The Cost of Building An Upscale Club

[Jeff_Brauer]

Jeff:

I disagree with your premise that costs are generally the same across the board.  Costs are the same if you build everything to the same standard ... it's the standards that need to change.

I just did a detailed budget for a potential new project in Michigan.  Actually we did two budgets so the owner could understand what he was getting into ... one with USGA greens and tees built out of mix and wall to wall cart paths, and one where the greens and tees would be built from native soil and the paths were green-to-tee only and the irrigation spacing was a bit wider.

The two budgets came in at $4.2 million and $2.8 million, respectively.  Or, in other words, the "modern standards" cost 50% more than the old way of doing things.  And I'll be damned if most golfers would know the difference.

And I disagree about sod too ... my best-conditioned courses today are the ones where we used zero sod in the grow-in process.

I guess if it were a walking only club you could save the money.  On the other hand, I cannot think of more than a handful of clubs without cart paths.

Otherwise, my presumption was of a typical upscale club in any big metropolis USA, on normal (to me) clay soils, etc., and not even a Chechessee Creek, which as noted is a second club for most.

So, besides cart paths, and USGA greens (I rarely use them, but presumed the certified super from some other big name club comes over, etc.  I doubt you could convince that type to go topsoil greens, although, if it were a 10K round club, it would have the best chance of doing so.

So, you can continue your argument that standards must change, and that could be an interesting debate, but my answer was tailored to my expectations from a theoretical membership.

BTW, I think I clarified that seeding and netting yields great results, especially when the sod subsoil and the site subsoil don't match.  My best comparisons are the Giant's Ridge (sodded) and Wilderness (seeded) nearly side by side.  Results ended up about equal.  Hard to know all the ins and outs of what the weather was, grow in program, superintendents experience, etc. but yes, in those cases, grow in was pretty similar.  What I could tell the difference between sod and see was areas at Giant's Ridge NOT sodded next to sodded areas.

[RJ_Daley]

On the Bull Valley thought, the big question for me is can it be turned into something truly *special*, and how much will the clubhouse kill you.  I had a friend that wanted to get some people together to buy it, and I kept saying as it is, you just can't cash flow it.  I wasn't creative enough to think outside the box until I saw your renovation work and this thread (not to mention, I really don't have the money to chase a project like that).  

Man, I looked at that website for BV:
http://www.bullvalleygolfclub.com/course-description

Andrew, IMHO you couldn't get Alister MacKenzie to come back from the grave to remodel the course for free and not have an overly built somebodies grandiose pipe dream like that which would not eventually eat you up, despite acquiring it for 1.7.  Looking at the website, F&B expectations, events expectations, and considering what it takes to run those operations year around, and most important the plethora of 'clubs' in that northern tier of N. Illinois as competition; I just can't see it.  I used to look into various situations like that and passed a few by, having feet of clay when I started to consider what the writing on the wall was for long term viability, and how people in various economic era likely smarter than I, failed.  They all get eaten by the market pressures, expectations, and it never seems to have much to do with the quality of the golf course.  BV looks like a graduate course study in grandiose plans (perhaps home builders 'may' have made money-but they are long gone).  But, the golf and club operations were left for the dreamers.  I may be full of it, but you could not hand me the keys for free with a market and infrastructure like that.  Just look at that Twitter feed of the superintendent and his recent rain deluge challenges, in context with tight budgets, and competition of so many other area clubs.  And, it isn't even set up to be remodeled to a golf only club, readily apparently walkable through the parade of homes.

These situations are best left to people of very deep pockets, patrons of golf like Kaiser, Kohler, Trump, etc.  Dreamers and schemers with an idea to outfox the market forces by buying low and living the dream, yet so many that have already failed (often multiple times), all believing they are just a bit smarter, are just lambs to the slaughter, IMHO.  

