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- Jul 6, 2012
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Talking to one of the Trey Texas Ranch owners over the weekend got me thinking about what amount of fees would be required to make the investment in a private course worth it from the standpoint a prospective owner. Of course, land values differ and are going to be the determining factor, but assuming that equipment and installation costs are $20,000, for 18 holes (what a local park commission paid for 18 holes last year), free design, and rural land costs in my area (about $7,500/acre) for 20 acres for a course, I reach a course cost of $170,000. Dismissing all opportunity costs (assuming a dedicated owner that just wants the course to provide a ROI based only on the cost to put in the course) and assuming minimal maintenance costs, including mowing, at $1000/month (wild guess) for half of the year ($6,000) and a proshop that provides enough money to cover the cost of an attendant for fee collection, I get an initial investment of about $176,000.
For a 10% return on this investment, the owner would need to collect about $18,000 in fees per year even assuming no property taxes. At 50 rounds per week (let "round" mean a single player for a day). the owner woud need to charge about $7.50 per round. Given the costs that I've missed or ignored, it seems like a more realistic number is going to be between $10-$15 per round unless the number of rounds per week is significantly higher, which it certainly would not be in my area.
I'm betting that there are plenty of people who just wouldn't pay that much for even a good quality local course. But maybe I'm wrong on this. Do these numbers appear to even be in the ball park?
For a 10% return on this investment, the owner would need to collect about $18,000 in fees per year even assuming no property taxes. At 50 rounds per week (let "round" mean a single player for a day). the owner woud need to charge about $7.50 per round. Given the costs that I've missed or ignored, it seems like a more realistic number is going to be between $10-$15 per round unless the number of rounds per week is significantly higher, which it certainly would not be in my area.
I'm betting that there are plenty of people who just wouldn't pay that much for even a good quality local course. But maybe I'm wrong on this. Do these numbers appear to even be in the ball park?