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Recently, the National Golf Course Owners Association initiated some efforts to encourage municipally owned golf courses’ membership in their group. If we understand correctly, board action was taken to sanction what appears, on the surface, to be a change in direction. As usual, the circumstances are a lot more complex and worth some historical perspective along with a realistic look into the future.
By the time we’re done, we hope that this will present a balanced view of this move that is wise, pragmatic and should be welcome. It also should help overall golf industry performance as we strive to provide better golf experiences in order to retain the participation gains of the past 5 years.
If you go back to the mid-1950s, 70% of US courses were private. Of the remaining 30% that were open to public play; about 80% were municipally owned. The remainder were mostly “resort” locations. The mid-1950s brought a building boom (and a second boom in the 1990s) that has changed the mix 180 degrees – today, fewer than 30% of US courses are private.
The mix of development investment also changed. Currently, only about 24% of the public golf courses are municipally owned. However, the private sector money that fueled this mix transition has also been impacted by the supply corrections of 2006 – 2020. In looking at over 2,600 closures, over 80% were privately owned. Only 3% were “resort” properties and only 8% were municipals. We would suggest that this trend will mean that municipally owned courses will actually increase as a percentage of public access golf facilities in the coming years. The NGCOA deserves credit for looking down the road.
This may seem counter-intuitive for an organization that was founded to represent the interest of private owners; but things change. We’ve been fortunate to have provided guidance to 100s of privately and municipally owned facilities over the years. Years ago, when GolfWeek writers Brad Klein and Marty Kaufman called for data to support both sides of their debate over the value of municipal vs. privately-owned public golf courses; it was like being the ferry operator in the Outlaw Josie Wales — he learned to sing “Dixie” and the “Battle Hymm of the Republic” with equal enthusiasm.
Traditionally, the common chasm between publicly and privately funded courses started with the point that municipals were exempt from property taxes. Usually following were access to “municipal rate” financing and advantageous prices for insurance and other services as additional ways municipals enjoy a “home field advantage”.
While those are definitely real advantages; our municipal work usually uncovers a myriad of ways municipals are bound by governmental guidelines and directives that are not imposed on privately funded courses. In Illinois, for example, “Living Wage” rules apply in the public sector, but not for private businesses. Other examples such as employee benefit packages mandated for public employees that are not required for private employers are common.
There are more subtle impacts. In one study, a golf course was using municipal water with a relatively high cost; and we showed that they could amortize the cost of a private well and save a significant amount of money. The City balked at the suggestion when they realized they would lose their second largest water utility customer. As a side note, we started looking at water costs long before “sustainability” became a buzzword because we have seen the same situation at other courses.
Also, many municipal courses are operated as “enterprise funds” – an official government designation for municipal operations that generate revenue and surpluses. In short, this means the golf courses are supposed to be self-funded. However, municipalities are allowed to allocate expenses and often find ways to tap into surpluses. In multiple cases, we have found maintenance sheds assessed “maintenance, repair and replacement” surcharges equal to the per-square-foot rates applied to the rosewood paneled Common Council Chambers.
As municipal courses share in the benefits of our 5 year period of good golf industry performance; anybody who thinks that municipalities aren’t eying growing surpluses with the intent to bolster other community activities needs a reality check. It’s also important to note that the “siphoning” of surpluses through administrative charges have resulted in putting many municipal courses in the same place as cash strapped privately owned courses found themselves in after the generation long golf demand downturn of 2002 – 2020. Many Municipal and privately owned courses face the same issues of deferred maintenance and capital replacement needs.
To blur the lines even further; there are questions surrounding how to classify golf courses that are associated with non-municipal entities – and we have done extensive work on many of those. How do you segment the courses at University of Illinois, Michigan State and Rutgers? And what about the courses at private colleges that are also non-profit – Purdue, Colgate and even small St. Lawrence University, not to mention Stanford and Yale? If you really want to get confused, try to figure out the accounting of courses run by Athletic Departments that regularly comingle public funds with “booster” money and now NIL proceeds.
And then, what do you do to help in markets dominated by municipal courses? Los Angeles, Denver and Chicago are great examples. In our Golf Local Market Analyzer platform, we found it helpful to differentiate between municipal and privately owned facilities and show municipals as “green” with the shapes we use to indicate Premium, Value and Price segments within any geography. Take a look at the preponderance of red (private) and green in LA.
If these blurred distinctions aren’t enough to establish some commonality; how about the fact that they all share the need to cut grass, stage carts and organize the flow of golfers? In addition, when you get down into the trenches to work with the people responsible for these tasks; their overarching concerns over expense control, customer service and competitive pricing issues are shared by those course operators at Municipal, privately owned courses and all those in between.
As some political operatives found out recently; treating certain constituencies as monolithic groups can lead to unanticipated results. One of the major thought contributions Jim Koppenhaver made to the golf industry was his tongue-in-cheek comment “I think I’ll go play a good muni today”. He understood very early in his development of golf analytic tools that looking at municipal courses as somehow different from others was not consistent with how golfers decide where to play.
We would suggest that the one universal truth we can establish is that all of those who own golf courses are interested in the same thing – delivering value to their customers. We would also suggest that this common goal is essential to our continued success. How we collectively present our product will determine our ability to attract and keep people who choose to play golf because it represents a “recreational value”. Golf courses surely compete with each other; but, in the bigger scheme of things, we compete with a whole bunch of other activities for discretionary time and money.
As we have said on many occasions, the efficient delivery of good golf experiences is our biggest challenge – every golf course is facing a variety of pressures. We would contend that the more successful we all are in achieving that goal reflects positively on all of us. If you believe, as we do, that the NGCOA helps golf course owners be better operators, it makes sense that their services be encouraged for all owners.
Editors Note: Jay Karen, CEO of the NGCOA was interviewed on Colin Weston’s Modgolf podcast on October 16th. It’s worth the 45 minute listen for how he looks at the future. Just a warning: Jay gives a nice mention of Pellucid’s pioneering weather work.
The ModGolf Podcast: Fun is The Leading Message - Jay Karen, CEO at The NGCOA