The Cost of Building An Upscale Club

[Rick Sides]

So I have a general question for the group.  Recently played a nice upscale private club and couldn't help but wonder, roughly how much does it cost to build an upscale club from the ground up?  Meaning cost like land, design, equipment, clubhouse, etc.  Obviously this figure can vary greatly.

[Tom_Doak]

Rick:

Of course it varies tremendously from one property to the next, but for a rough estimate:

Golf course $5 million
Clubhouse $5 million
Other stuff $3m - 5 million (maint. bldg, maint. equipment, grow-in costs, design fees, etc.)

Land cost

That's $15m - $20 million.  You'd have to sell 400 memberships at $50,000 to get it back.  That's why not a lot of these clubs are being developed nowadays.

Note that it doesn't have to be so expensive ... I've built great golf courses for $2.5 million if the soils and topo are right.  But you can't use those as a realistic estimate, and even then, sadly, the golf course cost is much less than 50% of the total investment.

[Adam Lawrence]

Tom,

What about linksland in the UK and Ireland and a nice but not OTT clubhouse - presumably less than the above figures? And then the annual cost of maintaining them to the level of, say, a Renaissance club?

I've always wondered how much it would cost to get that Kilshannig Cross development off the ground if I ever came into enough money and the other issues which prevented the project getting off the ground didn't exist...

Cheers
B.

Brian - don't forget the line item 'ten years of planning lawyers' fees' for such projects!

[Frank Pont]

Tom,

What about linksland in the UK and Ireland and a nice but not OTT clubhouse - presumably less than the above figures? And then the annual cost of maintaining them to the level of, say, a Renaissance club?

I've always wondered how much it would cost to get that Kilshannig Cross development off the ground if I ever came into enough money and the other issues which prevented the project getting off the ground didn't exist...

Cheers
B.

Brian,

you could build very inexpensively on links/heathland ground, especially if you kept irrigation basic and did not move a lot of dirt, probably in the order of 0.7-1.0 mil euro, and still have a very good course.

[Rick Sides]

Tom,
That's exactly what I was thinking about while playing the club the other day.  I wondered how in the world the club could not only sustain daily costs, but also I can't imagine the cost of construction, land, etc.

[Tom_Doak]

Brian,

you could build very inexpensively on links/heathland ground, especially if you kept irrigation basic and did not move a lot of dirt, probably in the order of 0.7-1.0 mil euro, and still have a very good course.

Frank:

Those are exactly the sort of numbers that get guys like Brian to lose their shirts trying to develop a course.  As Adam says, the lawyers' fees on a new links project in Ireland would probably exceed that number all by themselves ... certainly for Kilshannig anyway.

Trying to grow in a course with as little irrigation as you are including in your number is fine, if you're willing to wait two or three years for the course to open if the weather is not helpful.

What sort of budget did you have for de Swinkelsche?  How much irrigation did that include?  And what was the land cost and clubhouse cost and maintenance building and all the rest?

We added the second course at Dismal for about $2.5 million, but it's a lot easier to do when the clubhouse and maintenance facility are already in the ground courtesy of a previous owner.

[Jeff_Brauer]

The biggest cost differences come from fine dining (kitchens can be over $1M themselves) the clubhouse, maintenance area, staff, equipment and operations  budgets inside and out.

There are some things you can put in a golf course that make it more expensive, but in general, building 18 holes cost about what it cost in a given area. I have built the nicest upscale public golf course in town for what another architect on course next door spent on a $30 muni.

Some golf course extras are fancier bridges, textured pavement (and wider pavement) expensive shelters and halfway houses.  For golf itself, these things can raise costs:

Building 8K USGA greens vs. 6K greens .
Wall to wall irrigation with part circle heads, etc.
A design decision to use hundreds of bunkers or large waste bunkers adds cost in a hurry,
Most fine clubs want the best bunker sand, which often is shipped by rail, barge and truck at a cost of well over $100 per ton.  
Bunker liners
Fans, Sub Air Circulation to keep bent in the south
Solid sod for quicker opening (although you can also argue that you start getting revenue sooner, so its close to a net wash)

[JC Jones]

Clubhouse $5 million

Why does the clubhouse have to be this expensive?  How big of a club house are you talking about?  

