Why are golf carts extremely profitable?

[Jim Sherma]

When discussing the "profits" from carts I always wonder what the true economic costs are. I know that many pro-shops get the cart fees and therefore the profits from the carts. However, the additional maintenance required on a course that has large cart usage has to come out of one of the other accounts. If you looked at the club's entire economic picture, are carts really that profitable given a certain level of accepted maintenance? If there were very limited or no carts how much maintenance budget can be saved?

[Rich Goodale]

Yes, Kris, caddies do have their place, but it is a shrinking one, IMO.  I only use carts or caddies when I am forced to by the club, and if I am given the choice I'll take the cart 99 times out of 100.  Carts are cheaper, they go where you tell them to go and they don't talk back to you!

[Brent Hutto]

I think your argument works theoretically for both private and public courses, but in practice, only really for public courses where the cart fee is often wrapped into the "greens fees."

Or at any place where they do not allow walking.

[Gary Slatter]

Golf cart operations are extremely profitable to the clubs bottom line. 

I've been involved in club operations for too many years, I was an assistant when the first carts came on line, the club where I work now has 76 carts, and they are optional.  You do not have to rent a cart, although 95% do most days.  Some days it might get as low as 80% cart usage. Often 3 ride and one walks, only the 3 riders pay a cart fee.

Cart operations pay for related maintenance and construction costs, quickly!

Golfers pay for their carts as they use them, they don't pay out the money in one lump sum each spring.

Golf course maintenance vehicles cause more expense that carts - at least where I've worked the past 40 years.  Proper cart pathways can lower maintenance damage.

Gas carts require little in special storage costs and  have no down time - I've found that 6 gas carts replace 10 electric carts (which require facilities).

Carts are cheaper to operate than caddie programs (unfortunately) and fewer labour laws are violated.

Carts are a fact of life in areas where golf is a business as well as a sport.  Parts of the world are just now converting golf from sport to business.

We have found fourballs in carts play faster than fourballs walking, unless there are mandatory cart paths on every hole.
Mixed fourballs play slower than all male or all female fourballs, riding or walking.

[Kris Shreiner]

Rich,

Sounds like caddie hater material to me?

Gary,

Name me the two MOST financially sussessful new facility openings in the last 20 years. Just golf...no real estate tie-in. Nationwide in the U.S....it's Bandon...by a zillion miles! NO CARTS! Internationally....Kingsbarns....NO CARTS! Except for medical or handicap issues, which should be accommodated by all means. You can call these anomalies if you wish, but that's the truth.

You are reporting on the type of golf YOU know and have experience with. You also aren't factoring in all the other game-related elements, NON-PROFIT AND LOSS related, that gain ZERO from cartball. When one takes a wider view, the obvious becomes apparent...the game AIN"T all about cartball. If what you purport is true...why is the game...and the industry...so sick? The excuse about the economy only covers so much. The model championed by many is poor Gary. It's that simple.

Cheers,
Kris

[Jason Thurman]

Kris is right about Bandon. The best business model to make a profit is to charge at least $200 green fees so that cart fees don't matter. We can only hope every course in the country will learn from them.

Gary's perspective is clearly skewed by his experience working in the niche market of presumably mid-priced, local-play reliant private/public clubs where people do things irrelevant to the modern market like play twilight rounds after work and sometimes stopping after only 18 or even 9 holes.

The real problem with golf's profitability is that so many people think they should be able to play for under $200.

[Brent Hutto]

It has very little to do with what price segment you're operating in. There used to be a little 9-hole Par 33 layout near my neighborhood. Six Par 4's ranging up to about 320 yards followed by three Par 3's of around 150 yards each. Bulldozed for a housing development right before the housing bubble collapsed.

Back in the 90's it was 10 bucks to walk nine holes or 15 bucks to go around twice for eighteen. The entire property was 40-some acres including the driving range with only one hill to walk down and back up. As easy a walk as you would ever want to have. If you wanted a cart it literally doubled the price. From 10/15 to 20/30 dollars. Yet every time I played there I saw people riding in carts. The majority of the cart users were under 30 years old. The high school and college age kids in particular never walked.

People ride in carts because they want to ride in carts. It's not affected much by pricing, it has nothing to do with pace of play or whether you're able-bodied or not or with how spread out the course is. There are millions of golfers who will not walk if a cart is available and they will not play at a course that does not offer carts. When you say "Golf" to these people the picture that springs to mind for them is of a golf cart tooling down the middle of a fairway, not some guy with a bag slung over his shoulder.

Bandon can afford to blow those people off completely. Almost any place else in this country would be completely foolish to try and do the same. As a wise man once said, the American people have yet to discover any activity than can not be improved by the addition of an internal combustion engine.

