Buying a Closed Course

smashdnsmashdn Let's cut them trees down.Members Posts: 1,330 ✭✭✭✭✭✭

May have an opportunity to buy a former country club, that turned public, that turned closed. I don't know the full story as to what caused the demise but I read some reviews still on golfnow from 2015 and the end was near then, conditions were "crap" according to posters then.

What I know:
1. There is a 18 hole course approx. 7200 yards.
2. Bermuda fairways that I bet are mostly crab grass, bermuda rough that is really rough and bent greens
3. No clubhouse, it was destroyed.
4. Tennis Courts and pool. Cart barn (maybe two) and a maintenance shop.
5. Plenty of water on site. Tons of ponds big and small. Frankly, I think it has too much water and that would be something I would attempt to correct.

What I would plan to do to bring it back:
1. Investors first and foremost. There is no way I can do this by myself.
2. Concentrate on golf first. Get the course playable and create a revenue stream.
3. Refurbish the greens this fall, winter and spring.
4. Spray out cool season grass in the fairways while bermuda is dormant this winter.
5. Refurb the driving range. Mow the "range" area and spray the tee area to kill cool season grasses over the winter. Install mats to have as an option. Have a good range for revenue stream. (I might be able to extend the tee to the back of the second cart barn and create indoor bays that could be heated for year round use.)
6. I guess I need to buy some carts and some push carts. I would bet the course is very walkable given the surrounding topography. Looks downright flat actually. I want to promote a walking culture if I can.

Down the road:
2. Keep pool area usable and maintain for additional revenue stream.
3. Refurb Tennis courts.
4. Purchase odd shaped inclusion on property to square the property line and gain space to straighten a funky tee to green transition and add space to put a tee at opposite end of range for a double ended range and practice bunker/short game area.
5. Clean up some odd teeing areas. Reshape some holes away from the few homes that border a hole on the course. Lucky there is room to add a slight dog leg and re-position a small pond that is in play but need not be. I want to add width to the fairways where I can and keep rough short so rounds are fun and fast.

What I don't know:
2. Where am I going to get the money?
3. What kind of shape the bunker drainage and irrigation system is in. My guess is the bunker drainage is shot and the irrigation system has leaks a plenty.
4. What to do for a temp clubhouse. Probably just an office trailer/modular type thing.
5. How willing the adjoining landowner would be to sell that funky square.
6. Where would a find a super as crazy as me to work at course that needs resurrecting.
7. Is there even enough market to have a course there
8. Could I turn it back into a private club after being public for a few years. Can I keep the infrastructure/amenities that public courses don't have (pool, tennis) from crumbling that I would want to have at a private course?

I love golf. To the point I took some golf management classes in college. It is not what I do but I understand the basics of what is going on and I have a fair understanding of agronomy and economy. My wife has a business management degree. She ran a multi-million dollar retail business for about 15 years. I think the business side we could handle.

For those of you that operate courses, what else should I be wary of and what am I missing completely?

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Comments

  • larrybudlarrybud Members Posts: 11,356 ✭✭✭✭✭✭✭

    Why did it close in the first place?

  • third-times-a-charmthird-times-a-charm Members Posts: 1,747 ✭✭✭✭✭✭

    Well...I dont know what area you're in (competition/demographics) which will dictate most answers.

    Off the top of my head I would say getting volume into the course via cheap rates and buckets for the range will do you the best financially. Open a privately owned muni, essentially.

    I would also add that if you stock the lakes with fish you may be able to charge people to fish from the banks at certain hours.

    if you have extra land or are able to do it, foot golf or disc golf may also be an additional revenue stream with little investment in equipment.

  • smashdnsmashdn Let's cut them trees down. Members Posts: 1,330 ✭✭✭✭✭✭

    @larrybud said:
    Why did it close in the first place?

    I don't know for sure. My guess is that they were attempting to operate it initially as a country club in a small town that had two. I do not know which one came first. I suspect however due to the location between two much larger towns that have few public golf options that a public course with a good practice facility would go over well.

