[Chris Shaida]

The challenge is obviously bank rolling such an idea, building, succeeding and then replicating.

For the sake of the game in the US, I hope there is a way to make a model such as this work. Affordable, walkable, thoughtful golf design on shorter courses with strong junior programs, some sort of caddie/maintenance program for high school / college kids and ties to the community.

John K,

Fantastic discussion! Two ideas to add to your (hypothetical) business plan/model:
1) make explicit the multiple forms of 'return' and the multiple 'currencies' in which those returns would be realized.  That is, a number of posters have alluded to this (WPA, junior golf, communities, etc.) but for this to work on a repeatable basis you almost certainly need to have a structural class of 'investment' that doesn't expect it's return in USD -- this would include various forms of government, community associations, trade associations (ie the USGA, equipment manufacturers) which have an interest in a specific project or range of projects for reasons other than getting a cash return.  If your model explicitly accounted for those -- an explicit public/private structure but with the twist that the 'public' is not a single, monolithic perjoratizable (not a word but...) thing (like the federal govt) but might be somewhat different in each case then the math might become more interesting

2) an add to the point above about 'not dumbing down' -- if you made explicit that the difference was that it's all about the course -- no fancy clubhouses, no shiny pro shops, no halfway houses, whatever -- you might be able to get across something other than 'cheaper'.  The time has probably passe for this marketing line but something like 'it's ALL about the course, stupid...' to get across the point that the OLD model -- in trying to many things (fancy clubhouse, parking attendants, etc.) watered down the essential thing -- the golf course.

[Stephen Davis]

We actually found a site - a course that is open for play with great drainage but poor management. Unfortunately the land ask was too expensive.

Started kicking around this idea in 2009 - many of the same ideas as John's - The goal was (hopefully is one day) to build the first course and then repeat the model in other cities.

Yes, it is walking only which will limit the demographic, but a strong junior program and fairly short course on flat land would make it very enjoyable for golfers of all skill levels and ages.

http://www.walkerscourse.org/

The challenge is obviously bank rolling such an idea, building, succeeding and then replicating.

For the sake of the game in the US, I hope there is a way to make a model such as this work. Affordable, walkable, thoughtful golf design on shorter courses with strong junior programs, some sort of caddie/maintenance program for high school / college kids and ties to the community.

Rob,

Having just moved from Oregon a month ago, I can tell you that I would have loved a place like this. I love walking a course and there are too few courses in the Willamette valley that are dry enough in the winter to still be a enjoyable walk, although I still walked them. I can't wait to hear more about this project.

[Bradley Anderson]

As long as we're floating ideas:

What if you built this model in the inner city areas where most of the homes have become vacant?

And the golf course would hire the people and contractors in those communities to develop the site, with the help of an architect, and then run the operations?

There are areas in Detroit where you could actually do this and you could apply for grant money.

The golf course could also be built to operate on sustainable models that would employ a greater number of people. For instance, if you operate with NO CARTS the course would employ a corp of young people from the community to caddie. The greens, tees and approaches could be hand mowed with electric mowers. The fairways and rough could be planted to fescue and watered sparingly - you can get away with that on a public course if you don't have carts.

[Tom_Doak]

As long as we're floating ideas:

What if you built this model in the inner city areas where most of the homes have become vacant?

And the golf course would hire the people and contractors in those communities to develop the site, with the help of an architect, and then run the operations?

There are areas in Detroit where you could actually do this and you could apply for grant money.

The golf course could also be built to operate on sustainable models that would employ a greater number of people. For instance, if you operate with NO CARTS the course would employ a corp of young people from the community to caddie. The greens, tees and approaches could be hand mowed with electric mowers. The fairways and rough could be planted to fescue and watered sparingly - you can get away with that on a public course if you don't have carts.

Bradley:

I can tell you there would be a lot of interest in that from the city of Detroit.  I spoke with Mayor Bing about just that, briefly, at the opening for our Midnight Golf project -- and the mayor was the one who brought it up!  But, he's got a lot more pressing problems to deal with ...

