Why do owners/members sell golf course properties? Just the other day, a friend suggested I use this space to promote discussion on that. Thus, I went back in my files of brokerage, consulting and appraisal assignments to review why these transactions occur. Below are some reasons:

  • Generational Considerations: Sometimes, the family member who originally acquired or developed the course passes on and the next generation has alternative plans to operating a golf facility. It could be from different interests or pursuits to lack of successors.
  • Distress: If a golf course or club is under-performing, it’s possible different ownership can be more effective. This is particularly prominent with under-performing, member-owned clubs. If the property has an alternative highest and best use and like many golf courses should be re-purposed.
  • Positive Profitability: The most profitable golf operations are, of course the most desirable, especially in market environments like we’re experiencing now where there are investors seeking to build golf property portfolios. Over-performing properties have often generated multiple offers to purchase and sale prices considered to be premium.
  • Capital Needs: Often, clubs exhibit significant deferred maintenance for which ownership/membership is unable to fund correction. If these capital needs are ignored, the facilities can decline leading to diminished performance. Sales often occur to buyers willing and able to fund these needs and move the club forward.
  • Management: Some clubs, even those without much or any deferred maintenance aren’t being operated as effectively as they could be. Often, new, maybe more capable ownership can “take the property to the next level” through professional expertise that maybe the smaller, independent owner can’t achieve. Recognizing and acting on this can be a profitable move for an owner.
  • Re-Investment: Sometimes, taking the club to the next level simply requires updating and adding to facilities. Many private clubs have embarked on renovations to better compete and serve members but some either have not or could not, and (different from deferred maintenance) some sales occur so new ownership can improve or enhance facilities.
  • Focus: We’ve dealt with many clients that owned golf courses when their primary business was something else. In an effort to focus on the primary business, they’ve sold the golf property to use the proceeds and human resources toward that enterprise.
  • Partnership Dissolution: Many golf courses are owned by groups that, over time fracture due to differences of opinion, diverging objectives or conflict of some type. Accordingly, some golf properties are sold to resolve any issues and end the partnership.
  • Bankruptcy: Unfortunately, some golf courses are sold due to a bankruptcy situation. These often occur from debt or bank foreclosure, but can occur for other reasons as well.
  • Politics: Sometimes, municipalities will sell their golf courses because they become politically unpopular due to poor financial performance, capital needs or limited numbers of golf participants in the community.
  • Timing: Though timing isn’t often the primary reason someone sells, there’s no doubt that it plays a big role in the process. Anything from relocation to how proceeds are used to retirement is usually a timing based factor that should be considered.

It’s not uncommon for someone to say to me “golf courses rarely sell, do they?” I’m sure there are quite a few other reasons golf courses are sold but the fact is they do change hands and as shown above there are many reasons why. One of the first questions I ask when someone inquires about selling a golf course is “WHY?” This is as critical as analyzing the property to ensure that goals and objectives are addressed. As I always like to say, “treat the patient (owner), not just the disease (property).”