[Thomas Dai]

Let's assume I have loads of £ to spend and want to build a golf resort on an area of pristine links-land in a beautiful rural area of the UK where there is no established golf infrastructure and no significant roads, airports, ports etc nearby.


One 18-hole high quality (say DS 8-9) course. Simple practice facilities.
On-site lodging for say 30 but 'comfortable' rather than gold tap in style. No pool, spa or such, just lodging and food/drink for golfers.
Open 8-months of the year.
No local members - visitors only.


What would we be looking at in terms of ballpark initial cost to build and annual operating costs thereafter? How many staff? Ballpark figures are fine.


Assume the land is free.


Atb

[Adrian_Stiff]

Ball park.


10 Greenstaff
3 people to man the shop/start
3 chef (you need 3 for each position running 7 days dawn-dusk)
6 bar staff
3 cleaners
1 general manager
1 assistant manager
1 accounts


Cost to build the course could be from £1.5M to £10M
Lodging for 30 ie 8 cabins with furnishings  £1.0M £2.0M
Infrastructure costs from £0.1M up to a silly amount
Equipment for maintenance inc building £0.5M
Cute Clubhouse £1M

[David_Tepper]

The other wild card is the cost of the legal help to negotiate whatever is necessary to clear the legal/planning/environmental hurdles needed to obtain permission to build the course.

 

[jeffwarne]

Ball park.


10 Greenstaff
3 people to man the shop/start
3 chef (you need 3 for each position running 7 days dawn-dusk)
6 bar staff
3 cleaners
1 general manager
1 assistant manager
1 accounts


Cost to build the course could be from £1.5M to £10M
Lodging for 30 ie 8 cabins with furnishings  £1.0M £2.0M
Infrastructure costs from £0.1M up to a silly amount
Equipment for maintenance inc building £0.5M
Cute Clubhouse £1M

a world gone mad when there are 3 x as many people to run bar and restaurant as there to run  golf operation

[Tom_Doak]

One 18-hole high quality (say DS 8-9) course.
     Between $2m and $4m depending on size of irrigation system, amount of earthmoving, assuming no cart paths or that sort of thing.  But, you need to include architect's fees and expenses, and development expenses, so more like $4m to $6m.

On-site lodging for say 30 but 'comfortable' rather than gold tap in style. No pool, spa or such, just lodging and food/drink for golfers.
     For modest hotel quality you are looking at $250 per square foot all inclusive [building, furnishings, fees, etc.]. Bunk-house style your rooms would be 300 sf; a decent motel room is more like 500 sf.  So this is another $2m to $4m.
     
I'll trust Adrian on the operating expenses.

[Mark Chaplin]

Why would it only open 8 months a year?? The greens at Deal are at their best in February and March. Rye gets as much member play in the winter as the summer. Oh and where has 10 green staff?

[Niall C]

Why would it only open 8 months a year?? The greens at Deal are at their best in February and March. Rye gets as much member play in the winter as the summer. Oh and where has 10 green staff?

As per Castle Stuart and Kingsbarns. The thinking seems to be close down over winter to make sure course is in top condition during the play season so as to get top fees.


Niall

[Adam Lawrence]

Why would it only open 8 months a year?? The greens at Deal are at their best in February and March. Rye gets as much member play in the winter as the summer. Oh and where has 10 green staff?

As per Castle Stuart and Kingsbarns. The thinking seems to be close down over winter to make sure course is in top condition during the play season so as to get top fees.

Niall

I think it's more that, for a pay and play at that level, it's not economic to open in the winter.

[Thomas Dai]

Thanks for all your thoughts and to Adrian and Tom for their ballpark figures.


As you probably realise what I'm attempting to do here is build up for discussion purposes, and general golf business enlightenment, an outline plan for a fictional golf business venture. As such various assumptions are needed.


I used 8-months on the assumption that not many folk, especially from oversea, would be willing to travel to a remote rural area of the UK during the usual erratic winter weather period. 30 staying on-site seemed a decent number.



Let's assume from Adrian and Tom's ballpark numbers £7m to design and build and buy maintenance equipment for both the course and decent but not-flash clubhouse/accommodation.


In this exercise the cash is there already waiting to be spent (although in reality there'd be loans and the like and interest). Out of curiosity what would be considered a sensible loan payback period for such a project.....10/20/30 yrs?


As to annual operating costs for both course and accommodation including staff, materials and supplies, etc etc how does £1m p/a sound?


Now to the other side of the coin - players and revenue - and we're assuming a very fine links course here, DS8-9 level - the kind of course that would hopefully be very attractive to visit.


Say 30 staying and playing plus a futher 10 playing but not staying at say £150/round and £75 p/n for accommodation and grub. That's circa £2m for a 240 day playing period.


Figures can be changed, so by all means suggest other/better assumptions.


Is this kind of scenario feasible, will folks travel to it and will it make money in the UK?


