In these tough economic times, it appears that even players in the “sport of kings” are tightening their waistbands to the dismay of golf course owners and their financial backers. Many posh private courses have had to delay improvements, lower their membership fees, and allow public play for daily greens fees. While this has been a pleasant proposition for the public golfer, it hasn’t made the members who paid hefty membership fees during healthy economic times very happy. The combination of decreased income, increased expenses, and unhappy members has put the golf course portion of the real estate market “in the rough”.

In Arizona alone, 15 golf courses have gone into foreclosure or bankruptcy since the middle of 2008. To date, all golf courses remain open, but many have changed ownership, often at fire-sale prices. Some prestigious courses have sold for as low as ten cents on the dollar. The multi-million dollar Club West Golf Course in Phoenix was recently sold for only $500,000, less than the original price for many homes in the area. Residential properties that border golf courses are also experiencing price drops and foreclosure increases.

According to a recent survey by the National Golf Foundation, 25 percent of private golf courses across the nation have not been profitable in recent years. Other industry reports show that over 100 golf courses have ceased operations in the past two years. In sharp contrast, only 40 courses were closed during the preceding ten years which comes out to a dramatic 1250 percent increase.

The European KPMG advisory firm reports that the global golf industry is seeing similar downturns. They estimate that almost half of the golf courses in Europe, Africa, and the Middle East have seen revenues and profits fall and have cut staff to reduce costs. Resort and community golf courses have suffered more financially than stand-alone courses.

Golf courses are not seeing any signs of economic recovery and continue to lose money month after month. To make matters worse, some lenders are placing golf courses on a “toxic asset” list. Three of the major players in golf course financing, GE Capital, Textron Financial Corp, and Capmark Financial Group, Inc., have completely stopped backing any type of course regardless of the circumstances. On the other hand, cash-rich investors who have an efficient business plan may be able to find substantial bargains given the current situation. Although tourism is down and players are reducing their playing time, no one expects avid players to give up the game for good.