This Golf Club Could Make $600K a Year… Or Bankrupt You

0:00Hello, everyone, and welcome back to this episode of Acquisitions Anonymous. This is the Internet's number one podcast on buying, selling, and operating small businesses. My name is Bill D 'Alessandro, and today you get the full compliment of all four hosts, myself, Mills, Snell, Heather Anderson, and Michael Girdley. And we have a cool deal. It is a golf club and restaurant in a developed area near neighborhoods for sale. It is in Moyoc, North Carolina. there's something really interesting about Moyoc that I share in the episodes so stick around for that. This is profitable. It makes like 600 grand a year.

0:35Golf, restaurant, bar, kind of local gathering place. Can't really replace it. So it's a really interesting deal. I hope you enjoy this episode of Acquisitions Anonymous.

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2:25Right? Welcome to Acquisition Autonomous. Michael hates golf clubs. Michael, you're a bike rider. You're a cyclist. You're not part of a club? No, I'm part of a club, but we don't have like a facility. The club doesn't own real estate. Right. So it's actually really interesting. I went over to Spain for my anniversary and I looked to see, well, should I try to take my bike and I could go do have this cool experience and go ride with a bunch of old dudes in Girona or Valencia or one of these towns. And I started to look at the clubs and they're entirely different over there. A lot of these are basically social clubs where the people ride their bikes from them, but they own a clubhouse.

3:07It's like an Elks Lodge for bicycles in Spain. and it was too intimidating for me. I couldn't sign up for this. I thought you were going to tell us that they were like gangsters and you were going to get initiated into the club. Also awesome. I think more hobbies should have clubhouses. I mean, right? We need more get-together places and people could be part of a clubhouse. I would join a club that had a clubhouse.

3:35Jason Scharf:Equestrians have the barn. It's kind of the same thing. You hang out at the barn. Yeah. Yeah. You hang out with people who are into the thing you're into. Yep. Yep. One of the things, I had a question for you about equestrian stuff, Heather, which is like, there is so much high fashion in equestrian now. Yes. Like, I look at these ladies' outfits and they are going all out. Like, what do you think, why is that? Like, what is causing that kind of nature? I mean, it's an expensive sport. So I think that the businesses that make equestrian apparel know that and they are very high ticket items. Some of it is necessary, right?

4:16Jason Scharf:There's at least some of it is functional, right? Some of the boots and the breeches and everything, you need it to be a certain way depending on what you're doing. but it goes way way beyond that to fashion and they charge a really high price for all of it because they know that the uh you know their customer has a lot of money to spend on the sport and they are spending a lot of money on the sport so like anything it's all the accessories that uh people make money on and what is what is fun about riding a horse like why do you like this Well, because it's one of those things that you and the horse have to have a relationship.

4:56Jason Scharf:And so the simplest thing is actually really difficult. And when you finally achieve it with the horse that you're riding, it's a huge accomplishment. So even though it looks like we're just, you know, trotting around in circles and doing little basic things, it takes a lot of nonverbal communication with a big animal. And there's something special about that to people that do it. So it's kind of like being married to a man. Do you have that kind of relationship with your bike, Michael? Is it a special bond? He's got a whisper sweet nothings in the handlebars to get to do what he wants. Great question that you guys are making me fun of before, but I will give you a truthful answer to it.

5:36There is something that happens physiologically to, I think, a person in their brain when you go through a shared trauma with something else. And I've seen that happen to me with the bicycles. Like you, when you're on a bicycle, you could be doing a three or four hour ride, like going through like just total hell, like seeing spots and that level of trauma, whatever it is, like it elicits like that level of kind of camaraderie that I have for the bicycle. And like my wife knows, like, like the first thing I check for, like if somebody accidentally leaves the garage door open or the house door flies open or whatever, I'm like, what's up with the bicycles?

6:14Like, did anything happen to my bicycles? Seriously.

6:18Jason Scharf:So yours is trauma related. Mine is like more like nurturing. See, that's why women like horses. Yeah, like empath. I don't want to say it's the same, but you see how team cohesion happens when people go through shared trauma and shared difficulties. And that happens in military bootcamp. It happens when people go to war. It happens when companies barely survive and turn around and have a good exit. Like they have that special bond that's there. I happen to have it with a bicycle made of carbon fiber and two wheels. So what you're saying is when you make something simple, really hard, somehow it's fun.

