Reality Is: "Golf Courses Are Closing"

Greg Hanson is a noted sports reporter for the Arizona Daily Star. He writes about many sports. We know, from reading his articles over many years, that Golf is one of his favorites. This past Sunday, Hansen observed, as he has many times, that the sport of golf is simply in decline.

What follows is the entirety of his comment regarding what is the demise of yet another golf course. Greg asks, at the end of the article, "who's next?"

Our fondest desire is that it would be the Town Of Oro Valley Country Club, a facility that benefits very few at a high cost of the many.

Read Greg's article. Then, ponder what is best for you. For example, would you be better served if the land were converted to a beautiful linear park for all to use?  Then consider: How can you can get your message to the "Rock Solid Seven" who currently comprise the Oro Valley Town Council?

Source: Arizona Daily Star
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The Saga Of Dead Golf Courses (Part 2)

We have posted about the demise of golf as a sport a few weeks ago.   Last Monday, we posted part 1 of this two part posting.

We had heard that several Oro Valley Golf courses, in addition to the Hilton's, are experiencing financial difficulties.  Our analysis provided a detailed explanation of what was happening.

A reader sent us an article about the Ahwatukee Lakes Golf Course in Phoenix. It is yet another dead golf course.  The article is titled: "Closing a golf course brings tax penalties, angry homeowners". The article discusses in depth regarding the problem with the sport of golf and with golf courses in general.

The Ahwatukee Lakes Golf Course is closed.  When this course closed, the owner"...got slapped with a tax bill from Maricopa County for closing the course. ... owes $1.6 million in back taxes, according to the Maricopa County Assessor’s Office. That’s thanks to a 1985 statute that gives a golf course owner a tax break of $500 per acre each year as long as the golf course operates as a golf course. If the owner takes the tax break and closes the course, he or she must pay 10 years of the tax break plus interest and a penalty." Ouch!

The article continues, the owner "...let the course go fallow because the water bills were too high. Then he became embroiled in a years-long ongoing dispute with angry homeowners who’d paid premium lot prices to face the golf course. [The owner] wants to convert the dead golf course into homes, and the homeowners are threatening to sue him."

Homeowners are suing the owner.  A group called "Save The Lakes" has formed. They are property owners who live near the golf course. They are outraged that the course has been closed and left in disarray.    Save The Lakes is suing the former owners for monetary damage.

One claim is that the owner has violated the property's covenants, conditions and restrictions ("CCR").  The CCR, they allege, requires that the land be put back into its original condition.

A second claim is the essence of the law suit.  It alleges that the property owner has violated their responsibility to deal in good faith.

“Every contract, whether a contract for a purchase of a home or to loan somebody money, every contract has implied into it a covenant of good faith and fair dealing,” according to Tim Barnes, plaintiff attorney.   

“Good faith and fair dealing in a legal sense means the parties to the contract must not do anything that deprives the other party to the contract of the benefit of what they bargained for."

In other words, homeowners bargained for a golf course when they purchase property.  Suddenly, the property has been abandoned. Suddenly, the property owner wants to sell the property so that Pulte Homes can build on it.  This is not what the original property owners bargained for when they purchased their home.  (Source)

This disaster for the homeowners is one of the potential unintended consequences of changing the use of a golf course or closing a golf course, when that course was built as the centerpiece of a development.
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The Saga Of Dead Golf Courses (Part 1)

This is Part 1 of a "Saga Of A Dead Golf Course"   It is also the saga of what could happen to homeowners when things happen to the golf course.  It also continues a previous discussion we've stared on the demise of this sport and its impact on Oro Valley.

First, we start with an "HBO Real Sports" video on the demise of the sport.  The video is hosted by Brian Gumbal. In it, Williams visits a dead Florida golf course. According to the video, the course visited is now "...home to anything and everything that is not golf." He continues: "On average, 130 american courses have closed every year for the last 8 years."

This video, however, shows some innovative concepts that are being tested to revitalize the sport!

Dead Wild Hog On Dead Florida Golf Course

Then, there's the report last week by Greg Hansen of the Arizona Daily Star: "Tucson City Golf, which is now operated on a daily basis by OB Sports, reported last week that play is down 10.1 percent in the first four months of the fiscal year. Those are frightening numbers, but also reflect the general drop in golf play nationally. The Greens Committee reported that the five city courses are $802,000 over budget in those four months. Only 15,899 rounds were played in that period, compared to 18,648 last year."