I think some others have proposed similar deals already, but of course they all want to get some real estate for free out of it ... none of the big-money players in the city are going to do it for the good of golf.

[Bradley Anderson]

Tom,

I think the hardest part would be tying off all the utilities, e.g. sewer, gas, electric, water mains etc. And when you start making cuts you might even hit asbestos cement lines - who knows.

But the soil in those neighborhoods is some really good material to work with. The best guy to work out the grassing of something like this might be Tom (can't remember last name) former CD superintendent - you probably know him.

[Tom_Doak]

Bradley:

That would be Tom Mead, whom I know very well ... he worked for me for several years, at High Pointe and Lost Dunes and Atlantic City CC.

[Bradley Anderson]

Tom,

Gentrification would ruin the entire concept. This would be about golf helping the community. Gentrification hurts inner city people.

If there is going to be a next wave of golf construction projects again in this country, for God's sake lets keep the real estate idiots out of it. They ruined golf in America.  

And keep the NGF (national goof association) out of it too!

[Mike Hendren]

John, you list the first benefit as "provide a superior product" yet borrow from the McDonald's brand in your thread title.  There is a HUGE mass market out there that either doesn't want or doesn't care about superiority, whether it's burgers or golf courses.  They simply want to satisfy a need by buying a known commodity of acceptable quality at an affordable price, preferably with a limited time commitment.  I fear this is where your plan breaks down.  The mass golf market has no need of golf course architecture, at least not as we discuss it.  They certainly won't pay for it, or favor it over a course that's closer and cheaper, at least not on a repeat basis.  Given them true greens, grass on the tees and carts and they're good to go.   

Absent land cost, the economics are otherwise compelling.  30,000 rounds a year at $50 minus operating costs of $500,000 yields $1,000,000 cash flow repesenting a 20% yield on a $5,000,000 investment.  It's a lot easier to find 1.0 acre for a McDonald's than it is 125 acres for a golf course.  That, and a McDonald's can simply locate at an interstate exchange to capture transientand local  traffic.  Not sure many people will see a golf course and pull over. 

As always your theory is well reasoned and I appreciate the time you've taken to lay it out.  Forgive me for being so pessimistic.

Bogey

[Tom_Doak]

30,000 rounds a year at $50 minus operating costs of $500,000 yields $1,000,000 cash flow

That WOULD be compelling ... except that I'm not sure that there is a course anywhere on Earth doing 30,000 rounds on a total operating budget of $500,000.  The operating numbers I hear from various courses (my own and others) are just mind-boggling to me.

[John Kirk]

Hi Bogey,

I was assuming a $300-500k course maintenance budget, which excludes all other functions, with the general logistics of greeting and taking care of customers a significant expense.  I think a course would be hard pressed to keep its total operating budget under $1M.  $1.5M is probably closer to reality, which means your pessimism is justified.

[Mike_Young]

30,000 rounds a year at $50 minus operating costs of $500,000 yields $1,000,000 cash flow

That WOULD be compelling ... except that I'm not sure that there is a course anywhere on Earth doing 30,000 rounds on a total operating budget of $500,000.  The operating numbers I hear from various courses (my own and others) are just mind-boggling to me.

I know a couple with operating budgets of $675,000 doing 35000 at average of about $33 rounds...it can be done....While it is rarely discussed I think the next big savings will be operating the clubhouse operation from a ticket booth type of scenario.  That saves a ton and could probably get you near the $500,000 number...

[Eric Smith]

30,000 rounds a year at $50 minus operating costs of $500,000 yields $1,000,000 cash flow

That WOULD be compelling ... except that I'm not sure that there is a course anywhere on Earth doing 30,000 rounds on a total operating budget of $500,000.  The operating numbers I hear from various courses (my own and others) are just mind-boggling to me.

I know a couple with operating budgets of $675,000 doing 35000 at average of about $33 rounds...it can be done....While it is rarely discussed I think the next big savings will be operating the clubhouse operation from a ticket booth type of scenario.  That saves a ton and could probably get you near the $500,000 number...

