Build a new golf course?

[JWinick]

The golf industry is going through one of the toughest times in its history.  The increased supply of new golf courses in the last two decades far exceeded the demand.  Even some of the most venerable private clubs are struggling.   Financing is tough.   New housing developments are non-existant.

Under what circumstances can you see a deal make sense for a new golf course (be it private or public) in the United States?   

[Rob_Waldron]

Jon

This is the perfect time for someone with a huge ego and comparable bank account to build a course assuming of course that both exceed his common sense.

Seriously it is very difficult to pencil out a golf deal requiring new construction. It woudl me much less expensive to buy a distressed property and renovate it. Both golf course builders and architects are struggling for work these days since so many new courses and renovations have been put on hold.

[JC Jones]

Not sure if this is thread-jacking or not but on the golf channel yesterday, they were discussing Deere Run and said that it was a great course and was NOT a part of a housing development.  Then Steve Sands or whomever said how it was so rare to see a good new course that wasnt surrounded by houses and it was hard for a development to make it that wasnt tied to housing.

[PCCraig]

Not sure if this is thread-jacking or not but on the golf channel yesterday, they were discussing Deere Run and said that it was a great course and was NOT a part of a housing development.  Then Steve Sands or whomever said how it was so rare to see a good new course that wasnt surrounded by houses and it was hard for a development to make it that wasnt tied to housing.

Isn't Deere Run a partnership between John Deere Co. and the PGA Tour? Meaning I think it was Deere's land and the Tour built and operates the course.

BTW- TPC Deere Run is actually a pretty darn good golf course if anyone's in the area, and it doesn't break the bank at $70ish.

[JWinick]

Rob,

As a distressed debt buyer, I can't see the need for anyone to want to build a new golf course in this environment.   Perhaps, the industry needs to push for property tax relief so that these projects can make sense.   

Jon

Jon

This is the perfect time for someone with a huge ego and comparable bank account to build a course assuming of course that both exceed his common sense.

Seriously it is very difficult to pencil out a golf deal requiring new construction. It woudl me much less expensive to buy a distressed property and renovate it. Both golf course builders and architects are struggling for work these days since so many new courses and renovations have been put on hold.

[Adam_Messix]

Tough call....There are a number of outstanding projects that have either been stalled or outright stopped lately due to current economic conditions.  However, if someone is looking to build their "dream course" on the "dream site" and they have the capital and perhaps more importantly, the patience, this may be a time to look for bargains as a lot of people are trying to unload property and turn it to cash and are willing to take pennies on the dollar for their land. 

It's tough to build a golf course without a housing component in this day and age unless you have a huge amount of capital behind like the PGA TOUR or an extremely wealthy individual behind it OR the land and golf course can be bought and built without THAT much money (think Sand Hills) and I'm still not sure if that can be had even today.

[archie_struthers]

 


pretty hard to justify any construction in the United States right now, note how many prominent architects have so much of their work outside the USA  ..........  there will  always be a site that intrigues an entrepreneur with money like Mike Keiser ....but even Bandon Dunes would be a little dicier to build right now  ...   I think there will still be the occasional golf course / senior facility built or proposed but the golf course will no doubt be more user friendly or executive type courses than what we are used to seeing

[Kalen Braley]

While no dbout, the overall industry is suffering, I wonder if there aren't individual markets out there that could still be better served with more courses.

Take for instance the Bay area.  I'm guessing many of the courses are still packed most of the time and somewhere like San Jose would be well served with a high quality affordable public layout.

Just wondering.

[Bruce Katona]

Anyone out there willing to lend a really nice guy $8,000,000 to build a pretty darn good course?  You might not get paid back anytime soon.

Probably not.

BK

[Michael Dugger]

Gentlemen,

Wine Valley GC in Walla Walla, WA is a great test case for the issues you are bringing up and discussing here.

It was constructed right in the middle of this financial mess, but I am convinced it will be a success for the following reasons:

1. Regions that are golf poor will support a new golf endeavor if it is priced right
2. Wine Valley was built on a reasonable budget.  No more million $ design fees (much to Dan's chagrin!), wall-to-wall sod...massive amounts of earthmoving...etc   The era of ridiculous construction budgets has passed...I predict the era of building courses on land not well-suited to the game is passing.
3. New golf endeavors MUST have the support of the local community.  Junior golf programs, special rate for locals.  Neighbors can't be irked by the project, they must WANT IT.
If the project meet this criteria, I think it can survive, even thrive in this economy....  

