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For Palm Coast’s Money-Losing Golf Course, Grass Is Always Greener On Other Side of Promises

| April 14, 2015

One of the many images KemperSports, the management company running the Palm Harbor Golf Club, used this morning to illustrate course improvements. See below.

One of the many images KemperSports, the management company running the Palm Harbor Golf Club, used this morning to illustrate course improvements. See below.

For five years, KemperSports, the company managing Palm Coast’s Palm Harbor golf course, has promised the city council that it was making improvements, reaching out for new players, fostering things like Internet initiatives and “loyalty programs” and new pricing strategies, with promotions targeted at non-residents. It used the word “outreach” a lot.

And for five years, the operation has been losing money, requiring the city to pump in tax dollars by $100,000 a year or more close the deficit. Same story at the city tennis club, but not as terribly. The losses have been wearing on members of the city council, particularly on Bill McGuire, who’s been asking for an update from the Kemper front since the council renewed its contract with the Illinois-based company, and since it acquired its third local general manager in five years in the youngish, assertive Brad Adams.

Adams appeared before the council Tuesday morning. And again, there was a series of of bright-sounding stories about Kemper’s new initiatives, improvements to the facility (which sounded as if there’d been no improvements previously, though there had), new programs to target new players. Adams used the word “outreach” a lot.

There was one key difference with this presentation. Jim landon, the city manager, who always has his teams rehearse their presentations with him before they go before the council, had instructed Kemper management not to do one thing: not to make projections. Not to talk about breaking even.

It did go over well with three council members, who were left asking questions, starting with what Kemper was projecting to get the operation out of the red. That was the point of the presentation McGuire had asked for. And Landon had told the company not to make such claims, even as, once again, Kemper presented numbers still soaked in red: a projected deficit of $130,000 for the year at the golf course, based on the first six month’s losses—only a slight improvement over last year—and a projected deficit of $75,000 at the tennis center, also a bit of an improvement over last year. While it’s increased walk-on participation, it has lost members.

The numbers of rounds played at the golf course are still flat. The costs to players, because fees have increased, are higher. Expenses are up, too.

The council did not take well to the lack of projections, or even to the look of some of Kemper’s presentation, down to one council member ridiculing the sort of deceiving images used in the powerpoint, such as before and after shots of brown and green grass, designed to imply happy improvements (as opposed to indicators of a dry summer as opposed to a wet spring). The council member later backtracked a bit and spoke kindly of the presentation as a whole, missing information notwithstanding.

Today’s presentation, Landon said, lowering expectations at the beginning of the meeting, was to “see some of the positive trends we’re seeing with the numbers, even though we’re not focusing on the numbers.”

“Speak for yourself,” snapped McGuire, a numbers guy foremost, immediately signaling that he was not going to play along.

Trying to change the narrative of loss by lowering expectations and forbidding further projections about breaking even.

Adams presented. He spoke of the many new faces at the golf operation. “There’s no doubt that over the past few years the property may not have had the playability, the conditions that it once had, so our main focus this year was to improve upon that,” he said. Management has been seeking to improve the maintenance of the grounds through such things as “consistent green speeds,” consistent mowing, renovating bunkers, and enhancing the look of the place, including the fringes of greens that used to get ragged.

A key initiatives is to draw in more women, appealing to the notion of golf as a social occasion, and to draw younger players in. “We always hear different reports about the golf industry in general has been struggling,” Adams said, “more golfers are leaving than entering the game. All that may be true to some extent, but our belief is that the reason why new golfers haven not come out to the game is because there hasn’t been a really strong effort in community outreach programs, especially when it comes to the schools.”

Kemper is planning to set up a golf program in schools called Giant Leap Forward, with Wadsworth Elementary as its pilot school. Its hope is to extend the program to all 12 schools, through fee-based, after-school five-week programs. The Level 1 segment of the program would be held at each school. Level 2 and 3 would be on the golf course. But those, too, would be fee-based. Such fee-based programs have generally not have broad success in economically stressed places like Flagler. But Kemper has done this in another market, Adams said, creating a “fun” environment and drawing out younger players to feed into the game and help it grow.

