Transient Clubs Hit Hard By Gas Pricing

 As seen in Golf Business May/June 2022 

By Steve Eubanks, Contributor, Golf Business Magazine:

The whole place seems like a time machine. When you’re driving from the Palm Springs airport out to Desert Island Golf and Country Club in Rancho Mirage, California, you make a left onto Gene Autry Trail and take it a few blocks until you hit Dinah Shore Drive. One more turn and you hit Gerald Ford, which takes you down to Bob Hope. That’s where you turn right and cruise past Walter Annenberg’s place, the private estate where Ronald Reagan used to play golf every New Year’s Day. Then you make a right onto Frank Sinatra. Desert Island is there on your left. The only thing missing is Sammy Davis, Jr. meeting you at the guard gate with a tux and a dry martini. 

The Coachella Valley – Palm Springs and its surrounding enclaves from Indio to Oasis – lives off of its golden-age celebrity vibe, including thoroughfares with names like Jack Benny Road and Monte Hall Street. The beautiful San Jacinta Mountain range doesn’t hurt. But the reason people travel and live there is golf. A four-block radius anywhere in the area might include five courses, all lush and pristine. But today, even those celebrities who beat a trail to the desert when they weren’t on a Hollywood set would flinch at the cost of filling up the Cadillac.

Exclusive-1_OldGasPump.jpgThe average price for a gallon of gas the year that Dean Martin (who also has a street in Rancho Mirage named after him) made “The Wrecking Crew” with Sharon Tate was 34 cents a gallon. Adjusted for inflation that is $2.80 a gallon in 2022 dollars. At the end of April, the average price per gallon in California was $5.73, with most places in the Coachella Valley charging well over $6. For a golf town that relies on seasonal and commuter traffic, this hits hard in every respect.

“It’s not just the people having to buy gas to get back and forth to Los Angeles,” said John Stenmoen, the head superintendent at Desert Island. “The cost of operating a golf course is so expensive now. Fertilizer is a petroleum product, so those prices are going up. It seems like more and more stuff is getting expensive.”

The desert has an opposite season to the rest of the country. From Phoenix and Las Vegas to Palm Springs, most of the business comes from people traveling in for the winter. As Stenmoen put it, “By the end of May people have left. But (the summer) is when we do our capital improvement projects.”

The problem is, with the price of things like fertilizer for next year in such flux, many capital improvements are being put on hold. And very few supplies are found in the Valley. Gravel, pipe and everything else has to be trucked in on I-10 through mountain passes that burn diesel like pouring water out of a boot.

“It doesn’t really matter how many quotes you get,” Stenmoen said. “They’re all pretty much the same because of the petroleum prices. Now we’re getting all these surcharges because of gas prices. The prices of the product may or may not be the same, but there is a surcharge to deliver almost everything. In the past, gas prices would go up (in season) but then they would go back down. Now, nobody seems to be expecting the prices to go down.”

In the spring, Stenmoen made some difficult calls on fertilizer application. “We may not put that last application of fertilizer down and hope for the best,” he said. “You just have to be more selective, maybe go with a slow release (fertilizer) instead of a calcium nitrate. How you manage your fertilizer application is going to be critical with these prices.”

A bunker renovation project is currently up in the air. “Covid has increased golf memberships, so you have a lot of clubs out here who are doing renovations in the summer, but they’re looking at a tripling, maybe a quadrupling of the costs,” Stenmoen said. “We looked into a million-dollar renovation, which we needed, that is now looking at costing $5 million.

“Demand is part of it but increases in prices are a big factor. Our minimum wage in California is much higher than it used to be, and in a few years, they want us to stop using any gas or diesel equipment and make everything electric. That’s something we have to think about as we’re budgeting into the future. Plus, the technology isn’t there yet.”

As the industry learned throughout the Great Recession, deferred capital expenditures have a compounding effect. Delaying an irrigation replacement this year because of jarring petroleum prices will only make the job more expensive down the road.

“It’s a tough time,” Stenmoen said. “There are going to be some hard decisions. We’ll be fine. Our business is good. But we’ll be doing things differently than we would have a couple of years ago, that’s for sure.”

Steve Eubanks is a contributor for Golf Business | This article was featured in the latest edition of Golf Business Magazine.