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

[Lou_Duran]

"Why should a local operator (and I'm not suggesting TD practices this) enjoy laissez-faire economics when a valid use basis (golf) exists for taxpayer $$, when used to purchase & maintain open space lands?"  Steve Lapper
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We in the Western world have a real serious lack of knowledge of elementary economics.  I read somewhere that over 50% of the members of Congress are lawyers.  There may not be one single member who is a trained economist!  Really, we haven't had a period of "laissez-faire economics" in this country for over 100 years, even during the "Roarin' 20s".  

"The Forgotten Man" by Amity Shales is a good read for those interested in how we've arrived to where we are today.

What local private operator, golf or otherwise, today runs a business unencumbered by government?

Besides having to pay property, sales, employment, income, and a sundry other taxes, the business is closely regulated by workplace, OSHA, EPA, COE, employment and a myriad of other laws and rules.  This is all before having to address competitive issues of similarly constrained businesses, and those of private and public competitors who have been able to forge preferences and advantages via the political system.

Finally, the business has to respond to the ever picky consumer who has not just alternatives for your golf course, but a much wider array of recreational choices at his disposal.

Those markets where the golf operator can sometimes set his price are in hyper-regulated, high-tax, high-cost of living areas like CA and NY.  Here, new development without considerable government pull and involvement is impossible, and few courses (and businesses) are built.

Any number of private golf developers would build in the low-end market if the economics work.  Unfortunately, $20 green fees won't make it just about anywhere.  I know that the Commerce and Welfare clauses of the Constitution have been stretched to the point of absurdity, but to suggest that they cover heavily subsidised golf is well beyond even that.

By the way, the private sector has to continually evaluate all types of risks, none more important and potentially fatal than those posed by government.  A good example is President Reagan's tax law flip-flop in the mid-1980s which I believe forced many viable financial institutions, developers, and real estate investors into bankruptcy and dissolution.  Uncertainty poses great risk which has to be priced into the enterprise.  Prices, as a result, must go up.  Failure to do so (price risk properly) has dire results as is evidenced by the current sub-prime debacle.

The bottom line, if a would-be developer has to consider that government will enter his market, he and his investors will require a higher rate of return.  Historically, the segment most likely to attract government competition is at the low-end.  And perhaps this is one of reasons so few affordable courses are attempted by the private sector.  There is just not enough return in a low-cost/high volume operation to warrant the risk.      

 
       

[A.G._Crockett]

A.G. - In Atlanta, I'd put River Pines, Greystone, and Wolf Creek in that category to name a few.  Greystone and WC compete against muni's, RP does not.  Which do you think is the busiest?

Good examples.  The only qualifier I would make in these examples would be that there are probably other reasons that Wolf Creek is less busy than River Pines (I'm not that familiar with Greystone.)  River Pines (which IS family friendly primarily because of a neat little par 3 course) is located squarely in the middle of the fifth most affluent Congressional district in the U.S., with average household incomes more than 3 times the national average.  I don't know the numbers for College Park, but they are way, way less than that.  More people in Alpharetta can afford to play golf than the folks in College Park.

Additionally, I think Wolf Creek is actually marginally more expensive for daily play than River Pines.  River Pines is family-owned and operated on land that has been in the Miers family for generations, AND is in a much more competitive environment overall, even given the absence of a muni nearby.  I think this particular example oversimplifies the market that both courses are in.

Nevertheless, I take your point.  I don't think I agree with it, but I do understand the rationale.

[Phil McDade]

Lou:

I live in a state -- Wisconsin -- viewed in many quarters as a hyper-regulated, high-tax state, and I can recall one -- a single one -- golf course built in the last 20 years by a unit of government (Art Hills' Washington County course, near Erin Hills on the outskirts of Milwaukee). Private golf development, on the other hand, has been booming -- particularly on the high-end of the scale. During the same time period (since mid-1980s, roughly), noted architects and golfers like Dye (five courses), Nicklaus, Lehman, and Andy North have built courses in Wisconsin, with seeming financial success, most of them high-end daily fee courses.

