The Business Model for Managing a Golf Course is Irrevocably Broken

Rose Colored Glassed?

The National Golf Foundation is the pre-eminent for‑profit research and business‑intelligence organization that serves the golf industry.  Its in-depth research provides valuable insights.  The NGF, in releasing in January 2026 its one-page “2026 Graffis Report” stated,

“Green-grass golf participation surpassed 29 million in 2025 (all-time record is 30.6 million in 2003), marking an eighth consecutive year of growth and a net increase of roughly one million golfers YOY. Over the past eight years, on-course participation has risen by over five million, reinforcing that this is not a short-term COVID bump but a broader, lifestyle-driven shift toward experiences that deliver social connection, time outdoors, and physical, mental, and emotional well-being.”

Since 2019, the NGF report cites that “on course golfers have increased 20% lead by youth participation 58%, females 44%, and people of color 61%.”

At the Annual NGCOA Golf Course Meeting, Executive Director Jay Karen stated,

“Golf Culture is Changing, that Institutions aren’t controlling culture anymore, people are,” because “for lack of a better term, due in large part to the power of social media. And it will be social media that also serves as an accelerant to include more diversity throughout our game.”

Has golf reached an apex?

The question is not whether the golf course industry has achieved impressive results, but rather the extent to which it has realized its economic potential.

We believe the golf business model for facility operations is flawed by historical practices.  Golf courses are only realizing 66% of their potential revenue.  Through the redefinition and realignment of the business policies outlined herein, significant incremental revenue is readily achievable.

But the question that will remain unanswered is “In an industry that is basically a small business entrenched is antiquated practices, will anyone exert the leadership to cross the chasm to adopt the business practices leveraged by airlines, hotels, professional sports team and other entertainment venues?

Economic Impact of the Golf Industry

The American Golf Industry Coalition (AGIC) is the unified advocacy and public‑affairs body for the U.S. golf industry, published the “The 2022 U.S. Golf Economy Report.

It should be noted that non–green‑grass golf (Topgolf, simulators, driving‑range entertainment venues, indoor tech ranges, and off‑course practice) has become one of the fastest‑growing segments of the U.S. golf economy, and its economic impact is now massive—measured in the tens of billions annually.

While the 2022 U.S. Golf Economy Report does not publish a standalone “off‑course only” dollar figure, the report makes clear that:

• Alternative forms of golf are a major driver of the industry’s growth and accessibility.
• Off‑course participation is included in the $101.8 billion in direct U.S. golf economic activity in 2022.

Industry analysts (NGF, Topgolf, Callaway earnings, and IMPLAN‑based modeling) consistently estimate that off‑course golf accounts for a similar share of economic activity, of the $45.8 million, it might be speculated that 27.48 billion in revenue is related to green grass facilities (29.1 golfers / 48.1 participants).

Thus, the average revenue of the 15,963 golf courses in the United States would be $1,721,588. While one is always skittish about aggregating data from disparate sources and reaching a definitive conclusion, the number appears fairly stated in all significant and material respects based on historical research.

With the industry benchmark of 15% EBITDA, the average golf course might expect to earn $258,238. While impressive on the surface, it doesn’t account for depreciation expenses for inevitable capital repairs to the clubhouse, equipment replacement, or golf course renovation.

The golf course is a living organism comprised of 13 components, i.e., greens, irrigation systems, fairways, tees, bunkers, etc., each having a varying useful life. Given the 2026 cost of renovating a golf course of $10 million, the Golf Course Builders Association suggests that an annual capital reserve for the golf course entity exceeds $300,000.

Thus, the operation of a golf course is, in essence, a break-even business.   The real value of owning a golf course may be evidenced by the land’s raw value, which, over time, through appreciation, creates a favorable return for the investor.

However, we believe that, when properly managed, a golf course can generate an appropriate annual investment return sufficient to create adequate capital reserves and dividends for the golf course owner.

The Obvious But A Small Leak – No Shows

The most obvious leak in a golf course’s revenue stream is no-shows.

Notefy, an automated tee time demand system, conducted joint research with Metolius Golf and found that approximately 9% of public rounds are no-shows, resulting in the average golf course losing $142,500 in annual revenue. Golf’s Billion Dollar No-Show Problem: How Technology and Policy Can Mitigate This Problem in 2025 – JJKeegan+.

There are many easy solutions available to reduce this revenue shortfall:

• Suspend the reservation privileges of those who fail to cancel.
• Charge a non-refundable reservation fee
• Secure a tee time with a credit card
• Require prepaying, which is now an evolving trend
• Designating a tee time, like other sporting events or concerts, where the purchase is nonrefundable.

