Every fall, golf courses are faced with determining their budget for the upcoming season. Typically, the finance committee will hold a meeting regarding cost-per-hole statistics provided by auditors or local golf associations. However, cost-per-hole is not a good metric to use. A course’s cost-per-hole will vary on factors such as intrusive trees, grass varieties, drainage characteristics, size of practice facilities, labor availability, number of rounds, cart usage, etc. You might find a better, more accurate result if more variables are considered. Salaries, chemicals, and topdressing are included in all operating budgets and can easily make up 20% of the operating budget. Golf course expenditures are complex, here’s how to evaluate them.
Common Expenses to Consider
Water
A small percentage of courses do not pay for water usage, while some purchase water with yearly costs ranging from $8,000 to $223,000, and the majority paying an annual fee of about $4,000 for the right to pull a specified limited amount from wells, ponds or rivers.
Employee benefits
Not all courses include health benefits and other perks to their golf course expenditures, as it may be added to the general and administrative budgets. Therefore, a direct comparison between courses is challenging since each course will greatly vary from what they offer employees. One course may offer extensive benefits, while the next may not offer anything. You will need to determine if it makes sense for your operations to factor in this cost to your expenditure management.
Utilities
Do you include your utilities in the ground budget? Depending on the size of your course, this item can quickly become a huge expense, largely due to the electricity needed to run irrigation pumps.
Leased equipment
If you lease equipment, this should be included in your operating budgets. This could be quite the hefty expense to consider, so some managements purchase the equipment outright to capitalize on it.
As you can imagine, considering these factors along with many others will tell a much different story than simply dividing the operating budget by the number of holes. Mistakes happen, calculations are sometimes off, and issues arise. This is why securing Tee to Green Insurance is crucial to safeguard your business.
Comparing Golf Course Costs
Methods of comparing golf course expenditures with nearby courses are looking at cost per acre, cost per maintained acre, and cost per finely maintained acre.
Let’s explore these variables:
Cost per acre
Divide the total operating expenses by the total of acres in the property.
Cost per maintained acre
Divide the total operating expenses by total maintained acres (rough included, but not native areas).
Cost per finely maintained acre
Divide the total operating expenses by total acres of greens, tees, and fairways.
Final Thoughts
By thinking about the operating budget comparisons based on the most important parts of the golf course (greens, tees, and fairways), we can better learn what club is most efficient. Although, keep in mind that manipulators preventing a fair comparison among nearby courses is inevitable. Ensure that superintendents are properly managing budgets to the level of their competition when it comes to your course expectations. It can also be helpful to assess critical differences in what makes your course grounds unique and budget design differences from your competitors. Considering variables that inaccurately impact your metric and using more refined metrics will offer a more accurate comparison to neighboring courses.
About T2 Green Insurance
T2Green Insurance provides the best customized and comprehensive protection for your club, resort, or golf management business. Our niche expertise and sole focus is insuring this class, while our industry professionals are dedicated to providing exceptional results so that you can feel confident with your coverage. T2Green offers specialized coverage options that are unique in the industry. With our exclusive program unlike anything else on the market, you can feel peace of mind with protection that is tailored to your club’s unique needs. T2Green is driven by innovation and responsiveness in both coverage solutions and customer service. We understand the challenges that are presented in varying locations and seasons to write policies for clubs from coast to coast and everywhere in between so you can operate with confidence, no matter what conditions arise. Reach us at 844-223-9005 with any questions or so we can begin tailoring a package that works best for your club.