Now, granted, the state has the usual run of government-owned and operated courses -- classic munis in Madison and Milwaukee, a few other good munis here and there, the Univ. of Wisconsin's over-rated URidge, and even a state-run course that's fun and quirky in Door County. But interestingly, to me at least, golf course development has been strongest in areas where there are thriving muni's -- here in the Madison area, where a very well-regarded Hawk's Landing was built next door to URidge (along with Andy North's Bergamont and the pretty good Oaks course), the well-regarded Glen Erin right near Janesville's very good muni Riverside course, and Erin Hills and the Kohler courses, within easy access of Milwaukee County's range of muni's.

Might there not be an argument that those muni's do a decent job of developing interest and ability in golfers, who then move on to the higher-end courses and are replaced by others who play the muni's as beginners, or cost-conscious customers?

[archie_struthers]

 

Lou Duran waxed so eloquently on the continuing assault on entrepeneurism by the government. Taxes, regulations, permitting , user fees, tariffs, OSHA , he hit them all, until more are passed.

Why not real open space with walking trails and fishing holes, not 12 milliion dollar golf courses that are destined to fail economically without taxpayer subsidies, and bring down the surrounding courses value in doing so.

I don't see the need for government to supply a recreational amenity of this magnitude that will be supplied by the tax paying owner if economies dictate the need.

[George Pazin]

Do you really think municipalities get into the game to "help expose it to the masses," or even "directly compete" with the local private CCFADs? I think neither. It seems to me that in NJ, towns/counties do it to help justify preserving public space purchases and conceptually create a recreational amenity.

I don't know about the specific places you mention, but I think in general governments get involved in golf because it's a fun way to spend other people's money.

Of course, most of us couldn't sleep at night if we were doing that, whether it's other people's money or our own. But we aren't really the types to be involved in local government; government people are a different breed.

I emailed someone in response to an article I read the other day and said the following: It's frightening to me how many people feel comfortable making life and death decisions for others - and even more frightening how many are content to let others do so. You could say the same thing about spending other people's money as well.

[Steve Lapper]

Guys:

   I don't disagree with your idea that government shouldn't spend its taxpayer $$ to compete with local entrepreneurs and I do like the idea of  creating open space walking trails and fishing holes. Golf does, however, appeal to as many taxpayers as fishing or trail-walking and a decent, cheap course isn't the worst use of land.

  Private developers (golf course and otherwise) do retain the option of buying open space land and deed-restricting it, a technique used for centuries by other economically-oriented end-users.

  I don't want decisions made for me by others, including spending my tax dollars, but I have a vote and and the freedom to lobby, just as everyone else does...use it if you want to try to influence a local government decision..sometimes it works.

  Finally, I ask all of you how you would feel if the USGA stepped in and bought or leased a property nearby other golf facilities and created an affordable and accessible golf complex? Given that they enjoy a 501(C) not-for-profit status, would that be the same as a municipality doing something similar?

[archie_struthers]

 


Affordable....accessible .....is great  ...however this isn't what has evolved  ...nuff said!

[D_Malley]

lets not forget that many of these muni courses were not developed by the municipality, they were purchsed from an owner who had a failing business, or a once private club that moved on to somewhere else.  The town buys the course to prevent a developer from building houses and shopping centers on the property.  They want to preserve open space.  The course i manage was accuired just this way back in the 60's, and this is a trend that is happening often in todays market.

[TaylorA]

Could it be as simple as giving the community politicos and bureaucracy a chance to play Big Time Developer without much personal downside risk?  

Lou, thanks for your comments in this thread. I thought you might appreciate this one - you may already have heard about it. The City of Carlsbad spent 22 years and $68 million on this muni:

http://www.nctimes.com/articles/2007/08/08/sports/figueroa/23_13_578_7_07.txt

I'd be curious to hear if anybody has played the course and what their thoughts on it are.

[Steve_ Shaffer]

George,

Deerfield in Delaware and Reading CC in PA have joined Paxon Hollow as former private clubs acquired by governments to preserve open space. 5 Ponds in Warminster,PA was built to preserve open space.

[D_Malley]

ingelside was recently accuired by the twp. although it was not private, and i suspect the same may eventually happen to Iniscrone.

