Do taxpayer owned courses unfairly impact privately owned daily fee layouts?

[Matt_Ward]

I've heard this argument from private developers who say that government, at all different levels, has too many benefits on its sides (own the land, are not taxed on the property, etc, etc).

When forced to compete against this situation private developers say loudly they're at a considerable disadvantage.

Given the lack of growth in the game -- both in terms of players and new courses -- I wonder what others may think on this topic.

I don't doubt "muni golf" is needed at some level because private developers really are not interested in keeping fees that low. Has government supported golf caused a situation that has pushed others away from the business in bringing forward privately owned daily fees or is there other forces / arguments at work here?

[Garland Bayley]

They chose to go into business under those conditions! Therefore, they have no beef! Bunch of cry babies.

[jeffwarne]

yes they do.


What would happen to privately owned public golf courses on Long island if Bethpage, Montauk, and other courses subsidized by the taxpayer didn't exist? Or if they had to charge market rates?
now one might argue they are a profit center, but that would hardly be the case if they had to acquire the land and endure the same land and operating taxes.

Not a pretty scenario for the golfers of course-the question is do golfers deserve a subsidy?

Not making a judgement, just answering the question.

[David_Tepper]

Matt -

You can have this private vs. public discussion on a variety of topics.

Do public libraries that make DVD/video tapes available hurt the Blockbusters and Netflixs of the world?
Do the YMCA and other non-profits (that operate free of taxes) that offer workout facilities compete unfairly against for-profit health clubs and gyms?
Do churches and religious groups that offer health, senior & child care facilities operate at an advantage vs. for-profit businesses?

For better or worse, the public and their elected representatives decide how public funds & resources get allocated.  Business men decide whether or not to compete.

Sorry, I don't see the "lack of growth in the game" to which you refer.  The number of new golf courses that have been built, both in the US and the world, over the past 15-20 years is truly staggering.

DT  

   
     

[Steve Lapper]

Matt:

   The private sector is indeed at a considerable disadvantage to publicly-owned courses. Yes, municipalities and counties don't pay taxes and essentially have little or no embedded land costs. This functionally deters many private developers from seeking to build anything that might compete head on with a taxpayer-owned course.

  Private owner-operators can, however, compete by offering better architecture, service, experience and ease of access. Do you think many of the privately-owned daily fee courses in NJ compete effectively on that basis? Personally, I don't think they try hard enough to create such an edge.

  The real question to ask is: If the government did not provide affordable golf, would private developers step in and fill the void?  I think not. The growth of the game isn't at all affected, IMHO, by the dearth of new daily fee courses. In fact, I think the game would shrink, maybe dramatically, should the government be regulated away from creating new or operating existing courses.

[JeffTodd]

Is it not in the best interest of the municipality to see both the publicly owned AND privately owned courses do well financially?

Speaking to our neck of the woods, Matt;  Egg Harbor Twp. would not be best served if McCullough's Emerald Links cut into the ability of courses like Renault, Blue Heron, Twisted Dune, et.al. to stay in business and generate tax revenue. The township's best interest lies in a symbiotic relationship, does it not?

I remember a lot of static being caused when Sonny McCullough was looking to build that course; all based on the perception that it would cut into the business of recently constructed daily fee courses. However, the way McCullough’s prices are structured, I wonder to what extent that is happening? In reality, it seems to me that the Emerald Links is an outlet for residents to play a round of public golf for under $50 peak time; an option that most South Jersey residents have yet Egg Harbor residents really did not despite living in a golf-rich township (unless you include some of the less than stellar 9-holers in the area).

On the other hand, for non-residents it's usually $70-$85 peak, only slightly less than other local courses that, in my opinion, are better than Emerald Links; making Emerald Links an option, but not an option that is unfair to the competition because it's really not an overly attractive option for the out-of-towner. And it was with the out-of-towner in mind that most of the high-end daily fee courses in the greater Atlantic City area were built.

Then again, I could be wrong. Maybe Emerald Links is driving the whole market into the ground, although I doubt it. If so, however, I'd like to hear about it.

