Another one bites the dust ....

[Andy Doyle]

To follow up on a recent thread:

http://www.ajc.com/metro/content/metro/northfulton/stories/0511metgolfcourse.html

"Nationwide, the equivalent of 94 18-hole courses closed in 2005, according to the National Golf Foundation. A foundation report says that 54 percent of those closures were because of development, most of it residential."

Andy

[Craig_Rokke]

I wonder how many closed because they were actually in financial trouble vs closing because the value of the land had appreciated so greatly that a sale of that land was impossible to resist.

What does 150 acres of prime real estate go for anyway? I would imagine that a well situated property could fetch $20,000,000
-$35,000,000 no problem. Am I correct?

[A.G._Crockett]

This is from an article in today's AJC about the closing of Lanier GC, a very good Joe Lee course on the north end of suburban Atlanta.  We had a thread or two where this has been discussed, but this club has been profitable; it is purely a money move by the owners.

I think the answer to Craig Rokke's question, at least in Atlanta, is that the vast majority of the closings (though not all) are motivated by land values rather than difficulty in making a go of it in the golf business.  New courses continue to open in the area, just farther and farther out typically.  Lanier GC used to be very much in the country; the exit off the highway that you take to get there is now one of the most congested in all of metro Atlanta.

I played golf on Monday with a friend who is a developer; he is getting ready to do a project in Alpharetta on which he will realize a profit of around $200,000 PER ACRE on a 23 acre tract after holding the land only 1 year!  For better or worse, that's Atlanta...

[Wayne Freeman]

Boy-  you sure wouldn't believe this story if you're out in the Palm Springs area.  The building around golf courses in unreal.  There are so many high end residential enclaves and at most of them the homes start in the 1.6 million range and way above-    Toscana, Hideaway, Tradition, Big Horn, Stone Eagle, Quarry, and bunches more.  The Madison has begun selling lots which start at over a million and apparently they are having no problem-  that's a real Hollywood crowd I'm told and is going to be SUPER exclusive and expensive.
     

[ed_getka]

Wayne,
   1.6 million is a starter home in NorCal.

[David Kelly]

Wayne,
   1.6 million is a starter home in NorCal.

Ed,
They're second homes in SoCal.

[Bob_Huntley]

Apart from the profit received in the sale of very valuable land on which sits the golf club, has anyone remarked on the increase in property taxes the local county gathers from such development?

An example may well be the charming little one bedroom, one bath cottage in Carmel that sells for a cool million dollars. The current owner bought it for twenty thousand aeons ago and pays property tax of about $200-300 pa. This was pegged by Prop 13.

The new owner tears it down, builds a new house that has now cost him close to something like three million. The county's take is now thirty thousand a year vs the three hundred  on the old property. About twenty per cent of the tax stays with the county and the rest goes to the State.

No wonder their is not much support for golf courses per se.

Bob

[Craig Sweet]

In another thread, long ago I mentioned the "New England Lost Ski Area" project and posted their web site url...

Through out New England small ski hills have closed down....gone...reverted to woods.....these were the inexpensive, mom and pop...family ski hills where several generations learned to ski...

Now, we see golf courses closing....for all kinds of reasons....

The question is...will the golf industry follow the lead of the ski industry and replace 50 golf courses with 10 or 12 large, expensive, corporate, private golf courses??

[Peter Pallotta]

"...the vast majority of the closings (though not all) are motivated by land values rather than difficulty in making a go of it in the golf business."

Just an aside/question: even though we usually frame the situation in these terms, isn't this a FALSE dichotomy?

What I mean is, can/does anyone actually SEPARATE land values from a golf course's viability as a business? (Isn't that the very aspect that makes the golf 'business' different from most other businesses?)

I assume that some courses flat out fail because they can neither attract enough golfing customers to cover expenses nor successfully market and sell themselves (in part) as residential communities; but are there many of those types of failures?

How many land owners (golf lovers though they may be) would ever willingly and knowingly chose to make less profit/reduce cash flow simply in order to own a course?

Don't the Bandon and Sand Hills exist because, given their locations, the most financially viable use of that land WAS as golf courses (and not, say, housing, or growing wheat etc).

Tom Doak started a thread recently about changing economics. I guess what I'm trying to say here is that perhaps the above dichotomy must now be seen as false, and that maybe those in the industry will have to start making the very best golfing use out of land that's of not much use for anything else, or desired by anyone else (e.g. old landfills etc).

As I've said before, I know that’s not a great option for those in the industry. On the other hand, didn’t golf start out this way? I mean, the original links land in St. Andrews was just that kind of land, i.e. land that no one really wanted, because it couldn't be used for anything else.

Peter

 

[A.G._Crockett]

Peter,
I don't think there's a contradiction there, and I also think that you are right about using land that isn't any good for housing.

Let's assume for a moment that the Lanier GC has been a profitable golf business, and nets $500,000 per year, split between two owners.  This is a viable business, but for an owner(s) to turn down $20 million for the land from a developer would be very, very tough.  That doesn't mean the golf wasn't viable, except in relative terms.

Meanwhile, just a few miles from Lanier GC, the Love organization has built a course named Windermere, which is now part of a 15 club group of courses and a successful business also.  However, unlike Lanier, which is basically flat with lots of road frontage, Windermere is built inside a housing development on land that probably wouldn't perk anyway.  It was indeed left-over land.  In fact, I think Paul Cowley once wrote on GCA that when they first saw the site, they didn't think a course would work there.  It does, very well, but it took some really clever design to do it, and it sure ain't walkable!

All of this is a product of Atlanta expanding QUICKLY to the north.  When Lanier was built, that land was cheap; it isn't anymore, and that changes the whole dynamic.  Golf worked as a business, and worked well, but money talks.

[Peter Pallotta]

A.G.,
Thanks, that was a great example you chose. Atlanta's experience must be a common one, i.e. cities expanding northwards and the value of 'housable' land going with it. And it's interesting that the Love/Cowley course isn't walkable. Like most here, I prefer to walk; but if I'm asking owners/ designers to look at land that isn't naturally great for golf and to try to make the best of it, I should also be willing to make the best of it, i.e. to be prepared to put aside some important, but not essential, parts of my golfing experience so that I can actually have a place to play.
Peter