6:55And that's what golf is, right? Trying to put a little ball in a hole and you as a good walk, spoiled. I think as Harvey Peenick used to say. Exactly. Would you guys like for me to show you a loop net deal that I love loop net deals? Let me pitch you on this deal. because there's a lot of interesting stuff happening in the golf world. And it's on LoopNet, and it's the Golf Club and Grill at Eagle Creek in Moyoc, North Carolina. So where is that? I've never heard of that. Let me tell you something super cool about Moyoc, North Carolina that you probably don't know. So this is in like the eastern part of the state, like the middle of nowhere.

7:33There's like nothing here. But do you know what is there? The headquarters for Blackwater, the paramilitary contracts. Yes. Now known as Z, I think, or whatever iteration of it they're in now, they have essentially their own private military base outside of Moyoc, North Carolina, where they like blow shit up and like fly helicopters and all of the like major military equipment they own. They practice and play with it in Moyoc. Yeah, you can't go there. It's like their private spot. That's their HQ. Well, let me read this deal to you and pitch you on this deal because maybe Blackwater has something to do with this business even being in existence.

8:16Maybe so. Okay, the asking price is$4.6 million. They have some pictures here of this golf course. And they have outside picnic tables, a little clubhouse, and looks like a bar, fire pit, some dudes in golf carts. Whoa. What? What? and then if you're on YouTube you can see there's a picture of a lady with her tongue out the server is on fake eyelashes and she's carrying the server is making like a hard rock and roll like kiss the band face with her tongue while she's tearing people's food to the table moving on

8:57and then a stock photo of some boomers playing no these are Gen X sorry so they're all so excited about this putt this woman's making hitting a putt in and then back to the original photo wow that was a wild ride we can sell tickets for that okay it looks nice that looks nice look it looks like kind of billiard like this kind of sub ex-urban like rural golf course like that we have some of those around san antonio i assume you have them around charlotte where somebody just went out into a field somewhere and bought 50 acres and was like here's a golf club in the middle of nowhere. That's what this is because Moyoc is the middle of nowhere.

9:35So like this is somebody, there's all kinds of land out there. So they built a clubhouse and a golf course and it might be like a legit gathering place. You know, how many other places where you can go get dinner and like swim in a pool and look at the fireplace over the lake, et cetera. This could be a destination. Well, let's tell us more about it, Michael. Asking price is 4.6 million. Inventory is$300 ,000. That's a lot of golf balls. Real estate is$2.6 million, and it's been around since 1997, so it's 28 years old as of this recording. It is an established The Golf Club and Grill at Eagle Creek for sale.

10:12All caps, please read in full before contacting me. Do not call the business. It is a full grill and 200-person event center currently doing over$250 ,000 a month in revenue, and all golf course equipment paid for and goes with the property. It's a turnkey business with established customer base in an up-and-coming area. There's a small apartment above the pro shop rentable for an Airbnb. It has been profitable for the last three years with stable revenue of$2 million to$3 million, including$2.4 million last 12 months revenue from the golf course restaurant and events. It operates at 20 % to 25 % profit margins, so$600 ,000, and strong operations are in place with potential need for a new day-to-day manager in six to 12 months.

10:58It is a great lifestyle business as operations are humming and growing. There are full long-term employees already in place. Financials and tax returns, all caps, not available. Oh. Sales reports available with proof of funds. Recent appraisal at 2.8 million available. No SBA buyers, please. all caps. Please send an signed NDA and proof of funds and is located in Moyoc, North Carolina. Inventors included in asking price. Real straight is owned. 4 ,000 square foot building, 31 employees. Has a bunch of parking spaces and it is one of the only local courses and restaurants in a 20 mile radius. And the owner will stay for six months to help you transition and is now retiring.

11:47And they put a map of where this thing is. It's Moyoc yeah kind of in the middle of nowhere it's like north very northeastern north carolina uh probably about an hour in from the coast uh near the north carolina virginia line line all right can we go straight to the elephant in the room why are financials and tax returns not

12:08Jason Scharf:available heather oh boy they are not reporting their income or they're reporting it way lower than what they're saying here and they're basically saying we don't have any documentation you can use to qualify for a loan. So don't even think you're going to go get a loan on this. They're saying no SBA loan, but I mean, what other kind of loan can you get that doesn't require the tax returns and the financial statements to be verified? So I think we have a big problem here. Yeah. I mean, no SBA buyers, please. In fairness, if they're not going to give any tax returns or financial statements, you're not getting an SBA loan.

