November 18, 2024
Dear Board of Directors,
At Wednesday’s Board Meeting, you are scheduled to approve the 2025 Budget and Fee Schedule. Before you do that, please take another look at the Golf Program.
The proposed 2025 Fee Schedule includes several changes to Golf rates and fees. Some of these are substantial fee increases. But nothing proposed will fix the decades-long problem that exists:
- Millions in subsidy (loss) every single year
- Steadily declining rounds of play
- Steadily increasing golf fees for the membership
The attached charts clearly display the issues graphically. In summary for the years 2010 through 2023:
- Over 17 million dollars in total subsidy (loss)
- Rounds played have declined from 292,000 to only 224,000 *
- Member costs per round have increased by 65% (daily pay) and 51% (annual pay) – 2010 thru 2023
*Even worse, according to the ‘History of Hot Springs Village,’ way back in year 2000, on only 7 golf courses existing at that time, 343,485 rounds were played.
That $17 million loss does not include any capital expenditures on the courses over that entire time period. It is also well known that the capital which was expended (see the chart) on the golf courses in every year has been woefully insufficient.
Think how much better that $17 million could have been used
Of course, the naysayers will claim that golf in the Village is supposed to lose money. Not so. Golf should at least break even or, ideally, throw off some cash to support the rest of our massive infrastructure. It is the only ‘amenity’ with the ability to do so. And it only makes common sense.
Supporters of the status quo will also tout the relatively new ‘stay ’n play’ packages as a panacea. However, total rounds played have not reflected this. What’s happening is:
Membership play has seriously dropped and is still declining
So, how to fix this? Obviously the various band-aids being applied over the years have not worked. Surcharges, flex pricing, annual deals, family plans, the Troon debacle, special deals, stay ’n play, and tournaments are some examples. Here are a few suggestions:
- First: Change who is actually in charge of Golf. The same people have been either directly managing or influencing the golf program for over two decades. They have to go. Their input eliminated. And yes, this is going to hurt some feelings. Change is never easy.
- Next: Simplify the fee schedule – There is no good reason why so many special deals need to exist. Super senior, employee, couple, marshal, 30-day passes, etc. Three and one half pages of the fee schedule for golf alone – please! All the special deals need to go. Every Property Owner Member should pay the same rate per round.
Yes, that’s right – Eliminate the Annuals Program for Golf
Everyone should pay the same daily rate. Get over the antiquated idea that POA needs an influx of cash early in the year to “get us through the lean months.” Old thinking. We have better financial controls now than we once did AND we now have seriously increased assessments to boot.
- Equalize the pricing for Members on all the courses. We all own them, so why should we, the membership pay more for one course versus another? Makes no sense and is unfair. Let outsiders pay more, course to course, if you must.
- Make 9 hole rounds exactly half the 18 hole price for green fees and cart rentals. It only makes common sense – pay only for what you actually are using. Half is half, period. This alone will increase nine hole rounds played.
- Keep: Morning and afternoon rates. Keep: Seasonal rates, winter versus summer. Keep: Afternoon rates. Add: Twilight rates. Add: An ‘early bird’ rate.
- Longer Term: We need to get back to owning our own golf carts rather than the last six years or so practice of leasing them. Unless there is a tax write-off for leasing – and there isn’t in a non-profit operation – it is always better to own your own equipment. The fools that implemented the leasing idea are now long gone and so should the leasing practice.
There are probably many more common sense ways to fix the decades-long problem of golf losing money in HSV. But the main idea is:
Get the Membership to Play More
Everyone who lives here should be encouraged to play. Now only a minority play golf. More membership play won’t happen so long as prices keep rising and are confusing, complicated and prohibitive to the casual, maybe beginner, maybe older, maybe less well-heeled property owner.
Furthermore, there is simply no reason why those die-hard ‘annual’ golfer members (they are the minority, by the way) should be allowed to play 200-300 rounds per year at something like 1/2 the cost per round of the occasional member player.
And finally, from a simple Economics 101 point of view:
It Never Works to Raise Prices when Demand is Declining
Thank you for your consideration.
Tom Blakeman
9-year property owner and golfer
tomblakeman@yahoo.com
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Well stated data driven market analysis
Kudos change antiquated failing business model , personnel, practices towards a better tomorrow.
See tomorrow, today !
Thanks Wes. I’ve kept out of the fray for a number of years now since the masses and those in charge seldom listen. But I was moved to come out of ‘retirement’ for this effort. No doubt this attempt will fail but at least I tried. You and I are two of the sensible few.
