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By Scott Kauffman
A 10-15-year cycle could result in nearly $10 billion worth of renovation work within the golf industry.
Commercial builder and avid golfer David Tavlin never dreamed of owning a golf course. When a local Lakeland, Florida, residential course began teetering on the brink of financial collapse a couple years ago, however, Tavlin considered buying the Sandpiper facility because he already owned a handful of rental homes at the community.
The fact Sandpiper represented 100 prime acres in the middle of the growing corridor between Orlando and Tampa was another factor in pursuing the property. So Tavlin, 57, acquired the struggling course last year for a little more than $1 million and quickly began planning for the development of 47 new golf course homes.
“I bought it three days before Hurricane Irma,” says Tavlin, president of Lakeland-based Crossroads Construction Co. “What great timing that was. The eye of the hurricane came right over Lakeland.”
Last year’s hurricane timing notwithstanding, the biggest challenge for Tavlin was restoring a deteriorating facility that barely had a functioning irrigation system, was overrun with weeds and got further damaged by the hurricane that also plowed through Puerto Rico. More than a year later, Tavlin figures his final course-related tab will be “close to $3 million” after he completely renovates, redesigns and modernizes the entire property by summer 2020 with 200,000 square-feet of new sod, a new lighted driving range and a shiny new Rain Bird irrigation system among other big-ticket items.
While the Sandpiper project might not represent the typical fixer-upper in Tavlin’s real estate portfolio, this major course makeover is emblematic of a looming course infrastructure crisis facing thousands of course owners across America. Indeed, a decade after the Great Recession, hundreds of public and private course owners and operators now flush with capital are pouring hundreds of millions into course improvements and irrigation infrastructure to shore up aging facilities and position properties for greater long-term sustainability.
Based on feedback from many course owners, operators and irrigation experts, the industry might be approaching the cusp of what could be the greatest period of golf course capital improvement projects ever — a 10-15-year cycle that could result in nearly $10 billion worth of complete bunker and greens renovation work followed by irrigation component technology upgrades to full-blown brand-new irrigation systems.
“We’re really at the front end of a wave of irrigation projects,” says Jeff Spangler, Troon senior vice president of science and agronomy, whose Scottsdale, Arizona-based company counts 23 major course, bunker and/or irrigation renovations since 2016. “If you look at the life expectancy features of a golf course, bunkers got the shortest unfortunately. But that’s changing now with new liner systems.
“So, we’re in that wave where every one of those 500 courses we were building every year for a while, every one of those has had a bunker renovation. Then we’re probably going to go into a cycle of greens resurfacing. And as soon as that’s done, you’re starting to get into the ground and putting in new irrigation systems.”
So how big can this next wave of course-related capital improvements actually get? Consider in 1994, the National Golf Foundation reported an all-time high 190.5 daily-fee golf courses opened in America with another 769 courses under construction. At the time, it was the greatest amount of new golf course development activity in the 20-year history of NGF research.
Nearly 25 years later, those 1,000 courses alone are starting to show serious middle-age wear and tear, much like Tavlin’s Sandpiper facility that opened in 1985.
“Our irrigation system is completely on its last leg,” says Tavlin, whose front nine was closed this summer while contractors installed the new Rain Bird system, dug a new well and put in a new well pump. “Keep in mind our infrastructure reinvestment is being made possible via the homes I plan to construct on the course. I just could not imagine how most of the public courses in this area are being able to complete such a reinvestment without sources of income outside normal green fees. Without me being able to develop these houses it certainly wouldn’t have been something economically feasible.
“I’m not looking to make money off (the course operations). I definitely want to make the golf course look better and we recently completed renovations in the clubhouse bar and pro shop. Now the bathroom, kitchen and restaurant are being done. … So everybody’s excited about these changes. We couldn’t have stuffed more people on the golf course from January to April. Of course, we had nine holes closed and we’re still using some of the old pricing structure. … But I don’t know if the course is going to be a viable entity or not.”
And that is precisely the predicament many course owners face these days: Does one renovate a property and invest in the future, hoping for a future payback, or just keep patchworking the course on a day-to-day, month-to-month basis, trying to stay afloat in what can be a challenging business for many golf markets.
Longtime irrigation consultant Dave Ragan of Palm Beach Gardens, Florida, says he often gets asked the question, when will I need to replace my system?
“I tell them when you can’t take the pain anymore,” says Ragan, whose namesake Ragan Technical Solutions company consulted on Tavlin’s Sandpiper irrigation upgrade. “Unfortunately, many courses have to live with it because they don’t have a million and a half dollars to replace it like Sandpiper. … I’m very busy right now. Never been busier in 30 years.”