[Jeff_Brauer]

That would be an interesting speculative topic....if Mac, Ross or whoever came back from the grave, what new technologies would they adopt?  Certainly greens construction research and irrigation were well known, but less sophisticated at the time.  Would they insist on the simpler construction techniques of yesteryear, based on whatever writings we have in their career?

[Tim_Cronin]

On the Bull Valley thought, the big question for me is can it be turned into something truly *special*, and how much will the clubhouse kill you.  I had a friend that wanted to get some people together to buy it, and I kept saying as it is, you just can't cash flow it.  I wasn't creative enough to think outside the box until I saw your renovation work and this thread (not to mention, I really don't have the money to chase a project like that).  

Man, I looked at that website for BV:
http://www.bullvalleygolfclub.com/course-description

Andrew, IMHO you couldn't get Alister MacKenzie to come back from the grave to remodel the course for free and not have an overly built somebodies grandiose pipe dream like that which would not eventually eat you up, despite acquiring it for 1.7.  Looking at the website, F&B expectations, events expectations, and considering what it takes to run those operations year around, and most important the plethora of 'clubs' in that northern tier of N. Illinois as competition; I just can't see it.  I used to look into various situations like that and passed a few by, having feet of clay when I started to consider what the writing on the wall was for long term viability, and how people in various economic era likely smarter than I, failed.  They all get eaten by the market pressures, expectations, and it never seems to have much to do with the quality of the golf course.  BV looks like a graduate course study in grandiose plans (perhaps home builders 'may' have made money-but they are long gone).  But, the golf and club operations were left for the dreamers.  I may be full of it, but you could not hand me the keys for free with a market and infrastructure like that.  Just look at that Twitter feed of the superintendent and his recent rain deluge challenges, in context with tight budgets, and competition of so many other area clubs.  And, it isn't even set up to be remodeled to a golf only club, readily apparently walkable through the parade of homes.

These situations are best left to people of very deep pockets, patrons of golf like Kaiser, Kohler, Trump, etc.  Dreamers and schemers with an idea to outfox the market forces by buying low and living the dream, yet so many that have already failed (often multiple times), all believing they are just a bit smarter, are just lambs to the slaughter, IMHO.  

A very wise Chicagoan with a golf portfoilo and a vision for excellence looked closely at Bull Valley, and passed.

[David_Tepper]

Why build when you can buy for well under $2.5 mil?

http://commercialsearch.savills.co.uk/property-detail/2693

[Paul Gray]

I guess if it were a walking only club you could save the money.  On the other hand, I cannot think of more than a handful of clubs without cart paths.

Why the need for cart paths anyway on US courses?

Rainy Britain seems able to cope with carts on fairways, and I'm not referring solely to links and heathland courses.

[Jeff_Brauer]

David,

That is an issue that will keep new golf course construction in the dumper for a while.  The construction boom was fueled in part because it was almost as cheap to build new as to buy used.  That in part came from a few well funded golf management groups/REITS who paid high prices just because they had the money to spend, and not because of any ratios of investment to income.

One problem with buying a used golf course is you don't know exactly what capital improvements you might need to bring it back in shape. There are always the obvious ones, but you never know for sure.  Another is whether you can truly turn the image of a failed place back to a successful one, with some spruce ups, a new name, etc.  You may buy for $2.5M, and spend another $2.5 in spruce ups/image changes, capital improvement catch ups, etc.  Still cheaper than starting from scratch, especially if you consider permitting and land costs.

I have put in an underfunded offer to buy a golf course, but feel lucky that the Owner has passed on my lowball offer.....

Paul,

I don't know other than we do get concentrated wear areas, perhaps self inflicted solely because there are cart paths.  However, the majority of those who run and make money from golf courses seem to think they are imperative, and few are willing to try courses without them.  Is this just herd mentality and golfclubatlas.com knows something they don't?

[Chris Johnston]

"The two budgets came in at $4.2 million and $2.8 million, respectively.  Or, in other words, the "modern standards" cost 50% more than the old way of doing things.  And I'll be damned if most golfers would know the difference."

