It's (Financially) In the Hole!

It's (Financially) In the Hole!
August 21, 2013

Minnesota’s golf season typically runs shorter than in most places, but for one city-owned course, it was over before it started this year—and taxpayers are still being hit with substantial upkeep costs.

The Red Wing City Council put Mississippi National Golf Links out to pasture for the year, buying time to sort out what’s become a $150,000 annual financial handicap for local taxpayers.

“We all know what the lay of the land is for golf courses,” said Rick Moskwa, public works director in Red Wing. “They’re all struggling. There’s an over-saturation in this area for sure, but I don’t know what the likelihood of somebody coming in and saying we’re interested in running something like this is, and if that’s even possible that it can bankroll itself.”

Many Courses, Few Golfers

Since the course’s opening in 1985, city officials outsourced management of the 36-hole course along the Mississippi River to a private operator. But an oversupply of golf courses, declining number of players, and the Great Recession led the links’ longtime private operator to shut down operations last November.

Although litigation with the former management played a key role in closing the course this season, so did “significant uncertainty about the financial sustainability of the course in the short- and long-term,” according to the Mississippi National Golf Links Study commissioned by the city to examine scenarios for public use of the property.

Once a destination course for many Twin Cities golfers, its fairways now look as shaggy as the rough. Only the driving range remains open for business as usual.

“It’s been minimally maintained,” said Moskwa. “The buildings are all closed down and winterized, all that kind of stuff.”

Despite bare-bones upkeep during this year’s suspension of play, Red Wing taxpayers will spend about $200,000 on maintenance, adding to $3.4 million already spent over the years on land and improvements.

‘Property Tax Support a Given’

In presenting options for the more than 400 acres of land, the no-nonsense city report warns generating cash flow will be more challenging than the course’s toughest holes. The report includes a survey of other Minnesota municipally owned courses, noting “directly supporting the golf operation with property taxes is essentially a given, with the prospect of being able to break even or make a profit being well into the future, if ever.”

“Even with the best of intentions, the prospect for Mississippi National to reopen and generate enough revenue to be self-sustaining is highly suspect if judged against the performance of these other public courses,” the report states.

Under one scenario, the report estimates an annual taxpayer subsidy of $222,000 to operate Mississippi National in future years, plus another $3.3 million in essential building and outdoor improvements.

A 2010 online survey found broad support among residents for subsidizing the municipal swimming pool at a cost of about $160,000 per year but not underwriting losses at the city-owned golf links. Nevertheless, Red Wing recently posted a Request for Proposal to solicit bids to operate the golf course next season.

“It’s pretty wide open. They want someone to come in and run it as a fullly operating golf course with banquet services and not request any money from the City of Red Wing,” said Moskwa. “That would be ideal. No subsidy from the City of Red Wing.”

No Golf Course Sale

Although ceasing golf operations and divesting the land was listed as an option in the city’s report, Red Wing officials say Mississippi National is not for sale. With that in mind, a community group says it hopes to take a swing at saving Mississippi National and operating it as a nonprofit patterned after a 36-hole course in Detroit Lakes, Minn.

“They’ve been doing just that since 1930,” said Robb Rutledge, president of the Red Wing Municipal Golf Corp. “They have a nonprofit group of volunteers aboard that run the public golf course, also 36 holes, and they haven’t asked the City of Detroit Lakes for a penny through good times and bad for 80 years. So it can be done.”

Tom Steward (tom@watchdogminnesota.org) reports for Watchdog.org, where this article first appeared. Reprinted with permission.