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Kitchener backs away from privatizing golf courses

The city of Kitchener has backed off a notion of privatizing its muni golf courses after support from the public, according to a press release

The decision, based on information contained in an operational review by National Golf Foundation (NGF) and feedback from the public during a recent consultation, mirrors Kitchener Golf’s current blended model of operation. This model sees the management of the pro shop contracted out, and a concession lease agreement in place for the golf academy at Doon Valley, as well as the food and beverage functions at both courses.

Approximately 95 per cent of the public feedback received listed the self-operation and blended model as the top choice, indicating a strong preference for the city to be involved in the operation of the golf courses.

I’m also perplexed when city officials see that 95 percent of support comes in favour of the courses — those golfers, often seniors, who play the courses are always the most vocal. Just because people shout to support something doesn’t mean they are right, but politicians seem to take notice of these people. The same situation happened in London where they have a horrible muni costing the city upwards of $200,000 per year and the city won’t close it. If River Road in London were in private hands it would have been shuttered long ago. However, there’s more to the Kitchener situation than one course losing money.

Anyway, Kitchener is looking at other options, including a management contract, to operate the courses over coming years.

However, I did find the discussion of the course’s financial losses to be revealing. In the past, as was the case with most munis, the Kitchener courses pumped money back into the city. A story in the Waterloo Record pointed out the courses have put $3.7-million into city coffers over the years, a point typically ignored when munis want to make capital improvements, for example.

Here’s how NGF, a golf consultancy (from Florida — couldn’t they have found a Canadian outfit?) described the financial situation:

The NGF operations review was conducted partly in response to Kitchener Golf’s accumulated deficit balance of $1.75 million.

The deficit can be attributed to economic conditions, declining interest or time to play golf, high fees or inconsistent weather conditions – factors that have adversely affected golf courses across North America. The City of Kitchener has a dividend policy in which Kitchener Golf pays dividends to the tax base. Kitchener Golf has, for the last number of years, contributed additional excess dividends in the amount of $1 million; this has also contributed to the deficit.

The city’s dividend policy for golf requires that a dividend equivalent to the notional value of property and income taxes be paid to the city annually.

With this knowledge, the committee supported refunding the amount the golf courses have overpaid – a decision that will reduce the deficit to $750,000, which must be eliminated through the performance of golf operations.

 In other words, the courses really only lose money because in tough times they are still required to pay a dividend back to the city. Lost in some of the discussion was the notion that Golf North seemed very keen on acquiring Rockway:

There is at least one call for the city to sell the Rockway Golf Course. Shawn Evans, the president and chief executive of Golf North, emailed the mayor and city councillors encouraging them to consider the sale of the 77-year-old golf course.

“We are disturbed to see that the potential sale of Rockway Golf Course was not reviewed by NGF Consulting in its report,” Evans said in an email.

Golf North owns and/or operates many golf courses in southern Ontario, but not everyone agrees with its call to see Rockway sold.

One thing you won’t see in all of this is anyone from the golf industry supporting these courses, though munis should be the place that develops new players and helps grow the game. Where is Golf Canada in this, arguing that these courses, with their inexpensive green fees, should help add new players? The National Allied Golf Associations — the group of course owners, pros, equipment makers and such? Strangely silent. Could that be because private course owners tend to oppose publicly-financed golf?

At some point we need to decide whether munis are the equivalent of a hockey arena, which are also publicly funded. I don’t have a problem putting a little money into arenas, though no one in my family plays hockey or skates, and I think — within reason — the same point can be made for municipal golf courses.

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Robert Thompson

A bestselling author and award-winning columnist, Robert Thompson has been writing about business and sports, and particularly golf, for almost two decades. His reporting and commentary on golf has appeared in Golf Magazine, the Globe and Mail, T&L Golf and many other media outlets. Currently Robert is a columnist with Global Golf Post, golf analyst for Global News and Shaw Communications, and Senior Writer to ScoreGolf. The Going for the Green blog was launched in 2004.

2 CommentsLeave a comment

  • The always look selling facilities when the economy is poor and the selling price is at its low point. If they really want to look at the value and net worth they need to stop looking at a single year during a weak ecomony and on a year when it rained more than normal.

    How many years before did the facilities help the bottom line for the city?

    On the other end of things municipal golf courses are not there to subsidize golf, do what businesses does and raise to cover costs.

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