Golf Stockphoto

Situation

South Florida, 36-hole project set on an exceptional location and generating nearly six million dollars in total gross revenue annually. Under prior ownership the operation had a revenue distribution that was nearly 50% golf to 50% food operating from an expansive 57,000 square foot clubhouse and boasted an elaborate food & beverage operation which contributed to a negative net operating income of $50,000 per year before debt service.

Challenge

Our team was charged with the responsibility of setting forth a business and agronomic plan to maximize profitability while maintaining the highest possible level of playing conditions available.

Solution

The tremendous inefficiencies were immediately identified in operating a club house and elaborate full-scale food and beverage operation of this magnitude. The F&B operation catered on-site weddings, banquets in addition to running a full service dining room and 19th hole restaurant and bar. In order to keep food and beverage staffing available, ownership staffed kitchen personnel, housekeeping, banquet sales and administrative staff as well as other employees at tremendous expense.

Additional insurance, payroll taxes, personal property and real estate taxes, utilities, equipment and various administrative charges resulting from the F&B operation, all which under our business model, was entirely unnecessary.

The banquet and catering operations (except those held in conjunction with golf outings) were closed and approximately 70% of the existing clubhouse was demolished to reduce the facility to a size adequate to house a golf shop, locker rooms, 19th Hole bar, and golf event banquet room. By eliminating the expenses that were incurred in connection with the F&B operation and scaling down the clubhouse as described, ownership would be able to generate strong cash flow.

Results

Nearly a $1,000,000 increase in EBITDA was created where prior ownership saw none. This property represents an excellent example of how ownership can lose focus on the low hanging fruit and their core business for something more glamorous and less profitable.