    If I could pick this course up and move it to my current location it would be a no-brainer. Golf in my area is very underserved (imo). But real estate prices here make it not very inviting to build a golf course when you could subdivide the same ground and make money instantly. There is a population boom in the county to the north of me and the counties that surround it including my own. There is one public 18 hole course in that county with a population of 125,000. In the surrounding/bordering counties there are four more public tracks. You have five public courses less than an hour's drive of 265,000 people. I know there are ratios that the industry tends to follow.

  • smashdnsmashdn Let's cut them trees down. Members Posts: 1,330 ✭✭✭✭✭✭

    @third-times-a-charm said:
    if you have extra land or are able to do it, foot golf or disc golf may also be an additional revenue stream with little investment in equipment.

    Not sure I am on board with foot golf but have played disc golf and was pretty good at it when i played regularly. There is a nine hole course near my current location that has both. It doesn't work well as they want to close the golf course when they have disc golf events. I just don't know how well they gee-haw when you have both types of golfers out there at the same time.

  • third-times-a-charmthird-times-a-charm Members Posts: 1,747 ✭✭✭✭✭✭

    @smashdn said:

    @third-times-a-charm said:
    if you have extra land or are able to do it, foot golf or disc golf may also be an additional revenue stream with little investment in equipment.

    Not sure I am on board with foot golf but have played disc golf and was pretty good at it when i played regularly. There is a nine hole course near my current location that has both. It doesn't work well as they want to close the golf course when they have disc golf events. I just don't know how well they gee-haw when you have both types of golfers out there at the same time.

    I wasnt saying on the course thats used for golf. Around here (disney magnolia for instance) they just maintain and slightly manicure the waste areas between holes and call them disk/foot golf holes so its seperate

  • dmac4gdmac4g Members Posts: 1,295 ✭✭✭✭✭✭

    Make sure you overestimate the costs to get it open and keep it open for year 1. If you do not have the capital to operate at a loss for a SOLID year or three, you will just become the latest failed owner. It sounds like the course was poorly maintained prior to closing and I would bet there is a large amount of deferred maintenance in the existing assets. Pay some people that are experts in irrigation, maintenance and construction to give you a proper idea of what this will cost. It does not sound like it will be turn key! Good luck and best wishes on the new adventure!

  • Big A HGBig A HG Members Posts: 646 ✭✭✭✭✭
    edited Jul 26, 2019 9:22pm #9

    There is a very inexpensive 9-hole muni near me that is going through the process of reopening since closing in 2016. The land was donated to the local university exclusively to be run and maintained as a golf course back in the 1960s. All profits from the course would go to the university. If the university no longer wanted the course, the land would be given back to the donors. However, a new university administration wasn't aware of the original agreement and closed the course to develop the land now that the city has grown around the course and the land value has skyrocketed. This created a lawsuit and now the university decided to keep the course and will reopen it. The course was closed in 2016 and minimal maintenance has been done to keep the land in respectable shape, but nowhere near golf shape. As far as course reopenings go, this is about as minimal as it gets because everything is still in place and nothing was damaged or tore up in the process. To reopen this 9-hole course will cost about $250,000 as an estimate (and estimates are always low it seems).

    I'd say you'd have better luck just starting from scratch. If you like that piece of land, you could buy the property, tear it up, and do it how you want to do it. I doubt it would cost much more in the long run. On top of that, a "new" course design and layout might generate more interest opposed to reopening an already failed course. Unless you have a lot of money yourself, this doesn't seem worth the time or investment.

    Here's some info on the course I talked about that is reopening: https://www.grandforksherald.com/news/4555637-self-inflicted-wound-und-faces-backlash-over-ray-richards

  • LeoLeo99LeoLeo99 Members Posts: 4,254 ✭✭✭✭✭✭✭

    I love to walk and prefer it over carts but why would you want to promote a walking culture? Carts are a revenue stream.

    What revenue are the tennis courts going to provide? Get rid of them.
    Are people going to join your swim club without any amenities like a club house? Get rid of the pool.
    Existing private country clubs are going bankrupt.

  • DavePelz4DavePelz4 A golf course in the Chicago area.ClubWRX Posts: 24,809 ClubWRX

    If it closed, there is a possibility a bank technically owns the course. Do a bit of work to see if you can find out the actual owner of the business and start from there. If it's the bank, you might be able to pick it up for pennies on the dollar or for back taxes. You can (possibly) get a small business loan of up to $3.75M but you're going to need investors and some money invested by you with a great business plan to qualify. You'll need to build a business plan to show profitability within 2-3 years.

