The Business An extravagantly landscaped 18-hole miniature-golf course complete with cascading waterfalls and a man-made pond circumscribing the grounds. Located in Myrtle Beach, the self-proclaimed "miniature-golf capital of the world," the course derives 92% of its revenues from putting fees, and the rest from food vending and concessions. Because only half of the four-acre site (which is leased) has been developed, there's room for another 18 holes.
Financial Summary 1990 1991 1992
Gross revenues $160,000 $162,000 $147,000
Recast earnings before $41,000 $60,000 $37,000interest, taxes, depreciation,and owner compensation
Price $595,000* * *
Outlook This layout reflects the post-1970s trend away from the courses with tacky windmills and giant orange dinosaurs, to designs with lots of greenery and challenging contoured holes. But attendance at so-called family-entertainment centers, which include miniature-golf setups, was down 13% nationwide from 1989 to 1991 -- 26% in the southern Atlantic region. And some say Myrtle Beach, though blessed with ample tourist traffic, may be oversaturated by its 30-plus existing minigolf operations.* * *
Price Rationale Experts say that 3 to 4 times earnings is a typical price for a miniature-golf course, but the multiple here is 16. What gives? Well, the seller based the price on what it cost to build this course from scratch. And the broker recently sold a 36-hole facility in the area for $1.2 million. At the price of $595,000, plus $200,000 to add 18 holes, you'd have a 36-hole course at, the seller argues, a bargain price of $795,000 (sorry, no seller financing). The trouble is, the revenues don't justify such an investment; insiders cringe at the low sales figures. This price tag is all about potential. You're certainly not buying a revenue stream.* * *
Pros The course is well built, beautifully designed, and surrounded by tourists, and has room to expand. Plus, you could spend almost every waking minute holding a golf club (sort of like Johnny Carson, but without the cash flow).* * *
Cons Yes, well, let's see. . . . There's the copious competition, the low revenues, the likelihood that expansion isn't worth its cost. And there's no way you could afford to pay a manager -- which means this deal amounts to buying a job. And not a very high paying one, either; taxes, depreciation, and interest aside (wouldn't that be nice?), the earnings don't even add up to a decent salary. Does anybody love golf that much?
-- Christopher Caggiano* * *
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Equitable Business Brokers, Myrtle Beach, S.C., 803-626-3625. n