[Jud_T]

So what's the cart policy at Ballyneal now?

[Adrian_Stiff]

Rich,

Sounds like caddie hater material to me?

Gary,

Name me the two MOST financially sussessful new facility openings in the last 20 years. Just golf...no real estate tie-in. Nationwide in the U.S....it's Bandon...by a zillion miles! NO CARTS! Internationally....Kingsbarns....NO CARTS! Except for medical or handicap issues, which should be accommodated by all means. You can call these anomalies if you wish, but that's the truth.

You are reporting on the type of golf YOU know and have experience with. You also aren't factoring in all the other game-related elements, NON-PROFIT AND LOSS related, that gain ZERO from cartball. When one takes a wider view, the obvious becomes apparent...the game AIN"T all about cartball. If what you purport is true...why is the game...and the industry...so sick? The excuse about the economy only covers so much. The model championed by many is poor Gary. It's that simple.

Cheers,
Kris

Kris, I think your wrong and Gary is right. Gary's opinion has pretty much nailed it, most of what he said is how it works for us, hell you dont even need a cart barn, leave them outside, electric buggies are fiddly gas is better. There is a lot of money if you can out 76 buggies in one day, in the UK you dont need many buggies per day to pay for a greenkeeper and its hard to keep things going at the moment the last thing you want to do is get rid of your buggies. Bandon works because its a great course(s) not because its walking only, everything is ass backwards at Bandon no logical accountant could thumbs up that project when it was mooted, everything gets over ridden by one thing and thats the quality of the golf. As for Kingsbarns, well I was there a few weeks ago and it was dead, whilst at the same time the Castle course, Old, Jubilee, New and even Fairmont were rammed.

[Matthew Essig]

Because a lot of people are lazy.......

[Kris Shreiner]

Jason,
 
We do have to understand that golf CAN'T be just the $200.00 plus segment. Though I love elite-level play at caddie golf facilities...they are select company. It is more important that REGARDLESS of pricepoint, the golf be enjoyable and of value relative to the fees.

Adrian,

Cart golf is here to stay for many facilities. I recognize that. But to extrapolate that to all situations and hold it up as the way to go is flat out INNACURATE! Again, you base that on YOUR environment and put your arm around Gary's take. Wonderful.

My assertions on profitability are very sound regarding the caddie golf facilities listed. You caught KB on a slow day. That facility, on average, has CRUSHED the other offerings in that area revenue-wise (except for the Old) since it's inception. Remember, those other courses are on mainly PUBLIC ground. The St. Andrew's tracks have hordes of locals paying DIRT for the year to play them. Numbers playing on a course  doesn't always tell the complete story. In the main, they didn't have land or heavy infrastructure costs either. Fairmont...please. That place can't touch KB.  If you'll note, I'm talking MODERN facilities, not those coasting along in the slip-stream of the days when carts were non-existent.

You know little about caddie golf as you have admitted. How many caddie rounds have you embraced in your life. Note the word EMBRACED. If one has no real context on which to draw conclusions, how can what you(or anyone else) state be reflective of the ENTIRE arena?

My intent is not to argue. It is to provide another window that many miss or choose to ignore. For a variety of reasons.

Cheers,
Kris

[Brent Hutto]

That's like asking how many $120 steak dinners I have EMBRACED in my life. Talking about caddies in a discussion directed at the game of golf as a whole is like talking about the economics of 3-star restaurants in a discussion about grilling hamburgers.

[JMEvensky]

That's like asking how many $120 steak dinners I have EMBRACED in my life. Talking about caddies in a discussion directed at the game of golf as a whole is like talking about the economics of 3-star restaurants in a discussion about grilling hamburgers.

You correctly answered the original question a couple of pages ago--because most people want to ride and they're willing to pay for the privilege and clubs/owners know it and charge accordingly. It's really that simple.

[Brent Hutto]

To torture my hamburger analogy, asking why golf carts are profitable is like asking why a McDonalds franchise is profitable or asking Willie Sutton why he robs banks.

[Adrian_Stiff]

Adrian,

Cart golf is here to stay for many facilities. I recognize that. But to extrapolate that to all situations and hold it up as the way to go is flat out INNACURATE! Again, you base that on YOUR environment and put your arm around Gary's take. Wonderful.

My assertions on profitability are very sound regarding the caddie golf facilities listed. You caught KB on a slow day. That facility, on average, has CRUSHED the other offerings in that area revenue-wise (except for the Old) since it's inception. Remember, those other courses are on mainly PUBLIC ground. The St. Andrew's tracks have hordes of locals paying DIRT for the year to play them. Numbers playing on a course  doesn't always tell the complete story. In the main, they didn't have land or heavy infrastructure costs either. Fairmont...please. That place can't touch KB.  If you'll note, I'm talking MODERN facilities, not those coasting along in the slip-stream of the days when carts were non-existent.