    You're probably going to need significant cash to return the course to its former (better) state and also to market the course. Look at different revenue models like "member for a day" where a player can hit all the balls they want and play all the golf they want for X/day. A couple of courses here do that and it's a nice model.

    Forget the tennis courts, it NRG time (non-revenue generating).

    Look at rebuilding the clubhouse and developing a nice restaurant. The restaurant along with banquet activities can be a HUGE revenue generator and also provide some consistency.

  • DavePelz4DavePelz4 A golf course in the Chicago area.ClubWRX Posts: 24,809 ClubWRX

    Also, depending on where you're located, a clubhouse can be built out with simulators so you have year round golf capabilities which will also give you some additional F&B opportunities.

  • LeoLeo99LeoLeo99 Members Posts: 4,254 ✭✭✭✭✭✭✭

    @DavePelz4 said:
    If it closed, there is a possibility a bank technically owns the course. Do a bit of work to see if you can find out the actual owner of the business and start from there. If it's the bank, you might be able to pick it up for pennies on the dollar or for back taxes. You can (possibly) get a small business loan of up to $3.75M but you're going to need investors and some money invested by you with a great business plan to qualify. You'll need to build a business plan to show profitability within 2-3 years.

    You're probably going to need significant cash to return the course to its former (better) state and also to market the course. Look at different revenue models like "member for a day" where a player can hit all the balls they want and play all the golf they want for X/day. A couple of courses here do that and it's a nice model.

    Forget the tennis courts, it NRG time (non-revenue generating).

    Look at rebuilding the clubhouse and developing a nice restaurant. The restaurant along with banquet activities can be a HUGE revenue generator and also provide some consistency.

    A lot of the public courses near me host weddings or have happy hours on the patio or other ways to generate non-golf revenue from the clubhouse.

  • JeffreySpicoliJeffreySpicoli Members Posts: 1,956 ✭✭✭✭✭✭

    @DavePelz4 said:
    If it closed, there is a possibility a bank technically owns the course. Do a bit of work to see if you can find out the actual owner of the business and start from there. If it's the bank, you might be able to pick it up for pennies on the dollar or for back taxes. You can (possibly) get a small business loan of up to $3.75M but you're going to need investors and some money invested by you with a great business plan to qualify. You'll need to build a business plan to show profitability within 2-3 years.

    You're probably going to need significant cash to return the course to its former (better) state and also to market the course. Look at different revenue models like "member for a day" where a player can hit all the balls they want and play all the golf they want for X/day. A couple of courses here do that and it's a nice model.

    Forget the tennis courts, it NRG time (non-revenue generating).

    Look at rebuilding the clubhouse and developing a nice restaurant. The restaurant along with banquet activities can be a HUGE revenue generator and also provide some consistency.

    Food and alcohol can carry a club. I’ve seen for-profit companies buy up struggling clubs, focus on food & alcohol, and actually improve the club while reducing membership fees.

    Of course, you better know what you’re doing and play to the masses as restaurants aren’t typically good investments.

  • duffer987duffer987 I'm old enough to remember a time when Ignore and Feedback worked. Canadian in CaliforniaMembers Posts: 9,345 ✭✭✭✭✭✭✭

    First things first you need to get on the KornFerry tour and start selling swag... that's for @mci711 ;-)
    But really why so coy? Where/what is the course? NO ONE here is going to jump in and nick it from you and all your financial backers.
    Golf SimCity fantasyland is a fun way to while away a Friday afternoon, but there's no way in h-e-double hockey sticks this is a goer in the real world.

    If you want to p i s s away some money and have a laugh, go buy an empty 50 acre plot of land with good soil/terrain for a 9-holer.
    Correspond/meet with some actual course designers; join the GCSAA; Bandy about the names Sweetens Cove, Reigate Heath, the Sacred Nine, and Sewanee for a bit to get some interest from GCA anoraks. Put the call out for unemployed/underemployed shapers, rent some backhoes, and break ground.

