Rental boom not yet felt on the links; most golf courses still buy or lease turf equipment; constant use negates attractiveness of renting machines
Published in: Diesel Progress North American Edition,
Date: 7/1/1999
By: Mike Mercer
While equipment rental has come of age in the construction equipment and power generation markets, it is leasing that rules the links.
Over the past five years, equipment rental in the construction industry has grown to where it is now nearly a $5 billion business. In some market segments it seems as if it may render traditional equipment purchasing a thing of the past. But when it comes to rental and golf courses, it’s a whole different game.
For while the golf course equipment markets are not entirely devoid of rental machines – after all it takes a staggering amount of equipment to build, care for and modify a golf course – the majority of the equipment is still purchased. And more recently, a growing amount is leased.
“The rental concept is more prominent in the construction equipment markets than in lawn and garden because of construction’s project-to-project nature,” said Todd Grey, business manager of golf and turf leasing for John Deere Worldwide Commercial & Consumer Equipment Division. “Golf courses are a permanent application where equipment is in almost constant use. Consequently golf courses have historically purchased their equipment.
“What the industry is seeing now is the growing importance of equipment leasing. This allows golf courses to conserve capital for one, but it also allows the golf course to bring in new equipment every three to four years.”
“Leasing equipment has been an option for a number of years,” added Dennis Brown, manager of marketing services for Toro Co., one of the leading manufacturers of commercial turf equipment in the world. “In the last three to five years there has been more of a move toward leasing, causing equipment suppliers to offer attractive leasing programs for their customers.
“Rental has a small piece of the commercial golf course turf equipment markets. Equipment rented by a golf course is related more to the construction of special projects on the property and not the day-to-day course maintenance issues.”
Longer-term projects that could include rented equipment includes building or maintaining buildings, construction and maintenance of course hazards or course reconfiguration projects, according to Brown.
The type of equipment rented for use on golf courses is generally confined to skid-steer loaders, trenchers and other small construction equipment. Turf-related equipment that is sometimes rented includes products for special single or infrequent use applications, such as soil aerators and spraying equipment.
New golf courses tend to lease used equipment rather than brand new equipment. Conditions on new courses tend to be hard on equipment, so rather than spend the money on new equipment that is likely to be torn up more quickly, most course operators opt to lease older machines. That strategy also improves cash flow, another important consideration for any start-up business, particularly in one as capital intensive as a golf course.
“New courses tend to lease equipment for the first few years, and in many cases, that equipment is used” said Brown. “There is a grow-in period for a new course that lasts two to three years. This time period is especially hard on equipment.”
Turf equipment has a very predictable life cycle, according to Grey. At around 3000 hours, turf equipment starts to need some very major servicing which makes leasing equipment more attractive to golf courses.
The golf course industry is structured very much like the automotive industry, with essentially three tiers of equipment users, Grey added. Exclusive country club and resort courses make up the first tier, while the second tier is a mix of high-end public courses and smaller, less exclusive country clubs. The third tier is primarily smaller, privately and municipally owned public courses.
“High-end tier one courses are not interested in maintaining equipment long term,” said Grey. “They generally lease brand-new equipment and run it for three to four years and then replace it.”
John Deere has established a program through which it will lease new equipment, take it back after a specified period, recondition it and then either sell it or release it to a second or third tier course. Many other turf equipment manufacturers have or are creating similar systems.
Courses generally stick to the same type of equipment in their fleets. For example, if a course uses a John Deere greensmower, its entire fleet of mowers is likely to be from Deere. The same holds true for other manufacturers. If a course has Toro or Jacobsen fairway mowers, the entire cutting fleet will be Toro or Jacobsen.
While brand loyalty no doubt plays a role, much of the devotion to one brand or another is done to ensure uniform cut quality and prevent variances in course condition. Different equipment tends to provide a slightly different cut, according to industry professionals.
Even if there is an increased demand brought about by a special event such as a tournament, the needed equipment is seldom rented. If a course needs extra equipment for a few days or weeks, the local distributor/dealer will typically assist the course in procuring the extra equipment required, often at no premium or even for no charge as a goodwill gesture to the course.
About the only significant equipment rental that occurs with any regularity is in golf carts for special events. There is almost an entire separate industry with fleets of golf carts for use in tournaments and other special events. And more recently, some courses have begun contracting all or part of the course maintenance to a third party service company. This can encompass as little as aeration and spraying to complete course maintenance, according to industry sources.
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