Chechessee Creek has about the most perfect clubhouse I've been into for a modern club at it is 9,200 sqft.  Are you saying it is $500/ft to build something like that?  If so, perhaps one should bid out the construction a little better.

[Mark McKeever]

If you build it, they will come.

[Brent Hutto]

Jeff,

Is there any turf-quality advantage/disadvantage to sodding? Obviously on Day 1 the difference in sod and bare ground is huge ;-) but I mean a year down the road is sodded turf any better or worse than growing grass in place?

[Jeff_Brauer]

JC, I have seen some $1M kitchens.  Add in fittings and furniture and artwork from Europe or what have you, clubhouses can easily get to $5M.  At that point, many upscale club members, who might pinch every penny in their businesses, get extravagant if the goal is the best club in town.  

I think basic construction is still around half that for a nice clubhouse, or at least I saw an estimate the other day of $250 per LF.  Residential level construction (good for most smaller clubhouses) can still be found for around $100 SF, at least here in TX.  I bet that varies quite a bit.

One thing that won't vary is a pro forma that tells you that the huge, 50,000 SF clubhouse (even 25K) will eat your lunch well before you finish yours in their dining room....... It happens nearly every time.

[Jeff_Brauer]

Brent,

There are some advantages to full sod.

First, its the best insurance policy against heavy rains and half a million in reseeding costs.
Second, you can tell the quality difference for many years between sod and seed.
Better environmentally (reduces siltation and runoff)
Third, grow in is nearly guaranteed (okay, maybe 1A as an off shoot of the first point)

But, there are some down sides, including needing a sod that has the same soil as yours.  If you get a clay based soil that is heavier than your soil, you will spend years aerifying and topdressing to try to get the water through.  Some areas have nothing but peat soil sod, which doesn't work over sand capped fairways very well.

The second is cost.  Netting seed is very effective and cost about $6K per acre vs. the $14K for solid sod.  $8K over 100 Acres or so is not insubstantial to most budgets.

Every project is different, but on most, they always end up adding sod at some point because of its benefits.

[Tom_Doak]

Clubhouse $5 million

Why does the clubhouse have to be this expensive?  How big of a club house are you talking about?  

Chechessee Creek has about the most perfect clubhouse I've been into for a modern club at it is 9,200 sqft.  Are you saying it is $500/ft to build something like that?  If so, perhaps one should bid out the construction a little better.

JC:  I was figuring a 20,000 to 25,000 square foot clubhouse at $200-$250 per sq ft.  I agree with you that's really excessive [and a killer financially], but that's what most people think when they hear "upscale private club".  Chechessee is a different animal, being part of a second-home community.

[JC Jones]

By my math, doing something Chechessee-esque would run $150-200/ft so ~$1.3-1.8mm.  While I still think that is high, I think it is a cap on what would work on a nice, yet not super upscale, private club.

[Tom_Doak]

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.

[Frank Pont]

Brian,

you could build very inexpensively on links/heathland ground, especially if you kept irrigation basic and did not move a lot of dirt, probably in the order of 0.7-1.0 mil euro, and still have a very good course.

Frank:

Those are exactly the sort of numbers that get guys like Brian to lose their shirts trying to develop a course.  As Adam says, the lawyers' fees on a new links project in Ireland would probably exceed that number all by themselves ... certainly for Kilshannig anyway.

Trying to grow in a course with as little irrigation as you are including in your number is fine, if you're willing to wait two or three years for the course to open if the weather is not helpful.

What sort of budget did you have for de Swinkelsche?  How much irrigation did that include?  And what was the land cost and clubhouse cost and maintenance building and all the rest?

We added the second course at Dismal for about $2.5 million, but it's a lot easier to do when the clubhouse and maintenance facility are already in the ground courtesy of a previous owner.

I did not include permitting fees, they can be out of this world.

Irrigation depends on the climate, in W Europe I have built courses with no/limited fairway irrigation. No fairway irrigation with pure fescue fairways has a grow in of 1.5-2.0 years, but then you have great turf (I did this on a simple 9 holes course called Land van Thorn in Holland, when I showed it to Brian Schneider when he visited me he said it was one of the best turfs he had ever seen).  One row irrigation (like Turfvaert that you saw when you visited) has a grow in of 1.0-1.5 years.

