ZACK HOOPES ¦ Staff Writer
(Oct. 5, 2012) A scant few days after the extended controversy over the city’s distribution of free golf passes, the city has again been solicited to divest itself, at least operationally, from the golf business it has established at the Eagle’s Landing municipal golf course in West Ocean City.
An email to city officials from Rob Waldron of Billy Casper Golf, dated Sept. 21, offers to discuss extending the company’s services to Ocean City. BCG is a golf management company, which operates by running golf courses for their owners, often local governments. The company is compensated either by a flat management fee or through some sort of profit-sharing agreement.
“I trust Eagle’s Landing benefitted from the early spring weather this golf season. Unfortunately we all know this was an anomaly. Municipal golf courses across the country have been fighting downward trends in rounds and revenue while faced with escalating operating expenses resulting in lower profit contributions to municipalities,” Waldron’s letter read.
“At Billy Casper Golf, we have been able to buck this trend with most of our municipal facilities through creative marketing of golf programs, attention to detail with respect to course conditioning, customer service as well as the implementation of cost controls.”
The essential value of turning operations over to an outside management company, like BCG, is an economy of scale when it comes to certain fixed costs such as booking systems, marketing, and human resources, Waldron stated.
The notion of turning over the city’s golf operations to a third party may seem attractive, given that Eagle’s Landing has become a political issue of late.
Three week ago, Councilman Brent Ashley traded barbs with Mayor Rick Meehan over accountability measures for the city’s complimentary play system. While the purpose of the passes – to promote the city’s golf tourism base by offering free rounds as giveaways for charities and official events – didn’t seem to be in question, Ashley seemed to be concerned how the city was vetting to whom and for what the cards were being given.
“There’s no accountability with these cards,” Ashley said at the time. He went on to cite the practice as another example “of the loosey-goosey accounting of taxpayers’ money” and the “country club attitude that has permeated city spending.”
Meehan contended that he had tightened up the system during his time as in- terim city manager. Last week, the council voted to codify Meehan’s policies, and some even stricter revisions.
That discussion was not the first, however, to imply that the golf course is worth more to the city as a wheel-greaser for public relations and political niceties than it is as an actual moneymaker.
But city Parks and Recreation Director Tom Shuster said that now would be a less wise time to turn operations over, given that the course’s business is increasing.
“Every few years, the Casper group will send out a letter saying that they’re up for consideration for this,” Shuster said. “But from an operations standpoint and from a bottom line standpoint, we’re actually better off running the golf course ourselves.”
Following a dip with the economy, Shuster said that Eagle’s Landing has been on the upswing for the past three years. Fiscal year 2012 saw 35,751 rounds played, up 3,101 rounds from FY11. Green and cart fees were similarly up $117,000, and pro shop and concessions sales up $27,000.
The golf course is run as a separate “enterprise fund” within the city’s budget, Shuster noted. “We have to propose a budget each year that is either balanced or produces some revenue in excess of projected expenses,” he said.
Final numbers from FY11 indicate that, from a total operating cost of $1,948,542, a slight profit of $77,917 was turned.
“A private operation can only do better than us if they do one of two things: either they drastically reduce their costs or increase their revenues,” Shuster said. “Typically, this means reducing staff or increasing rates.”
A move to slash staffing costs seems to be alluded to in the literature included in Waldron’s proposal. An article from “Golf, Inc. Magazine” on operational privatization stresses the reduced personnel hassles that come with less governmental oversight.
“The payroll cost structure is higher [for municipal courses] than incurred by daily-fee courses,” the article states. “Fringe benefits and retirement packages can aggregate up to 30 percent of base salaries. With higher labor costs, municipalities are often forced to reduce marketing and capital investment.”
Billy Casper Golf has managed the Ocean Pines Golf and Country Club since the fall of 2010, when it was brought on in hopes of correcting the $200,000 loss the course was operating under. But since then, the course has still been troubled by a lack of capital improvement funds and reportedly poor greens conditions.