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Cost to operate a golf course?


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#1 mattswanson49

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Posted 13 May 2011 - 06:41 PM

How much could one expect to spend on operating expenses for an above average golf course in the Midwest?  I don't have much information to offer but would like some info on this.  Thanks guys.


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#2 Buzzkill

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Posted 13 May 2011 - 07:15 PM

Don't have midwest info but when I worked in Florida our budget for two 18 hole courses with 2 mechanics and 15 greenskeepers was $750K which I believe is low by most standards.  This was a private country club too.
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#3 tigerphan

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Posted 13 May 2011 - 07:26 PM

 Buzzkill, on 13 May 2011 - 07:15 PM, said:

Don't have midwest info but when I worked in Florida our budget for two 18 hole courses with 2 mechanics and 15 greenskeepers was $750K which I believe is low by most standards.  This was a private country club too.

that is very low, considering that most golf courses run at for a year 750k in expenses. Lean and mean style runs around 500k.(That's pushing it for a good normal course). These are my runs for courses in ontario, think it would be a good amount cheaper to run a course in the states.

#4 8orBetter

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Posted 13 May 2011 - 07:47 PM

I'm an owner of a lower/mid tier public golf course in Alabama. $34-38 for 18 with cart. We have good Bent greens but nothing else fancy, we run equipment until it is worn out beyond repair, get new carts every 3 years, I buy range balls when I can't find a dimple on one, run a full kitchen, etc etc and it's about $750K for us. It's hard to put an exact figure on it  but I'd say in the 1.0-1.25 million range. Factoring in maintenance costs is very hard to do without seeing a layout/design. You could have 2 course with 120 acres of turf and one could cost twice what the other does to maintain, then you get into clubhouse/ property notes etc. That would be my best guess though.

You can waste an absolute ton of money with no return on a golf course. Most new courses go broke  multiple times before somebody finally gets it cheap enough to operate it successfully. It is very tough in the golf industry right now.

#5 8orBetter

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Posted 13 May 2011 - 07:50 PM

 tigerphan, on 13 May 2011 - 07:26 PM, said:

 Buzzkill, on 13 May 2011 - 07:15 PM, said:

Don't have midwest info but when I worked in Florida our budget for two 18 hole courses with 2 mechanics and 15 greenskeepers was $750K which I believe is low by most standards.  This was a private country club too.

that is very low, considering that most golf courses run at for a year 750k in expenses. Lean and mean style runs around 500k.(That's pushing it for a good normal course). These are my runs for courses in ontario, think it would be a good amount cheaper to run a course in the states.

You're way off.


#6 SpinMill75

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Posted 13 May 2011 - 07:58 PM

In my area, there are some courses that once were private that now allow public play.  That pretty much tells me that they're unable to keep up with the bills......I'm not in the golf biz, but looking at these courses I would guess the O&M costs are over a million each year easy.

#7 teejaywhy

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Posted 17 May 2011 - 09:34 AM

The National Golf Foundation should have the data you are looking for.   It's not free but if you are considering getting in to the business, probably a worthwhile expense.

http://www.ngf.org/

#8 596

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Posted 17 May 2011 - 12:54 PM

Just finished an article about the cost of running a course.  From that article I'd expect something in the $1,000,000 to $2,000,000 range.  The cost to buy is cheaper then building.  The cost to buy could be something around $3,000,000.  So the mortgage would be about $250,000 per year alone.  Then add what they expected to be $500,000 to $1,000,000 just for maintenance of the course, add in payroll, taxes, insurance, building maintenance, retail sales costs, food and beverage costs.....etc. and its easily into the 1-2 million range.  Yes, that is a huge variance but the overall costs of expenses will vary greatly from course to course I'm sure.

I'm running my 3rd business.  There are always costs you can;t foresee.  An investor in a course would look for a 15% return on his money.

#9 SFbaybum

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Posted 17 May 2011 - 01:23 PM

I just finished a year as Pres of our private club in the Monterey area of Calif.  I can tell you our Golf Course Maintenance budget is $1.6mil annually which includes Superintendent and his staff of 19.  Now California is always expensive and we are a year round operation which I assume (maybe wrong) the midwest would not be.  This does not include Capital Expenditures such as new mowers, sand pros, etc for the Golf Course.

