Lexington, KY - Golfers always try to avoid hazards, but local interests fear the city's involvement in the golf business has the whole industry shooting from the rough.
"The municipality's involvement in golf is hurting the quality of golf in this community by keeping us from being able to reinvest in our facilities," said Larry Hart, owner of the private Greenbrier Golf and Country Club off Winchester Road. "There's way too many, and they're very underutilized, and until some golf courses go away, this is going to be a very difficult business."
Hart, along with his brother and employees at Greenbrier and Andy Hightower, executive director of the Kentucky Club for Growth, an advocate for small government, expressed concern for the way LFUCG operates its golf courses, especially at a time when the city has been looking for ways to fill a $12 million hole in its budget.
"The numbers in the city's budget are pretty plain; it looks like they budget to lose a million dollars," said Hightower, a member of the policy shop in former Gov. Ernie Fletcher's office.
However, Jerry Hancock, head of Parks and Recreation for Lexington, said that isn't the case.
"The golf courses owned by the Urban County Government break even on a regular basis - on an operating basis - and have for a couple of years," Hancock said. "We break even on an operating basis, and we can't seem to say that loud enough or often enough so that the entire community hears it accurately."
And breaking even has been the intent for the golf program under the Newberry administration, said General Services Commissioner Kimra Cole, who oversees Parks and Recreation. Cole, who is herself a member of Greenbrier, said golf is much like other city services that can be duplicated by private entities. The city's golf courses make participation in the popular sport possible for citizens who cannot or choose not to golf on Lexington's private courses and nearby private daily-fee courses. And according to a 2006 mail-in survey of Lexington residents commissioned by Lexington Parks and Recreation, the city's golf courses are among the most utilized of the city's recreational facilities. Ten percent of the survey respondents indicated that city golf courses were the parks and recreation facilities that they used most often, making the courses the fourth most popular facilities among survey takers, behind pools (12 percent), neighborhood parks (25 percent) and community parks (34 percent). In 2008, there were 141,898 rounds of golf played on the city's seven courses.
"Golf is one of many programs that we offer as a government, and we have other programs (for which) private enterprise is offering similar services or the same services as well," Cole said. "I think that for a city-operated program, a break-even (situation) probably is a good place to be. If we weren't breaking even, then the argument could be made that taxpayers are subsidizing a program."
Still, some question whether the city is truly breaking even on its golf investment. For the fiscal year that ended on June 30 of last year, golf brought in $3,549,427 with expenses of $3,571,755, a $22,328 deficit, according to an internal Parks and Recreation profit and loss statement. The current city budget, however, indicates that the city will spend $4,682,570 this year on a program that brought in just under $3.55 million last year.
Cole said the discrepancy is explained by adjustments that have been made since that budget took effect in July. An anticipated $851,000 for golf course utility bills was initially allotted in the city budget, more than twice what was spent last year, to account for increased gas costs and and the city's new sewer fee, which is based on the amount of water used. That utilities estimate has since been reduced to $577,868, Cole said. In addition, many of the authorized employee positions included in the city budget numbers will not be filled, Cole said, saving an additional $344,286, although an additional $25,775 will be needed to pay seasonal employees.
As a result of those adjusted estimates for revenue and expenses, golf is looking to bring in $82,523 during this fiscal year, Cole said. But that assessment doesn't take into account an additional $347,960 line item for "Golf Administration" in the city budget, which Cole said covers a series of programs and outreach initiatives that are not germane to golf course operations, including the First Tee program, a 501c(3) that instills the lessons of golf in youth and encourages development of another generation of players; the Police Athletic League's Hook a Kid on Golf programs; golfing lessons and clinics for beginning golfers; rental of facilities; and eight championship tournaments. Included in that $347,960 budget line,
as well, is the $61,695 salary of Director of Golf Operations Mike Fields, who is responsible for those programs.
Hart, Greenbrier's owner, scoffed at the assertion that the director of golf operations' salary shouldn't be considered when determining the program's profitability. Similarly, Hart has problems with the fact that debt service for the purchase and renovations of the Picadome Golf Course, bought for $5 million a decade ago, doesn't appear on the city program's ledger.
The 2010 budget shows a $706,910 payment on the bond indebtedness to pay off the purchase and renovations done to the Picadome course, where the Parks Department offices are housed and which were included in the bond. Hancock and Cole said only $123,800 of that is "attributable" as an annual expense for the golf program. The only documentation of that amount is within the Parks and Recreations Master Plan Update, and not in any budget documents that could be found.
"That (number) is what appeared to be agreed upon by the council (at the time of the Picadome purchase in 2000); it's a figure that's been around a long time," Cole said.
Hancock said it isn't taken into account, in the same way that other bonded items aren't considered as part of city services.
"We don't cover that debt payment, but neither do swimming pools or baseball facilities or restrooms that we build," he said.
That's not an explanation that sits well with Hart, who has to consider loan payments for improvements to his Bahama Road facility in his bottom line. Last year, another local private club, Andover, declared bankruptcy after putting money into its facilities.
"The city has got a huge budget shortfall. They're closing down fire stations, and at the same time, the city is operating municipal golf courses and losing (money). One dollar is too much (to lose) if they're having to shutdown essential services," he said in reference to the rolling one-day closings of some city fire stations.
Hart and Kentucky Club for Growth's Hightower would like to see the city investigate other options to privatize part or all of the six city-owned golf courses. In Louisville, for example, the golf pros at the city courses are contract employees and not city employees. Cincinnati has a management company, Billy Casper Golf, run the courses and employ all of the workers.
Casper's arrangement in Cincinnati is what Joe Livingood, a senior vice president at Billy Casper Golf, calls a hybrid, where the company is paid to manage the city's seven golf courses and pays the city to be the concessioner running the pro shops and providing food and beverage service. Roughly half of the municipal courses run by Casper, according to Livingood, involve the company paying cities for use of their courses and taking all the risk on themselves, while taking any and all expenses off the rolls of each city.
In Cincinnati, the city courses, which Billy Casper Golf has managed since the early part of last decade, have "pretty much always made money, but in this case they are making substantially more. And even in 2009, where we had a serious economic downturn, the portfolio in Cincinnati had the best year it's ever had," Livingood said.
Lexington has not investigated any possible partnerships with private management companies for its golf courses, according to Cole.
"We haven't directly looked at (bringing in management companies to take over the courses). What we've tried to do is make sure that the golf courses aren't being run at the expense of essential services," Cole said..
One of the benefits and potential cost-saving opportunities that Hart sees in moving to a private administrator of the courses would be to do as he does and shutter the courses during winter months. Currently only two of the city's courses, Meadowbrook and Avon, are closed from December through February. At Lexington's other public courses, whether the truly dedicated can hit the links in the dead of winter depends on the weather.
"We had golfers out here (in early February) when there was still snow on the ground," Fields said.
Hart's concern is for his business and his brethren in the private golf business. While he said Greenbrier is operating in the black, the $350 monthly fees for membership have stayed level for years, and his initiation fee has been drastically reduced.
"We're in survivor mode, and that's the mode every club is in right now," Hart said.
But he acknowledges that the well being of the area's private clubs is not top of mind for the average taxpayer.
"Nobody's going have sympathy for any country club, Andover or us or anybody else, they're just not," Hart said. "But you take a guy whoÖ has eliminated every luxury out of his life because he is just on the edge and then you tell him that the tax money that he is paying,Ö they are going to use some of those dollars to subsidize (golf)Ö . At the same time you're telling him that the fire station right down the street from him is going to be closed because the city doesn't have the money to keep it open."