In the last years, many golf courses are selling based on multiples of revenue (<1) because there aren’t any profits to calculate any type of return on investment. A 10% return might seem reasonable for buying a golf course, but the reality is that the return of many of these courses at the time of sale might be -10%.
Full Answer
What is the profit margin for a golf shop?
For some golf shops, OPEX becomes 30 to 35 percent. Therefore, any item you sell that earns less than that OPEX percentage creates a loss and items above it earn a profit. It is easy to anticipate profits when projected to sell at full price, but it is important to recognise what happens to profits when you mark it down.
How profitable are golf courses these days?
On an encouraging note, Sageworks’ data show that even though golf courses have negative margins, they have strengthened steadily since 2008, when the average net profit margin was about -9%. Weaver said golf courses and country clubs have reined in overhead costs nicely, cutting them since 2010 by about 3 percentage points.
What is the average revenue per round on a golf course?
A healthy course will typically run at a utilization rate of 50% to 65% of weather adjusted available tee times and average revenue per round as a percentage of peak revenue per round between 70% and 80%.
How much should a golf course spend on capital expenditures?
From a capital expenditure standpoint, public and semi-private golf courses should on average spend between 3% and 5% of total revenue on maintaining existing capital items. Private clubs sell and market more than just golf, they promote a lifestyle and social hub.
What is an average profit margin at a golf course?
Profitable golf courses are generally selling for six to eight times EBITDA, while courses that aren't profitable tend to sell at 0.8 to 1.4 times revenue.
What is the average revenue for a golf course?
According to the National Golf Foundation's 2010 Operating & Financial Performance Profiles of 18-hole golf facilities in the U.S., private 18-hole golf clubs had average total revenue of $3,277,000 in 2009, but with total expenses of $3,204,500.
Do golf courses actually make money?
The most common income streams are green fees, membership fees, pro shop sales, and food and beverage sales. While increasing membership fees or green fees might seem like a good way to increase revenue, it might put off more golfers than the additional income earned.
How do you value a golf course business?
As with most property types, golf courses can be valued via the income approach, sales approach, or cost approach. Each method has its limitations. Given the specialized nature of golf course properties, the application of the comparable sales approach is preferred.
How many acres do you need for a golf course?
An average 18-hole golf course requires approximately 140 and 180 acres, while a 9-hole course requires 70 and 100 acres. A 9-hole par-3 course can be built on as little as 65 acres, while an 18-hole pitch and putt require around 25 to 30 acres.
How many gallons of water do golf courses use?
Depending on the location of the golf course and the climate, an 18-hole course can use on average 2.08 billion gallons of water per day. Depending on the amount of water needed, a typical golf course can spend between $7,000 and $108,000 per year.
How can I make my golf course more profitable?
Strategies to Boost Revenue at Your Course This SeasonSell packages.Custom memberships.A well-designed loyalty rewards program.Branded merchandise.Sponsorships.Add an eCommerce page to your website.Open up an online booking channel.Upselling and cross-selling.More items...
Why are golf courses so expensive?
Why is golf so expensive? Golf is costly due to the high cost of quality golf clubs, accessories, course fees, memberships, and the amount of golf that is played. Golf clubs are made from quality materials meant to last a lifetime, and courses often require membership, the cost of which reflects the club's exclusivity.
How can I make my golf course successful?
Offer Online Tee Time Booking. Online tee time booking is more important than ever. ... Look at Third-Party Booking Outlets. ... Offer Varying Golf Course Membership Options. ... Add a Loyalty Program. ... Use POS Reporting and Analytics. ... Automate Ordering and Inventory. ... Host Golf Events and Contests. ... Add Time-Based Discounts.More items...•
Do golf courses appreciate in value?
A study done by the National Recreation and Parks Association found that properties that view a golf course, even if they are not a part of that golf community, have 15-30% higher property values.
What does it take to run a golf course?
The cost to achieve the condition players expect — or will tolerate — ranges from about $500,000 a year for a daily-fee course to $1,000,000 a year for a private club, estimates Bob Randquist, chief operating officer of the Golf Course Superintendent's Association of America.
Who owns a country club?
Traditionally, country clubs have been tightly held by a wealthy family or by the club's members. Many still are. But as in so many industries, corporations are gobbling up the more than 5,000 U.S. country clubs and some 16,000 golf courses. ClubCorp, one of the largest of these companies, owns or operates nearly 100.