Beyond this is everything else, Clubhouse facilities (loans requring debt service?), Clubhouse staffing (GM & staff of 30 beyond the golf course).  Ours is a $6mil revenue Club consisting of just over 400 Golf Members ($700/month dues) and about 100 Social Members ($275/mo dues) that is budgeted to break even annually...

#10 Pepperturbo

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Posted 17 May 2011 - 01:47 PM

In my experience - some numbers quoted here are low.  Maybe they are low end courses (not meant as an insult anyone), can't say.   On average, courses in AZ and CA cost about 6M-15M, depending on course turf, turf equipment and facilities.   An acquaintance bought a tournament level course years back.  Tournament level and upscale daily-fee courses cost considerably more to operate due to larger staff, and "turf quality", which influences monthly operating expenses.  His costs over 1M per year to operate, and he does not own the capital equipment.  An important variable is whether or not the course owns all of it's capital turf equipment, which in and of itself is very expensive to maintain for a higher caliber of courses.  The other option is shared lease  with nearby courses, which cuts costs considerably.

Edited by Pepperturbo, 17 May 2011 - 01:52 PM.

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#11 wescottlefty

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Posted 17 May 2011 - 02:05 PM

Two  local courses that are run by the government have a loss of 70k and other of 1.2 million which the newer 27 hole course has averaged since starting of a 1 to 1.5 mil loss that is with a 850k debt services.  Other courses around here that are private tend to break even.  I know this doesnt help with your question but it shows that the economy/businesses in your area also will greatly effect your bottomline.  I would not get into a golf course to make money right now unless you are like the 5th or 6th owner of a course that is less than 10yrs you might be getting a hell of a deal depending on your assets.  Equipment conditions Carts/maint. equipment.  Good luck I think if you work the course yourself you would be that much closer to breaking even.  I'll see if anyone in the area will give up any numbers as to budgets.

#12 HenryBall

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Posted 17 May 2011 - 02:58 PM

If you are running an 18 hole facility with food and beverage ops here are some of the numbers you can expect
Food and Bev operation: 150,000
Golf related expense (flags, event signs, handicapping, pos software, staff, range balls, etc): 100,000
Maintenance: 200,000
Marketing: 75,000
Misc repairs/expenses: 100,000

These numbers may be slighlty skewed. The numbers I had were from a 45 hole facility in the Midwest with three food and beverage areas. I basically divided everything by 2.5. If you have other questions, let me know.

#13 muxi87

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Posted 17 May 2011 - 04:17 PM

 SFbaybum, on 17 May 2011 - 01:23 PM, said:

I just finished a year as Pres of our private club in the Monterey area of Calif.  I can tell you our Golf Course Maintenance budget is $1.6mil annually which includes Superintendent and his staff of 19.  Now California is always expensive and we are a year round operation which I assume (maybe wrong) the midwest would not be.  This does not include Capital Expenditures such as new mowers, sand pros, etc for the Golf Course.

Beyond this is everything else, Clubhouse facilities (loans requring debt service?), Clubhouse staffing (GM & staff of 30 beyond the golf course).  Ours is a $6mil revenue Club consisting of just over 400 Golf Members ($700/month dues) and about 100 Social Members ($275/mo dues) that is budgeted to break even annually...

My club seems to be same size membership wise.

I haven't played a course in nicer shape than ours...wall to wall manicuring (no low lying limbs in the trees, no unintentional brush, perfect fwy and nice, thick rough, top notch bentgrass greens, etc)...I'm talking manicuring to the extent that there isn't a bare spot of land on the property...maintenance comes in at approx $800,000 annually.

Of course, no overseeding saves some money...as does the GA v CA dollar.

#14 SFbaybum

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Posted 17 May 2011 - 05:47 PM

[/quote]

My club seems to be same size membership wise.

I haven't played a course in nicer shape than ours...wall to wall manicuring (no low lying limbs in the trees, no unintentional brush, perfect fwy and nice, thick rough, top notch bentgrass greens, etc)...I'm talking manicuring to the extent that there isn't a bare spot of land on the property...maintenance comes in at approx $800,000 annually.

