What does a golf course or club contribute to its community? I am often asked this question, especially nowadays, as some golf courses struggle in the sputtering economy, and owners consider alternative land uses that might cause some courses to close and others to be left neglected due to poor cash flows.
In some cases, citizens with little or no interest in golf are questioning the wisdom of government subsidies for a recreational activity that is used on average by less than 12 percent of the population.
But this view dramatically understates the impact that golf courses have on their surrounding communities. According to a 2009 study carried out by South Carolina state tourism economist Julie Flowers, the average annual gross revenue of a golf course in South Carolina was approximately $1.844 million (making the total revenue for all courses in the state an impressive $710 million).
According to the study, the direct, indirect and induced impact on the state’s economy was:
- $2.721 billion in output or sales
- 33,535 jobs
- $834 million in personal income
- $276 million in federal, state and local taxes.
Green fees and club membership dues generated $I2.9 million in admissions tax revenue alone, accounting for more than 39 percent of state admissions tax collections. These figures do not include the impacts of real estate sales in golf communities and off-site purchases of golf equipment by local golfers.
Premium Lots, Tax Revenue and other Valuable Benefits
One particular area of economic impact outside the golf course boundary is real estate. The “Proximity Principle” demonstrates that there is value to being near amenities. In fact, an article by academics David Wyman and Stephen Sperry in the spring 2010 issue of The Appraisal Journal referenced a study analyzing 563 vacant lots. Premiums ranged from 42 percent to 85 percent for golf course views. For years, developers and industry observers alike have recognized lot premiums in golf course communities and properties with golf course frontage, with estimates ranging from as low as ten percent to premiums in the range suggested by the Wyman and Sperry study referenced above and more. It also should be noted that in many cases, often because of the high investment in lot value, owners often build large and expensive homes, all of which generates additional tax revenue as a result of the existence of the golf course.
Since many courses pay in excess of $100,000 in real estate taxes and often preserve more than 150 acres of open space, these same courses generate positive tax revenue to the community without additional stress on essential community services (such as police and schools) and by preserving and enhancing the environment with open space, often in developed areas.
Even with relatively few courses now being constructed in the United States, many clubs and courses have realized that now is a good time to upgrade facilities and this creates additional jobs and an infusion of capital expenditures into a community.
One of the challenges of the golf course industry is that it is a very management intensive business. That is also a benefit to any community. Golf courses routinely employ upwards of 50 people in a variety of jobs ranging from management to skilled and unskilled labor, as well as hospitality and service employees.
The market value of many US golf courses may be depressed right now, but the value of these facilities to communities is significant in many ways. Without question, those courses where development may have been ill-advised to begin with or where market conditions just ‘caught up’ with them will either close or be repositioned in the market. However, most courses have a positive future and contribute economically to the communities they serve in many ways. See the checklist below to estimate the economic impact of your golf course.
This article is adapted with permission from By Design, Issue 5, Winter 2010.
Larry Hirsh is president of Golf Property Analysts, a leading golf property appraisal consulting and brokerage firm based in Harrisburg, Pa., with offices also in North Carolina and Florida. He has performed appraisal and consulting assignments on more than 2,500 golf properties in 45 US states and Canada.
Measuring the Impact of your Facility
Estimate your course’s economic impact on its community using this simple checklist, created by the American Society of Golf Course Architects (ASGCA) and the National Golf Course Owners’ Association (NGCOA) as part of the golf industry’s We Are Golf initiative.
1. Facility Operations $
Expenses paid through the operation of the golf facility, including salaries, benefits, property taxes and more
2. Capital Investments $
Long-term capital improvements to the golf course, clubhouse and more, paid in materials and various services
3. Golfer Supplies $
Sales taxes paid on golf balls, clubs, apparel and more
4. Tournaments/Charities $
Annual fund raising for local or national organizations stemming from charitable golf tournaments held at facility
5. Real Estate $
The impact of your facility on surrounding home values. Nearby homes typically enjoy an increase of at least 15 percent
6. Hospitality/Tourism Dollars $
Including hotel and restaurant revenue, spent in your community by outsiders coming to play your golf course
7. Other Benefits $
Including storm water storage, gray water use, water purification or fire break provision that can save taxpayer dollars
www.WeAreGolf.org Total $