Arizona Golf – Phoenix Needs To Get Out of Golf Business

From Huff’s Stuff Arizona Golf Blog by Bill Huffman at the Arizona Golf Authority

Once upon a time, when golf ruled the recreational scene in Arizona, they couldn’t build the courses fast enough. It took 75 years to get to approximately 50 courses in Arizona, another 10 to get to 100, 10 more to get to 200 and 10 more to get to 350.

Today, we are holding steady at 350 (give or take a few) and there hasn’t been a course built in Arizona for the past five years, although that will change shortly when Tucson adds another high-end public facility at the new Casino Del Sol. (By architect Notah Begay, no less!)

Yes, there are a lot of golfing opportunities if you live in fun-in the-sun Arizona. Apparently, too many if you’re paying attention to local and national reports on our golf industry.

Recently the Arizona Republic bannered a story across the top of its Valley & State section that proclaimed: “Golf’s decline proving costly.’’ That was followed by a subhead that declared: “As sport loses luster, Phoenix’s courses face $14.8 million deficit.’’

At first, not knowing that the article was specifically aimed at Phoenix’s six municipal golf courses, I was a little perplexed. That’s because the National Golf Foundation released a report this past year that stated Arizona’s rounds were up 7 percent in 2011. And when I called Rob Harman, the Phoenix Parks and Recreation’s deputy director of special operations (a.k.a. golf), he told me that rounds at Phoenix’s six municipals were up 8.2 percent for the past two years.

“They’re up, but yet it’s troubling because pretty much any way you do the numbers on rounds played, (the municipal courses) are probably never going to make money,’’ he said. “That’s why we’ve appointed a special committee to study the issue through a series of town hall-type meetings that will bring together the ideas of our golfers and the general public.

“When that committee gets the feedback from those who attend those (five) meetings, it will make a recommendation to the City Council, which will then decide the fate of our six municipal golf courses.’’

The choices, according to Harman and a study done by the City, are as follows:

*Outsource the course pro shops to increase revenue. (I can tell you right now, this won’t get it done. It’s not enough.)

*Close the courses from July to September when golf is slowest and cheapest. (Once again, not realistic from a maintenance perspective although it could reduce heat strokes.)

*Cut the course hours from 14 hours a day to 10 hours a day. (Again, not realistic if you’re trying to maximize tee times and revenues.)

*Since the golf courses are deeded public access and can’t be sold, turn them into parks. (Again, get real. The costs associated with that move would dwarf the golf losses.)

*Privatize some or all of the courses by leasing them out to golf management companies. (Completely realistic.)

*Keep offsetting the losses with the City’s general fund. In other words, suck it up in the name of recreation. (Completely acceptable when you consider the low-cost recreational opportunities it provides both junior golfers and senior citizens.)

The Republic’s story, which included other findings from the NGF, noted that there was a decline (no percentage listed) in the average number of rounds played in Phoenix between 1990 and 2010. It also pointed out that during that 20-year span, golf courses increased in Maricopa County from 153 courses to 214, thus driving down the number of rounds played at the munis.

However, the worst news about keeping open the City’s municipals – Aguila, Cave Creek, Encanto, Maryvale, Palo Verde and Papago – was that the hefty $14.8 million debt was accruing at a rate of $2.4 million a year, a running total that dates back to 1999. The City apparently has been keeping the courses afloat through its general fund – the taxpayer-supported fund that covers the bulk of the city’s costs such as salaries and services, and was referred to as one of its possible “solutions.”

Harman said this isn’t unusual, that other cities cover their golf deficit through a general fund. He also said that munis across America are facing similar dilemmas, which is troubling because we need more affordable golf like municipals provide if the game is going to grow.

But Harman is all over the flag with his assessment that munis, in general, are bleeding red with a few exceptions, the biggest being San Diego, where Torrey Pines, Coronado and Balboa Park bring in so much money they subsidize other city programs. Believe it or not, that also was the case in Phoenix during the 1990s, Harman said.

Sadly, it’s not the case today. In fact, just to the south of us, the City of Tucson has been stumbling through the same scenario as Phoenix to the tune of $1.2 million a year for its five munis – Dell Urich, El Rio, Fred Enke, Randolph North and Silverbell. And like Phoenix, Tucson has a committee that is studying the issue to see what solutions, if any, can be put in place.

“We’ve been aggressive controlling our costs; we can’t control how many people play,’’ Tucson Parks and Recreation director Fred Gray told Inside Tucson Business.

Harman said that’s how the ball is rolling in Phoenix, too. No matter how they swing it, the munis are going to land in the red. And, no, there is no money for the novel idea of marketing them, Harman said, with the exception of its ties to EZLinks.com. (That Harman thinks EZLinks.com is a marketing tool should tell you right away that the City doesn’t get it when it comes to advertising. Discounting your golf tee times is the equivalent of hari-kari, especially when your green fee for residents is the least expensive in Arizona to start with, ranging from $18 in the summer to $43 in the winter.)

