase in the costs of cutting units, utility vehicles, trailers and skid steers.
At clubs undergoing renovations, it is not simply the costs of construction materials that concern managers. Case in point, Red Run Country Club in the Detroit suburb of Royal Oak, Mich., where general manager Joe Marini is keeping track of a bunker renovation plan by designer Bruce Hepner. It was bad enough when an outside contractor quoted the cost of sod installation as going from 27 cents up to 42 cents per square foot.
At the same time, Marini’s clubhouse operation is facing price hikes of 30 to 40 percent in meat, 20 to 30 percent in seafood, and 20 percent in disposables like napkins and straws. Supplies of hard goods like glasses and china are at a virtual standstill. And in the clearest sign of the pandemic times, a case of Nitrile gloves that used to cost $47 now runs $220.
Welcome to the new world order. It’s an order on backlog, and at a higher price than ever. The continuation of the current golf boom will depend upon whether the public is willing to foot the steeper bill.