Mike, Is there a structure for cart storage in this scenario? Certainly a dual usage option with it if so, no?

[Mike_Young]

30,000 rounds a year at $50 minus operating costs of $500,000 yields $1,000,000 cash flow

That WOULD be compelling ... except that I'm not sure that there is a course anywhere on Earth doing 30,000 rounds on a total operating budget of $500,000.  The operating numbers I hear from various courses (my own and others) are just mind-boggling to me.

I know a couple with operating budgets of $675,000 doing 35000 at average of about $33 rounds...it can be done....While it is rarely discussed I think the next big savings will be operating the clubhouse operation from a ticket booth type of scenario.  That saves a ton and could probably get you near the $500,000 number...

Mike, Is there a structure for cart storage in this scenario? Certainly a dual usage option with it if so, no?

Actually both have clubhouses and cart storage....2500 sq ft clubhouse and 6000 sq ft clubhouse

[Don_Mahaffey]

In many cases golf courses can be operated for a lot less then we've come to expect.
But it takes a different approach.

If you are going to operate your course with an extremely low maintenance budget, it takes people on the ground who want to make it happen. In golf, we usually pay the superintendent based on the budget; high budget = high pay, low budget = low pay. Try this approach in your low end business plan and you usually end up with a lot of turnover and poor results over the long term. Its easy to operate on a low budget for a year or two, just don't fix anything, defer maintenance, and it will look OK for a while, then crumble.  Don't have to look far to see this example.  Just check out most any course for sale, you'll usually see a parking lot full of pot holes, clubhouse with wood rot, and a maintenance facility in disarray.

If you want to operate on a low budget over the long term you need a good superintendent. Best case he's a part owner and completely on board with doing the most for the least, 2nd best case he's on a profit sharing program based on positive cash flow.

To be successful, you need a quality product that is very efficiently operated. You will not get that with a new guy coming in every year. Superintendent has to be invested in the results.

[Ben Sims]

I would like to do an exercise in deductive reasoning.  If we reason that 30,000 rounds a year for an 18-hole facility is ambitious, and that many would consider a $50/round average (think about what it costs to play weekdays, weekend, prime time, twilight, repeat rounds, etc) ambitious as well, yet a $1.5MM yearly budget is possibly a touch low; is there any wonder why so many good public facilities are dying? 

The holy grail right now doesn't include the numbers above.  It includes developing a golf course and clubhouse infrastructure that costs much less than 1.5MM a year.  I don't think it is hard to charge $50 on the weekend, $35 during the week, and $25 at twilight in this economy in an average American city or town.  But the trick is to develop a budget around what you can charge, not charge what your budget is.  It's a paradigm shift.  Some guys get it.  Most of the industry doesn't. 

[John Kirk]

I have to believe that attempts to market and brand your golf course, by selling your own logo shirts, hats and golf balls, is expensive and rarely profitable.  I say that without data to back it up, but that marketing stuff seems best suited to high-end clubs and resorts, if anyone.

[Sean_A]

30,000 rounds a year at $50 minus operating costs of $500,000 yields $1,000,000 cash flow

That WOULD be compelling ... except that I'm not sure that there is a course anywhere on Earth doing 30,000 rounds on a total operating budget of $500,000.  The operating numbers I hear from various courses (my own and others) are just mind-boggling to me.

And here I was trying to look at my club's accounts critically to figure out how to trim some expenditure from a £614,000 total operating budget.  While I can see a much more streamlined public course raking in more than our £54,000 net profit, I am still struggling to see a course make a gross million on 30,000 rounds on an average of 50 bucks a go. 

One thing which impresses me about our club is it is not complacent.  The officers and Sec are always looking for ways to increase income and cash flow.  A new deal for 2013 is selling up front guest fees.  They are selling 5 for £100.  I think this is a brilliant idea.

Ciao   

[Mike Hendren]

As a commercial banker I understand the challenges of making money in a mature industry during a zero growth economy.  If you can't grow the top line, you must operate more efficiently.  I know zero about golf course operating expenses, but it seems to me somebody in the industry should be smart enough to run an 18 hole golf course at $500,000/year, particularly if it is built with that target in mind.