12:44You probably shouldn't waste your time. Right. But like, how are they not going to give you financial statements? But then earlier in the same paragraph, they quote that profit margins are between 20 and 25 percent, 600K on 2.4 million. Well, you notice, too, that they say profitable for the last three years. It makes me think it has been around since 1997. There's maybe some questionable years in there. Yeah, that was the thing that made me nervous, too.

13:11Jason Scharf:Yeah, it's profitable for the last three years, which is odd. and we don't have any tax returns to prove that. Okay, on its face, like what do we have here? We have a golf club and a bar and grill attached to it. It's doing, there's 700 Google reviews. Like, for something in this area, that is massive. Are they good, Mills? Yeah, it's like four and a half stars. Okay, so you have a good golf club that people like in Moyoc, North Carolina that is making 2.4 million in sales, clearing 600 grand a year. It's presumably somewhat membership based, right? Which is probably positive. Let's take them in face value that they say the area that it's in is growing, which would be very important for something like this.

13:58On the face of it, this isn't a bad business, right? I mean, what do we think about that as a business? Michael, I know that you are super bullish on golf long term. But like, do we would you guys buy a golf club that is profitable 20, 25 % profit margins in a growing area?

14:15Jason Scharf:I'm questioning how profitable it really is. Wow, Heather. Well, I've seen I've seen tennis clubs before I've seen the financials. And a lot of times a lot of the revenue is actually coming from alcohol and food sales in the restaurant. And those margins are tricky. That's a difficult business to be in. And it ends up being like you're mostly in the restaurant business and you get a little bit of membership revenue as well. Not all, but I feel like that could be the case in some of these golf clubs like this. And you've got to have cash flow enough to make this worth 4.6 million because they're telling you that the real estate's worth about 2.6 million.

15:01Jason Scharf:So that's great. The real estate, I think is pretty valuable. It's got to be a lot of acreage there. It's got a cost to maintain it as a golf course. But to pay that extra$2 million, you're buying an enterprise and it's unclear, you know, where the revenues are coming from, just, you know, how much money you can really make in this business. So Heather, do you like it better if most of the revenue is from memberships and golf? Yes, I would like that a lot better. I would think that's more stable. And I would think the margins are a little bit more easy to control. When it comes mostly from the restaurant, you know, alcohol, food sales, I think it's a little more volatile.

15:38Jason Scharf:It would be just like lending, you know, in my world, lending to a restaurant is tough to do. This is a restaurant with a captive audience, a captive customer base, but it's still a restaurant. My two Spidey sense things going on here are, number one, they say they don't have financials or tax returns. Number two, this guy is clearly listing it himself. I guess this is him, Timothy Pash. The combination of lack of tax returns, that there's a sketchy apartment in the building, and that he would think it's appropriate to put this picture of a young lady in the thing with her tongue out. Those three things, it's just super spidey sense to me.

16:22There's just like, I don't know if this is the type of quagmire I want to get into from like a, I don't want to say classiness, but like kind of, yeah. Let's say it feels yucky. That's what I'm saying. There's some risk mitigation that you're interested in, personally, character-wise. I mean, it's the same reason I'm not like, hey, I want to go open a Hooters franchise. Yeah. It's just like, this just isn't where I want to be. I agree with Bill, though. So this is probably a very good business. I'm not saying this one specifically, but this generically is a good business in an area that's not going anywhere.

17:04It's really hard to build a new golf course. It's really expensive to build a new golf course. They're probably not doing it in rural North Carolina like this. They might be doing it in the Asheville area and these big destinations, but then they get like a, you know, a designer of golf courses who's like epic to build them. This is probably very old. It probably predates 1997, if you had to guess. I mean, the golf course itself. But one of the things I'm interested in with this is it's, if you look at it on a map, it's like completely surrounded by a neighborhood, not in, and they say there are new neighborhoods going in, which it does look like is going on there.

17:46A lot of times there's like an HOA component to neighborhood golf courses. And I wonder if there's anything more there on this, because you have all these people who live on the golf course and probably benefit from it. And then there's usually some HOA dues and fees associated with that. I wonder about the dynamic. So Mills, it's interesting that you say it's totally surrounded by neighborhood, because one thing I was going to say is if this is in a growing area and it's hard to build new ones. On one hand, great, it's hard to, I can have a competition. On the other hand, you're also sort of land banking here.