Atb

[Niall C]

Adrian


Interesting comment. My gut feel however is that you are perhaps light on the clubhouse cost but then how long is a piece of string ?


Atb,


Why ignore land value ? Depending on the location/planning etc this can have a significant impact on the overall costs as well as impacting on the other criteria.



Niall

[Adam Lawrence]

Adrian

Interesting comment. My gut feel however is that you are perhaps light on the clubhouse cost but then how long is a piece of string ?

Atb,

Why ignore land value ? Depending on the location/planning etc this can have a significant impact on the overall costs as well as impacting on the other criteria.

Niall

Niall -- every model I have ever seen says that you either need to get the land or the construction for free, or pay for everything from your own resources if you want to make a profit. Covering land purchase, construction cost and debt interest is typically a step too far for most golf operations.


This is why inert landfill is, economically at least, such a strong model for golf

[Tom_Doak]

Thomas:


Hold on there!


As always we find when we try to simplify this stuff, that we've left stuff out.


Golf architects talk about "construction costs" which is what contractors are paid to build the course.  This is the "above the line" budget.  But here are some of the things that go "below the line":


Maintenance building
Maintenance equipment

Design Fees
Engineering Fees

Clubhouse


Those we covered.  These we didn't:


Entry, Parking, etc.
Landscaping for clubhouse and parking
Grow-in maintenance between seeding and opening
Perimeter fencing - I guess you don't do this in Scotland - right to roam!
Power hookup
Wells


You've probably got to add another $1 million for all of that.


BTW, this is where many projects fail financially.  Many first-time developers do not realize the extent of the "below the line" costs until they're committed to the project.

[Adrian_Stiff]

ATB


Also left out from run costs are Rates and the costs of waste disposal. There are so many small ones that add up, I seem to write a cheque for £200 every week. If you want Sky TV thats silly money. I could go on forever.


Electric, Water costs can be huge I did briefly touch on it, ie anything from 50,000 to a crazy sum if it really is remote.


A road in with car parking could easily be £1,000,000.


Remember Vat from your income, everytime you take a £1 the government take 16.66 pence.


£75 per night is cheap for lodging. Most hotels are £100. Motels are £75.

[Niall C]

Adam,


I'm quite sure that's correct which was why I was asking Atb why he was wishing away the land costs.




Adrian


I think you are perhaps mixing in some running costs with the upfront capital cost.


Niall

[Thomas Dai]

Excellent comments guys. Thank you. Just the kind of points I was looking for, some nice nitty-gritty to enhance understanding.


Lots more cost categories and factors to price in. Maybe a few to leave out as well or if not leave out decide whether or not they are really needed rather than just nice to have.....what they do or don't do at places like Askernish and Carne. How the OTM at Rosapenna has no sprinkler system. How many greenstaff does a links really need? Sheep and cattle helping to 'mow' the course a la Brora. Many rural courses have simple, basic even, clubhouses and catering, how acceptable is that? How Perranporth houses visitors in wooden lodges.

One of the things that inspired this thread was a comment from another poster herein along the lines of "it's not the golf that's expensive, it's everything else that goes on around it".


Comments to date are much appreciated.

Atb

[David_Tepper]

Niall -

Thomas D. did ask about "operating costs thereafter."

I suppose the other factor to consider is how many rounds per year the course will see. 5,000? 10,000? 20,000?

Does anyone know how many rounds Machrihanish Dunes is seeing per year? 

DT

[jeffwarne]

One of the things that inspired this thread was a comment from another poster herein along the lines of "it's not the golf that's expensive, it's everything else that goes on around it".

Nothing better than the old honor box.
always a nearby pub, inn or B&B to provide anything else one may need -yet every club makes this same mistake-repeatedly

[Philippe Binette]

Couple of things :

I ll have local members, you need the presence and the collaboration of the local community

I d insist on the qualityof the course and a minimum clubhouse, no heavy cooking... It s amazing how costly ventilation and insurance is when you have a full kitchen... Panini machine, sandwich and beer is enough, if you need a steak... Go to the local pub !!!

Golf is not about having to tip 5 people on the way to the first tee !!!

[Peter Pallotta]

Thomas - a few weeks ago I came across an article by a golf management guru suggesting that 10-15% return on investment (roi) is what owners should look for. A week after that I came across a video with the caddie master at Bandon (who seemed like a very smart and decent fellow) mentioning that their ROI was "very good....very good".
I have no context through which to judge the validity of either of those comments, but thought it relevant in terms of your question about a reasonable pay-back period for the loan in question.
Peter

[Thomas Dai]

Thanks for the additional comments.


Members welcome naturally, but in rural coastal areas and using Adrian's 20-min rule they would most likely be the cherry on the icing on the cake. Nevertheless all such revenue welcome. Interesting thoughts too on the desire for golfing simplicity, "back to basics" (as a certain PM once said).


What about links land availability?