Sir,
Thank you. I hope residents will read your comments and that the board will consider your counsel.
Unfortunately, I don’t believe your analysis goes far enough in exploration of the underlying reasons why we are in this condition or what operating structures were incorrectly created before developer transition. Far too often, leadership and empowered citizenry only consider factors within their own tenure. Until we’re willing as a community-business to examine and correct or at least address how we got here, we will continue to execute bad practices.
The general golf subsidy may appear to some to be reluctant acceptance, but it is actually a loud and continuous insistence for sustaining engineering and product improvement necessary to protect the capital investment (as inadequate as you or others may assess it to be.) Within reason and in most business spheres as you no doubt know, this is a sound strategy. I have often publicly concurred and supported staff and board in this. Unfortunately the rolling and ever increasing subsidy was not applied rigidly to current holdings, but was dispersed laterally into the emerging excess capacity, which then in turn required even more subsidy. You accurately cite the year 2011 for metric purposes, but the system we’re still stuck in was put in motion with golf course expansion a number of years earlier. Further, I’ve never understood the intent of just stating the number of golf rounds. Comparing them year-to-year with no more analysis than subjective weather assessments is academically interesting, but not particularly relevant unless measured by the system’s total capacity. If we want to truly know where we are, if as some say we are a golf community, we must assess the total capacity of the total course system in a nominal year, then measure rounds as a percentage of that capacity, over the total cost to operate plus improvement costs to each course and the golf system as a whole. I think this number would show that we’re in much worse condition than we believe, because of wasted capacity. I think anyone reading this note with a manufacturing background will understand my analogy. We have to start thinking about the courses like a factory, starting and stopping lines as appropriate to meet demand or retool when necessary.
I do not believe the golfing community were the drivers (no pun intended) of the over-capacity bad practice. Certainly they benefited from it, many have vocally supported it over the last 20 years, but ultimately our subsidy dilemma can be traced directly to the developer’s creation of additonal and likely unnecessary courses in order to create maximum profit high-priced lots, as well as the downstream efforts of realtors and builders. Everything in HSV can traced in two steps to shortfalls in a sound development strategy. We’re far too random and all to willing to let profiteers steer the ship while we swab the decks. While we’d like to be a community and often espouse that we are, we are in fact a development business with one fiscal engine given precedence over all else.
You’ve many great ideas for interim fixes. Certainly making our courses more welcoming, more egalitarian, etc., may make up for some of the lost subsidies. I’ve made the same recommendations to staff over the years, not the least of which is establishing one cost for all residents and one cost for NRPO’s and visitors. Maybe you’ll have better luck.
But until we have a frank and open discussion about excess capacity – a forum of stakeholders, investors, residents both golfers and not, or a commission on “par” with the many private committees created in the past few years – we will simply move this problem down the road, passing along the debt and diminishing the quality of our courses. And no one, even detractors, wants that.
Thank you for indulging me and to the Gazette for providing a platform for comment.
p.s. I wouldn’t mind going back to playing and throwing some dollars in the kitty. Let me know when our courses are accomodating to rank and file residents. I may not be an adequate pro but I have my own clubs and some fancy shirts. 🙂
Thanks for your input. You, like I, are one whose ideas and fact based commentary are mostly ignored and I doubt my write up will get any recognition or traction. Oh well, such is life. Thanks for your valuable insights.
Good grief, here we go again with Tom’s “expert” analysis. He who plays with numbers can manipulate them. I look at 2023 v. 2015 (instead of 2010) and see positive things. What I don’t see are specifics on how to solve the “problem”. Fire the people in charge and hire somebody else. Who exactly would that be? Are you certain they would be better? Get rid of various fees and encourage members to play more – huh? In other words, raise prices and hope members will play more? Idiotic.
We all benefit from the golf courses being here and being in amazing shape. Even property owners who do not live on a course or play golf benefit with increased home values. Part of our monthly POA dues should go to the golf courses, just like they should go to other amenities that make this community such a desirable place to live. It’s not a subsidy.
The other usual refrain that comes with this discussion is the closure of one or more courses. That would only invite litigation as many property owners, not just those living on a golf course, could argue that their property value has been diminished due to the closure of said course(s). That litigation would take many years and a lot of money to settle (I know, because I used to do this for a living). $10 million and 8 years would be a nice round number for the closure of one course.
Enjoy life; enjoy the village. It’s a screaming bargain at only $110/month.
Welcome to the naysayers club. It’s always refreshing to hear from someone who can’t see the forest for the trees. By the way, no way do I endorse closing courses but of course some with low intellect do think this is something to consider.