18:19And eventually you can wipe the golf course and realize a ton of value in the real estate. But that's harder to do if you've got 200 homes who expect to be living on a golf course. And I don't even know if you're allowed to do that. I want to understand the deed restrictions on the land. Totally. It is like five miles from the Blackwater site. So it's like, it's incredibly close. And there's also like a massive, massive solar farm right nearby it. I don't hate this. I agree with Michael. It seems like there's just the contagion risk of it is a little bit weird. But I mean, is there a price that makes sense where you kind of plan for the worst?

19:07I mean, you can't get financials. It sounds like all you can get is sales data, no expense information from them. Is that the way you guys are understanding it? Maybe. Now, even if you don't get financials, you do have a mortgage as an option here, right? Because you're buying a bunch of land. So there is hard asset value. So you can get a mortgage, you get a land value loan, right? For at least some of it.

19:34Jason Scharf:you've got to show some way to repay it. So somebody could come along who has outside income, you know, and they could prove to a bank that they could pay it regardless. But if they don't have that, even that kind of loan, they're going to want to see how you're going to generate cash flow off this property. And if you, you know, can't produce historical financial statements, it's going to be a problem for most loans. Yeah, I mean, I just don't see how anybody can possibly buy this without historical financials. I mean, that's... Which, I mean, proof of funds, like whenever somebody asks for proof of funds, I always think it's funny on a business transaction because the person who has$5 million in cash to show you in their bank account is not sinking it into a rural golf course, right?

20:24And an astute broker or advisor knows that nobody's paying 100 % cash for a business, 99 % of the time anyways. So it's like whenever I would deal with brokers when I was doing a lot more buy side work and they would like ask for a copy of the driver or your driver's license. And it's like, I'm representing a firm. Like you don't need my driver's license. Like you don't have to credit check me, you know? Yeah.

20:47Jason Scharf:I think the key to, for most of the listings that we look at and certainly that I work with is for the brokers to know what's financeable, but instead they are still stuck on asking for how much cash do you have and that doesn't really answer the question you could have a lot of cash and the deal could still not be financeable at the value that they're asking well let's call a spade a spade this thing's not financeable because this guy's not paying his taxes that's what it is what's going on yeah and he's admitting it publicly which is i always find this very strange in our space that uh you know people will well here we know exactly what business this is.

21:24Jason Scharf:They're admitting publicly something that, you know, the IRS could come knocking on their door. I think that's a crazy thing to do. Are you ready to take a leap into business ownership, but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker Deibel, the lab is your fast track to success in the search diligence and acquisition process. With hands-on support, world-class resources, and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey.

21:57And we're proud to call Walker and Chelsea, the Lab's director, long-time friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream a reality. Visit AcquisitionLab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. Okay, well, is it possible, give this person the benefit of the doubt, is it possible the owner is the developer of the surrounding neighborhood and it's never been broken out on its own, right?

22:31It's kind of run as a, it's just not run with very organized books, right? I'm not saying he's not making up an income statement or not making up, but like poorly preparing with a Moyoc North Carolina CPA, you know, some sort of, you know, tax return every year, but it's lumped in with his development activity of all the land around. And, you know, it's just totally unclean. And so it seems like a lot of work to this dude to prepare and present financial statements just for the Eagle Creek Golf Club and Grill. And he's like, geez, I'd rather not do that. You know, I'm just gonna put that in a listing.

23:07Jason Scharf:Could be. And that would be like what we call a carve out. So if it's, you know, a more professional broker would say this is a carve out, doesn't have its own standalone tax returns. And that would be what you're saying. So that could be, it could be that he just didn't know how to say that. So you suggested like right approach on this. We haven't talked about if it's overpriced or not. That's probably our next discussion. But like, so you see sketchy signals in a deal like this, Bill, you're saying like, okay, well maybe there's a chance that it's not sketchy. Maybe it's a carve out. Maybe they're just positioning the business poorly.

23:39You give them a call and then you just have your ears open for some sketchiness and then you pull the ripcord at the moment you see it. Michael, you just described that is how good deals are made in S &B land, right? Like sellers who aren't that organized, sellers who don't want to hire a professional intermediary because guess what? Professional intermediaries get market price for a business. right? Without one, you might get not the market price for a business in a good way, right? They might not know what they've got. They're probably open to more creative deal structures that are off market.