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Losses at Palm Coast’s Golf and Tennis Clubs Mount to Record $431,000; City Council Shrugs

| January 12, 2016

Images like the one above adorning KemperSports's presentation to the Palm Coast City Council on the city's golf and tennis operations were prettier than the stated bottom lines.

Images like the one above adorning KemperSports’s presentation to the Palm Coast City Council on the city’s golf and tennis operations were prettier than the stated bottom lines.

At Palm Coast’s money-losing golf and tennis operations, losses get steeper last year, but the Palm Coast City Council appears less concerned.

The city-owned golf course lost a record $346,191 last year, up from a previous-year record of $315,000. It is projected to lose almost $300,000 again this year and next, and lose $230,000 in 2017, with a projected loss of $190,000 in 2018. Operating losses in the earlier years of the club, which opened in 2009, were less steep. Yet the latest numbers elicited little more than a shrug from Palm Coast City Council members, who heard a presentation Tuesday morning from KemperSports, the private company contracted to run the golf course.

The city-owned tennis center is in slightly better shape but only in comparison with the golf operation, and it’s still losing money: almost $100,000 in losses in 2014, an $85,000 loss last year, and a projected $81,000 loss this year, with projections seeing losses fall to between $65,000 and $75,000 each of the next three years.

Palm Coast taxpayers, the overwhelming majority of whom do not play golf or tennis at either venue, are covering the losses. The city administration says the losses should not be seen as anything different than any government operation that doesn’t make money. It sees the golf and tennis operations as part of its parks and recreation operations, which are not profitable, either.

But what money goes into parks and recreation’s budget is paid mostly to city employees. Last year’s $431,000 loss, in other words, has amounted to a subsidy covering the private company’s losses, at city taxpayers’ expense.

The Palm Coast City Council had begun to fret over the arrangement in the past couple of years, with council member Bill McGuire especially speaking unfavorably of a contract that has yet to produce a break-even year. It’s been at his request that the city administration has invited KemperSports officials to make periodic presentations to the council about the business. Those officials did so again today, framing the red ink in a lot of optimistic projections.

This time, however, McGuire’s and other council members’ criticism was muted despite the worsened deficits, with only a few questions about operational details here and there rather than about strategy or the long-term viability of the arrangement.

At the golf course, which has been managed by Brad Adams for just under a year, the per-round average has fallen from $36 in 2013-14 to $35 last year because there’s been an increase in less-expensive nine-hole rounds. Golf has been suffering across the country for almost a decade, with nine-hole games providing some relief: they’re shorter, less expensive, less demanding on golfers’ personal time. The club registered a total of 34,400 rounds played in the last full year for which numbers are available. It’s projecting 35,000 for this year.

“How many additional rounds of golf would it take for us to break even, and does the course have the capacity for those additional rounds of golf?” Mayor Jon Netts asked. It would be his most probing question of the day.

The answer: “upwards of 40,000” rounds, Adams said, though that’s not in the club’s projections. And in 2011 and 2012, when the course registered more than 43,000 rounds each of those years, it still lost money, according to a presentation by a different set of Kemper officials three years ago, though the cost per round was closer to $25 than $35. (That presentation also projected a break-even point in 2013 and slight profits every year after that.)

But the course has been making progress through marketing in attracting younger players, especially students through junior camps, and women, and with charitable events once a month.

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“Lately we have seen, and to me it’s really great to see, all walks of life, all ages, and sometimes you don’t get that in golf,” Adams said. “It’s really nice to see that whether it’s parents coming back and becoming reinterested or interested for the first time, but top see all walks of life passing through the doors is a great thing especially for municipal golf clubs.”

Some of the discussion focused on issues that might sound remote or alien to most people—that is, the overwhelming majority of Palm Coast residents—for whom golf does not play a role in their life: the condition of the greens or the poor condition of some of the 68 “bunkers” (that is, the sand traps) and how to double their longevity, and how maintaining those bunkers takes up half the maintenance labor at the course.  The most displeasure the golfers are experiencing are the state of the bunkers, which will be renovated. (The city has had its bunkers evaluated. The recommendation is to cut down the number of bunkers and make others smaller.)

The presentation included the flashing of several “positive” but anonymous comments by users of the golf course.

“If one of the competitive, privately owned courses in Flagler County were to close shop, what effect do you think that would have on us?” McGuire asked.

“A positive effect,” Kemper officials immediately said.

McGuire’s point, he explained, was that getting new participants will likely not happen by convincing younger players to pick up the game, but by draining existing players from a competitor, which could then cause that competitor to close up shop, thus improving the Palm Harbor’s club’s bottom line. But however optimistic—for Palm Coast—that predatory approach might sound, the reverse is more likely this year, given Flagler Beach’s direction: the city has just signed on with a local company to re-open and manage the old Ocean Palm Gold Club at the south end of town, which has been unused for many years. If anything, the re-opening of that course will have a draining effect on Palm Harbor by keeping Flagler Beach’s golfers closer to home.

One unfailing bright spot year after year at the golf course: its restaurant, whose chef, Karen Barchowski, continues to impress and draw crowds to her tables, with last year’s Restaurant Week declaring offerings there as providing the “Best Lunch” in town.

It’s much the same story but on a smaller, less money-losing scale at the tennis center, off Belle Terre Parkway. The center’s brightest spot continues to be its Men’s Futures tournament, a United States Tennis Association event scheduled for later this month, which will be hosted at the center for the seventh year. The event brings $31,000 in revenue to the center (or rather to KeperSports).

But there was a 20 percent loss in revenue at tennis center last year, with participation in camps and clinics declining and annual pass-holder aging and dying (annual passes make up 41 percent of the revenue at the center).

“Why do you believe you’ll be able to recover some of that less this year?” council member Jason DeLorenzo asked.

“Through the marketing efforts and the programs,” Jody Graham, Kemper’s regional operations director, said. “The idea is much like golf to make this family-oriented, make it an asset to the community.”

The presentation is below.

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21 Responses for “Losses at Palm Coast’s Golf and Tennis Clubs Mount to Record $431,000; City Council Shrugs”

  1. Anonymous says:

    It’s obvious that palm coast does not need these golf courses, not enough retirees here….and having taxpayers foot the bill is another reason I tell people not to buy homes here…..because the city lacks common sense

  2. tulip says:

    With the exception of Bill McGuire, I think the council people and the admininstrators have waterlogged brains. Just think what those hundreds of thousands of dollars they are throwing at a failing project could do instead. What possesses them to think they can just throw the money in the trash. Oh, I know, it’s because it comes out of the taxpayers wallets.

    Mr. McGuire has been the only one to consistently show common sense and fiscal responsibility. Maybe he should run for Mayor.

  3. m&m says:

    You all look at the losses but they still return revenue as compared to all the walking trails, parks, boat landings etc. The city supports these and spend millions of $ for upkeep and city does not mention them in the complaint.

  4. Rich says:

    Interesting comment that most residents do not play golf or tennis. True. But then again many households do not have children in the schools either. But they still pay taxes for them. That is part of belonging to a community.

  5. Joe says:

    “If one of the competitive, privately owned courses in Flagler County were to close shop, what effect do you think that would have on us?” McGuire asked.
    “A positive effect,” Kemper officials immediately said.

    Now I know why the city is dragging its feet when it comes to the course at Matansas Woods, they want zero competition!

  6. Woody says:

    There is a big difference between the two Rich,one is recereation for a small number of residence.The other is an attempt to mold a future of productive citizens.

  7. Woody says:

    We need to stop the INSANITY!! Can”t wait to vote out the incumbents.

  8. groot says:

    They don’t know how to contract. Kemper is taking them to the cleaners. Make the Palm Harbor area pick up the loses for the course.

  9. layla says:

    Woody, only about 15% of the citizens in Palm Coast even bother to show up and vote. Don’t expect long lines. The people here all badly informed and could care less about that.

  10. Dave says:

    well you have poor courses, average courses, better than average, , good and exceptionally maintained courses. Palm Harbor falls into the average to good category depending on the time of year.. A golfer will pay to play a good and exceptional golf course but Palm Harbor needs to work on their greens and the course in areas has issues with standing water, put some real sand in the sand traps. The city needs to put their money OUR MONEY were its supposed to go and not some pet project and turn this course into a true winner, if not, sell the land and build some more homes, yep all we need is more people, doing nothing but complaining about how they did up north. City owned golf courses most always die a slow death due to the misappropriation of the money that is supposed to go into the maintenance and improvements of the course. Said really and nice piece of property.

  11. layla says:

    Groot, it’s not legal to charge select neighborhoods for the mistakes of their politicians. If we just show up and vote these guys out, that would help a lot around here. But nobody in Flagler is willing to do this. They can’t be bothered.

  12. Mark says:

    We obviously need more red light cameras to cover the costs.

  13. Dean Carpenter says:

    Lot’s of taxpayers are subsidizing the recreation of people driving cars worth over $100,000. Maybe I need to take a look at Bernie Sanders website.

  14. Denise Calderwood says:

    And ironically enough, Palm Coast which was advertised originally as a retirement community doesn’t have a dedicated senior center. What gives? And at the same time there is no leadership from the council stepping up to assist the 30,000 senior citizens.

  15. Buylocal says:

    There are qualified local people that could run this golf course and thus save the management fees paid to Kemper. Next thing you know the course is holding it’s own, enhancing the community and providing local jobs. You only have to look at Grand Reserve in Bunnell as an example of this. The owner went bankrupt and recently bought it back from the bank. If the course in Flagler Beach opens and does well this would compound the proof. We will see. I’m not betting against them. Pine Lakes looks to be on an upward trend now as well. Come on man! We could do better at Palm Harbor.

  16. Dave says:

    and Fla taxpayers pay out for a lot of other things as well. We fund food stamps, schools, roads, medical care, art centers, sports arenas, airports etc.. Not to mention pet projects these “representatives” attempt to push through. Death and taxes about as permanent as you can get.

  17. BIG JOHN says:

    Public golf courses = Socialism for the rich.
    Close the public golf courses, let the PRIVATE SECTOR golf courses sink or swim based on supply and demand! That’s what CAPITALISTS DO! What kind of Republicans are these Palm Coasters?
    Are they incompetent? Are they crooks? Are they stupid?
    NO! WE THE PEOPLE ARE STUPID! We let these politicians do whatever they want and no one is willing to complain….Well I’m mad as hell and I’m not going to take it anymore. C’mon everybody…OPEN your windows, OPEN your minds, and scream…I”M MAD AS HELL…AND I”M NOT GOING TO TAKE IT ANYMORE!

  18. layla says:

    Anonymous, you are wrong about one thing, and that is that we don’t have enough retirees. And sadly many bought their dream home on the golf course at Matanzas and then watched the course and their dreams stolen from them.

    That is the State of the Union of Palm Coast.

  19. layla says:

    Ms. Calderwood, has anybody approached that wonderful Bill McGuire about this?

  20. layla says:

    Nobody in the county seems to mind spending thousands on a dirt bike race. I guess it might be just a matter of who’s pockets you are lining.

  21. Ang says:

    It seems to me that if the courses and tennis center consistently loses money then they need to be closed. Find an alternative like opening a senior center or something that will make money. This is not the time to continue to WASTE tax payer money. Otherwise this city will fail.

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