Owning a golf course can be quite challenging – it requires a lot of maintenance and a decent upfront investment. You must know whether it is profitable before investing your time and capital. The answer to “are golf courses profitable” is not simple, as there are a number of factors at play. And it is exactly what this piece tries to explain, so let’s get straight to it.
On average, the golf courses generate about 2-3% of the profit on the total investment. If you invest about $7 million in a golf course, and you can make $175,000 a year in profit. It is mainly because the maintenance of golf courses can take a decent portion of the revenue.
The amount of profit you stand to make in different areas is as follows:
|$500,000-$1,000,000||$12500 – $25000|
|$1,000,000-$5,000,000||$25000 – $125,000|
|$5,000,000-$7,000,000||$125,000 – $175,000|
|$7,000,000-$10,000,000||$175,000 – $250,000|
|$10,000,000-$15,000,000||$250,000 – $375,000|
|$15,000,000-$20,000,000||$375,000 – $500,000|
What Does Owning a Golf Course Even Mean?
Owning a golf course is not as simple as owning real estate. There are a number of hats to wear while owning a golf course, including restaurants, entertainment value, and the pitch. Because of this diversity, golf attracts investment from diverse backgrounds, including food specialists, successful, trained agronomists, and professional golf players.
The amount of profit generated by a golf course depends on the performance of each facility within it.
How much Investment Is Required To Own a Golf Course?
There are a lot of variables that influence the amount of investment required for a golf course.
Examples of such variables include the golf course’s location, reputation, and infrastructure, among others. The costs can also vary greatly based on whether you want to build the golf course or buy one already built.
According to recent listings in American Market, The Lake Ridge Golf Course in Lakeview, Oregon, costs about $600,000. Whereas The Highlands Course at Fisher Mountain, Franklin, costs about $8,000,000. The information about the median prices of golf courses is not available, but even if it were available, it probably would not have much use.
Typically, the major factor that determines the cost of a built golf course is its location and the real estate value of that location. So, you can take pointers from the real estate listings of the area where the golf course is located.
The cost of land is a vast confounder even when one decides to build a golf course on your own. However, if we put the price of the land aside, the cost of building a course can be estimated with decent precision.
It costs anywhere around $800,000 – $3,235,000 to build a typical 18-hole course, excluding the cost of land. The average price of building a 9-hole course costs about 1,045,000 on average. At the same time, the executive and par 3 golf courses cost about $975,000 and $280,000.
Factors such as grading, drainage, shape finish, green construction, bunker construction, grassing and seed prep, and tee box construction, among many other factors, can determine the cost of building a course. Furthermore, the cost of restaurants and other entertainment facilities within a golf course can also influence the overall cost of a golf course.
Operational Costs of a Golf Course
The operational costs largely depend on the type and size of a golf course. According to research, labor takes a huge chunk of the operational budget. It usually takes more than 50% of the total operating budget, and the exact amount depends on the golf course size. The equipment, chemicals, fertilizers, fuel, and lubricant costs follow the labor cost.
As per the figures published by the GCSAA, the average maintenance costs of golf courses in the United States have remained constant at around $700,000 a year throughout the last decade. Furthermore, maintenance of a single hole costs about $46,000 on average. We believe it is the right indicator to estimate the budget it will be required to operate a golf cost. Multiply this figure by the number of holes on a golf course, and you will get a somewhat right estimate of the operational cost of a facility.
Furthermore, the operational cost of a golf course can also be broken down into cost per acre, which varies greatly based on the area of the course. For example, it costs about $68,469 per acre for putting green, $8,604 for fairways, $40,507 for bunkers, and $1,762 for rough.
Although these are not the most recent figures, the operational cost of golf costs within 2023 would not vary too much from them. We can say this with certainty because, despite the ups and downs in the economy, the operational costs of golf courses have remained almost the same throughout the last decade.
Operational Costs of Golf Course – Percentages of Major Expenses
|Fuel and Lubricants||3%|
What Are the Options to Finance a Golf Course?
There are several options to finance a golf course, including SBA 504 loans, bridge loans, SBA 7(a), and Non-SBA options. The amount, terms, credit score requirements, and amortization of loans can vary greatly in different types of loans. Investors can get more than $1 million with non-SBA loans and get up to 75% LTV/LTC.
How Much Profit Can You Make with a Golf Course?
Now that you have an idea about how much owning a golf course can cost, let’s look at the potential profit you can make by owning one.
Like everything else that has been mentioned so far, a number of factors determine the amount of profit a golf course can make. A well-established and running golf course can make as high as five million dollars a year. However, an ill-maintained golf course might not even make a golf course profitable and instead put the investors at a loss.
Golf courses generate revenue from several sources. The most common income streams include membership fees, green fees, shop sales, and food and beverage sales. Golf courses that comply with international and domestic regulations can also organize different tournaments to generate a stream of income.