[Ben Sims]

I think a model based on Mike Keiser's Dunes Club would look pretty attractive to a lot of people right now.  That isn't to say only 9 holes, but the way it was done.  Small staffs, small facilities, golf only.

[Adrian_Stiff]

I think new golf courses are probably 10 years away. Might be an odd one with special circumstances, but Bruce Katona summed it up and also distressed ones can be bought for cents on the dollar. Sadly this is going to be dustbowl days for golf course architects.

[Jed Peters]

While no dbout, the overall industry is suffering, I wonder if there aren't individual markets out there that could still be better served with more courses.

Take for instance the Bay area.  I'm guessing many of the courses are still packed most of the time and somewhere like San Jose would be well served with a high quality affordable public layout.

Just wondering.

Kalen.

You can't build a high quality and affordable public layout in the bay area.

Thanks,

Jed

[Kalen Braley]

While no dbout, the overall industry is suffering, I wonder if there aren't individual markets out there that could still be better served with more courses.

Take for instance the Bay area.  I'm guessing many of the courses are still packed most of the time and somewhere like San Jose would be well served with a high quality affordable public layout.

Just wondering.

Kalen.

You can't build a high quality and affordable public layout in the bay area.

Thanks,

Jed

Why not?

Especially if a city owns the land and does something like CommonGrounds.....I think it could be done.

[Jed Peters]

Nope.

Permitting and environmental compliance would drive the cost to "non-affordable".

Not to mention municipalities and their "land"--nuh uh.

Jed

[Tom_Doak]

I have actually looked at two potential new projects in the last month.

One was for a client who is selling his financial company for something north of $500 million.  Obviously he can afford to create a new course near his summer home if he wants to; and it's possible that in three years when it opens he'll be able to sell memberships or run enough daily-fee traffic to pay for the maintenance.  He will never recoup the construction costs, and he's fine with that.

The other is for a large company ... I can't share the details for another month or two, but it makes tremendous sense for them to build this project right now, and I think it has a very good chance of being profitable.

Of course I still have to cross my fingers that I get one or both jobs, because there aren't many more like these; but to say it's completely over is wrong.  Consider that Colonial, Southern Hills and Prairie Dunes were all built during the mid-1930's at the height of the Depression, which was way worse than anything we've seen so far, anyway.

[Buck Wolter]

I read of a guy opening a new restaurant who figured the construction/material costs were down 40-50% since last year. You'd have to have deep pockets but land acquisition costs have to be down and you may even be able to convince someone its a shovel ready infrastructure project and getting some stimulus money!

[Trey Stiles]

I don't think it's over

Wounded , yes ... Over , no

Working with a developer right now who is considering golf to add value to his development.

No , I can't discuss details , Yes , we've engaged an architect.

[JWinick]

Tom,

Is the large company building the golf course as a benefit to their employees or to entertain clients?  Kemper built Kemper Lakes in Chicago for similar purposes before selling off the golf course to a private developer.   

I have actually looked at two potential new projects in the last month.

One was for a client who is selling his financial company for something north of $500 million.  Obviously he can afford to create a new course near his summer home if he wants to; and it's possible that in three years when it opens he'll be able to sell memberships or run enough daily-fee traffic to pay for the maintenance.  He will never recoup the construction costs, and he's fine with that.

The other is for a large company ... I can't share the details for another month or two, but it makes tremendous sense for them to build this project right now, and I think it has a very good chance of being profitable.

Of course I still have to cross my fingers that I get one or both jobs, because there aren't many more like these; but to say it's completely over is wrong.  Consider that Colonial, Southern Hills and Prairie Dunes were all built during the mid-1930's at the height of the Depression, which was way worse than anything we've seen so far, anyway.

[Tom_Doak]

JWinick:

I will be glad to share details on that project assuming I get the job.

If I told you their rationale, it would narrow down the list of companies too close for comfort.

[Scott Macpherson]

We are currently in construction on what seems to be the only new golf course to be built in the UK this year. The client is self made and this is the second course on the property.  By bidding during the down turn they got very competitive bids. The property has no houses but a boutique hotel, and their business plan is solid and the courses are public but they also have members. Some people can make these things work during in tough times.