Brad Adams

Brad Adams

Lack of school “outreach” may have played a role in golf’s decline, in part, but it masks a broader reason the industry has been in the dumps. Like an echo of the housing bubble that burst in 2008, golf experienced its own bubble—and its own, slower-paced bust. Between 1986 and 2005, the National Golf Foundation reported, the industry added 4,500 courses, or more than 230 courses per year. The boom was led by what proved to be an inaccurate assumption that the country had a shortage of golf courses to satiate the playing needs of aging and retiring baby boomers.

Aside from building an oversupply of courses, the industry never figured on changing habits, both among boomers and younger people, to whom golf was no longer of as much interest as it had been to the previous generation: golf is time-consuming, and the Eisenhower-era notion of dads spending hours and hours away from their families to be on the golf course doesn’t go over well in today’s families. For years, the sport has been losing core players, those who play eight times a year or more. The fact that the sport doesn’t require helmets—that it’s considered safer than  many other sports—hasn’t led to a surge in youth interest.

“The slow correction that is now occurring is very much overdue and necessary, to help return the golf course business to a more healthy equilibrium between supply and demand,” Joe Beditz, the foundation’s CEO, said in 2011, a year that saw 157 golf courses close, as opposed to 19 that opened. That lopsided trend isn’t over. In 2013, just 14 courses opened, and 157 closed. In 2014, it got worse: 174 18-hole courses closed permanently, according to the foundation, and just 11 new ones opened, though 91 were also renovated in hopes of attracting more golfers.

None of that historical perspective was in Kemper’s presentation. Landon told the council he didn’t want more stories about why golf is in retreat, more complaints about the weather, more retreads of previous presentations. He wanted to change the narrative—and change expectations by first eliminating expectations and focusing on what Kemper was doing now.

But Kemper’s presentation as if begged the questions Landon didn’t want asked.

“City Council made a leap of faith when we renewed our contract with Kemper,” Mayor Jon Netts said. “Dealing with the golf course, you have made all kinds of changes, new initiatives, improved maintenance, so on and so forth. Why wasn’t that done by Kemper all along? Why was the course allowed to deteriorate.”

“I can’t speak for what’s past,” Adams said. “I wasn’t here personally. But from what I understand we operated to a budget, and that budget was not sufficient to the quality or the standards of where we’re going today.”

Jim Landon. (© FlaglerLive)

Jim Landon. (© FlaglerLive)

But it’s just as true that year after year, as Kemper has made its periodic presentations to the council, it has also made similar assertions of significant improvements. There’s never been a year—nor a Kemper presentation—when the message was: “we’re static.”

Then Netts asked the key question Landon didn’t want asked: “One year does not a trend-line make,” the mayor said. “If you were to project into the future, are these changes going to bring us closer to break even, or is that pie in the sky?”

“I told them not to give you projections,” Landon said, “because every time they gave us projections last five years, they were never right. And I said it’s time to quit blowing smoke, and quit doing projections. Let’s get a year under our belt with the new programs, see how that goes, and then with more realistic numbers, start making projections.”

“Without that information, all this is nothing, I mean, honestly,” council member Steven Nobile said. “My questions are this: what are the projections. That’s the first thing. You made changes, what do you anticipate those changes doing?”

There was no clear answer.

“There were very specific direction that we were no longer going to have this be an enterprise fund. We were going to try to make money, but we were no longer going to make those kinds of business projections,” Landon said. An enterprise fund is a segmented government division that is designed to support itself financially (like the city’s utility department, or the county’s airport). But it’s not quite accurate that the council directed its administration to fold the golf course and the tennis center into its parks and recreation department, rather than keep it as stand-alone enterprise funds. Landon presented that plan to the council, recommended it, and got approval for it. It was not a council-driven initiative—just as, today, it had not been a council initiative to ask Kemper not to make projections anymore, but Landon’s. And McGuire sharply corrected the city manager on that score.

Bill McGuire (© FlaglerLive)

Bill McGuire (© FlaglerLive)

“Mr. Landon,” McGuire said, “the city council has never said, to my recollection, that, well, we’re going to just roll with this and hope it does good, but we’re going to stay with it. Every successful business, every one, and this is a business, we sell this service. Every successful business has a profit plan. You may not hit it. But you have to have measurable goals that you reach for, and they have to be quantifiable. I would like to see an analysis, financially speaking, of, all right, in the past, the golf course lost money, and here are the fiscal measurable for all the factors of that golf course. This one is OK, but this one, we’re going to have something about, and this is what we’re going to do. There’s a reason why our golf course is not, from a business standpoint, doing better than it’s doing, and it is not all tied to how well the grass grows. And by the way, I’m not sure that a picture of the grass at the end of a hot summer in September is measurable to a nice, long, rainy winter with the lush grass that’s growing in April. But that’s a separate issue.”

Nobile was incredulous at Kemper not knowing “what potential market you have,” if it’s Kemper’s (and the city’s) intention to keep the course as a “premier” venue. “I’m just hearing we build it, and hopefully they’ll come.”

Landon said the archives are full of Kemper presentations with projections that led nowhere. It’s time, he said, to take the golf course as a “community asset” first.  But there was nothing new in that, either: the city has never not looked at its golf course as an asset. That’s why it has kept subsidizing it by the hundreds of thousands of dollars every year for the past five years.

“We showed the slides of how many golfers there are now versus before,” Landon said, “the older generation and all that, and the numbers show that we shouldn’t be in the golf business if we’re trying to break even or trying to make a profit. That’s the bottom line. So now the question is, do you want to maintain a recreational facility? Indian Trails Sports Complex, we use tax dollars to keep that going. Now, do we get a return on investment through the cash registers and those types of things? I would say that the golf course and the tennis center, one of the reasons some people move here and the cash register rings and we have visitors etc., that’s not in our numbers, because those are numbers we can’t identify.”

“Indian Trails Sports Complex generates a huge amount of money for the local, retail, and it’s measurable, and we measure it every month between the Chamber of Commerce and the TDC,” the Tourist Development Council, McGuire said, “we know where it’s successful; and where it’s not successful.”

Council member Jason DeLorenzo, too, was skeptical: even though more rounds are being played and golfers have been willing to pay more at the door ($5 more per round, on average), they’re not spending as much once they do get in the door. “So what’s not working?” DeLorenzo asked.

There was no clear answer.

“I like the presentation, I like what you guys are doing, it’s definitely making an asset more valuable,” McGuire said, “but call me an old curmudgeon, I still want to see a goal. You may not hit it. But if you don’t have one, you ain’t going to hit it.” He added: “Those of us that are sitting here speak for the people that elected us. The people that elected us are not happy with the performance of the golf course, because keep in mind that there’s more than 78,000 citizens that we represent, a small fraction of those play golf. Now, the people who play golf down there love it. They love Kemper. They’ve got red t-shirts that say so. But I have to go back and tell the people that live in the B Section hey, this is why we’re doing what we’re doing, and I have to be able to put it in perspective and say, the new Kemper management that’s here has a different direction, a different plan, and they’re showing some results here. As long as I can say that—I mean, if we ever got to break even, there’d be dancing in the street, because a lot of people don’t understand and don’t look at our golf course as a city asset like the mayor does. They look at it like a boat. People will say, what’s a boat? It’s a hole in the water you throw money in.”

Netts, as he often does when signaling the end of a discussion, summed up the matter after 65 minutes: “In summary, at some point, this city council or the next city council or subsequent city council is going to make a decision,” the mayor said. “Obviously we’d love to break even, we’d love to make money. That may or may not happen. You’ll report back on the new initiatives. But at some point, city council is going to say: if the golf course does not break even, we’re going to a, sell it, if we could find someone willing to buy it, b, close it, you’re willing to accept that impact on the community, or c, we’re going to continue to subsidize it as part of our recreation program. There aren’t a lot of other options.”

But it’ll still be the council’s decision as to “how much we’re going to subsidize it,” he said. His hope, Netts said, is that “you’re going to start seeing a trend line.”

The council expects to see Kemper make another presentation in six months.

KemperSports Presentation on Palm Harbor Golf Club and Tennis Center (2015)

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18 Responses for “For Palm Coast’s Money-Losing Golf Course, Grass Is Always Greener On Other Side of Promises”

  1. steve miller says:

    The Town should not be in the Golf course or Tennis club business to begin with. Sell them both to a for profit private company and let them sink or swim….The 95% of the tax payers who never use either of them should not be picking up the tab year and and year out..

    • Jim Lathan says:

      Having been a member for many years, and no longer am, mainly due to the fact that the Kemper model does not allow for true memberships, I feel that the return to a Semi-private course with outside play allowed would promote the direction that the city would like to see the course go in. There are no member programs that encourage weekly play and use of the dining facilities. If the course was promoted as a Semi-private course membership would increase, play would increase, and it would also return to a destination course for snowbirds and also youth programs . Just my thoughts

  2. DwFerg says:

    Interesting perspective on how to run a business. If the city knew how to make a profit or at least , break even, they would manage it themselves ala swale reconstruction and other landscaping project initiatives brought in-house.Golf was once a bigger driver for Economic Dev’l long before the city found sports tournaments as a source of Bed tax and other revenue.Perhaps the critics of the subsidized golf course would prefer the course to go the way of Matanzas…..nobody sees value in owning golf facilities unless you have lots of golfers paying decent greens fees. All other blather is merely that, Kemper or Casper cannot get more oink out of the pig apparently, Palm Coast simply needs more players. For other insight, check out the P/L @ Pine Lakes and Cypress Knoll…They are in the same quandry financially…Also check out the P/L at Waterfront park , Holland Park, Indian Trails maintenance, The swimming pool etc. Amenities drive the community energy and quality of life, continued audit of the Golf course will keep Kemper focused on optimization of facility. My two cents, I support the golf course along with all the residents in the “C” section whose real estate values are tied directly to its survival.

  3. m&m says:

    Raising prices DO NOT increase play. The coures is poorly designed and the course wants to cut down some trees to enhance grass growth but the city says no.

  4. Joe says:

    Don’t worry, I am sure that the city will come up with a scheme like a new tax or something of the like to dig into your pockets to cover this loss, Landon’s comments sure show who is really running things in PC!

  5. Brad W says:

    The bottom line to that course is foot traffic. The answer to that problem is actually pretty simple for a course like Palm Harbor . . . introduce new options. The one great option that has been showing up on golf courses (and been pretty successful too) is Foot Golf. It’s not a huge deal to fit the option into the course and designate times for play. I strongly feel that if that option of play was implemented you would see that course go from deficit to profit in less than one year.

  6. Rob says:

    I could write endlessly about this issue. I almost forgot, don’t overlook that so called 1,000,000 “loan” Kemper is supposed to pay back.

    First this investment was doomed from the start. To use one of Bill McGuire’s phrases, it was a vocal minority, who badgered the town council into this blunder. I don’t believe the town owns the entire course, there was talk that there was a deal cut between the developer and the town via Jim Landon and the developer still has rights to portions of the course.

    Did anyone study the economics of the golf course industry in the US before investing the taxpayers money? There is a valid reason that golf course operators, investors and owners were attempting to get out of the golf course business. There was a fire sale of golf courses, and greens fees in this area were a pittance of their normal rates. Duh, there was a reason for low greens fees and golf courses being placed on the market. Why do you think the Matanzas golf course never opened? Why did those investors who bought the Grand Club lease out Pine Lakes? Not because it was making money. Jim Landon was using a number of 40,000 rounds of golf to break even. He can keep dreaming because it will snow here in July before 40,000 people play golf in one year at Palm Harbor. And not one council member questioned that number, they just bought it hook line and sinker. Lewis, Moorman, Netts, DiStefano and I think Meeker, not one of them said hold on let us take a closer look at those figures. Golf course play decreases 40-50% for 4 months in the summer so there is a deficit to make up in the other 8 months. In addition there is limited daylight for 5 to 6 months, so factor those numbers in. In short 40000 rounds is not going to happen. And the town council is paying a klutz close to 200 grand a year to tell a vendor not to speak of numbers during their presentation of how they are going to return to profitability.

    Ladies and gentleman of the town council and anyone else who can read, there will be no profitability and anyone telling there will be is selling you a snow job. They can speak of outreach all day long. You should have shown Kemper the door and selected the management company who promised to underwrite any losses. The city would be no worse off and could be better. And while you are at it show Jim Landon the same door.

    And one last note, for the 200 grand the citizens are paying to subsidize this losing effort one would think that Kemper would at least put some sand in the practice sand trap because it is not sand it is dirt. So some golfers hit a few balls out of the traps on the course and if the club pro sees a person hitting more than one ball out of the sand traps on the course he cries like a baby.

    I am not biased against golfers I am a guy who used to play golf every day and would play in 30 degree weather. This situation is nothing but: wasteful, foolish and stupid.

  7. Groot says:

    “a projected deficit of $130,000 for the year at the golf course, based on the first six month’s losses—only a slight improvement over last year—and a projected deficit of $75,000 at the tennis center, also a bit of an improvement over last year.” NO MORE. Dump that tennis center and get out of the golf business! Why was the Kemper contract renewed again? There is no excuse for this. The city does not know how to effectively contract with and monitor the performance of private entities. The golf course is a crowded mess. Due to slow play, we no longer play there. Grand Reserve has rounded into a course that is ten times the course that Palm Harbor will ever be and pace of play is acceptable. Palm Harbor’s lay out is awful. It’s almost as bad as Cypress where no good shot goes unpunished. Of all the courses that should have survived, Matanzas was destroyed so disasters like Palm Harbor,Cypreess and Pine could exist. The Mayor lives near Palm Harbor as I recall. Anyway, put the tennis and golf facilities up for sale to the highest bidder. Time to move on from both.

  8. buylocal says:

    I feel they discourage afternoon play, in the summer, they will not let you out to play 18 after 2:30. More concerned the carts are returned early so they can shut down and go home.

    After being turned down, I went to Grand Reserve and played 18. They will stay open until it gets dark.

    They have a very good restaurant, that closes at five o’clock??

    The course has 81 sand traps that are hard to maintain. Get rid of some of them. They are usually hard has a rock anyway. This should save on maintenance cost.

    Dump the management company and do it yourself. Palm Coast has the qualified people to do this.

    This is totally doable. I’m alittle confused over this quandary.

  9. palmcoastpioneers says:

    The Palm Coast Golf Course, later known as The Palm Harbor Golf Course, is Federally Ordered REDRESS Compensation for me / us / Palm Coast pursuant F.T.C. C-2854.

  10. Wannabe Golfer says:

    When I was single, I was able to play at least twice a month. Then I got married and had kids. I just can’t go out and spend $40-$50 and give up 4-5 hours but a couple of times a year. On top of it, I can go on Groupon, and spend half-as-much at Royal St. Augustine instead of staying in town.

    And then, why are they starting at Wadsworth? Is it because most of Pine Lanes is zoned for WES? It’s a Title 1 school which means it’s a low-income school. Doesn’t make sense.

  11. lena Marshal says:

    Kemper your tennis and golf program are a joke, give it up and let a real company take over.

  12. confidential says:

    Our Palm Harbor Golf Course and the Tennis Center are two very important city of Palm Coast amenities that give our city the higher community marks and style created originally by ITT and we should preserve.
    What is needed to achieve in both entities is that Kemper or whatever other management break even at least. Our government should not be in business to make money, but instead to give us the services and amenities we pay with our taxes.
    Since we raised cane before the renewal of the last Kemper contract regarding the lack of proper maintenance of the Golf Course by Kemper, they tighten that up. Now the course looks like a Golf one and the surrounding residents do not have to endure an eyesore and homes values eroded over it.
    Someone told those course workers to deliver the work they were paid for! I still see some of them just cruising around but much less now. The cost of Kemper management is still too high for the revenue, in order for our taxes to have to subsidize them yearly for over 130,000. How many Chiefs and few Indians are we funding?
    Can the city take over the course maintenance and recover the 130,000/year that way?
    I believe and please correct me if I am wrong…that the community center makes money for the city as no one can use that place without paying a fee, including the sports competitions held annually were all athletes pay a pretty high fee to compete. Then other than having the Golf and Tennis as a stand alone enterprise, maybe Landon should suggest to make them part of Parks and Recreations and fund it that way, as city should not be in the business to make money, but just not to loose neither, to the order of 200,000 plus a year with the Golf and Tennis Kemper enterprise.
    I am all for preserving our golf course and tennis…what Palm Coast would be without it! I hear that Kemper is a bit expensive for the old time locals. What about getting to the old players list and start calling them back and offering them some special deal in certain days? I now some have sold and moved to the Villages and with them we lost valuable residents. Others get together to play in Ormond or Daytona.
    I am writing anything improper next except some misspell? I also believe that the 12 schools inclusion is a plus and the schools and parents should start fund raising like bake sales events etc. to fund those interested students to join golf and tennis. We already have some young aficionados and they need to reel more in. While my kids were in school in NJ we funded their expensive snow ski trips and competitions. Why not promoting them to golf…as is even less expensive?
    We can’t afford to loose our golf course, can you all imagine the kind of undesirable element that will gather on that land if were transformed into a huge park..? Then won’t be enough sheriff deputies and city clean up crews to make it safe and clean and will cost us much more than 130,000 a year for a crime gathering area! Please city tax payers think about it and support our golf course while preserving the value of our homes and the amenities of Palm Coast! Thank you for reading!

  13. confidential says:

    Lets also preserve our southern neighbors public trails in Palm Bay by signing the petition:
    That is why we overwhelmingly voted Yes in our Land Preservation Funds usage Amendment in our last elections. Is to save our Florida pristine lands, not to help distribute our potable waters or resolve normal flooding on incorrectly housing approved on wetlands!

  14. Groot says:

    This isn’t rocket science. Kemper should be given a set amount to operate the facilities. If they want to make a profit, they operate efficiently and make a profit. If they don’t operate efficiently, THEY take the loss, not the city. If there is a problem with them, put them on monthly financial reporting. (I am assuming that they are on at least quarterly financial reporting?) They need to provide updated cost reports and Profit and Loss Statements every month. If they don’t turn a profit, the contract is cancelled and put out bids for a new contractor. The city missed their chance to do this when they renewed the contract again with Kemper. At this point, close both facilities, maintain at minimal standards and sell to the highest bidder. Oh, and hold Mr Landon accountable for this mess. He knows better, he has an MPA.

  15. David B. says:

    I believe they need to go after a new generation. Every time I have gone to the golf course, I always see the same people playing. Mostly men and women who are Seniors. I keep asking myself what does it take for Kemper and the city to try and bring in and introduce new programs to attract a younger generation to this great game ? I would love to see Kemper and the city go after families, and develop a program that they can afford, and speed up the game. Nobody of a young generation, wants to spend 4 to 5 hours on a golf course..

  16. Shark says:

    Take the deficit out of Landon’s salary!!!!!!!!!!!!

  17. Green Light says:

    When the Red Light Cameras are abolished, more folks will start playing golf in Palm Coast. Most folks refuse to travel threw the Red Light Camera gauntlet to play golf, tennis and swim.

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