[John Moore II]

I am not sure they unfairly impact the privately owned clubs. In general, public owned courses are not of the same caliber that the daily fee clubs in the same area are. Yes, there are exceptions, Bethpage, Torrey Pines, and others, but overall, the level of the course is lower than others in the area. Also, there is a finite number of rounds available at public facilities, so when they are full, people have to go to the other clubs. People are going to play golf where they want, if they want cheap but not so great, mostly they will go to the muni, if they want good and somewhat inexpensive, its probably the private daily fee club.

[Scott Weersing]

There are very few public land golf courses in Nevada. But the changed the assessments for golf courses in 2005 according to an article in the Review Journal.

"Thanks to a provision slipped into a catchall assessors' bill during the state's 2005 legislative session, golf courses across Nevada are paying a fraction of the property tax they shelled out before the law's passage."

http://www.lvrj.com/news/13762632.html

Private owned courses can lobby for a new assessors bill in their area.

On the other hand, courses owned by citie have to use revenue from the course to support non-revenue generating recreation facilities. I don't like having to pay for rec facilities that I do not use because others will not pay to use them.

[SB]

If munipalities built only muni's then I'd say there's no problem as it provides a needed service.  But they don't.  They build high end daily fee courses that are 7,200 yards long charging $85 a round.  That is not providing a service to golf, junior golf, or to the community, that is an aggressive attempt at capitalism, with government help.

And they don't get just the land for free, they get the whole thing for free because they often pay for the course out of capital funds.  They then call it profitable if they make a single dollar, even though they don't have any debt service.  Meanwhile the guy down the street with the family friendly layout who has to charge less is getting creamed because he lost his corporate outing business and he DOES have debt service because he had to take out a loan to renovate to keep up with the muni course.

You can argue that is is cheap for residents, but what about when they undercut the other privately owned local courses for non-residents, too?  Is that fair?  

[Peter Pallotta]

Matt - good question.

In my neck of the woods (Toronto), they don't seem to compete for the same dollars.

The municipal courses are, for the most part, still good value for the money. They range from pretty basic designs that are best suited to beginners to very good courses designed by the likes of Herbert Strong (i.e. Lakeview).  A brand new course (Braeben) was built on an old landfill, and I'm told is also a very good one. All the municipal courses are always crowded.  

Now, neither Lakeview nor Braeben is exactly cheap, not even by Toronto standards, but they become excellent values when compared to the privately owned daily fee layouts around here, which have positioned themselves, I think, for the corporate dollar and offer sleek layouts with all the bells and whistles (like carts with GPS) at costs that average well over $100 a round, and closer to $150-200 a round for the most popular ones or the ones considered the best.

Those high-end publics seem to have cycles -- periods when a lot of new ones are built and then periods when that whole market is (or appears to be) oversaturated.

But it seems to me that the ebbs and flows of that 'market share' have little to do with the municipal courses.  

Peter  

[Jerry Kluger]

In today's world most local governments are coming to the position that golf courses are a drain on their budgets and they would just as soon close them.  They look at the property as a prime source of tax income which is lost.  

The other problem is that many golf course developers don't go into building a course with a realistic business plan.  Past history tells us that a large percentage of golf courses have not made it financially. Those that are part of a housing development have a better shot at success, but stand alone courses require some really deep pockets to allow for a slow start up and long term recovery of construction costs.

[John Moore II]

I think that in many ways, the elite public clubs, Chambers Bay, Torrey Pines, Bethpage wind up competing with the upper end public courses in the areas. In this way they do not take the same place as a normal municipal club. I see nothing wrong with publically owned clubs doing like this and charging premium prices.

[J Sadowsky]

I think the problem here is that we are all going to have a different definition of the word "fair" depending on our views of government.  From a positive standpoint, clearly the municipal courses do take revenue away from the daily fee courses.  

I do, however, think that the degree any particular public course has an advantage over a daily fee is a more nuanced question, however.  After all, there are a variety of reasons that governments own courses.

Some are for historic or cultural reasons - Bethpage most clearly comes to mind.   In these rare instances, the simple circumstances may mean that daily fees are going to have to take their lumps.  However, even Bethpage can only handle so many golfers, and when I go back home I generally avoid Bethpage - mainly due to the guaranteed 6+ hour round.

