Professional Documents
Culture Documents
Prepared For:
San Francisco Nonprofit Golf Foundation
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Prepared By:
February 2007
Operational Review and Recommendations
For City of San Francisco Golf Operations
Table of Contents
Introduction ................................................................................................................... 1
Market Environment.................................................................................................... 13
Market Area Overview .........................................................................................................13
Demographics Summary ............................................................................................................. 13
Economic Overview..................................................................................................................... 14
Golf Market Overview ..........................................................................................................15
National Trends in Golf Demand and Supply .............................................................................. 15
National Trends in Municipal Golf ............................................................................................... 16
Public Golf Operational Norms.................................................................................................... 17
Estimated San Francisco Area Golf Demand 2006-2011 ........................................................... 21
San Francisco Area Golf Supply Inventory ................................................................................. 23
Golf Market Summary.................................................................................................................. 24
Market Environment Summary ............................................................................................25
In response, the Department, in partnership with the new nonprofit established to help the City
explore best practice alternatives to managing the courses, engaged NGF Consulting to
complete a thorough assessment and evaluation of the City’s golf course operations and capital
needs. The results of this study will help determine the most appropriate course of future action.
Throughout this report, we may refer to shortened names for: the City of San Francisco (“City”),
the San Francisco Parks and Recreation Department (“RPD”), and National Golf Foundation
Consulting, Inc. (“NGF Consulting” or “NGF”).
The primary goal of the study is to evaluate the overall golf system structure from the standpoint
of revenue and performance optimization, and to help identify opportunities that can be
exploited to increase the overall economic performance of the golf system, while preserving or
improving the quality of the assets and ensuring affordable access for San Francisco residents.
A necessary adjunct of this research effort is the evaluation of each of the system’s six golf
courses (in five parks) individually from the standpoint of management, maintenance, pricing,
operations, and adequacy of physical plant.
The results of this review will be used to assist the City and RPD officials in determining the
appropriate courses of action for the future of these facilities with regard to management,
operations and capital improvements. Activities conducted in completion of this report included:
field research; statistical analysis; a series of meetings with key City, and RPD officials;
meetings with golf operations personnel at the individual courses; a series of tours and
agronomic inspections of the City golf courses; and, interviews with City of San Francisco
golfers. Further, NGF staff consultants visited many of the area’s competing public golf facilities
to gain an understanding of the market dynamics that help shape operating results at City
courses.
The key consultants contributing to this study effort include Richard B. Singer, Director of
Consulting Services at National Golf Foundation (NGF), and Ed Getherall, Senior Project
Director at NGF, as well as Forrest Richardson and Rick Wesselman of Forrest Richardson &
Associates.
NGF Consulting would like to thank the officials and staff members of the City of San Francisco
Recreation and Parks Department, who contributed greatly to this study effort. Special thanks
goes to Frank (“Sandy”) Tatum, Jr. of the San Francisco Nonprofit Golf Foundation, for helping
us understand the history of San Francisco golf, and the importance of these City golf facilities
The City of San Francisco’s municipal golf system comprises an impressive portfolio of golf
course assets located in beautiful urban parkland or coastal settings. Nearly all have highly
regarded layouts and character favored by golf traditionalists, and several have historical
significance. Three of the five date to the early 1900s, and each has a classic design, including
Alister Mackenzie’s Sharp Park. We have observed many municipal golf systems, and we feel
the San Francisco municipal golf courses comprise a very valuable and diverse set of facilities
that compare favorably to nearly all we’ve observed.
Harding Park, which also includes the 9-hole executive Fleming course, is the crown jewel of
the system, and is widely respected again since its renovation. The scenic Lincoln Park offers a
strong layout that is playable for golfers of all skill levels, and features the spectacular 17th hole,
which has striking views of San Francisco Bay and the Golden Gate Bridge. Sharp Park has the
classic Mackenzie design and hugs the Pacific Ocean. Golden Gate Park offers an excellent
urban parkland venue that is great for children and beginners. Gleneagles features a very
interesting and extremely challenging layout, with elevation changes and excellent vistas of the
City; it appeals to the hard-core golfer.
City oversight of the golf courses is restricted to grounds maintenance and contract oversight.
This is extremely rare in municipal golf systems. Normally, even if the municipality’s owned golf
courses are privately operated, there is someone in the Parks department that has business
knowledge with respect to golf. In San Francisco, there are no positions, either staffed or
vacant, that entail any expertise in the actual administration and management of
municipal golf courses or golf system operations. NGF Consulting was told that creating
such a position was discussed “four or five years ago” but it has never been budgeted for.
The individual golf facilities, with the exception of Gleneagles, are maintained by RPD personnel
and are managed under a variety of agreements, with no uniformity. Gleneagles is operated via
a ground lease, and contributes roughly $48,000 per year net to the Golf Fund. Two of the
facilities – Lincoln and Sharp – have been on month-to-month lease agreements for several
Later that year, the city devised a plan to use $16 million of state grant funds, which were
designated to improve or build recreational facilities for low-income and minority San Francisco
residents, as a loan to Harding Park. Future golf course revenues were designated as a means
to repay the loan with interest. In 2002, the Board of Supervisors authorized the Recreation and
Park Department to use the state funds for Harding, provided that the money was repaid with
interest from golf course funds within 25 years.
The creation of the Golf Fund was a component of the overall plan to renovate Harding Park. A
RPD brief – “The Revised Plan for Renovating Harding Park” – from February 2002 stated “The
fund could capture golf course revenues and use them to pay for operating and
maintenance expenses and a capital improvement reserve, to repay the initial grant
expenditure plus interest, and to help fund future improvements to other City courses
including Lincoln Park. The Golf Fund would essentially function as a dedicated capital
improvement reserve account for improving and maintaining the golf courses.” (Bold and
italics by NGF Consulting).
The Harding renovation (which ran way over budget) had the desired effect on green fees and
revenues, which are now among the highest in the nation for a municipal facility at more than $6
million. Average green fee revenue per round for the Harding Park championship course for the
first two quarters of FY06-07 is nearly four times what they were in 99-00, a reflection of non-
resident green fees that are about five times what they were prior to the renovation. System-
wide revenues increased from about $5.1 million prior to the renovation, to $8.93 million
(excluding General Fund transfer) in 05-06. Additionally, the relationship with the PGA TOUR
that resulted from the renovation plan should have positive repercussions on the system for
years to come, as it will help to add exposure and popularity to Harding Park and San Francisco
golf, if not earning net profits for the Golf Fund.
The cost of production per round in 05-06 was $49.56, up 500% from about $10 in FY 99-00.
San Francisco’s cost of production per round in FY 2005-06 was the second highest among the
regional municipalities surveyed in this report, at $45.24 per round. This figure will go up
considerably for 2006-07, as the payment to the Open Space fund increases to $1.41 million
and the budget at Harding Park increases significantly. Despite these budget increases, the
average number of full-time equivalent maintenance staff is lower in San Francisco (on a staff
per hole ratio) than at other regional municipal golf facilities profiled for this report. Labor as a
percentage of the total expense budget averaged 44.8% among the municipalities reporting. For
those golf systems that were completely self-operated by the municipality, the average was
49%. San Francisco is at 56.2%. San Francisco’s cost to produce each round of golf is also
more than twice that of nearly all the national comparable municipal golf systems profiled in this
report
These statistics would not be so telling if the San Francisco municipal golf courses were
in better condition. However, based on the experience and industry expertise of the NGF
Consulting team, the City courses (other than Harding Park), particularly Lincoln and Sharp, are
in inferior maintenance condition, to the vast majority of regional (and national) golf systems we
profiled. With the high expense structure, we would expect top-flight maintenance conditions at
the subject facilities, but that is not the case. As NGF Consulting documents in this report and in
Appendix G, the City’s municipal golf courses, with the exception of Harding/Fleming due to the
recent renovation, have been neglected to various degrees.
The increasing operating expense and debt service payment at Harding Park came at a time
when rounds played at the City courses were falling precipitously. System-wide (excluding
Gleneagles) rounds fell by an extraordinary 125,598 between FY 1999-00 and 2005-06 – a
decline of 37%. Although rounds were falling in most golf markets nationally during this time, as
well as in the Bay Area (NGF Consulting research revealed an average per course decline of
about 25% since the late 1990s), the decrease in San Francisco was more dramatic than in
most markets we’ve studied.
The combined effect of decreased play levels, rapidly increasing expenses, and the debt service
payment tied to the Harding renovation had a predictable effect on the Golf Fund’s economic
performance. The Golf Fund cash flowed positively through FY 2003-04, when it netted
$337,416. In FY 04-05, the Fund showed a $51,692 loss, excluding a transfer in from the
General Fund of $536,372. Still, 04-05 showed a small operating profit before the initial
repayment to the Open Space Fund was made in the amount of $329,080. Operating losses
grew in FY 2005-06, to nearly $880,000 (excluding a transfer in from the General Fund of $1.57
million), despite revenues of more than $8.9 million. The repayment to Open Space of $935,420
brought total losses to $1.815 million.
It is certainly true that the market environment for golf has contributed to these problems, as a
combination of factors has conspired to affect golf negatively both regionally and nationally.
Though NGF demand modeling does not indicate an excess supply of golf courses in the region
(and certainly not on the peninsula), there has been a considerable amount of new golf course
development in the region, particularly in the East Bay and North Bay areas. Callippe Preserve
in Pleasanton and Los Lagos in San Jose are the two most recent municipal market entrants,
and both had immediate market impact. Other factors that have contributed to a decline in golf
regionally and nationally include: an increase in the cost of living; the aftereffect of 9/11
MANAGEMENT ISSUES
Having noted this, NGF Consulting believes that the major factor contributing to the current
situation that the Golf Fund and the individual courses find themselves in is neglect of the golf
system by the City and the RPD. As noted, there is a lack of expertise and oversight within the
RPD with respect to the business of golf; though there are undoubtedly talented people working
here, none have the background in municipal golf course operations. The neglect of the golf
assets is the result of the lack of oversight, and NGF Consulting believes that the condition of
these courses, with the exception of Harding/Fleming Park, is the single greatest factor
precluding meaningful revenue growth. The primary reason these courses fell into disrepair is
that, even when the system was making money, profits were siphoned off and not re-invested in
system. The lack of a formal master plan for improvements, which is extremely rare in municipal
golf systems, can be a death knell for a golf system.
The City is experiencing a troubling combination of circumstances with its golf system. Our
experience has been that we would normally observe municipal golf courses in poor condition
when private lessees were neglecting them. When this occurs, at least the municipality has no
exposure on costs and is collecting rent/concession payments without financial risk. In San
Francisco’s case, as we have documented in this report, the municipality is maintaining the golf
courses poorly, and at great expense – the worst of both worlds. Golf courses in poor condition
will generally preclude most actionable solutions to improving revenue performance. San
Francisco is essentially caught in a “Catch 22” situation: In order to increase revenues to
support the high expense structure and debt payment, green fees and/or rounds played must
increase significantly; however, in order to be able to increase fees and/or rounds, conditions
must be improved. Therefore, either additional expense has to be incurred (further deepening
the deficit) to improve the courses, or a more efficient solution to maintaining the golf courses
must be arrived at.
Municipal golf systems in financial distress are not unique, and have become much more
common since the present downturn in the national golf economy began around the turn of the
century. In the body and appendix of this report we have detailed several regional municipalities
that are actively seeking solutions to their golf enterprise fund problems. For instance, the City
of Oakland currently has an RFQ issued for the management, maintenance, and capital
upgrades of Lake Chabot Golf Course. Also, as a result of low revenues and growing
maintenance costs, the City of Salinas currently has an RFP issued to privatize maintenance,
with the stipulation that nobody that worked on maintenance will lose jobs, but will be relocated.
The second example is Baltimore, which faced a very similar situation to New York. Also,
mismanagement and excessive political influence on the daily operations of the golf system
were a huge problem. The city’s ultimate solution involved the creation of a tax-exempt, non-
profit 501(c)3 corporation, which leased the golf courses from the city. The new 501 (c)3
Corporation, led by a Board of Directors, hired golf management and maintenance experts.
Operating free of the reins of local government, the Baltimore Municipal Golf Corporation
became a success story, rehabilitating the golf facilities and eventually turning enough profit to
re-invest millions in the system, as well as contribute greatly to junior golf causes, while
preserving very affordable resident green fees.
Continue As Is
NGF Consulting has presented a detailed overview of the various alternatives the City should
consider for the future operation of the golf system. These options include continuing with the
status quo – growing losses subsidized by the General Fund, continued deterioration of the golf
courses – or even closing one or more golf courses. Continued operation by City was quickly
dismissed, due to the reasons cited earlier – lack of expertise, ever increasing expenses,
political influence interfering with best business practices. In doing our financial modeling, we
found that, even under the best case scenario, maintaining the status quo with the City
overseeing the golf operation and performing the maintenance, operating losses continued to
mount ($3 million by 2012), meaning higher subsidies and still no money left to be put into
needed improvements, resulting in further deterioration of the assets.
Close Course(s)
NGF Consulting was hired because of its vast experience and expertise in helping municipal
golf systems improve their economic performance. The goal of the study was to identify the
most viable option for the continued operations of the City’s golf courses. As such, analyzing the
potential costs and benefits of potentially closing one or more courses was beyond the scope of
this study. For the City to consider this option, it would obviously have to do much further study,
identifying both its goals with respect to offering affordable golf to its residents, as well the
expenses, revenues, and various other costs and benefits that would be eliminated with the
closure of golf courses.
Of course, there are many details that will have to be worked out between the City and the new
not-for-profit corporation. The basic framework, as we envision it, is:
• City leases, or even deeds, the golf courses to the 501(c)3 non-profit corporation (the
“Corporation”). A long-term lease of 30+ years is recommended. Language is put
into the lease regarding required capital improvements (and who owns them),
maintenance standards (and how they are enforced), and green fee guidelines for
residents, indexed somehow to market conditions.
• Of the five golf facilities we recommend that Harding/Fleming, Sharp Park, and
Lincoln Park be packaged together, and an RFQ (request for qualification and
interest) be issued by the Corporation to solicit potential interest for the
management, maintenance, and master planning (creation and implementation of
short- and long-term capital improvement plan) of these three facilities. Of course,
current operators will be encouraged to express their interest. Gleneagles will remain
a ground lease to be absorbed by the new 501 (c)3.
• As we saw with the City of San Leandro, where American Golf Corporation invested
more than $8 million of its own money in Monarch Bay, as well as with Oakland
(language in their RFQ notes at least a $3 million investment required of interested
parties) and New York City (AGC, again, has spent multiple millions of dollars
because they know the golf facilities will throw off considerable positive cash flow), it
is not unreasonable to expect a management entity to invest considerable money in
needed capital improvements. Language in the initial RFQ should clearly spell out
the expected requirements of the bidder with regard to capital investment.
• Based on our projections for these facilities, assuming our recommendations are
enacted, we foresee considerable interest in operating these facilities if they fall
under the Corporation umbrella. The ultimate operating structure should be with one
operator for all three facilities, working under a sub-lease to the 501(c)3.
• Golden Gate should be handled differently within the Corporation. Due to the nature
of the facility and the clientele it serves (the junior/beginner market), we believe the
facility should not necessarily be managed/operated by the ultimate entity that
manages Harding, Lincoln, and Sharp.
One thing that would help immensely would be a change in the repayment terms on the Open
Space debt. Perhaps the annual payment could be deferred until the Corporation begins turning
an operating profit. Another option for short-term operations and capital improvement financing
is a loan from the General Fund to the Corporation. Of course, any funding scenario is expected
to include some component of private donations and, at least as far as capital improvements are
concerned, contributions from the ultimate manager of the properties. A creative example of
raising private funds comes from the City of Houston, where private sector contributions in the
amount of $1.2 million took the form of sponsorships for elegant granite hole markers that were
placed at each hole of Memorial Park. The contributions went toward Memorial’s renovation in
the mid 1990s.
Business Model
Of course, for this model to work, the City must be content to rid itself of the financial burden,
take a nominal payment in return, and allow people with knowledge and expertise to manage
the golf system without political interference. The new Corporation must be free to enact best
business practices while stewarding these assets for San Francisco residents. The basic
business model for returning the system to financial health under a 501(c)3 is:
• Golf course assets are rehabilitated; moderately higher resident rates enacted (golfer
survey overwhelmingly indicated resident golfers’ willingness to pay higher fees in
exchange for better conditions).
• With other courses joining Harding as high quality venues, cooperative marketing
campaign between City, Corporation, and Convention & Visitors Bureau begins (see
below).
• With higher quality courses and effective marketing, much higher non-resident rates
will be sustainable at Lincoln Park and Sharp Park.
• The city/peninsula is somewhat of an insular market, with few local golf courses
(especially given that the state of some of the City courses) to service the dense
population. NGF research confirms that the city has a higher-than-average number
of households available to support each 18 holes of golf in the City, and the City is a
large net exporter of rounds played to outlying areas such as the East, South, and
North Bays. Improving the golf course will allow them to capture back market share,
especially among S.F. residents.
• San Francisco golfers, as confirmed by the golfer survey results, are very passionate
about the City’s golf courses. Respondents generally rated the subject facilities
below average on key business drivers compared to national benchmarks
established for public-access golf courses. It is NGF’s conclusion that many of these
passionate customers would return to the City courses, or play more frequently, if
they were better managed and in better condition.
• The golfer survey results also indicate, overwhelmingly, that residents would be
willing to pay moderately higher green fees in exchange for better course conditions
at Lincoln and Sharp.
• The golf courses, with the exception of Harding Park, are all currently operating at
much less than capacity, and at much lower levels than the regional average for
municipal golf courses. Additionally, they have all shown the potential in the recent
past to achieve much higher activity levels.
• In addition to increased rounds that will result if the courses are improved as
recommended in this study, the Corporation can re-position Lincoln and Sharp to
significantly higher price points for non-residents, especially out-of-state tourists who
are typically not price sensitive. The seeming inelasticity of Harding Park’s demand
since the September 1, 2006 price increases is encouraging in this respect.
• In addition to the City and Bay Area resident populations, the municipal golf system
has an enormous untapped supplemental market from which to draw play – San
Francisco’s 15+ million annual tourists. NGF Consulting believes that this market
shows enormous potential, once the maintenance conditions of the courses,
especially Lincoln and Sharp, are improved. There seemingly has been no organized
effort on anyone’s part to tap this market. Even if San Francisco cannot successfully
• In 2005, the San Francisco Convention & Visitors Bureau booked more than 2 million
confirmed group room nights for future years. A direct selling effort to hotels for
tournaments, as well as a cooperative marketing effort between the Corporation, the
City, and the C&VB should be very successful in drawing high fee visitor rounds.
Enhanced Marketing
In order for the golf system to succeed, direct selling must be accompanied by an organized
marketing campaign centering on the quality of the golf courses, and must leverage and build
upon the brand equity created at Harding Park due to its reformation, and its affiliation with the
PGA TOUR. A marketing campaign should be a cooperative effort with the Convention &
Visitors Bureau, and may focus on branding San Francisco as a golf destination. Even if the city
is never truly thought of in those terms (it has so many other attributes attractive to visitors),
these marketing efforts should succeed in creating awareness of the golf courses and getting
golfers who are visiting anyway to play golf while they are there.
A second prong of the marketing campaign should be more oriented towards local golfers who
may have given up on the City courses. “Under new ownership” is a marketing theme that often
has little meaning, and gains little traction with consumers. However, because poor course
conditioning and other negative factors that are key business drivers have driven golfers away
from the City courses, marketing that emphasizes how the courses have been improved should
be highly effective (“try us again for the first time”). Along these lines, a month-long “Grand Re-
opening” event, featuring special promotions and tournaments, will build good will and
awareness in the market and give the municipal golf courses a leg up on recovering market
share.
Though the rehabilitation of Sharp Park and Lincoln Park are seen as necessary and critical to
such a marketing push, NGFC has concluded that it is equally important that the
relationship with the PGA TOUR be sustained, both for marketing purposes and so that
the lucrative non-resident rates at Harding Park remain sustainable. In order to ensure this,
the City/manager must be certain to maintain Harding Park to the standards required of the
master agreement between the two parties. Issues covered in this report, such as the potential
for increased problems with kikuyugrass, must be addressed.
Additionally, because of several factors, not the least of which is the $24 million that was
spent renovating the golf course, it is essential that the City (or Corporation) ensures
that the Superintendent (or Gardening Supervisor in San Francisco nomenclature) at
Harding Park have the proper credentials, knowledge, and experience required to
oversee a property of this quality. If this is not ensured, not only is the value of the asset
compromised, but also the future relationship with the PGA TOUR is at risk. Losing this
relationship could very well have reverberations throughout the system, in terms of the
sustainability of the high rates at Harding, as well as the brand equity associated with the
facility, which will be key to future marketing efforts.
SUMMARY STATEMENT
In summary, NGF Consulting’s inspection of the City of San Francisco municipal golf courses,
and our review of the golf system, has revealed an impressive portfolio of beautiful golf course
assets that have been neglected and have fallen into disrepair. For a variety of reasons
enumerated in this report, the golf system now suffers from large operating deficits, and ever-
deteriorating assets, with the exception of the flagship Harding Park Golf Course.
However, we have also concluded that the system is salvageable, mainly due to the high quality
and potential of these golf courses, which was cited by nearly every golfer and golf industry
professional we came in contact with during the course of this study. In order for the assets to
be rehabilitated and the system to return to profitability, the golf courses must be managed by
people who have the experience and expertise to do so, free of political interference. We
believe that the 501(c)3 organization provides the best means of achieving this goal. The non-
profit organization will ensure that best business practices are implemented and followed, and
that the golf courses will once again offer affordable quality golf for the residents of San
Francisco. The Corporation will also be much better equipped to perform the stewardship role
for these assets, assuring that they never again fall into the state of disrepair they are now in.
However, in order for this to happen, the City must have the political will and foresight, as well
as the desire, to preserve these urban jewels, which someday should again reflect well on this
proud city.
Demographics Summary
San
Francisco
Gleneagles Harding Lincoln G. Gate Sharp MSA California U.S.
Summary Demographics
Population 1990 308,227 196,108 216,242 175,217 83,304 1,603,685 29,759,153 248,709,429
Population 2000 341,404 213,818 223,445 182,516 85,193 1,731,183 33,871,640 281,421,211
CAGR 1990-2000 1.03% 0.87% 0.33% 0.41% 0.22% 0.77% 1.30% 1.24%
Population 2006 Estimate 321,118 199,203 206,597 168,119 83,054 1,673,939 36,861,522 296,459,203
CAGR 2000-2006 -1.22% -1.41% -1.56% -1.63% -0.51% -0.67% 1.71% 1.05%
Population 2011 Projected 305,261 188,114 193,853 157,253 81,233 1,626,409 39,243,835 310,728,811
CAGR 2006-2011 -1.01% -1.14% -1.27% -1.33% -0.44% -0.57% 1.26% 0.94%
Median HH Inc $69,765 $72,899 $73,607 $71,864 $83,618 $72,849 $54,444 $46,615
Median Age 39.6 41.6 40.9 41.9 39.9 40.6 34.6 36.3
Source: NGF Consulting 2006.
From the data collected for this study, NGF Consulting has made the following observations
regarding the demographics of San Francisco and surrounding areas:
• The population bases in the subject markets are relatively dense, with 2006
estimates of between 175,000 (Golden Gate) and 308,000 (Gleneagles) people living
within 3 miles of each San Francisco City golf facility. There are fewer people living
within 3 miles of Sharp Park, located in Pacifica. The population of the San Francisco
MSA has been declining moderately, losing about 57,000 residents between 2000
and 2006. This pattern is expected to continue through 2011. The implication for
continued operation of public golf courses in the market is that the large and dense
local populations surrounding each facility should help to maintain golf demand for
the foreseeable future.
• Median Household Incomes in the San Francisco area are much higher than the
national and California medians, indicating a higher proportion of upper-income
residents. In general, higher income residents are more likely to participate in golf,
and they play more frequently than lower income residents. This effect is mitigated
somewhat in the Bay Area, due to the extremely high cost of living.
