The New Role For Golf Courses Around The World

Article by Herb Rubenstein

Introduction

Golf courses stretch over 200 to 300 acres for 18 holes and can accommodate at most (in temperate climates) a total of 192 golfers a day. (assuming four golfers teeing off every 10 minutes for 8 hours a day). Assuming 250 days of play at that rate (since weather will close the course some days) that means 48,000 rounds of golf can be played on an average golf course. Assuming $50 per round (which includes cart) a total of $2,400,000 in revenue can be generated annually for a golf course. This is a gross revenue of $8,000 per acre per year.

Assuming $1,000,000 in basic maintenance costs for the greens, fairways, bunkers, trees, rough, golf cart paths and including water, electricity, and building maintenance, $400,000 in staffing, financing, and miscellaneous costs, we are down to $1,000,000 net income, or $3,333 per acre per year. This is assuming the course is already paid for and building a golf course today can cost $10,000,000 to $20,000,000 and rebuilding old golf courses can easily cost four or five million dollars.

Even if golf courses could borrow money at 4%, you can see this net income figure of $3,333 per acre quickly turns into basically no return at all per acre for the huge land areas that golf courses require. Recently in Colorado a golf course that cost nearly $20,000,000 to build, including a grand clubhouse, was sold for less than $2,000,000. Many financial disasters like this one have plagued the golf industry over the past decade.

The recent “brush-up” with Donald Trump in Scotland where he demanded that no wind turbines be built offshore within sight of his new golf course development, was no accident. Trump lost and the wind turbines may now go up and golfers will now just have to figure out how to play the game while nearby areas produce energy that the rest of the world needs.

More importantly, we now have vertical wind turbines that kill fewer birds (often golf courses are homes to many bird species) and look less unsightly than large horizontal wind turbines. Secondly, we now have solar panels that can float on water or be placed over parking lots or in areas on and around golf courses that would help the land golf courses use produce energy. In addition, some golf courses sit on geothermal energy and while digging for geothermal energy would cause some disruption to golf course operations, after the geothermal energy is found and begins to be piped where it can be useful, the ongoing disturbance to golf course operations of geothermal energy production would be minimal.

What is At Stake

Virtually every society will need more energy in twenty years than it needs today. The high cost of land and the high opportunity cost for the land for golf courses makes them not very economic in most places to be operated as stand-alone golf courses in the future. Recently, Green Gables County Club in Lakewood, Colorado was sold to a developer for $15,000,000 and when all of the permitting and some infrastructure work was done in support of the new residential community that is being built there now, the property was then sold for $35,000,000. When all of the housing is built over the next decade, the land will probably be worth $100,000,000, a significant multiple of the value of the land as a stand-alone golf course.

Other great land such as the Rock Creek Golf Course in Washington, DC (where the back nine is one of my favorite places in the world) could be similarly worth $100,000,000 to any developer in their right mind. The economic value of this land to the National Park Service is basically zero, but the psychic value to the golfing world and land/park preservationists is “priceless.” There is the basic conflict and this article is about finding a way to resolve this conflict.

So, the future of golf as we know it is in danger. More and more courses are closing. The historic Glen Garden Country Club in Ft. Worth where Ben Hogan and Byron Nelson used to caddy was closed on December 10, 2014 and sold to a distillery. Closing courses will leave the make the remaining courses more crowded leading to five- and six-hour rounds, mounds of frustration, and people just quitting the game. The way to avoid this death spiral and maybe rejuvenate the game of golf is to do what many golfers think is the unthinkable – share their golf courses with energy-producing assets such as wind, solar and geothermal.

This Is Already Happening

The Northport (Mich.) Creek Golf Course which opened as a nine-hole golf course has on-site solar panels producing electricity and is basically “off the grid. “ Several other golf courses in the US use on-site solar panels for much of their electricity.

Golf courses that build substantial wind and solar assets could not only eliminate their electricity costs, but they could also become net energy producers and sell their excess energy to the utility through a power purchase agreement. There could be “third-party” owners of the wind and solar assets (and geothermal) so that investors could receive some of the tax benefits that these investments usually spin-off.

Conclusion

Using our precious land in ways that benefit the most people must be our standard going forward. Stand-alone golf courses no longer make much sense economically or environmentally. They could be producing much-needed energy around the world and make money doing it. Possibly the Brooklyn muni course, Marine Park, could become a leader in this trend. It has wind, sunshine, plus a parking lot and water areas that could be covered with solar panels and these energy assets would produce much-needed energy for the metro New York area.

The time is now to call upon the US Department of Energy, the Department of the Interior, the Environmental Protection Agency, as as well as state and local authorities who control municipal golf courses to fund feasibility studies to see which courses, both public and private, might be excellent candidates to become renewable energy producers. This will be good for golfers by helping protect their most important asset, golf courses, and help society by producing reasonably priced electricity.