What happens if you sell an item that earns less than the OPEX percentage?
Therefore, any item you sell that earns less than that OPEX percentage creates a loss and items above it earn a profit.
Does gross profit percentage mean squat?
Last month, we looked at the impact of stock turnover rate on our profits and understood that gross profit percentages ‘don’t mean squat’ in comparison to cash. This month, pricing philosophy is the topic. I am keenly aware of what competition has done to the pricing for golf merchandise. Customers can always buy it elsewhere for a lower price, but let’s examine mathematical considerations for pricing.
What would happen if you had honest hard working people in charge and the right golf course for the population base?
If you have honest hard working people in charge and the right golf course for the population base you could do very well and have fun doing it.
Why are golf courses abandoned?
Many a golf course has been abandoned during economic downturns due to the high cost of keeping it alive and prospering.
What generation is golf?
According to a 2013 National Golf Foundation Survey, the demographics of golf break down as follows: 11% of golfers are members of the Silent Generation (born before 1946), 27% of golfers are Boomers (born 1946-1964), 27% of golfers are members of Generation X (born 1965-1979), 29% of golfers are members of Generation Y (1980-1999) and 6% of golfers are members of Generation Z (born after 1999).
Why do golf clubs offer special packages?
Many golf clubs offer special packages for midweek, weekend, or senior golfers to boost their membership numbers. The purpose of these packages is to draw golfers to your course during slow times.
What did Mark Twain say about golf?
As Mark Twain said when reading his obituary, “rumors of my death have been greatly exaggerated.” So too with the death of golf. Golf is one of the few sports that people can pick up in childhood and play well past the time their bodies have failed them in the sports of their youth. I can’t tell you how many golfers with repaired rotator cuffs, replaced knees and artificial hips I play golf with.
What does it mean to look at a well-manicured golf course?
Looking at a well-manicured golf course creates a peaceful feeling until you play some challenging golf. Being an owner of a golf course can fill you with loads of pride but can lead to financial difficulties.
Can golf courses survive without competitive advantage?
The honest truth is that many golf courses won’t survive indefinitely without competitive advantages. A bad season can ruin your financials, and put your business at risk. Many courses are turning to golf management companies to handle their operations. Billy Casper is an example of that type of company.
Is golf a symbol of wealth?
Golf courses and country clubs, long symbols of wealth and status, aren’ t doing so well themselves, financially speaking.
Do golf courses have negative margins?
On an encouraging note, Sageworks’ data show that even though golf courses have negative margins, they have strengthened steadily since 2008, when the average net profit margin was about -9%. Weaver said golf courses and country clubs have reined in overhead costs nicely, cutting them since 2010 by about 3 percentage points. “Those overhead costs are ongoing costs that aren’t direct labor or materials, so it’s showing these country clubs and golf courses are able to carefully manage spending.”
7.1 Break-even Analysis
Using averaged monthly total expenses and an estimated variable cost, the monthly break-even point in sales revenue is calculated and shown below.
7.2 Projected Profit and Loss
The following table and charts show the projected profit and loss for three years. Monthly figures for the first year are shown in the appendix.
7.3 Projected Cash Flow
The following table and chart show the projected cash flow for three years. Monthly figures for the first year are shown in the appendix.
7.4 Projected Balance Sheet
The following table presents the projected balance sheet for three years. Monthly figures for the first year are shown in the appendix.
7.5 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7997, Membership Sports and Recreation, are shown for comparison.
How much money did the government spend on golf courses in 2020?
In 2020, the federal government spent a total of $45,000 on Golf Courses & Country Clubs. It has awarded 1 contracts to 1 companies, with an average value of $45,000 per company.
How does the market affect prices?
Rise and fall in market prices are affectedd by supply, demand, and the cost of goods/services sold. Higher demand or COGS will put upward price pressure on prices. Higher competition among Golf Courses & Country Clubs companies will put a downward pressure on prices. The chart shows how prices are changing within the industry, month-to-month over the last three years.
What is compensation statistics?
Compensation statistics provides an accurate assessment of industry-specific jobs and national salary averages. This information can be used to identify which positions are most common, and high, low, and average annual wages.
Why do banks use liquidity?
Bankers and suppliers use liquidity to determine creditworthiness and identify potential threats to a company's financial viability.
What is the focus of a golf course?
