Shocking news: Harding Park big money loser

[Michael Hayes]

Page 152...The costs associated with hosting the PGA Tour is only thought to be $26,400 for the construction of Championship tees, all other renovation costs incurred by the city.....WHAT!!!!!!!!!!!!!!!!!!!!!!!!!

MH

[Tom_Doak]

This report is fascinating reading.

I've copied several paragraphs that I found interesting and will copy them here, one or two at a time, with comments.  I have not found any complete breakdown of the original budget, but there is some accounting of the overruns and some items about the shortfall that are worth pointing out ...

The first excerpt:

1. The renovation of Harding and Fleming Golf Courses would be funded by borrowing $13,127,627 in State Proposition 12 funding to be reimbursed by greens fees through a new "San Francisco Recreation and Park Golf Fund." The total estimated renovation projects cost was $16,027,610, including a new clubhouse. At that time, the Department estimated that only $26,400 (for championship golf tees) of the total $12,791,110 in estimated construction costs for the Harding and Fleming Golf Courses' renovation projects were attributable to PGA Tour Championship requirements. The Department contended that all other renovation costs would have been incurred anyway. By the time the Harding and Fleming Golf Course renovations were complete, the total cost had increased from $16,027,610 to the $23,611,457 shown in Table 6.1 below. This represents a total increase of $7,583,847 million or 47.3 percent. According to a March 4, 2004 memorandum from the Department to the Budget Analyst, the additional expenditures were required due to "unforeseen project costs" related to (a) mandatory destruction of old wells discovered on the site, (b) demolition of buildings previously intended for re-use, (c) golf course drainage and erosion problems, (d) additional maintenance building and clubhouse facilities, and (e) new utilities.

So that's where the extra money went.

[Tom_Doak]

The next excerpt is about the drainage problems they had, which they wish the Tour would have foreseen, and why they did not sue the Tour over them.  Note the words "pro bono".

One can also assume that with the City wondering aloud how they could sue the Tour for damages over drainage problems, the Tour would not want its designers to comment publicly about any of this stuff.

Here's our next excerpt:


The Harding and Fleming Golf Course reopening date was delayed from July 4, 2003 to August 22, 2003 for a variety of reasons:

•Construction of the Harding and Fleming Golf Courses' renovation projects began in May of 2002. Erosion and drainage problems caused by storms in December of 2002 required landscape reconstruction and retrofitting of the drainage sumps at a cost of $2,435,390 to the City. The drainage system had been designed by the pro bono PGA Tour Design Services, Inc. Therefore, there was no contract against which the City could seek damages. While PGA Tour, Inc. donated additional design services to rectify the erosion and flooding problems, it provided no extra funding.

•The City's Purchaser objected to the Recreation and Park Department's sole source purchasing of $1.2 million worth of new maintenance equipment and required a competitive bid process which also delayed the reopening date.

•It took longer than scheduled for the Department's maintenance crews to achieve the required golf course maintenance standards, in part due to the delay in obtaining the required new maintenance equipment.

The Harding and Fleming Golf Courses reopened on August 22, 2003 without a new clubhouse due to cost overruns. However, PGA Tour, Inc. was not prepared to use the temporary clubhouse made out of trailers at any future tournaments. Therefore, a new clubhouse was completed in August of 2005 at a cost of $8.3 million from a variety of public and private funding sources (see Table 6.1 below). The First Tee Program did not commence until April of 2004 due to the need for ongoing fundraising, volunteer training, and the beginning of spring weather.


In fact, if you read on a bit further, you find that the Tour has also donated "$1 million worth of design services pro bono" as part of the tournament agreement, to fix up Lincoln Park and Sharp Park ... but the city isn't taking them up on their commitment just yet because of the cost overruns at Harding.

[Mike Benham]

Tom -

The table (page 156) that I found interesting shows the breakdown of where the $ 23.6 million was appropriated.  In the paragraph following the table, they note that the Park and Rec 1998-1999 Assessment Study estimated the costs of rennovating the Harding and Fleming Courses at $ 5.5 million.

