London turns around its munis — or does it?

London’s River Road — and yes it looks pretty, but it isn’t much fun to play.

So the staff at the city of London, where I’m now living, has put a recommendation forward that River Road Golf Club, a horribly designed course that has haemorrhaged money for more than a decade, should stay open based on the best season for golf in recent memory.

That’s quite a turnaround, though I wonder if those new numbers tell the whole truth.

Let me explain. Here’s what was said about River Road in a report that suggested it be closed:

Notice that, even before the reserve money was set aside, River Road lost $176,032 in 2010. Then came 2011, with its horrible spring. The numbers weren’t any better.

Fast forward to yesterday. The city said rounds were up throughout its courses by 17,000. That’s pretty solid, even in a great year for weather. But that’s also spread out over four and a half courses. So it is almost 4,000 rounds per course, which is also very positive.

However, there’s this comment from a London city bureaucrat:

Scott Stafford, division manager parks and community sports, explained how a situation that appeared dire in 2009 now sees city courses running at a surplus and contributing to a revitalization of the sport.

Stafford said the plan staff, with the assistance of the golf community, saw a number of changes put into place. Among those changes, a renewed focus on customer service, improvements to all municipal courses, an increased number of rounds played and twice as many junior programs put into place.

However, it is the system’s financial health that shows the turnaround in the most easily understood terms.

“It has literally resulted in over a $500,000 turnaround from 2011. We were in the hole $250,000 some odd last year and we predict close to $300,000 in the good this year,” Stafford said. “All three golf courses are profitable before the contribution to reserves. We are predicting $293,000 to reserves for future life cycle renewal and golf course system modernization.” (source)

Pardon me, but this doesn’t add up to me. Two years ago the courses (Fanshawe and Thames) were losing almost $270,000, and they lost, by their own admission, $250,000 last year over all the courses. Yes, revenue of 17,000 rounds at an average of $30 would be about $500,000. That’s good news. But I just don’t think it is that simple. For starters, few golf operations calculate on rounds any m0re — they calculate on overall revenue. And 17,000 rounds — depending on where they come from (member rounds, discounts, etc) doesn’t necessarily add up to $500,000.

Interestingly, the 2010 report has Thames Valley at 35,186 rounds. The London Free Press said that number was down last year to 34,694, or basically flat. So that would suggest almost all of the new play was at the weaker two facilities — River Road and Fanshawe Park. That means both facilities added more than 8,000 rounds each last year. Sorry, but that doesn’t make much sense given the overall industry. Or at least I find it hard to imagine they were paying rounds. Maybe more member rounds — but that wouldn’t add up to $500,000 in revenue.

Now, one thing is clear — Steve Bennett, the pro who came in two years ago to run the municipal system — has undertaken some interesting initiatives. He’s forced members to spread out their play — and not limit it to Thames Valley, which is the best of the courses. That’s certainly spread revenue around and probably brought more paying public rounds to Thames. But I don’t understand — nor does the city full explain — how they bucked a trend seen industry-wide to declining play. How did they come up with 17,000 new rounds, where most places were up slightly year-over-year? If they pulled this off they should be speaking with munis across North America — most of which are seeing declining rounds. If there’s a secret here, I think many want to know what it is.

And the bigger question is this — if the London municipal system made some money — by my estimate, based on past figures (which indicate a $290,000 loss last year) it made a little bit of a profit during the best year in recent memory —  is that the new normal? They jumped 13% in rounds using the figures disclosed — and that’s a big leap. Can they expect that to remain there? I find it hard to believe.

But break even isn’t a bad place to be — so if this normalizes — and it will — then that’s not a bad figure. I don’t think anyone can argue that muni golf is a bad thing if it doesn’t cost the taxpayer anything additional.