[Bradley Anderson]

In Chicago Joe Jemsek and others built golf courses like Cog Hill as a course to provide private club conditions and amenities for the public golfer. No doubt this was happening all over the country.

The Joe Jemesk model was very successful and more clubs were developed along the same model with equal success. But then the public facilities began to compete with that model by building and upgrading their golf courses with private club conditions and amenities.

This is an etrememly important topic of discussion because the effects of this could really hurt the game of golf. Golf can be a difficult and humiliating game in the beginning as we all know, but where does a beginner golfer learn the game today in an environment that doesn't totally intimidate him? Where does he go to learn the game at an affordable cost?

The park district and forest preserve courses of old (what we used to call the "muni") were generally cheap, short, and wide open with easy greens, and not too penal bunkering. And they did not have excessive forced carries over water and wetlands etc. But not so today. The contemporary model of the muni is a page direct from the Joe Jemsek play book - it is designed for golfers with low handicaps and middle to upper income pocket books.

Many of the golfers who play the game today got their start as caddies of private clubs, as members' children of private clubs. But a great mass of them got their start on those old beat up muni tracks.

It amazes me how dumb we are about demographics. For instance, much of Western Europe has had a below replacement level fertility rate for three generations now and in another 100 years it could very become one Islamic state. But I digress.

If golf doesn't get busy being very fertile right now, it will become something we don't even recognize. Golf needs courses that are affordable and easy to play, inside metropolitan markets. And the only entity that is postured to provide that are the park districts and the forest preserves. But they seem only intent upon building monuments to their commissioners.

[Matt_Ward]

Archie:

Please read what I said.

I have no issue with taxpayer-owned jurisdictions getting golf courses built if the primary need is to serve those with limited means to play the game.

If anyone believes the private developers are going to create courses for the masses with low fee structures guaranteed they are smoking some heavy duty weed. The primary thought is to grab as much $$ as they can. Nothing wrong with that provided the markets that are served are handled correctly.

The issue is whether such jurisdictions should be building / owning high end courses that can certainly grab players from other comparable courses in the same locale. But, even on this front, the taxpayers of that jurisdiction must give their approval for such an effort anyway.

C'mon Archie -- enough of the conservative baloney that any government involvement with such enterprises is always bad. Then why have any recreation departments owned by the people of a given jurisdiction? Why have public tennis courts? Or swmming pools? And on and on and on it goes.

The issue for me, is one of the proper framework and size.

Unfortunately, private developers will scream bloody murder when even the tiniest hint of competition intrudes at their door. Especially when they have had a monopoly on such services and fear the lower-priced alternatives will suck them dry.

It's been mentioned that feeding the game with more players should be the primary thrust. That's what I see as the role for taxpayer-owned facilities. Having such a pipe-line gets these players involved with the game and likely moving upwards to more sophisticated facilities.

Archie, let me mention another related topic and I say this as an elected local office holder. Those in office who push golf related projects need to square the dollars involved and what the short / long term benefits will be. The public, in nearly all cases, will have a final say even through elections / referenda, etc, etc.

No doubt there are a number of taxpayer-owned courses that are mis-managed. That's a shame. But, let's be a bit forthcoming -- privately owned daily fee golf is not about anything more than simply raking in as much $$ as possible. They are simply aimed to grab the top 10-15% of the cash cow. I see nothing wrong with taxpayer-owned jurisdictions moving ahead to provide facilities capable to introduce people to the game itself. Working in harmony can be done and clearly if anything needs to be done is to develop a more harmonious communication link. The ultimate aim should be what is in golf's long term interest. I see a clear role for taxpayer-owned courses -- the issue is one of context and scale.

[archie_struthers]

 


Matt ...I stand by my position that entry level golf is the only place government should even think about....but given the demagraphics, other recreational activities deserve the money more. More kids will benefit, plain and simple, at a fraction of the cost.  