Others is to give someone a cheap place to play.  Here, the daily fee can't really compete.  But the only reason the public loss-leader is taking that is because there is no natural competitve market for golf at that rate.  In that sense, public courses are growing the game by providing a service that the market won't bear.  I think the benefit in the growth of the game exceeds the loss to someone who would otherwise suck it up and pay out double the cost.  

The more interesting question at this level is whether/how much the government should be spending on subsidizing golf rather than on the needs of the poor, returning money to taxpayers, etc.

A third reason that municipalities may own golf courses is for revenue.  But if a particular course is not bringing in more revenue than it would if privately-owned and taxed, then there is no value to the Government in owning the golf club.  So I think the "subsidy" that the Government is giving these courses by being tax-free is really illusory.  Here, the government is competing, quite fairly, as a player in a private market.  Whether the government should be able to do so generally is a longer, political question - one that will not be resolved in our little thread.

A fourth reason is for development purposes.  But once again, once the development occurs, if the government can make more money by selling the course (with whatever assurances necessary to protect the development), it should do so.

I think alot of people don't appreciate the pressure government officials have on budgetary matters.  Non-profitable golf courses are the easiest to withdraw money from, because of the lack of benefit.  This is why you see so many shoddily-maintained public courses.  

The real problem with daily fee courses is an inability to keep costs down.  In DC, every decent course is in the 75-125 prime rate range, but most of them are 5 hour rounds.  That means, at least in part, that they're fully booking.  And yet the market indicators that I've seen says that daily fee courses are saturated.   That means courses are either undercharging, or that if they are charging the proper rate, that there is barely a market for golf, given the cost structure these courses are currently facing.  That's not a public course competition issue - that's a "need to rethink your business model" issue.

[Jeff_Brauer]

Private developers bring this up often. While right or wrong is a judgement call, courts have reviewed this since about 1905 and consistently rule that public golf is a legitimate pursuit for local government.

If this were a small market, and in individual situatations, a case could be made, of course.  But its a big market, and with lots of variables.  The simple facts are that there are many areas where they each compete for golfers successfully.  They are out there.  If a private developer complains about how it might affect his specific project, I understand.  In general, there is not a huge problem.

BTW, some govt courses might argue that they have higher costs, given union rules, govt bennies, etc. And many private owner courses have their course construction cost subsidized by housing, using cheap floodplain land, etc. much like lower bond costs subsidize govt courses.  Getting your money out of a moderate priced course when figuring construction costs in has always been marginal.  Cities may want to break even, and that is an advantage compared to trying to send 20% of revenue to the home office of some management company or owner.

[Matt_Ward]

I have to wonder if the argument made by private developers is more a situation tied to particular areas of the country where actual land costs are THAT high as opposed to other areas of the country where all associated costs are much smaller and better able to be absorbed.

Privately owned daily fee golf in the metro NYC area has become more and more a thing of the past than a reality today. Oh, yes, there are such courses but more and more fo them are further and further removed and in the hinterlands because of what I mentioned in the preceding paragraph. Thank heavens for taxpayer-owned facilities (e.g. Bethpage and Montauk in NY, Hominy Hill and The Knoll, to name just two on the Jersey side of the Hudson).

I think it's fair game to wonder if public entities do in fact get into the "golf business" are they doing it to expose the game to the masses (a good thing) or are they simply looking to push out any competition when designing high end CCFAD's that are in direct competition with other such courses -- albeit from the private side of the aisle.

Candidly, I don't see private developers offering any real benefit or desire to the people who are beginners or novice players. When I do hear these tears of pain I have to wonder if they see any responsibility for that side of the equation or is it just simply a frustration / anger that another entity is eating into their profit margin?

David T:

I understand what you say -- regarding the various examples you mentioned. I believe the taxpayer has voiced support and as a result elected folks have pushed ahead for the development of such facilities whether they be golf courses, libraries, parks, tennis courts, etc, etc.

The broader issue is at what level should public golf be? Should it be to capture the top tier of the disposable dollars - likely the top 5-10%? There are a number of instances in which taxpayer jurisdictions have seen fit to move into the upper realm in order to reap the bonanza.

