Golf course foreclosures and distressed sales are continuing at a brisk pace. One thing many of these courses have in common is that they had recently renovated the course or clubhouse. They took on debt with the hope that it would lead to increased rounds or membership. But it only led to financial struggle.
Despite this history, other golf courses continue to announce planned renovations, spending anywhere from $500,000 to more than $3 million. Many are moving forward with the hope that increased revenue will justify the expense.
Some are private clubs funding the renovations with internal member funds. Some are munis with the city or county hoping to make the course profitable. An example, Grand View Golf Course in Des Moines, Iowa is spending $2.7 million on a new clubhouse under the expectation that it will double F&B revenue.
And some are paying for it with loans. But whether the upgrades are with internal funds or debt, it is still a risk. For some courses, the risk is minimal. For some, the risk is great, but the alternative is worse — continued loss of membership or marketshare.
But for too many, it seems that the promise of a better future outweighs the reality of the market. Which makes one wonder, are golf courses renovating themselves out of business?
When business is lackluster, it is sometimes necessary to invest into the property. But it seems too many courses believe that renovation is the magical answer to their problems. And that could lead to more distressed sales in the near future.