Economic Overview
In addition to identifying demographic trends and characteristics of the area, we have examined
certain economic indicators and other mitigating factors that have the potential to affect the
performance of the City of San Francisco’s golf courses. Below are some key observations
highlighting the City’s demographics, education, economic development and quality of life. All of
these findings are generally viewed as positive for continued operations of municipal golf
courses in San Francisco.
General
Occupying just 47 square miles of land, the combined city, county, and port of San Francisco is
located on a peninsula between the Pacific Ocean and San Francisco Bay. The county’s current
population is close to 800,000, according to California’s Department of Finance. Despite its
small physical size, San Francisco ranks as the eleventh most-populous county in the state.
Fast Facts
• The region is the birthplace and worldwide center of high technology, and acclaimed
as the incubator of biotechnology (thanks to the talent at the University of California,
San Francisco). The Bay Area has more pioneering high-tech and bio-tech firms than
any other region, including Dolby Labs (audio), Salesforce.com (customer
relationship software), Industrial Light and Magic (Entertainment), and Genentech
(bioscience), to name just a few. Other high-tech highlights for the area:
• Despite the strength of high technology in the region, an industry downturn in the
early 2000s led to much job displacement, which certainly had an affect on activity
levels at area golf courses.
• San Francisco Convention & Visitors Bureau - In 2005, the Bureau booked more
than 2 million confirmed group room nights for future years. Average occupancy for
• San Francisco features the 11th largest airport in the U.S. and 21st largest in the
world, with more than 2,000 daily arrivals and 50+ airlines served.
• In 2005, San Francisco’s labor force declined by 1,800, to total 420,500. The
county’s 2005 unemployment rate (5.1 percent) was 0.9 percentage point lower than
the 2004 rate, and significantly lower than the high of 7 percent recorded in 2002.
• In 2005, after four years of consecutive loss, industry employment in San Francisco
gained 6,300 jobs to total 509,100. During the profiled years (2001-2005), two
industries posted cumulative growth - educational and health services, and
government.
• The Bay Area has a very high cost of living, and this is especially true with respect to
housing. Despite a housing market that has cooled off, the median price of a house
in San Francisco is an extremely high $760,000.
• San Francisco’s generally mild weather makes it a year-round golf market, with
average temperatures in the 60s, and average annual rainfall of only 22 inches.
As rapidly as the demand for golf has grown, the supply has grown even faster, with an average
increase of about 2.1% per year. With the increase in supply, we are seeing a marked increase
in competition, and the supply is greater than the demand in some markets.
In addition to increased competition, four other factors have contributed to a decline in the
number of rounds per course during the 2002 to 2005 period. These include: 1) an uneven
economy; 2) the aftereffects of 9-11, which greatly reduced the traveling golfer market; 3) the
increasing time pressure on individuals and families; and 4) abnormally poor weather conditions
over the past few years in much of the U.S., including the Bay Area. The combination of these
factors has caused many golf facilities to become distressed, particularly those that have a high
debt load because of higher construction costs and the perceived need to build high-end
courses. The level of golf course closings has quadrupled from an annual average of 24
courses per year in 1993 – 2001 to 48 courses in 2002-03, 63 courses in 2004 and more than
100 courses in 2005 (and projected for 2006).
On the positive side, the growth in golf course development has slowed considerably nationally
and in the majority of local markets, a trend that should help ease some of the competitive
pressure. Another positive trend is the aging of America. Baby boomers are rapidly approaching
retirement age when golf activity flourishes. The baby boomers represent not only the largest
single demographic in the US, but they also approach retirement age with more disposable
income than any previous generation.
Nearly all municipalities that own golf courses offer highly discounted, or even free, green fees
and programs for juniors; many also do so for lower-income and/or at-risk youth. Though there
may be no short-term financial benefit in doing this, the intangible benefits are obvious, as
programs such as this have proven to help troubled kids by providing them with a healthy outlet
that can become a lifelong interest or even passion. Additionally, there is likely to be long-term
financial benefit to the City, as players are being cultivated as potential future customers.
One example of a formally organized youth golf program is The First Tee, whose main goal is to
offer a venue for introducing people - primarily children - to the game of golf in an affordable,
non-intimidating setting. The First Tee, an initiative of the World Golf Foundation, states as its
mission: “To impact the lives of young people by providing learning facilities and educational
programs that promote character-development and life-enhancing values through the game of
golf”. San Francisco currently has an active youth golf program at Golden Gate Park, as well as
through its First Tee Program at Harding Park.
Still, several factors have changed over the last few decades that have, at least temporarily,
altered the golf course market and the role of the municipally owned golf course. The main
factors are:
Increased Competition: In the last two decades the supply of public golf courses has
increased dramatically, thus eliminating the near-monopoly on public golf that municipalities
used to have. Now municipal courses are finding themselves competing head-to-head with
private enterprises.
Growth in Golf: In 1950, there were an estimated 3.5 million golfers. By 1998, this had grown
to over 26.4 million – a growth of 654%. However, since 1998 growth in golf activity has all but
stopped but growth in the number of facilities has continued leading to saturation in many
markets. Today, municipalities are finding that they are not only competing head-to-head with
private enterprises, but that they are doing so in an increasingly competitive market.
There are several factors that typically inhibit municipalities in their ability to compete
successfully with private enterprise. These include:
3. Personnel Policies: One of the most glaring areas separating municipal governments
from private enterprise is in relation to personnel policies and costs. This is particularly
true with regards to:
Benefits: Municipalities typically offer very rich benefit packages – far superior to
what is normally the case within the golf industry. This results in the municipality
paying far more for labor than competing private facilities.
Termination: With most private enterprises, if an employee is not productive,
they are terminated – and often quickly. With governments, however, it can be
extremely difficult to get unproductive employees terminated.
Marketing: Most municipalities lack marketing expertise that is critical to
succeeding in a competitive business.
Procurement: When large items, especially capital improvements, are needed,
municipalities are often constrained with lengthy procedures and mandated
policies that slow the process down and can lead to situations where the best
product or contractor is not selected. Another issue regarding procurement is
getting funding, which can often take months longer than in private industry.
Incentive: With most municipal golf operations where all the employees are
employees of the municipality, there are little or no incentives given to the
managers for superior performance. As a result, municipal golf managers often
earn the same secure income regardless of how successful the facility may be.
In summary, municipal golf facilities face considerable challenges to survive in the modern golf
industry, and the City of San Francisco is facing many of these same issues, as we will identify
throughout the text of this report.
The San Francisco market area is part of the San Francisco – Oakland – San Jose, California
DMA (Designated Market Area). The tables below illustrates how this key California DMA ranks
in relation to the other 209 DMAs nationwide on some key golf demand and supply measures.
The above shows how the region is one of the top ten golf markets in the U.S. in terms of
golfers and potential rounds demanded. The total number of facilities ranks in the top 12%,
including a 12th place ranking for the number of premium (highest fee) courses and a tie for 94th
place in number of value (lowest fee) facilities. In all, the approximately 470,000 permanent
resident golfing households are expected to produce roughly 9.7 million rounds of golf annually,
or about 21 rounds per golfing household per year.
While the San Francisco DMA is among the largest golf markets in the United States in terms of
total demand, actual golf participation rates, and particularly rounds demanded per household,
are low relative to national benchmarks. However, due to the sheer size of the population,
estimated rounds demanded in the market is a very large number. Additionally, as we will see,
the corresponding supply to service this demand, relative to national benchmarks, is extremely
low – a positive for existing golf facility operators.
As we can see, even using very conservative estimates for annual visitors, the potential demand
for golf from San Francisco area tourists is more than 700,000 rounds annually. These visiting
Household/Supply Ratios
Utilizing this data in conjunction with the demographics presented earlier, we note the following
comparison of golf facility supply to the number of households available in the market to support
each facility. This “Household/Supply Ratio” estimates the relative supply of a market for
comparison to other U.S. locations. The Household/Supply Ratio is derived by dividing the total
number of households by the number of 18-hole equivalent golf courses. Household/Supply
indices are derived from these ratios, and then compared with the base national figure of 100.
As the table below indicates, the immediate local San Francisco market area appears to be
undersupplied with golf relative to the U.S. benchmark of 7,477 homes to support each 18 holes
of golf. For instance, in the San Francisco MSA there are more than three times (Index=309) as
many households available to support each 18 holes of golf than we observe nationally. The
undersupply is even more notable in the public segment of the San Francisco MSA, and in
some of the local 3-mile sub-markets. NGF research indicates that the City/County is, by a wide
margin, a net exporter of rounds played to surrounding areas; the relative undersupply of golf
courses in the City/County, as well as the poor condition of the City courses, are two of the
primary reasons for this.
Households Supply Index: Total 2,898 258 460 598 346 309 183 100
Households Supply Index: Public 2,059 428 327 425 246 396 199 100
Households Supply Index: Private 0 131 0 0 0 200 153 100
Source: NGF Consulting 2006.
Opportunity Chart
Gleneagles
Opportunity Chart Harding
Linco ln
800 Go lden Gate
Sharp
700
Households Per 18-Hole Facility Index
SF Co unty
SF M SA
600 SF DM A
Califo rnia
Inactive 500 Opportunity U.S.
400
300
200
100
0 20 40 60 80 100 120 140 160 180 200
0
Saturated Active
-100
Rounds Dem anded Index
The demographic profile of San Francisco, in terms of median household income and median
age, is predictive of high golf participation, according to NGF Demand Models. However, this is
mitigated somewhat by the extremely high cost of living in the area. Household/supply ratios are
also extremely favorable for golf operators located on the peninsula, as there are several times
as many homes available to support each 18 holes of golf than there are nationally.
In general, the Bay Area is undersupplied with affordable public golf courses, and in the more
urbanized areas such as San Francisco, demand is significantly supply constrained, especially
given the current state of disrepair of some of the City’s golf courses. As a result, NGF research
NGF Consulting has also observed underserved corporate and hotel markets in San Francisco.
Local corporations and other organizations are strong candidates for lucrative tournament play.
However, due to both the poor conditioning and a lack of marketing emphasis, tournament play
is a small percentage of total rounds at the City courses. Harding Park, as would be expected,
does the most tournament business, at about 8% of total rounds.
There are also a reported 16 million annual visitors to San Francisco, and approximately 35,000
hotel rooms within the city. The visitor market has extremely good potential for the City golf
courses, once all of them are in better condition and marketed properly. The courses located
within the city would be at a competitive advantage for golfers staying in city hotels, if only due
to proximity. This is especially true of business travelers, who may have time constraints. In
summary, both the corporate and hotel/visitor markets will be prime candidates to tap for
increased rounds played, if Sharp and Lincoln Parks are rehabilitated.
Monarch Bay Golf Club 18H-R; 9H-E 71 / 128 / 7,015 / 5,140 City of San Leandro 1982 Lease/Lease
Palo Alto Municipal Golf Course 18H-R 72 / 118 / 6,820 / 6,227 City of Palo Alto 1956 Mgmt./City
Poplar Creek Golf Course 18H-R 70 / 113 / 6,042 / 4,768 City of San Mateo 1933 City/City
San Jose Municipal Golf Course 18H-R 72 / 119 / 6,700 / 4,200 City of San Jose 1968 Lease/Lease
Santa Clara Golf & Tennis Club 18H-R 72 / 118 / 6,704 / 5,492 City of Santa Clara 1987 Mgmt./Mgmt.
Shoreline Golf Links 18H-R 72 / 125/ 6,645 / 5,433 City of Mountain View 1983 City/City
Skywest Golf Course 18H-R 72 / 121 / 6,862 / 6,171 Hayward Area Rec & Park Dist. 1965 Muni/Muni
Sunnyvale Golf Course 18H-R 70 / 121 / 6,255 / 5,279 City of Sunnyvale 1969 City/City
KEY: R – Regulation P – Par 3 E – Executive
Mgmt – Management Company
N/A – Information not available
18-Hole
18-Hole Non- 18-Hole N/R 18-Hole Per
Total Resident Resident Twilight Senior Person
2005 Recent Green Fee Green Fee Green Fee Green Fee 18-Hole
Golf Course Type Rounds Trend (WD/WE) (WD/WE) (WD/WE)1 (Res/NR) Cart Fee
Area Municipal Golf Courses
Callippe Preserve Golf Course 18H-R 73,5142 DNA $42/$60 $36/$51 $26/$39 $26/$30 $13
Chuck Corica Golf Complex 36H-R, 9H-P 170,000* Down $30/$35 $23/$27 $23/$25 $18$/23 $14
Lake Chabot Golf Course 18H-R, 9H-P 43,329 Down $26/$37 $22/$30 $18/$30 $17/$17 $13
Los Lagos Golf Course 18H-R 70,000 Level $31/$45 DNA $22/$27 $20/$20 $14
Monarch Bay Golf Club 18H-R, 9H-E 114,000 N/A $35/$59 $27/$35 $19/$26 $27/$27 $13
Palo Alto Municipal Golf Course 18H-R 75,000 Down $35/$46 DNA $26/$30 $26/$31 $13
Poplar Creek Golf Course 18H-R 83,000 Down $35/$45 $28/$35 $24/$29 $23/DNA $13
San Jose Municipal Golf Course 18H-R 75,000* Down $34/$48 DNA $24/$30 $20/DNA $13
Santa Clara Golf & Tennis Club 18H-R 85,247 Down $33/$41 $20/$26 $24/$26 DNA $13
Shoreline Golf Links 18H-R 65,837 Down $38/$45/$54 $31/$38/$47 $25/$28 $28/$28 $11
Skywest Golf Course 18H-R 65,000 Down $29/$38 $25/$34 $19/$24 $18/$21 $14
Sunnyvale Golf Course 18H-R 85,000 Down $33/$43 DNA $24/$27 DNA $12.50
Market Average Rounds (per 18 holes)/Fees 69,305 $33.5/$46 $29/$39 $23/$28.5 $22.5/$24.5 $13
CHART KEY
E – Executive P – Par 3
*NGF Consulting Estimate
1 Refers to early afternoon twilight; super-twilight rates are also the norm in market
N/A – Information not available
2 For first 12 months open (December 2005 – November 2006)
DNA – Does not apply
N/R – Non-resident
Note: Where three rates listed, middle rate is Friday.
18-Hole
18-Hole 18-Hole 18-Hole N/R Resident1 18-Hole Per
Total FY N/R Green Resident1 Twilight Twilight Senior Person
2005-06 Recent Fee Green Fee Green Fee Green Fee Green Fee 18-Hole
Golf Course Rounds Trend (WD/WE) (WD/WE) (WD/WE) (WD/WE) (WD/WE) Cart Fee
Gleneagles Golf Course 34,851 N/A $20/$27 $20/$27 DNA DNA DNA $12
Harding Park Golf Course 60,4642 Down5 $135/$1553 $46/$59 $105/$1253 $35/$44 $31/$594 $13
Lincoln Park Golf Course 34,748 Down $32/$36 $20/$24 $19/$23 $19/$23 $12/$19 $13
Sharp Park Golf Course 35,195 Down $32/$36 $20/$24 $19/$23 $19/$23 $12/$19 $13
CHART KEY
1 City/County of San Francisco; northern California rates also available *NGF Consulting Estimate
N/A – Information not available
2 Rounds are for 18-hole Championship course only DNA – Does not apply
3 Fees include cart N/R – Non-resident
4 Resident only
5 Hosted Amex in 2005
• Harding Park’s 60,464 rounds fall below the market average, which is not surprising
given the much higher price points. When the Fleming course’s 41,502 rounds are
added in, the overall facility falls just below the market average per 18 holes.
• Interestingly, both other City 18-hole courses, Lincoln and Sharp, are at about 50%
of the average market activity levels, as is the 9-hole Gleneagles.
• The market average non-resident walking green fee was $33.50 on weekdays and
$46 on weekends, with corresponding resident rates of $29 and $39, respectively.
Average per person cart fee (shared cart) was $13. Resident rates at Sharp and
Lincoln are considerably below market average, which is likely reflective of below
average course conditions and support amenities at these two City courses as
compared to the majority of municipal competitors. Non-resident weekend fees are
also considerably lower than market at Sharp and Lincoln.
• As would be expected, Harding Park’s non-resident green fees, which are cart
inclusive, are considerably higher than those at any other municipal course we
surveyed. The next highest municipal fees are at the brand new Callippe Preserve,
at $42/$60 for non-residents and $36/$51 for residents.
• All but four of the municipal courses surveyed – Los Lagos, Palo Alto, San Jose
Municipal, and Sunnyvale - offer resident discounts.
• Fees at Gleneagles are in line with the only other 9-hole regulation length courses in
the regional market – Diablo Hills, which is about 25 miles away in Walnut Creek,
and Fremont Park, 28 miles away in Fremont.
• Chuck Corica, despite losing as many as 80,000 rounds off its peak activity of the
1990s, remains the most active overall facility in the market, though the most active
courses per 18 holes are Santa Clara, Sunnyvale, and Poplar Creek.
• Los Lagos (San Jose) and Callippe Preserve (Pleasanton) are the newest entrants
into the area municipal golf market, and both are high quality facilities that had
immediate market impact. However, each has high associated debt service and Los
Lagos has been unable to turn sufficient profit to service this debt. According to
course operator CourseCo (which also manages Los Lagos), Callippe Preserve did
an impressive 73,500 rounds in its first twelve months of operation, making the East
Bay and South Bay golf markets even more competitive.
Per
18-Hole Person
Estimated Peak 18-Hole 18-
Annual Season Twilight Hole Off Season
Rounds Green Fee Green Fee Cart Discounting
Golf Course Type Location Played (WD/WE) (WD/WE) Fee (Yes/No)
Regional Daily Fee Golf Courses (Regulation Length)
Adobe Creek Golf Course 18H-DF Petaluma 44,400 $36/$46/$561 $25/$28/$39 $14 No
Bridges GC at Gale Ranch 18H-DF San Ramon 40,000 $65/$85 $45/$60 Included Yes
Canyon Lakes Country Club 18H-DF San Ramon 35,000 $55/$65/$80 $27/$60 Included No
Cinnabar Hills Golf Club 27H-DF San Jose 50,000 $80/$100 $59/$79 Included Yes
Course at Wente Vineyards 18H-DF Livermore 40,000 $85/$105 $55/$65 Included Yes
Coyote Creek Golf Club 36H-DF Morgan Hill 60,000 $79/$86/$102 $65/$71 Included Yes
Crystal Springs Golf Course 18H-DF Burlingame 65,000 $36/$51 $26/$36 $14 Yes
2
Half Moon Bay Golf Links 36H-DF Half Moon Bay 90,000 $135/$155 $40/$50 Included No
Hiddenbrooke Golf Club 18H-DF Vallejo 35,000 $65/$75/$95 $49/$69/$79 Included Yes
Metropolitan Golf Links 18H-DF Oakland 60,000 $40/$50/$60 $20/$30 $15 Yes
Peacock Gap Golf & CC 18H-DF San Rafael 60,000 $30/$46 $21/$31 $14 Yes
Poppy Ridge Golf Course 27H-DF Livermore 58,000 $57/$823 $27/$383 $16 No
4
Presidio Golf Course 18H-DF San Francisco 62,000 $78/$90 $32/$37/$52 $18 Yes
San Geronimo Golf Club 18H-DF San Geronimo 55,000 $33/$38/$65 $25/$35 $14 No
Sunol Valley Golf Courses 36H-DF Sunol 80,000 $28/$55 $20/$26 $12 Yes
CHART KEY
1 Resident fees are $28/$32/$44 Note: Where three fees indicated, middle fee is for Friday
2 Advance reservation green fee is $165/$180
3 NCGA and SCGA members receive significant discounts off
of this rate
4 San Francisco resident rates are $42/$65/$77
• Other forms of discounting are also prevalent in the market, with the most common
type being twilight and super-twilight rates. Twilight rates, which are illustrated in the
table above, generally start at noon or 1:00 pm and run until mid-afternoon, at which
time still cheaper ‘super’ twilight rates are offered (often for unlimited play until dark).
Twilight rates are typically accompanied by discounted carts.
• There are still other ways that discounting among daily fee courses manifests itself,
including resident discounts, “player’s clubs” (frequent player programs), and
participation in on-line wholesale programs such as golfnow.com and golf707.com.
• Finally, many daily fee courses practice aggressive yield management, where tee
sheets are carefully monitored and unsold inventory is offered at discounted rates
with the idea that an unsold tee time is gone forever. A common practice of yield
management is to form e-mail clubs and to send out blasts to customers advertising
special deals for certain times of the week.
• The daily fee facility that competes perhaps most directly with the San Francisco
municipal golf courses (certainly Harding Park) is the Presidio, which practices very
aggressive yield management. In addition, the Presidio offers significant discounts to
City/County residents (its resident rates are cheaper than at Harding Park on
weekdays and highly competitive on weekends). Super twilight rates are only $25
weekdays and $30 weekends, with a discounted $12 cart.
• Additionally, the Presidio offers other ways for golfers to play very cheaply, including
a “Twilight Player’s Club” (pay $29 per month, and play anytime there is an opening
while paying only the applicable cart fee), and the “Walk On” pass, which offers
unlimited play for an entire year, with no fee, whenever there is an opening. This
pass costs $1,700, which means a golfer playing only two times per week would
effectively pay only $16.35 per round to play Presidio.
• Harding Park’s green fees compare with the highest daily fee rates in the market,
and are higher than most. The clubs closest to Harding Park with regard to fees are
Half Moon Bay ($135/$155 weekday/weekend) and Pasatiempo in Santa Cruz
($150/$175, plus $20 cart).
• As a result of new course openings, the 9/11 tragedies, and other economic factors,
average rounds played at area daily fee courses are down about 20% to 30% since
the late 1990s or 2000. While competition in the East Bay, South Bay, and North Bay
areas is reported to be very intense, it is NGF Consulting’s opinion that the City
courses may benefit from being in more of an insular geographic market, particularly
if the day comes when these facilities can compete from a course conditioning
perspective.
• In addition to rounds played being down, the majority of daily fee operators report
that average daily rates (ADRs) – the actual green fee revenue divided by the
• The majority of daily fee courses in the market are not directly competitive to Lincoln
and Sharp, due to location and the relative price/value proposition offered. However,
as noted, deep discounting at certain times will prompt the golfer that is normally
content with playing an average course for very affordable rates to play a higher
quality course for a slightly higher cost.
• The daily fee courses that are probably most directly competitive to Sharp and
Lincoln are Crystal Springs, leased from the City’s Public Utilities Commission, and
Metropolitan Golf Links in Oakland, which reopened in April 2003 after being closed
for about six years.
• Operated by CourseCo through a 30-year sublease involving the City and Port of
Oakland, Metropolitan offers excellent conditions at affordable prices, particularly for
afternoon tee times. It also offers discounts to Oakland residents. The home facility
for the Cal-Berkeley golf team, Metropolitan offers a Johnny Miller ‘American Links’
design, grass driving range (a rarity in the East Bay), an expansive practice area,
and full service clubhouse and banquet facilities. The course offers excellent
conditioning, and drains exceptionally well, a clear advantage in this market. Greens
are pure Bentgrass, resulting in consistent conditioning and speeds. The facility also
benefits from excellent access to the 880 and the entire Bay Area.
Golden Gate Golf Course 9H-P San Francisco $14/$18 $10/$12 $7/$10 Applicable DNA
Chuck Corica (Mif Albright) 9H-P Alameda $9/$11 $9/$11 $7/DNA $7 $14
Mariners Point Golf Links 9H-P Foster City $16/$16 $12/$12 $12/$12 $10 DNA
Mill Valley Golf Course 9H-E Mill Valley $17/$19 $12/$14 $11/DNA $10 DNA
• Mariners Point, in Foster City, is a comprehensive teaching and practice center that
features a 9-hole, par 3 golf course that is set along San Francisco Bay and is lighted
for night time play. The facility also has 64 practice stalls on a variety of surfaces,
including natural grass, and the hitting area has yardage markers and target greens.
The short game facility includes well-manicured greens and bunkers to practice
chipping, pitching and sand shots of varying distances. Mariners Point also has a
fully stocked pro shop, with a large variety of hard and soft goods.
• Mission Hills, which the Hayward Area Park District opened in 1999, is a high quality
well-maintained facility that features a highly successful night lighted, 50-stall,
double-decked driving range and a fully equipped golf shop, in addition to the
executive length golf course.