Having seen the old ways firsthand, I''d bet the lower cost version would be much better.  $1.4 million (difference) is a lot of sunk cost and could be the difference between comfortable and intensive care.

Better is better.

[Andrew Buck]

On the Bull Valley thought, the big question for me is can it be turned into something truly *special*, and how much will the clubhouse kill you.  I had a friend that wanted to get some people together to buy it, and I kept saying as it is, you just can't cash flow it.  I wasn't creative enough to think outside the box until I saw your renovation work and this thread (not to mention, I really don't have the money to chase a project like that).  

Man, I looked at that website for BV:
http://www.bullvalleygolfclub.com/course-description

Andrew, IMHO you couldn't get Alister MacKenzie to come back from the grave to remodel the course for free and not have an overly built somebodies grandiose pipe dream like that which would not eventually eat you up, despite acquiring it for 1.7.  Looking at the website, F&B expectations, events expectations, and considering what it takes to run those operations year around, and most important the plethora of 'clubs' in that northern tier of N. Illinois as competition; I just can't see it.  I used to look into various situations like that and passed a few by, having feet of clay when I started to consider what the writing on the wall was for long term viability, and how people in various economic era likely smarter than I, failed.  They all get eaten by the market pressures, expectations, and it never seems to have much to do with the quality of the golf course.  BV looks like a graduate course study in grandiose plans (perhaps home builders 'may' have made money-but they are long gone).  But, the golf and club operations were left for the dreamers.  I may be full of it, but you could not hand me the keys for free with a market and infrastructure like that.  Just look at that Twitter feed of the superintendent and his recent rain deluge challenges, in context with tight budgets, and competition of so many other area clubs.  And, it isn't even set up to be remodeled to a golf only club, readily apparently walkable through the parade of homes.

These situations are best left to people of very deep pockets, patrons of golf like Kaiser, Kohler, Trump, etc.  Dreamers and schemers with an idea to outfox the market forces by buying low and living the dream, yet so many that have already failed (often multiple times), all believing they are just a bit smarter, are just lambs to the slaughter, IMHO.  

RJ, I tend to agree with you.

To be clear, the friend who brought it up a few times was never really serious and more knee jerk thinking because the price was so low.  

The craziest part of the club, IMO, is that they are a "golf only" club.  No pool or tennis courts to attract families.  But as a "golf only" club (without a storied history) they have a 37,000 sq foot clubhouse, which makes no sense.  I think their superintendent does an amazing job with the course, and it's my understanding is it's run with as modest of a maintenance budget as there is.  With that location, it needs to be truly special, or the clubhouse needs to be bulldozed over, in my very novice opinion.  It doesn't surprise me that some big names looked at it and passed.

[JMEvensky]

Why build when you can buy for well under $2.5 mil?

http://commercialsearch.savills.co.uk/property-detail/2693

A local,member-owned club just had a small group of members buy the bank debt and now own the club.The replacement cost might be 5X what they paid--if not more.

But the buyers are more interested in keeping their club afloat than some future payoff.This wasn't exactly charity--but it sure wasn't a prudent real estate investment.

[Andrew Buck]

Paul,

I don't know other than we do get concentrated wear areas, perhaps self inflicted solely because there are cart paths.  However, the majority of those who run and make money from golf courses seem to think they are imperative, and few are willing to try courses without them.  Is this just herd mentality and golfclubatlas.com knows something they don't?

The private course I belong to does not have continuous paths, and it's fine most the year, but does get beat up in spring, and we do lose a few days after heavy rains.  With a short golfing season, we allow carts a few days we shouldn't as well which really tears up the roughs.

This year I had a group of 12 in town on a beautiful Friday, and we had to move our round to the semi-private course with continuous paths to play because of heavy rain the previous day.  Now, if the difference is $500k, you need a lot of "lost" rounds to make it up, however.

