Once the economic market derived number of rounds, average green fee and expense ratio range has been established for each class of golf course, the valuation process can begin.

Typically, economic market rates form the basis for valuation, however, in some instances a course’s actual income and expense data may be relied upon if it falls within the range established in the development of economic rates.  Due to the unique nature of golf course operations, it may be difficult to argue that the income and expenses from a competently managed course are not economic.

The economic market rates established from the analysis of for-profit operations are also utilized for the valuation of private and non-profit courses and for-profit courses that do not supply financial information.

The following steps reflect the necessary procedure required to value for-profit golf courses.

1.   Classify the golf course according to the classes provided in Section 5.

2.   Establish typical or stabilized golf course income by type of course by analyzing:

• green fees,
• membership dues,
• locker and other club house fees, and
• driving range fees.

3.   Establish typical gross rents for the following operations:

• cart rental,
• restaurant including food, beverage, and concessions, and
• pro shop.

4.   Add golf course revenues and gross rents to establish stabilized gross potential income.

5.   Establish typical, or stabilized, overall expense ratio that includes expenses for:

• maintenance and operations,
• management, marketing, and administration,
• water supply,
• heat and utilities,
• insurance,
• other costs, and
• reserve for replacements.

6. Do not include expenses associated with the operation of:

• The restaurant and lounge.
• Any other non-golf-club operations.

7.   Deduct the allowable stabilized expenses from the gross income to determine the net income.

8.   Capitalize the net income by the selected rate determined through the analysis of golf course sales.

9.   Deduct for non-assessable items such as furniture, fixtures and equipment.

10.  Arrive at final estimate of value.