So, It’s Time to Sell Your Golf Course or Club – Or is it?

You’ve owned the property for many years, you’re getting older or you’re a membership that simply can’t operate the club efficiently.  You’ve decided it’s time to sell the club.  Or is it?

We work with many clients considering the disposition of their golf properties.  Every situation is different.  First, we want to understand the client’s goals.  Some want to sell quickly, others are seeking the highest return on their investment and others view their equity as retirement savings.  There are some clients who are motivated to sell by operating losses or debt and some who are just simply tired and ready to move on.

One thing we’ve learned is that regardless of your situation, an exit strategy is necessary.

The first thing in planning an exit strategy is establishing your goals.  If you haven’t figured that out, you’re not ready to sell just yet.

The next order of business is to review your financial operating statement and see if the performance is at an optimum level.  If not, are there expenses that can be better managed or eliminated?  Are revenues being maximized?  Are there specific practices that can be employed to enhance the financial performance that aren’t being done?

Next to consider are physical issues.  It stands to reason that in most cases, owners who are considering selling may not have kept up with maintenance and capital improvements during later years of ownership or if the club was experiencing any financial distress.  A few months back we wrote about when capital improvements are necessary and this often brings up a decision about whether these improvements are necessary, or which (if any) deferred maintenance requires immediate attention.  This raises the all-important question, if you’re planning to sell, as to what, if any investment in the club is needed to maximize potential selling price.

This decision can be influenced as much by the personal or corporate goals of the seller as the condition and performance of the property.  Is the seller motivated by a potential windfall profit?  Is the seller motivated by avoiding continued losses?  Does the seller seek to avoid capital improvements?  Is the seller seeking to retire?  These and other motivating factors can contribute significantly to the decision of when to sell a golf (or any) property and how to prepare the property for sale.  Just like a doctor has to treat the patient as well as the disease, the broker/consultant has to consider the seller’s goals, objectives and challenges in advising when to sell and how to approach the process.

Once the decision to sell is made, there are several vehicles to consider.  These include:

  • Traditional Marketing (often with the assistance of a broker)
  • Hybrid Sealed Bid Auction (HSBO)
  • Auction

Which of these one chooses is largely dependent on the answers to the seller’s goals and objectives, the appetite for improving the property and preparing for sale and the timeline desired by the seller.  None of these options is universally better than the others, and none (despite some conventional thinking) indicates distress on the part of the seller.  As a potential checklist to making sell/not to sell decisions, gather the following information:

  • Establish personal goals
    • Financial
    • Timing
  • Facilities Analysis
    • Deferred maintenance
    • Required upgrades
    • Property condition
    • Costs to correct
  • Financial Analysis
    • Present Value
    • Value as if improvements are made
    • Operating history and projections
  • Time
    • Time to make improvements
    • Time goals to close a sale
    • When to market property
  • How to Market Property
    • Method of marketing
    • Marketing “partner” (broker, auctioneer, etc.)

Once you’ve considered these items, the decision of how and when to sell will likely be fairly clear.