[Anthony_Nysse]

Jeff:

And I disagree about sod too ... my best-conditioned courses today are the ones where we used zero sod in the grow-in process.

Many courses use sod for purity and instant gratification. Courses that Doak, C&C and other design would lose a lot of the ruggedness and many of the unique features if sodding was done. The machines and manpower would change the look too much-too many hard edges. Phil Cricket is even sodding greens. Sod also eliminates the chances of wash out

[David_Tepper]

JMEvensky -

Sorry, I am a little confused.

"A local,member-owned club just had a small group of members buy the bank debt and now own the club.The replacement cost might be 5X what they paid--if not more."

1) Are you saying that a group of members at a club near St. Margarets has purchased the St. Margarets property?

"But the buyers are more interested in keeping their club afloat than some future payoff.This wasn't exactly charity--but it sure wasn't a prudent real estate investment."

2) Are you saying that they bought St. Margarets primarily as an investment speculation and more to protect their current club rather than to operate St. Margarets as a going concern?

DT

[JMEvensky]

JMEvensky -

Sorry, I am a little confused.

"A local,member-owned club just had a small group of members buy the bank debt and now own the club.The replacement cost might be 5X what they paid--if not more."

1) Are you saying that a group of members at a club near St. Margarets has purchased the St. Margarets property?

"But the buyers are more interested in keeping their club afloat than some future payoff.This wasn't exactly charity--but it sure wasn't a prudent real estate investment."

2) Are you saying that they bought St. Margarets primarily as an investment speculation and more to protect their current club rather than to operate St. Margarets as a going concern?

DT

Sorry for the confusion--"local" to me.This happened in Memphis.

[Jeff_Brauer]

Paul,

I don't know other than we do get concentrated wear areas, perhaps self inflicted solely because there are cart paths.  However, the majority of those who run and make money from golf courses seem to think they are imperative, and few are willing to try courses without them.  Is this just herd mentality and golfclubatlas.com knows something they don't?

The private course I belong to does not have continuous paths, and it's fine most the year, but does get beat up in spring, and we do lose a few days after heavy rains.  With a short golfing season, we allow carts a few days we shouldn't as well which really tears up the roughs.

This year I had a group of 12 in town on a beautiful Friday, and we had to move our round to the semi-private course with continuous paths to play because of heavy rain the previous day.  Now, if the difference is $500k, you need a lot of "lost" rounds to make it up, however.

Some clubs aren't willing to forego or even take the chance on losing that much revenue.   They also prefer a one time construction cost to small and unpredictable cost nibbles every year.  

The math is some guesswork, but is it better to have $45K in annual debt (approximate debt on $500k of cart paths) and be almost guaranteed revenue right after the approx. 20-30 rain days a year or is it better to save the $45K, spend $5-10K re-sodding, roping, etc. and potentially lose under $35K in revenues?
  
Obviously, most courses have opted for the greater certainty, and if the wackier weather associated with global warming comes true (or they believe it will) that decision will become even easier.

[Brent Hutto]

I've got to channel the former GCA'er who must not be named and ask does it ever occur to anyone to WALK the golf course when it's too wet for golf carts.

Sorry, just had to get that out. It was chafing a bit...

[Jud_T]

What are the cost differences between building on a nice sandy-based site and a clay field?  Construction, irrigation, wall-to-wall paths vs. only green-to-tee, ongoing maintenance etc.?

[Jud_T]

My ideal clubhouse: Can't be more than 1200 sq. feet:

http://www.boothhansen.com/projects/the-dunes-club-clubhouse/

[JMEvensky]

I've got to channel the former GCA'er who must not be named and ask does it ever occur to anyone to WALK the golf course when it's too wet for golf carts.

Sorry, just had to get that out. It was chafing a bit...

It's getting harder to get people to just walk from the cart paths. Ask your Pro Shop how many people will call after a rain storm to see if the golf course is "cart path only". A lot of them will refuse to play.

