Financial Losses Are Par for the Course at Municipal Golf Clubs

Financial Losses Are Par for the Course at Municipal Golf Clubs
April 30, 2014

To get an idea of the uphill lie facing many municipal golf courses in Minnesota, check with Fred Richards.

But you better get a tee time, and soon.

Before anyone even took a mulligan this year, the city of Edina announced 2014 would be the last round for the Fred Richards Executive Golf Course. The announcement went over like a bad hook to a crowd of 300 Edina residents intent on saving “The Fred.”

“I think an outside observer might have looked at the people attending the meeting — decked out in their matching ‘Save The Fred’ T-shirts — and called them an ‘angry mob,’” Scott Neal, Edina city manager, wrote on his blog. “I would not call them that. For the most part, they were civil, even though some of them were quite angry with this whole idea.”

$485,000 Annual Subsidy

One of the few cities anywhere in the country to provide 45 holes of golf, Edina’s three courses require a $485,000 annual subsidy. Last year the nine-hole par 30 Fred Richards course lost $122,000. Still, some 350 residents have signed an online petition, even drafting their own fix-it plan.

“While I understand that the golf course ‘loses’ money for the city, the same thing can be said for playing fields, outdoor hockey rinks, parks and playgrounds,” wrote Geir Johansen on the Web site.

“Save The Fred and Dump Manager Neal. Net savings (equal) his salary $156,000,” commented Patrick Manion.

“Don’t just do away with it. We need another park or retail space like we need a hole in our head,” wrote Deb McCracken in support.

Fewer Rounds

The number of rounds played in Minnesota declined by 10 percent in 2013, due to poor weather and the sport’s declining popularity. Total rounds posted by Minnesota Golf Association members in April this year increased to 19,000 compared to 5,800 in 2013, still well below the 89,000 rounds played at this point in 2012 under ideal conditions.

“I’m optimistic for this year. We got started a little bit earlier than I thought we were going to get started,” said Warren Ryan, communications and editor for the MGA. “This last weekend wasn’t very good, and this week is not going to be very good, but I’m fairly optimistic.”

The question of how challenging municipal links are for players has become a question of how challenging the courses are for taxpayers—even in posh Edina.

A Watchdog Minnesota Bureau analysis of state audits of city-funded golf courses in 2012 — the latest year available — shows only a handful of municipal courses broke even or made money. Nine cities racked up six-figure operating deficits — Buffalo ($539,154) and Moorhead ($538,200) topped the list.

“Before golfing was pretty popular, but maybe there was a course that wasn’t very well-managed and so the numbers weren’t good,” said Rebecca Otto, Minnesota auditor. “I think because we have industry-wide less interest now, it’s going to really force all of them (local governments) to examine what they’re going to do and how they’re going to handle it.”

Following a $12 million makeover, Ramsey County plans to reopen historic Keller Golf Course in Maplewood this summer.  Brooklyn Park approved a $2 million upgrade of city-owned Edinburg USA links for this summer in hopes of attracting more customers and money.

Privatization Trend

The broader trend, however, appears to be privatization of more operations by cities around the state. Duluth contracts with a private management firm, paying $416,000 to manage the city’s two public courses. After exploring the possibility of selling off Lakeview National Golf Course again in recent months, the city of Two Harbors will pay a private operator about $28,000 to oversee the course with a $1,000 bonus for every $5,000 of net revenue over $185,000.

This season a private management company, Prom Management Group, took over operation at two of St. Paul’s city courses. Phalen and Como golf courses were responsible for about $400,000 of the estimated $1 million divot incurred on city links last year.

“To say that the demise of some of these public golf courses is simply a sign of greater forces at work is missing the point,” said Jonathan Blake, vice president of the Freedom Foundation of Minnesota and analyst of city finances. “These weren’t successful golf courses that then were victims of a bad economy. Look at what St. Paul is doing right now in contracting out the operations of a couple of courses. The reason is because it’s not efficient to have government running it in the first place.”

Now Nonprofit

After shutting down for a year and failing to attract a buyer, Mississippi National Golf Links in Red Wing re-opened in April — not as a city-operated course but as a nonprofit run by a foundation that will receive up to $600,000 in taxpayer funding for capital improvements if the course meets financial milestones. The course needs to score about 30,000 green fees to get $900,000 and break even.

“It’s been a real big community effort. We just need to bring enough people down from the Cities and Rochester here to keep it going this year,” said Nathan Gale, head golf professional at Mississippi National Golf Course. “Until we get enough in the bank to where we’re comfortable, we just can’t have a bad year, basically.”

Used with permission of Watchdog.org.