Thanks to reader Scott for this Susan Fornoff story on the state of the golf business in Northern California. A few highlights, or lowlights:
Much easier to find are stories such as the one in the Feb. 18 editions of The Chronicle, which reported that San Francisco city golf courses, including the newly renovated and universally praised Harding Park, operated more than $500,000 in the hole in the 2004-05 fiscal year. In Napa, a pretty, vineyard-lined 27-hole complex called Chardonnay went into bankruptcy and emerged under new ownership.
Same story in Antioch, where Roddy Ranch, a player-friendly and media-acclaimed golf course, couldn't sustain itself without homes on the property and went into bankruptcy, emerging in the hands of Black Mountain Development of Pleasanton and Pacific Coast Capital Partners of Sacramento with plans to eventually build 700 houses.
Ditto in the mountains of Plumas County, where a well-marketed and challenging golf course, aptly named the Dragon at Gold Mountain, landed in bankruptcy after the lots sold and the course and clubhouse couldn't make a go of it. Yet just up the road, a new course opened last summer, with developers Lowe Enterprises ga-ga over the possibilities of Grizzly Ranch, where private golf memberships are going for $50,000 and home sites start at $150,000.
Mike Mohler, the project manager, said the company prefers communities with plenty of amenities. "Would we have built a golf course without real estate? Probably not."
Probably most certainly not. The game that experienced a boom in popularity with the coming of Tiger Woods and the strong economy in the late 1990s is busting in the 21st century. Nationally, rounds declined by 3 percent in 2002 and 1.5 percent in 2003, bounced up by 0.7 percent in 2004 and dropped 0.1 percent in 2005, according to the National Golf Foundation.
"What I'm seeing is that everybody's running very aggressive deals," said Hiddenbrooke director of golf Matt Ochs, who brought golfers out in February for golf and lunch at $50. "We need to stop building golf courses and we need to start growing golfers."
Even golfers agree there are two things wrong with the game: It's expensive and time-consuming to learn and play. Eighteen holes take a minimum of four hours; add the drive, the warm-up and the wind-down, and there goes the day. Green fees range from $23 to walk 18 at Castro Valley's Willow Park on a weekday to $180.20 with cart on a weekend at the seaside Half Moon Bay Golf Links at the Ritz Carlton. In the Bay Area, weekend golf costs more than $60 at all but the most budget-friendly municipal courses.
"The new course in Pleasanton has a $60 weekend green fee; ours is $95," said Truebridge of the Bridges. "If you're a senior or are on a budget, where are you going to go play? We're getting 43,000 to 45,000 rounds a year. I'd like that figure to be 50,000 to 55,000, yet I'd like to get the green fees over $110."
Add to fees the cost of lessons and equipment -- and the luxury of having the time the game takes to play -- and it's no wonder that homeowners are perfectly comfortable having a couple hundred golfers stroll by the backyard every day. It's not as if the visitors are going to jump the fence to take the patio furniture.
"Golf obviously adds value to real estate," Krah said. "People like living on a golf course and are willing to pay a premium to do that."
What about the cost to the developers? "Golf courses are a million dollars a hole, that's the round number," he calculated. "Directly, you get premiums back -- you can charge somebody an extra $50,000 to live on the golf course instead of having to stare at the neighbors."
A million dollars a hole? I forget...that copper irrigation piping...
So real estate sales can safely cover the golf course building costs. Now players have to cover the annual maintenance and staffing fees. And because the rule of thumb seems to be that residents will account for no more than 10 percent of the annual rounds, 90 percent of the players have to come from somewhere else.
The golf course's reputation with the media and players influences that, which is why the Tahoe Mountain Club is managing to fill Old Greenwood in Truckee even at $170 per round. East West Partners, developer of 99 home sites and 174 resort homes on the property, hired golf legend Jack Nicklaus to design the course on a gorgeous piece of land, guaranteeing great publicity and playability.
NBC announcer Johnny Miller put his signature on the Bridges, which had a dry creek bed on the property that couldn't be filled and thus has a reputation for being tough, the kind of place where players lose a lot of golf balls.