Local governments in the metropolitan Detroit area that are losing money on their courses should get out of a business that caters “to a limited number of residents who like the sport” and focus on core services, the newspaper said.
Under the headline, “City-Owned Golf Courses Can Be a Handicap,” The Detroit News published an editorial to express the newspaper’s opinion that local governments in the Michigan city’s metropolitan area should look closely at getting out of the business of operating courses “before they are forced out” by poor financial performance.
‘Municipally owned golf courses have been a source of pride for their communities,” the News said, “but they’ve catered to a limited number of residents who like the sport. Recently, they also have become a financial drain on many local governments. Golf is a nice game, but not so much so that taxpayers should strain financially to support municipal golf courses.
“In Metro Detroit, most of the municipal-owned courses are marginal operations,” the News continued. “And even if they are showing a revenue balance, the funds go back into the facility and not the local general fund.
The City Council of Royal Oak, Mich. has been learning about the difficulty of operating golf courses first-hand, the News reported. Royal Oak has decided to keep both its golf courses operating in 2014, but will form a committee to monitor their operation, it was noted.
“City Manager Donald E. Johnson says Royal Oak’s two courses are leased to a third-party company, which lost about $90,000 last year,” the News stated in its editorial. “He says the city hasn’t lost any money yet and wants the review committee to make sure that doesn’t happen. That’s a good call.”
The News cited the example of the city of Pontiac, Mich., which “got burned by its golf course.”
“For years the city operated a public golf course, and it continued to lose money until it was sold to a private contractor,” the News noted.
“Other communities aren’t quite in that dire position, but few have golf courses that are prospering,” the News continued. “Birmingham [Mich.], for example, showed a profit in 2013 for the first time since 2006 from its two golf courses. That money will have to go back into paying off bonds used for work on the courses. Troy [Mich.] also is reinvesting what profits it makes from its two courses into the facilities.”
Few municipal golf courses are putting any money into a community’s general fund, the News noted, while conceding that the example of Auburn Hills, Mich. “may be an exception.”
“Although it sold bonds to build its golf course, the debt will end in 2017, and [Auburn Hills] expects to put $200,000 a year into the general fund from profits,” the News reported. “The course also serves a second function for the city. It is part of the Auburn Hills watershed and is used for storm drainage.”
Shelby Township. Mich. owns the land to Cherry Creek Golf Club, but a private firm is leasing the property, the News reported. No public money is used in its operation, and so the lease funds go to the township.
“Generally, though, municipal golf courses are subsidized by all the residents while the number of those playing golf grows smaller,” the News said. “According to the National Golf Foundation, the number of golfers decreased to 25.7 million in 2011 from 30 million in 2005, a drop of 14 percent.
“At best, most municipal golf courses are breaking even,” the News concluded in its editorial. “Any profits go back into maintaining the course. Little money finds its way into public coffers to help finance universal services.
“Communities that operate golf courses should look closely at the balance sheets. For most, it would be wise to get out of this recreational business, before they face [the] dilemma [of Pontiac, Mich.] and are forced out.