Big Business: From Gravel To Greens

816

By Keith Norbury

Greater Victoria’s golf courses contribute millions to the local economy and billions to the Canadian economy.

Never in his life has Tom Plasterer stepped onto a golf course and hit a ball, and, at age 56, he isn’t about to take up the sport. For more than a decade, though, he has been building a course on property his father bought half a century ago near Thetis Lake.

While Plasterer admits the appeal of golf eludes him, he has become a self-taught expert on building a golf course. He and his brother Phil have driven the excavators and bulldozers to shape the fairways and greens of the family’s Highland Pacific Golf course in the southwest corner of Saanich. “It’s sort of been a long haul. We can actually see the light at the end of the tunnel. For a while, we thought we’d never see the end,” says Plasterer.

General manager Doug Hastie says Highland Pacific opened its 44-stall driving range in July 2007, followed by the first nine holes of the course in October 2008. The remaining nine holes are scheduled for play next June, making Highland Pacific the 10th 18-hole course in Greater Victoria, a list that includes two courses on Bear Mountain.

Add to that 10 more nine-hole courses, and there are plenty of places to play golf in the capital region. It’s a big business that runs on millions of dollars. Maintenance costs alone on an 18-hole course can approach $1 million a year. Just the equipment can cost $1 million, which is what Cordova Bay golf course spent, says its general manager, Jay Basi. “The golf course business is very capital- and labour-intensive,” he says.

Just building Bear Mountain’s two courses cost a combined $37 million —and that didn’t include the land.

Cash flow from rounds of golf is counted in the millions as well. Green fees at a typical 18-hole course top $1 million a year, if figures from municipally owned Cedar Hill golf course are any guide. Saanich’s 2008 financial report says the municipality took in $1.25 million last year from rounds of golf. Cedar Hill also pulls in more than $1 million annually in food and beverage sales, a big source of cash for most golf courses.

 “We have a tighter budget for sure,” says Gary Kelly, the general manager of the course, comparing his municipal layout — which is set up to break even — and for-profit privately owned courses. “We are in the recreation business. They are in the golf business. That is what they do and they do it very well.”

The privately owned golf courses, as well as the private members’ golf clubs, were shy about revealing too many financial details, citing confidentiality and the competitive nature of the business. However, discussions with over a dozen golf course insiders found that golf is a big business in Greater Victoria — even in a recession. Most experienced a slowdown in 2009, but others say it’s better than ever. Given that between 30,000 and 50,000 rounds are played annually on a typical local golf course — Cedar Hill alone, one of the busiest courses in Canada, boasts 60,000 rounds — Victorians play some 800,000 rounds a year, including 18-hole and nine-hole courses.

Keeping those golfers happy requires a lot of work. The 18-hole courses employ between 40 and 120 people during the peak season, with Cordova Bay at the high end. Even in the slow season, the course keeps 20 to 30 people working. “Just to put it in perspective, in terms of location and the playability of the golf course, we’re most likely one of the busiest 18-hole golf courses on the Island,” Basi says.

Cordova Bay, owned by the Jawl family and Terry Johnston, is a privately owned public course. Anybody can book a tee time, unlike member-owned Victoria Golf Club, with a one-year waiting list and a $35,000 initiation fee. The distinction between types of courses isn’t clear-cut. Private golf clubs — Victoria, Uplands, Gorge Vale, Royal Colwood — are owned by members, like a co-op or social organization. Access is restricted to members, although there are often reciprocal arrangements to let members play other private courses. Some, like Uplands, allow the public to play for a green fee of $115.

Privately owned courses can be open to the public or impose some restrictions. Bear Mountain, for example, has a private club with restricted use of its Mountain course. However, the Valley course is considered a public facility. Glen Meadows Golf and Country Club in North Saanich is “semi-private” in that it sells memberships, although it waived its sign-up fee ($6,000 for senior members) during a special promotion.

Most public courses offer “memberships,” basically annual passes that also confer such perks as preferred tee times. Victoria Golf Club allows guests of members to play once a month, although that rule is flexible, says general manager Scott Kolb. His club was founded in 1893 and caps membership at 665, which provides consistent revenues in the form of monthly dues, but also poses challenges.

“Financially, we are very stable,” Kolb says. “But you can imagine and do the math. If a golf course is 40 members short, there is $100,000 they’re not getting in dues. If you’re losing that from your budget, it can be a challenge.”

His biggest challenge since taking the GM’s post has been to change the perception that golf is a rich man’s game. “When I arrived here, I was given a goal of transforming this club into a family-oriented golf club,” he says.

To some degree, he has succeeded. In the 1980s, many new members were Ontario retirees in their 60s. During the recent oil boom, about half the new members were people from Alberta taking early retirement. “There was a stretch there where half our members were coming from Calgary. That is not necessarily the case any longer.”

The revenue model aside, a private golf club faces the same expenses as a public course. Kolb says maintenance costs on an 18-hole course can easily reach $1 million a year. “Water is a big one. Depending on the municipality you’re in, it could be $60,000 to $200,000,” he says. “Ours is on the low end because we do our best [to conserve]. Because it’s a business expense, we are really motivated by how much water we use.”

That’s a common concern at every course. All have their own wells and reservoirs. In most cases, it’s enough to keep the courses green. And when it isn’t, the tendency these days is to let parts of the course “naturalize.” Cordova Bay has some natural springs and retention ponds but still pays Saanich a water bill of $70,000 to $80,000 a year, says Basi.