“Say you have some bubbling in the fairway on No. 2 (hole). By the time you go out there and invest in new pipe and fix it, it might cost you $1,000. You do that two times a month and that’s close to $23,000 a year. … For a lot of course superintendents, it’s the cost of doing business.”
According to the National Golf Foundation, in the 10-year span between 2006-2016, during a period when the industry starting annually closing more courses than opening new layouts, nearly 1,000 facilities made the former business decision and conducted multi-million-dollar course renovations representing a conservative $3 billion in all.
It’s a conservative estimate considering NGF defines a major renovation as one that involves a minimum nine holes being closed for a minimum of three months. Throw in the countless number of minor rehabilitation projects, where courses are just revamping a few greens or bunkers, or upgrading software irrigation control systems and/or other components, and that $3 billion figure could easily grow by another $250-$500 million.
What’s often forgotten is there were actually 4,000-plus new golf facilities that opened during golf’s development boom from 1986 through 2005. So, if some 1,000 facilities underwent an estimated $3-plus billion worth of restorative work, the coming decade portends to be quite prosperous for architects, irrigation consultants and contractors and irrigation equipment suppliers like Toro Company, Rain Bird Corp. and Hunter.
“In 20 years, you have stuff starting to cause some irrigation irritation,” says Ragan. “In 25-30 years, it’s daily.”
Perhaps that’s one reason Toro’s Professional Segment had another record year in 2017, reporting $1.812 billion in sales for the fiscal period ending Oct. 31, 2017, up 6.2 percent from $1.705 billion in 2016 that was fueled by “increased golf irrigation projects,” the company stated. Toro’s Professional Segment drove 72 percent of the company’s overall record sales in 2017, and the golf division represented 24 percent or $433 million of that growth.
Toro executive Steve Snow agrees with Spangler that the wave of full-blown irrigation renovation projects are still a few years way, but the industry is certainly busier than ever phasing in upgrades to various components – everything from pump stations this year to control systems the following year and sprinklers next, he said. The only thing getting in the way of more work, according to Snow: labor. Quality contractors to be specific.
“Renovation work is as good as it’s been,” adds Snow, Toro’s North American director of sales and service for golf irrigation. “Since 2016, it’s been a steady progression. Not double digits (growth). There’s a capacity to do more but we’re bumping up against labor. You couldn’t upgrade 400 this year if we wanted to.
“This is a complicated task. And if you want that particular contractor or that one guy, you better get on a schedule. … There’s maybe 10-20 contract companies that are in demand, and when you’re spending $1.5 to $3 million, you don’t want just anybody digging holes and upsetting your operations.”
Many have already started these types of capital-intensive endeavors. Kelly Greens, an active-adult golf course community in Fort Myers, Florida, that opened 30 years ago, recently completed a $3.9 million course renovation that featured a new Rain Bird irrigation system and pump station, 44 acres of newly aerated lakes, redesigned greens complexes and tee boxes and the replanting of 800 trees.
Basically, “every square inch of the course was moved,” says superintendent Mark Thomas, and the newly minted course has been met with rave reviews. Moreover, Thomas reports the investment behind a newer more efficient irrigation system is already paying off with significant savings in water usage since the property reopened to members more than a year ago.
“Golf’s solid participation rate and growing latent demand, as well as a positive national economy are driving golf course owners and operators to enhance their offerings,” says Billy Casper vice president of agronomy Bryan Bielecki, whose Reston, Virginia-based company completed 20 course renovations in the past two years. “Furthermore, the time is now to upgrade the countless courses built during the ‘Tiger Effect’ days, so they’re up to modern standards. Renovations in the form of irrigation, bunker work, putting greens and everything tee to green are gaining steam.”
Stuart Hackwell, Rain Bird’s national sales manager for the golf division, is getting braced for robust business indeed.
“There are definitely a growing number of courses that are talking about updating the system to 21st century standards,” Hackwell says. “This includes replacing aging infrastructure (pipe and wire), locating sprinklers in the correct places on each hole, taking advantage of improved sprinkler performance, upgrading old control systems and replacing aged/inefficient pump stations. We believe this trend will continue to increase as clubs try to justify the financial investment of a seven-figure project.
“We have added staff in the U.S. market and key other places around the world and expect to see continued success in these markets with increased renovations in future. All in all, the future is really bright for Rain Bird and the golf irrigation industry.”
Scott Kauffman is a golf business writer and the managing director of Aloha Media Group.