• Green fees at the City’s 9-hole Fleming course are considerably higher than those at
other alternative length facilities in the market, and are similar to 18-hole rates at
both Lincoln and Sharp Park. The fees are also not much below some other
municipal course 18-hole rates, and are more expensive than several when the $11
replay rate is considered. Finally, fees at Fleming are similar to the super twilight
rates at some high quality daily fee courses in the market.
• There are no power carts available at Golden Gate, Mariners Point, or Mill Valley.
• Average non-resident fees at Harding are similar to Torrey Pines South course fees,
but considerably higher than the North course. Also, Harding non-resident twilight
rates are more than twice those being charged at Torrey’s North course. These
comparisons to fees at Torrey Pines are notable, as Torrey enjoys not only a very
high quality, but also considerable brand equity among municipal golf courses.
• Average rounds played among these premium municipal courses are about 50,000
per 18 holes. Harding Park, at about 102,000 rounds last year on its 27 holes, is one
of the more active municipal golf courses at this price point. Bethpage State Park is
the most active (about 277,000 on its 90 holes in 2006) of those we surveyed, but it
is at a considerably lower price point than Harding Park.
• Resident play accounted for an average of about 50% of total play at the national
comparables – identical to the 50% currently proposed for Harding Park, after a
recent change in policy (mandated resident percentage had been 65%).
• Among our sampling of high-end national municipal golf courses, residents paid an
average only 42% of the corresponding fees for non-residents. Residents of San
Francisco receive a higher discount, relative to the green fee charged to non-
residents, than residents receive on average at the other national municipal courses.
• The large fee disparity between residents and non-residents is reflective of the
typical operating model at very high-end municipal courses: non-residents pay much
higher fees so that residents can still enjoy affordable golf at a premium facility. It is
sometimes the case that residents are playing at fees that do not cover the cost to
the operator to produce the round.
• In addition to Harding Park, several of these national premier municipal courses have
hosted professional events. Most prominent among these is Bethpage ‘Black’, which
in 2002 became the first municipal golf course to host the U.S. Open. Brown Deer
Park annually hosts the U.S. Bank Championship (formerly Greater Milwaukee
Open), and SilverRock Resort will soon become home to the Bob Hope Chrysler
Classic. Torrey Pines hosts the Buick Invitational each year and will host the U.S.
Open in 2008. Crandon Park has been a long-time host to a Senior PGA Tour event.
Note: Tenant has a management agreement with CourseCo for daily operation of the
premises.
Terms
Base Rent:
Annual Base Rent Monthly Payments
Year 1-3 $1,250,000 $104,167
Year 4-10 $1,500,000 $125,000
Year 11-15 $2,000,000 $166,667
Year 16 forward $2,250,000 $187,500
Adjustment allowed each anniversary except #4, 11, and 16 – based on CPI
Percentage Rent:
8% F&B gross
12% Merchandise gross
Years 1-2 25% gross revenues all other sources
Years 3-5 35% gross revenues all other sources
Years 6-20 40% gross revenues all other sources
Required improvements:
Clubhouse renovation and ADA conformance $550,000
Parking, landscaping, entry gate improvement and expansion $215,000
Maintenance building, fuel storage tanks, on-course snack bar, ADA restrooms,
landscaping $240,000
Driving range/practice area irrigation, turfing; fence repair; build practice green; add range
lighting; add second deck $185,000
CourseCo to prepare master plan for golf course improvements $635,000
Add cart paths
Reconstruction and expand certain tees and bunkers
Restore native habitats around and within the course
Improve drainage of the course and containment of run-off
Contingency allowance for modification or additions to above $150,000
Total – not less than: $1,975,000
Base Rent
From June 1, 2003 through May 31, 2006, base rent payable in monthly installments of
$100,000.
From June 1, 2006 through the term of the lease, Base rent calculated as the greater of:
• 80% of average annual accrued rent for 3 immediately previous annual periods
• or
• CPI adjusted base rate
Percentage Rent
Modified as follows:
8% F&B gross
From 6/1/03-end 8% Merchandise gross
Remainder of term 30% gross revenues all other sources
Up to and including Revenue Threshold (as defined below)
AND
65% gross all other sources exceeding Revenue Threshold
Other Changes
• Beginning June 1, 2003, City will make contributions to Capital Improvement Fund in
addition to Tenant’s contributions (2% gross revenues) as rent credits. When the
amount deposited by Tenant to bring CIF to $500,000 has been matched, City’s
contributions cease.
• Changed the requirement of a new irrigation system in lease year 6 to:
• New cart paths, new cart barn, wash down area, and other golf course and
clubhouse improvements will be installed before lease year 13. Other capital
improvements will be installed prior to end of the Term. Tenant obligated to expend
not less than $2,000,000 on capital improvements.
• Provided for a two-year lease review. Audited operating income for 2003 and 2004
compared to projected operating income for those years. May lead to amendment of
lease.
Rent
Annual Base Monthly
Rent Payments Annual Percentage Rent
5% admissions gross
+ 2.5% equipment rentals gross
Year 1-2 $250,000 $20,833.33
+ 4 1/8% concessions gross,
payable monthly
10% admissions gross
+ 5% equipment rentals gross
Years 3-10 $500,000 $41,666.67
+ 8.25% concessions gross,
payable monthly
Year 11 & forward Calculation $166,667 Same as years 3-10
Adjustment allowed on 10th, 15th, and 20th anniversary – based on CPI
Improvements
Tenant’s sole expense, in accordance with Landlord’s approval in writing. Tenant pays Landlord
and administrative fee of 5% of total cost of any work in excess of $5,000.
Required:
• Replacement of greens - four per year over a 9-year period
• Renovation of the café/bar
• Improvements to clubhouse
• Repaving of maintenance road and parking lot
• Replacement of cart bar
Maintenance
Tenant has sole responsibility for condition, operation, repair, maintenance, and management of
the premises.
Labor Expense / Revenue Dollar N/A $0.67 $0.42 N/A $0.27 $0.30 N/A N/A N/A $0.46 $0.24 $0.00 $0.29 $0.62 $0.59 $0.64 $0.93
Cost of Production per Round $29.41 $32.00 $54.30 $16.95 $42.08 N/A $44.05 $59.29 $6.40 $35.04 $27.65 $44.75 $35.29 $49.56 $71.23 $35.03 $30.26
Cost of Production (excluding debt service) N/A $32.00 $54.30 $16.95 $34.67 $39.45 $35.12 $39.29 $1.83 $26.51 $27.65 $40.63 $35.29 $45.24 $62.06 $35.03 $30.26
Labor Exp. %/Total Expense Budget N/A 60.9% 42.2% N/A 35.2% 46.0% N/A N/A N/A 53.2% 36.2% N/A 40.0% 56.2% 55.2% 52.9% 70.4%
1 Rounds at Skywest are down from a peak of 90,000+ in the late 1990s to the current 65,000 5 Represents estimate based on current budget of $2.58 million, not including management fee
2 This figure includes a $400,000 administrative charge from the General Fund and an additional 6 Complete information was not provided for San Jose Municipal, Rancho del Pueblo
$100,000 transfer to the General Fund 7 Doesn’t include transfer to General Fund, which is equivalent to operating profits less a capital improvement set-aside
3 Highest number since 2000, but not necessarily all time peak 8 Operates as part of Community Recreation Fund
4 Total gross revenue not available as aspects of the pro shop are concessioned
*NGF Consulting estimate
General Notes: Figures reported are for most recently available fiscal year (2005-06 for City of San Francisco courses)
Labor expense at Harding/Fleming includes KSM payroll. Labor expense at Lincoln and Sharp is from City perspective only.
Maintenance expense at City of San Francisco courses includes payroll, materials & supplies, and equipment; for Harding/Fleming, also includes course & grounds maintenance listed on KSM income statement.
Gross reported for all systems includes a net lease payment for food & beverage
Difference between total gross revenue and total expense may not equal the net profit in some cases (see San Jose), as some municipalities reported total gross (cost of goods sold not deducted) while others reported adjusted gross revenue
Summary Observations
The bullet points that follow note some significant observations NGF Consulting has made
regarding these operations. Following the summary is a table displaying the summary operating
information for the municipal golf systems profiled in this section, as well as for New York City,
which we will cover in the Recommendations section later in this report.
• New York City is an example of a very profitable municipal golf system, generating
about $6 million in profit (all from license fees) for the City in 2005, while maintaining
control of course conditioning, policies, fees, etc. In addition, the licensees are
responsible for capital improvements.
• Nassau County and Houston are examples of systems that are struggling under a
very high cost of labor (nearly 70% of total expenses). Houston, which self-operates
several facilities and has a mishmash of contracts for the rest, loses money on the
facilities it self-operates but generates a profit on its private operations. However,
unlike New York City, course conditions at its privately operated golf courses are
poor, as the lessees struggle to put money into maintenance while making the rent
payments to the City.
• San Diego is an example of a system that is being supported by a cash cow – Torrey
Pines. Despite losing money at its other two facilities, San Diego generated a net
profit of nearly $5 million in 2005. Similarly, New York State clears about $4 million at
the Bethpage State Parks Golf Courses.
• Crystal Springs, which is leased from the City of San Francisco through its Public
Utilities Commission, is almost a microcosm of New York City. San Francisco
receives anywhere from $1.2 million to $1.3 million annually on the facility, with little
associated expense. Additionally, the City sets stipulations for green fees, and the
operator – CourseCo – has reportedly invested about $2 million in the facility and is
responsible for future capital improvements.
• San Francisco’s cost to produce each round of golf is more than twice that of the
examples noted above, with the exception of Nassau County, which is producing
rounds at about 58% of the cost that San Francisco is.
Other Measures:
Labor Expense N/A $4,476,694 $4,280,000 $771,930 $3,500,000 N/A $3,500,000 $5,513,780
Labor Expense as % of Total Expense N/A 68.7% 52.0% 40.3% 69.8% N/A 58.3% 56.2%
Cost of Production per Round (excl. debt) N/A $26.58 $22.89 $20.84 $19.46 N/A $21.66 $45.24
Cost of Production per Round N/A $28.64 $22.89 $32.69 $19.46 N/A $21.66 $49.56
*NGF Consulting estimate
Harding Park’s 60,464 rounds fall below the market average, which is not surprising given its
price points, which are considerably higher than those at any other municipal course we
surveyed. When the Fleming course’s 41,502 rounds are added in, the overall facility falls just
below the market average per 18 holes. Both other City 18-hole courses, Lincoln and Sharp, are
at about 50% of the average market activity levels, as is the 9-hole Gleneagles.
The greater Bay Area features a highly competitive daily fee golf market, as illustrated by a
decrease in average rounds played of about 20% to 30% since the late 1990s. Though most
daily fee facilities are not considered direct competition for the City courses, discounting of fees
is prevalent at many high quality courses, prompting some golfers who would normally play at
generally lower fee municipal courses to occasionally travel to play “luxury” rounds. Many daily
fee courses practice aggressive yield management, where tee sheets are carefully monitored
and unsold inventory is offered at discounted rates with the idea that an unsold tee time is gone
forever. This is a flexibility that the San Francisco municipal courses do not currently have.
The daily fee facility that competes perhaps most directly with the San Francisco municipal golf
courses (certainly Harding Park) is the Presidio, which practices very aggressive yield
management. In addition, the Presidio offers significant discounts to City/County residents, and
offers other programs whereby golfers can play the course affordably. Presidio’s resident rates
are cheaper than at Harding Park on weekdays and are highly competitive on weekends.
Harding Park’s green fees compare with the highest daily fee rates in the regional market, and
are higher than most. The clubs closest to Harding Park with regard to fees are Half Moon Bay
($135/$155 weekday/weekend) and Pasatiempo in Santa Cruz ($150/$175, plus $20 cart).
Resident green fees at Harding are now higher than those at Torrey Pines. For instance,
weekend resident rates are $12 higher than San Diego residents pay to play on the ‘South’
course that will host the U.S. Open. Average non-resident fees at Harding are similar to Torrey
Pines South course fees, but considerably higher than the North course. Also, Harding non-
resident twilight rates are more than twice those being charged at Torrey’s North course. These
comparisons to fees at Torrey Pines are notable, as Torrey enjoys not only a very high quality,
but also considerable brand equity among municipal golf courses.
NGF Consulting also performed an analysis of some premier national municipal comparables to
Harding Park, which, at about 102,000 rounds last year on its 27 holes, is one of the more
active municipal golf courses at this price point. Among our findings was that resident play
accounted for an average of about 50% of total play at the national comparables – identical to
the 50% currently proposed for Harding Park, after a recent change in policy. Additionally, we
noted a large fee disparity between residents and non-residents at high-end municipal courses,
which is the typical operating model at very high-end municipal courses - non-residents pay
much higher fees so that residents can still enjoy affordable golf at a premium facility.
We also presented overviews of regional municipal golf systems that were illustrative of trends
with respect to golf in this regional market. While we observed a variety of operating structures,
Our regional overview also revealed a couple of key operating ratios that are illustrative of the
high expense structure for the City golf system. Labor expense per revenue dollar averaged
$0.38 among seven municipalities reporting, compared to $0.62 for San Francisco. Secondly,
San Francisco’s cost of production per round in FY 2005-06 was the second highest among the
municipalities surveyed, at $45.24 per hole. This figure will go up considerably for 2006-07, as
the payment to the Open Space fund increases to $1.41 million and the budget at Harding Park
increases significantly.
In the final section of this chapter, we present the contract terms for the City’s two PUC golf
courses, which are leased to private operators. They serve as examples within the City of San
Francisco itself of golf courses that are managed by people with golf expertise and experience,
and that provide significant positive cash flow to the City. Additionally, though they are not
considered municipal golf courses, the City retains oversight with respect to green fees and
maintenance conditions, and also requires certain capital improvements of the lessees.
As we will see from the results of the Golfer Survey Program (GSP) instituted at the five golf
courses during the course of this engagement, the City’s municipal golf system suffers from a
very poor public perception at this time, with the possible exception of Harding Park. However,
at the same time, golfers also recognize the unrealized potential of facilities such as Lincoln
Park and Sharp Park, and are very passionate about the potential rehabilitation of these assets.
As part of this consulting effort, NGF Consulting has observed a very dedicated and hard
working staff that is managing a budget of over $10 million in golf revenues in each of the last
three fiscal years. Harding Park alone has accounted for over $8 million of this revenue, placing
it among the highest five of municipal golf courses nationally in annual revenue production.
Administration
The City’s Recreation & Parks Department (RPD) and its Director oversee the municipal golf
courses. The Department’s Golf Division oversees grounds maintenance, while the Property
Management Department handles contracts for each golf course property, including those with
the First Tee, PGA TOUR, and Kemper Sports Management. The basic chain-of-command for
the Golf Division is as follows:
A 1999 Office of the Legislative Analyst (OLA) report noted that the City’s golf courses had, up
until that point in time, been generating surplus revenue, which was appropriated to fund other
RPD (Department of Recreation and Park) programs. In FY 1999-00, total annual revenue from
green fees and concessions totaled approximately $5.1 million. RPD’s FY 2000-01 budget for
the City’s golf courses was approximately $3.4 million, about 77% of which was spent on
salaries and benefits – about 77 percent. As we will see later in this section, the situation has
reversed, as General Fund transfers are now required to support the Golf Fund. This is despite
the fact that Harding Park green fee revenues have nearly tripled since FY 1999-00, to more
than $4.1 million.
Total budgeted maintenance staffing for the City courses for Fiscal Year 2006-07 is summarized
in the table below. As we will explore further in the individual course section of this report, actual
staffing at the golf courses is considerably lower than budgeted as of this writing:
• Sharp Park – 11 allocated staff; currently includes 4 vacant gardeners, 1 park section
supervisor, 1 truck driver, and 5 gardeners (though the Golf Program Director noted
he had only 4 here)
In addition, there is a four-person program-wide tree crew, plumber, mechanic, and pest control
specialist.
Manager I 0.12 $12,337 0.38 $39,064 0.25 $25,700 0.25 $25,700 1.00 $102,801
Gardener 1.00 $57,422 18.00 $1,033,597 9.00 $516,799 9.00 $516,799 37.00 $2,124,617
Park Section Supervisor 0.33 $23,041 1.00 $69,821 0.67 $46,781 1.00 $69,821 3.00 $209,464
Pest Control Specialist 0.12 $8,378 0.38 $26,532 0.25 $17,456 0.25 $17,456 1.00 $69,882
Tree Topper 0.38 $27,836 1.12 $79,940 0.75 $53,531 0.75 $53,531 3.00 $214,838
Tree Topper Supervisor I 0.13 $10,351 0.37 $29,460 0.25 $19,906 0.25 $19,906 1.00 $79,623
Plumber 0.20 $17,726 1.00 $88,633 .40 $35,453 0.40 $35,453 2.00 $177,265
Truck Driver 3.00 $215,990 1.00 $71,997 1.00 $71,997 5.00 $359,984
General Laborer 0.12 $6,660 0.38 $21,091 0.25 $13,876 0.25 $13,876 1.00 $55,503
Special Salary Savings - Misc. ($629) $2,564 ($6,469) ($2,618) ($2,478) ($9,630)
Attrition Savings - Misc. $3,207 (1.98) ($119,059) (2.92) ($178,589) (4.90) ($294,441)
Overtime - Misc.
Total 2.40 $163,422 0.00 ($5,541) 26.63 $1,682,020 10.84 $680,711 10.23 $644,377 50.10 $3,164,989
• At Golden Gate Park, a 9-station driving cage was installed, and the City agreed to
pay Manager $65,461.54 reimbursement for planning, design, purchase and other
costs, payable in five annual installments.
• The Gleneagles Tenant (who may be allowed rent credits for City-required
improvements upon City approval) agreed to make specific facility improvements:
Year 1-2: Improvements to entrance, clubhouse, kitchen and patio area; trim
and remove tree limbs. Explore adding a driving range/cage. $50,000
estimated cost.
Years 2-4: Review possibility of adding forward tees on several holes; lease
new equipment. $50,000 estimated cost.
Year 4-5: Based on financial feasibility studies, implement driving range.
Purchase new TVs for clubhouse. $50,000 estimated cost.
Year 6-7: Review cart path and conduct major renovation of cart paths;
review condition of parking lot and driveway and possibly repave and stripe.
$100,000 estimated cost.
• The initial contract for Sharp Park required capital improvements of $575,000 in
three stages; rent credits were to be allowed for improvements beyond those set
forth in lease.
A RPD brief – “The Revised Plan for Renovating Harding Park” – from February 2002 noted that
securing a PGA TOUR event was not the goal of the project. Rather, the brief stated, “the
Championship offers a critical means toward achieving the ultimate goal of providing the best
possible recreational experiences for San Franciscans at affordable fees”.
Some key specifics of the plan for the Harding Park renovation, as outlined in the RPD brief, are
summarized below:
Financing – While the City does not have to pay these funds back to the State, a portion of
revenues from the renovated golf courses will be used to pay to the voter approved Park,
Recreation and Open Space Fund (the “Open Space Fund”) an amount equal to the grant funds
used for the Harding project, plus interest.
The City will enter into shorter-term management agreements, under which the City will retain
greater control over course management than it would have had under a lease.
Fees and Rounds - The fee structure ultimately selected will be designed to meet target
revenues while preserving historic levels of resident play at Harding Park.
Of the 25,000 non-resident rounds, no more than 5,000 rounds could be set aside on a
discounted basis for certain “Bay Area” residents, if an equal number are set aside at a premium
rate for long-term advance reservations.
Scope of the Renovation - The estimated budget for the project, excluding the First Tee
facilities, is approximately $14 million. The First Tee program would separately pay for all of its
facilities, plus some percentage of the overall capital costs of the project.
…the only additions to the course needed for the City to host the PGA TOUR Championship are
special Championship tees.
Management – The courses will be operated as public, municipal golf courses without having to
balance the needs and objectives of a private-for-profit development entity against the City’s
municipal purposes. Rate increases to keep pace with the Consumer Price Index will continue
to be subject to the approval of the Recreation and Park Commission, and rate increases
greater than CPI increases will require both Commission and Board of Supervisors approval.
Within these constraints, the City intends to seek qualified managers who, in addition to
providing normal course management services, can provide specialized training to the City’s
maintenance staff and otherwise participate in ensuring Harding’s excellence. The manager will
also be required to ensure that resident play stays at historic levels and to upgrade the
reservation system and generally improve the process of securing a tee time.
Course Maintenance – City employees will continue to maintain the courses. In fact, to
properly implement and sustain the renovation project, a substantial increase in the number of
Special Golf Fund – Without adequate funding, even the best-trained City employees cannot
properly maintain Harding Park. To protect the course from slipping back into disrepair after the
renovations are complete, it is essential that the City establish a regular source of funding for
supplies, maintenance equipment and long-term capital repairs and improvements. Specifically,
the City could establish a special “Golf Fund” as an enterprise fund separate from the City’s
General Fund. The fund could capture golf course revenues and use them to pay for
operating and maintenance expenses and a capital improvement reserve, to repay the
initial grant expenditure plus interest, and to help fund future improvements to other City
courses including Lincoln Park. The Golf Fund would essentially function as a dedicated
capital improvement reserve account for improving and maintaining the golf courses
(Bold and italics by NGF Consulting).
The PGA TOUR Championship – …Second, the PGA TOUR Championship will pay the City
significantly more money than it will cost. A non-profit agency, the PGA TOUR has agreed to
donate an estimated $1 million dollars and 50% of any remaining net revenues from each
Championship held at Harding Park to the City, which will help pay for the First Tee Program at
the Harding-Fleming golf complex, course related improvements and improvements to the
surrounding Lake Merced recreational area.
Harding Park would become a regular site of the TOUR Championship if certain improvements
to Harding Park were made. Subject to the terms and conditions of this Agreement, TOUR
hereby agrees to hold the Championship at Harding Park three times over the nine-year period
beginning January 1, 2006 or until the TOUR permanently cancels the Championship.
City required to build a 26-stall driving range with artificial mats, target greens, yardage markers
and fencing.
Facility Fee – For each Championship held at Harding Park, the TOUR shall pay City a facility
fee (Base Reimbursement Fee) in the amount of $250,000 (increased for successive
Championships by CPI increase).
No more than 120 days after completion, the TOUR shall pay the local First Tee Chapter at
Harding Park from any net revenues earned by the TOUR from such Championship $250,000
(CPI increase). If net revenues from the applicable Championship are less than $250,000, the
amount of the Phase I First Tee Fee shall be limited to the amount of such net revenues.
No more than 120 days after completion of each Championship held at Harding Park, from any
net revenues earned by the TOUR from such Championship, TOUR shall pay City an amount
equal to the amount, if any, by which the City’s actual costs related to any Championship (as
reasonably documented by City to TOUR) exceed the Base Reimbursement Fee, up to a
maximum of $130,000 (increased…CPI).
Amendments
There has been an amendment to the original agreement between the City and the PGA TOUR,
dated January 1, 2005. This dealt primarily with the amounts paid to the City and the First Tee,
as well as the TOUR’s commitment regarding the type and number of tournaments that will be
played at Harding Park. The amendments also addressed revenue sharing terms.
The flat base amounts payable by the TOUR to the City and The First Tee during tournament
years was increased from $250,000 to $500,000. Additionally, the contract now calls for five
tournaments over 15 years, beginning January 1, 2005. NGF Consulting was told that the
primary impetus of some of the changes was scheduling conflicts that were occurring from the
TOUR’s perspective. The new agreement notes that the tournaments at Harding Park will be
either the NEC, Amex, or TOUR Championships, though the President’s Cup in 2009 is
currently the next tournament being proposed.