Of course, no overseeding saves some money...as does the GA v CA dollar.
[/quote]

..a large chunk is just cost of living as our payroll alone in the Golf Course maintenance dept is equal to your entire budget before we buy any fertilizer, gas, sand, topsoil, etc....  We don't over seed either.

#15 msupl

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Posted 17 May 2011 - 07:20 PM

I'm sure the cost of gas is a budget buster for a lot of courses out there, especially with a weak economy where membership is cutting back either due to being laid off from work or just cutting back on expenses.


#16 bananapel

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Posted 17 May 2011 - 07:30 PM

Are you guys including other op expenses if you have more than a golf course (pool, tennis, etc)?

#17 8orBetter

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Posted 17 May 2011 - 07:31 PM

 msupl, on 17 May 2011 - 07:20 PM, said:

I'm sure the cost of gas is a budget buster for a lot of courses out there, especially with a weak economy where membership is cutting back either due to being laid off from work or just cutting back on expenses.

I can't remember the last time a customer came in our shop and bought a shirt, putter, dozen balls and a glove. Now it's twilight play and $1 used Noodles and NXT's from a jar.

#18 KennyLee

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Posted 17 May 2011 - 07:32 PM

Way too broad of a question to get a good answer to without a ton more information.  I've seen budgets that were $300k per year (goat track) and places where the greenskeeper made that much or more.  

Climate is a huge factor.

Costs are rising, no matter where you start the math.

#19 fatmouse

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Posted 18 May 2011 - 02:30 AM

Alot of times this information is made public, either by golf clubs for members or by municipalities for tax payers. If you know how to read a basic income statement, try googling "golf course income statement" or "golf course financial statement".

The municipal golf course in my neighborhood had $3.6M in revenue but had a net loss of $300k. The operating cost of one 18 hole golf course, a driving range, a few putting greens, and a club house with wedding facilities was $3.9M. Things are more expensive in california, but the general theme of increasing costs, razor thin margins, and fewer rounds played is a national trend. I'm not a financial adviser but I think you'd be wise to consider something else to invest in. If you still want to do it, at least keep in mind the old saying "The third owner makes money".

Edited by fatmouse, 18 May 2011 - 02:35 AM.


#20 Tstiles

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Posted 18 May 2011 - 08:25 AM

 mattswanson49, on 13 May 2011 - 06:41 PM, said:

How much could one expect to spend on operating expenses for an above average golf course in the Midwest?  I don't have much information to offer but would like some info on this.  Thanks guys.

Matt , You might want to redefine your question.

Having been a multi course operator for 30 yrs , I can tell you the range is broad with by far the largest variable being labor.

Here are a few issues you might want to define :

- With or Without debt service
- With or Without interest
- With or Without Capital Improvements Escrow / Contingency Repairs
- With or Without Management Fees
- Leased or Owned Carts & Equipment ... If Owned , do you include depreciation
- Depreciation
- Water Costs ... Some guys pay nothing , some guys pay $ 500K
- Service Standards ... Can make a significant difference
- F&B Operation ... Snack Bar ? , Fine Dinning ? , Banquet Operation ? , Ect. ?
-  Tennis / Swimming / Athletic / Ect.
- It goes on and on and on

The range can be as low as $ 500 and easily as high as $ 2,500,00 and above.

Expect $ 1,250,000 to $ 1,500,000  range for a solid 12 month season daily fee golf course , leased carts , owned equipment , no depreciation , no interest , no debt service , no mgt fees , no water bill , 5% CIP allowance , no swimming / tennis , modest sales and marketing costs , modest service levels , modest F&B , modest utilities , ect.


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#21 SFbaybum

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Posted 18 May 2011 - 02:01 PM

 bananapel, on 17 May 2011 - 07:30 PM, said:

Are you guys including other op expenses if you have more than a golf course (pool, tennis, etc)?

In my case, no.  We have a $1.6mil Golf Course Maintenance Budget which includes Golf Course only labor, Golf Course Labor Worker's comp and everything needed to operate/maintain a first class California Private Golf Course.  

Again, Capital Expenditures (a new well or pump for the irrigation or mowers or green rollers, etc) are extra.  This also does not include any part of the pro shop, the clubhouse, swimming facility, fitness facility or F&B operation.  Additionally, each of these areas will have their own Capital requirements in addition to their own operational budgets.




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