Well links land in rural areas tends to mean things like nature reserves, holiday areas, caravan parks and..........MoD/armed forces land, ex-bases retained 'just in case', training areas etc, often with runways, some with buildings that could be used/converted for clubhouses and lodging, much of it acquired during WWII and never handed back.


The UK Govt have been making statements recently about disposing of MoD land. Some of the land is environmentally protected, but if the Govt wants to rake in some £ what will their stance be on factors limiting or delaying potential sale, especially if the buyer is looking toward creating something on a no-hassle, softly-softly, work with (not fight) the environmental and nature conservatory bodies, minimalist kind of basis?


On Bingmap or Googlemap trace around the UK shoreline. See how many links land areas there are and what they are being used (or not used) for.


atb

[Adam Lawrence]

Excellent comments guys. Thank you. Just the kind of points I was looking for, some nice nitty-gritty to enhance understanding.

Lots more cost categories and factors to price in. Maybe a few to leave out as well or if not leave out decide whether or not they are really needed rather than just nice to have.....what they do or don't do at places like Askernish and Carne. How the OTM at Rosapenna has no sprinkler system. How many greenstaff does a links really need? Sheep and cattle helping to 'mow' the course a la Brora. Many rural courses have simple, basic even, clubhouses and catering, how acceptable is that? How Perranporth houses visitors in wooden lodges.

One of the things that inspired this thread was a comment from another poster herein along the lines of "it's not the golf that's expensive, it's everything else that goes on around it".

That last quote is true, but only to an extent. You can, as Askernish has proved, build a course today on a total shoestring. And, if you are fortunate with your site and location, that shoestring start, might not be a problem -- if you plonked Askernish down in Fife or Lancashire, it would make a fortune.


But what we have seen proven in recent years is that the sites of that quality in primo locations are basically long gone. So there is almost always a tradeoff between site and location. We know you need a world class site to produce world class golf. But to produce profitable golf, location is probably more important than site. (NB I know Bandon is an exception to this, and Barnbougle too, but there are not many other examples).

[David_Tepper]

Thomas D. -

I am surprised Jon Wiggett has not commented on this thread, as he engaged in a search for a linksland site several years ago.

DT

[Paul Gray]

Adrian

Interesting comment. My gut feel however is that you are perhaps light on the clubhouse cost but then how long is a piece of string ?

Atb,

Why ignore land value ? Depending on the location/planning etc this can have a significant impact on the overall costs as well as impacting on the other criteria.

Niall

Niall -- every model I have ever seen says that you either need to get the land or the construction for free, or pay for everything from your own resources if you want to make a profit. Covering land purchase, construction cost and debt interest is typically a step too far for most golf operations.


This is why inert landfill is, economically at least, such a strong model for golf

Whenever I've tentatively played around with some numbers for my own little viability study, this is exactly the conclusion I've come to.
 
Atb goes on to mention those costs which you might be able to save on; the four legged greenkeeping staff et al, at which point I'm left, yet again, wondering if there would ever really be enough demand for expensive green fees on such uber natural courses. That then always leads me on to thinking that, at least at a lower price point, there's a perfect model here if only a different model hadn't been adopted 25 years ago. Wind back time and start doing this in 1990 and it might just work. As it is, the sheer number of courses in Britain means supply is just too high to take the risk. 

[Thomas Dai]

A whole bunch of interesting aspects here, thank you for moving this thread along.



Adam made a comment about location earlier, suggested that "if you plonked Askernish down in Fife or Lancashire you'd make a fortune", which got me wondering.....


one, how far from an existing UK golfing centre would be too far (in hours not miles) such that folk wouldn't bother to travel in sufficient numbers to such a location to play/stay at such a facility?


and ....


two, what would happen if you took an existing course in or near a well known golfing area and converted it into an Askernish type facility?


and....


three, is such a facility likely to attract UK golfers or is the psyche of the majority of UK golfers now so embedded in either play where you live or travel to Spain/Portugal/Turkey/Florida/UAE etc to play in buggies in hot weather on green lush courses with lakes and fountains and flower beds and white sanded bunkers that thinking that sufficient folks might conceivably travel to a remote rural area of the UK and play 'rugged' golf is just not viable?


atb

[David_Tepper]

Thomas D. -

Mike Keiser's proposed project at Embo, north of Dornoch, is the closest thing to a case study you will find currently.

Building on an ultra remote site is a real risk. It is hard to imagine Askernish will ever see more than 2,500 rounds a year. As I asked earlier, I wonder how many rounds a year Machrihanish Dunes is seeing.

It is no accident Keiser chose a site close to Dornoch and Mark Parsinen sited Castle Stuart almost within walking distance of Inverness Airport.

There may very well be nice stretches of dunesland on the west coast of the Highlands between Gairloch and Lochinver, but could you really draw enough traffic to make a course viable economically? I doubt it.

DT     

 

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