San Francisco Recreation & Park Department - Golf Revenue & Expenditure Summary
FY 2002-03 FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07
Revenue Budget Actual Budget Actual Budget Actual Budget Actual Budget
Golf Green Fees $3,701,000 $3,255,710 $7,332,800 $6,356,368 $7,687,000 $6,213,549 $7,832,000 $6,235,928 $8,150,218
Resident Cards/Concessions $285,000 $258,207 $1,832,600 $795,259 $1,590,000 $1,787,343 $2,915,000 $2,603,519 $2,693,420
Operating Transfer from GF $536,372 $536,372 $1,568,079 $1,568,079 $1,391,414
$1,391 Beginning Fund Bal - NRP $43,232 $43,232 $120,316 $120,316 $112,001
Beginning Fund Bal - APR $311,312 $311,312
Interest Earned - NPR $6,528 $20,000 $266 $10,000 $5,433 $10,000 ($33,451) $10,000
Interest Earned - APR ($1,271) $0 ($1,562) $0 ($822)
Revenue Total $3,986,000 $3,519,174 $9,185,400 $7,150,331 $10,177,916 $8,896,419 $12,445,395 $10,494,391 $12,357,053
Expense
Salaries $1,894,729 $2,055,981 $2,693,854 $2,638,658 $2,876,784 $2,833,079 $2,760,825 $2,895,550 $3,164,989
Fringes $490,930 $516,876 $531,136 $513,981 $706,662 $706,663 $883,250 $784,105 $948,619
Overhead $487,808 $358,592 $971,223 $613,254 $1,688,318 $1,151,846 $3,036,110 $1,536,601 $1,520,467
Professional & Special Services $30,000 $29,926 $2,887,941 $2,299,097 $2,602,535 $2,099,549 $3,510,537 $3,273,505 $4,079,835
Rent/Leases Equipment $284,024 $284,024 $280,131 $284,024 $284,024
Other Expenses $10,903 $10,820 $14,571 $28,953
Materials & Supplies $97,000 $96,043 $337,654 $183,322 $362,977 $308,128 $358,105 $332,528 $356,040
Workorders $270,357
Equipment $58,800 $0 $75,580 $0 $4,662 $0 $16,668 $16,338
Services of Other Dept. $165,000 $161,288 $258,336 $212,089 $386,158 $378,149 $371,087 $354,537
Facilities Maintenance $300,000 $300,000 $250,000 $202,514 $637,546 $310,401 $48,447 $48,447
Capital Reserve (APR) $251,364 $251,364 $251,364
Repayment to Open Space $329,080 $329,080 $935,420 $935,420 $1,417,075
Operating Transfer $461,733 $0 $997,139 $150,000
Expenditure Total $3,986,000 $3,518,706 $9,002,863 $6,812,915 $9,889,649 $8,411,739 $12,466,515 $10,741,372 $12,357,053
• Harding/Fleming Park accounted for more than $5.96 million in revenue in FY 2005-
06, including $4.14 million in green fees, or $58.49 total revenue, and $40.60 green
fee revenue, per round. System-wide green fees were $6.236 million, or $28.77 per
round. Total concession/resident card revenue was $2.6 million, including $1.82
million from Harding Park.
• The total expense budget for the entire golf system was about $3.4 million as
recently has FY 2000-01. Expense growth to $10.74 million in FY 05-06, including
$7.26 million at Harding ($935,000 payment to OS is included here). The cost of
production per round in 05-06 was $49.56, up from about $10 in FY 99-00. The total
expense budget for FY 2006-07 is $12.36 million, an increase of more than 15% over
05-06 actual expenses. This increase reflects a $482,000 increase in the payment to
Open Space, but also includes an increase in professional services at Harding of
more than $500,000 and an increase in salaries and benefits of $434,000.
• The Golf Fund cash flowed positively through FY 2003-04, when it netted $337,416.
In FY 04-05, the Fund showed a $51,692 loss, excluding a transfer in from the
General Fund of $536,372. Still, this year showed a small operating profit before the
initial repayment to the Open Space Fund was made in the amount of $329,080.
• The cost of labor system-wide has increased from $2.78 million in 99-00, or $8.12
per round, to $5.5 million (including Kemper payroll), or more than $25 per round.
Golf Fees
The system-wide fee structure is approved annually by the San Francisco Board of Supervisors.
Year-to-year fee increases, except by special ordinance, are restricted to a percentage equal to
the increase in the Consumer Price Index (CPI) for residents, and to two times the CPI for non-
residents. Gleneagles, which is operated through a ground lease, is restricted to the language in
its contract regarding the setting of fees. There is currently limited flexibility in the system to
adjust fees seasonally or based on demand without council approval. This puts the City courses
at a distinct competitive disadvantage compared to privately operated daily fee facilities as well
as some other municipal golf courses, which are able to practice time-appropriate yield
management.
The City of San Francisco is maintaining their golf facilities with primarily unionized full-time
employees. NGF Consulting is told that four labor unions – plumbers, engineers, teamsters, and
gardeners – work on the maintenance crews. The City appears to have a generous benefits
program, equivalent to about 30 percent of total salaries (does not included operations payroll at
Harding Park). Also, staffing is constant throughout the year, and does not vary with play levels.
One of the main benefits of using “seasonal employees” from the City perspective is savings on
benefits.
• San Francisco’s cost to produce each round of golf is more than twice that observed
for other California/National municipal golf systems profiled on page 46 of this study.
The exception is Nassau County, which is producing rounds at about 58% of the cost
that San Francisco is. These production costs are driven largely by the high cost of
labor.
• Our regional overview revealed that labor expense per revenue dollar averaged
$0.38 among seven municipalities reporting, compared to $0.62 for San Francisco.
• Labor as a percentage of the total expense budget averaged 44.8% among the
municipalities reporting. For those golf systems that were completely self-operated
by the municipality, the average was 49%. San Francisco is at 56.2%.
These statistics would not be so telling if the San Francisco municipal golf courses were
in better condition. However, with perhaps a couple of exceptions regionally and among
the national golf systems we profiled, Lincoln Park and Sharp Park Golf Courses are in
far worse maintenance condition than any of those we’ve observed (Appendix G).
NGF Consulting surveyed three high-end privately owned golf clubs in the San Francisco
market to gain wage information for golf course maintenance workers. Though only a couple of
position categories match exactly, the table below illustrates the disparity in the wage structures
of the City workers and those at the subject privately owned clubs.
Wages
Private
Sector
Position # Title Wage Wage
3422 Gardening Supervisor $33.09
3417 Gardener $27.22 $20.00
7355 Truck Driver $34.09
7328 Operating Engineer $39.22
7347 Plumber $41.99
7514 Laborer $26.30 $14.00
3436 Arborist $37.72
3424 Pest Control Specialist $33.09
7737 Machinist $40.42
Mechanic $25.00
Spray Technician $22.00
Foreperson $25.00
The issue regarding high labor expense structures is common with municipally owned facilities,
and makes it more difficult to compete with private sector golf courses.
Another problem that is evident is the “gray area” (to quote one operator) about how
maintenance salaries (including system-wide tree crew, etc) and overhead are assigned to each
course. Based on the condition of the golf courses at Lincoln Park and Sharp Park, which NGF
Consulting documents in this report, and despite having only 5 working gardeners each, Lincoln
and Sharp Park were assigned $643,000 and $749,000, (as well as close to $200,000 each for
allocated overhead) respectively, for maintenance labor and benefits in 2005-06. Our inspection
of these facilities indicates that they have limited value to show for this money.
In 1934, Jack Fleming, head of the City’s Golf Courses, undertook remodeling of the course in
anticipation of the U.S. Public Links Championship in 1937. Significant changes were made,
including changes to bunkers, tree planting, and addition of turf on the tees. In 1959, additional
remodeling was undertaken to allow for a 9-hole course (The Fleming Course) to be configured
within the 18 holes that made up Harding Park. The six practice holes that had been created in
the original design, plus the practice area, were used to create the new 9-hole course.
Design work for the re-building was handled by the PGA TOUR. The golf course builder
(contractor) was Landscapes Unlimited. The reported contract amount for golf course
improvements was $7.3 million. This was for construction work only and did not include the
clubhouse, turf eradication, tree work, or the First Tee Facilities.
The requirements of the PGA TOUR seem to have been given greater weight in the
reconstruction than were preserving the historical qualities of the existing golf courses. While
both courses were reported to be in terrible shape and literally “falling apart”, there were
certainly features resilient in the facility from its original design. A review of the changed course
and construction approach shows that virtually none of the classic era golf features were
preserved, nor were any efforts taken to restore features. Rather, Harding Park and The
Fleming Courses were completely re-built. Only the routing (layout) endures, and even it was
significantly adjusted in the effort.
Inventory of Facilities
In addition to its two golf courses, the Harding Park Complex includes a driving range, First Tee
learning center, clubhouse/pro shop, maintenance facility, and on-course beverage carts. On-
course restrooms take the form of dilapidated temporary structures. Food and beverage service
is provided by the Grill & Bar located within the clubhouse at Harding Park.
Practice Facilities
Existing practice facilities include a small, netted full driving range, the First Tee area and a few
practice putting greens. One practice putting green forms a large lawn immediately adjacent to
the existing clubhouse. This establishes a pleasant entry experience as one comes onto the
property.
Clubhouse
The clubhouse is a new, bi-level construction that was developed in conjunction with (just after)
the 2003 renovation. The clubhouse consists of two full levels, plus a basement. The ground
level houses a pro shop, main dining area, kitchen, restrooms and the ‘Lakeview Terrace Room’
(used by PGA TOUR as a lounge during the tournament). The upper level includes additional
restrooms, offices and meeting space. Banquet capacity is 70-80 upstairs, and up to 150 in the
Cypress Room. The dining area is capable of hosting up to 140 - 150 patrons at a time and is
often used for events and parties.
It is essential to think of each of the City’s golf course property as an asset. Together, the
courses form a collection of assets that may be marketed, used and enjoyed by residents and
visitors. Ideally, golf courses are always in excellent condition and there is always a well-crafted
plan for future improvements. In reality, this not always the case, as golf course owners and
managers get sidetracked. These essential ingredients must be continually addressed and
revisited. If properly maintained and upgraded, these golf courses have the potential to reclaim
their previous stature and comprise an outstanding municipal golf system befitting the beautiful
City of San Francisco.
Method
NGF Consulting utilized the services of golf architect Forrest Richardson, a member of the
American Society of Golf Course Architects (ASGCA) to assist with the physical evaluations of
each City golf course. Mr. Richardson has completed golf course projects in the Bay Area and is
currently overseeing large restoration/renovation projects involving Bay Area microclimates and
similar turf issues. Additionally, Mr. Richardson is the author of two books on golf course
architecture, including an extensive work, Bunkers, Pits & Other Hazards (John Wiley & Sons,
2005), in which he includes significant perspectives on classic era golf course design,
restoration, renovation and maintenance issues associated with older golf courses.
Findings are compared to similar courses and operations that have been observed both recently
and over the last 15+ years by Mr. Richardson and NGF Consulting, and conclusions are made
regarding the relative maintenance condition of the subject courses. Maintenance staffing
recommendations that are made for each facility are based on factors unique to each course,
such as configuration, layout, turf acreage, expected use levels, and not based on any ‘industry
standard.” Please reference the many pictures contained in Appendix G that support the
conclusions made in this section.
Recommendations are derived that balance goals and objectives with reasonable expectations
for improvement and/or preservation of each golf course asset. It is typical that
recommendations are prioritized, but in some cases it may not be possible to determine a
priority without further study. Without specific study and preparation of detailed plans it is not
possible to accurately arrive at final cost estimates for improvements to golf courses. Therefore,
any estimates given should only be considered as general ranges for use in planning and
budgeting. This methodology is used in the NGF Consulting physical review of all five of the
City’s municipal golf courses.
In reviewing topsoil management procedures it became clear that the effort to re-build the
courses assumed that deeper soils were of sandy quality, typically a beneficial soil type for
growing turf. However, since there was no specific requirement or specification for managing
earthwork, these sandy soils became mixed with other soils and pockets of less suitable soils
are likely to have become mixed with this blend. The result: A hodge-podge of soils was
developed at the golf courses. Currently this poses problems to turf care and may contribute to
drainage woes.
A major budget crisis erupted during construction when drainage sumps dug to handle water
drainage failed. A major drainage effort needed to be re-planned and constructed in order to
preserve the work done and render the courses acceptable for growing turf and operation. A
large drainage field was excavated and established. Drainage lines from areas of the course
were connected to this field and the original sump design was scrapped. Other problems
resulted from heavy rains (late 2002 and winter 2003) that washed away excavated soils into
Lake Merced. This event — termed a landslide – was a catastrophic environmental event that
clouded the high profile project before it was completed.
Soil Types (Resulting from Topsoil Management) - During re-construction, golf industry best
practices were not used in topsoil management. The result has been difficult turf management,
irrigation inconsistency and problems with drainage. While this is being handled by the present
maintenance staff, it has prompted additional cost to the City. An aggressive program to
topdress fairways is being implemented to even out the conditions. Of concern with this effort is
the addition of organic material that the City reported is being added to the topdress mix. This
may be counterproductive. Scrutiny is essential in order to mitigate this situation caused by a
lack of topsoil management and to ensure that the topdress mix is well thought out.
Artificial Turf Decline - The artificial turf installed at practice and First Tee areas is showing
decline, primarily in respect to weed infestation. Some hitting areas are worn and not up to
standards for practice. NGF Consulting understands that this is the responsibility of the First
Tee, and should be addressed with the contractor/manufacturer and implement a plan for on-
going weed control.
On-course Facilities - Rest Room facilities and drinking water were not facilitated in the major
re-construction effort. These facilities are much needed to complete the transformation of the
Harding Park Golf Facility and there is infrastructure available to add these facilities.
Drainage - New (additional) drainage is needed in numerous areas to relieve wet conditions. Of
course, it is customary that even the most well-planned renovation/remodeling requires ancillary
drainage and irrigation measures afterwards. Drainage along paths, gradual areas and shady
areas would benefit from new drain lines connected to the master drainage system. The correct
method of this evaluation is to engage an independent golf course construction consultant to
prepare findings. Should the system not be adequate, or prone to failure, the City will have no
choice but to invent in retrofitting and additional improvements.
Maintenance Approach/Staffing
Harding Park is being maintained by a reported 24 employees, including the Supervisor, a
mechanic, 3 truck drivers, a plumber, an operating engineer, and 17 gardeners (Total staff
recommended by the PGA TOUR is 36). The staff falls under the same labor union that
manages non-golf city parks; therefore, categories of employees are non consistent with
standard golf industry nomenclature or organization. For example, only certain employees may
operate certain equipment. Irrigation must be handled by “plumbers”, who are not allowed to
perform other functions.
Note is made that the PGA TOUR has recommended a total staff of 36 for Harding Park’s 27
hole operation. Considering the issues noted and the need for increased maintenance activity
before and after PGA events, this recommendation seems appropriate. An alternative solution
would be to engage temporary labor at these times. However, there appears to be an obstacle
to temporary labor.
A review was made of requirements of the PGA TOUR with respect to maintenance procedures
and plans. Absent a detailed review of maintenance procedures, it does appear that the City is
meeting the general intent of PGA requirements, and mowing protocols seem in line with the
suggestions of the PGA. Because the Harding Park Course has mostly naturalized areas of
rough and tree canopy, PGA requirements concerning ornamental planting areas and beds do
not seem to apply. The requirement for aerification and topdressing appears to be met based on
the overview meeting held with the maintenance staff. In order to address specific areas of the
PGA requirements an in-depth assessment of maintenance practices would need to be
undertaken.
It was reported that the Harding Park facility, according to agreements with the PGA TOUR, is
to receive agronomic oversight from the current management company, Kemper Sports
Management. Such oversight, with corresponding budgets, planning and commitment, would be
very beneficial to Harding Park.
Other Observations
Reclaimed water is potentially a future consideration for Harding Park’s irrigation needs.
However, there appears to be no solid plan in effect to begin planning for this likelihood. It is
unclear whether the irrigation system as installed would require significant retrofitting, or
whether measures would need to be taken to isolate additional drainage fields from Lake
Merced. (Lake Merced is a source of emergency drinking water for the City.) Such comment is
made so these potential issues may be evaluated and integrated to further planning.
Pesticides and herbicides are significantly limited within the City of San Francisco. The City’s
tight control exceeds U.S. Federal requirements in several areas. This places a hardship on the
effective operation of golf courses in controlling weeds and pests. While strict control is
desirable, the level of control thwarts many “best practice” approaches used throughout the golf
industry, even in highly sensitive environments. The City’s Integrated Pest Management (IPM)
program makes it very problematic to rid courses of English Daisy and other weeds. Ground
burrowing mammals are also left uncontrolled except for trapping methods.
Staffing - Kemper
Kemper has reported the following full-time staff to NGF Consulting. (All other labor is reported
to be part-time in nature):
It is apparent that Harding Park has a large payroll, even by the standards of premier municipal
golf facilities across the nation that we profiled in a previous section of this report. Obviously,
City labor laws contribute to the high expense, but there are areas where NGF Consulting is
concerned that the operation is top heavy. The food & beverage operation, for instance, has a
payroll of nearly $500,000, yet is producing only about $740,000 in gross revenue (compare
Sharp Park’s ($1,000,000+ in F&B revenues). Secondly, it seems that the responsibilities of the
three top management positions could be combined into two positions (as noted, two are
actually vacant currently). It is the consultants’ understanding that the cumbersome reporting
function to the City is one of the reasons for three management positions.
Staffing Issues
There are no industry standards that can be referenced to determine the appropriate staffing
levels for a golf operation. The number of staff needed for a particular golf operation depends on
several factors. In the total United States, municipal golf facilities with a 10 to 12 month golf
season average 15.3 employees per 18-hole facility, and all golf courses with golf revenue in
excess of $1.0 million average 17.3 employees per 18-hole facility in 2005. Some factors
influential in determining appropriate staff:
• The number and size of tournaments and outings or other special events a facility
accommodates each day, week or month.
Personnel costs typically represent the largest single expense item in a golf course operation,
and this is the case for Harding Park Golf Course. Therefore, an analysis of these costs is
essential to understanding the financial performance of the City of San Francisco golf operation.
The NGF review of municipal golf operations nationwide in 2005 revealed the following
averages for full-time staffing at 18-hole municipal golf courses nationwide:
U.S. Averages
Distribution of Staffing – Full-Time (Year-Round)
If the Season is If Total Revenue is
Below $1.0 Above $1.0
U.S. 10-12 mos. <10 mos. mm mm
Course Maintenance 7.4 8.0 6.7 7.1 8.0
Golf Operations 3.3 4.5 2.2 2.9 5.5
General & Administrative 1.3 1.2 1.4 1.1 1.2
Food & Beverage 1.3 1.6 1.1 1.7 2.6
Other 0.0 0.0 0.0 0.0 0.0
Total 13.3 15.3 11.4 12.8 17.3
Source: Operating & Financial Performance Profiles of 18-Hole Facilities in the U.S. – 2005 Edition, National Golf Foundation
We see that Harding Park has more considerably more staff than the U.S. average, although
the amount is not out of line when you consider there are 27-holes (+ First Tee), the size of the
revenue and expense budgets (also much higher than U.S. average), the administration
required to manage the facility and the fact the course is hosting professional championship
events.
Incentive fees paid by City to Manager after the end of each anniversary date of the initial term
of the agreement are 5% of gross revenues exceeding $6,000,000 in any fiscal year.
Under specified guidelines, the Manager is entitled to compensation for additional services
required by the City that increase personnel costs above standard staffing levels. The City will
pay payroll and benefit expenses plus a management fee of 10% of such payments. Approval
required for additional funding.
Manager will meet all requirements of hosting the PGA TOUR tournament events (entering a
separate agreement with the TOUR subject to approval by the City).
Manager must employ a Director of Agronomy to work with the City’s Superintendent of Golf
Course, the PGA TOUR, and the USGA. Manager will enter into a separate agreement with the
USGA for agronomy services.
• Qualifications.
Have thorough knowledge of general business administration practices and golf
course operations practices and procedures as would be acquired through a
minimum of five years of similar golf course maintenance experience in progressively
responsible positions.
Prior supervisory experience required and working knowledge of golf course
operations, turf management and practices necessary.
Credentials subject to the approval of the PGA TOUR.
If the Manager of Operations meets the qualifications, he or she may also serve as
the Director of Agronomy.
• Duties.
Work closely with local tournament personnel and with PGA TOUR staff to prepare
for successful tournaments and events.
Provide periodic written reports and evaluations of the courses’ conditions to the
PGA TOUR as directed by the City or as required under the Tournament Agreement
with the PGA TOUR.
Develop strategies for achieving the course conditions described in the Master
Tournament Agreement with the PGA TOUR.
Meet at least on a weekly basis with the City’s Director of Golf and Superintendent of
the property.
Review USGA reports obtained according to the contract between the Manager and
the USGA and discuss any problems cited in such reports
Propose and discuss plans for addressing those problems with the City’s
representatives at the regular meetings.
Consult with the USGA’s Agronomist on a regular basis and discuss any concerns
and possible remedies for such concerns with the City’s representatives.
In conjunction with the City’s Director of Golf and the USGA’s Agronomist, the
Director of Agronomy shall also develop and provide periodic training programs for
City’s employees.
City agreed to construct a new clubhouse “shell” and bear sole cost and expense of pre-
opening, marketing, design, and construction. Manager is responsible for designing and
Manager was to take out a two-part loan. Trache 1: for pre-opening costs and expenses in the
amount of $800,000 to $1,000,000 to be repaid by City to Manager, amortized over the first 48
months of the initial agreement, as part of Operating Expenses. Trache 2: for improvements to
the clubhouse, not to exceed $1,000,000, to be repaid by City over the remaining period of the
agreement. No more than $1,000,000 may be outstanding principle at any one time. Provisions
are included for default by either party.
++++++++
Approval papers for lease for establishing and operating a professional golf shop at the Harding
Park Golf Course between California Golf Center, Inc. and the Recreation and Park
Commission. Approved April 18, 1983. No lease attached.
Marketing Issues
The overall San Francisco area golf market has become much more competitive over the last
decade, and Harding Park has been affected in its ability to maintain rounds activity levels of
past years (more below), at least partly due to much higher price points. NGF Consulting has
observed that despite these declines the City of San Francisco has not been active in
attempting to attract additional players to the Harding Park facility. It seems the City and
Kemper have been largely reliant on the associated publicity and afterglow of the AMEX
Championship as its chief marketing tool, with some other limited marketing activities such as
promotions with the Convention and Visitors Bureau, CD and other advertising, including with
United Airlines.
Website
The major marketing push lately has been the creation of a website that was built and managed
by Cyber Golf for Kemper Sports - www.harding-park.com. The golf course operator pays for
the website as part of the pass-through operating expense and maintains it, and has been using
it to build up an email database in conjunction with the website to be used for marketing
purposes. In general, we found the website to be well designed and functional. We particularly
like the up-to-date rates and tee time information. Also, a website is extremely useful when
people can find it easily. When we searched with Google and Yahoo, this website (or the City’s)
comes up as one of the first 10 listings under “San Francisco golf,” but not “Bay Area Golf.”
New Players
It is our understanding that many other golf courses in the region are becoming more
aggressive in their efforts to attract new players using beginner programs, lessons, golf schools,
tournaments/outings, leagues, and clubs. Rather than waiting for potential customers to contact
the course, many courses find it is more productive to actively seek out new players in various
ways ranging from price discounts to value-added specials to innovative pre-paid arrangements.
While this may not be an issue for the Harding Park operation, NGF Consulting will address it in
greater detail with regard to Sharp Park and Lincoln Park.
Market Draw
As would be expected of a course of Harding’s caliber, it draws from a much wider market area
than do the other City courses. However, NGF Consulting’s analysis indicates that a relatively
small percentage of play is coming from players that do not reside in northern California.
Rounds played information supplied to us indicates that, prior to the Bay Area, and then
Northern California, rates being implemented, actual rounds played from non-City residents was
less than 30%. Since these rates were implemented, it has become apparent that less than 15%
Fee Structure
A special ordinance by the Board of Supervisors raised Harding Park’s and Fleming’s green
fees to the highest level ever. In the first two tables below we list the current green fees; the
second set of tables shows the fee trend over the last few years. (Please note that the Northern
California Rate, which applies to residents of 43 counties, superseded the Bay Area Rate).
As the tables indicate, Harding’s resident walking fees have gone up 39% on weekdays and
28% on weekends since 2004-05, while non-resident rates (include cart) have gone up by more
than 70%. Senior resident rates have increased by 55% on weekdays and 28% on weekends.
Though Harding Park is certainly a premier facility and has developed some brand equity due to
the publicity surrounding the renovation and the AMEX Championship, activity levels over the
course of FY 2006-07 bear close watching. These fee increases will be a good barometer of the
price elasticity of demand at Harding Park.
Note: Other observation regarding the green fees for Harding and Fleming, in relation to the
competitive market and some premier national municipal comparables, are contained in the
‘Competitive Golf Market’ section of this report.
