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Toronto municipal golf courses latest to struggle financially

Don Valley — part of the debate over the value of municipal courses.

Toronto’s munis are apparently the latest to face mounting financial difficulty. The city’s issue follows similar problems in Winnipeg, Kitchener, London and Thunder Bay, all of which have had to deal with financial shortfalls.

The Toronto Star points out that while Toronto’s city courses still make money, they make less than they used to — a drop of $700,000 in profits over five years:

Toronto’s five municipal golf courses could soon require taxpayer help if the city can’t keep profits from falling, says a report from the city’s auditor general.

“If the current trend continues, the golf courses over the next number of years will operate in a deficit position and as a result will require taxpayer funding,” the report says.

The courses are profitable but net profits dropped to $521,000 in 2011. That compares with an average annual profit of almost $1 million over the four years from 2007 through 2010.

The report notes that the city has never developed a long-term business and marketing plan. It suggested that such a plan hasn’t been a priority because the assets have been a money-maker for the city, overall.

And like London, which has been debating the future of money-losing River Road for several years, Toronto has Dentonia, a par three course that loses money annually.

One consistent money-loser, however, is the par 3 Dentonia Park course at Victoria Park Ave., north of Danforth Ave., with a total of $822,000 in losses since 2007.

The city should examine Dentonia’s future, the auditors say. But the situation hasn’t been addressed, possibly because profits from the other four courses have more than offset its losses.

What’s the issue? The report seems to suggest maintenance costs are part of the factor. That’s certainly been the case in other municipalities that have struggled with their courses. Often times maintenance workers at city-run clubs are unionized staff that make considerably more than typical maintenance crews. That’s the case in London, where high costs aren’t offset by paying golfers at places like River Road (though London’s other two clubs make money). Toronto Deputy Mayor Doug Holyday has it right when he says city staffed maintenance has to be reconsidered as it artificially reduces the money made by the courses.

But should munis disappear? Is Dentonia destined to become condos?

Toronto isn’t alone on this — look at the news out of Calgary, for example. Or take a look at the news in Ottawa, where there’s discussion of mismanagement of a city-run facility. Finally, in Vancouver there’s been talk of selling part of one of its munis for development. The Toronto issue is just the latest in a long line of munis under fire.

It strikes me that, within reason, a city needs to supply recreation to its citizens. In the case of Toronto, it is in the process of closing the only driving range in the city, and a course like Dentonia — in an area surrounded by high rises with lots of visible minorities — offers alternatives for youth and adults alike. Certainly we don’t have a problem paying to support arenas and soccer pitches — both of which typically take money out of city coffers. Often times traditional media takes shots at golf because it is perceived as being an “elite” game. But Dentonia — as anyone who has been there can attest — is far from a blue blood haunt. It is a low-key muni where people can learn to play the game and hopefully progress. It is also built in a ravine with a creek running through it — I doubt it could be turned into developable land even if that was the city’s desire.

And if the courses are making money — isn’t that enough? Wouldn’t it be good enough if they broke even? Show me a city arena that makes money. I doubt there are any. But golf courses have been cash cows for years — and municipalities feel that should continue.

However, I’d worry about Toronto’s vague plans to turn the finances of its courses around, though they do have some points about people not even recognizing the courses are there. The city also uses a very industrial looking website to “promote” the courses, with one small picture of each to show its merits. Seen a typical privately-owned golf course website these days? It’ll have more than a single one inch-by-one inch photo on it. Heck, the city website says Don Valley is “award-winning,” but the website has no place to tell you what that award is.

Toronto, like all cities, needs to start being smart about its munis. They are a valuable recreational source for city residents. But right now they are being run as if they were part of the parking authority or the water department, with websites and promotion and marketing that is bettered by waste removal billboards.

Time to wise up — and $700,000 in lost profits should demonstrate to bureaucrats that they need to make some significant changes.

 

 

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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.

8 CommentsLeave a comment

  • Oh, lets see, $700 million with the movement of the natural gas development the Orange fiasco, I know this is a provincial issue but the last time I looked Toronto was part of the province. These golf cources gives everyone young and old a chance to play golf at a resonable price, get a little exercise and a good social outing. Maybe we should waiste a little more and help these other endevours out.

  • It’s just a hunch, but I bet you’ll find out that part of the “lowering in revenue” is the increased cost to buy water (from themselves) at the courses that are without storage ponds on site.

  • If any of the city courses have the room, they would be wise to build a driving range. With the demise of the the decrepit Beach range, there is a need for a practice facility for golfers in Toronto to go to, which could also be a huge revenue opportunity for the city.

  • Robert, I’ll bet there are many opportunities to save $$ on these course operations. Hopefully the current adminstration will take the auditor’s report to heart and find ways to deal with the various competing interests that will inevitably come into play here. It would be a shame to lose a facility like Don Valley or Humber Valley which have been staples on the Toronto golf scene for 60+ years and started many many juniors (incl me) on their way to a lifetime of golf enjoyment.

    One other quick point…many people believe that a shorter time frame for a golf outing is key to turning around dropping participation rates. If the Dentonia problem is dropping revenue, doesn’t this suggest that this is a fallacious argument? Frankly, I have never believed this argument as a general rule…yes there are people who cannot play golf regularly due to other commitments but there are far more subtle and cutural reasons why golf is declining.

  • Ian, Don Valley recently made renovations to the 3rd hole which included a substantial storage pond.
    The closure of Beach Fairway driving range and poor management of the city’s courses really has me pessimistic about golf’s future in Toronto. There is so much potential at the city-owned courses for fun, convenient golf experiences that it’s a shame more profits from the strong years haven’t been reinvested into the long-term viability of these facilities.

  • People have no problems subsidizing arenas but there is a lot of opposition to golf municipal golf courses, even when they are profitable. I guess it’s the perception of golf as an elitist sport. Something, ironically, that the municipal courses help to combat. It isn’t politically popular in this city to set aside money for upkeep or promotion. Compare Toronto’s municipal courses to the ones in Mississauga, where they are willing to put in the effort. Compare their websites, too.

    http://www.toronto.ca/parks/golf/don/index.htm

    http://www.mississauga.ca/portal/discover/lakeviewgolf

  • Great piece RT. I’m surprised to read they make money (as most golf courses do not). It really is a ’rounding error’ in the grand scheme of Toronto budgets.
    I suspect your labour cost analysis is a major cost issue (and the long term liabilities of the clubs will only deteriorate as the city employee’s fully indexed pensions rise faster that revenue). Perhaps it’s as Ian suggests and it is direct cost back to the city. All other golf courses are paying huge water bills.
    What we need are solutions to find the $1MM hole:
    1) Let’s freeze the city payroll. I’m sure we’ll miss 10-15 employees less than the Muni courses.
    2) Let’s privatize some City services and put the City’s real estate portfolio into a REIT- The sale of the REIT would generate tens of millions of dollars and get it off Toronto’s balance sheet. Once executed, you would need fewer City workers.
    3) RFP it out to private firms under the qualifier that the courses must stay public. The new O/O can bring in his own crew and pay them regular wages. Do you see a trend here?
    I’m sure collectively your readers can come with 100’s of solutions. Bring ’em on.

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