Cost to acquire a golf club

[Rob Marshall]

I played with a friend yesterday who is a member of the Venetian Golf and River club in Venice Florida. He said that Lennar had sold the club to a company that owns an manages clubs. It’s supposed to close in October. The members offered 2.8 million and they think it went for around 4 million. Doesn’t that seem cheap? I’ve played the course. It has a bunch of replica holes and it’s a course. I have to imagine that they are selling it for a loss at that price. Am I all wet on that?


https://www.venetiangolfandriverclub.com/

[Joel_Stewart]

Valuations are all over the place depending on your location.  A couple of years ago you could buy at 2X to 5X net earnings. 


About 5 years ago I had a public course that was privately owned offered to me for free but it was out of the way, losing money and needed a few million to renovate. Even then it was probably going to lose money.

[John Emerson]

There are SO many questions that would need to be answered before anyone one could say if a club is worth the asking price.

[Tom_Doak]

Rob:


The golf course was a loss leader that helped Lennar sell all their real estate.  Anything they get for it in a sale is gravy.


You are correct that the buyer couldn’t build the course themselves for $4 million, so it’s a good deal from that perspective.  But once the course opens its doors, that money’s gone and the only factor in play is how much it can net in revenues each year.  If it can’t make money then it’s not worth $4m, it’s worth zero.

[Dave Doxey]

A 27 hole course by a name designer is dormant near me.  Built in the late 90’s, it operated for only a few years.  Lien holder gave it free to the HOA after being unable to sell it.  The HOA has been unsuccessful in either selling the course or  finding a firm to operate it at a zero dollar lease.  Zoning makes the land unusable for any development.


I’m not knowledgeable in golf course economics, but it fascinates me that this place can’t operate at least at a break even level with no debt.

[David_Tepper]

Take your pick!

https://www.loopnet.com/search/golf-courses-and-driving-ranges/usa/for-sale/

https://golfcoursesforsale.com/

[Rob Marshall]

Rob:


The golf course was a loss leader that helped Lennar sell all their real estate.  Anything they get for it in a sale is gravy.


You are correct that the buyer couldn’t build the course themselves for $4 million, so it’s a good deal from that perspective.  But once the course opens its doors, that money’s gone and the only factor in play is how much it can net in revenues each year.  If it can’t make money then it’s not worth $4m, it’s worth zero.

If you can’t develop the land I guess you’re right. At one time I think they were getting 40k initiation fees. My buddy joined last year for a $1000. It’s a nice track and was in good condition when I played it in May.

[Steve_ Shaffer]

Re: Venetian


Refundable Golf Membership $12,500 Initiation Fee


Non-Refundable Golf Membership $7,000 Initiation Fee


https://www.venetiangolfandriverclub.com/venetiangolfandriverclub.com/files/VEN%20Membership%202021%20LD.pdf

[David_Tepper]

https://www.venetiangolfandriverclub.com/venetiangolfandriverclub.com/files/VEN%20Membership%202021%20LD.pdf

[Rob Marshall]

Re: Venetian


Refundable Golf Membership $12,500 Initiation Fee


Non-Refundable Golf Membership $7,000 Initiation Fee


https://www.venetiangolfandriverclub.com/venetiangolfandriverclub.com/files/VEN%20Membership%202021%20LD.pdf

Steve, don’t know what to tell you but I just confirmed with him he payed  $1000. Dues $7800, and he pays a $2600 trail fee. He lives in the development.

[David_Tepper]

On a related topic:

"There’s a Flurry of Dealmaking in Golfing, Boating, and Other Leisure Activities"

https://www.bloomberg.com/news/articles/2021-09-15/mergers-and-acquisitions-in-golfing-boating-boom-during-covid-pandemic?srnd=premium

[AChao]

100% correct on it being worth zero once the money to buy the course is gone.  I was looking at a course a while back and calculated that I would want the existing owner to pay me a fair amount before I'd be willing to buy it. 

Rob:


The golf course was a loss leader that helped Lennar sell all their real estate.  Anything they get for it in a sale is gravy.


You are correct that the buyer couldn’t build the course themselves for $4 million, so it’s a good deal from that perspective.  But once the course opens its doors, that money’s gone and the only factor in play is how much it can net in revenues each year.  If it can’t make money then it’s not worth $4m, it’s worth zero.

[Adrian_Stiff]

In the Uk the land value is often worth more than the golf course itself.

[David_Elvins]

]
Steve, don’t know what to tell you but I just confirmed with him he payed  $1000. Dues $7800, and he pays a $2600 trail fee. He lives in the development.

Rob,  am I missing something?  How does the economic model work when a club asks for $10,400 a year to play golf at a course that offers tee times on Golf Pass for $35-$50 a round?

[Jim Sherma]

How is a trail fee any different than "Dues"? You obviously can't play without paying your dues, and I'm pretty sure you can't play without paying the trail fee. I despise the nickel and diming dishonesty of this type of fee structuring.