Golfer Survey
Distribution of NGF’s Golfer Survey Program was by means of an e-mail distribution to a
proprietary NGF database of San Francisco golfers, as well as a distribution of paper surveys at
each City course, and a posting of the survey’s master link on the RPD website. A complete
listing of results from the survey is provided in a separate GSP Appendix Book. This appendix
book will also include key definitions, and an explanation of how grades are established.
Harding Park 18
During the course of this consulting effort, NGF implemented our Golfer Survey Program (GSP)
at Harding Park to gauge opinions from the facility’s golfers. NGF Consulting recognizes that
this survey was conducted with current golfers at the facility and is limited in that former and
infrequent players at the City golf course may not have been surveyed. Still, a total of 435
surveys were collected by NGF, with 211 completed by those identifying themselves as City
residents. The ratings from the total survey group are displayed in the following table.
Other Findings
1. Harding Park golfers that responded to the survey rated the facility relatively high on the
measures of scenery and aesthetics of course, convenience of location, and overall
course conditions. The key business drivers on which Harding Park fared the poorest
were tee time availability, affordability, on-course services (such as restrooms), pace of
play, food and beverage service, and overall value of course. Though ratings on several
key business drivers, such as overall experience and friendliness/service of staff, were
relatively low compared to national benchmark data, the absolute ratings for these
measures did not illustrate overall dissatisfaction among the survey group.
2. Our surveys also show a wide variety of other golf courses that are also played by
Harding Park golfers. The Presidio and Half Moon Bay are the most popular local
facilities with this group, in addition to many other area golf facilities both public and
private (consistent with lower loyalty).
3. The profile of the Harding Park golfer is predominantly male (92%) and somewhat
younger (52% between 30-45) than the national benchmark. One key finding was only
2% of survey respondents were out-of-state visitors, indicating a potential opportunity for
the facility to grow activity in this potentially lucrative market. The map displaying the
origin of customers is displayed in Appendix F to this report.
4. The survey indicated that 67% of respondents think that the overall quality of the City’s
golf courses would improve if oversight and management of the golf system were not the
City’s responsibility. Among the comments noted on this question were that golf is not a
priority for the city, the courses are being neglected, the City “handcuffs” operators and
the City does not respect the golf courses as a true City resource. The survey group
5. City residents tend to be a little more loyal (loyalty index = 19%) and rate the golf course
slightly higher than non-residents (loyalty index = 5%). The City residents who filled out
the survey are slightly younger and report slightly lower incomes than the non-residents.
Overall, the grades and importance factors tend to be roughly the same between the two
survey groups.
Fleming 9-Hole
GSP was also implemented period at the 9-hole Fleming Course. A total of 72 surveys were
collected by NGF, with 48 completed by those identifying themselves as City residents. The
ratings from the total survey group are displayed in the table below.
Other Findings
It appears that the Fleming golfers completing the survey shared some of the same concerns as
noted for the Harding 18. The pace of play, food and beverage service, and on course services
were rated below average. Course conditions and overall value were rated higher, with
improvement still needed in overall course conditions. Fleming golfers were only slightly
younger (60% under 50) and more apt to be female (15% female). Fleming golfers were also
much less likely to believe that the overall quality of the City’s golf courses would improve if
oversight and management of the golf system were not the City’s responsibility (58% say City
Activity Levels
The Harding Park Golf Course maintains a relatively high level of rounds activity, with both the
18-hole regulation and Fleming 9-hole courses exceeding national municipal golf course
standards. However, NGF Consulting does note that overall activity at this facility has fallen
from its FY2000 high of 145,000+ rounds down to just under 102,000 rounds in FY2006 (decline
of 30%). NGF Consulting notes that FY2006 featured a very rainy spring and the American
Express Championship (AMEX) that involved either closing the course entirely or restricting play
for several weeks. Early indication for the first quarter of FY2007 shows increases in September
and October of 2006, particularly in non-resident and tournament play.
Capacity Issues
A golf course’s theoretical capacity can be determined mathematically by multiplying the
number of available tee times (utilizing only the first tee as the starting hole) in an hour by the
number of hours of daylight, minus two hours, multiplied by the maximum number of players in a
group, usually a foursome. A more realistic measure, a golf course’s actual capacity takes into
account the loss of tee times for weather, unplayable conditions, cancellations, no-shows,
groups of less than four players, and other reasons a golf course would never actually play the
theoretical capacity such as a desire to maintain conditions (as with the 18-hole course at
Harding Park).
The actual capacity for a given course is difficult, if not impossible, to calculate because most
courses differ in physical characteristics and management procedures. For example, a course
that has paved cart paths and good drainage can quickly resume play after a heavy rain,
whereas a course that does not have paved cart paths and/or has poor drainage may have to
suspend play for several hours or the entire day. In the San Francisco, California area the 18-
hole municipal golf courses have demonstrated activity in the 90,000+ rounds per year range on
18 holes (theoretical capacity), but the actual capacity of the area’s 18-hole golf courses is more
Revenue Analysis
NGF Consulting has reviewed the financial statements in detail and has made comparisons to
the rounds activity reports. The following tables summarize the Harding Park GC revenues for
the past two full fiscal years, with a partial year in early FY2007. Overall, the data shows a
relatively consistent level of revenue performance since the renovation with total top-line
revenues expected to exceed $6.0 million in FY2007. As shown previously, this revenue
production is very strong in comparison to other public golf operations nationwide.
Of particular note is the considerable increase in ancillary revenue coinciding with the addition
of the new clubhouse at Harding Park. This served to triple food and beverage revenue, and
nearly double the revenue from merchandise sales. Range revenue has also increased
considerably in the last two years and the data shows all ancillary revenue centers up
substantially in the first quarter of FY2007.
Harding Park Golf Course revenue is derived primarily from golf fees and the concession
income as shown above. The average green fee revenue per round of golf increased by
approximately 10 percent from FY2005 to FY2006, while overall facility revenue per round grew
at 26 percent over the same period due of course to the opening of the new clubhouse. The
data shows the significant impact on total facility revenue resulting from the renovation of
Harding Park back in 2002. Total revenues have more than tripled from about $2 million to $6.6
million, as has total and green fee revenue per round. The first six months of FY2006-07 show
considerable increases in revenues and revenue per round as new increased green fees have
taken effect. Average revenue per round estimates are displayed below:
Harding Cart Fee per Harding Resident Round $7.21 $7.56 $4.34
Expense Analysis
The City of San Francisco and Kemper Sports have provided the consultants with actual
expenditures for the operation of the Harding Park Golf Course for FY2005 and FY2006, as well
as a budgeted amount for the full FY2007. The Harding Park Golf Course expense performance
appears in the table below. The figures show that the 2006-07 budget now exceeds $8.6 million,
about $1.34 million+ higher than in FY2006. It should be noted that these expense estimates do
include capital reserves and a $1.4 million repayment to City open space fund. Still, this amount
is clearly higher than the revenue and certainly seems out of line with expectations for upscale
public golf courses in the U.S. and in this local market area.
Harding Park’s total expense budget has grown from $1.36 million in FY 1999-00 to a budgeted
$8.6 million in 06-07, an increase of more than 500%. Maintenance labor has is expected to go
up by more than $570,000 between actual 04-05 and the budget for 06-07, an increase of more
than 16% in just two years.
Cost of Production
Golf facilities are like any other business enterprise in that the facilities operate under the
restrictions of “production costs” – costs associated with “producing” a round of golf. In the golf
facility industry, most of the production costs are fixed and will be required regardless of how
many rounds are played, unless staff is reduced. NGF Consulting has derived from the Harding
Park Golf Course financial statements that the total expense to operate the facility is budgeted
to be $8,606,218 in FY 2007, including administrative overhead, encumbrances and general
fund payments. Given this amount and the 2007 expected rounds played, the facility cost of
production ratios are as follows:
Clearly, Harding Park has benefited from growing popularity since the renovation and the
hosting of the AMEX tournament, and is in high demand. However, as noted earlier, NGF
Consulting analysis indicates that a relatively small percentage of rounds played at Harding
Park are at the highest non-resident fees, so relative access to the course may not be an issue
at this time. This could change of course if the City puts an emphasis on marketing San
Francisco golf when, or if, the other courses in the system are brought up to standard.
Base Assumptions
This proforma estimate is based on the assumption that the City continues its operation on an
‘as-is’ basis, with only minimal changes to the operation. NGF Consulting has assumed that
rounds activity observed in the first half of FY2006-07 will continue for the next five years.
Average revenue per round is expected to increase at a sight two percent (2%) per year, after a
significant increase is assumed for FY2006-07 due to fee increases and actual results for the
first six months of the year. The facility expenses are projected to increase at four percent per
year (4%) across the board, with the exception of fringe benefits that increase at eight percent
(8%), and we assume the City can at least get a handle on the growth in expenses for the next
five to six years (through 2012).
Green + Cart Fees - Harding $4,578,672 $4,670,246 $4,763,651 $4,858,924 $4,956,102 $5,055,224
Green + Cart Fees - Fleming $947,843 $966,800 $986,136 $1,005,859 $1,025,976 $1,046,495
Total Green + Cart Fees $5,526,515 $5,637,046 $5,749,786 $5,864,782 $5,982,078 $6,101,719
Expenditure
Salaries $1,682,020 $1,749,301 $1,819,273 $1,892,044 $1,967,725 $2,046,435
Fringes $506,763 $547,304 $591,088 $638,375 $689,445 $744,601
Overhead $605,813 $630,046 $655,247 $681,457 $708,716 $737,064
Professional & Special Serv. $3,669,159 $3,815,925 $3,968,562 $4,127,305 $4,292,397 $4,464,093
Rent/Leases Equipment $284,024 $295,385 $307,200 $319,488 $332,268 $345,559
Workorders $5,000 $5,200 $5,408 $5,624 $5,849 $6,083
Other Expenses $0 $0 $0 $0 $0 $0
Materials & Supplies $185,000 $192,400 $200,096 $208,100 $216,424 $225,081
Services of other Dept. $0 $0 $0 $0 $0 $0
Facilities Maintenance $0 $0 $0 $0 $0 $0
Capital Reserve $251,364 $261,419 $271,875 $282,750 $294,060 $305,823
Repayment to Open Space $1,417,075 $1,417,075 $1,417,075 $1,417,075 $1,417,075 $1,417,075
Expenditure Total $8,606,218 $8,914,054 $9,235,826 $9,572,219 $9,923,960 $10,291,813
The history of Sharp Park begins with Mackenzie’s well-intentioned design of an 18-hole course
along the coastal dunes of Pacifica. With Lincoln Park and Harding Park busy on weekends,
another course was needed. The City of San Francisco purchased lots in San Mateo County
from 1929 to 1930, paving the way for creating another golf course.
Jack Fleming was Mackenzie’s assistant at the time. The approach to the Sharp Park site was
to dredge material in order to build up fairway grades. This work took a reported 14 months. In
mid 1930, Robert Hunter was appointed to direct construction of Sharp Park Golf Course.
Hunter is thought to have a great deal to do with the design of Sharp Park. Joe Faulkner, in his
San Francisco Golf History, notes that Hunter was paid $750 for his ten months duration of work
at Sharp Park. After delays due to wet conditions, the course opened in April of 1932.
The site chosen, and methods of dredging to fill areas for fairways, have each contributed to
chronic drainage problems. While the course became immensely popular, holes along the
beach (Nos. 2 through 8) that were part of the original design were soon relocated. A major tide
and storm decided their fate within a few years, in 1938. Eventually, these holes were replaced
in an area now referred to as “the canyon”, the opposite direction from the ocean. In the 1960s
There are many more “tales” of remodeling at Sharp Park, but the changes noted above
constitute the primary alterations. Even with so many significant changes, Sharp Park remains
an engaging and interesting golf course. This is a testament to Alister Mackenzie’s skill at
creating interesting greens and a routing that unfolds like any good and exciting story. While the
“story” would be much better with holes along the ocean—as per the original design—the
course as it is today remains a very enjoyable routing when conditions are good.
Inventory of Facilities
Sharp Park Golf Course includes an 18-hole golf course, clubhouse, practice green and
maintenance area. A summary of these amenities follows:
Golf Course
The Sharp Park golf course plays to a total of 6,476 yards from its longest tee, down to 5,793
yards from its shortest tee. The shortest yardage is traditionally used by the female segment of
golfers and NGF Consulting notes that 5,800 yards is very long for women. Female golfers
usually hit golf balls about 75% as far as male golfers, meaning that a 5,800-yard golf course for
women is equivalent to a 7,730-yard golf course for men (longer than PGA TOUR courses). The
Sharp Park GC operators have recognized this length issue and assigned a ‘women’s par’ of
74, instead of the standard 72. The United States Golf Association (USGA) has also recognized
the length and difficulty of the red tees and assigned a higher slope and rating to the Red Tees
(72.9 rating – 120 slope) than to the longer Blue Tees (71.2 rating – 119 slope).
The golf course setting is links, meaning it occupies land formed by erosion of the seashore
caused by winds, tides and inland drainage. (A “links” is defined as: A seaside golf course
constructed on a natural sandy landscape that has been shaped by the wind and receding tides
[from the Old English “lincas”, meaning the plural of a ridge, a Scottish term to mean the
undulating sandy ground near a shore]).
The set-up of the golf course is rather unique in that four (holes #4-7) of the 18 holes are on the
east side of Cabrillo Highway (U.S. Highway One), connected by a tunnel under the freeway.
The routing offers several parallel fairways divided by several rows of mature trees. The central
lagoon comes into play on three of the holes, while hole #16 plays along the Pacific Ocean. In
general, the course is walkable, but some hills, particularly on the east four holes, are such that
the site it is only walked by the hearty and well conditioned golfer.
Clubhouse
The current clubhouse is the original facility dating back to 1932. Although somewhat historic,
the lack of functionality in the clubhouse may be detracting from the overall potential of the
Sharp Park golf operation. The bag drop and parking situation is awkward to say the least, and
the pro shop is small with limited outward view to manage the flow of golfers. The food and
beverage concession appears to be well thought of by the golfers, but the clubhouse does not
provide for a large enough common area to support any kind of large gathering of people such
as in a tournament or golf outing. Space has been added over the last 20 years at operator
expense and this has helped facilitate a larger volume of restaurant business that comes
through the facility.
Irrigation
The irrigation system at Sharp Park is made up of many types. Canyon holes, for example, are
plagued by an irrigation system designed by the City’s park staff in the 1980s, apparently with
little knowledge of golf course irrigation system nuances. About half of the course is irrigated
through the use of a quick coupler system, an older type of irrigation system that is no longer
used in modern golf courses for primary irrigation needs. The “system” is a hodge-podge of
types and causes excess time to be spent repairing and managing the watering. Additionally,
water expenses may be increasing due to cost issues associated with water rights and
grandfathered cost agreements. It is obvious that an updated, state-of-the-art irrigation system
would benefit the maintenance, help to reduce expenses and help to improve overall water
conservation.
The large Laguna Salada, a marsh/pond that remains within the golf course, functions to collect
water that runs off from inland areas, detaining it before it is metered out to sea. This system
seems simple enough, until one examines the changes that have taken place over the years:
• First, a large sea levee was constructed to protect the course and residential areas.
This change isolated the Laguna Salada from the ocean and necessitated a
mechanical means of pumping water out to the ocean. It is our understanding that
the original system used gravity, but eventually a pump was installed at a lower pond
known as Horse Stable Pond.
If these problems are not enough on their own, the condition of slow moving water, and too
much water-growing vegetation, has now caused an increase in some species of animal habitat
within portions of the golf course. Specifically, the Red-Legged Frog, San Francisco Garter
Snake, Fork-Tailed Damsel Fly and the Yellow Bellied Salt Marsh Thrush are all species that
have found refuge in the lagoon at Sharp Park Golf Course.
During recent rains (in 2005 and 2006), the course flooded so significantly that emergency
pumping is called for. However, the frog species was believed to be vulnerable had additional
pumping been allowed. The result was a prolonged period in which water remained over turf
areas and pumping was halted.
During this time it was reported that drainage may have compromised residential areas because
the lagoon water had backed up so far as to not allow more water to be collected within the golf
course/lagoon area. Ideally, water enters the golf course through drainage channels and is
detained. From this lagoon location, water then is supposed to drain by gravity to a lower pond
(Horse Stable Pond) and is then pumped out to sea—its historic drainage path. However, with a
moratorium placed on pumping, the lagoon remains full and the entire system backs up. This
potentially endangers the public and the Sharp Park property.
Safety
Cart signage is needed to appropriately orient golfers where the paths may pose a safety risk.
Further, there are locations on the golf course where the tees and hole alignments may add to
the safety concern related to errant golf shots. This requires further study in conjunction with a
master plan.
Arbor Care
The City deploys a well-trained arbor crew and staff to take care of trees. However, as we will
document in other City courses as well, this work is performed in a vacuum when it comes to
the City’s golf facilities. No formal plan for taking care of trees is in effect for the golf courses,
nor does it seem as though the game of golf being considered when maintaining trees. Factors
such as shade, turf quality, irrigation, strategy, safety, views, etc. appear to be considered in the
maintenance of trees on this property. While it may be that these factors are considered, it
appears from interviews and research that at no point is a professional golf course architect in
the mix to give advice and opinion.
Maintenance Approach
Sharp Park’s limited crew results in a golf maintenance program that cannot catch up with daily
needs. The staff falls under the same labor union that manages non-golf city parks, and is
categorized in a manner that is not consistent with standard golf industry nomenclature or
organization. A course of this size and complexity should have a minimum of 12 maintenance
personnel. It would also be common to employ seasonal staff.
Other Observations
As with the other City golf courses, use of pesticides and herbicides is significantly limited due
to the City’s tight control. This places a hardship on the effective operation of golf courses in
controlling weeds and pests. While strict control is desirable, the level of control thwarts many
“best practice” approaches used throughout the golf industry, even in highly sensitive
environments. The City’s Integrated Pest Management (IPM) program makes it very problematic
to rid courses of English Daisy and other weeds. Ground burrowing mammals are also left
uncontrolled except for trapping methods.
It was noted during this study that there is a small contingent within the community that has
proposed closure of Sharp Park Golf Course, presumably rendering it to a natural or passive
park state. This seems unwise as the golf course provides a sustainable recreation amenity and
the golf course exists quite nicely alongside trails and existing passive recreation areas. It is,
after all, the servant-like function of the golf course to handle drainage from the Pacifica area
and other upstream areas that both serves the community and also has enabled this habitat
initially.
The NGF Consulting finding related to this data is that the mix between maintenance and non-
maintenance labor seems to be weighted heavily towards non-maintenance labor when
compared to other municipal golf facilities. Further, we note that while there are five FTE’s
assigned to maintain the Sharp Park facility, the contracted operator reports to NGF Consulting
that not all maintenance workers are present when needed. In all this suggests that the
distribution of labor at Sharp Park may not be ideal, especially in light of our physical review that
suggested some areas of golf course maintenance are lacking. Irrigation maintenance was
singled out by the NGF Consulting team as a problem due to antiquated equipment, and the fact
that there are so few maintenance employees to handle the job. In all it seems that the total staff
level at Sharp Park is not enough to cover all necessary maintenance items at this facility.
Concession Agreements
The concession agreement in place at Sharp Park is summarized below:
Consent to Assignment of the Sharp Park Golf concession lease from Jack Gage and Joan
Lantz to Sharp Park Restaurant and Pro Shop, Inc. dated September 15, 1988. Approved by the
City. The concession involves starter services; full bar, restaurant, and banquet facilities;
lessons, equipment and cart rentals; and merchandise sales.
Lease for establishing and operating a restaurant and a professional golf shop, dated April 22,
1983. Between Recreation and Park Commission on behalf of City and County of San Francisco
(Commission) and a joint venture of Jack Gage, Joan Lantz and Mike Shannon (Lessee). Terms
go through 2003. Lessee pays minimum annual rent of $30,000 first year and $75,000 each
year thereafter. Percentage of gross revenue, (all income less sales taxes) payable monthly:
If percentages do not add up to minimum annual rent, Lessee pays the minimum 10 days after
the end of the fiscal year. Minimum annual rent is adjusted each January 1, based on CPI,
beginning in 1991. Lessee must give employees pay and benefits and working conditions
generally same as City/County employees, but Lessee may collectively bargain with union for
rates.
Lessee pays for utilities, equipment, materials, supplies, etc. and maintains at its own expense,
the leased facilities, furniture, and equipment. Lessee pays all taxes, licenses, permits, and
assessments. Capital improvements of $575,000 in three stages were agreed upon in the lease:
Rent credits will be allowed for improvements beyond those set forth in lease.
Note: This agreement has been on a month-to-month basis for several years.
One of the keys to Sharp’s future financial success is to create additional non-resident play,
similar to the Harding Park model. With higher maintenance standards, improved customer
service and increased amenities Sharp could become much more competitive in the local golf
market. If this facility is to be able to grow its revenues to cover the day-to-day golf course
operation and fund the desired improvements noted previous, it is clear that Sharp Park will
have to either (1) grow rounds to levels exceeding present levels, or (2) increase the average
revenue earned per round at the facility, or (3) do both.
The legacy of Alister Mackenzie is virtually unknown by golfers at Sharp Park. The occasional
visitor will know of the Mackenzie legacy, but this is rare. With so few courses designed by
Mackenzie that available to the public, San Francisco is missing a grand opportunity to
capitalize on this in marketing and promotion.
Fee Structure
The City of San Francisco pricing structure for Sharp Park is outlined in the tables shown below:
Green fees at Sharp Park are among the lowest in this municipal market. Increasing the amount
of higher-revenue non-resident play is one of the keys to profitability at this facility but, as
discussed in earlier in this report, the fees for Sharp Park seem market appropriate given the
below average condition of the course and the quality of the support amenities. As rounds have
been declining severely over the last several years, fee increases cannot be reasonably
justified. NGF Consulting believes that the facility must first be rehabilitated before any
meaningful price increases would be absorbed by the market without a drop in play.
3. Our surveys also show a wide variety of other golf courses that are also played by Sharp
Park golfers, including other City courses like Harding Park and Lincoln Park (both in the
top five). Crystal Springs and the Presidio are the most popular other local facilities with
this group, in addition to many other area golf facilities both public and private
(consistent with lower loyalty).
4. The profile of the Sharp Park golfer is predominantly male (90%) and somewhat older
(58% over 50) than the national benchmark. One key finding was that the course is as
popular with Pacifica residents (22%) as San Francisco City residents (21%). The map
displaying the origin of customers is displayed in Appendix F to this report.
5. The survey indicated that 74% of respondents think that the overall quality of the City’s
golf courses would improve if oversight and management of the golf system were not the
City’s responsibility. Among the comments noted on this question was that a ‘private
operator’ would have a greater vested interest in maintaining activity and that excess
revenues from the golf course would go to continued upgrades and improved
maintenance. The survey also revealed that 60% of respondents would play more
frequently, 30% would not be affected, and only 10% they would play less if the
conditions at Sharp Park were improved AND fees increased.
6. There is virtually no difference in survey responses, grades or loyalty between the two
survey groups - residents and non-residents. However, the non-resident group did not
mention the other City courses (Harding and Lincoln) in the top five of other courses
played, while City residents listed Harding and Lincoln as the top two facilities played
(other than Sharp).
Activity Levels
The +/- 35,000 rounds played at Sharp Park in FY 2005-06 represents a considerable decline of
more than 50% from the earlier years of the decade when the facility was hosting upwards of
68,000 rounds. Many variables contributed to this decline, not the least of which was a very wet
FY2005-06 when the course had to be closed for several weeks. Early (first five months) results
in FY 2006-07 show very strong rounds performance and the possibility of rounds activity back
to 2003 levels. The rounds data as provided by the City of San Francisco are shown in the table
below.
Revenue Analysis
NGF Consulting has reviewed the financial statements in detail and has made comparisons to
the rounds activity reports. The following tables summarize the performance of revenues for the
past five full fiscal years. Overall, the data shows a clearly declining level of revenue
performance, mirroring the decline in rounds activity. In FY2001-02 the Sharp Park Golf Course
generated over $2.5 million in total top-line gross revenue, falling to $2.0 million in FY2005-06.