Golf, as much as we love it , is discretionary income driven. We should not subsidize golf thru taxation, particularly funidng huge losses of municipal CCFAD'S If you want to give existing land owners some incentive to preserve open space,
that's about as far as I'm willing to go.
,
We do agree that  projects in the tens of millions are absolutely insane, I'm just a Libertarian/anarchist at heart, particularly given the sad state of affairs in our beloved NJ.

[Lou_Duran]

"Might there not be an argument that those muni's do a decent job of developing interest and ability in golfers, who then move on to the higher-end courses and are replaced by others who play the muni's as beginners, or cost-conscious customers?"  Phil McDade
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Philosophically, I would say that government has more pressing responsibilities and obligations which it is not fulfilling so that it should not be involved in golf at all.  On a practical basis, I don't have a problem with govt. providing entry-level, low-cost facilities.

As to golf development in WI, kudos to its populist/socialist governments for refraining to spend taxpayer resources on golf.  Though the state ranks in the top 10 in overall tax burden, Milwaukee is near the middle of the pack nationally in terms of home affordability (median home price relative to median household income).  I believe Forbes even has the People's Republic of Madison in its top 20 cities best to do business in.

WI has plentiful land without dense population, and I suspect that a number of the courses you cite depend to a considerable extent on regional tourism.  Are there courses opening with fees in the $30 - $40 range?

Taylor Anderson,

I've read about the Carlsbad muni, though I understand that the turn-key price is over $80MM.  For a private developer to do this deal, he would have to get $200+ fees just to break-even.  For the most part, the private sector is priced out the heavily populated coastal areas in CA.

Reportedly, Carlsbad is a wealthy community with budget surpluses, and it is home to several important golf industry companies.  I don't know how many rounds it will cannibalize form the private sector, but I doubt that it will have an effect on new construction in the under $100 category (non-existent).

I have not played the course, though I hear it has numerous routing and playability problems.  I'll try to get out there sometime this year for my subsidised round.
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Bradley Anderson writes:  "It amazes me how dumb we are about demographics. For instance, much of Western Europe has had a below replacement level fertility rate for three generations now and in another 100 years it could very become one Islamic state. But I digress.

"If golf doesn't get busy being very fertile right now, it will become something we don't even recognize. Golf needs courses that are affordable and easy to play, inside metropolitan markets. And the only entity that is postured to provide that are the park districts and the forest preserves. But they seem only intent upon building monuments to their commissioners."

This is not news.  Many people actually consider this trend to be a blessing, not a problem.  A dominant thrust in environmental activism is not to slow growth, but to actally reverse the process to depopulate the earth considerably.  I've seen the figure of one billion people as the desired level to achieve sustainability, so we have some 5.3 billion to lose.

Do you think that government might have higher priorities than to fund a feeder system to the golf industry?  We are facing a $14 billion budget shortfall in CA.  Nationwide, there is a $700 billion unfunded liability for state and local public employee pensions.  Add the unimaginable Social Security, Medicare, and Medicaid structural deficits facing us over the next 20 years, should we really ask for help so we can beat a little white ball around?

I think the industry needs to think a bit more "out of the box" and find other ways to ensure its future.  Getting government out of the business and lobbying to closely align regulation to actual risks are good starts.            

[Bradley Anderson]

The problem as I see it Lou is no one else but the government is in a position to provide affordable fields of any kind of recreation, baseball, soccer, and basketball notwithstanding, inside of metropolitan areas, because the value of land in those areas is too high for a private concern to develop for anything other than residential or very highly profitable business usage.

So where are beginner golfers going to learn the game in the high density living areas? There is no way for a privately funded organization to provide that kind of learning facility.

[Lou_Duran]

"So where are beginner golfers going to learn the game in the high density living areas? There is no way for a privately funded organization to provide that kind of learning facility" Bradley Anderson
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If that is a high priority and money is an issue, move to Texas, New Mexico, Colorado, Nebraska, parts of the Carolinas and Florida, and numerous other places where there is availability and the cost of living is more reasonable.  Of course, this has been happening for years.

Do you really believe that it is reasonable to ask for government to spend many tens of millions of already scarce taxpayer dollars so that a few thousand people in a densely urbanized area can learn to play golf?  It seems that we want the conveniences and advantages of big city living without incurring the costs and consequences.