Does public golf need to be at the Bethpage Black level? Granted in the example I just mentioned there are other "levels" of courses for those who are just beginning or are novice players.

Libraries do provide DVD's and the like -- but in most instances they don't have the database to compete with any of the private providers. In the other example you provided daycare providers from churches are usually catering to those on very limited dollars and the services they provide are generally fairly narrow in scope.

In sum, I do agree with you that private developers of daily fee golf need to understand the playing field and try to fit into a spot that will satisfy their botton line plans. In the greater NYC metro area that model is becoming almost extinct.

[Jim_Kennedy]

Matt,
I think it's a regional question, no one answer fits every situation.

I'm sure someone on this site knows this market better than I, but in Albany NY and the surrounding area (within an 11 mi. radius) there are around a 1/2 dozen munis, 9 or 10 public/semi privates, and 9 or 10 privates. This particular area has a very high percentage of golfers, well above any average I've ever seen. Everyone seems to co-exist well. I've been to several of semis and they never seem to be lacking for players, likewise for the munis, very busy and not lacking players.

One thing I think should be remembered, there is a limiting mechanism as to how many rounds any muni can siphon off from the rest of a market, and that is the number of tee times they have available on any given day. Other limiting factors are leagues that eat up some of their choice times and players who stay away from munis, if given a choice, because of slow play. There are probably some folks in any given market who shy away from them just because they are munis.

In the end, if a semi-private course is forced out of business because it can't compete w/the 'new' muni down the street, who's hurt? Golfers get a place to play at a favorable rate and the S/P owner will probably make a fortune selling the land to a residential or commercial developer. If he/she loves operating, they can use their new found fortune to look for a better opportunity elsewhere (I hope this doesn't sound callous, it's not meant to be taken that way).

[Steve_ Shaffer]

Matt,

What's the current situation with McCullough's Emerald Links outside of Atlantic City in Egg Harbor Township? I remember it wasn't doing so well financially and, of course, the other recently developed privately financed daily fee courses nearby -led by Archie Struther's Twisted Dune- objected to Mayor McCullough's  Emerald Links being built.

This case is directly on point.

[Kyle Harris]

Is it not in the best interest of the municipality to see both the publicly owned AND privately owned courses do well financially?

Speaking to our neck of the woods, Matt;  Egg Harbor Twp. would not be best served if McCullough's Emerald Links cut into the ability of courses like Renault, Blue Heron, Twisted Dune, et.al. to stay in business and generate tax revenue. The township's best interest lies in a symbiotic relationship, does it not?

I remember a lot of static being caused when Sonny McCullough was looking to build that course; all based on the perception that it would cut into the business of recently constructed daily fee courses. However, the way McCullough’s prices are structured, I wonder to what extent that is happening? In reality, it seems to me that the Emerald Links is an outlet for residents to play a round of public golf for under $50 peak time; an option that most South Jersey residents have yet Egg Harbor residents really did not despite living in a golf-rich township (unless you include some of the less than stellar 9-holers in the area).

On the other hand, for non-residents it's usually $70-$85 peak, only slightly less than other local courses that, in my opinion, are better than Emerald Links; making Emerald Links an option, but not an option that is unfair to the competition because it's really not an overly attractive option for the out-of-towner. And it was with the out-of-towner in mind that most of the high-end daily fee courses in the greater Atlantic City area were built.

Then again, I could be wrong. Maybe Emerald Links is driving the whole market into the ground, although I doubt it. If so, however, I'd like to hear about it.

Hasn't Blue Heron Pines sold off and closed on of their 18s to development?

[Matt_Ward]

Steve:

That's one of the reasons for my post -- there are other similar locales.

Frankly, the ACC market went overboard with the $100+ green fee situation when things were really rockin and rolling. Locals were often left in the cold because these other facilities were simply catering to the guys / gals heading to AC for a quick jaunt to the casinos and often times flush with some serious $$ to spend.

I simply see McCullough's trying to grab a bit of the lower end of the market. No doubt owners of the other courses would resent that because of the dollars they perceive as being lost.

Some markets are not as settled as the example Jerry previously explained.