This represents a decline of 33 percent in green fee revenue (to the City) and 19 percent in
concession items from the 2001-02 high mark.
The above table shows how ancillary revenues can play a large role in the overall potential of
the Sharp Park Golf Course, especially in the food and beverage revenue center, which is a
very strong performer and continues to improve. Also, the average cart rental revenue per round
is much lower than the fee for the item, indicating the possibility of a high volume of walking
golfers. Still, since the City is only collecting about 10% of cart revenue there is room for
increased net revenue to the City as carts tend to have a high operating margin (more detail in
this section). The level of retail sales is very weak at Sharp Park with a very light selection of
items being offered and a lot of unused space. A more aggressive retail operation could
significantly enhance top-line revenues. Although margins in golf retail tend to be somewhat low
(more detail in this section), the highest margin items do tend to be apparel and logo-type items
that may sell well at Sharp, especially in the tourist segment.
Expense Analysis
The City of San Francisco has provided the consultants with a complete budget for the City’s
portion of operation expenses at Sharp Park Golf Course for the last two full fiscal years, as well
as a budget for the current (FY2006-07) year. The City-provided Sharp Park Golf Course
expense performance appears in the table below. The figures show that the 2006-07 budget
has grown to $1.26 million, about $450,000+ higher than the green fee and concession revenue
earned by the City at the facility. It should be noted that expense estimates include all internal
transfers and payments to the general fund.
Expenditure
Salaries $12.20 $16.74 $18.41
Fringes $2.94 $4.54 $5.56
Overhead $4.46 $5.18 $6.63
Professional & Special Serv. $1.75 $1.81
Other Expenses $0.18 $0.63 $1.37
Materials & Supplies $0.87 $1.40 $2.27
Facilities Maintenance $2.27
Expenditure Total $22.91 $30.25 $36.05
Source: City of San Francisco and NGF Consulting
It is expected to cost the City of San Francisco about $36.00 total in FY2007 to produce each
round of golf on the Sharp Park Golf Course, EXCLUDING actual vendor expenses. As noted,
there is no industry standard for an appropriate cost of production, but this figure should be
compared to the revenue ratios and be considered whenever green fee schedules are being
contemplated.
Carts – Sharp Park features a gas cart fleet. Due to legislation related to environmental
concerns first raised by the Clean Air Act of 1990, gasoline powered golf cars are no longer
available for purchase or lease as of June 2000 in the San Francisco Bay region (as well as
other targeted areas of California). The cart fleet is in need of replacement, thus necessitating a
new electric cart barn. The concessionaire noted to NGF that he would replace the barn if
awarded a new contract (see previous issue).
Lack of Point-of-Sale System – As noted in the overall operations section of this report, there
is no unified point-of-sale system at the City’s golf courses. In fact, Sharp Park is strictly a cash
business. In general, NGF Consulting strongly recommends against municipal golf courses
operating without a POS system, and especially not on a cash-only basis, as accurate
accounting of rounds played is not always assured.
Base Assumptions
This proforma estimate is based on the assumption that the City continues its operation on an
‘as-is’ basis, with only minimal changes to the operation. NGF Consulting has assumed that
rounds are held at the very successful levels observed in the first five months of FY 2006-07
and that average revenue per round increases at a slight two percent (2%) per year. The facility
expenses are assumed to be somewhat more stable, and are projected to increase at four
percent (4%) per year, except fringe benefits that increase eight percent (8%) per year through
2012.
Total Green Fee Revenue $1,307,621 $1,333,774 $1,360,449 $1,387,658 $1,415,411 $1,443,719
Expenditure
Salaries $644,377 $670,152 $696,958 $724,836 $753,830 $783,983
Fringes $194,562 $210,127 $226,937 $245,092 $264,699 $285,875
Overhead $231,952 $241,230 $250,879 $260,914 $271,351 $282,205
Professional & Special Serv. $63,300 $65,832 $68,465 $71,204 $74,052 $77,014
Other Expenses $48,000 $49,920 $51,917 $53,993 $56,153 $58,399
Materials & Supplies $79,429 $82,606 $85,910 $89,347 $92,921 $96,638
Facilities Maintenance $0 $0 $0 $0 $0 $0
Expenditure Total $1,261,620 $1,319,867 $1,381,067 $1,445,387 $1,513,006 $1,584,115
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 100
LINCOLN PARK GOLF COURSE
The Lincoln Park Golf Course is an 18-hole ‘precision’ golf facility located in the northwest
corner of the City of San Francisco, along the Pacific coast with views of the Ocean and the
Golden Gate Bridge. The facility includes an 18-hole golf course and clubhouse that sits on
property that is immediately proximate to the Golden Gate National Recreation Area.
Jack Neville, who later would co-design Pebble Beach, was instrumental in pushing the City to
begin thinking about establishing a municipal golf course in 1902. At that time San Francisco as
a community offered golf only to the wealthy at country club settings. Joining Neville (a member
at nearby Claremont Country Club), was Vincent Whitney (a member of Olympic Club.) Neither
man needed affordable golf, but stood fast in their determination to convince John McLaren, the
City’s park director, to undertake a public golf course project.
McLaren suggested Potter’s Field and the two were given approval to try and construct a few
holes. Until 1908 the three holes remained, and were a popular draw to locals. Neville and
Whitney created another three holes, and then more. By 1917, eighteen holes had been
created, although they were described as a hodge-podge of mediocre golf.
Herbert Fowler, a member of the Royal & Ancient Golf Club of St. Andrews and the Honourable
Company of Edinburgh Golfers, became interested in golf course design in the early 1900s. He
eventually partnered with Tom Simpson to form Fowler & Simpson. While Simpson worked on
the firm’s majority of American projects, Fowler focused on British projects. Lincoln Park,
however, is credited to Fowler in its 1922 transformation. Fowler remodeled the original 9 holes
and created a new 9 holes. San Francisco’s own Jack Fleming is credited with the most modern
remodel of Lincoln Park in the 1960s.
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 101
Inventory of Facilities
Lincoln Park Golf Course includes an 18-hole golf course, clubhouse, practice green and
maintenance area. A summary of these amenities follows:
Golf Course
The Lincoln Park Golf Course is a par-68, 5,146-yard course. It is “precision” in nature - slightly
longer than an “executive length” course, but slightly less than a typical regulation length
course. There is only one par-5. The setting is parkland with dramatic ups and downs as the
course unfolds across a hill above the City. Views are spectacular, highlighted by the famed 17th
hole that overlooks San Francisco Bay and the Golden Gate Bridge.
Courses with an 18-hole par between 55 and 68; derived from the expectation
that “executives” would be able to enjoy a round of golf within the business day
and still meet their commitments; coined by the late William Mitchell, golf course
architect, who reasoned that “such courses could be quickly and enjoyably
played by business executives at the tail end of a hectic workday. (On Course, A
Dictionary of Golf Course Terms; FRA 2001)
The set-up of the golf course is unique in that three (holes #3-5) of the 18 holes are located
behind the ‘Legion of Honor’ building that sits at the top of the hill on the property. Finding your
way from the second green to the third tee is difficult for golfers not familiar with the golf course
as there is a lack of adequate signage. The routing offers several parallel fairways, with little to
separate and distinguish individual golf holes. This golf course is very walkable due to the short
length of the golf course and the general closeness of the golf holes.
Clubhouse
The current clubhouse is the original facility dating back to 1916. Although somewhat historic,
the facility has serious flaws, not the least of which is it is not compliant with the ‘Americans with
Disabilities Act’(ADA). The building also has two levels, including a lower level locker/rest room
that is not completely functional. During our visit, the men’s restroom was not clean. The
bar/food service area appears to have been updated recently and has some appeal with a
window overlook to the 18th hole, although it should be noted that several panes in the glass are
cracked or broken. The food and beverage concession appears to be well thought of by the
golfers, and there is a separate room available, adjacent to the kitchen, to host larger parties
and/or banquets of up to 60+ persons. However, this area is clearly run-down with chipped
paint, wall cracks and other unsightly features that make the facility less desirable as a location
for an event.
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 102
Poor condition of Lincoln Park GC clubhouse
Physical Review
NGF Consulting has reviewed the physical condition of the Lincoln Park Golf Course under the
same methodology as described previously. The key physical issues uncovered at Lincoln Park
include the following:
Irrigation
The irrigation system at Lincoln Park is made up of many types. These range from portions that
were installed in the 1920s, to partial replacements in the 1950s, to recent upgrades. A
comprehensive plan has been prepared by a qualified golf irrigation designer, but has not been
implemented in full. The result is a “system” that is, at best, awkward to manage and highly
unreliable. The irrigation problems lead to turf problems, additional maintenance requirements
(time, labor, materials, and costs), and customer dissatisfaction.
Drainage
Drainage is problematic due to focused drainage paths established as a result of various
developments. It is likely that prior to the development of park roads, public spaces, and cart
paths, the course drained fairly well, but these improvements created diversions that focused
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 103
run-off onto course areas. The results are severe drainage issues during rainy periods and the
wet season.
Examples of drainage & irrigation problems at Lincoln Park GC; cart paths in disrepair
Safety
Road crossings need to be addressed to improve safety. Directional signage is needed to safely
orient golfers along longer hauls between holes where road crossings and traversing through
parking areas is required.
Maintenance Staff
With just five on the crew to take care of the course, Lincoln Park operates at a bare minimum
level of maintenance. The course suffers from a lack of needed attention to nearly every
imaginable area of typical and customary golf course care. Greens are not aerified as frequently
as needed, grass is now mowed as often as needed, bunkers are not cared for as needed, etc.
The list goes on and on. It is nothing short of a miracle that the five crew members do as well as
they do in keeping the basic course areas in shape enough for customers to play golf.
Arbor Care
The City deploys a well-trained arbor crew and staff to take care of trees. However, as with
other golf courses, this work seems to be performed in a vacuum when it comes to the City’s
golf facilities. No formal plan for taking care of trees is in effect for the golf courses. The care
provided is reactionary - when a tree dies, it is removed; when a tree falls, it is carted away;
when it appears like areas are barren, new trees are planted. Again, it appears from interviews
and research that at no point is a professional golf course architect in the mix to give advice and
opinion.
Maintenance Approach
Lincoln Park’s limited crew results in a golf maintenance program that cannot catch up with daily
needs. A course of this size and complexity should have a minimum of 10 maintenance
personnel. It would also be common to employ seasonal staff. At Lincoln Park, a maintenance
supervisor must also oversee Golden Gate Park Golf Course. This position, as well as an
irrigation technician, should ideally not have to split time to other facilities.
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 104
Other Observations
As with the other courses, Lincoln’s use of pesticides and herbicides is significantly limited due
to the City’s tight control. This places a hardship on the effective operation of golf courses in
controlling weeds and pests as with other golf courses.
Operations Overview
Staffing
As noted the City employs a total of five FTE’s at Lincoln Park to maintain the golf course
grounds. The concessionaire employs additional staff to manage the golf and food/beverage
operations, although the total staff at the facility is not large. The key NGF finding related to this
data is that there clearly is not sufficient staff to maintain this facility to the standard that would
allow Lincoln Park to compete effectively with other golf facilities.
Concession Agreements
The concession agreement in place at Lincoln Park is summarized below. We note that this was
an incomplete document.
An Assignment, Assumption and Consent Agreement between the City and County of San
Francisco (City), Arnold Palmer Golf Management LLC (Assignor), and Yugi Golf Management
LLC (Assignee) was dated March 20, 2001 (effective March 1, 2001). Assignor and City were
parties to a lease dated April 22, 1983; amended by a memorandum of understanding dated
February 20, 1986; and further amended from time to time. By this agreement, Assignee took
over all of Assignor’s interests and obligations under the lease. City consented and released
Assignor.
Attached as Exhibit A is an undated lease agreement for restaurant and golf pro shop at Lincoln
Park Golf Course that has missing pages in our copy. It is between the Recreation and Park
Commission (on behalf of the City and County of San Francisco) and California Golf Centers,
Inc. and was approved by the Board of Supervisors on April 19, 1983. The term is for 10 years
with a possible extension of one 5-year period. The agreement notes the City is to collect all
green fee revenue and 25 percent (25%) of all other ancillary revenues to the facility.
Also attached is a February 20, 1986 memorandum of understanding for golf pro shop lease at
Harding/Fleming Park Golf Course and Lincoln Park Golf Course. The agreement is between
the Recreation and Park Commission and Silband Sports Corporation (formerly California Golf
Center, Inc.) The purpose of the MOU was to clarify the 1983 lease.
NGF Consulting believes that Lincoln Park has an excellent opportunity to draw significant
tourist play through aggressive marketing, but that this opportunity will be achievable only after
the facility is brought up to a quality level at least comparable to competing facilities as
documented in this report. We also feel that there is potential to raise non-resident play
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 105
significantly once the facility is improved and marketed. High fee tournament/ outing business
should also improve markedly after improvements.
Finally, the legacy of Jack Neville (co-designer of Pebble Beach) and Herbert Fowler (a
respected British designer) are all but forgotten at Lincoln Park. While much of Neville’s work is
likely lost to years of remodeling and change, it can certainly be said that both men were
responsible for establishing much of the routing and anatomy of Lincoln Park’s current layout.
This legacy is worth marketing and touting by the City.
Fee Structure
The pricing structure for Lincoln Park is outlined in the table shown below:
Lincoln Park
Weekday Weekend
Standard $32 $36
Resident $20 $24
Senior $12 $19
Junior $10 $19
Back 9/10 $11 $15
Twilight $19 $23
Tournament $38 $47
Driving Range/Cage: Cage Call for Info
$1.00 per person will be added to above rates if reservations are made through the Automated Reservation System
Weekday = M-Th; Weekend = F-Sun
With green fees identical to those at Sharp Park, fees at Lincoln Park are among the lowest in
this municipal market. Also like Sharp, the fees at Lincoln are market appropriate given the poor
conditioning documented in this report and the quality of the support amenities, and the facility
must first be rehabilitated before any meaningful price increases would be absorbed by the
market without a further decrease in rounds.
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 106
Lincoln Park Golf Course
144 Responses
11/14/2006 – 1/8/2007
Average
Score
Factor (Scale 1-5)
6-Scenery and Aesthetics of Course 4.5
14-Affordability 4.1
2-Convenience of Course Location 4.1
3-Tee-time Availability 3.8
10-Friendliness/Service of Staff 3.4
1-Overall Value of Course 3.4
13-Overall experience 3.1
7-Pace of Play 2.9
8-Condition of Golf Cars 2.5
11-Food and Beverage Service 2.4
9-Amenities (clubhouse, pro shop, locker room) 2.2
12-On-course Services (restrooms, drinking water) 2.2
4-Overall Course Conditions 2.2
5-Condition of Greens 2.0
Average Score: 1 = very dissatisfied; 2 = somewhat dissatisfied; 3 = neither satisfied nor dissatisfied;
4 = somewhat satisfied; 5 = very satisfied
Other Findings
1. Lincoln Park survey respondents rated the facility relatively high on the measures of
convenience of location, affordability, and scenery and aesthetics. The key business
drivers on which Lincoln fared the poorest were condition of golf cars, food and
beverage service, amenities, on-course services, overall course conditions, and
condition of greens. Though ratings on factors such as overall value and friendliness/
service of staff were relatively low compared to national benchmark data, the absolute
ratings for these measures did not show an average score indicating dissatisfaction. The
survey group indicated that the golf course conditions should be the highest priority for
improvement.
2. Our surveys also show a wide variety of other golf courses that are also played by
Lincoln Park golfers, including other City courses like Harding Park and Sharp Park
(both in the top five). Crystal Springs and the Presidio are the most popular other local
facilities with this group, in addition to many other area golf facilities both public and
private (consistent with lower loyalty).
3. The profile of the Lincoln Park golfer is predominantly male (90%) and somewhat older
(96% over 30) than the national benchmark. One key finding was that golfers identifying
themselves as “out-of-state visitors” represented only one percent (1%) of respondents,
indicating a potential opportunity to grow rounds in this potentially lucrative segment.
The map displaying the origin of customers is displayed in Appendix F to this report.
4. The survey indicated that 67% of respondents think that the overall quality of the City’s
golf courses would improve if oversight and management of the golf system were not the
City’s responsibility. Among the comments noted on this question was that a ‘private
operator’ would be more likely to invest the dollars needed for improvement, and then
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 107
hire motivated employees to protect the investment. The survey also revealed that
73% of respondents would play more frequently, 21% would not be affected, while
only 5% they would play less if the conditions at Lincoln Park were improved AND
fees increased.
5. City residents tend to rate the course slightly higher than non-residents, although the
“atrocious” conditions are still a sore spot with both groups. The non-residents who filled
out the survey tend to be older, wealthier and more likely to be female the City residents.
Overall, the grades and importance factors tend to be roughly the same between the two
survey groups.
Activity Levels
Activity at Lincoln Park has fallen steadily since the 2002-03 fiscal year, settling at about +/-
35,000 rounds played in FY 2006, with rebound expected in FY2007. The rounds data as
provided by the City of San Francisco are shown in the table below.
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Lincoln Park Golf Course
Rounds Played by Type – FY2003-06
2002-2003 Weekday Weekend Total
Standard 9,069 8,780 17,849
Resident 6,948 8,827 15,775
Senior 6,577 1,454 8,031
Junior 1,035 426 1,461
Tournament 137 524 661
Twilight 4,506 3,542 8,048
Back 9 1,682 1,395 3,077
Total 29,954 24,948 54,902
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Capacity Issues
The shorter-length 18-hole course at Lincoln Park should be able to achieve rounds played
numbers up to 65,000+ rounds annually, indicating that the facility is under performing at less
than 55 percent of capacity.
Revenue Analysis
NGF Consulting has provided a summary of revenue performance for Lincoln Park GC for the
past four full fiscal years, plus a preliminary estimate of green fee revenue in FY 2007. Overall,
the data shows a clearly declining level of revenue performance, mirroring the decline in rounds
activity through FY 2005-06. However, as with other courses in the system, Lincoln Park GC
has had a rebound in rounds activity for the first five months of FY2006-07.
In FY2002-03 (the last year of Arnold Palmer Golf Management) the Lincoln Park Golf Course
generated about $1.67 million in total top-line gross revenue, falling to just under $1.15 million in
FY2004-05, with a slight recovery in FY 2005-06, and a strong recovery seen in early FY2006-
07. The figures in FY2004-05 represent a decline of 19 percent in green fee revenue (to the
City) and 38 percent in concession items from the 2002-03 level. Unlike the other courses in the
City system, Lincoln Park has experienced a more severe decline in concession revenue than
green fee revenue. This may be a reflection of the diminished quality of ancillary services at the
facility since the Arnold Palmer Golf Management team has departed.
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City of San Francisco
Lincoln Park per Round Revenue (Fiscal Years 2004-2007)
FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07*
Total Green Fees $24.40 $25.02 $25.85 $23.05
The above table shows a generally growing per round revenue performance of the Lincoln Park
Golf Course, with a reduction back to FY2002-03 levels seen in early FY2006-07. It is our
understanding that the food and beverage concession was closed in 2003-04, just after the
departure of the previous (Arnold Palmer) management team.
Expense Analysis
The City-provided Lincoln Park Golf Course expense performance appears in the table below.
The figures show that the 2006-07 budget has grown to just over $1.21 million, about
$350,000+ higher than the green fee revenue earned at the facility. It should be noted that this
expense estimates do not include any capital improvement funds, operating encumbrance or a
payment to the general fund.
Cost of Production
NGF Consulting has derived from the Lincoln Park Golf Course financial statements that the
total City expense to operate the facility was $914,977 in FY 2006 and budgeted at $1,216,812
for FY 2007. Given this amount and the actual rounds played, the facility cost of production
ratios are as follows:
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Lincoln Park Golf Course
Cost of Production (Fiscal Years 2005-2007)
2006-07
2004-05 2005-06 Budget
Golf Rounds 33,274 34,748 35,000
Expenditure
Salaries $16.14 $14.41 $19.45
Fringes $4.41 $4.10 $5.88
Overhead $7.05 $5.54 $7.00
Professional & Special Serv. $0.12
Other Expenses $0.04 $0.05
Materials & Supplies $1.20 $1.75 $2.31
Equipment $0.47
Facilities Maintenance $0.94
Expenditure Total $29.77 $26.33 $34.77
Source: City of San Francisco and NGF Consulting
It is expected to cost the City of San Francisco about $34.77 total in FY2007 to produce each
round of golf on the Lincoln Park Golf Course, EXCLUDING actual vendor expenses. As noted,
there is no industry standard for an appropriate cost of production, but this figure should be
compared to the revenue ratios and be considered whenever green fee schedules are being
contemplated.
Clubhouse – The current clubhouse, though functional, is in a state of disrepair. Built in 1916, it
may have some historic value, but it is not conducive to a high quality golf experience. NGF
Consulting was told that it had “pre-existing non-conforming” ADA; status, and possible
asbestos issues. Needless to say, the current facility would not be appropriate if the golf course
itself were to be rehabilitated and high-fee tourist play actively sought.
Even if the City (or some other entity) preferred to renovate the clubhouse rather than replace it
(thus preserving some of the historical significance), the cost of renovation for a building of
similar size would likely be $2.5 million or more (especially if added banquet/function space or
completely replaced). However, NGF Consulting sees this as necessary to maximizing the
economic potential of Lincoln Park, in terms of both rounds played and other revenues.
(Banquet and corporate meeting business would have great potential because of the views
offered at Lincoln). NGF Consulting recommends hiring a structural engineer to determine if the
building is worth renovating or it is best to simply replace it.
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Lincoln Park Best Case “As –Is” Financial Projections
Based on the analysis conducted in early 2007, the NGF Consulting team has prepared an
estimate of best case financial performance for the Lincoln Park Golf Course assuming that the
facility continues operations on an “as-is” basis. The results of this analysis are shown in the
table that follows.
Base Assumptions
This proforma estimate is based on the assumption that the City continues its operation on an
‘as-is’ basis, with only minimal changes to the operation. NGF Consulting has assumed that
rounds are held at actual FY2005-06 and FY2006-07 (partial) levels and that average revenue
per round increases at a slight two percent (2%) per year. It is also assumed for this ‘best case’
scenario that City expenses are held in check to an average annual growth of four percent (4%),
except fringe benefits that are eight percent (8%) per year through FY2012.
Total Green Fee Revenue $1,083,405 $1,105,073 $1,127,175 $1,149,718 $1,172,712 $1,196,167
Merchandise $53,683 $54,757 $55,852 $56,969 $58,108 $59,270
Lessons $7,158 $7,301 $7,447 $7,596 $7,748 $7,903
F&B $67,283 $68,628 $70,001 $71,401 $72,829 $74,285
Golf Carts/Rentals $208,290 $212,456 $216,705 $221,039 $225,460 $229,969
Other $12,884 $13,142 $13,404 $13,673 $13,946 $14,225
Total Concession $349,297 $356,283 $363,409 $370,677 $378,090 $385,652
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GOLDEN GATE PARK GOLF COURSE
The Golden Gate Park Golf Course is a 9-hole, par-3 golf layout built within the famous Golden
Gate Park. The course is located near the western end of the park and is accessible through
several Park entrances near the Chain of Lakes Drive and the Beach Chalet. This facility serves
a niche in the local golf market, serving primarily juniors and other less-skilled golfers. The
facility is also appealing in that it offers the local City golfers a round of golf with a shorter
duration, which is important today because NGF studies have shown that time availability is the
most often cited reason for declines in golf participation.
Inventory of Facilities
Golden Gate Park Golf Course includes a 9-hole golf course, clubhouse, practice green and
netted practice hitting area. A summary of these amenities follows:
Golf Course - The Golden Gate Park golf course plays to a total of 1,357 yards, with all 9-holes
being par-3’s ranging from 109 to 193 yards. The short, simple golf course provides for ease of
play for all skill levels and certainly is easy to walk. Further, five of the nine holes are in
immediate proximity to the clubhouse for additional ease of access. This golf course has strong
appeal to less-skilled golfers and the present staff works to promote the facility to beginners of
all ages, thereby providing a potential ‘feeder’ facility to help grow the number of golfers in San
Francisco that can participate at this and all other City golf facilities.
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Practice Amenities – Golden Gate offers very simple practice amenities including a small
putting green just off the clubhouse, and a caged hitting station for full swing practice. While
simple in nature this ‘swing cage’ set up appears to be a nice fit for the Golden Gate facility and
an excellent source of additional revenue for the facility, in addition to providing a station for full
swing practice and lessons. This full swing cage was added at the expense of the present
operator, though it was eventually sold to the City and is being paid off in installments.
Google Earth image shows limited space for additional practice facilities
Clubhouse - The current clubhouse is a small facility that primarily serves as a snack bar area
for the facility. The space includes a small kitchen with a counter and seating for no more than
20+ patrons. A small selection of golf items are also displayed for sales in the open space.
Outside, the present operator has added a deck area with tables for additional outdoor seating.
The food and beverage concession goes by the name “Ironwood BBQ,” and offers a diverse
menu and daily specials. The facility promotes itself well and uses the Ironwood BBQ brand to
attract non-golfers to the facility for lunches. The facility is also capable of hosting some parties
and events, although the sizes are limited.
Maintenance Facility and Equipment - Equipment for aeration is brought in from other
facilities. As a result, aeration is infrequent. A barn serves to house the few pieces of equipment
present at this golf course. It can be described as cozy, old and barely large enough for a few
mowers and some hand tools. Security can be a problem. A new, larger facility should be
considered.
Physical Review
NGF Consulting has reviewed the physical condition of the Golden Gate Park Golf Course
under the same methodology as described previously. The specific physical enhancement
recommendations and associated costs are presented in the Recommendations section later in
this report. The key physical issues uncovered at Golden Gate Park include the following:
• Maintenance Staff - The City gets by with just one full time employee to take care of
this roughly 25-acre facility. This facility should have 3-4 full-time maintenance staff,
with perhaps two sufficing during off season times.
• Arbor Care - Trees need thinning and removal in some areas, thereby allowing for
better air circulation and sunlight. The operator reports that people looking for lost
balls under fallen tree limbs has contributed to slow pace of play.
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• Feature Remodeling - The staff undertakes re-building of selected golf features,
including bunkers, etc. While this is admirable, much of the work is contrary to design
aesthetics and strategy. The floor is way too high and there remains very little
challenge in the hazard. In essence, the charm and appeal of the bunkers are being
lost to work that is well intentioned, but incorrectly executed. Worse, labor and funds
are being spent that should be better earmarked. To rectify this situation, a master
plan and guidance by a professional golf course architect is called for.
Operations Overview
Staffing
As noted there is only one City employee to maintain the entire Golden Gate golf facility. The
concessionaire employs a very small additional staff to manage the golf and food/beverage
operations. Exacerbating the problem is that the lone gardener is off on Thursday and Friday
(ahead of normally heavier weekend play), and reportedly spends two to three days per week at
Lincoln. While NGF Consulting believes that there is insufficient staff to maintain this facility to
high standards, this issue is less severe at this facility than at the other 18-hole courses in the
City system (Sharp, Harding and Lincoln).
Concession Agreement
This management agreement for Pro Shop and Food & Beverage concession services between
the City and County of San Francisco (City) and Global Golf Management, LLC (Manager) was
dated May 26, 2004. The term is for seven years from July 1, 2004 through June 30, 2011. No
provision for extension except “holdover on a month-to-month basis upon mutual agreement.
City pays a management fee of $300,000 annually at $25,000 per month. Security deposit
$25,000.
All gross revenues go to the City, except for golf instruction and beer/wine sales.
Incentive fees are paid by the City to the Manager after the end of each anniversary date of the
initial term of the agreement:
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The Annual Budget Figure is the projected base revenue target for individual revenue streams
presented as part of Manager’s Annual Budget, which is approved by the City’s General
Manager.
Under specified guidelines, Manager is entitled to compensation for additional services required
by the City that increase personnel costs above standard staffing levels. The City will pay
payroll and benefit expenses plus a management fee of 10% of such payments. Approval
required for additional funding.
• Driving Cage – City agreed to pay Manager $65,461.54 reimbursement for planning,
design, purchase and other costs for installation of a 9-station driving cage. Paid in 5
annual installments.
• Product Inventory – City agreed to purchase from Manager existing inventory of
merchandise and food and beverage items in stock at time of contract initiation, to
serve as a starting inventory for the Manager.
Manager supervises all golf activities that comprise the day-to-day business operation of the 9-
hole course. Manager maintains structures, grounds, parking lots, and walkways. The City
maintains the golf course. Manager is required to accommodate all First Tee activities.
Fee Structure
The pricing structure for Golden Gate Park is outlined in the table shown below:
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Golden Gate Park
Weekday Weekend
Standard $14 $18
Resident $10 $12
Senior $7 $10
Junior $4 $6
Twilight $7 $8
Tournament $17 $25
Driving Range/Cage: Cage $3 $5
small bucket large bucket
(approx. 25 balls) (approx. 75 balls)
Weekday = M-Th; Weekend = F-Sun
As noted in the competitive section, fees at Golden Gate Park are in line with area comparable
courses, and are commensurate with the market the facility serves – beginners, juniors, and
families. As Golden Gate can effectively serve as a cultivator of new players and a feeder facility
for the rest of the San Francisco municipal golf system, its fees should be affordable to the
majority of residents, though there may be room for moderate increases without a decrease in
play or putting an undue burden on golfers.
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Other Findings
1. Overall, Golden Gate Park golfers are about 50% loyal to the facility, much higher than
the national benchmark of 5% (‘value’ facility benchmark) and the highest in the City golf
system. It is clear that golfers at this facility are satisfied in every aspect of the operation,
except the golf carts of which there are none. The survey group indicated that the
condition of the greens is the only area that is in need of improvement.
2. Our surveys also show the other City courses Harding Park, Lincoln, Gleneagles and
Sharpe Park were all in the top six competing golf facilities.
3. The profile of the Golden Gate Park golfer shows the highest proportion of females
(24%) and a generally younger (52% under 50) golfer than at other City facilities. The
course tends to draw a very local clientele as 87% of respondents identified themselves
as City residents. The map displaying the origin of customers is in Appendix F.
4. Unlike at the other facilities, most respondents (58%) think that the overall quality of the
City’s golf courses would NOT improve if oversight and management of the golf system
were taken away from the City. The survey also revealed that a majority of respondents
(83%) would prefer to keep the fees low in lieu of improvements.
Activity Levels
The +/- 47,000 rounds played at Golden Gate Park in FY 2005-06 represents a considerable
decline from the earlier years of the decade when the small 9-hole facility was hosting upwards
of 68,000+ rounds. The rounds data as provided by the City of San Francisco are shown in the
table below.
Capacity Issues
NGF Consulting expects a short-length, 9-hole par-3 golf course like the Golden Gate Park GC
should be able to achieve rounds played numbers up to 60,000+ rounds annually, indicating
that this facility is operating at well below capacity.
Revenue Analysis
NGF Consulting has reviewed the financial statements and presented the revenue performance
for Golden Gate Park GC in the following tables. This data shows that Golden Gate Park is
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capable of generating revenues of $850,000+, and more than $15 per round of golf. We note
that data shows green fee revenue per round is up in FY 2006-07, while ancillary revenue per
round has fallen slightly.
The operator has created two profitable revenue centers that did not exist before they took over
– lessons and a hitting cage – and built up the food & beverage operation, indicating a strong
degree of business savvy. The hitting cage (driving range) added in 2004 has been generating
upwards of $35,000+, and unlike other revenue centers at the facility is still trending upwards. In
all, $35,000+ in revenue for a hitting cage like this is a very strong level of revenue and likely
indicative of demand for range use in the City. It is clear that the driving range revenue, much of
which comes from customers who do not play a round of golf, will be the key to the future
growth in revenue at this facility. Lessons, which accrue to the operator, are also a strong
performer, averaging more than $140,000 over the last two years.
Concessionaire Revenue
Lessons $229,650 $297,982 $140,000 $140,000
Beer Sales $34,338 $42,370
Total Facility Revenue $912,283 $886,108 $784,057 $859,278
Source: City of San Francisco, Global Golf Mgt. + NGF Consulting. Lessons not payable under new City
agreement beginning 7/1/04.
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City of San Francisco
Golden Gate Park Golf Course Revenue per Round
(Fiscal Years 2002-2007)
FY 2001-02* FY 2002-03* FY 2003-04* FY 2004-05 FY 2005-06 FY 2006-07*
Total Green Fee Revenue $7.98 $7.70 $10.04 $9.93 $11.25 $14.04
Expense Analysis
The City-provided Golden Gate Park Golf Course expense performance appears in the table
below. The figures show that the 2006-07 budget now stands at roughly the same $600,000
level from the previous year (with a slight decline). As such, this facility is showing an operation
profit for the City, unlike the other City courses we have examined. The high cost of labor
allocated to these City golf courses is evident here, as Golden Gate was assigned $234,935
(FY2006) in labor expense for sharing a teamster, a gardener, and a gardening supervisor.
Cost of Production
Given the above noted expense estimates and the actual rounds played, the facility cost of
production ratios are as follows:
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Golden Gate Park Golf Course
Cost of Production (Fiscal Years 2005-2007)
2006-07
2004-05 2005-06 Budget
Golf Rounds 48,298 44,823 45,000
Expenditure
Salaries $2.83 $4.16 $3.63
Fringes $0.60 $1.08 $1.06
Overhead $0.83 $1.05 $1.31
Professional & Special Serv. $0.00 $7.00 $6.97
Other Expenses $0.01 $0.01 $0.00
Materials & Supplies $0.04 $0.15 $0.24
Facilities Maintenance $0.04 $0.00 $0.00
Expenditure Total $4.35 $13.45 $13.20
Source: City of San Francisco and NGF Consulting
It is expected to cost the City of San Francisco about $13.20 total in FY2007 to produce each
round of golf on the Golden Gate Park Golf Course, EXCLUDING actual vendor expenses.
Base Assumptions
This proforma estimate is based on the assumption that the City continues its operation on an
‘as-is’ basis, with only minimal changes to the operation. NGF Consulting has assumed that
rounds are consistent with actual FY2005-06 levels and projected FY2006-07 figures. We also
assume average revenue per round increases at a slight two percent (2%) per year. The facility
expenses are projected to increase at four percent (4%) per year, with eight percent (8%)
increases in fringe benefits through 2012.
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City of San Francisco
Golden Gate Park Golf Course Projected Revenue
(Fiscal Years 2007-2012)
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Rounds Played 45,000 45,000 45,000 45,000 45,000
Concessionaire Revenue
Lessons $82,753 $84,408 $86,096 $87,818 $89,574
Beer Sales $23,682 $24,156 $24,639 $25,132 $25,634
Expenditure
Salaries $169,959 $176,757 $183,828 $191,181 $198,828
Fringes $51,306 $55,411 $59,844 $64,631 $69,802
Overhead $61,185 $63,633 $66,178 $68,825 $71,578
Professional & Special Serv. $326,092 $339,136 $352,701 $366,809 $381,482
Other Expenses $0 $0 $0 $0 $0
Materials & Supplies $11,264 $11,715 $12,183 $12,671 $13,178
Facilities Maintenance $0 $0 $0 $0 $0
Expenditure Total $619,807 $646,651 $674,734 $704,117 $734,867
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GLENEAGLES GOLF COURSE (MCLAREN PARK)
The Gleneagles Golf Course is a small 9-hole golf course located at McLaren Park in the
southeastern part of the City of San Francisco. The golf course was carved out of a hillside and
is bordered on two sides by residences in the Excelsior and Visitacion Valley districts. The
course occupies about 50 acres out of 300 acres that make up McLaren Park.
This facility has been leased to a private operator since its inception in the 1960s, and has been
promoted as a tough test of golf for better skilled players seeking a time-shortened round of
challenging golf. The facility is another of the City golf courses that has appeal in that it offers a
round of golf with a shorter duration to appeal to a growing segment of time-constrained golfers.
Gleneagles GC History
Jack Fleming designed the course in 1962, arguing with City officials that the more gradual
terrain at the upper portion of the 300-acre park would be better suited to golf. Fleming lost—but
was probably correct in his belief given the drainage and saturated soil problems facing
Gleneagles today.
Budgets were reported to be exceeded in the construction, as was a failure to follow Fleming’s
plans. Fleming had designed Golden Gate Park Golf Course for the City in 1950 and it was
through this connection that he became involved in the golf course at McLaren Park. Fleming
did his best, creating nine unique golf holes on what—even today—would be considered a
nearly impossible site. Keeping in mind that Fleming was not given authority to move much
material, the 9-hole course is quite remarkable.
The City eventually considered closing the course, citing a lack of business and conditions that
were atrocious. Robert Muir Graves, a golf course architect from northern California, made
modifications in 1982. Eric de Lambert eventually took over the course on a month-to-month
lease. De Lambert made his own changes, most notably the new No. 1 green that sits
awkwardly above the old green’s location on a steep hillside. New management has been
contracted with the City on a lease-basis.
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Inventory of Facilities
Gleneagles Golf Course includes a 9-hole golf course, clubhouse and practice green. A
summary of these amenities follows:
Golf Course - The Gleneagles golf course plays to a total of 3,006 yards, although a second set
of tees allows a golfer to play a second nine holes from 2,854 yards. Otherwise, the course
plays as normal with two par-5s and two par 3s. As noted, the hilly site makes the golf here
somewhat difficult and provides a real challenge for better golfers. The hills have also created
some very awkward shots in the playing of golf.
Practice Amenities – There are no practice facilities for hitting warm-up shots. The lessee
communicated a concept to install a few hitting nets (cages) against the hillside behind and
adjacent to the maintenance building. This seems a reasonable idea and one that may
positively affect business and enjoyment of the course.
Clubhouse - The current clubhouse is a small facility that emphasizes the Scottish pub-type
atmosphere. The small, full-service bar is very popular with golfers and other locals. There is
limited food service, and a very small retail area. Total seating inside is for about 30, while an
outside seating area accommodates several small tables and perhaps 20 people.
Maintenance Facility and Equipment - Equipment is old and not entirely in working order. The
lessee has made improvements and purchased some newer equipment. The old facility does an
adequate job of housing equipment, but needs repairs.
Physical Review
NGF Consulting has reviewed the physical condition of the Gleneagles Golf Course under the
same methodology as described previously. Specific physical enhancement recommendations
and associated costs are presented in the Recommendations section later in this report. The
key physical issues uncovered at Gleneagles include the following:
• Poor Turf Conditions - Turf problems are evident where drainage and/or irrigation
coverage is most lacking. Additionally, turf issues are present in shady areas where
trees need to be thinned or removed. Soils at Gleneagles have endured years of
poor drainage and build-up of organics, resulting in mucky areas where good
drainage is now nearly impossible, and turf suffers from aerobic soils that drain and
allow oxygen to reach roots. Kikuyugrass (Pennisetum clandestinum) has infested
portions of the course but this may actually be welcome in many areas where grass
does not grow at all. Greens are frequently soft and mushy. Topdressing and
aerification has been successful in rectifying conditions in some areas, but more
needs to be done. Greens are virtually unplayable in wet conditions due to the
spongy nature of the soil and its tendency to not allow proper drainage.
• Drainage - Drainage problems are due to the fact that this golf course is built on a
hillside, and the slopes allow run-off to infiltrate features and downhill areas of the
course. A very well placed and engineered drainage intercept trench along the
entirety of the upper flanks of the golf course is required. Once such an improvement
is in place, it would then leave only the seepage and watershed that falls on the
course itself to be dealt with. On a positive note, the sloping terrain supports positive
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drainage. Obviously it is the wet season when drainage is most troublesome, but
Gleneagles experiences a significant amount of wet areas even when it is relatively
dry in the rest of the Bay area.
• The greens need significant drainage improvements. Some work has been done, but
without a formal plan. The lessee is to be commended on efforts thus far, but could
likely realize even better results if a plan were crafted and followed as investment
dollars were expended.
• Arbor Care - The City is no longer responsible for the care of the trees on the
course, which is the lessee’s responsibility. Much progress has been made in just the
past six months, but more work is required. As with the other City courses,
Gleneagles needs a well-crafted tree plan. The City should recognize that the trees
remain an asset of the park and, ideally, participate in assisting the lessee with
needs associated with arbor care.
• Safety – Some added tees may be ill-positioned in relation to greens and fairways.
Also, while tree lined fairways provide buffering, they also restrict views and prevent
golfers from warning one another with the cry of “fore” when an errant shot may pose
danger. A study of changes (added tees) should be undertaken to determine if any
adjustments may be warranted.
• Cart Paths - A loosely established collection of paths, some of which are not
connected, wind their way around the course. Many of these paths are poorly
aligned, have no drainage associated with them, and have developed significant
rutting. The result is a “system” of paths that often appear as deep trenches, and in
some cases as wide ditches. With little gravel or base, they become deeper. This
situation is not entirely detrimental given the fact that Gleneagles does not have
many cart users and features a fleet of only 15 carts. But it is essential that
maintenance equipment has good access to areas of the course. This is especially
important in wet climates such as San Francisco, and on steep sites such as this.
Operations Overview
Staffing
As noted the City does not have any employees associated with the Gleneagles operation, as
all employees work for the lessee. The lessee has four full-time workers – a General Partner, a
head groundskeeper, and two other groundskeepers. There are approximately six part-time
workers. Labor is brought in as needed for special projects.
Concession Agreement
This lease for management, maintenance and operation of the 9-hole golf course and all
ancillary activities between the City and County of San Francisco (City) and Gleneagles Golf
Partners, LP (Tenant) was dated December 1, 2004. The term is for nine years from December
1, 2004 through November 30, 2013. At the end of lease term, either party has the option to
extend the lease for nine more years, upon approval by City. If the option is not taken, holding
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over on a month-to-month basis is allowed within guidelines. Tenant paid a security deposit of
$25,000.
Tenant pays City a base rent of 7% of monthly gross revenues plus participation rent of 2% of
gross revenues between $737,337 and $860,050 and 3% of amount above $860,050.
Tenant may be allowed rent credits for City-required improvements, upon City approval.
• Year 1-2: Improvements to entrance, clubhouse, kitchen and patio area; trim and
remove tree limbs. Explore adding a driving range/cage. $50,000 estimated cost.
• Years 2-4: Review possibility of adding forward tees on several holes; lease new
equipment. $50,000 estimated cost.
• Year 4-5: Based on financial feasibility studies, implement driving range. Purchase
new TVs for clubhouse. $50,000 estimated cost.
• Year 6-7: Review cart path and conduct major renovation of cart paths; review
condition of parking lot and driveway and possibly repave and stripe. $100,000
estimated cost.
The operator does maintain a dedicated website (gleneaglesgolfsf.com) for Gleneagles; the site
features a basic history of the course, as well as a scorecard and basic information regarding
directions and rates. Attractive pictures of the course scroll through the screen as one reads
about the facility. In addition to the website, the operators do some advertising, including a
recent 2-page ad in the “Bay Area and Northern California Golf Guide”. The first page of the ad
includes basic information for Gleneagles, as well as an interesting write-up. The facing page is
an elegant, non-busy ad with Scottish-themed illustrations and the theme: “So difficult, we
stopped building after nine holes”.
Fee Structure
The pricing structure for Gleneagles is outlined in the table shown below. Though the
agreement with the City is structured as a ground lease, the Board of Supervisors must approve
proposed green fee increases. Fees at Gleneagles are in line with the only other 9-hole
regulation length courses in the regional market – Diablo Hills, which is about 25 miles away in
Walnut Creek, and Fremont Park, 28 miles away in Fremont.
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Gleneagles Golf Course
Weekday Weekend
9 Holes $13 $16
18 Holes $20 $27
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Other findings
1. Overall, Gleneagles golfers are about 33% loyal to the facility, much higher than the
national benchmark of 5%. Customers that responded to the survey rated the facility
quite high on the measures of affordability, tee time availability, overall value, and
friendliness/service of staff. The key business drivers on which Sharp Park fared the
poorest were condition of golf cars, and on-course services.
2. The profile of the Gleneagles golfers shows a group that is predominantly male (92%)
and older (51% over 50). The course tends to draw somewhat local as 55% of
respondents identified themselves as City residents. The map displaying the origin of
customers is displayed in Appendix F.
3. The survey revealed that a vast majority of respondents (92%) would play more or the
same rounds of golf at Gleneagles if the conditions were improved AND the green fees
increased.
4. In open-ended comments the respondents noted the ease of getting a tee time and the
fact that the golf course presents a challenge, even to better-skilled players. They also
noted affection for the staff and friendly bar atmosphere created at the facility.
2005 2006
Rounds Revenue Rounds Revenue
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Ancillary Revenue
McLaren Park (Gleneagles) Golf Course
Ancillary Revenue - 2005-2006
2005
F&B Merch Carts Total
2006
F&B Merch Carts Total
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City of San Francisco
Gleneagles Golf Course - Operations
Revenue
Concessions $37,590 $47,219 $48,328
Revenue Total $37,590 $47,219 $48,328
Expenditure
Salaries $28,445
Fringes $6,536
Overhead $9,876
Facilities Maintenance $2,411
Expenditure Total $47,268 $0 $0
Proforma Estimate for Gleneagles Golf Course (City Perspective) FY2007 – FY2012
City of San Francisco
Golden Gate Park Golf Course Projected Revenue
(Fiscal Years 2007-2012)
FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Rounds Played 35,000 35,000 35,000 35,000 35,000 35,000
Green Fees $463,750 $473,025 $482,486 $492,135 $501,978 $512,017
Merchandise $12,243 $12,487 $12,737 $12,992 $13,252 $13,517
F&B $179,791 $183,387 $187,055 $190,796 $194,612 $198,504
Golf Carts/Rentals $34,623 $35,316 $36,022 $36,743 $37,478 $38,227
Total Concession $690,407 $704,215 $718,300 $732,666 $747,319 $762,265
Concession to City $48,328 $49,295 $50,281 $51,287 $67,259 $68,604
Total Facility Revenue $690,407 $704,215 $718,300 $732,666 $747,319 $762,265
Total City Expenditure $0 $0 $0 $0 $0 $0
Surplus (Deficit) $48,328 $49,295 $50,281 $51,287 $67,259 $68,604
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SYSTEM-WIDE BEST CASE ‘AS-IS’ FINANCIAL PROJECTIONS
Based on the individual facility best case financial projections presented above, the following
tables show how the whole system is expected to perform over the next five full fiscal years, or
through the end of FY2012.
City Revenue/Round
Harding/Fleming $64.74 $66.04 $67.36 $68.70 $70.08 $71.48
Sharp $22.48 $22.93 $23.39 $23.86 $24.33 $24.82
Lincoln $24.91 $25.41 $25.92 $26.43 $26.96 $27.50
Golden Gate $17.63 $17.98 $18.34 $18.70 $19.08 $19.46
Gleneagles $1.38 $1.41 $1.44 $1.47 $1.92 $1.96
Tot. City Revenue/Round $36.25 $36.97 $37.71 $38.47 $39.29 $40.07
Sal. + Fringe % of City Rev. 37.9% 39.0% 40.1% 41.3% 42.5% 43.7%
Overhead as % of City Rev. 14.0% 14.3% 14.6% 15.0% 15.3% 15.6%
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Full System Revenue and Expense Projections
Expenditure
Salaries $3,164,989 $3,291,810 $3,423,704 $3,560,874 $3,703,531 $3,851,894
Fringes $948,619 $1,025,001 $1,107,493 $1,196,584 $1,292,803 $1,396,720
Overhead $1,520,467 $1,585,074 $1,652,455 $1,722,730 $1,796,024 $1,872,470
Professional & Special Serv. $4,079,835 $4,243,323 $4,413,366 $4,590,225 $4,774,175 $4,965,501
Rent/Leases Equipment $284,024 $295,385 $307,200 $319,488 $332,268 $345,559
Workorders $286,640 $300,922 $315,916 $331,658 $348,184 $365,535
Other Expenses $48,000 $49,920 $51,917 $53,993 $56,153 $58,399
Materials & Supplies $356,040 $370,282 $385,093 $400,497 $416,516 $433,177
Services of other Dept. $0 $0 $0 $0 $0 $0
Facilities Maintenance $0 $0 $0 $0 $0 $0
Capital Reserve $251,364 $261,419 $271,875 $282,750 $294,060 $305,823
Repayment to Open Space $1,417,075 $1,417,075 $1,417,075 $1,417,075 $1,417,075 $1,417,075
Expenditure Total $12,357,053 $12,840,210 $13,346,094 $13,875,875 $14,430,791 $15,012,152
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Recommendations
NGF Consulting has prepared a schedule of recommendations for the continued operations of
the City of San Francisco municipal golf system. These recommendations are organized into
three main categories: 1.) Management; 2.) Other system-wide; and, 3.) Individual facility
recommendations. In the chapter following these recommendations, NGF Consulting will display
the potential financial impact of enacting all of these recommendations. However, we first
present the various alternatives available to the City, followed by a discussion of each.