Do the chemical purveyors have an incentive to make that happen?
Does the superintendent have an incentive to make that happen?
Do equipment salesmen have an incentive to make that happen?

The little clubhouse at Olde Mac is perfect - just use cheaper materials.
Pre-engineered steel metal building for maintenance.
No range.
Modest to small sized greens.
Few bunkers.
Max 6500 yards par 70.
Prudent turf choices.

It can be done BECAUSE IT HAS TO BE DONE.

Bogey

[Jud_T]

Here's your chance.  9 Hole Donald Ross with room to expand.  No reserve:

http://golfcoursesforsale.com/modules.php?name=Realty&file=detail&id=45076

[Sean_A]

As a commercial banker I understand the challenges of making money in a mature industry during a zero growth economy.  If you can't grow the top line, you must operate more efficiently.  I know zero about golf course operating expenses, but it seems to me somebody in the industry should be smart enough to run an 18 hole golf course at $500,000/year, particularly if it is built with that target in mind.

Do the chemical purveyors have an incentive to make that happen?
Does the superintendent have an incentive to make that happen?
Do equipment salesmen have an incentive to make that happen?

The little clubhouse at Olde Mac is perfect - just use cheaper materials.
Pre-engineered steel metal building for maintenance.
No range.
Modest to small sized greens.
Few bunkers.
Max 6500 yards par 70.
Prudent turf choices.

It can be done BECAUSE IT HAS TO BE DONE.

Bogey

Bogey

All I can say is most of the very modest courses I profile for folks here don't raise much interest.  I am sure courses can be run for half a million and I am sure there are examples of fine courses on that sort of budget, but to gross a million out of it is what makes me scratch my head. 

Ciao

[Peter Pallotta]

Don's good post made me think that a re-imagining of ownership would help moving forward, a healthier/more sustainable and more collaborative concept of who the stakeholders are and how the costs and returns can be shared amongst them. The model of the money-bag client/owner who takes all the risks and reaps most of the the rewards is one way, but not the only way. Can we embrace a different model? Dare I say, a co-operative, with architects and supers and head pros and money men sitting down together from the outset and hashing out both the vision and the details for a golf course that actually works both short and long term, and for everyone involved. Where there's a will there's a way -- but aside from Don and a few others, I don't see much of a will from any of the potential players. That's fine too.

Peter

[Craig Van Egmond]

I am still waiting for the GCA owned course.

[Tom_Doak]

Don's good post made me think that a re-imagining of ownership would help moving forward, a healthier/more sustainable and more collaborative concept of who the stakeholders are and how the costs and returns can be shared amongst them. The model of the money-bag client/owner who takes all the risks and reaps most of the the rewards is one way, but not the only way. Can we embrace a different model? Dare I say, a co-operative, with architects and supers and head pros and money men sitting down together from the outset and hashing out both the vision and the details for a golf course that actually works both short and long term, and for everyone involved. Where there's a will there's a way -- but aside from Don and a few others, I don't see much of a will from any of the potential players. That's fine too.

Peter

Peter:

I've tried this approach on more than one occasion.

The problem is that generally, the money men listen to everyone else's ideas and then set up a deal where they keep most of the profits themselves ... and then everyone else gets jaded and leaves them to it ... and then they fail, because they really never understood the idea of running the business as a co-operative, to begin with.

I think you've got to keep the money men out of it altogether, except if they are willing to DONATE to support a good cause.  The good news is there are a lot of those kinds of people in the world of golf, too.

[Tom_Doak]

I am still waiting for the GCA owned course.

Craig:

Not to be too flippant, but Golf Club Atlas Developments turned out not to be a co-op, either.

[Craig Van Egmond]

I am still waiting for the GCA owned course.

Craig:

Not to be too flippant, but Golf Club Atlas Developments turned out not to be a co-op, either.

True.   I'm not sure how well having 1500 owners would work out anyway.   

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