This is not yet a story about Oro Valley. It is a glimpse, however, into what could happen when a golf course in Oro Valley goes dark or if its use is changed to something entirely different.  Our courses are in trouble.  Take the course at the Hilton El Conquistador, for example. It is poorly maintained. According to one golfer visiting from Tucson: "The bunkers are a mess. There's slump block and other stuff. It's a sorry sight." The members of the Oro Valley Country Club are negotiating a bail out deal with their lender.  Trouble now. Trouble ahead.

Golf Everyone? We Hope So

We've been reading a late the sport of golf in general is declining in popularity.  We've also heard that, several Oro Valley golf courses are experiencing difficult financial times. One is up for sale. Another will likely be acquired by its main debt holder.

A decline in the popularity of this sport has combined with challenging economic times.

Could this have significant impact on Oro Valley?

Apparently, Golf Is Not For Everyone

Oro Valley has 6 golf courses. All of these courses are 18-hole courses. There are a total of 40,414 yards of fairway.    All of these courses have homes built around them.  Our guess is there's probably 1,200 such  homes.   There's probably five times that many that are dependent on the golf course.   There are probably 6,000 properties that are directly impacted by a golf course.

So, if something happens to a golf course, such that it can no longer operate as a golf course, it's not only a problem for the owner of the golf course but also a problem for those live around it.

Private member clubs are finding it hard to survive.  More are being sold to or managed by private companies. So, the sale of Oro Valley's Stone Canyon Club, a top 100 club, to golf star Phil Mickelson's company,  Mickelson/Loy group, is no surprise.

Without doubt, Tiger Woods brought a level of excitement to the sport of golf that engendered an entire new wave of players.  But, for the past five years, Woods as been a non player.

The result of all this is that "... country clubs are lowering prices for membership and for nonmember rounds of golf." (Source)

There are in fact those who predict golf will continue to decline in popularity.  "It won't go away, but it will likely tread water over the next couple of decades."

Add to this the concept that research shows that Millennial's (those born between 1980 and 2000) are simply not as interested in sport of golf as previous generations.  "The participation rates of people aged 18 to 34 fell roughly 13% in 2013 from 2009, while their rates for other active sports like running rose 29%, according to SFIA data."

"For the fifth year, overall participation in golf fell in 2014 as measured by the number of U.S. individuals who reported playing on a course at least once, according to Sports & Fitness Industry Association data." (Source)

The reasons given for the decline is that the sport of golf takes a long time to play and that it costs a lot of money.   It is generally not a family sport.  So, in a town that thinks its getting younger, as Council Member Mary Snider has asserted, the sport of golf does not seem to be an attraction for younger families.

Golf Courses Are Money Losers

The decline in popularity has resulted in a decline of profitability for golf courses.    "Average net profit margins for privately owned golf courses and country clubs have been negative for several years." (Source)  These courses have a net profit margin of  -10%.  For example, in 2013, one public course in Ohio (Grantwood) cost $1.1 million to run but it only takes an review of $1 million.

All public of courses require subsidy by the taxpayers. Municipal golf courses are facing the same difficulties as private golf courses.

"The cost to maintain a municipal golf course is rising, and as many cities and parks departments feel the strain of tighter budgets, everyday expenses represent enough of a burden, let alone the improvements needed to be competitive. "Municipalities are having to make decisions," says Jeff Bollig, senior director of marketing and communications at the Golf Course Superintendents Association of America, who estimates that 2011 saw a net loss of 107 golf courses in the United States. "Do we operate this course at a loss and understand that it is a service we provide, do we break even, or do we try to make money that returns to the general fund?" (Source)

Add to all of this the fact that there are golf courses galore in Pima County so Oro Valley's golf courses do have competition.

You might ask: Why should I care?  

You should care because if an Oro Valley golf course goes dark it will substantially change that neighborhood.  Those lush greens; the cooling effect, the beauty will be lost.   One can imagine the outrage the public would feel if this were ever to happen.

Imagine, too, operating a golf course at a time when the sport is in decline and when it is projected by experts to continue to be in decline for many years.    How does one make money in a declining business? How does one even keep that business going?

Today, Oro Valley is very dependent on the success of the golf industry.

What do you think?
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