The days of Canadian golf courses being built without housing projects around them are coming to an end, say operators and developers.

Canada has become a haven for professional players who endorse large golf course and residential developments.

In addition to current and former Canadian veterans Mike Weir of Bright's Grove, Ont., Stephen Ames of Calgary and Dick Zokol of Richmond, B.C., globally recognized current and former stars, including Jack Nicklaus, Gary Player, Fred Couples, Nick Faldo and Greg Norman, are lending their names more frequently to courses in communities ranging from Whistler, B.C., to Uxbridge, Ont., and points further east.

"You do need a real estate component if you're spending multi-millions of dollars," says Ken Fulton, general manager of the Baxter Creek Golf Club near Peterborough. "At the millions that we've spent here, you can reap the benefits through green fees and make money at it."

Photo courtesy of Heath Fletcher, The Rise
PGA Tour veteran Fred Couples has given instant name recognition to The Rise, a Vernon, B.C.-area golf/housing development.

Baxter Creek, which opened in May, is an exception to an increasingly common model where Professional Golf Association (PGA) veterans are listed as course designers, but their actual involvement varies.

Nicklaus, who rarely competes on tour these days, is considered among the most active, while others are less hands-on because of their busy tournament schedules. Golf-course architects do most of the actual design work.

As a result, course operators say it is becoming almost impossible to make a profit on golf alone.

"The guys who run golf courses now are real estate developers - pure and simple," says Scott Allred, owner and head pro at Elbow Springs, located on Calgary's western outskirts.

Allred, whose course opened in 1992 and has no real estate connection, says he could easily start another successful golf course today, because his surname has been well known in Calgary since his family launched a golf school in the 1970s. But most new operators could not.

Baxter Creek was built on former farmland owned by members of the Larmer family, whose ancestors have lived in the region since the 1880s.

"We thought about spending the money to put someone's name on it," says Fulton, adding the Larmer group checked the marketplace and felt a course with "average-joe" prices would be more feasible than one with a big name attached to it.

"We took a flyer on it and it's proved itself to be a good investment for the family," he says. "The tradition will live on forever."

Fulton, a former club pro who spent six years on the PGA Tour and will soon be inducted into the Manitoba Golf Hall of Fame for his junior exploits, says the property has about 30 lots that could eventually be used for a multi-family or retirement-type project.

The Larmers' business has benefited because they did not have to buy the land. Otherwise, the course could not have been built, he adds.

"If anybody's building (a course/ real estate development) thinking that they're making money (on the golf side), they aren't," he says. "They're being funded by a rich owner or a rich corporation or they're being funded by a real estate play. You can't make it otherwise. I defy anybody to show me how you can make it through regular patronage of green-fee players or membership."

He estimates a new course costs a minimum of $20 million, when you add up the cost of land and building the golf course and clubhouse. Any project that costs more than $15 million, he adds, should have houses along with it.

Fulton says operators risk losses if they over-charge golfers, because they will play elsewhere, or under-charge them, because they won't be able to cover their overhead.

"It's a real dilemma, so you have to have a real estate deal going - it's just a must," he says. "And, it's unfortunate, because you don't have that classic golf course that doesn't have houses around it anymore."

Allred, whose initial investment was about $5 million, says he would not start a new course again without a housing component. Around the same time Elbow Springs was being built, developers also launched a nearby housing community, and both the course and neighbourhood have thrived ever since.

"If you don't cut corners (on a stand-alone golf course), you might pay the mortgage, but you're not going to make much money," he says.

"The market is getting tougher," he adds. "The growth (in golfers) is not keeping up with the number of holes that are being built. If you're an operator, it's affecting you."

He notes large companies that develop and operate several courses are able to save money by hiring one executive pro and one general manager to oversee their courses and get better economies of scale on equipment, fertilizers and other essentials.

Meanwhile, large-scale course operator-developers say design deals with PGA players are essential to their success.

Terry Yacyshen, resort general manager at The Rise near Vernon, B.C., a project worth an estimated $1 billion, says the advantages of partnering with PGA pro Fred Couples are clear.

He says Couples gives instant recognition and credibility to The Rise, which will feature 1,600 homes and a private beach club developed over 10 years.

"In life, you make choices, and I think this was the right one to make," says Yacyshen. "It just makes sense. If you look at the golf course offerings in the Okanagan Valley, they're all sustainable. They're all good, but this (endorsement) puts us just one rung on the ladder higher.

"You certainly pay for his expertise. But if you translate that into a development that will be here forever and a build-out that will take another 10 years, the cost that's associated with it is just called a good investment."

Stephen Duke, vice-president of Vancouver-based Marine Drive Properties Inc., which is developing the Nicklaus-designed Wyndandsea golf course and hotel-housing project at Ucluelet on Vancouver Island, says the Golden Bear helps ensure his company will execute its plan and meet international customers' expectations of an oceanfront luxury experience.

When completed in 2012, Wyndandsea will offer an exclusive golf, hotel and residential resort next to a national park.

Duke likens it to the Banff Springs Hotel, also home to an internationally renowned golf course in a unique environment.

"We recognized it as a once-in-a-lifetime opportunity to do something really landmark," says Duke. "There are few golf-course designers who are internationally known and put your golf course on the map for international visitors.

"Nicklaus is a well-known name. He's not an upstart. The first golf course he designed was Glen Abbey (in Oakville, Ont.) in 1975-'76."

However, Duke doesn't believe a course needs a connection to a PGA veteran to do well. Some municipal courses get more play than nearby links that are endorsed by stars, he adds.

He also notes studies show homes on a golf course have higher long-term and resale values than off-course residences.

But housing values on some courses drop if there are several golf courses in the nearby community.

Baxter Creek's Fulton says affordable green fees will ultimately determine a golf course's fate.

"If they can't afford it, they won't come," he says.

(Monte Stewart can be reached at monte@businessedge.ca)