  • larrybudlarrybud Members Posts: 11,356 ✭✭✭✭✭✭✭

    @smashdn said:

    @larrybud said:
    Why did it close in the first place?

    I don't know for sure. My guess is that they were attempting to operate it initially as a country club in a small town that had two. I do not know which one came first. I suspect however due to the location between two much larger towns that have few public golf options that a public course with a good practice facility would go over well.

    I mean, it sounds like you have even done the most basic research into this.

  • SocratesSocrates How can it be so *&#% hard to make a shoulder turn? WinnipegClubWRX Posts: 9,467 ClubWRX

    @smashdn said:
    For those of you that operate courses, what else should I be wary of and what am I missing completely?

    You need to get an outside, independent opinion as the viability of such a venture. In this day and age when courses are closing daily, there has to be a plethora of ventures you could sink your money in to and not be virtually assured of losing every dime you have. Up and until the late 90's, you could make a ton of money with a good golf course. Now in 2019, you can lose a ton of money with a good golf course.

    You state you like to golf. I can guarantee you that if you were to jump into this, you likely would never have the time to golf again.

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  • Hawkeye77Hawkeye77 Countdown to The Open Championship! IowaClubWRX Posts: 18,281 ClubWRX

    Doctor friend wanted to buy a bike shop. His CPA told him just to go buy some bikes and give them away if he wanted to be in the bike business. If you need investors you are already treading water.

  • Hateto3PuttHateto3Putt Smoking Makes You Look Cool! Members Posts: 6,317 ✭✭✭✭✭✭✭

    Buy it, then be prepared to never play a round of golf again.

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  • howaboutmehowaboutme Fairfax, VAMembers Posts: 149 ✭✭✭

    A lot of great questions. Sounds like you want to make your hobby a business (that doesn't lose money), usually not a good thing. Good luck!

  • 596596 Lakeland, FLMembers Posts: 3,685 ✭✭✭✭✭✭✭

    I've purchased a couple multi million dollar businesses. I started small and used the SBA 3 times for financing. You'll need money to purchase and rebuild/repair, as well as operating capital until you can start running a profit. It takes much more capital then you imagine. Most businesses fail from being under capitalized at the start. I'd also recommend a mentor that has done this in the past. Find someone that knows a lot more about this then you do. Don't reinvent the wheel.

  • oregongolforegongolf Lefty Boomers Posts: 8,576 ✭✭✭✭✭✭✭

    Is there equipment other than a shop? Mowers, etc? I suspect the irrigation system will need to be repaired and/or upgraded. I would never even entertain this idea unless I could know every detail about the property's current condition and other pertinent details (water?). Just way too many variables.

    Promoting a walking culture but leasing a fleet of carts does not compute. As an operator, you'd want everyone to take a cart, but have a walkable course. I would suggest a serviceable driving range, but I definitely wouldn't look to it as a significant revenue generator (it won't be, without significant expense).

    If given to you for free, it might be worth it. Paying to get a highly distressed asset in a tough industry without real experience. Yeah, hard pass. And I say that as a golf facility operator.

  • Hawkeye77Hawkeye77 Countdown to The Open Championship! IowaClubWRX Posts: 18,281 ClubWRX
    edited Jul 27, 2019 8:28pm #23

    And to add to earlier comment, if you don’t know why it closed and what the market is, all of the wish list things that need fixing or purchased are just a bunch of carts in front of one horse. “If I could just find the money” begs the most important questions you don’t have answers to. A backwards way to start a small business. I don’t see the basic business bases covered at all. Take the money you might commit and take some nice trips using other people’s courses - you’ll be leap years’ ahead in every significant way.

  • MadGolfer76MadGolfer76 Admiration is the state furthest from understanding. Members Posts: 20,084 ✭✭✭✭✭✭✭

    You lost me at driving range mats.

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  • CCTxGolfCCTxGolf Going to the Masters...Someday Corpus ChristiMembers Posts: 862 ✭✭✭✭✭

    This is crazy. Good luck.

    Every golfers dream job: be the beneficiary of an awesome track and play golf all the time!

