The Depression, World War II & ____ ?

[Patrick_Mucci]

The other day I was reviewing a number of green committee budgets for 2005.  I also reviewed their 5 year history.

Reviewing these budgets alarmed me for several reasons.

First, the green budget tends to be the largest of all of the club budgets, the most visible and the most prone to trimming when clubs seek to tighten their belt.

Secondly, if costs continue to escalate, will it change how the course is maintained ?

And will it change WHAT is maintained ?

Will roughs be expanded at the expense of fairways,
will greens shrink, will bunkers go untended or worse yet, be eradicated ?

What features are most like to suffer if the funds aren't available ?

And, what can be done in advance to try to prevent or ameliorate maintainance restrictions caused by budgetary pressures ?

[Mike Benham]

Patrick -

In reviewing these budgets,

What was the increase/decrease (average) over the prior year?

How does the increase/decrease compare to the overall clubs annual operating budget?

Are these clubs anticipating an increase or decrease in club membership?  And club revenues?

For the green committee budgets, was the increase/decrease in the area of labor, project work, maintenance or equipment expenditures?

Did these budgets have line items to build up reserves for future year expenditures (renovation, equipment, etc.)?

[Donnie Beck]

Less water = less disease pressure = less chemical budget = less man power = lower overall budget

[Patrick_Mucci]

Mike Benham,

What was the increase/decrease (average) over the prior year?

The average is distorted by one club with a very large increase in the 25 % range, others are in the 10-20 % range[/color]

How does the increase/decrease compare to the overall clubs annual operating budget?

Each club is unique, some had real hits to their taxes, others to their insurance costs, some had major capital budget expenditures for special projects as well.[/color]

Are these clubs anticipating an increase or decrease in club membership?  And club revenues?

Assumptions are made that memberships will remain stable.
That the exiting members will be replaced by the new members.  Club revenues can be a function of the competitive market for food and beverage, but generally, increased dues are intended to cover increased operating costs.[/color]

For the green committee budgets, was the increase/decrease in the area of labor, project work, maintenance or equipment expenditures?

Equipment falls under the capital budget not the operating budget and my concerns are focused on the operating budget unless a club has been using smoke and mirrors to hide an inadequate capital budget.  Most special projects have a capital budget.  Utilizing in-house labor and resources to undertake a special project can be hazardous to the superintendent's job security.  Conditioning the golf course should be his primary focus, absent distractions.  
I tend to favor outside contractors supervised by the superintendent rather then diverting his labor, resources and funds from his budget. [/color]

Did these budgets have line items to build up reserves for future year expenditures (renovation, equipment, etc.)?

I've never seen a club establish reserves for operating expenses.  That doesn't mean it can't happen, but, I've never seen it.  Most reserves that I've seen are for capital budgets/ special projects.[/color]

Donnie Beck,

I'm one of the few who would like to see the cost of water rise.

[BCrosby]

Pat -

Even the lower rates of increase you cite are huge. 10% a year increases add up quickly. 25% a year is breath-taking.

RTJ and Dick Wilson advertised their renovation services in the 50's and 60's as resulting in, among other things, cheaper to maintain courses. From what I've seen, that usually meant more symetrical greens, less contouring, shallower bunkers and often more trees.

Over time, I would guess that some or all of those things begin to happen to courses that can't keep up with maintenance expenses.

Bob

[Tom_Doak]

Before we get a lot more speculation on this topic, I'd like to ask the superintendents who contribute, how much is your budget going up for next year, and why?  [Certainly fuel costs are going to be higher, but that's not a signficant percentage of the total, or is it?]

If it's going up more than 10%, a follow-up question:  how many more years do you think your club can afford to swallow such increases?

[Donnie Beck]

Tom,

Our budget has remained relatively flat for the last 5 years. At most clubs labor makes up about 50-60% of the budget. Fuel cost are about 2% of the total budget.

[JohnV]

A few numbers from our survey of clubs, we have four categories of clubs based on initiation prices and location.  Type A clubs are the high end, Type B are mid-priced around Pittsburgh, Type C are the lower priced clubs and Type D are those that are out of the greater Pittsburgh area

Green Operations Budget for Maintenance 5 year % change:
A +19.8%
B +25.8%
C +2.3%
D -3.4%

Green Budget was 28% of club's overall budget in 1999 and 20% in 2004.

Labor Costs were 52% of the green budget in 1999 and 54% in 2004.

I looked a survey done by another association and found that green budgets increased 3.3% from 2003 to 2004.

[BCrosby]

John -

Are those percentages aggregate over five years or averages for each year over five years?