[Brent Hutto]

No, I meant walk the course. Not slogging 10 miles worth of back and forth to a cart parked on a path. I wouldn't wish that sort of 6-hour death march on anyone.

[Wade Whitehead]

JC:

The clubhouse at my favorite golf course didn't cost $5M, and it serves it purpose quite nicely.

WW

[Lou_Duran]

Some clubs aren't willing to forego or even take the chance on losing that much revenue.   They also prefer a one time construction cost to small and unpredictable cost nibbles every year.  

For a private club, not allowing carts out because of possible turf damage is a sure way of losing members.  For a daily fee facility, it would mean losing market share.  Whether we like it on this site or not, riding carts are preferred by members and customers at most places in the U.S. and a necessity in many climates (Phoenix, Palm Springs, Vegas, Dallas, Miami, Atlanta, etc.) much of the year.  Regardless of the type of course I was building in any of these areas, it would have cart paths.  BTW, I notice a lot of riders amongst our GCA.com brethren, particularly if the cart is included in the fee.  Even at the walking-only Red Course at Dismal River, a number of participants obtained special dispensations to ride.

As to the subject of the thread, I would think that the bulk of the cost variance is due to the location.  A 4,000 s.f. house where I live in Frisco, TX can be had for $350 to $700k.  The same house 25 miles south in Highland Park is $2.5 to $5+ Million.  The main difference is the cost of the land.

In certain parts of the country, availability of water would be a major factor, as are the environmental and zoning regulations.  I suspect that getting a golf course built in Orange County, CA would be nearly impossible today.  Near Frisco, TX, $5M for land, $5M for golf, $5M for clubhouse, maintenance facilities, FF&E, etc.  or $15M for a killer Brauer signature course; eye-candy AND subtlety, perfect bunkers, and a full fleet of top-of-the-line carts with built in stereo and beer coolers included.  Maybe we can get Jerry Jones to GP the deal while he is building his headquarters and practice facilities in the city.  He could probably get it done with no money out of his pocket and still retain the naming rights.      

[Adrian_Stiff]

You can obviously spend anything on building a golf course, I dont think you get what you pay for by paying much more than $5,000,000 for the lot, most figures upwards of 5M are just wasting money and largely thats backed up in the resale's price.

In the UK, Greens cost $20,000 perhaps 30,000 so multiply that by 20, tees dont really cost much, perhaps $5,000 per hole, Irrigation perhaps $400,000, for greens, tees and twin row fairway. Shaping costs perhaps $200,000, Drainage another 150K, Seeding is about 50K.

A reasonable clubhouse might cost $750,000, $250k for the furnish, $400k for machinery, car park, roads, maint store, project management a $100,000 design fee and the land cost. Things can be much skinnier and its my experience the skinnier the better if you are thinking of making a profit. Location is everything in the UK, a golf course in the herbrides might look great to a few but not to a banker, it needs people and lots of them.

I have got very busy again because my customers want things done at a reasonable price, I can probably build 18 holes for less than most architects design fees. I just cant see the Western world wasting money again and making the sort of mistakes that got made.

[Andrew Buck]

No, I meant walk the course. Not slogging 10 miles worth of back and forth to a cart parked on a path. I wouldn't wish that sort of 6-hour death march on anyone.

It's unfortunate but almost no one walks.  I have one guy who will walk with me early in the morning, and one other who would maybe consider it.  I walk a ton early morning before work by myself or with my friend.  Other than that, I've tried and I have a very, very hard time walking when I'm the only guy in the group doing it.  Even in the club championship I tried to walk, but we were in twosomes, and it was very difficult to have my competitor ride up to his ball and wait, so I ended up riding with him.

It's more enjoyable for me to walk than ride, but that changes if the others are riding, for me.

[Brent Hutto]

Seriously, though. I don't want to derail the excellent discussion on economics and such. I feel your pain, Andrew. Bummer.