The profitability of most golf courses largely depends on its location, reputation, and the facilities it has to offer. It works like every other business venture. The more you offer, the more you will earn. For example, a golf club located near the city’s center and offers quality service will certainly make more than one located far away from the major population densities.
How To Increase the Revenue from a Golf Course?
By now, you should know that managing and maintaining the golf course takes a lot of effort. Knowing a few techniques or ideas that can make the golf course more profitable is important. You might need a bit of experimentation with these ideas to find the most suitable one for your golf course. However, once you find the right combination, the revenue from the golf course will certainly increase. Let’s take a look at them;
1. Source The Golf Course to Event Planners
It is one of the most overlooked yet profitable ideas to generate extra revenue from a golf course. The golf courses make an incredible place to hold various events, including weddings, bridal showers, pre-wedding ceremonies, corporate events, and rehearsal dinners. You can use either source the location from an event planner or market the venue yourself. Either way, it will significantly boost the overall revenue generated by the golf course.
You can also start dining service and hire professional staff to make the golf course look like an appealing venue for hosting a range of events.
2. Create a Tiered Membership System
Creating a tiered membership system is the key to generating revenue from the golf course. Not everyone who plays in your course will have the same routine. Casual golfers might hit the course once or twice a month. In contrast, players who compete in tournaments will use the course twice or thrice a week. So, making different membership plans for the two groups is important.
For example, if the plan is too expensive, it would not appeal to casual golfers. Whereas, if it is too affordable, it will cap the revenue golf courses can generate from those that play frequently.
You can also offer customized plans to the players. It will allow them to cherry-pick the needed facilities instead of opting for pre-designed plans. For example, many golf courses can list all services available, including spa services, driving range, public golf courses, golfing, dining, etc., and price each of them appropriately. Visitors can pick a combination of different services which suit them the best. The flexibility in the plans makes the membership more appealing.
3. Drive Sales Via Pro Shops
Pro shop sales at the golf courses are also a significant source of revenue. Several items, such as tees, gloves, golf balls, and clubs, sell in large volumes. You can drive sales by adding branded merchandise to the pro shops. Furthermore, the golf course can also start its own line of brands to offer golf equipment.
You can order the most selling items from a trusted manufacturer and place your logo on them. The logos on the product will also market the golf course and drive more people toward it. Another option is to allow golfers to personalize their gear. You can make a deal with a custom manufacturer and provide their services at the golf course pro shops.
You can also provide discounts on select items to people with premium memberships. It will drive the sales of the pro shops and make the premium membership plans more appealing.
4. Invest in Digital Marketing
Like every other business, digital marketing is also necessary for golf course owners. You can use the targeted ads on different social media platforms such as Instagram, Facebook, and YouTube to target the right audience and drive memberships for the golf course.
Furthermore, maintaining an e-commerce presence is also essential. You can create new deals at the pro shops, market membership plans, and make information about the golf course accessible to potential players.
By garnering a decent audience on these social media pages, revenue can also be generated by these pages. For example, the tournaments can be broadcasted live on YouTube, and reels of the golf courses can be uploaded on Instagram to generate revenue from the pages.
5. Indulge in Partnerships with non-Profit Organizations
Golf Courses can partner up with non-profit organizations to improve their public profile. You can hold on-site charity dinners, sponsor events, and spread awareness about a social issue via social media pages. Hosting such events on the golf course will improve the golf course’s reputation and introduce the venue to new people, some of which will ultimately sign up for the golf course membership.
6. Organize Tournaments
Organizing tournaments at the many golf clubs between the different members will go a long way toward marketing the golf course. The competition attracts more people, not just those playing golf but also those who come to watch these tournaments. Some of the visitors will visit the pro shop, spa, and other facilities that the golf course offers and ultimately increase the overall revenue generated by the golf courses.
FAQs on Are Golf Courses Profitable
How Can I Make More Money in the Golf industry?
You can make more money by sourcing the golf course to event planners to organize a range of events, including weddings and rehearsal dinners. Adding branded merchandise to pro shops can also increase revenue.
How much does a golf course owner make?
Depending on the golf course’s size, type, and maintenance, the golf course owners can make anything between a few thousand dollars to more than five million dollars a month.
How many golf courses make money?
About 75% of the golf courses are profitable, whereas the remaining 25% do not generate any profitable income.
Owning and managing a golf course can be quite taxing, but it can be very rewarding if done right. There are ways beyond just offering the landscape to play that make revenue for the golf courses. You have to identify the ones that work for you and keep improving them.
Be mindful that to profit from a golf course, it is important to manage it correctly, which requires a decent amount of capital. If there is enough capital to buy or build a golf course but not enough to manage it, the golf course will likely make a loss.
We hope this piece has been helpful in letting you know whether or not golf courses are profitable.