City officials told Metro Council’s budget committee last month that all of the 10 city-owned golf courses were operating at a loss so far this fiscal year, continuing a downward trend of use and profitability that was draining general fund dollars and necessitated the closure and repurposing of four courses this fall.
Mayor Greg Fischer’s proposed budget that would initiate these changes has to be passed by June 25, but the council could amend it to keep the courses as they are — a choice presented at the budget committee as a debate over whether golf is a vital government service to maintain even when it is far from breaking even on its own revenue and expenses.
A closer review of Metro Parks and Recreation records over the past few years by Insider Louisville shows that while the operating loss of the city’s 10 golf courses grew to over $700,000 in the last fiscal year, three courses still operated with a profit — including one that Fischer named as potentially on the chopping block — while the city-owned courses collectively broke even as recently as the 2016 fiscal year.
Additionally, much of the revenue at city-owned courses never makes its way to the city’s coffers, as contracted golf professionals who manage the pro shop at each course keep roughly 90% of the revenue from cart rentals and concession sales.
That 90% figure remains an estimate, as Parks has not turned over complete records documenting total “club pros” revenue before the city takes its cut and the contracts documenting the percentage of revenue sharing at each course.
However, city records and contracts obtained by Insider through another source — in addition to an interview with the club professional for nearly 40 years at one course — suggests that the city typically brings in less than 10% of the total cart and concession revenue, which is often more than the green fees that the city collects 100% of and makes up most of each course’s revenue line item.
Rich courses, poor courses
According to data provided to the council by Metro Parks last month, every one of the city-owned courses was operating at a loss in the first 10 months of the current fiscal year, which collectively amounted to nearly $1.4 million. In that 10-month period of the 2018 fiscal year, the department showed the courses had a $916,533 operating loss, again with none posting a profit.
Metro’s budget director, Daniel Frockt, told the council members that the city’s golf courses had generally broken even since the time of the merger in 2003 until three or four years ago, when reduced play led to decreased revenue and climbing pension costs led to rising personnel expenses — with the newly growing deficits requiring new strategies on dealing with the properties.
“Long term, that’s not going to be a sustainable model,” said Frockt. “I think we’re going to keep seeing a greater and greater amount of general funds being drawn into golf.”
However, a review of Parks records for each course shows that while they collectively posted an operating loss of $700,446 in the full 2018 fiscal year — counting the profitable months of May and June — the numbers aren’t all gloomy going back a few years, especially for the few courses consistently reporting a profit.
According to a revenue and expense report for each course in the 2016 fiscal year obtained through an open records request, Metro Government received $2,729,700 in total revenue from the nine courses it owned at the time, which was just over $2,000 more than the courses’ total expenses.
Four of the nine courses reported more revenue than expenses that year, led by the $221,537 profit posted by the Charlie Vettiner course. Seneca, Shawnee and Crescent Hill also reported operating profits in 2016.
Along with Vettiner, those same four courses once again reported a profit in the 2017 fiscal year, though collectively the city’s nine courses reported a loss of over $281,000.
Despite the fact that the Vettiner course posted yet another operating profit in the 2018 fiscal year — albeit a much-smaller $17,168 — it is one of the six courses listed by the Fischer administration as being considered for the four closures this fall after the profitable summer season is over.
The other five courses at risk of closure are Crescent Hill, Cherokee, Bobby Nichols, Iroquois and Sun Valley, all of whom operated at a loss in the 2018 fiscal year.
The Seneca course — whose $650,000-plus revenue in each of these years far exceeded all other courses — posted a large operating profit in each year from 2016 to 2018, while the newly acquired Quail Chase course posted a nearly $20,000 profit in the few months that it was owned by the city in 2018.
The Sun Valley and Long Run courses both posted operating losses exceeding $100,000 in each of these three years, with the former growing to $209,813 in 2018. The operating loss of the Nichols course grew to $164,844 in 2018, while Shawnee went from a profit of $52,444 in 2016 to a loss of $138,917 in 2018.
Not counted in these figures are the budget numbers for the golf office, which includes revenue from the annual memberships at each course and the expenses of golf administrators’ salaries. According to Metro Parks records, this administrative office went from a $24,101 operating loss in 2016 to a loss of $69,691 in 2018.
While the operating loss of the city-owned courses grew from $281,249 to $700,446 from 2017 to 2018, that was not due to a decrease in revenue or the number of people in Louisville playing golf, but a dramatic increase in expenses, mostly on personnel.