But curing the no-show problem will only result in a small incremental growth in revenue.

The real opportunity for exponential revenue at a golf course resides in dramatically altering its pricing practices while not even having to make a dramatic change in its flawed operational philosophies that eschew achieving the highest earnings return.

Current Operational Philosophies  

It may seem illogical and contrary to common sense, but the goal of most golf courses is not to maximize their annual earnings.

Of the 13,961 facilities, 2,951 municipal golf courses, mostly accounted for in enterprise funds financed primarily by user fees that are designed to offset operating costs, have an operational philosophy that is focused on providing value-based recreation to their citizens.  Profit is not their primary focus.  Thus, municipalities fail to realize the revenue potential of their facilities.

Of the 8,672 daily-fee courses, the vast majority are resistant to change and most are encumbered by debt. Most daily operators are comfortable with their current situation and do not want to jeopardize their operating environment or their standard of living.

While these municipal and daily fee golf courses create operational budgets, few have developed a written business plan that defines their goals and competitive positioning.  By definition, 4,336 of these golf facilities engage in below-average or substandard management practices.  Most people attend educational conferences not to learn or execute, but to socialize.

The mindset of public golf owners is not to maximize their investment return; they prefer a stabilized cash flow that results from the status quo. Further, many lack the equity or borrowing capacity to invest materially in capital improvements.

While their operational philosophies for public golf courses aren’t focused on profit, the business model they implement through flawed pricing practices could be radically changed, resulting in higher earnings with no additional effort.

What is Wrong With Current Pricing Policies?

Ask yourself, how many different customer categories do airlines, hotels, professional sports teams, and collegiate programs offer?   Perhaps less than five.

The flaw at public golf courses rests with the proliferation of player types.  Some golf courses have over 40 different player types: monthly seven day members, monthly five day members, annual seven day members, annual five day members, seniors, juniors, 5 – 10 and 20 round punch card holders, league players, men’s club members, ladies club members, residents, non-residents, bronze – silver – gold – platinum loyalty card holders.

Each player type generates its own rate structure, ranging from the simple task of selling a tee time to the complex undertaking of accommodating the golfer’s whims and wishes.

The golf course owner, we believe, remains focused on the historical past where supply exceeded demand and chases pennies with the false belief that a round played, regardless of price paid, is vastly superior to fewer rounds achieved through a proper pricing structure.

The number of memberships and player types available at the golf course vastly exceeds what is necessary or appropriate, and will not maximize revenue per round.  One Colorado golf course, operating at near capacity, lost $66,000 in offering senior rates in 2025.

This is the major difference between golf course pricing policies and those of airlines, hotels, and sporting events, which serve a broader range of player types.

Course operators have fallen astray by offering discounts to customers to entice them to visit not only on their initial visit but also on subsequent visits to the facility.  In contrast to airlines, hotels, and sporting events, benefits and loyalty points are earned in arrears after the fair market value is paid, based on the experience provided.

Admittedly, one of the many disadvantages of being a golf course owner is knowing, on a personal level, their customers, their families, where they work, etc. This level of intimate connection compels the golf course owners to make decisions in their best interests. In contrast, customers identify with the corporation only at airlines, hotels, and professional sports teams, and have no intimate connection with its employees.

RECONSTRUCTING THE GOLF COURSE BUSINESS MODEL

Among the 100 largest Core Based Statistical Areas (CBSAs) (US geographic regions built around an urban core of at least 10,000 people), demand for golf far exceeds supply.  Furthermore, due to various factors, such as the availability and cost of land and water, supply is unlikely to increase meaningfully. Thus, the market is price inelastic – changes in price do not significantly reduce quantity demanded, which is ideal for dynamic revenue pricing.

Many golf course operators believe dynamic pricing for tee times is the holy grail for optimizing revenue.  Golf courses have used dynamic pricing to vary rates based on player type, time of day, day of the week, and time of year.

Dynamic revenue pricing is a revenue management strategy that continuously adjusts prices based on real‑time demand, capacity, timing, and customer behavior. The objective is to maximize total revenue by charging higher prices during peak demand and lower prices during periods of excess capacity, rather than relying on fixed or discount‑driven pricing models.

Though the term “dynamic pricing” is in vogue, it is being misused.  In theory, dynamic pricing increases revenue by matching prices to demand, improves utilization, reduces discounting, balances capacity, rewards flexibility, responds to seasonality, and supports fairer pricing for customers and operators alike sustainably.