Life is about choices.  I personally prefer to make my own as opposed to having them made on my behalf by even the most well-intentioned politicians and bureaucrats.  

[Bradley Anderson]

Lou,

"Do you really believe that it is reasonable to ask for government to spend many tens of millions of already scarce taxpayer dollars so that a few thousand people in a densely urbanized area can learn to play golf?  It seems that we want the conveniences and advantages of big city living without incurring the costs and consequences."

Heavens no. But I do feel that whenever a golf course is built with public money, it should be affordable and accessible to it's constituency. In the instances where that is not the case, the pool of golfers is generally not grown so much as it is diluted, to the detriment of everyone.

[A.G._Crockett]

"So where are beginner golfers going to learn the game in the high density living areas? There is no way for a privately funded organization to provide that kind of learning facility" Bradley Anderson
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If that is a high priority and money is an issue, move to Texas, New Mexico, Colorado, Nebraska, parts of the Carolinas and Florida, and numerous other places where there is availability and the cost of living is more reasonable.  Of course, this has been happening for years.

Do you really believe that it is reasonable to ask for government to spend many tens of millions of already scarce taxpayer dollars so that a few thousand people in a densely urbanized area can learn to play golf?  It seems that we want the conveniences and advantages of big city living without incurring the costs and consequences.

Life is about choices.  I personally prefer to make my own as opposed to having them made on my behalf by even the most well-intentioned politicians and bureaucrats.  

Lou,
I always enjoy reading your posts; they are ALWAYS thoughtful and insightful, even though I disagree with much of what you believe.  You make the best libertarian arguments I've ever read, I believe.

You're right; life IS about choices.  Of course, you choose to have government catch criminals for you instead of doing it yourself.  Add putting out fires, paving roads, attempting to educate the masses, collecting the garbage, providing national defense, regulating the power company, and on and on and on, including recreation like baseball fields, basketball courts, walking trails, senior centers, etc.  You have simply chosen here to draw the line at NOT providing one particular form of recreation that YOU already have access to due to your personal socioeconomic status.

And the argument that people should just move is condescending to those unable to afford private or CCFAD golf, to say the least. The movement you refer to has been to follow jobs, which were moving to areas of cheap land and labor.  With the exception of retirees, I seriously doubt much of the sunbelt migration has been for golf access, and I know you don't believe that either.  That cheap land might also be more likely to mean cheap(er) golf is a side benefit.

The great thing about democracy is that if elected officials act against what the public perceives to be in its best interest, that public can throw the bums out, and elect new government that will plow under the munis and use the land in a more intensive way, which might actually be appropriate in places.  Again, it comes down to what YOU believe is a proper good or service for government to provide; you have arbitrarily drawn the line.  

But the role of government in our market economy, among other things, is to provide "public" goods (non-exclusive), which the market alone will NOT produce, and which the public deems necessary or desirable through a democratic process.  A public golf course, as long as the fees are relatively low so that the course is accessible to most residents, is not the worst form of correcting a market failure, at least in my judgment.  That doesn't mean that everyone has a "right" to golf, or that golf becomes an entitlement, any more than Little League for your kids is.  Just means that government is providing a good that the private sector will not provide by itself.  That is our system.

[Matt_Ward]

Archie:

Couple of quick retorts.

Those in the privately owned daily fee side of things have failed (not in all instances mind you) to know how to build their base of players. To incorproate "reward" features - similar to the credit card providers and others - and to implement a fee structure that can add to their overall usage of their facility.

Too many during the high days of the 90's simply thought that bumping up fees without a REAL sustained effort to customer service would forever suffice.

It didn't and the bubble burst.

What's funny is how the response is to simply blame government instead of looking internally and seeing if real outreach / customer service development plans were really instituted in the first place.

You also have people who jumped into the course development business without really studyng the existing terrain in terms of just how many players could come on board given the fees charged. See the inane approach taken with golf course development in the Grand Strand area and other similar locales.

Government has a role in providing recreational opportunities for its citizens. No doubt the people who are part of that jurisdiction will have a final say on just what is provided and of course will pay the fees / taxes associated with such efforts.

