No, not in today's market! Jeff Brauer's model is mostly correct.
As many of you know, Kelly Moran and myself had a project in Old Bridge, NJ. The course was to be less than 5 five miles from one of the top three traffic junctions in the US (NJ Tpk., US 287, Garden State Pkwy, and the Staten Island Expressway. The site was less than 40min from NYC within 75 miles of over 8 million people.
We were to be granted a 25-50 year lease for a raw 208ac with a very, very low embedded cost (redevelopment fees, utility hook-up fees, and various other relatively minor fees). We were responsible for all build-out costs, had a very low and efficient capital cost structure that required building 18 holes, a small and reasonable clubhouse/pro-shop facility, maintenance facilities, adequate parking spaces, and adequate irrigation and water retention areas. Our initial budget for all of this ran near $11.5MM. Adding 10% for overage brought this up closet to $13MM. Heck, KBM wasn't even charging any outrageous fee! The project had a zero Real Estate component.
Our end pricing was only constrained by a state rule (for Green Acres Land) that prohibited us from charging local residents anymore than 50% of our top rate. Given that and market competition parameters, we assumed between 40-50,000 rounds max(seasons and conditions permitting, with some years accordingly lighter). Rounding out the all the pricing formulas, all the bare operating costs (Donnie...we were leaving the rough in their natural grasses and not planning on irrigating it), we broke even, after debt service and return of invested principal, near a $85 daily fee and really didn't make any $$ until we drove the average north closer to $110-115.
If we failed to hit the capacity #'s in any given season, we could have easily gone into the red and fallen behind our debt reduction(and thus exposed the principals to real and personal financial risk). We did exhaustive local and regional demographic market research. Kelly had a magnificent and highly-entertaining routing. Textron agreed to make us the only "to-be-built" loan offer East of the Mississippi and the town had agreed to defer any profit share until all invested capital could be repaid. Kelly and my team were in this as much for a labor of love and pride.
Sure, a course in the Northeast has inherent seasonal weather constraints and risks, but the offsetting argument is the density of population and active public golfer community. Yes, labor, marketing and regulatory costs are considerably higher in NJ as well, but none of those variables were large enough to break the model. Bottom line is we had to reach near perfection to make anything and break-even wasn't buffeted by a large margin. We had highly efficient operating schedules and budgets with realistic assumptions.
Eventually, costs rose and terms became onerous (higher interest rates, 100% full personal recourse, etc..) and after efforts seeking to have the township participate in the financing met stiff and unyielding resistance, we relented and abandoned it. Could we re-ignite this project, maybe, but given how tough times are, the model has only gotten far, far worse.
Back in 2004-5 we approached ALL the major group operators and developers and while all of them loved the location, each and every one noted that it was getting much cheaper to buy an existing course, than building a new one. Only (once deep-pocketed) RE developers and equally wealthy autocratic golf visionaries can afford to build new courses these days (with the exception of an occasional local government). Those folks, IMHO, are the only people hiring the Tom Doaks and C & C's these days.