What’s making them struggle ?
When you do a pro forma for a golf course you have to look at the following basics:
"paid" rounds
+food and beverage (not always a gain)
-expenses for the clubhouse
-the cost of maintenance
-the servicing cost on the debt of building the project
=the balance
I’ve selected round numbers for simplicity.
$100. green fee (average collected) x 20,000 rounds = $2,000,000.
Break even in the clubhouse and clubhouse costs
Maintenance = 1,000,000.
Land costs: 1,500,000.
Build: 4,000,000.
Servicing the site: 500,000
Modest Clubhouse: 3,000,000.
Grow in and equipment: 1,000,000.
Debt Load: 10,000,000. @ 5% (servicing the debt) = 500,000 per year
Let’s say a payment of $600,000.
$2,000,000.
-1,000,000.
-600,000.
=$400,000. per year
If overnight you struggle to get $75. you lose $100,000.
If your rounds remain at $100. but they drop to 15,000. you lose $100,000.
You can slide the numbers around a bit and raise and lower numbers to get some rough ideas, but I hope this makes it easier to understand why people have a tough go of it with new courses.