The number of rounds played at the nine courses owned by the city in both 2017 and 2018 increased by 3% last year, and by 9% when factoring in the newly purchased Quail Chase course. Total revenue from these courses went up by $8,700 in 2018, but that was offset by a much larger $428,000 increase in their expenses.
Club pros and profit-sharing
While the bulk of the $2.6 million in revenue from courses comes from green fees, they also collectively took in an annual average of nearly $270,000 in cart rental and concessions sales revenue from 2016 to 2018 through a profit-sharing agreement with PGA professionals contracted to manage each course.
The city has not yet provided Insider with the contracts detailing what percentage of such revenue is to be shared with the city at each course and did not provide any details on how much revenue each club pro makes and keeps. In response to a follow-up open records request, the city indicated that additional time was needed to acquire such records because they “are held by an outside vendor that the golf pros use.”
However, other Metro Parks documents and contracts obtained by Insider going back to 2004 show that the city usually only keeps less than 10% of the total revenue from golf cart rentals and concession sales that are managed by the club pros, plus other services like merchandise and lessons.
Those figures were confirmed to Insider by Paul Schuchard, the contracted club pro at the Iroquois golf course since 1981, who noted that such pros also have significant overhead costs and personnel expenses to manage the courses’ pro shops, not just pocketing the money.
For example, a Metro Parks document showed that club pros took in nearly $3 million of revenue in the 2016 fiscal year, not including the $2.4 million in green fees that the city received all of. Of that $3 million — which mostly consisted of cart rentals and green fees — the club pros kept $2.76 million and gave $233,443 to the city, which amounted to a roughly 92% to 8% split.
Budget documents ranging from 2004 to 2012 show roughly the same split, with club pros keeping over 90% of such revenue, regularly surpassing $2.5 million.
A number of club professional contracts with the city document that in exchange for their management of the pro shops and maintenance of golf carts, they are to submit 10% of cart rental fees and concession sales to the city, as well as 1% of merchandise sales. Contracts for some pros at some courses like Cherokee were allowed to keep an even larger percentage of such revenue, while contracts for other courses like Seneca included clauses that would require the city to receive 12% or 14% of cart and concession revenue if the course exceeded a certain amount of rounds played that year.
The official Metro Parks budget for courses in the 2016 through 2018 fiscal years included line items for how much the city receives from club pros in cart rentals and concession sales, but does not indicate the total amount of revenue for club pros or what the overhead costs are for those club pros to operate those courses.
Asked why club pros are important to the city, Parks spokesman Jon Reiter said “they’re our ambassadors to the game of golf” in Louisville, noting that “they also operate as businessmen and have significant expenses.”
“In so many instances, and these gentlemen have hundreds of years of experience as PGA professionals – players, teachers and as the faces of their respective courses – they are responsible for introducing generations of golfers to the game,” stated Reiter, noting that for decades they and Metro Parks have organized youth tournaments and “maintained a commitment to junior golf in the area and to keep it going through programs such as the First Tee.”
According to a 1989 article in the Courier Journal, the contractual arrangement with club pros at each course used to be much different, as they were not only city employees with benefits, but the highest-paid employees in the city.
While Mayor Jerry Abramson had a salary of $58,101 that year, a report by the city’s budget office stated that Eddie Tyree, — the golf pro of Seneca at the time — earned a nominal salary of $1,400 but took in $120,000 annually from all of the cart rental and concession sales profits at the course. City leaders were looking to change how this operated and the article noted that in Indianapolis such club pros had to give the city a 10% cut of such cart and concessions revenue, which Louisville eventually adopted.
Mentioned in that article was Schuchard, then in his eighth year of serving as the club pro at Iroquois, where he remains today.
Schuchard confirmed to Insider that he gives the city 10% of cart and concession revenue from the Iroquois pro shop, but added that he receives closer to 84 cents of the dollar after paying the sales tax. He also noted that “there’s more to it than just collecting money,” as he has to pay for personnel and various types of insurance.
Based on the $37,000 that the city received from cart rentals and concession sales at Iroquois in 2018, Schuchard did not dispute an estimate that his cut from such proceeds — before his overhead expenses — would have been roughly $330,000.
Schuchard employs 16 individuals at the pro shop, most of whom work part time, while he and two other staffers are full time. After paying all of his personnel, concessions and insurance expenses, he said that if he is left with 30% to 35% of the revenue each year. “I’m doing real good, but that’s working a lot of hours and keeping employees at a minimum.”
None of the other eight club pros at the nine other city-owned courses returned a voicemail from Insider requesting to speak about their operations, though a club shop employee at Long Run who declined to give his name suggested that the club pro struggles to break even there.
Based on a similar 10% estimate, the club pro with the largest amount of cart and concession revenue in 2018 after the city took its cut would have been Kevin Greenwell at Seneca, with $636,305
Schuchard noted that five city employees work at Iroquois doing maintenance on the course, which is not under the purview of club pros. He noted that expenses at courses can fluctuate based on where golf administrators move certain city employees, noting that the expenses of Iroquois went down significantly last year when a highly paid maintenance worker was transferred to Crescent Hill.
Noting that Iroquois was on the list of courses that the city may close this fall, Schuchard was told that a decision on those four courses would be made in November. He questioned whether the city would be allowed to convert the land to something other than a golf course based on the conditions set by the family who donated the Iroquois property to the city, but Reiter did not respond to an email asking to confirm that.
Additionally, Metro Council passed an amendment to an ordinance last year that would require a majority vote of Metro Council before any golf course was closed.
National golf course consultant JJ Keegan was hired by Parks for $20,000 last year to conduct a financial review of the city’s golf courses and explore options for the properties as revenue declines.
While with the department told Metro Council last August that they would receive the results of the study the following month, Councilwoman Cindi Fowler, D-14 — the parks committee chair whose district includes Sun Valley and Nichols, both potentially on the chopping block — told Insider that she has not yet received the report, despite asking for information multiple times.
Reiter did not return an email asking about the Keegan report.
Richard Singer, a senior director at the National Golf Foundation, told Insider that Louisville’s contractual arrangement with club professionals is the traditional model of what municipal courses used from the 1950s through the 1980s as a way to keep labor costs down.
However, he said that cities are increasingly moving in one of two very separate ways: becoming more self-operational or contracting out all management and personnel.
While city-owned municipal courses have actually grown in number over the past decade as cities look to buy up and turn around struggling private courses, Singer added that this may make less sense for Louisville due to the relatively large number of courses it already owns.
Fowler strongly advocated for not closing any golf courses in the May budget meeting, comparing them to libraries in that they provide a valuable government service and affordable option for individuals to golf, even if they don’t technically make a profit. Frockt countered that libraries are different, in that there is no private actor willing to step in and provide a library service, whereas individuals can always go to privately operated golf courses.
Asked about the fate of city-owned courses like Iroquois, Schuchard said that there is definitely still a need for municipal golf in Louisville.
“I think it’s one of those things that is a drawing card for businesses and for families and for young people,” said Schuchard. “We have a lot of young people that play golf, and older people who are on fixed incomes that can’t afford country clubs. And that’s pretty much our clientele.”
Schuchard added that revenue at all courses has been greatly harmed by record rainfall totals over the past two years, but if the city is forced to close or alter the operating arrangement of courses, it may have to start with those that are the least trafficked.
“I think the city’s got bigger fish to fry than the golf courses,” said Schuchard. “They’re talking about laying off police and fire and all that, but if they did it from a business sense, I would think that you would go in and look at which ones are your highest-played courses and look at them for your revenue producers, and then look at the bottom courses and see what you could do with them.”
The Iroquois course ranked third in both revenue and rounds played from 2016 through 2018.
Schuchard noted the peculiar decision of the city to move toward closing courses when it just purchased the Quail Chase course from an operator in early 2018, despite it already being on land that the city owned and leased out — a sentiment that was also echoed by Fowler.
Noting the value of having city courses with green fees that are more affordable than private courses, Schuchard added that “if they have to raise it, they have to raise it. You know, it’s like when you go to the gas pump, sometimes it’s $3 and sometimes it’s $2.50. And when it’s $3 you still buy it.”
Schuchard is nearing his 40th year as the golf pro at Iroquois — he’s only the third golf pro they’ve had since first opening in 1947 — but he won’t quite make it there, as he is retiring at the end of the year.
“I’ll be 66 at the end of the year, and this is a young man’s game,” said Schuchard. “Getting up at 4 and 4:30 on Saturday and Sunday mornings… It’s time to turn it over to someone younger.”