[Steve_ Shaffer]

Kyle,

Yes, BHP East was sold off for development recently but nothing is being built there....yet. I played BHP West this past summer. It was a sad site to see the Smyers course across Tilton Road turn fallow.

I think Emerald Links' competition is the nearby Mays Landing GC rather than Twisted Dune,BHP or Harbor Pines. Both are not on the same quality level as the 3 latter mentioned ones.

[David_Tepper]

The Robert Trent Jones Golf Trail, funded by public funds, was a conscious attempt to stimulate, on a very large scale, golf tourism and economic development in Alabama, as well as to provide quality golf courses for its citizens. I doubt a private entity would have ever taken on such a large project.

Can anyone speak (with some knowledge, if possible  ) as to how things are working out? Is the state earning a positive return on its investment? Has the private development of golf courses in Alabama been impacted over the past 5-10 years?

[archie_struthers]

 


Obviously there are different scenarios for Public/Municipal golf course that work. Hard to argue with Bethpage or any municipal that supports youth golf at bargain prices. These are good for the game and the taxpayer.

The Emerald Links is a good idea gone bad. Thinking of reclaiiming the municipal landfill was a great idea. Coverting it to recreation is another winner. However building an expensive course (construction costs) that is in direct competition with local businessmen ( taxpayers) just isn"t right.

Many municipal courses are subsidized by the taxpayers....and are given advantages (liquor licenses) different permitting scrutiny etc., etc.  

In our area Twisted Dune, Mays Landing and the other for profit clubs are operating at a severe disadvantage and only thru operators innovation and quality of service can they survive. note survive is the operative word. In our market, price drives the play to a great extent. When the government owned course drops prices, we have to respond in kind, as there is no safety net of taxpayer money to fall back on.

Matt should be able to answer his question as regards North Jersey, where govenment boondoggles can't be doing too well, and will put taxpaying golf entrepeneurs out of buisness
Not having seen them all, I'll reserve judgment for the better informed.
 

This being said , if government courses support junior golf and use little ( if any ) taxpayer dollars to operate, there are obvious merits!  But middle to high end municipals are , in my opinion, a terrible idea!

[john_stiles]

As I drive by the countless lighted ball fields, lighted tennis courts, swimming pools,  gyms open at night in the dead of winter, gyms open for league BB play,  I do not see that tax supported golf course are an issue.

Do public tax supported tennis courts, gyms, ball fields, and swimming pools hurt  private facilities ?  I am sure they do.

Determining whether is it unfair or not is difficult even after someone could define fair.

[JWinick]

There are three main public benefits for a golf course:

1) Open Space.   One of the hottest issues in suburban America is protecting open space.  A golf course achieves this goal.   That's why many municipalities are stepping in and preventing private golf courses from selling their real estate for development.   The golf course I grew up with in Long Island was all set to sell, but the town issued a moratorium.

2) Public health.  Local governments believe that they should provide public recreational services for their constituents, even if the private sector offers the same services.  To wit, my neighborhood in Chicago has a gym and pool for $10/month.  I can use these bare-bone services or join a more upscale gym.

3) Environmental Remediation.  Usually, a private developer does not want to take on the task of developing contaminated property.  Only in some rare circumstances is it financially feasible (WS, Liberty National, Bayonne).  A golf course is one of the best ways to profitably redevelop environmentally contaminated property.

As for competition, I agree that government has an unfair advantage, but there is no constitutional prohibition for public entities.  

[Bill_Yates]

While taxpayer subsidized municipal courses appear to have the fiscal advantage over privately developed courses, they have one huge disadvantage.  For the most part, they have to compete for General Fund budget money with schools, police departments and other critical municipal services.  As a result, they are usually severely underfunded.  

Without sufficient operating funds, these courses have to compete on price to get high numbers of rounds in order to generate revenue. And with high numbers of rounds and little base funding, the downward spiral of quality, of the course, of its infrastructure and of the playing experience, begins and then continues.

On the other hand, efficiently managed privately owned courses that are properly priced for their market and invest in course conditioning while focusing on delivering a consistent playing product of high quality, can and will survive.

Will people flock to the cheaper municipal product?  Sure, and sadly they'll get what they pay for.