You know little about caddie golf as you have admitted. How many caddie rounds have you embraced in your life. Note the word EMBRACED. If one has no real context on which to draw conclusions, how can what you(or anyone else) state be reflective of the ENTIRE arena?

My intent is not to argue. It is to provide another window that many miss or choose to ignore. For a variety of reasons.

Cheers,
Kris
[/quote]Kris -I am not really saying carts belong everywhere, certainly in the UK they are a small part. Equally in some parts of the world they are a big part. I play at one facility that has 3 courses and with buggies and on a good day they take $60,000, they are probably getting 300 buggie outings at $30 thats EXTREMELY profitable, WHICH is what the thread is about really. Caddies v Carts is a whole series of plusses and minusses but for different reasons, if we are talking cash and profits then Carts win. Gary eluded to a number of reasons which seem fair to me. I dont know much about Caddie programs but the problems as I see are; A caddie is quite expensive at say $50- $60 per round and the club makes nothing, so against Carts a golfer will plump often for the cheaper route, the cart. The cart yields money to the club so caddies are no financial benifit to the club. In the UK clubs with caddies are virtually over, a few cater for the American market but in the 40 years I have been playing caddies have faded. The discussion really is only about £$£$£$£ and the values of the income versus associated problems and costs. IMO Carts are hard to dismiss from the business plan. Hearsay, I was told KB has lost a lot of business to the Castle Course beca use it is significantly cheaper, I dont really know the absolute truth, but in the past year I have been there twice and its been very quiet. Fairmont has been busy, they market themselves well, they have the hotel, right location, its not all about the quality of the golf course itself, but remember we are talking about financials.

[Jason Thurman]

Kris, I appreciate your enthusiasm for walking, caddies, and capital letters, but you're just wrong. There's no comparison between facilities charging $200 per round that you cite and the 99.63% of golf courses that are trying to make a profit by catering to local players. If you're keeping the tee sheet full at $200 per round, you can probably get away with forgetting cart revenues. But if you're charging $35 a head, you can't.

Does anyone have an example of a daily fee golf course with a greens fee above $7 and below $100 that is a walking-only facility and has good profit margins?

[Gary Slatter]

Kris, sorry you feel that way about my 47 years in the golf business.  Where do you work?

We used to lend carts to Kingsbarns when they needed them.  It's a great facility, although Fairmont tees off more local golfers each year.  I reviewed their (KB) financials last year, not sure that it is the second most successful operation opened in the last 20 years.  Very dependant on the aging and shrinking US market.   Maybe in the top 100 though.  Bandon's brilliant, and Cabot is also, let's hope they make it (without adding cart paths).

The question was "Why are golf carts extremely profitable?"   Dozens of reasons, one is they allow older NA golfers to play this wonderful game longer.  Today at the club where I am working we had 98% choose to ride, and we had players from 12 to 88 years old.  One walker was 71, said he loved it, so did his son, who drove.  We even had players from Prestwick and Dublin, ENJOYING carts for their first time!

[Rich Goodale]

Rich,

Sounds like caddie hater material to me?

Calm down, now Kris!  I've done my penance as a paid caddy and still loop from time to time for friends who have beaten me in the early rounds of match play events (this is the etiquette over here in Scotland).  That being said, I have much more time for kid caddies (e.g. Eddie Lowry) than old mercenary ones (e.g. the entire shack at Cypress Point).  If I ever have to use a caddie again, I'll ask for the youngest and most gormless one they have available.  He might be able to teach me something and vice versa.  One's golfing life is far too short to spend 4 hours with a 47-year old prima donna who cares only to get in and get a 25% tip.

Rich

[Tony_Muldoon]

  Very dependant on the aging and shrinking US market. 

Gary have you any figures that support that?  It would be very interesting to see them, I wonder how many of the 'bucket list' courses are planning for this.

[Jud_T]

Guys,

The reality today is that many private clubs require that you take caddies if they are available whether you walk or ride.  Why is this?  Because otherwise THERE'D BE NO CADDIE PROGRAM as most everyone would ride, carry or pull.  Honestly, except at a top course that I've never played before, the only reason I take a caddie is to carry my bag because my knees and back are shot but I still enjoy walking, and hopefully he/she will find that 1 lost ball that may swing the betting.  I agree that it's nice to help out a high school or college kid as well.  The only time to take a pro jock is if they're really knowledgeable and you're in a tournament or a big money game.  And don't get Shivas started on doubles...

[Kris Shreiner]

Cart golf = profit and a healthy game? Really.

Rich, Read your most recent post again.