Let me point out out something Lou either failed to mention or simply dismissed. Taxpayer-owned courses in the northeast are the only real way for the sheer masses of people to continue to play the game on any regular basis. The other two options are just not doable on a consistent basis -- CCFAD and/or private golf.

If one were to take the idea that government should not operate anything that private providers can provide where would that stop? No doubt the private side is simply geared towards the profit margin they can attain.

Lou's other idea that people should simply move is also not reasonable or doable for way too many people. Those with the means are better served with such a suggestion. What's amusing is that same group of people can better absorb the prices being faced now. If I were taking up the game now instead of 1969 I don't know if golf would have really grabbed the hook it has on me now.

[Lou_Duran]

"If I were taking up the game now instead of 1969 I don't know if golf would have really grabbed the hook it has on me now."  Matt Ward
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Matt,

And you offer that as substantiation for government golf?  I guess I should be thankful that my benevolent superiors didn't perceive the benefits of acres of open fields and stables where I may have developed a polo addiction.  Just kidding, of course.

As to moving for golf, I was only half serious, though I've done it myself once and will likely do it again before too long.  

In contrast, my son, who enjoys golf and was a very good player in high school, won't even move across the Hudson so he can have a car and access to golf.  In his evaluation, the benefits of living in Manhattan far outweigh the negatives, so he plays only a handful of rounds each year.  Is it reasonable for him to ask NYC to build a golf course for like-minded folks within easy access?  I think not.

AGC,

I didn't mean to be condescending in suggesting that moving might be reasonable option for those who have a great interest in golf, but live in underserved areas.  You might be surprised how many people consider golf, weather, and other recreation/quality of life issues when deciding where to live.  My wife and I certainly did when we moved from Ohio to Texas, and will be again when we leave CA (paradise weatherwise, but little more).

Nothing in what I've written suggests that government does not have a role in our society.  Of the functions you have noted that are legitimate for government, national defense, protection from criminals, and enforcement of criminal and civil laws are the most important and have the most support in our founding documents.

I would have added the education of the masses, but the deteriorating results of the government monopoly in primary and secondary education, despite substantial increases in per-capita, inflation-adjusted "investments", give me pause.  At some point in time in the real world where making wrong decisions have real consequences, I was taught that pouring good money in after bad is not a very smart thing.

If government had a fine record in the golf business- why did Bethpage become a crime-ridden, rat-infested slum before the USGA came in with the cash infusion; why does it take six hours to play short, poorly conditioned munis in SoCAl?- and we had budget surpluses, perhaps we could be thinking in good conscience about providing golf as recreation to 10% - 15% of our population.  I don't think that we are there.

As to how democracies work, I never questioned the ability of government to gain powers which it should not have.  Indeed, that was the foremost concern of many of our founders.

We've discussed this before, but one man-one vote loses its legitimacy and effectiveness when a majority can vote itself benefits while saddling others with the attendant costs.  With nearly 50% of our population not paying federal income tax, we are very close to that point.

I've previously provided a few of the many admonitions and cautions from our founders regarding govenment usurping our individual rights and responsibilites.  I am not so pessimistic as some of my acquaintances who believe that our society as in a downward spiral to points unknown.  However, I will venture to say that with the unthinkable upcoming unfunded liabilities for Social Security, Medicare, Medicaid, and public employee pensions, the need for government funded golf will not likely cross our benevolent superiors' minds.

In my humble opinion, golf will adjust and survive.  As long as the game continues to capture our hearts and imagination, just like nature, it will find a way.

 



   
 

[Matt_Ward]

Lou:

Just a small correction to your post -- NYC has been a leader in bringing forward taxpayer-owned golf from many years ago. Van Cortlandt Park was the nation's first taxpayer-owned layout and thank heavens for that because the masses sure as hell weren't going to get any tee times at nearby private clubs in Westchester and other nearby locales.

Manhattan doesn't have any golf courses because of real estate prices.

Like I said before -- it's very easy for privately owned developers of daily fee courses to blame government when their own due diligence (lack thereof) is a big part of the issue.