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(Photos by David Kidd)

Course Correction

Once-popular public golf courses have become a strain on many cities’ budgets. Are municipal greens still up to par?
by | September 2019

Standing on the 7th hole putting green on the municipal golf course in Rockville, Md., it’s easy to take a deep breath and forget about the traffic-clogged roads, noisy highways and rumbling commuter trains that cut through much of this bustling Washington, D.C., suburb. It’s quiet at RedGate Golf Course. So quiet, in fact, that it’s easy to hear the crunch of lifeless, gray grass underfoot while strolling across the once-vibrant green.

The financially troubled course has been closed since December, when the company operating it for the city backed out of its contract three years early. Turning management over to Billy Casper Golf, which runs more than 100 courses nationwide, was Rockville’s last-ditch effort at keeping RedGate open. Over the last three years, the course saw a more than 50 percent decline in revenue to roughly $550,000 in 2018. Billy Casper drastically cut expenses—which hurt the attractiveness and quality of play at the course—but still wound up losing an estimated $91,000 last year, according to the National Golf Foundation. 

When the company sent its contract-ending notice, few were surprised. “The writing had been on the wall for a long time,” says City Manager Rob DiSpirito. This summer, after just a half-season of neglect, the course was already being reclaimed by nature. Vines curled around fences and up the clubhouse walls. Some fairways were still being mowed in the spring, but as of July they were left to grow wild. 

And as they do in nature, the vultures are circling on this prime, 144-acre open space just 13 miles from the nation’s capital. Dozens of ideas have been pitched to the city, many of them by developers who see an opportunity in an area with very limited new development space left. Other uses have also been proposed, including a needed school bus depot, a new county fire and rescue service facility, a light industrial park, an arboretum, playing fields, a campground, an amphitheater. The list goes on. In fact, just about every conceivable use for the space is under consideration—that is, except for a golf course. After 45 years, the city’s golf venture is over.

The story in Rockville is being repeated across the country as municipal golf courses are struggling amid a national decline in the sport. Golf courses were part of a nationwide building boom in the 1990s and early 2000s as municipalities and developers invested in the sport, often linking them to new housing developments. But over the past 15 years, golfing participation has fallen by 20 percent, from 30 million in 2005 to 24 million today. Now, according to the National Golf Foundation, there are more municipal courses than ever—some 2,800 across the country—but they are serving far fewer golfers than they once did. As a result, course costs are cutting into city budgets. One-third of public golf courses don’t make enough to cover annual operations. That number goes up when taking into account other expenses, such as debt and employee retirement benefits.

The supply-and-demand economics have forced difficult conversations in cities about whether taxpayer money should support a recreational activity that appeals to fewer people than a generation ago, is expensive to maintain and takes up a lot of real estate. Over the past year alone, more than a half-dozen cities including Aurora, Colo.; Detroit; and Houston have closed public courses, and even more may follow suit. Chula Vista, Calif., and Seattle are studying possible alternative uses for their city-owned golf courses. In Minnesota, where 40 golf courses have closed since 2005, Duluth is weighing whether to sell one or both of its courses, which are deeply in debt and in need of a $7 million upgrade. Louisville, Ky., is considering closing or selling four of its 10 public courses because they are straining the city’s already-tight budget.

As many cities across the country try to find the right balance between promoting economic growth, offering affordable housing and providing quality-of-life green space, golf course closures represent what might be the last big land grab in highly developed metro areas. Government officials are tasked with striking the right note for their communities—and not repeating mistakes of the past. “When the metrics all change, you have to be realistic,” says DiSpirito. “This is an opportunity to address some of our community’s needs and even some things that are on our wish list.” 

 

 

For decades, municipal golf course economics were pretty straightforward. Those who had the means and the social access could have the privilege of forking over the money to join a private country club. The rest of America could reserve a tee time at the local public course. “The municipal golf course was the path to playing the game for a lot of America,” says Jay Karen, CEO of the National Golf Course Owners Association. But starting in the 1960s, golf became more popular after broadcast networks began televising tournaments and championships. More courses began popping up that were privately built and run, but open to the public. That category now dominates the supply of golf courses across the nation, while private country club courses and municipal courses are very much in the minority. “That changed the dynamics,” says Karen. “Now if you want to play golf, the choices are huge and you have options up and down the economic spectrum, even without municipal golf.”

That change in the market, along with declining participation, is why many argue that cities don’t need to be in the business of subsidizing golf anymore. To be sure, few are saying that courses need to turn a profit. Most parks and recreational facilities operate at a loss; they are offered as community amenities. Access to them is either free or fees are nominal. Swimming pools are a classic example. If cities charged residents what it actually costs to maintain a pool, few could afford to go.

But golf courses are losing a lot of money. Even in Florida, home to some of the country’s most beautiful courses and nearly year-round golfing weather, some public courses are struggling. Sarasota’s city golf course has lost $3.7 million over the past five years, while Martin County is out nearly $6.6 million on a golf course it took over in 2015, according to a recent USA Today and Florida Today investigation. The investigation found that, overall, Florida’s municipal courses have lost nearly $100 million over the past five years. Many municipalities are doubling down on their courses, an indication of the importance of golf to the state’s economy. But that reaction is more an anomaly.

