I suspect that the town officials who needed to read the contracted report on the golf operations probably put little effort into doing so. The mayor once said, "I don't need to know the Codes, that is why I have staff." Following the same logic, one might assume that, “We don't need to read the report, the contractor will advise us what to do.”Below are direct quotes from the report:
Pages 1-4 discuss the current financial condition and the necessary upgrades/improvements.
"As a whole, the El Conquistador Golf and Tennis (ECGT) and Pusch Ridge golf facilities combined to produce total top-line revenue of just over $2.9 million in 2016, the vast majority of which comes from golf fees, member dues and Food and Beverage (F&B) sales. The on-site operating expenses at the facility totaled around $5.2 million resulting in a roughly (-$2.3 million) loss on operations (excluding other necessary costs such as capital upgrades and new investment in infrastructure).”
“The current financial condition is worse than most public sector golf operations in the U.S. where 67% of municipal golf course operations are able to cover on-site expenses, but not able to cover both onsite expenses and capital improvement costs (only about 33% can cover both)."
"The National Golf Foundation (NGF) has estimated a total of $5.1 million in required repairs over the next few years, in addition to the $6.0 million estimated by the Town for clubhouse and community center improvements. This investment also includes upwards of $170,000+/- in annual recurring items."
"While losses on operations are common in municipal golf, the depth of this loss is less common."
"The overall demand/supply balance for golf in the greater Tucson market is very unfavorable to golf courses."
Page 6 summarizes the cost to implement each of the options presented.
Option A - Stay with 36 holes - Total investment = $5,115,775
Option B - Reduce to 27 holes - Total investment = $4,639,115
Option C - Reduce to 18 holes - Total investment = $4,200,795
Additional to all above options is to convert the Pusch Ridge course from a 9-hole course to a 12-hole, Par 3 course called The Dirty Dozen. Total investment = $3,013,120
The consultants recommended Option B. To go with Option B and the Pusch Ridge conversion will take an additional investment of $7,652,235.
Page 7 mentions outright closure of all golf courses.
"Outright closure, although perhaps the most economically beneficial decision, is not necessarily a “cheap” option, as there are costs to prepare the property appropriately and there may be additional contemporaneous impacts that have to be considered (property values, tax base, resort relations, etc.). Further study is recommended."
Pages 67-68 summarize closing all golf operations.
"Full closure of the El Conquistador 36-hole operation would involve significant costs to remove managed turf areas and, at minimum, plant and establish revegetation desert varieties to the areas removed from turf.”
“Based on 146± acres of existing managed turf, we estimate approximately $2.5 million for turf conversion and establishment at El Conquistador using a per-acre cost of $17,000 (slightly less per acre than shown for specific options A, B and C; based on volume). Added to this cost would be approximately 20% for soft costs (design, engineering, etc.) and a reasonable contingency. Our opinion of probable cost is approximately $3 million.”
Page 68 discusses closing the Pusch Ridge course.
"In order to fully close the Pusch Ridge facility, we estimate that an average cost of $20,000 per acre be applied to calculate removal of existing managed turf with re-establishment to native desert vegetation. This slightly higher amount per acre is recommended due to significant slopes involved in the Pusch Ridge terrain combined with more intricate access than at El Conquistador.”
“Based on a total turf footprint of 40± acres, we estimate full conversion of existing turf areas to be approximately $800,000 plus soft costs and contingency of about 20%, rendering an estimated probable cost of near $1.0 million. Additional costs to fully close the Pusch Ridge facility would need to account for razing the existing (old, now abandoned) maintenance facility (estimated at $40,000) and disposition of the existing irrigation storage pond, which has not been estimated."
As I understand it, it would cost $1,040,000 to close Pusch Ridge, and $3 million to close the remaining 36 holes.
Going back to Page 7, the NGF states:
"Continued operation with rounds at or near current levels (under 50,000 total) will not lead to profitability for ECGT, and severe losses will continue, but become more manageable for the Town under any of the renovation options presented."
The most cost-effective option.
The report states that no matter what option the Town Council chooses, golf will continue to lose money. It doesn’t take a CPA to see that investing $4 million to repurpose 45 holes and END GOLF is a more cost-effective option than spending $7.6 million in upgrades to continue golf despite no guarantees of breaking even in another 5 years.