[JohnV]

They are the aggregate change from 1999 to 2004.  Also, I was asleep early and calculated the percentages the wrong way round.  I've corrected them.

The raw numbers (in $1000)
Type A 1999 - 860, 2004 - 1,030
Type B 1999 - 643, 2004 - 809
Type C 1999 - 498, 2004 - 487
Type D 1999 - 388, 2004 -375

[Patrick_Mucci]

Tom Doak,

Analyzing budgets can be difficult, comparing them can be impossible.

It's not uncommon to see a large increase in a club's budget when that club has been overly frugal with their previous budgets, and the new administration is merely playing catch-up.

Often times reallocating expenses can cause budgets to go up.  If for example, the clubhouse, tennis and pool maintainance costs/budget is merely merged into the green budget, it will reflect a significant "bump".

My concern is that some areas can't be controlled, such as real estate taxes, insurance, and Labor associated costs.

If budgets continue to rise at double digit increments, sooner or later the golf course has to suffer, unless the club has deep pockets.

My question was framed in the context of how budget driven directives would impact the maintainance and architecture of/on a given golf course.

Will we see a cycle of deprevation where the golf course's architecture is compromised ?

[TEPaul]

"The other day I was reviewing a number of green committee budgets for 2005.  I also reviewed their 5 year history."

Patrick:

What single golf club in their right mind would let you review their green committee budget, much less five of them? I heard these are troubled times in golf but I didn't know it'd gotten that bad!

[Mike Benham]

What was the increase/decrease (average) over the prior year?

The average is distorted by one club with a very large increase in the 25 % range, others are in the 10-20 % range[/color]

The 10-20% is actually higher than I thought it might be ... [/i]

How does the increase/decrease compare to the overall clubs annual operating budget?

Each club is unique, some had real hits to their taxes, others to their insurance costs, some had major capital budget expenditures for special projects as well.[/color]

Are these clubs anticipating an increase or decrease in club membership?  And club revenues?

Assumptions are made that memberships will remain stable.
That the exiting members will be replaced by the new members.  Club revenues can be a function of the competitive market for food and beverage, but generally, increased dues are intended to cover increased operating costs.[/color]

 I forgot to ask if the monthly dues paid by the members was staying flat or also increasing?[/i]

For the green committee budgets, was the increase/decrease in the area of labor, project work, maintenance or equipment expenditures?

Equipment falls under the capital budget not the operating budget and my concerns are focused on the operating budget unless a club has been using smoke and mirrors to hide an inadequate capital budget.  Most special projects have a capital budget.  Utilizing in-house labor and resources to undertake a special project can be hazardous to the superintendent's job security.  Conditioning the golf course should be his primary focus, absent distractions.  
I tend to favor outside contractors supervised by the superintendent rather then diverting his labor, resources and funds from his budget. [/color]

True, the equipment and special projects may fall on the capital side of the balance sheet however these expenditures require cash (or financing) and clubs are essentially a cash flow business.  Part of any budget process should also include cash flow projections, if a club doesn't have the cash to pay the bills, it doesn't matter what they have budgeted to spend in the upcoming months.

I agree that the operating budget should focus on maintenance and conditioning.[/i]

Did these budgets have line items to build up reserves for future year expenditures (renovation, equipment, etc.)?

I've never seen a club establish reserves for operating expenses.  That doesn't mean it can't happen, but, I've never seen it.  Most reserves that I've seen are for capital budgets/ special projects.[/color]

Again, this question was more directed at the cash flow side of running a club.[/i]

Obviously, if member dues or revenue sources don't increase as costs increase, something will need to be cut from the budget unless the prior year actuals produced a surplus.

An argument (with myself mainly) that I have always had with my club is whether or not they properly set member dues and allocate the budget based on the membership of the club (Social vs. Golf vs. Tennis ...).  With over 5,000 members, only 900 or so of those golf members, how do you think the expenditures of member dues should be allocated?

[TEPaul]

" With over 5,000 members, only 900 or so of those golf members, how do you think the expenditures of member dues should be allocated? "

MikeB;

5000 members?? What the hell is your club--a small town?

[Patrick_Mucci]

Mike Benham,

The answer you seek would extend beyond financial statements and budgets.  Sometimes cultural and historical issues take precedent over equitable distribution of dues, bonds, assessments, etc., etc..

The answer you seek would take an incredible amount of  study.  5,000 members is huge.  Each $ 1,000 in dues or assessment equals $ 5,000,000 in additional revenue.
What is the initiation fee and the Bond ?

Like TEPaul, I'm curious, what golf club has 5,000 members.

TEPaul,

Charlie Lighthall and some other members recently asked me to review the budget at GMCC.