]
Steve, don’t know what to tell you but I just confirmed with him he payed  $1000. Dues $7800, and he pays a $2600 trail fee. He lives in the development.

Rob,  am I missing something?  How does the economic model work when a club asks for $10,400 a year to play golf at a course that offers tee times on Golf Pass for $35-$50 a round?

[Rob Marshall]

]
Steve, don’t know what to tell you but I just confirmed with him he payed  $1000. Dues $7800, and he pays a $2600 trail fee. He lives in the development.

Rob,  am I missing something?  How does the economic model work when a club asks for $10,400 a year to play golf at a course that offers tee times on Golf Pass for $35-$50 a round?

Great question. Why would they advertise a $12,500 initiation when I know someone who paid $1,000?

[David_Elvins]

]
Steve, don’t know what to tell you but I just confirmed with him he payed  $1000. Dues $7800, and he pays a $2600 trail fee. He lives in the development.

Rob,  am I missing something?  How does the economic model work when a club asks for $10,400 a year to play golf at a course that offers tee times on Golf Pass for $35-$50 a round?

Great question. Why would they advertise a $12,500 initiation when I know someone who paid $1,000?

Lots the places discount initiation fees.  If i was running a club and a guy was willing to pay the equivalent of 200-300×green fee in yearly subs, I would discount the initiation fee too.  Obviously different clubs have different models but from what I have seen, most clubs with public play have subs 20-40xgreen fee, not 200-300x green fee.

[Jeff Schley]

Here are three all around Lancaster, Ohio that have sold in the last couple months.
https://clubandresortbusiness.com/ohio-courses-sell-with-opposing-fates-to-follow/

[Rob Marshall]

]
Steve, don’t know what to tell you but I just confirmed with him he payed  $1000. Dues $7800, and he pays a $2600 trail fee. He lives in the development.

Rob,  am I missing something?  How does the economic model work when a club asks for $10,400 a year to play golf at a course that offers tee times on Golf Pass for $35-$50 a round?

Great question. Why would they advertise a $12,500 initiation when I know someone who paid $1,000?

Lots the places discount initiation fees.  If i was running a club and a guy was willing to pay the equivalent of 200-300×green fee in yearly subs, I would discount the initiation fee too.  Obviously different clubs have different models but from what I have seen, most clubs with public play have subs 20-40xgreen fee, not 200-300x green fee.

I guess the question would be how available are the public times and whats the cost November thru April?



I'm on the waiting list for a club owned by a major corporation, two courses,  run by a hotel. $71,000 bond of which $56,000 is refundable. Dues are $12,000 a year which includes a beach club at the hotel. No assessments and I believe no minimums. Hotel guest can play one of the two courses each day for around $200+ in season. There are 600 people on the waiting list. They say that only 1 in 5 will actually join if given the opportunity so lets call in 100 on the waiting list.

[David Margolis]

Rob:


The golf course was a loss leader that helped Lennar sell all their real estate.  Anything they get for it in a sale is gravy.


You are correct that the buyer couldn’t build the course themselves for $4 million, so it’s a good deal from that perspective.  But once the course opens its doors, that money’s gone and the only factor in play is how much it can net in revenues each year.  If it can’t make money then it’s not worth $4m, it’s worth zero.

[Adrian_Stiff]

Not all golf courses are like this.


A UK golf club can be run and make good profits.


As part of my design  strategy I make sure the golf course is easily manageable and mainly have worked with owners in good locations, setting up a plan to be fair value and get a good market share, those courses are very different from the loved ones on here but they are well thought of by good golfers and courses that hold professional golf tournaments.


One of my courses will make $1,300,000 profit  this year.

[Sean_A]

Not all golf courses are like this.

A UK golf club can be run and make good profits.

As part of my design  strategy I make sure the golf course is easily manageable and mainly have worked with owners in good locations, setting up a plan to be fair value and get a good market share, those courses are very different from the loved ones on here but they are well thought of by good golfers and courses that hold professional golf tournaments.

One of my courses will make $1,300,000 profit  this year.

How are the Stranahan at Players and the Orange at Cumberwell Park doing? I have a lot of time for both.

Ciao

[Adrian_Stiff]

Not all golf courses are like this.

A UK golf club can be run and make good profits.

As part of my design  strategy I make sure the golf course is easily manageable and mainly have worked with owners in good locations, setting up a plan to be fair value and get a good market share, those courses are very different from the loved ones on here but they are well thought of by good golfers and courses that hold professional golf tournaments.

One of my courses will make $1,300,000 profit  this year.

How are the Stranahan at Players and the Orange at Cumberwell Park doing? I have a lot of time for both.

Ciao

They do the worst of all but still pretty good. The consumers like the Other course at The Players Club and the nines that you don't like at Cumberwell more. Both courses have a good fanbase though.


Making money from golf and great architecture rarely go hand in hand. La Cala in Spain 10 years ago used to take 50,000E on a normal good day...3 courses all tee times sold 200 buggies out!