History says for every municipal golf operation that operates successfully, there are two that do not.
City- and county-owned courses in Cincinnati and Hamilton County in Ohio as well as Chicago and Cook County in Illinois are just two examples of successful municipal golf operations. Then there is Portland, Oregon.
During the worst recession in decades, the U.S. auto industry was deemed "too big to fail", prompting a publicly funded bailout. On a similar, but smaller scale, municipal golf in Portland, too, was viewed by city officials as too big to fail and two years ago received its own infusion of public dollars. It failed anyway.
Unlike the domestic auto industry which revived quite nicely thanks to a $70 billion boost by taxpayers, Portland's five golf courses are virtually bankrupt today despite an $800,000 bailout by taxpayers in 2017, according to a report by city auditor Mary Hull Caballero, who said the city's golf system is "at a crossroads." The auditor did not take issue with those managing the properties, but had stern words for city officials whom she says have been "lax" in overseeing a public resource. She went on to say that changes were needed to ensure long-term sustainability of the city's golf program, and even assigned that title to her report.
"While Parks has taken steps to cut costs and increase the number of golfers, it is fighting a national trend of a sport in decline and past ineffective program management," the auditor wrote in her report. "Many of the factors that led to the funding shortfall in 2017 remain in place. To ensure the golf program is viable for the long term, we recommend that parks and recreation: develop alternative financial forecast scenarios and present them to city council for direction on how to proceed; negotiate contracts to reflect current conditions; improve contract monitoring; present contracts to city council for approval and renewal."
The lesson seems to be: run it like a business, not like a government entity, which is a difficult concept for some public officials to comprehend.
Portland has offered municipal golf for more than a century. Its five courses, Heron Lakes, Eastmoreland, RedTail, Rose City and Colwood, are intended to be self-supporting entities, but had been operating at a loss for three straight years when the city council infused the golf program with $800,000 in 2017.
The operating budget for the five properties in 2018 was $9.6 million, including more than $3 million in salaries and benefits and more than $1 million in administrative costs.
Portland's population, according to the U.S. Census Bureau, has climbed by 22 percent in the past two decades, from 529,000 in 2000 to 647,000. Rounds played at the city-owned courses is down 6 percent in the past five years and 46 percent in the last 25 years. About 2,000 golf courses have closed in the past 13 years, and a large chunk of those have been municipal properties.
Portland's golf courses are on the precipice of becoming one of those industry statistics that no one envies.
The operating budget for the five properties in 2018 was $9.6 million, including more than $3 million in salaries and benefits and more than $1 million in administrative costs, according to the auditor. Payment on the Colwood course that the city bought in 2014 is due in four years.
The city's golf program is now just about bankrupt, leaving city officials wondering what to do next. Vulnerable and strapped for cash is an unenviable position for a stable of courses that are expected to be self-sufficient and are struggling to attract golfers in a time of industry decline.
Wrote the auditor: "To remain self-supporting, the program must achieve positive results with the factors it can control to withstand factors outside its control. Despite making improvements, the program faces challenges that threaten its ability to increase revenue."
Four years ago, the city's golf program started outreach programs to attract women and minorities and also has incorporated Foot Golf, but the city doesn't have data on whether any or all of these initiatives are working.
Mandatory marketing plans and performance reviews have not been initiated. Maintenance contracts also require the city to pay for normal wear and tear and repairs, which the city has not done. And the list of deferred maintenance projects, like replacing old window and roof repair is growing while cash in reserve is shrinking.
Parks director Adena Long wrote a response letter saying: "While maintenance of aging facilities remains a challenge, the Golf Program continues to be a good investment for Portlanders. PP&R's courses consistently generate operating surpluses and provide valuable ecosystem services over 800 acres of open space and natural area."
The hands-off approach by the city has left all five courses to operate as separate entities, the auditor said, which has been to the detriment of the city golf program as a whole.
The auditor advises the parks department do a better job at negotiating and monitoring contracts, defining its golf program and says it will have to come up with all new (and realistic) financial forecasting.
To determine whether the city golf operation was being managed correctly and could be a sustaining entity, the auditor's office consulted golf industry reports, reviewed golf industry maintenance standards, interviewed staff, combed through all reports and financial documents, reviewed industry trends and consulted with industry partners. In short, the auditor's office did everything the city's parks officials should be doing on a regular basis, but according to the auditor, have not.
