A sale is not imminent as Michigan’s largest city prepares to solicit bids for management of its courses—but revenue is down significantly from the previous two years and the head of the recreation department told the city council that “we’d like to sell some if we could, [because] it’s just not a good business anymore.”
Nearing the end of a golf season that brought declining revenues, a high-ranking official with the city of Detroit, Mich. said he would like to sell some of the city’s four golf courses, the Detroit Free Press reported. But a sale is not imminent as the city prepares to solicit bids for management of the courses, the Free Press reported.
The city’s revenue from its four courses — Rackham, Rouge Park, Chandler Park and Palmer Park — was $41,666 as of late October, the Free Press reported. That’s less than the $104,166 the city received in 2015 and the $125,000 it got in 2014.
Revenue dropped, the Free Press noted, because some of the money from golf went toward a delinquent water bill owed by Vargo Golf Detroit, which has managed the city’s courses for the last six years (http://clubandresortbusiness.com/2016/03/25/management-firms-extension-detroit-golf-courses-threatened-delinquent-water-bill/).
Charlie Beckham, who oversees Detroit’s recreation department as Mayor Mike Duggan’s group executive for neighborhoods, said it’s difficult for the city to make money from its golf courses because they are expensive to maintain and competition from other courses is heavy, the Free Press reported.
“We’d like to sell some if we could,” Beckham told the City Council’s budget committee on November 16. “It’s just not a good business anymore.”
But it does not appear the city is ready to put any courses up for sale, the Free Press reported. The recreation department’s interim director, David Miller, said the city is still researching options. A request for proposals to manage the courses for the coming year will be issued soon, Miller said in a statement.
The city had trouble this year trying to pick a new company to manage its courses, the Free Press reported. It was set to sign a ten-year golf course management contract in March with Motown Golf Management Group. But the City Council was uncomfortable with the deal because of the length of the contract and because Motown was a new company.
With time short before the courses were set to open, the city extended its contract with Vargo for a year rather than restart the bidding process.
Rob Vargo said his company would like to keep managing the city’s golf courses to take advantage of recent investments, the Free Press reported.
“The courses are in great shape, and the weather was good,” Vargo said. “We had a good amount of play.”
Shortly after Vargo received its contract extension, it was revealed the company had a $442,000 late water bill. Vargo said the delinquency has been taken care of with the city, the Free Press reported.
According to the recreation department, Vargo has entered into a payment plan to pay off the bill, and the Detroit water department “allowed Vargo a credit against their revenue payment to the city to pay against the water bills.”
The City Council’s second-ranking member, George Cushingberry Jr., took an interest in the golf courses after seeing tall grass that appeared neglected at the Palmer Park Golf Course in his west-side district, the Free Press reported. He asked for a report that included golf course revenues.”I thought we were going to hunt pheasants, the grass was so tall,” Cushingberry said at a budget committee meeting in October.
Miller said there was flooding on the Palmer Park Golf Course and the back nine had to be shut down for some of the year, the Free Press reported.
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