It you want to look at their site, go to www.closehouse.co.uk/golf

Or for some photos go to ours; www.tmgolfdesign.com/newcastle.html

scott

[Mike_Young]

JWinick:

I will be glad to share details on that project assuming I get the job.

If I told you their rationale, it would narrow down the list of companies too close for comfort.

Tom is more brave than I would be regarding discussing projects......funny that just a few years back architects had PR firms telling of all the projects they had signed......now no one would dare discuss when and where or for who a project may be built....there may be a few circumstances that could warrant a new course but they would be few and far between....I think you can break golf course decision makers into four groups....
1.  501(c)3 clubs- these projects rely on a board to make a decision and true cost savings are never realized as compared to an individual owner so they are the best bet for really selling a course in such times....they can assess and really never blame anyone but employees and the employees know more than the decision makers so they can sway the board however they wish.....
2.  Individual owner for profit courses- these guys are the tough sale...they know where the bullshit is hiding and all they want is to get the job done and make a profit....if they have been in business for a while they know their market and will do the work necessary to operate in such a market.  These are the guys that will bring golf out of this downturn....
3. Developers- they care mostly for golf as an amenity and have been primarily responsible for the large false growth of golf the game when really all they were promoting was golf the amenity....and so many of us got confused between golf the amenity and golf the game....the courses were a sales tool and once lots quit selling the developers had no desire to maintain at a level they had been....normally you could talk to one of these guys and they were best buddies with Jack or Arnie....had lunch with once a month or hunted with them....( I figure Jack and Arnie had about 1000 of these "best buddies" between them...and can't blame them for it....it was/is their business)  I don't think this will ever come back the way it was....I honestly think the day of the professional golfer signature is over except for a few instances around the world...( and that is not a slam at any of their work) it's just that people have analyzed the cost.
4.  Resorts- these guys will probably keep at it but may analyze cost more closely and the marketing departments seem to now have the rational that the flagship hotel may have more to do with customer attraction than who did the golf course.....as golf goes worldwide we see so many projects that will never play 6000 rounds yet these resorts will maintain them to the highest standards in order to have the "complete package"..  
It will be interesting to see how golf is perceived by the rest of the world over the next 25 years....we never discuss f the projects are viable..we just say they are building them....as for the architect business.....the hype is going to go away except for a few cases and most will remain regional and never heard of.

[Mark_Fine]

If you are in new construction, best to be working overseas because little new stuff will be happening in the U.S. for quite awhile.  There will always be a few new courses here and there but there are plenty of existing courses out there now to handle the demand.  That said, the restoration/renovation business isn't a bad place to be and keeps many of us who are not doing new stuff busy.  I do see, however, many more of the "new course" guys falling back to this kind of work.  That must be tough for them but there is not much else they can do.  It is hard to put your heart and soul into a project like this when you prefer to be doing your own designs.

[Adrian_Stiff]

We are currently in construction on what seems to be the only new golf course to be built in the UK this year. The client is self made and this is the second course on the property.  By bidding during the down turn they got very competitive bids. The property has no houses but a boutique hotel, and their business plan is solid and the courses are public but they also have members. Some people can make these things work during in tough times.

It you want to look at their site, go to www.closehouse.co.uk/golf

Or for some photos go to ours; www.tmgolfdesign.com/newcastle.html

scott

I have got one under construction in the UK too, but realistically it is virtually over here in the UK and for quite a long time I think. Over, or wounded the industry probably needs to lose 9 out of 10 architects. Eastern Europe might be first to kick off, in some places there a still very few courses so there is no over supply but the courses in Southern Spain are far from full and the resorts are down big time... I think Dubai is the same and one of my shapers has come back from Korea and has no work.
The problem is the whole world is on hold and there is no loose money. From a UK perspective

we built 63 golf courses between 1940-1965,
between 1965-1990 we built 441 courses,
between 1991 and now a further 500,
pre 1940 back to 1915 343 courses
and from 1890-1915 it was almost 1000 courses built.

[Melvyn Morrow]

Adrian

To continue your theme on GB&I clubs, it goes something like this
1885 – 1900 Total clubs in GB&I                  = 1,300
1860 – 1885 Total clubs in GB&I                =    160
18th Century – 1860 Total clubs in GB&I     =     30

Melvyn