Swinkelsche was built for 2.5 million euro, with 600,000 cubic yards of soil moving and a state of the art 2/3 row irrigation system (on the overview map in the discussion on it you can see the irrigation heads). Clubhouse will probably be another 1.0-2.0 million, maintenance building is converted barn. The land was owned (probably worth 2-3 million).

My main point is that if the landforms are great, you are building on sand, accept occaisional barren fairways in summer and you can live with a normal clubhouse you can still build a great course for little money

[Andrew Buck]

Rick:

Of course it varies tremendously from one property to the next, but for a rough estimate:

Golf course $5 million
Clubhouse $5 million
Other stuff $3m - 5 million (maint. bldg, maint. equipment, grow-in costs, design fees, etc.)

Land cost

That's $15m - $20 million.  You'd have to sell 400 memberships at $50,000 to get it back.  That's why not a lot of these clubs are being developed nowadays.

Note that it doesn't have to be so expensive ... I've built great golf courses for $2.5 million if the soils and topo are right.  But you can't use those as a realistic estimate, and even then, sadly, the golf course cost is much less than 50% of the total investment.

So really, the takeaway is if you want 18 tomato cans in the ground a trailer with a microwave and two Toro's you are looking at $20.1M.  

This gives some context around the Wisconsin course discussion.  I know Jud opined that 20,000 rounds at $150 a head should keep the lights on.  Even if Tom or another firm was able to build a great course for $3M, + $2M of equipment and maintenance needs, you'd be looking at an initial outlay of near $25M.  I would think a very bare bones maintenance budget (for a course that is commanding $150) would be about $500k.  Ignoring lodging or F&B, and add to that a conservative effort for a your golf staff marketing, etc. and that $3,000,0000 revenue likely shrinks below $2,000,000 in a hurry.

Not the type of return people would be lining up to invest in, given potential bad weather could further limit rounds and other unknowns.  Now, I'm sure Mr Keiser has it all worked out if they break ground, and land costs could vary a lot, but shows how difficult it is to be successful with a new build today.

[Andrew Buck]

Although, this discussion, along with the pictures of the Medinah redesign really have me thinking about a property that has recently changed hands.

The Rabine Group purchased a far NW Chicago club, Bull Valley, which includes a 37,000 sq foot clubhouse for $1.7M.  The land, IMO, has better bones than Medinah #1 did (although the surrounding development, which isn't in play on most holes, would probably prevent as dramatic of a rerouting).  Now ignoring the fact that it's likely silly for a "golf only" club to have a 37,000 sq foot clubhouse, with that modest outlay, and the bones that exist, I would think if you could bring in a Doak or a C&C, and turn it into a top notch club for a reasonable cost, you'd be able to pull the additional members needed to make money (or have a great destination resort for day trips from Chicago).  

[Kyle Casella]

I wonder what the books look like on some of Trump's newer courses, especially since he (and Keiser) is one of the only developers who seems to be building new, high end courses. He must be supporting newer ones out of pocket, but he must have the breakeven point figured out or he wouldn't keep building. After all, he is a capitalist.

[Tom_Doak]

So really, the takeaway is if you want 18 tomato cans in the ground a trailer with a microwave and two Toro's you are looking at $20.1M.  

This gives some context around the Wisconsin course discussion.

Andrew:

I think you misinterpreted something I wrote above.  Land costs are not $20m ... I was saying the total would be $20m if you put $12.5m to $15m into the other areas.  Land costs vary so much that I just gave it a bunch of question marks.

If the land cost in Wisconsin is excessive, Mr. Keiser will surely not pursue the project.  He's just got to get the land owner to understand that.  The land value for pulp timber is probably only $1000 per acre up there, which would be $2 million land cost for 2000 acres.  That's why the project might be viable.  Double the land cost, and the potential return is severely threatened.

Location is critical, but location and land costs are almost inversely proportional.  Put it this way -- Medinah can afford to spend more money on the ground they already own than Bull Valley can.  But, yes, if you could buy a club for under $2 million and turn it into something special for another $3-4 million, that would have a pretty good chance of being successful.  But if it were that easy, everyone would succeed!

[Chris_Hufnagel]

Clubhouse $5 million

Why does the clubhouse have to be this expensive?  How big of a club house are you talking about?  