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  • cxxcxx Members Posts: 3,160 ✭✭✭✭✭✭✭

    Every golf course finds it's level. Unfortunately, it leaves the dry husks of those who thought they could run it more effectively. It usually takes 3 or so bankrupt owners. This one sounds like it's level might be 6 feet under.

  • BNGLBNGL Members Posts: 1,737 ✭✭✭✭✭✭

    Depending on where you are I’d be willing to lend a hand and consult a little bit if you’d need, I’m a superintendent. Feel free to message me whenever.

  • mallratmallrat Members Posts: 3,014 ✭✭✭✭✭✭✭

    If you want to PM me I will happily discuss some things that make my course insanely profitable. But if you want to keep it public I would develop a plan for improving maintenance, nothing giant but chunks. First and foremost, greens. Seems like a lot of people can forgive a lot of things if the greens are good.

    Next I would develop a clientele, not just for golf but for life. Maybe offer a summer membership for a pool with a f & b minimum. Or develop the pool separately, then have like cabana service for the families (or just food). Next I would focus on developing a regular clientele for the restaurant/bar. Prime rib on Fri & Sat, maybe a live jazz band with good well priced food. We do a premade breakfast sandwich and burrito for 4.99 and sell 100 a day on average to golfers.

    Next I would try and become known as an event venue, business meetings, weddings and parties. This is a huge source of revenue for us. Also along with the business meetings we are a tournament golf course. We average 7 tournaments a week, mostly corporate and charity tournaments. One of the biggest boosts from this is the f & b that goes along with it. For example the Friday morning tournament bought 70 bloody mary’s Before the day even began. Before I got into working on a turf crew I managed restaurants, at one of them we had first Thursdays which is a thing in Portland. We did so much in alcohol sales on this day that we covered our fixed and labor costs for the month.

    As far as finding a super, I would say 2 routes. First look at one who does a good job at a low budget course and lay out your plan. Let him know when you plan to upgrade. Let him know that course conditions are a priority once the budget is there. 2nd would be a young up and comer that you can work side by side with.

  • DonatelloNobodieDonatelloNobodie Members Posts: 166 ✭✭✭
    edited Jul 28, 2019 2:37pm #29

    I did the research to develop a business plan to buy a bankrupt course a few years ago. No way to come even close to break even. No surprise that they went bust. Despite an amazingly low price that the lien-holder would take, I could not come up with a plan to even break even. I researched operating budgets of every local public and private course that I could get. At 1/3 debt service, 1/3 operating expense, and 1/3 fixed cost (insurance, rental equipment, utilities, etc), it came to about $1M annual expense. This was a very good public course in an area where relatively low cost taxes and maintenance existed, Clubhouse was very small and inexpensive to maintain.

    To offset that, it would require 20,000 rounds at $50 average. The course had nowhere near that level of play, and had a much lower average round cost. Food & beverage and pro shop sales were lucky to break even.

    Any capital improvements needed would only add to the expense number, and those were a big unknown without a lot of investigation expense.

    Land zoning was such that development for business or homes was not much of an option. Mostly flood plain, and picky local government.

    My advice would be to build a business plan. Review the course historical financials. Rounds played, average prices charged per round. Include any capital improvements needed. In your case, lack of a clubhouse is a big deal, requiring a lot of up front capital. A bad irrigation system would add staggering cost. Bunker improvements are also surprisingly costly – a lot more than just dumping in sand. $1 million in capital investment just to open is not uncommon.

    Look at US golf courses for sale. Lots on the market. Many at surprisingly low prices. A homeowners association near me is shopping for a course operator to reopen a closed course that initially was built for $20 million. They’re offering a $0 annual lease, yet are finding no takers. That says a lot about the golf business. I have a lot of respect for course owners that stay in business and wonder how some manage to do so. Most prospective golf course buyers today are developers looking for land that can be used for other purposes by closing the course.

  • JAMH03JAMH03 Members Posts: 961 ✭✭✭✭✭

    @smashdn said:
    May have an opportunity to buy a former country club,


     



  • DannyKDannyK Members Posts: 19 ✭✭

    A group of guys did this 2 years ago by me. Joe at harkers hollow in harmony,NJ might be a good guy to try to reach. He is running the place this year.

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