About 75% of the golf courses are profitable. 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, 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.
Revenue Streams and Costs
Green fee play, memberships, food & beverage, and pro shop sales are the four main levers that can lead to an increase in revenue at a golf course. The cost to achieve the condition players expect ranges from about $500,000 a year for a daily-fee course to $1,000,000 a year for a private club.
Perhaps the biggest incentive and way in which a golf course can attract the custom necessary to remain profitable during the winter is reduced green fees. For many golf courses, especially ones that offer membership, the winter is the perfect time to offer promotions in the bar/restaurant, meaning that even if they’re not playing, members have a reason to attend.
Potential and Growth in Mini-Golf
It is estimated that every year over 130 million people play mini-golf, generating a total annual revenue of over $1 billion for course owners. Mini-golf is a lucrative business because it has great potential for growth and staying power.
Additional Considerations
Building a course costs at least $5 million, typically $10 million. Land purchase adds more. Greens cost up to $60 per square foot.
Do golf clubs make a difference? For beginners, expensive clubs not worth it. Learning to swing, technology won’t help much.
Most golf course salaries are $24,000-$39,500. Top earner makes $56,500. How do courses make money in winter? Offer reduced fees, bar promotions. What’s a $100k earning club worth? $800k-$1.6 million based on earnings multiples.
Private courses are funded by fees, club sales, restaurant meals. Costs often exceed revenues despite high fees.
Most golf courses are privately owned. Avid Golfer magazine estimates monthly dues of $1,025 at private clubs.
Initiating a golf course business involves a substantial financial commitment influenced by location, market, expenses. Estimated starting cost around $3.8 million.
Profitable courses sell for 6-8 times EBITDA. Unprofitable ones sell at 0.8-1.4 times revenue. Home values often hold better in golf communities.
Weather significantly impacts profitability. Clubs should invest in course maintenance, have contingency plans.
Membership provides predictable revenue used for improvements. Most fall in the 15-25% profit margin range. Assess financials regularly to remain profitable.