For Evanston, Ill.-based Links Capital Advisors, these are busy times. The recession and its painfully slow recovery has brought plenty of economic pain to golf course operators, with many courses falling into foreclosure.
For a company like Links, a brokerage dedicated solely to the brokerage of golf courses, golf resorts and golf course communities, this means big business.
In the last 12 months, Links Capital Advisors has sold six golf courses for more than $17 million.
It’s a bit like in the housing industry: This may not be a great time to own a golf course, what with the sputtering economy keeping many would-be golfers at home, but it is a good time to buy a course.
“Prices for these courses are coming down dramatically,” said Chris Charnas, president of Links Capital Advisors. “Deals that used to be for $5 million or $6 million might sell now for $1.5 million or $1.9 million.”
Some of this activity can be traced all the way back to the 1990s. That decade saw a development boom in the golf-course industry. A lot of courses popped up.
Even when the economy was strong, demand never quite caught up to the high number of courses that were built. And not all of these courses were built by private developers. Municipalities themselves got into the business, some of them building public clubs that definitely ranked on the high end.
Unfortunately, many of these new clubs never earned any profits, Charnas said. There just weren’t enough golfers.
Now the number of golfers is even lower. Too many potential golfers are still worrying about whether they’ll have a job next month.
Private golf clubs are facing their own challenges, Charnas said. Many of them, in a race to keep up with their competitors, commissioned expansive and expensive remodeling jobs. To pay for them, they’ve had to charge their members higher fees.
As the economy continues its sluggish recovery, many members have balked at these higher fees and have quit. Now private courses have to charge an even smaller number of members even higher fees, leading more members to quite. It is, as Charnas calls it, a spiral.
What can drag the golf industry out of these challenging times? That’s the big question.
“Everyone is trying to figure that out,” Charnas said. “How do you get more people to play the game of golf? That’s what you really need. Does the game took too long? Maybe. Is the experience of going to a club friendly enough? Does it cost people too much to buy the equipment they need to play? Maybe. These are all issues the industry is looking at.”
For now, though, Charnas and his company are working hard to handle the rising number of golf course sales, most of them of the distressed variety. Charnas said his company now boasts eight golf course listings, and has interest in all of them. He pointed to a recent sale of a Chicago-arae golf course that fetched $1.5 million. The previous time this same course was sold, it went for a price of $7 million.
It’s an example of just how dramatically things have changed in the golf-course world.
— Dan Rafter