Financial losses from Oro Valley's owned golf courses are incredible Council Member Mike Zinkin appeared on the KNST Garrett Lewis radio show last week. Zinkin discussed the golf course financial losses with the host who, at one point said: "This is incredible!" Listen to Mike's interview here. In the following Guest view, Zinkin lays out the facts regarding the huge financial loss the town has incurred in just a four months of town ownership.
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The recalled candidates, Mayor Hiremath, Vice-Mayor Waters, and Council Members Joe Hornat and Mary Snider desire to talk about the Community and Recreation Center. What they are not disclosing is that the 45 holes of golf that were also forced through the Town Council without proper vetting are experiencing tremendous losses during just the first four months of ownership.
These four council members want to limit the information they share with the public, at least until after the election on Nov. 3, because they are solely responsible for a decision that was contrary to the desires of the People. The data supporting the analysis that I am going to present are from town documents.
Fiscal 2015 May and June losses, the first months on golf ownership total $612,096
First, let's look at how golf fared in May and June of 2015. The Town budgeted to lose $364,821, but actually lost $612,096. This loss is 68%, $247,275 more than the town budgeted.
Oro Valley plans to lose $2,409,343 on the golf this fiscal year
The budget for the golf courses this fiscal year includes expenses to pay for items like payroll, employee benefits, employee related expenses, professional fees, advertising and marketing, repair and maintenance, operation expenses, cart and equipment leases, utilities (including water), insurance, fees, permits, licenses, and management fees.
These are fixed expenses. They are going to happen even if the town earns no revenue from golf. This fiscal year, it will cost $5,508,571 just to operate the courses.
Sources of revenue include fees for memberships, green fees, lessons, swim/tennis, merchandise, and food and beverage sales. The town's budget for total revenue is $3,099,228.
This total budgeted revenue is $2,409,343 less than the budgeted expenses. So, the budgeted loss is $2.4 million. This loss is just the base of what it takes to run 45-holes of golf.
This loss does not include the $75,000 the Town has budgeted for upgrades this year. Nor does it include the $1.2 million that was taken from the Town's Contingency Fund to start the Community and Recreation Fund. According to the Dec. 17, 2014 report to the Council by the Town Manager, an additional $1,282,500 is budgeted to be spent on additional upgrades in FY 16/17.
The financial loss for the month's of July and August was budgeted to be $578,196. The actual revenue for these two months was $132,182 less than budgeted revenue. The estimated total loss for these months is now $711,678. The total loss-to-date, including the loss from May and June, is $1,323,864!
So, how are we doing? I'd say: "Not very well."
In July and August golf course revenues were short of plan because of less rounds and less average revenue per round than budgeted. Obviously, the revenue budgets were way too optimistic.
September budgeted loss of $241,566 is way too optimistic
This month, the Pusch Ridge course will close from 9/8 to 10/23 and the Conquistador Course will close on 9/14 for over seeding. Yet, the town budgets far more rounds of golf played at a higher average cost per round than were played in July and August.
Oro Valley must stop the financial bleeding
The future does not look bright and the numbers are not pretty.
So, was the $1 million purchase of the golf course/Community and Recreation Center a smart decision? For HSL the answer is yes because they can keep the resort status on the back of the Oro Valley residents. For the Citizens of Oro Valley, the answer is a resounding "NO".
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