If I’ve learned nothing else in 35+ years of focusing my appraisal/consulting practice on golf properties it’s that they aren’t just “golf courses”.
Let me explain. In the appraisal profession, we often receive requests for proposals from lenders for appraisals of golf properties on which they’re considering loans. Rarely, if ever do those requests include the name of the property or specify whether the property is a private club or daily-fee course, whether it’s a full-service club with a variety of amenities or simply a golf-only facility. A golf course is a significant element of a golf or club property and the course and other facilities (if applicable) are typically designed and developed for different users. The operational models can also vary considerably, often based on the location, site and improvements present.
There are two areas to look at. First, let’s explore the differences between varying types of courses. Golf facilities are made up of land, golf course improvements and building improvements (real property). While the operational differences are well known, with private clubs (PR) relying on annual dues and public access courses (DF) relying on daily fees, that is more about operations. There are significant differences in the real property (bricks, sticks and dirt) characteristics of private clubs and daily-fee facilities. One of the first questions a golf course architect or clubhouse architect raises in development or renovation is how the course will be used and who will be playing it.
The daily-fee golf course is typically designed and built with pace and volume of play in mind. Whether a course is planned as PR or DF is significant in developing the design. Most DF courses host a higher volume of rounds than private clubs and routing, hazards and sequence of holes are designed to accommodate this volume of golfers and minimize the time necessary to get around the course. Conversely, the PR course typically has more hazards, a routing focused on creating the ideal golf holes for challenge and scenery, while not preparing for a high volume of rounds. Most DF courses need to host more rounds and have tee time intervals at 10 minutes or less. Many PR clubs have tee time intervals at 10, 12 and even 15 minutes, enhancing the experience and limiting membership to provide easy access. The daily-fee course often chooses turfgrass varieties and irrigation systems with economy in mind.
PR and DF courses also have very different infrastructures and buildings. Clubhouses are very different. PR clubs typically have large locker facilities, fitness areas and banquet areas, in addition to a choice of dining options. DF facilities typically have much smaller clubhouses and rarely have the variety of amenities typically found at PR clubs. Few DF courses have the swimming, tennis, and other sports facilities enjoyed by most PR clubs.
According to the American Society of Golf Course Architects (ASGCA), no matter what level of a golf facility is being planned, there are certain elements that are common to all. These basic real property components of a golf facility (PR or DF) are:
• Parking lot
• Pro shop (minimum of a few hundred square feet)
• Restroom(s) (unisex and handicap accessible as a minimum)
• Maintenance storage building (minimum of a 2-car garage)
• Maintenance equipment
• Golf Course Improvements (tees, greens, fairways, irrigation, drainage, etc.,)
• Other buildings and facilities (swimming, tennis, etc.)
Each also typically has a clubhouse of some sort but usually these are quite different as discussed below.
In his famous 1927 book “Golf Architecture in America”, George Thomas writes: “The Municipal (DF) Course should first of all consider congestion; everything hinges on that, for there is the absolute necessity of getting as great a number of players around the course as possible between daylight and dark, and those many persons are all hammering golf balls in diverse ways both as to length, direction and execution, and like all golfers, are doing it with implements ill-suited to the purpose. In the opinion of the Municipal Greenkeeper, all such impeding obstacles as long grass, traps, hazards, one shot holes, and so forth are best elsewhere, and there is much truth in his belief.”
Furthermore, in his 2005 book “Golf Course Architecture – Evolutions in Design, Construction and Restoration Technology”, Dr. Michael Hurdzan, PhD, states: “A public golf course can expect to host golfers with a wider variety of skills than an upscale, invitation-only country club. This suggests that the public course might have more gentle hazards than those found at the private club.”
In his 1982 book “Turf Management for Golf Courses”, Texas A & M professor James Beard wrote: “Public fee and municipal courses may exhibit only the elemental concepts of strategy, having few bunkers and other hazards, whereas courses designed specifically for hosting major championships usually have numerous bunkers and water hazards to accentuate the strategic, heroic or penal nature of each hole and to create a high level of excitement during competition. The normal private club or resort course falls somewhere in between.”
These are the first clues that PR and DF golf courses can be very different and not appropriately comparable to each other, despite both being golf facilities. Private clubs typically have more complex and precise irrigation systems and because players demand quality playing conditions (and are willing to pay for it), these courses typically have better components as listed below:
• More and larger Hazards (bunkers, ponds, trees, etc.)
• Different types of turfgrass
• More extensive and lush rough areas
• Better maintenance practices throughout, including tighter cutting heights and faster, firmer greens and fairways.
• On-Course amenities (bathrooms, water fountains, “turn stations”)
• Better drainage systems (Better Billy Bunker reports 90% customers are private clubs)
• More extensive golf practice facilities
Golf course maintenance practices are typically more complex at PR clubs with larger budgets and result in healthier, more dense turf and more manicured, precisely mowed playing surfaces. Conversely, DF courses do not provide the strategic design, playing surfaces or conditions that PR clubs do.
Off the golf course, these differences are even easier to identify. They can include private clubs having:
• Larger, more elaborate clubhouse facilities with expanded locker/shower areas and often multiple dining and function areas
• Larger and more complex maintenance facilities, often with multiple buildings, storage areas for sand and chemicals and improved fuel facilities and wash areas
• Turf nurseries
• Additional sports amenities, such as swimming pools, tennis, paddle, squash and other facilities, including indoor sports facilities with fitness centers
As clearly demonstrated herein, all golf properties are not alike. They’re not all comparable. An analogy might be restaurants. McDonald’s and Ruth’s Chris are both “chain” restaurants. However, they are not comparable, serving dramatically different products, and most importantly in very different environments with different facilities. Golf facilities (much like other property types) are segmented into submarkets. While it is easy for the unfamiliar to segment those markets by operations, it should be emphasized that each requires real property characteristics and improvements necessary to meet the demands of each submarket and that these characteristics are significant enough to to render golf properties of one type not comparable to others.
Therefore, while the typical DF golf course can operate, and even thrive with more limited facilities, the PR club requires dramatically different characteristics to be successful. The differences are clear to golf and club consumers and they make choices accordingly.
The bottom line is that golf properties are not all the same and not always comparable to each other. Comparing an affordable daily-fee course to an upscale private club is like comparing a budget hotel to a 5-star resort. They may both be lodging properties but they’re designed, built and operated differently for different users and are the focus of different groups of investors with very different operating models.