Golf Course Development

By: Jackson Fields

Cost of Land

An 18 hole course with just short par threes is about 30 acres. An 18 hole course with just par 3's and 4's is about 75-100 acres. A full 72 par golf course is about 120-200 acres. 120 acres is about 700,000 dollars in Texas. Most of it depends on location and value of land.

Finances of Golf Course

Finance sources value a golf course primarily on cash flow history, "Showing a clear ability of the business to repay the loan." A golf course showing no earnings will not have good luck getting financed unless the borrower offers other sources of collateral to the banker. The lender will base its comfort level on a debt service ratio (DSR), which is the cash flow available after all operating expenses divided by the annual debt service (excludes depreciation, amortization, but includes 2 continginciesbased on gross revenues: 4% to 5% management, and 2% to 3% for capital reserves. The lender will consider the quality and condition of the property, and things like location, strength of income history, appraisal, etc. The experience, skill and risk of the buyer will also be a highly important factor to a lender. A comfortable DSR established by the lender, usually no lower than 1.25 to 1 (2004 - I'm raising the DSR threshhold to 1.35. This business is too risky for a 1.25 DSR in my opinion). Therefore the $3 million golf course earning $300,000 a year could qualify for an annual mortgage payment of as high as $240,000 (300,000 / 1.25 = 240,000).

Therefore, an experienced golf course buyer could borrow up to $2.6 million at 8% over 25 years on our $3 million dollar golf course.

Maintenance

Maintenance is a huge part of the golf course today. This is what gets the customers coming back to your course to play more and spend more. Since this is such a big part of the profit lots of our budget will go into the maintenance of the golf course. Here is a powerpoint from the USGA to tell us how to maintain a good golf course with a small budget. USGA Powerpoint

Bridlewood Golf Course

Bridlewood is a golf course in Flower Mound. If you ever wanted to go play a round of golf or ask about the business side of the golf course. Bridlewood is owned by Dominion Golf which is a organization that owns six courses in the area. Bridlewood closed down last labor day but was then bought by Lantana golf course and is now a great fully functional golf course.
U.S. Open 2015 - Golf Course Preparation

Other Things the Course Needs

A golf course must provide golf carts for there customers to keep up pace and to help people play that can not physically walk 18 holes. A regular electric golf cart with windshield is anywhere between 5,000 to 7,000 and most courses have about 60 golf carts so that is anywhere between 30,000 and 42,000 worth of golf carts. Also a golf course must provide a clubhouse for players to change, relax, check in, and go to the restroom. Also most golf courses have a small bar/restaurant to make more profit. There will also be a pro shop where customers can buy tools for there golf round and for other occasions. There is many other cost than just the course at a golf course as I know now there are many cost to a golf course.

Succesful Golf Courses

Follow this link and you will find some of the most successful golf courses in the world and how they became successful. Most Successful Golf Courses

This will show me how to make and run my golf course how the great ones do and make it so it can maybe be like the great golf courses one day.

Location

As I have seen most golf courses that are successful are not in the north I am not saying the north is a horrible place to start a course I mean look at Whistling Straits it is just easier to make profit in a warmer environment. The most successful golf courses are in warmer environments because it is easier to maintain and you make twice the amount of profit. Like in the north nobody will play in the winter only in the warmer times of the year. That is why I think that a golf course would be more successful in a wormer climate.
The Masters on ESPN

Advertisement

Advertisement is a huge factor in the golf business it is what gets people up and out to play and want to come to your course. The Advertisement of a golf course is what really brings in a lot of a courses business so I feel if I made a course advertisement would be a key factor in bringing people to my course.

How This Helped

This assignment helped me get much closer to my dream job but it has also showed me the difficulties of running a golf course. This was a great assignment and it helped open my eyes to the line of work I might someday want to go into. I really liked this assignment and I recommend doing this again.
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