Golf Course Rennovation   -   $   10,898,837
Maintenance Facility        -       2,473,500
Parking Lot                     -        1,953,508  
Clubhouse                      -        8,285,612
Total                               -   $  23,611,457

Also noted was that there was almost $ 3.4 million donated to pay for the toal $ 8.3m tab to build the Clubhouse.

[Tom_Doak]

By far, though, the most staggering part of the report is the city's accounting of things.  Their accountants must work for the movie studios the rest of the year.

The Tour pays $500,000 to lease the golf course for the event.

However, the city says they actually LOST $141,619 on the event, in direct and indirect costs.  They say they spent $329,900 on additional salary and fringe benefits and overtime, and that they gave up $311,719 in revenues [the difference between their revenues in fall '04 and fall '05].

The second part of the equation is the obnoxious part.  Because if you look at Table 6.6, you see the following:

Total revenues of Harding and Fleming 2000-01 = $1,845,000

Total revenues of Harding and Fleming 2004-05 = $4,360,748

So, they are bringing in $2.5 million more each year from the facility, yet claiming to lose money on the deal because the Tour event keeps them from raking in the higher fees during those weeks!!!

Now, whether that $2.5 million per year of additional revenue is really worth the $23 million they spent on the place is questionable, because I'm sure the maintenance costs are much higher now, too, and that offsets much of the additional income.  But, it's clear in this report that the city is putting the worst possible spin on the transaction.

And, Joel, I still haven't seen where the Tour is profiting by their deal.  I read somewhere that The First Tee got a chunk of cash out of the deal, but the City appears to be bummed that the Tour's design arm did their work for free, because now they can't sue them to get the fees back!

[Forrest Richardson]

One of the real jewels of SF is Gleneagles GC — the short, 9-hole near the Cow Palace. Anyone played it recently?

[David_Tepper]

Tom D. -

Thanks for taking the time to actually read the document and report the facts (such as they are). It is a breath of fresh air after some of the supposition and posturing that has been posted here.

Forrest R. -

I have not played Gleneagles in some time. You may (or may not) be aware that Erik de Lambert, the fellow who revived Gleneagles (aka MacLaren Park) 25 or so years ago gave up the lease to operate the course within the past 6 months or so.

Two younger guys are now operating the course. I think they are going to try very hard to maintain the prior standards, but I cannot say for sure how things are going there.

DT

[Forrest Richardson]

David — If they ever need help, call me. I'm up that way often and would enjoy stopping by. I had heard that the Scottish chap who had it was giving it up.

[Kevin_Reilly]

David — If they ever need help, call me. I'm up that way often and would enjoy stopping by. I had heard that the Scottish chap who had it was giving it up.

One of the partners in the course is a friend of mine.  The new managers are dedicated to the old Gleneagles standard.  I need to stop by there for a lookaround.

http://www.gleneaglesgolfsf.com/

[David_Tepper]

Kevin -

Forget about the Gleneagles golf course for a moment. What we really need to know is if the clubhouse bar there is still the cheapest place to drink single-malt whisky in San Francisco!
 
A dram that would cost $8-$10 in a downtown SF bar used to go for $4-$5 at Gleneagles. I sure hope THAT has not changed.

DT  

[Doug Siebert]

Sounds like the clubhouse got upgraded from about $3.5 million to $8 million somewhere along the way.

Also, I wonder how the parking lot could have possibly cost nearly $2 million dollars?  Isn't $1 million/mile the commonly accepted figure for 4 lane divided highways built to Interstate standards?  I'll bet JakaB is wishing he had that contract!

[Forrest Richardson]

Besides the single malt, one of my fondest memories in golf was walking up the 7th (?) fairway a day or two after Christmas — not playing, mind you — as the locals had a day or two before ripped the fence down and decided that a fairway bunker would make a nice place for a bonfire, a party and place to pile old appliances.

HOLE CLOSED UNTIL DAMAGE IS REPAIRED

read the sign.

[Tags:]

Tags: