When the Town stated at the May 16 Council Meeting that outside golf revenues were way up through March 2018, this really caught my attention. Maybe the long promised outside play (non-member) golfers have finally arrived to save El Con golf. Per Staff, the Community Center fund is projected show a small surplus in 2017-18 mainly due to rising non-member golf revenues.The March 2018 Troon cash flow statement (available for review on the Town website) reveals that March 2018 was the best ever month for outside play since the Town purchased the courses.
Several questions are raised
1. Did you see backed up foursomes on every hole all afternoon every afternoon in March?
2. After this great result at El Con, how did nearby Vistoso Golf Club see the need to close their doors just two months later? Did the Community Center steal its golfers? What the heck happened?
3A. Per Troon projections for FY 2017/18 (available on the Town website) El Con would have 318 members and would generate $1,793,000 in member revenue and $5,940,719 in total golf revenue.
3B. Per Town projections for FY 2017/18, the Town projected about 225 members, forecasted $811,811 in member revenue and forecasted $3,455,214 in total golf revenue. But somehow Troon is two years ahead of their 5-year plan. What the heck happened?
4. The NGF Study said the courses were in trouble and significant changes need to be made. A year later with no changes made we find ourselves two years ahead of schedule with respect to breaking even in the Community Center Fund. What the heck happened?
It’s all in the details
Absent any other source, you simply have to trust the Staff report made at Council. Needless to say, we should not trust it without seeing all of the supporting data, most importantly the outside golf receipts for March. We’re all paying for it with our sales tax. Show us the receipts!
It's a Community Center bought for the Community and paid for by the Community. Where is the detail that supports the newfound success? If I were the Town Council, I would gleefully share the details.
Fudging the numbers?
To those of us paying close attention, Community Center golf as managed by Troon is evolving into a financial scandal. Despite the fact that the sales tax subsidy has now risen to $2.3M (a $300K increase from FY 15/16) Troon and Staff still seem to feel the need to fudge the numbers to make it appear that the Community Center fund is turning a small surplus in FY 17/18.
The rising sales tax subsidy is the only good news regarding golf. And this has nothing to do with golf operations. A review of the Troon month-to-month numbers reveals no significant operational improvement in three years other than some hard-to-fathom outside play numbers for early 2018. But why?
Election year shenanigans?
Perhaps it is because we are in an election year and the Council is now seeking to justify major golf course upgrades to voters unfamiliar with the details. The bad news is out there. Golf courses are closing all over Arizona and nationwide. What is Troon doing right at El Con that others seem to be getting so wrong?
It’s the Management Contract, Stupid
Perhaps it is because the Troon management contract (which pays them $144K/year no matter what their results) is eligible for renewal in 2019 for 15 years unless the Town cancels the contract before March 30, 2019. Maybe some future revenues are being moved forward to the present to show a near term positive trend? Perhaps it’s, let’s keep the Troon gravy train going however we can?
Another way in which the Troon Management Contract may be terminated is per section 6.03 Financial Performance. In this case, if the facility does not earn 90% of the projected Gross Operating Profit (GOP), then the contract may be subject to cancellation. However the Purchase Agreement allows Troon to make up any shortfall within 30 days of being notified.
Imagine, if you will
Imagine a situation in which this shortfall is much less than $144K. In such situation, Troon may be motivated to simply pay the shortfall. The point is the amount to be paid to make up a shortfall, if any, is based upon Troon’s reported results. We as a Town should be monitoring Troon closely to ensure the fees we are paying are truly earned.
Thank you Oro Valley for making your residents need to learn about local golf course economics. That used to be a Troon issue. They are, after all, the experts. Now its a Town-wide issue and might remain so for at least 20 more years. Now that the Troon Management Contract renewal is coming up, we all need to be vigilant to ensure that Troon is reporting honestly and truly pulling their own weight.
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Tim Bohen grew up in Southern California and moved to Oro Valley in 2015. He has a Bachelors degree in Physics from UCI and an MBA from Loyola Marymount. He is employed as a Systems Engineer. He graduated from the Community Academy in 2016 and the Citizens Academy in 2017. He was recently appointed to the Oro Valley Historic Preservation Commission and is a volunteer mediator with the Arizona Attorney General’s office. His interests include aviation and history, with his greatest interest currently being frontier life and how the West was settled.
