Today’s Golf Course Industry

The primary data source used to form my opinions was National Golf Foundation publications. In most cases, this information is quoted verbatim.  There are three generally accepted traditional categories of golf courses; municipal, daily fee, and private courses.

 NATIONAL MARKET TRENDS

The golf course industry continued to undergo a slow and steady cycle of self-balancing in 2017. This right-sizing in the supply of United States golf facilities is the ongoing byproduct of an unsustainable period of growth (1986-2005) in the world’s best-supplied market.

At the end of 2017, there were a total of 14,794 golf facilities in the U.S. The net reduction represents a 1.5% contraction of the U.S. golf facility supply from 2016. Demand for land to develop residential and commercial real estate continues to fuel the supply correction in golf. For golfers, the quality of supply continues to gradually improve as some courses close and many remaining ones undertake improvements, both major and minor.

GOLF COURSE FACILITIES

Golf Course Facilities

SOURCE: NGF

In addition to the lower openings of golf courses, recently there has been a trend of courses closing nationwide.  As can be seen in the above chart, this has caused the net growth of courses to be negative.  Since 2006, the cumulative reduction in the total number of U.S. golf courses is 6.9%. By comparison, there was a 44% increase in the number of courses over a two-decade course building boom from 1986-2005.

Golf Course Renovations

Renovation, not new construction, is the largest source of U.S. golf course development activity. Approximately 1,100 course renovations over the past decade represent a total investment of at least $3.25 billion. That doesn’t factor in minor rehabilitation projects. The new courses that are being built demonstrate an increased focus on being playable and enjoyable.

PARTICIPATION

 This statistic shows the number of participants in golf in the United States from 2006 to 2016. In 2016, the number of participants (aged six years and older) in golf amounted to approximately 23.82 million.  The US golfer base saw a boom from the late 1990’s and early 2000’s where the golfer base climbed to nearly 30 million.  This does not bode well for the golf industry as core golfers account for the most rounds played at most courses.

Number of participants in golf in the United States from 2006 to 2016 (in millions)

Golf Course Participants

ROUNDS PLAYED

The average active golfer from this data set plays 16.4 rounds per year. Notice that we say “Active Golfer” and this might not represent the average golfer. Florida is on top of the chart as expected with 25.1 rounds per year. Golfers in Colorado play the least in our top 20, with the average golfer playing just 14.4 rounds per year.

Golf Rounds Played

Accessibility and Affordability

With 75% of facilities open to all players, it matches the highest public-to-private ratio in history. The municipal facility count hit 2,497 in 2017, an all-time high for the industry. The average price paid for an 18-hole round is $34 (Public peak season, weekend greens fee with cart, adjusted for discounts (weekdays, twilight, walking, senior, etc.)). The average price for a 9-hole round is $19.

Golf Facility Operations

The U.S. golf industry’s 15,014 regulation golf facilities generated $33.286 billion in operating revenue in 2016, up from $28.945 billion in 2011, representing a compound annual growth rate of 2.8%.  The total number of golf facilities declined during this period (down by 737 facilities, or 4.7%, from 2011), however average revenue for the remaining facilities grew as the U.S. economy recovered from the major economic downturn that ended in 2010.  Lower unemployment and stronger growth in consumer spending and tourism supported golf facility operations in 2016, as did the absence of extreme weather across most of the country.

Average Prices Paid for Golf Courses

With the majority of golf course transactions being in the $1 to $3 million dollar range, nationally, there has been an influx of first-time golf course buyers entering the golf course market.  According to sales data compiled by Marcus & Millichap, the following trends in golf course prices since 2006:

Golf Course Sales

According to Marcus and Millichap, profitable deals where sellers are seeking a 10% cap rate (10X EBITDA) still need to show incredible upside to trade at that price in terms of revenue growth. However, the better located courses with quality course conditioning and high levels of customer service (including leagues and events) will continue to provide owners with solid returns.

SUMMARY

Although a golf course closes every 48 hours in the United States based on statistics from the NGF, there has been an increase interest in renovations of existing golf courses. The compression of golf facilities since 2006 of about 6% compares with growth of 44% from 1986 to 2005. Rounds played nationally were up in 2014, 2015 and 2016, and that the reduction in supply is not impacting demand.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

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