Unlimited Golf and Profits ?

Question

I have this unusual concept for a golf course operation.
The all-in expense budget is $1M annually which I want to meet upfront.

100 Investors @ $10K per year or 50 investors @ $20K per year or $25 Investors at $40 per year, ETC...................

Investors receive UNLIMITED GOLF for themselves & 1 accompanying guest with no other fees or dues whatsoever.

The annual revenue comes from various sources:

1. 20K additional rounds @ $45  equals $900K.
2. Food & Merchandise Sales Profit of $100K
3. Normal Monthly Memberships equals $100K
4. Events & Tournaments equals $100K
5. Lessons equal $12K

Total Revenue equals $1,212,000.

ROI 21.2%

Please give me some feedback on this scenario.

William Green · Answer

$10,000 is not a lot for private golf club membership.  In fact, it's cheap.  That having been said, it's a heck of a lot for a semi private or public course.

Also $1,000,000 is cheap for a golf course.  Really, really cheap. Besides acquisition costs, I've been told (by clients who are golf resorts) that maintenance on an 18 hole course starts around $450,000 per year and goes all the way up to about $15,000,000 if something big breaks, or you are maintaining a premium course.

I'm no expert, but from what I understand your numbers don't add up.

Brian Boe · Answer

If I and a guest played once a week, you are charging about $100/round.  It would have to be a much nicer course than most public courses I have played on.  If this golf course hasn't been picked up by one of the 100's of golf mgmt. companies, I would be very suspicious.  A golf course would have the potential to be the biggest money pit you may ever encounter.

John Hicks · Answer

The Naysayers, Negatives and PermaBears have won ! I realize there are multitudes of distressed golf courses but only 1 on Amelia Island.The deal is dead for me. I have brokered it to Principals who specialize in golf course development; I'll just enjoy free golf as part of the package.

I passed on the opportunity and have since focused on other distressed properties. I've been buying and reselling distressed properties and enjoying modest returns....mostly failed condo-conversion properties. Been doing it since the 1980s.

Thanks for your input.

Trey Stiles · Answer

John , I'm an old golf operations guy , owned a golf mgt co , have owned a course for 20 yrs , have developed golf courses / deals , currently NNN lease the property that I own.

I could poke a few holes in your assumptions , but prefer to just ask the question , " how do carry the investment from acquisition date to the date when you sell 100 @ $ 10,000 ? "

BTW : Your method is not new

BTW2 : There are tons of golf deals out there that need new financing.

John Hicks · Answer

Negativity and skepticism win out again ?

Perhaps it was just sound logic and reality ?

Either way I passed on the opportunity to purchase an existing golf course for $500K.....

I do appreciate all the input and discussions. I have one huge developer interested and hope to work toward a straight sale in the coming months.

John Hicks · Answer

typo.........$1.5 million

John Hicks · Answer

I had hoped the reason no one had offered it before was because it was creative & original concept.

The acquisition price has so many variables, the final number has not been determined. Based on what I've learned so far the initial capital investment including purchase & working capital needs to be at least $1M.

Kevin Yeats · Answer

Perhaps there is a reason why no other golf course, public or private, offers this arrangement.

John, how much money are you investing in this acquisition?

John Hicks · Answer

Guys....especially Dustin & Kevin:
I am not trying to build a golf course....
It's already there.....it was left out of a much larger acquisition by a company that already had 2 of its own courses onsite.
I'm trying to operate & maintain it for $1M per year. If you cannot get past the $1M number, then use $1.5 million and 150 Founders with unlimited Golf and Profit Sharing.....whatever.

I have all the specific facts and exact figures you mention.

Perhaps, I'm not wording my question correctly.....I'm not looking for all the negativity  & specifics about the golf course industry.  I also have a 165-page prospectus that could answer every question on earth.

I'm aware there are a lot for sale.
However, none have a structure where they offer Unlimited Golf for a Founder & Guest and a portion of the profits.

Let me try again.....

If a golf course existed in a beautiful setting and it could be proven to be operated & maintained for $1M per year, would an Unlimited Golf Package with no other costs or fess in addition to Profit Sharing be an interesting proposition for $10K per year for 1-3 years? Hopefully after 36 months, the course could have enough members where the Founders' contribution was drastically reduced and eventually eliminated over time.

Members would have to weigh convenience with economics because you obviously could not play twice a day everyday if you had 500 members.....Logic can make those decisions.

This is the model I want feedback on.

Thank you for all input and please keep it coming.

Dustin Gott · Answer

I know a man that I worked for growing up that owned 9 golf courses. I was able to work my way up far enough in the company that I was privy to some of the financial information. I can promise you it costs more than 1 million to build (not physically build but build a desirable place to play well known by the community) and adequetely maintain a desirable golf course. Even if that were possible there are very few golf courses that profit greatly. That is a large reason many courses are publicly owned. I do not want to squash any dreams but am giving you a realistic view having seen it myself. The man I know owned other companies that supported his golf courses because golf was his passion. To spend 10K I better be at the one of the best golf course around or be getting a large profit share. I do not believe you will get either from the numbers you have posted or from my experience in the golf world. I genuinely hope you can prove us all wrong!!!

Unlimited Golf and Profits ?

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