Normally, I wouldn't consider such a request, but, the thought of quadrupling your dues and giving your locker to someone else seems quite appealing.  I am presently reconsidering  

I also want to talk to you about the tree nursery's that GMCC began in the late 1930's.

[TEPaul]

"TEPaul,

Normally, I wouldn't consider such a request, but, the thought of.....giving your locker to someone else seems quite appealing.  

Patrick:

You will see when you get down here that's not possible. GMGC has no lockers, never has had. We're a pretty basic operation but we do have some very fine hooks in our lockerroom!  

[Doug Siebert]

Are the same people who bemoan the ANGC inspired perfection of golf courses, perfect lies in the bunker, perfectly trimmed edges around those bunkers, while loving low maintenance look and F&F playing conditions that result really bemoaning the increases in maintenance budgets?

There's no way to stop it, as long as labor costs remain such a high percentage it'll only get work as the cost of human labor has gone up and up over history and it will continue, regardless of any changes or lack of same to minimum wage laws.  You can already buy robotic mowers for your home at quite a reasonable price -- a friend of mine got one this summer, it works well if a bit haphazard in its mowing pattern.  New construction apparently has wires buried around greens and fairways, just do the same around bunkers, water, trees and other unmaintained areas and once they make them smart enough to return home to the charging station when their batteries run down (the one my friend had just stops when it runs dry) and you only need people for the greens.

[Patrick_Mucci]

Doug,

You can't compare ANGC, its budget and treasury with the average or even the above average golf club.
It's an absurd comparison.

If every club had those TV and tournament related revenues do you think green budgets would be a problem ?

There are other factors that average clubs face.

One of them is when clubs create an abundance of gardens or islands of flowers and shrubs at every tee, green, and open vista.  These tend to be labor intensive and divert funds from the basics.

Will rising labor costs force more clubs to abandon walking mowers, will greens lose their configurations and shrink ?

Will fairways be narrowed ?
Will trees and shrubs grow, unchecked ?
Will a club with numerous bunkers abandon some of them ?
Will greens become slower ?

All of these issues are budget related and could affect the architecture.

[Donnie Beck]

Pat,

I think you would be suprised to see how little it costs to maintain the basics.

Walk mowing 5 scres of greens 3hrs labor X 7 days per week X 5 guys @ $12/hr X 32 week season = $40,320 per year

4 1/2 acres tee/approach 4 hrs labor X 3 days per week X 3 guys @ $12/hr X 32 week season = $13,824 per year

28 acres fairways 6 hrs labor X 3 days X 3 guys @ $12/hr X 32 week season = $20,736

15 acres cut rough 8 hrs labor X 2 days X 2 Guys @ $12/hr X 32 week season = $12,288

Trim work greens/tees/traps 5 hrs labor X 4 days X 4 guys @ $12/hr X 32 week season = $30,720

Total yearly labor for basic maintenance of a club in the northeast $117,888

There is always more that could be done but my point was to show how much the detail works costs. Most labor budgets in the northeast are between $400,000-$600,000 in labor.

[Patrick_Mucci]

Donnie Beck,

Based on your estimate of $ 117,000 per year for the basics, why would clubs spend another $ 900,000 for frills, unless there are some unique, phantom, incentive and profit sharing programs for superintendents that I'm not aware of ?

What detail work costs $ 600,000 per year ?

Operating green budgets in the Metro area are $ 1,000,000 and up ..... and climbing.

TEPaul,

One of the reasons I'm quadrupling your dues is that there will be a locker room.

Have I told you about the capital assessment necessary to build this facility ?

I've come up with a unique assessment program.

New members pay practically nothing, because the assessment is directly tied in to the number of years that you, your family or relatives have been members.

Since I understand that A. J. Drexel Paul was a founding member in 1916, you will be solely responsible for the retroactive membership assessment for the last 88 years that the members were deprived of standard locker facilities.

Please prepare a certified check or money order to cash, and send it, Fed-X, next day, 10:00 a.m. delivery, to my attention.
And, I will send you postcards from the Carribean for the remainder of the winter.

[Donnie Beck]

Pat,

Operating greens budget of $ 1,000,000 are common of which $400,000-$600,000 are labor costs. There are many factors that bring the total cost up. You have the numbers in front of you. Cut fairways everyday, cut tee's/A's every day. Double cut 3-4 times per week and see how quickly those numbers will grow. There are many other jobs I did not account for such as  driving range, rolling, trap maintenance, divot repairs, hand watering, club house trim exc. I think you will see how much it costs to keep a course in top shape by todays standards rathering than mainaining what is acceptable at many public courses. I can assure you that many supts are using every penny of that $1,000,000 on the golf course.