Buying a golf course

[Lihu]

What I'm thinking about is an off-season, off-hours indoor golf center, with 5-6 high-class virtual golf stalls, full swing analysis, launch monitors, computer analysis, club fitting, PGA lessons... from there - leagues, tournaments, rounds at St. Andrews, Pine Valley and Pebble Beach... maybe a little bar... putting green... pro shop...

Figured I'd need about $500K to start it up.

Any sponsors out there ?

If you watch some of Erik's videos, it looks like they have a setup like that in Erie PA.

[iacas]

If you watch some of Erik's videos, it looks like they have a setup like that in Erie PA.

@Lihu , you are responding to a post that is over eight years old. :-)

[Lihu]

@Lihu, you are responding to a post that is over eight years old.

Oops. Got to look at those dates.

[RickK]

In general, a golf course is a poor investment. Most private ventures into golf course ownership fail for multiple reasons. It's the typical 90/10 business rule.

I wouldn't consider buying one unless I had several million dollars laying around and wanted a course I could play as my own and could make private and limit it to people in my circle of friends to play on.

If you are considering buying one to make money at there are many other more enticing opportunities out there that have less risk, and cost less to get involved in.

Either way you slice it (no pun intended), a golf course should not be expected to make money, or become profitable unless you've got a 10 year window in which to invest in it. And throw in the uncertainties of weather, climate, and playability and you have to overcome a TON of obstacles just to be successfull.

Nowadays you're seeing a big trend towards course ownership in courses designed by big named tour pros, such as Jack Nicklaus, Fred Couples, Gary Player, etc. I guess people figure that if you put big Jack's name on their course then all of a sudden their grass is just a bit greener then the local muni down the street, therefore allowing them to charge $125 just to play the place on a weekday.

Just my two worthless cents. Take it for what it's worth.

You are so, so right.  Had some friends several years ago you owned a farm and they decided to turn it into a golf course.  They did all the work themselves with grading equipment and such and turned the farm into a pretty neat, but tight, little golf course.  They never once turned a profit off the course.  The equipment, maintenance and upkeep was a killer.  And, they owned the land to start with so there was not big nut they had to pay every month for the mortgage payment.

Yet another friend with more credit than he knew what to do with purchased a golf course that was once a pretty nice country club that due to money troubles went public and then still could not make it and ultimately went into bankruptcy.  He got the course for a decent price, $4.6 million but making the payments started eating him alive.  There was so much work do be done.  Obviously the place had not been well taken care of so the clubhouse had multiple issues and really should have been bulldozed over several years before.  It was repair after repair after repair.  Then the irrigation system for watering the course developed issues during the summer and he almost lost the grass everywhere from not being able to water.  Long story more boring, he made it about 4-1/2 years before he had lost some much money trying to make it a go that he simply gave up.

[0ldblu3]

It was repair after repair after repair.  Then the irrigation system for watering the course developed issues during the summer and he almost lost the grass everywhere from not being able to water.  Long story more boring, he made it about 4-1/2 years before he had lost some much money trying to make it a go that he simply gave up.

I had a weird opportunity to take a shot at a course last year. 137 acre 18 hole that had been run into the ground. Good bones, but the greens needed to be fixed and there was no equipment. Facilities (clubhouse, maintenance shed, parking lot) were good. The course was well liked and the old guys told stories of steady heavy use in the 90's and early '00's. But that's the thing, it was all gravy then and that is why so many courses were built. The industry stuff I read said that 500 courses in the US need to close and stay closed in order to get supply in line with demand. Now, I know that everything with golf is regional, you need local players and the the supply/demand curve is regional too. But in general golf has too many courses, just fly into Charlotte and look out the window as you come in, you see them everywhere.

Oh, my point...there is no worse thing to be stuck with as a failed golf course. If you've got one of those you are just hoping for a starry eyed dumbass to come along and take it off your hands. I'm glad I didn't go for it. The banker who was carrying the note wasn't even foreclosing even though no one was paying because he didn't want it on his books. He'd rather have a non-performing note than a golf course.

All that being said, if the financials work and it's your dream, then good luck. What is it they say, that it's the 3rd owner that has a chance to make money.

[WUTiger]

... Now, I know that everything with golf is regional, you need local players and the the supply/demand curve is regional too. But in general golf has too many courses, just fly into Charlotte and look out the window as you come in, you see them everywhere.

Oh, my point...there is no worse thing to be stuck with as a failed golf course. ...

I went to school with a guy who once worked in commercial banking. He said that some venture capitalists use golf courses as land banks. The idea was to build a golf course on the outskirts of a growing metro area. You could run the golf course, recoup your construction costs, and re-evaluate the option 20 years down the road.

After 20 years, you run the numbers, and decide whether to keep it as a golf course. You may find that you can make lot more money turning it into subdivisions, an office park, or a shopping mall.

Also, many golf courses occupy a quarter section (160 acres), and that's a good sized chunk of land in many built-up areas.

At a golf tournament, I ran into a banker who belongs to a start-up country club, and knows the owner of another regional golf club. The banker says owning a golf course is like owning a small winery: It's a labor of love - although the winery and course owners turn a profit, they could make a lot more money from other ventures.

[Hardballs]

One course I play was farmland, the farmer decided to make a 9 hole course, he already owned the land, a year later he built a clubhouse, not much, more a coffee bar and reception area, 4 yrs later he added the other 9, it's took a long time for the greens to get right, and there's still room for improvement, but he's always got staff out there cutting dressing and spiking, 10 yrs on he's now got a much better clubhouse with decent bar and snacks, a putting green, driving range and bowling green, recently started putting huge marquees up for weddings and other functions! And this year started memberships, or players contracts as well as still being municipal, although it appears to me the course has funded itself along the way, its taken over 10 yrs of love and hard work to get where it is, and probably another 10 years for the course and trees to mature to finally become a lovely little private self built course! Of course, the owner had the luxury of already owning the land and I think that's what made the difference, otherwise, the loan payments would have crippled him!