Public and semi-private golf course operations have a singular focus – maximizing the yield on a finite inventory of available tee times. As the market for golf continues to evolve, a focus on maximizing gross margin from non-golf related revenues will also become more important.
What is benchmarking in golf?
Benchmarking standards are commonplace in most industries. These standards are set and updated based on defined and evolving business models and shared information. The core objectives for creating and using benchmark standards are performance measurement and improvement. The golf industry has lagged other industries in ...
HOW DO YOU LEVERAGE KPIs?
A requirement for effectively using benchmark standards to improve your specific circumstances is the application of experience to compare and contrast your results with that of the standard, investigate discrepancies and develop focused improvement plans.
What are the KPIs for each type of golf course?
The KPIs for each type of course are different . As an owner or operator, this means you need to be recording, tracking and updating KPIs in a manner consistent with the industry (category) standard as a baseline starting point. Therein lies the greatest challenge the golf industry is set to overcome.
Why are benchmarks used?
Although benchmarks are typically used to measure historical performance, they can be used to make alterations on a timely basis if reviewed appropriately and to provide direction for adjustments moving forward.
Why do clubs use benchmarks?
The use of benchmarks allows operators to both measure performance and adjust operating procedures to improve performance and meet the goals of the club.
Why are expenses harder to come by?
Expense metrics which go beyond simple dollars and cents, are generally harder to come by due to the wide variety of operating models, departmental structures, and local market conditions for labour and other products and services.
How does the utilization of a miniature golf course determine success?
The largest variable that determines the level of success in a miniature golf operation is the percent utilization of the golf course during the season. As the marketing plan points out, there are clearly defined peaks and valleys of activity during a typical week. Evenings and weekends tend to produce very high utilization, even full utilization for much of this time. On the other hand, weekday hours (between 10 am and 4 pm) tend to have lower utilization. On average over the full season, most facilities (with a direct population base of 40,000 to 60,000) experience a utilization of approximately 35%. Sammy’s is fortunate to have a population base of over 150,000 within a 15 mile radius (based on the 2000 US Census). In spite of that, we have used rather conservative estimates of utilization (about 20%) in deriving our projected revenues. But it is worthy to note that if our course utilization were only 10% (half of the 20% projection), we would still break even. This huge margin of error should satisfy even the most skeptical reader.
How many golf courses has Mulligan-Bogey built?
The numbers have been verified by Mulligan-Bogey Leisure Builders. Mulligan-Bogey has built over 400 successful courses in the last ten years and they are well aware of the revenues of their courses.
What is the easiest way to create graphs for a business plan?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Why does the balance sheet show current liabilities?
The Balance Sheet shows the current liabilities at a zero balance. This is because all purchases and payroll are paid on a cash basis. >/P>
Is interest high for current lending?
Note the interest is high for current lending. This is in keeping with the conservative nature of this plan. It further demonstrates the basic health of this conceptual business.
Is miniature golf successful in rural America?
The expanding network of new concept miniature golf courses is finding success in rural America. Locations near rural arterials are performing well across the nation.
PlusFours
I've been wondering for some time what the profit margins on golf balls are. Since I have joined GolfWRX I've observed that there are a number of members with industry experience, and I'm hoping you will be able to answer my question.
twgolf
When I used to work in the pro shop at our local course the wholesale price for PROV1s was $36 and the Nike One was $32 a dozen, but that was a little over a year ago. There's not much mark up in balls, in fact these were the ones that had the biggest margins.
Gxgolfer
I hear there's a facility in Oceanside that was built by a ball company. :cheesy: And Callaway bought a company for its ball production capacity.
PlusFours
When I used to work in the pro shop at our local course the wholesale price for PROV1s was $36 and the Nike One was $32 a dozen, but that was a little over a year ago. There's not much mark up in balls, in fact these were the ones that had the biggest margins.
PlusFours
I hear there's a facility in Oceanside that was built by a ball company. :cheesy: And Callaway bought a company for its ball production capacity.
mantan
But the margin for the ball manufacturers has to be ludicrous!!! Wasn't it rumored that Titleist makes the majority of it's profit from ball sales, not equipment?? The wholesalers are paying a premium, but the company has to be making a mint!
themouth1
But the margin for the ball manufacturers has to be ludicrous!!! Wasn't it rumored that Titleist makes the majority of it's profit from ball sales, not equipment?? The wholesalers are paying a premium, but the company has to be making a mint!