Most places are cutting their losses, and some are doing it in controversial ways. In Virginia, the small city of Buena Vista let debt on its local golf course go into default in 2015 even though the city had money to make the bond payment. The $9.2 million in bonds were issued in 2005 by the city’s Public Recreational Facilities Authority for its Vista Links golf course. Buena Vista had hoped its Rick Jacobson-designed course would boost the local economy. Instead the Blue Ridge Mountain town of 6,650 residents poured $4.15 million into the course’s operations after it opened in 2004. When the authority ran out of money to make payments on the debt a decade later, the city decided to walk away from the mess rather than cover the payment. The selective default led to a protracted legal battle that was resolved earlier this year when a federal appeals court upheld the city’s actions and dismissed the lawsuit brought by the bond insurers.

 

 

Back in Maryland, Rockville’s first reckoning with its municipal golf course came in 2010. The Great Recession had wreaked havoc on the city’s budget and amid all the cuts to consider, RedGate’s half-million-dollar annual losses floated right up to the top. “Many golfers were very angry about the idea of not subsidizing the course,” says Councilman Mark Pierzchala. After weighing various options, the city opted to contract with Billy Casper Golf to run the course beginning in 2011. The hope was that by folding RedGate into a national company’s portfolio, Billy Casper would make the necessary investments to get the course to turn a profit. “We knew there was a possibility they couldn’t make it work,” says Pierzchala. “But in the end, we figured it was our best shot.”

Eight years later, the prevailing market forces are now too strong to salvage RedGate. It’s surrounded by competition. Four different country club courses are just miles away, and a county-run golf course and driving range is about 10 minutes northeast. Unable to turn much of a profit, Billy Casper Golf cut down on maintaining the course, which led to a host of irrigation problems in the hilly terrain. A National Golf Foundation report issued after Billy Casper dropped the course found that it would cost at least $2.5 million to repair the drainage, irrigation, cart paths and other landscaping necessities required to restore the course to its heyday. In total, the city was looking at an investment of up to $3.7 million to get the course back in good condition. And that investment came with no guarantee that the course would then break even.

In June, the city council officially decided to consider other options for the course and took the first step in hiring a consultant to conduct a master planning process. Unlike in 2010, there was very little—if any—pushback. Instead, most council members view it as an opportunity. For Pierzchala, it’s a chance to finally get the $15 million windfall the city needs to restore a historic dairy barn and farmstead on the north end of town for use as an event venue. The city’s town center also needs new investment, he says. The councilman is hoping Rockville sells a portion of the land to a developer for mixed-use housing and retail. Others would rather invest in keeping the entire area as open parkland. The debate is sure to dominate the city’s elections this fall. “To me,” says Pierzchala, “it’s about what are you giving up to rescue this place.”

 


Rockville, Md., Councilman Mark Pierzchala

 

Experts say golf is a life cycle sport, meaning a player’s time devoted to the sport has peaks and valleys throughout his or her life. Karen points out that youth participation in golf is at an all-time high. Statistics show that participation for many of those players will likely drop off during college years, and then rise again in adulthood. Tee times might be few and far between during child-bearing years, but could become a regular occurrence again once the kids are old enough to play too, or have moved out. Municipal courses, where the average cost for a round of golf is between $30 and $35, will always play an important role in providing an affordable, recreational outlet for these players. But municipalities also believe they have a responsibility—much as they did with building golf courses in the first place—to invest resources in the kinds of amenities their residents demand. Across the country, golf courses are turning into parks with walking and biking trails, dog parks and soccer fields. They are being converted into garden apartment complexes, wildlife habitats and even wildflower preserves. Wary of responding to fleeting trends, municipalities are making these decisions with input from the community and an eye toward meeting master plan goals for public offerings.

For the most part, recreational features such as bike paths or athletic fields are relatively low-risk. It’s a pretty safe bet that 30 years from now people will still enjoy walking and biking. At any rate, such amenities tend to be lower maintenance than many other parks and recreation offerings. “For the most part,” says Marty Conway, an adjunct professor of sports management at Georgetown University, “places view this as investment in a new form of public infrastructure, versus trying to satisfy the market need of a population.”

 

 

But, he warns, some cities are falling into a new trap when it comes to putting public resources toward what might be a one-generation trend. Esports, or competitive video gaming, is a fast-growing international phenomenon that’s predicted to be a $1.5 billion industry by 2020. Thanks to online streaming services and live events, casual gamers have morphed into serious stars with the potential to earn millions in winnings and brand endorsements. Most of the roughly 380 million fans watch the gaming events without leaving home, but a new trend toward dedicated esports arenas could change that.

Some places are jumping at the chance to get in on the ground floor of these high-tech activities with “American Gladiator”-esque arenas that aim to marry the virtual experience of gaming with the social experience of watching a live contest. Last year, Arlington, Texas, became the first municipality to help build an esports stadium. Located in a renovated section of the city’s convention center, the $10 million project was a public-private partnership. Arlington’s renovation and equipment investments are to be repaid through annual lease payments, event revenue and stadium naming rights revenue, among other things. 

It’s likely just the beginning. Comcast has plans to build from the ground up an esports venue in the city-owned Philadelphia Sports Complex, which houses an arena, football stadium and baseball field. A retired British soccer player has announced plans to build an esports stadium in New York City. Just how much cities will facilitate these and other venues remains to be seen. “Clearly there’s a bubble,” says Conway. “We’re at the end of an incredibly level market, so investments seem easier for things like this. But at some point, when the money slows down and reverses, there’s not going to be a clear exit path.”

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