Chechessee Creek has about the most perfect clubhouse I've been into for a modern club at it is 9,200 sqft.  Are you saying it is $500/ft to build something like that?  If so, perhaps one should bid out the construction a little better.

+1 on the Chechessee Creek clubhouse - I really enjoyed my morning at the club and loved the course and experience.  I thought the clubhouse fit in perfectly - understated, well-done, and with just enough of the comforts a membership would want without beING over-the-top.

Having had some experiences here, I do think having a small, serviceable, comfortable clubhouse for the membership does a couple of things - hopefully helps drive some additional revenue by increasing dwell time along with having the qualitative benefit of having the membership socialize longer and creating stronger relationships.

Obviously, this needs to be weighted against the cost of building it and operating it - I am guessing that it is a hard question to answer perfectly and one that doesn't have the same answer for every different scenario.

[Frank Pont]

Although, this discussion, along with the pictures of the Medinah redesign really have me thinking about a property that has recently changed hands.

The Rabine Group purchased a far NW Chicago club, Bull Valley, which includes a 37,000 sq foot clubhouse for $1.7M.  The land, IMO, has better bones than Medinah #1 did (although the surrounding development, which isn't in play on most holes, would probably prevent as dramatic of a rerouting).  Now ignoring the fact that it's likely silly for a "golf only" club to have a 37,000 sq foot clubhouse, with that modest outlay, and the bones that exist, I would think if you could bring in a Doak or a C&C, and turn it into a top notch club for a reasonable cost, you'd be able to pull the additional members needed to make money (or have a great destination resort for day trips from Chicago).  

Andrew,

we are going to see a lot of that happening here in Europe, because in effect you get the property at a distressed price, and can start again, but without lengthy permitting issues, which in Europe is key since it saves you a 5-10 year development time.

[Andrew Buck]

So really, the takeaway is if you want 18 tomato cans in the ground a trailer with a microwave and two Toro's you are looking at $20.1M.  

This gives some context around the Wisconsin course discussion.

Andrew:

I think you misinterpreted something I wrote above.  Land costs are not $20m ... I was saying the total would be $20m if you put $12.5m to $15m into the other areas.  Land costs vary so much that I just gave it a bunch of question marks.

If the land cost in Wisconsin is excessive, Mr. Keiser will surely not pursue the project.  He's just got to get the land owner to understand that.  The land value for pulp timber is probably only $1000 per acre up there, which would be $2 million land cost for 2000 acres.  That's why the project might be viable.  Double the land cost, and the potential return is severely threatened.

Location is critical, but location and land costs are almost inversely proportional.  Put it this way -- Medinah can afford to spend more money on the ground they already own than Bull Valley can.  But, yes, if you could buy a club for under $2 million and turn it into something special for another $3-4 million, that would have a pretty good chance of being successful.  But if it were that easy, everyone would succeed!

Thanks for the clarification, and yes I did.  Not to mention the quick calculation in my head of 200 acres * $10,000 an acre added an extra zero, and that makes much more sense.  

If land can be had for 1/10th that price, and a much bigger parcel can be acquired that really changes things.

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).  

[Thomas Dai]

Obviously location has a huge effect on the cost of land etc, but to what extent does the type of land under consideration effect the overall cost? For example, would sandy/not much use for agriculture kinda land, the kind seemingly preferred for golf, be cheaper than buying farmers fields or, once the rumour was out in the market place that the land was wanted for golf purposes, would a premium be added to the value/price of the same piece of land? I'm speaking UK/Europe here.

In addition, as a ballpark figure, how much does permitting issues cost, again in UK/Europe?

All the best.

[Frank Pont]

Obviously location has a huge effect on the cost of land etc, but to what extent does the type of land under consideration effect the overall cost? For example, would sandy/not much use for agriculture kinda land, the kind seemingly preferred for golf, be cheaper than buying farmers fields or, once the rumour was out in the market place that the land was wanted for golf purposes, would a premium be added to the value/price of the same piece of land? I'm speaking UK/Europe here.

In addition, as a ballpark figure, how much does permitting issues cost, again in UK/Europe?

All the best.

Thomas,

The main driver of value of land in Europe is the probability that houses can be built on it. In Holland farm land is 2 euro/m2, building land is 500 euro/m2.

Permitting costs can be between 200-500k euro per course in Holland