The key to dynamic pricing is that there is only one customer (player) type.

Therefore, for a golf course located in one of the 100 largest CBSAs, increasing revenue by 33% is achievable.   The average golf course only realizes 60% of its prime-time rate. Note that the 9-hole rate is set at 60% of the prime-time rate. The best we have noted, a Canadian client, yields an amazing 87%.  But many courses, especially those that use barter, earn less than 50% of the prime time rate per round.

Golf courses discount way too much.  Annual passes offer an average 30% discount, and seniors receive a 20% discount.  The 4-for-3 or 2-for-1 specials make no sense.  Leagues, outings, and tournaments are offered a discount based on presumed volume rather than a premium for the additional staffing required.

For the golf course owner seeking to maximize their net earnings, the business model to optimize the revenue of a golf course for a typical public golf course is straightforward:

1. Eliminate all player/customer types
2. Do not sell prepaid cards
3. Do not sell annual members
4. Do not offer tee times based on gender or age
5. Do not offer any discounted paper couples in trade publications and magazines
6. Don’t offer a range pass for unlimited buckets on the range.
7. Creating a two-set of foundational price matrices:
   • Monday – Thursday: set prices (opening to 12, 12 to twilight, twilight to close)
   • Friday, Saturday, Sunday, and Holiday: (opening to 12, 12 to twilight, twilight to close)
8. Install the following golf management software programs:
   • Club Caddie, Club Prophet, Lightspeed, Tenfore, based on your identification and preference for the graphic user interface
   • Metollius or PitchCRM golf marketing software
   • cOURSEREV.ai or Sagacity for dynamic pricing that automatically adjusts foundational pricing based on demand.
9. Require 100% of tee times be booked online.
10. Allow tee times to book up to 300 days in advance at a premium, charging a non-refundable reservation fee of $10 per player.
11. If you are so compelled to offer discounts, create a loyalty program that offers a bronze, silver, or gold level subscription at $99, $299 and $699 based on receiving discounts of 10%, 20%, or 30% of the rack rate on the day and time played.
12. Acquire an autonomous ball picker for the range.
13. Install Top Tracer on the range.
14. Save the money and don’t participate in any financial benchmarking service.
15. Create a single set of KPIs that measure the following:
    • Revenue:  Multiply the prime rate green fee and cart rate times 60%. That result is multiplied by the number of starts.   The result should equal your revenue from green fees and carts. Note that season pass sales, loyalty cards, and punches are added to the total gross revenue.
    • Net Effective Yield Revenue Per Round. Total Green Fee Revenue divided by Total Rounds divided by the Highest Green Fee Rate. Yield should exceed 60%
    • Green Fee Indicator 1:  Multiply the maintenance budget times .0001 the result should equal the green fee
    • Green Fee Indicator 2:  Multiply the median household income within a 30-minute drive of the golf course by .00091 that should equal the green fee.
    • Fringe Benefits:  Divide the total fringe benefits by payroll expense.  The rate should be under 30%.
    • Total Salary Expense:  Total salaries should be 40% of the total revenue for a municipal/daily fee golf course < $100. For a private club, salary expenses can range from 47% to 52%, depending on the level of service and membership dues.
    • Maintenance Expense:   Total maintenance salaries plus all related expenses for the course, i.e., electricity, equipment supplies, fertilizer, gas, water, etc., of revenue. The rate should be <35% of total revenue.
    • EBITDA: Earnings before interest, taxes, depreciation, and amortization should exceed 15% of gross revenue.
    • Annual Pass:  To determine the appropriate rate for season passes, multiply the number of playable days by 32%.  That result is multiplied by the rack rate.  That result is multiplied by 25%.
    • Cost of Goods Sold – Merchandise: 70%
    • Cost of Goods Sold – Food: 40%
    • Cost of Goods Sold – Beverage: 30%
    • Advertising and Marketing: 2%
    • Chemicals, Fertilizers, and Pesticides (Grounds Budget) (<$60,000)
    • Water Expense: Multiply the number of gallons of water used by $1.20 per thousand gallons ($387 per acre-foot).
    • Utilities (this may vary based on local rates, national guidelines)
    • Equipment Repairs with Leased Costs should be nominal unless nearing the end of the lease

THE LOGIC BEHIND THE RECOMMENDATIONS

Operating a golf course is a small business.   Golf course owners have an embedded, misplaced focus on chasing pennies by providing a rate for everyone, regardless of loyalty to the facility.

The key to financial success is to replace complexity with simplicity.