Sand is another big expense, only a fraction of it for sand traps. Tons of sand are raked over greens and fairways each year for good drainage. (Bear Mountain’s Valley course alone used 283,000 tons of sand in its construction, for example. The contractor’s rate for sand ranges from $14.25 a ton for road fill sand at Trio Gravel Mart to $30 for fairway sand at Butler Bros. Do that math and even cheap sand adds up to over $4 million.)

Jason Lowe, president of Golf Vancouver Island and the general manager of the B.C. Golf Association, estimates that golf in B.C. is a $1.5-billion-a-year industry. “We employ more people than the pulp and paper industry does,” says executive director Kris Jonasson.
A survey three years ago pegged the number of golf course workers in the province at 17,500. Since then, new courses have opened, so Jonasson figures the number is even higher. “When you factor in the real estate associated with golf, particularly in the Okanagan, but in other areas like Whistler and Bear Mountain, then you are getting into astronomical numbers,” Jonasson says.

The National Allied Golf Associations, a Canadian umbrella group of golf organizations, commissioned an economic analysis in 2009 that estimated golf’s impact on the country’s gross domestic product at $11.3 billion a year and the total impacts, direct and indirect,
at $29.4 billion.

The apparent health of Canada’s golf industry is at odds with what’s happening south of the border. In February 2008, well before the recession struck, the New York Times reported that the number of U.S. golfers had declined by four million between 2000 and 2006. Between 1990 and 2003, 3,000 new golf courses were built.

“No, we didn’t experience a general downturn in the number of golfers,” says Cordova Bay’s Basi. “Part of that is, I believe, the golf expansion in the U.S. More golf courses were being built in the U.S. as opposed to Canada. I think in Canada, what we’ve seen is slow and steady growth.”

Jonasson says Canada is the world’s number one golfing nation, with one in five Canadians playing at least one round a year. That participation rate of 20 per cent compares with 13 per cent among second-place New Zealand and 11 per cent in the U.S., Jonasson says.

Even so, most golf courses also rely on non-golf revenues. For example, Olympic View Golf and Country Club on the border of Colwood, Metchosin, and Langford hosts about 50 weddings a year in its 300-seat ballroom, says general manager Randy Frank. “It contributes to the golf course overall,” Frank says. “It’s a component. We try to be quite diverse, which I think is good in these times.”

During the summer, Glen Meadows in North Saanich hosts as many as three weddings a weekend in the 200-seat clubhouse. They bring in $2,000 to $5,000 each, which helps offset the $5,000 a day that owner Percy Criddle estimates it costs to run the course. Like Tom Plasterer, Criddle actually built much of his golf course himself. Originally from Manitoba, Criddle bought 160 acres in 1960 and took over four years to build the 18-hole course. Now 86, Criddle is semi-retired, leaving the day-to-day running of the business to his six children.

Glen Meadows is barely a nine-iron shot from another family-owned course, Ardmore, which the DuTemple family has owned since 1946. “It was a real mom-and-pop operation with the family all living here in a cottage on the property,” says manager Brian Wallace.

Like other nine-hole operations, it’s small with about 15 staff in the summer and a skeleton crew of management and couple of part-timers in the winter. Business is up this year, though, with golfers playing up to 45,000 rounds a year, recession or not.
“At the start of the year, I thought maybe nine-hole courses would do better because people wouldn’t want to give up golf completely,” Wallace says, “that maybe they would look at the lower cost in green fees and, you know, a shorter time to play.”

Arbutus Ridge recorded about 700 fewer rounds in the past year, as golfers try out Bear Mountain and Highland Pacific, says Lowe. Even so, “supply and demand” for golf remains in healthy equilibrium on the Island, he says. Criddle noticed a similar impact on Glen Meadows when Cordova Bay opened in 1991. Before that, half of the Glen Meadows membership came from Victoria; now it’s about 25 per cent. “There are so many golf courses now that everybody is looking for members, looking for golfers,” he says. Glen Meadows added 70 new members during a promotion this summer waiving initiation fees.

The business of golf courses has changed in another key aspect, even since Cordova Bay opened. The Jawls already had the property, having acquired it in the 1970s when land was less expensive. Now, land values are so much higher that the golf course is often just a component of a larger real estate development, a “loss leader” that depends on property sales in the subdivision around the course. That’s certainly the case at Bear Mountain.

“Now that we have 36 holes, we can start to make a little bit of money on golf,” says Len Barrie, the driving force behind Bear Mountain. “But our golf courses are meant to let us sell our homes and condos quicker.”

The story of how Barrie came to develop Bear Mountain is legendary. The condensed version is that it all began when the former pro hockey player hired a faller who cut down some trees in Barrie’s yard. It turned out that the trees were on the Royal Colwood Golf Club property. That led to Barrie’s expulsion from the club, and made him determined to build his own course. He convinced several former National Hockey League colleagues to help bankroll the Bear Mountain development, complete with golf courses designed by Jack and Steve Nicklaus.

So far, 1,200 residents live on Bear Mountain. At build-out, the population is projected to reach 12,000. Compared with that, the golf component is small. Still the Bear Mountain golf resort employs 300 people, including staff at the 160-room Westin hotel, says the resort’s superintendent of golf, Darren Burns. “It’s been extremely busy,” Burns says. “It’s been great. The Valley course is basically full every day. In fact, it’s too full. Everybody is enjoying it to its fullest extent.”

Fifty years ago, when the Criddles and Plasterers bought their properties, acreage was cheap. “It’s just like everything else,” says Plasterer. “If you bought land 50 years from now, it would be relatively expensive.”

The Plasterers also have plans for a 100-unit resort development once the golf course is running smoothly, but they’ll wait until the economy improves. They’re in no hurry. Tom Plasterer is confident his course will do a booming business, even if he doesn’t play the game. “They say golf is an addictive thing.”