Inside the factors driving valuations in today’s market — and what owners need to know before they buy or sell.
————
The golf market is hotter than ever, and the latest deals are proving it.
In June, Arcis Golf made headlines by adding three historic Georgia clubs to its portfolio, while also striking one of the biggest private club transactions in recent years with the rumored $200 million range purchase of The Woodlands Country Club near Houston.
For many in the industry, that price tag was stunning. But experts say the surge in values for high-end private clubs is less an anomaly than a reflection of today’s market forces — where strong financials, prime locations and surging demand are rewriting expectations for what a golf property is worth.
As the market for golf clubs continues to explode, Brandon Schempp, first vice president of the global commercial real estate leader CBRE, explains it really shouldn’t surprise anyone.
“High-end clubs with strong financials in locations that allow the sport to be played most of the year or year round are garnering high purchase prices,” Schempp said. “These clubs are commanding multipliers that are 7 to 9 or even 10 times the EBITDA (earnings before interest, taxes, depreciation and amortization).”
Given that few sales prices are actually made public — and even if they are — the number isn’t meaningful unless one knows the multiplier and other details of the sale. So how do owners/operators really know what their clubs are worth?
Supply and demand
While it’s clearly a seller’s market, the asking price for an individual property is directly tied to factors such as supply and demand, which have essentially been turned upside down since the COVID-19 pandemic.
In fact, the industry during 2000-2020 was losing approximately 100 clubs per year, according to Jeff Davis, managing director of Fairway Advisors.
But when the pandemic hit and there were few recreational opportunities, it gave die-hard golfers an additional reason to play, and it created a whole new generation of amateur players.
“Many people saw golf as an opportunity to participate in a safe socially distant activity,” Davis said. “Now, instead of closures, we are seeing long waiting lists for private clubs and healthy revenue streams for daily fee and municipal courses.”
A lucrative formula
Though business is booming at many clubs, how much a specific course is worth is directly tied to several variables — two of…
..
Click Here to Read the Full Original Article at Golf Inc….