How did it come to this? Well, poor planning for one thing, and a couple of bobbles for another. What the City of Phoenix doesn’t realize about golf is, it’s a lot like the restaurant business: If you don’t know what you’re doing you’re probably going to get burnt.

First of all, Phoenix doesn’t need six municipal golf courses at the moment. Maybe four, but definitely not six, although that could change in the future.

As I mentioned earlier, the financial troubles involving the municipal golf courses date back to 1999, the year Phoenix, coincidentally, purchased Palo Verde and opened Aguila. And despite what some might think, the problems with Papago over the past five years didn’t cost the city a red cent when it comes to its beleaguered golf fund. The actual $1.8 million settlement with a local bank came out of the general fund. So it was just the opposite: The $12 million renovation enhanced Papago with, hopefully, the rewards still to come (once a clubhouse is in place).

Aguila, however, fell into the category of overkill, something that has plagued the Arizona golf industry in general in recent years. Aguila is a great golf course, but it’s poorly located (S. 35th Avenue in Laveen), and it pulls tee times away from Encanto, Maryvale and Cave Creek, so it’s ultimately counter-productive. Palo Verde also should never have happened. It did because area residents who lived around the golf course didn’t want it razed for condos and apartments, and so the City bought it to placate the neighborhood. But remember, times were also “good,’’ and golf was a money-maker with no end in sight.

So where do we go from here? Well, don’t expect a revelation from those town hall-like meetings beyond what’s already on the table. And whatever the recommendations are, don’t expect the City Council to necessarily follow them. If you read blogs on the subject, it is obvious that at least two (or more) Council members don’t care much for the game.

The good news is, at least from a golfer’s standpoint, that the first meeting was very well attended, according to a couple of golf buddies who reported back to me. And the message was clear: Phoenix needs to keep its six munis in operation but with better management and presentation, so they can compete with other golf courses in the Valley. And — believe it or not! — a lot of golfers think those munis need to be marketed way better than they are now, which is basically like starting from Ground Zero.

That’s why a golf management company or companies need to be in charge of the Phoenix Six. It’s the only solution, really. Local companies like Blue Star Golf, OB Sports and Troon Golf, to name a few, have the expertise and the lower-cost maintenance staffs to get the job done in the black column rather than the red. Not only are they professionals, but they actually understand the concept of marketing, something you have to have if you’re going to survive in a heavily saturated market.

You look at the numbers for the Phoenix Six and you wonder: How are they losing money? In the golf industry, it is generally accepted that 40,000 rounds a year will get you to the break-even point when it comes to running a golf course and everything else is gravy. So get this: Cave Creek did 57,000 rounds in 2011, Encanto did 44,600, Aguila came in at 43,800, Papago did 39,100, and Maryvale 35,500. That’s an average of 44,000 rounds per course per year.

And wait! The Encanto Nine did 33,000 rounds while Palo Verde did 30,500 even if the Aguila Nine only did 8,000 rounds. But remember, those are nine-holers, where you need half the maintenance and presumably half the staff, so double those numbers and the Encanto Nine and Palo Verde should make money, too. As for the Aguila Nine, the best solution is to turn it into a practice facility.

The bottom line on all of this muni mess: Keep the Phoenix Six open and do a better job. And here’s how:

*Papago is way under the radar, as it should be doing a minimum of 60,000 rounds a year. Hey, it did over 100,000 rounds a year back in the 1980s and ’90s, and the course is in its best shape/condition ever, easily among the top 10 public courses in the state as we speak. Don’t take my word, just go play it.

*Granted, Aguila is off the beaten path, but it also has a untapped potential primarily because it’s so good that it rivals many of the public courses in the Valley that charge a $100-plus green fee. Definitely worth saving, if not right now then for the future.

*As for Cave Creek and Encanto, they are already meeting expectations, but if you bring in a more focused direction and a lower-cost maintenance staff, well, the profits will rise because you’re paying an employee $10 an hour to cut the grass vs. $20 or $25, the hourly it costs the City for many of its golf course workers.

*Maryvale, well, it wouldn’t take much to get it over 40,000 rounds a year, and it’s hidden gem, designed by the legendary William F. Bell, the same architect who built Papago, as well as Torrey Pines. Yeah, it’s a tough neighborhood, but tough kids can learn how to play golf, too.

*The nine-holers? Keep ’em with the exception of the Aguila Nine, and let the bigger courses subsidize them because they are kid-friendly and affordable for seniors.

Of course, the key to this solution, no matter how you slice it, is to get the City out of the golf business while still keeping the courses up and running. Hopefully, we can still call them “munis’’ even if they are being managed under different brands.

Click to visit our Arizona Golf Course Guide List Directory and read the AZGA Player’s Review for every golf course in Arizona at www.arizonagolfauthority.com/coursedirectory.

It’s “All Things Arizona Golf” from the Arizona Golf Authority.