worth reading The Downturn Down Under

Over the past decade, golf construction in Australia, like golf construction in the United States, has been driven by residential real estate.

But today the development model isn't working as well as it used to. The houses envisioned to be built around golf courses aren't selling, and developers are beginning to wonder if golf is the sales generator it's long been cracked up to be. They're asking themselves if other forms of open space -- lakes, trails, parks -- can move their inventory as well as, or better than, golf courses can.

“Golf is used as an amenity to improve the real-estate proposition,” Jeff Blunden says in the September issue of Australian Golf Digest. “But if the real estate proposition doesn’t even work, then golf’s not going to get a look in. And there’s plenty of evidence out there of golf developments that haven’t met original expectations.”

Blunden, who's described by the magazine as “a golf industry analyst,” has reportedly reviewed the financial statements of nearly half of the new courses built in Australia over the past decade, and he says that some of them are suffering significant losses -- losses of $500,000 or more annually.

Based on his analysis, Blunden has some advice for prospective Australian golf developers. In order to be profitable, he contends, new courses can never be completely private. The day they open their doors, he asserts, they need to have 600 members, a number that must quickly grow to 1,000. They need all those members because they have to generate at least 40,000 rounds a year, at a price of $70 or more per round.

And one other thing: the restaurant in the clubhouse can't sustain itself on golfers alone.

Now you know why golf is such a tricky business.