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  Why are so many Golf Courses failing?  

This question has surfaces many times over the last couple of years. Of course, saturation of golf courses, supply and demand, economy, busy lifestyles, etc. Those are a given and certainly they can be overcome when times are good. To understand a portion of the struggling golf market you must look at the structure that is now in place for the larger golf facilities.

As these beautiful new golf courses have popped up over the last 25 years golf management companies have increased in numbers as well. Many of these failing golf courses are operated by a management company. There is not the same concern about the profitability of the golf course as per say an owner operator facility.  Labor, fertilizer, water, general maintenance cost are on the rise but it is the management fee that has to be paid first. Once a management fee is paid how much is left for the golf course? The fee can be all inclusive of the operating team or it can be a fee in addition to labor cost.

I was involved with a golf course, 39% of the revenues went to servicing the debt and the management fee, that did not include labor.  The golf course was left to struggle with the remaining 61% and meet all labor cost. Improvements were kept to a minimum and the course struggled with its maintenance budget. Throw in the decreased value of a tee time and no question the course struggled.

What is the motivation behind the counter for that young golf professional? The assistant pro that is logging 50 plus hours a week at a fraction over minimum wage with an occasional student is not really concerned about the bottom line. Chances are he or she will move on to another course next season. Golf professionals often have no stake in the matter unlike years ago when the golf professionals may own the lease on a golf shop. It was their business to make money.

Spiraling down value of tee times is another concern. Tee times are booked in real time on websites, golfers shop tee times much more closely for the best deal. Golf courses have diminished the value of their tee times by offering price breaks at every moment of the day. Golfers are now rewarded for waiting to the last minute. This is has been encouraged by golf courses, PGA sections and online portals like ourselves

It is easy to blame the overbuilding of golf courses as the cause but further examination of the structure in place and how golf is marketed reveal more of the problem golf courses face. And we must not forget ……it is a tough game, growth in the game has been relatively flat for many years.

Like to Submit a Comment on this Topic?
Matt      Tuesday , Aug02, 2011
I agree with all of the points in the article and watched it firsthand myself. I also think that the final point that you made needs to be looked at further. The golf industry needs to look at ways to grow the game long-term. It is still a adult/male dominated game and there needs to be growth in...
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