Equipment Financing

Equipment Financing

Best Turf West has provided many tools for your equipment financing opportunities.

Why consider Leasing?

The golf industry has undergone significant changes over the past 15 years. Most areas around the country now have at least an adequate supply of golf courses, which has created a highly competitive environment and has compressed revenues significantly.

While each facility has it's own unique traits, the overriding issues or 'strains' can be felt in all sectors of the industry, including Daily Fee, Resort, Semi-Private, Private, and in nearly every region of the country.

Agricredit AccEptance, LLC
Derek Meinders
Director of Golf, Turf & Recreational Products
8001 Birchwood Court, P.O. Box 2000
Johnston, IA 50131-0020
(O): 800.873.2474 Ext. 3079
(D): 515.251.3079
(M): 515.299.0882
E-mail: d.j.meinders@agricredit.com

Let's take a closer look at the drivers of change in the golf industry.

Macroeconomic prosperity and growth coupled with and increasing interest of golf, combined to create an excess supply of golf facilities.
As the economy slowed, so did the public's willingness to spend their disposable income, which compressed revenues. Increased competition for those revenues forced reduced greens fees for Daily Fee facilities and many Private Clubs to offer 'financing' options for Initiation fees, both which negatively effect cash flow and the club's budget.
The 'Tiger effect' – an increasing number of new and average golfers began watching PGA Tour events and now expects that their local facility provide similar conditions, which puts enormous pressure to deliver a high quality product with reduced budgets.

The overriding outcomes are that each sector of golf facilities now compete with each other and are forced to provide sometimes unrealistic playing conditions, with reduced budgets and ever increasing cost of equipment and maintenance. In order to continue to maintain a competitive advantage each facility must find a Cash Flow solution to long term turf equipment and golf car fleet management.

It can be argued that Cash Flow is the single most critical component of business management and given the fact that very few facilities are exempt from competition, each must find new ways to optimize cash flow when making equipment replacement decisions.

Regardless of size of fleet or profile of facility, consider the following when creating an Asset Management strategy.

 Current and historic maintenance costs
Each assets frequency of use
"Visibility”"to your operation (this drives repeat business)
Golf Cars are highly profitable, highly visible and therefore should be leased and rolled over as often as possible (tax, quality, competition)
Turf Equipment are highly diverse assets and require customization

The solution to this problem is unique to each facility, but again the same principals will apply to every golf facility. The goal of every facility should be "to use ALL equipment as inexpensively as possible over its useful life ". Given the facts that each asset in a turf equipment fleet is utilized differently and that the useful life varies dramatically, every facility should complete a long term Asset Management Strategy. This requires some extensive work on the part of the golf facility and includes the following steps:

Assessing each asset currently on site (both turf equipment and golf cars), including gathering information on year, hours, condition, original value, current value, replacement date
Providing capital equipment expenditures and annual finance payments
Review current finance or lease contracts
Determining extraordinary R&M vs. scheduled maintenance costs over a previous 5-10 year period
Work with your Leasing Account Manager to set appropriate terms and lease types for each asset.
Utilize the information above to structure a 10-year plan

Creating a long term Asset Management Strategy and incorporating lease financing allows each facility to demonstrate to their owners, boards, members, etc how they intend to: maintain consistent equipment fleets and therefore higher maintenance standards, stabilize and accurately project their budget long term, and reduce their R&M expenditures through proactive rather than reactive equipment replacement.

Most golf facilities that have created an Asset Management plan immediately assumed that leasing or financing would require increasing their cash outlay. In fact the change requires more of a shift in internal thinking than an increase in actual dollars. Keep in mind that there are significant advantages in the following areas:

Potential tax benefits
Bulk equipment purchases (manufacturer discounts)
Reduced Repair and Maintenance

When deciding upon a finance company to utilize, keep in mind that there are major differences and that each has their own business goals so remember to ask questions, including:

What is your golf course knowledge, industry contacts, and staff experience?
Who do I contact and do I have a dedicated Account Manager (one-on-one contact from quoting to lease maturity, including customer service, buyouts, etc)?
Do you provide Live phone coverage or an automated system?
What are your product offerings - Lease Purchase, Capital Lease, True Lease, Loans?
What are your fees?
- What is your documentation fee per contract?
- Do you charge Interim Rents?
- What is your end of term -
- Who has Residual Value responsibility?
- Do you have and what is the charge for Asset management tools and reports?
- What types of equipment do you finance?

There are multitudes of financing options but very few finance companies that are relationship based and structured to fulfill all of the needs required by golf facilities. Every golf facility has a mix of different manufacturers' equipment and finding a brand neutral leasing option that provides you with the leverage you need to be successful is vital to creating the optimal long term asset management solution.

Best regards,
Derek Meinders
Director of Golf, Turf & Recreational Products
8001 Birchwood Court, P.O. Box 2000
Johnston, IA 50131-0020
(O): 800.873.2474 Ext. 3079
(D): 515.251.3079
(M):515.299.0882

E-mail:d.j.meinders@agricredit.com

Since 1999, Best Turf West has continued to earn the trust of our customers leading the turf grass services industry through the delivery of Baroness Mowing equipment, PlanetAir aeration and Pequea Precision Topdressers innovative technology, Turf grass/Soil-specific expertise and outstanding service quality. No matter how challenging their service issues may be, our customers know that when they call Best Turf West we will find a way to fulfill on our promise