Steven
Its not that easy. At $25/round and say 20000 rounds you only have $500K, not enough - and if you want to open only 3 days per week getting 20K through would not be possible.
Michael:
I think the course could break even or do slightly better than that if they charged $25 a round and $35 on weekends, under the present ownership ... it wouldn't be PROFITABLE, but there is no debt, and they have nothing better to do with the property right now.
Unfortunately, they aren't interested in that. And if you had to buy it from them for $2 million, it would be hard to make any sort of return on the capital in the short or medium term.
Tom
In Michigan with the surrounding population and ease to get to, it is possible and the recognition of HP would help, $25-35 is a great price point that the game and economy could use more of, my though on this is that if the course was leased to a group for a $1, that included ,maint barn and space for a proshop, you still would need carts, equipment and supplies. For 500K you could break even and protect the asset (course). For a fleet of carts, equipment, labour and supplies you would need a bankroll of 500K. However I think that a group with 500K would be better off to put his money in the bank and get a return than risk it.
For example a course I know of just went through this process, creditor protection followed by bankruptcy. The trustees realized that the asset (course) would lose its value if left unmaintained and harder to find it a buyer. They put up 450K for maintenance of the asset and found a guy to run the facility, he put up an additional 250K of bankroll to secure equipment, proshop supplies and carts. The course opened this past season, was maintained and from my last conversation with the operator, probably will get all of
his cash back and a little for his trouble. The plan almost worked, a buyer was found but then their financing fell through, the trustees are about out of cash and it is uncertain what the 2010 season will bring to the facility.
Operate from April to September: Use a blended rate of $25/round, 27 weekends. 81 days, 9 hours of available tee times (possible 270/day). That is 21870 potential tee times. Hope if never rains and every available tee time is filled with a foursome at 8 minute intervals. It is just not as easy as it sounds especially if only operating 3 days per week; I hope both facilities survive these challenging economic times.