MANAGEMENT OPTIONS
Before presenting the recommended management arrangement for the City of San Francisco
municipal golf system, NGF Consulting has examined a variety of options available to any
municipality that owns golf facilities. These options, which are presented from the perspective of
the City of San Francisco, include:
• Continue As-Is (Status Quo): Under this scenario, the City continues to operate the
facilities in the same manner as it is now.
• City Manages: In this option the City takes over full management of the golf courses
under control of the RPD.
• Closing the Golf Courses: Not part of the scope of this study – see discussion
below.
• Leasing: Lease the facilities to a private operator(s) in exchange for an annual (or
monthly/quarterly) lease payment to the City. The lease could be established to
include certain lessee requirements, possibly including capital investment in facility
improvements.
• New Corporation: The City could create a new non-profit 501(c)3 corporation that
would be formed to oversee the City’s golf facilities and pay an annual (or monthly /
quarterly) fee to the City. The Corporation would then be responsible for all
lease/contract negotiations, hiring, and compliance requirements.
A general discussion of each option, along with key advantages and disadvantages is presented
in the following paragraphs:
Status Quo is obviously the simplest solution, requiring no action unless the City is willing to
make a substantial investment (over $8.5 million) in upgrading the facilities and likely enhancing
revenues. While this option may seem irresponsible at first glance, the option may actually have
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some merit if the City feels obligated to retain City golf maintenance staff (gardeners). The City
has to also consider how it views the golf courses. If the golf courses are seen as primarily
being an amenity to the citizens of the City in much the same way as other parks that do not
produce revenue, then the City should be prepared to subsidize its operation just as it
subsidizes the operations of those other amenities.
However, if the City desires to generate a return from the golf courses, or simply have them pay
their own way, then the golf courses need to be run more like businesses and less like parks.
This will then require a substantial change in the operational makeup and require golf business
knowledge and experience in the City golf system that does not exist today.
• Revenues will not cover rapidly increasing costs, particularly labor cost.
City Manages
This option is very similar to the above “Status-Quo” option except that the City would take
direct control of all golf facilities (except the Gleneagles lease) and operate the golf courses
directly out of the RPD. Many municipalities throughout the United States employ this option in
order to retain very tight control of their golf operations. While this option does exist for the City,
it is very unlikely to work for San Francisco for many of the same reasons noted above. If this
option were to be considered it would also require a substantial change in the operational
makeup and require golf business knowledge and experience be added to the City system.
• Revenues will not cover rapidly increasing costs, particularly labor cost.
Discussion
It is clear from everything we have reviewed in this study effort that either of these City
continuing to run the golf facilities options are not tenable for the City of San Francisco. The key
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deficiency in the San Francisco City golf system, the high cost of labor, is not addressed in
either of these City-run options and therefore this option is not recommended.
Further, we note that NGF Consulting economic analysis of this option shows no scenario under
which the City can generate revenues sufficient to cover the expense structure and additional
cost of improvements, while also adhering to NGF Consulting’s recommendations regarding the
need for increased maintenance staffing at the golf courses. These cuts will only reduce playing
conditions further, leading to reduced revenue, leading to even more expense cuts, and so the
cycle continues with worsening conditions and increased General Fund subsides every year.
Management Only
This is very much like the agreement in place at Harding Park today. The ‘management only’
type of management contract assumes that a management company (or individual) is hired by
the City to manage the golf facilities. However, all employees remain employees of the City and
the City would continue to pay all expenses. The management company would be paid a fee to
oversee the operations. The fee can be a flat amount each month, or a percentage of revenue,
or a combination of both. NGF Consulting would not recommend a flat fee as it greatly reduces
incentive to perform.
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whereby the employees of the operation become employees of the contractor. We will also
assume that the contract includes both golf operations and maintenance.
• It is assumed that the company or individual hired has experience and expertise in
golf facility operations. Not only can this provide help in operations and maintenance
but also in other areas such as marketing and merchandising, that are currently
being ignored or minimally attended to at San Francisco facilities.
• Under a ‘management only’ contract the management entity does not have incentive
to control expenses, unless expenses remain with the management entity (which
really makes it a de facto lease).
• Under a ‘management only’ contract the high maintenance labor expense would
remain intact.
• The City would still be responsible for the long-term capital improvements.
• Management companies often will move managers around, taking their best
managers and putting them into their most profitable facilities.
• Management entities often ‘relax’ in the last year of an agreement, unless the entity
is strongly motivated to want to renew the contract.
• Does not address other personnel issues, such as the termination policy.
• The fact the City has four separate golf facilities (excludes Gleneagles) makes
personal services contracts much more difficult. It could mean as many as four
different contracts. Obviously, the more contracts, the more complicated it becomes.
• With multiple contractors comes the issue of consistency in operations from one
facility to the next.
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• With multiple contractors, it becomes more difficult to coordinate activities, such as
marketing and promotions, across the facilities.
Discussion
This is an option that could produce significant results, as long as the selected management
company is of good quality and is given full responsibility for the operation. However, under
most true management company scenarios, the expense will still flow through to the City. There
are good management companies and there are bad management companies. The overall
quality of these types of agreements rests with the City’s ability to find a qualified company,
negotiate a contract that is “win-win” for both sides, and then provide proper oversight to see to
it that the contract is complied with.
NGF Consulting believes that the only management contract that might make sense in San
Francisco is one that removes all payroll expenses from the City (a de facto lease). This should
not only result in a major cost-savings to the overall operation, but eliminates other issues such
as termination policies and specialized job responsibilities. When designed as a revenue-
sharing contract, the City would have a much greater chance for a positive cash flow.
However, the large downside to this option is the lack of any guarantees for the City of San
Francisco. The base management fee would be paid to the facility operator regardless of actual
performance and, as such, the operator has no real incentive to perform. In short, the City
remains the real risk taker and potential loser in the operation. Given this, it would be wiser for
the City to enter into a full-service lease than a management contract.
Leasing
Under this scenario, the City of San Francisco golf courses would be leased to a private
operator that would be responsible for all operating expenses as well as capital upkeep. The
lessee would then receive most (if not all) of the revenue and pay the City either a flat payment
(flat lease) or a percentage of revenue (percentage lease). The City of San Francisco already
has a lease agreement in place with one of the subject courses, Gleneagles (McLaren Park)
Golf Course.
Advantages to Leasing
• Stops the Bleeding: As all expenses for the operation of the facility would be the
responsibility of the lessee, the City would have no further exposure to cash outlays,
other than debt service.
• Guaranteed Revenue Stream: Given that the lessee would be absorbing almost all
of the expenses, plus would be paying a lease payment to the City, the City would
almost certainly have a positive cash flow. The lease would provide funds that be
used to help pay down the existing debt on Harding Park.
• Simplicity: The City would be relieved of a lot of the responsibility in maintaining and
operating the facility.
• Capital Improvements: The lease could require the lessee make the needed capital
improvements as a condition to the lease. This would greatly decrease or eliminate
the cost of improvements to the City.
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• Familiarity: San Francisco already has a lease agreement with one of its courses –
Gleneagles – with positive cash flow to the City. The PUC courses (Crystal Springs
and Sunol Valley Golf Courses) are also operated under a lease with terms favorable
to the City.
Disadvantages to Leasing
• Profit Motive: A lease arrangement may directly conflict with the stated objective of
providing an affordable, enjoyable recreation activity for the citizens of San
Francisco, as private interests (including maximizing return) can often be in
opposition to public interests (which include providing a community service).
• Labor Issues: The lease will likely mean that City maintenance employees would
lose their positions at the golf courses, or at least face reductions in pay and/or
benefits. Although we note the individuals in these positions now would likely be
transferred to another position within the RPD.
• Pricing Control: Unless specified in the lease, the lessee may seek free rein over
golf fees, likely making the golf courses more expensive to the general public. If the
lease has restrictions on raising fees, the lease option becomes less appealing to the
private management companies that may be bidding for the lease award.
• Quality Control: Unless the contract is carefully executed, the City would have little
ability to regulate the quality of the operation, as long as the lease terms are met.
And even if they are not met, the legal and practical cost to “force” conformity with
the lease can be expensive.
• Long term: Leases are typically for a long term, especially if capital improvements
are included in the lease terms. This makes it difficult to get out of the lease, should
the City become displeased with the lessee’s operations of the facility.
Discussion
While leasing of municipal golf facilities was popular in previous decades, its popularity waned
in the 1990s as golf revenues were increasing and municipalities began to see what they
thought were large sums in golf revenue going to an outside vendor and not the municipality.
However, since the turn of the 21st century leases are coming back into fashion for municipal
golf facilities, particularly in California. This has been due to increased competition in the golf
market and the growing need for expert and efficient management and marketing.
Although the appeal of turning everything over to an outside agency does have a lot of merit,
especially in terms of relieving the current financial burden, we should note some downsides of
this option. First, it s very likely that if the City goes in this direction many City maintenance
positions will be affected, although the individuals in those positions today will likely be
“reassigned” elsewhere. We also note that it may be difficult to attract an acceptable vendor with
lease terms favorable enough to the City to make it attractive enough to entice a vendor. These
lease agreements work best when they are “win-win” for both the lessee and the City. The
municipalities that find trouble in these lease agreements often have entered into agreements
where one party or the other is doing better. If the deal is too favorable to the City, the vendor
may struggle and the asset could suffer as a result. If the deal is too favorable for the vendor,
the municipality could suffer. So it is clear the contract terms are key to any successful lease
arrangement.
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New Non-Profit 501(c)3 Corporation
501(c) is a subsection of the United States IRS Code, which lists 28 types of non-profit
organizations exempt from certain federal taxes. These non-profit organizations are very
common in the business world, but much less so in golf (the so-called “Baltimore Model” was
the first). The 501(c)3 form of the organization typically involves various charitable, non-profit,
religious, and educational entities.
• Capital projects would be financed through private bank financing, with no use of
taxpayer dollars. Needed projects that might drag on for months or years awaiting
approval under public management can be quickly implemented.
• All of the workers are employees of the Corporation and have golf expertise. The
cost of labor is greatly reduced.
• Once the initial Board of Directors had been established, future and/or additional
board members are appointed by the existing board.
• The Board of Directors oversees the facilities and meets every month to review
financial reports, capital projects and operational/policy issues.
• Politics would not intervene with the implementation of best business practices. The
Board of Directors and management staff are free to concentrate on, and quickly
address, the needs of the golfing public.
Disadvantages to 501(c)3
• Labor Issues: This type of organization would likely result in current City
maintenance employees being offered positions to stay on, but under a different
labor agreement. Should they choose not to stay on under different terms, the City
would have to decide their fate. As noted earlier, we assume that the individuals in
these positions would likely be transferred elsewhere within RPD or the City.
• Pricing Control: Unless specified in the lease, the Corporation may seek to raise
golf fees thereby making the golf courses more expensive to the general public.
• Quality Control: Unless the contract is carefully executed, the City would have little
ability to regulate the quality of the operation, as long as the lease terms are met.
The first issue, of course, involves the City clearly defining what its objectives are in seeking
solutions to the current problems with the golf system. The pricing and quality control issues are
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easily addressed through careful negotiations and execution of the contract between the City
and the Corporation, and between the Corporation and the ultimate operators of the golf
courses.
With this basic fact in mind, and having discussed the state of the current City golf operation in
detail in this report and presented some options for the system’s continued operations, NGF
Consulting has concluded that there are two reasonable options available to the City if it wants
to continue offering golf to its citizens without using taxpayer dollars to subsidize it. These
options are:
Before we make our recommendation as to which of these options fits best for the City, we
present the following summarized case studies of two cities that have rescued failing golf
systems through implementation of these strategies. The state of the golf systems of these
cities bore many similarities to what is has been happening in San Francisco over the last five
years, especially with regard to golf course conditions, growing labor budgets, and declining
overall economic performance of the system. At the end of this section, we also summarize our
findings regarding two leased golf courses within the City of San Francisco itself.
Up until 1983, New York City operated and maintained the courses themselves with unionized
labor. Operating losses were in the multiple millions of dollars, and playing conditions were
atrocious. Recognizing that they did not have the expertise within the City to effectively manage
the golf system, and that labor costs were growing out of control, the City decided to turn a few
of the courses over to private managers to test the waters. No City workers assigned to the golf
courses lost their jobs; they were simply reassigned within Parks Department. The experiment
was a success, and the City golf operation was eventually fully privatized.
• The golf contracts are under the purview of the Parks & Recreation Department; the
system is not set up as an enterprise fund.
• Contractors are “licensees”, not lessees, and City retains much control over the
system:
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• City approves all fees (increases tied to inflation).
• Maintenance standards clearly spelled out, and inspectors routinely go out to check
compliance.
• Licensees must present detailed capital improvement plan (as part of RFP response)
for facility they are bidding on.
• Despite the declining rounds, the system remains highly profitable to the City. Gross
license fees from the City’s twelve facilities totaled $6.23 million (on gross revenues
of $23.3 million) in 2005, with minimal associated expenses (no expense is explicitly
assigned to golf, but rather is spread out over the City’s 100+ concessions) except
those associated with oversight.
Now widely known as the “Baltimore Model”, the new management structure for the municipal
golf system resulted in:
During the late 1970s and early 1980s, Baltimore lost more than $500,000 annually on the
operation of its five municipal golf courses, resulting in a reduction of the funds allocated to the
golf courses by the City Council and Parks Department. This reduction in funding resulted in the
facilities falling into total disrepair. Deteriorating course conditions led to further decreases in
rounds and revenues, resulting in a vicious cycle. The PGA and LPGA relocated two tour
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events, previously held on Baltimore City courses, to other cities. And, Baltimore's Pine Ridge
Golf Course, which was one of the region's finest public facilities, was removed from Golf
Digest's listing of top 100 courses.
Then-Mayor William Donald Schaefer formed a committee to assess the golf course operation
and to make appropriate recommendations. The committee was comprised of prominent
business leaders, Baltimore City's director of Parks and Recreation and director of Golf Course
Maintenance. The committee identified many operational problems that contributed to the
decline of the golf operation and which required immediate solutions, including:
Recognizing the need for a shift in management the committee assessed the various
management options. Though it would set a precedent, the committee decided that the
formation of a private, not-for-profit corporation incorporated the best features of the alternatives
considered. However, before the plan could be implemented, several issues needed to be
addressed, the foremost of which were: (1) The new organization would not have any assets,
and (2) The fate of the existing golf course employees. The committee addressed these issues
as follows:
1). Assets - the initial funding came from the City in two forms: a direct loan and a line of credit.
The mayor directed the City to provide the new company with a $125,000 bridge loan to cover
all of its expenses during the first month of operation. The City also made arrangements for the
corporation to receive a $350,000 line of credit to purchase badly needed maintenance
equipment, to be paid back in installments over five-years.
2.) Existing Employees - it was decided that the existing employees would be transferred to
other positions within the City, but they had the option to apply for positions with the new
company. Specifically, the new management agreement incorporated the following language:
"...all personnel now employed by the City to work on the golf course properties shall remain
City employees. It is also understood that the Baltimore Municipal Golf Corporation (BMGC)
may have need for the skills and talents of some of these persons and the City hereby
authorizes BMGC to offer employment to City employees at such rates and on such conditions
as BMGC shall choose. Such employees do not have to accept such an offer and, if not, will
remain City employees."
Under criticism from many corners, Mayor Schaefer chose to accept the findings and
recommendations of the committee and created the Baltimore Municipal Golf Corporation
(BMGC). The ten-member volunteer Board of Directors was composed of prominent business
leaders, the president of the Park Board, and average golfers. To ensure that City officials are
kept informed, BMGC sends them quarterly financial reports and an audited annual report. The
annual reports are also available to any citizen upon request.
As noted, the golf course assessment committee identified some major problems with the
existing operation; those issues most salient to the situation in San Francisco are noted below,
including their ultimate resolutions:
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Excessive Labor Budget: Wages had grown to 85% of the entire operating budget, and there
were 120 full-time workers and no seasonal/part-time workers, resulting in too many workers
during the slow season and too few workers during the busy season. The benefits package for
these employees had grown to 50% of the labor budget. There was also excessive leave and
overtime policies, and equipment repairs were conducted by an off-site central maintenance
department that was slow, unreliable and expensive.
Insufficient Funding: Under Parks and Recreation, all of the revenues received from golf
course operations went into the General Fund. Yearly budgets and capital improvements
required the approval of the Parks Department and City Council. Not only was there a decline in
the money being allocated to the courses, it could take months or years to get approvals for
capital projects.
Political Influence: Crucial operating decisions that required immediate action were held up by
multiple Park Board and City Council meetings. When decisions were made, they were often
politically motivated.
• Resolution: The new 501(c)-3 organization would be free of bureaucratic red tape as
it implemented sound business principles. The Board of Directors and management
staff, could concentrate on, and quickly address, the needs of the golfing public.
Since its inception, BMGC has turned around the floundering golf course operations that were
losing over $500,000 annually, thus providing the City of Baltimore with over $5,000,000 in
savings over the first 10 years of operation.
• BMGC's Board has directed more than $6,500,000 in capital improvements, which
were made without using tax dollars or bond issues. Funding for operational
expenses and capital purchases come from playing fees.
• The new golf management concept resulted in the BMGC becoming the first
recipient of the Reilly Award, presented in a national competition to determine the
best idea for change in parks and recreation.
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• BMGC subsequently had two of its courses rated among the top ten public facilities
in a tri-state area, and sustained some of the lowest greens fees in the Mid-Atlantic
states. Current 18-hole green fees, including riding cart, range from $25 to $45,
depending on the course and the day of the week.
Former Executive Director of the BMGC, Lynnie Cook, notes that, in order for this concept to
work, the municipality must be truly interested in the betterment of its golf course(s) and it must
allow the organization to function independently of local government. In essence, the
private, not-for-profit format works because it is operated and managed like a business.
According to NGF Consulting research, there are indications that the City of Baltimore is
forgetting this basic tenet, as the BMGC has become more politicized in recent years. More
importantly, as the system became more and more successful, the City of Baltimore, which at
the beginning was content to simply be rid of the operating losses, began looking at golf with
more interest. Ultimately, they decided to re-write the agreement with the BMGC and now
require an annual lease payment of $400,000 from the corporation. This requirement coincided
with a severe downturn in the Baltimore municipal golf market, as rounds have declined from a
peak of about 345,000 in the late 1990s to the current 260,000. Therefore, capital
improvements, which had been implemented on a yearly basis, are now being deferred, as the
lease payment to the City always takes precedence.
Basic Framework
There are many details that will have to be worked out between the City and the Corporation.
However, the basic framework, as we envision it, is:
• City leases, or even deeds, the golf courses to a 501(c)3 non-profit corporation (the
“Corporation”). A long-term lease of 30+ years is recommended. Language is put
into the lease regarding required capital improvements (and who owns them),
maintenance standards (and how they are enforced), and green fee guidelines for
residents, indexed somehow to market conditions.
• Of the five golf facilities, we recommend that Harding/Fleming, Sharp Park, and
Lincoln Park be packaged together, and an RFQ (request for qualification and
interest) be issued by the Corporation to solicit potential interest for the
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management, maintenance, and master planning (creation and implementation of
short- and long-term capital improvement plan) of these three facilities. Of course,
current operators will be encouraged to express their interest.
• As we saw with the City of San Leandro, where American Golf Corporation invested
more than $8 million of its own money in Monarch Bay, as well as with Oakland
(language in their RFQ notes at least a $3 million investment required of interested
parties) and New York City (AGC, again, has spent multiple millions of dollars
because they know the golf facilities will throw off considerable positive cash flow), it
is not unreasonable to expect a management entity to invest considerable money in
needed capital improvements. Language in the initial RFQ should clearly spell out
the expected requirements of the bidder with regard to capital investment.
• Based on our projections for these facilities, assuming our recommendations are
enacted, we foresee considerable interest in operating these facilities if they fall
under the Corporation umbrella. The ultimate operating structure should be with one
operator for all three facilities, working under a sub-lease to the 501(c)3.
• Golden Gate and Gleneagles should be handled differently within the Corporation.
These facilities have motivated and knowledgeable operators with business savvy
and a strong relationships with their clientele. Gleneagles is already under a
profitable lease. Golden Gate serves the junior/beginner market and has an operator
that is a good match.
• The only change we recommend with regard to Golden Gate is that the current
management agreement be terminated, and a sub-lease agreement be entered into
between the two parties.
• Because of the substantial capital improvements that are needed to make any
solution plausible, the likely need to fund short-term operating losses while the
courses are being improved and the transition is taking place, and the Corporation
taking on the substantial debt owed to Open Space, it is essential that the City put no
undue burden on the Corporation in the lease agreement. NGF Consulting believes
that a nominal payment of $1 per course would not be an unreasonable agreement,
as the City will be rid of the burden of its operating losses. In our model, we have
also assumed that the revenue from resident ID cards, which is upwards of
$300,000, will remain with the City. Between this revenue and the Gleneagles
ground lease, the City will be taking in between $350,000 and $400,000 annually,
with little associated expense.
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One thing that would help immensely would be a change in the repayment terms on the Open
Space debt. Perhaps the annual payment could be deferred until the Corporation begins turning
an operating profit. Another option for short-term operations and capital improvement financing
is a loan from the General Fund to the Corporation. Of course, any funding scenario is expected
to include some component of private donations and, at least as far as capital improvements are
concerned, contributions from the ultimate manager of the properties. A creative example of
raising private funds comes from the City of Houston, where private sector contributions in the
amount of $1.2 million took the form of sponsorships for elegant granite hole markers that were
placed at each tee of Memorial Park. The contributions went toward Memorial’s renovation in
the mid 1990s.
Yield Management
Give management, within boundaries, the flexibility to adjust playing fees (within specified
parameters) in response to market dynamics or repeated soft spots in the tee sheets (yield
management). While the published ‘rack’ rate would not be compromised, the ability to adjust to
market conditions will enable the municipal golf courses to compete more effectively with private
operators (we have noted how aggressively the Presidio, one of Harding Park’s chief
competitors, manages their inventory of tee times). As noted, yield management does not affect
the published rack rate, and can be a great way to stay in touch with customers and to test
pricing elasticity in the market. It is an effective tool as long as the club is covering the variable
cost attached to producing the round of golf.
Pace of Play
Interviews with the individual operators, as well as the results of the Golfer Survey Program,
indicate that slow pace of play is a serious concern for golfers at all of the City courses. Below
are some recommendations for improving (quickening) pace of play. The first step is to develop
a systematic way of tracking pace of play. This is best done by utilizing a starter that will record
the start time of every group, thus records can be established of what the pace of play really is.
If the pace is over four and half hours, it is a problem. There are a number of strategies that can
be employed to improve the pace-of-play including:
• Pin Placement: Pin placements should not be too punitive, such as on a steep
slope. This not only contributes to a slower pace of play (more putts), but also will
increase player dissatisfaction due to higher than normal scoring. Maintenance staff
needs to be better trained on how and where to locate the pins.
• Appropriate Tee: Golfers new to a course are often unsure as to which tee box to
use. Starters should be trained to help golfers identify the most appropriate tee for
their individual skill level and experience with the golf course. We would also
recommend that these handicap suggestions be put on the scorecard.
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• Tee Time Interval: When there are consistent delays at the start, it is indicative of a
tee time interval that is too short. If this is the case, we would recommend going to a
9- or 10-minute interval with the idea of working in walk-ins as the pace allows. With
a strong walk-in market the total number of rounds should not decrease as the walk-
ins can be more easily worked in with longer tee intervals. This has the double
benefit of increasing satisfaction both with the players booking tee times, as they are
going to be able to tee off at the designated time, and with walk-ins as they will be
more readily accommodated.
• Pace of Play Policy: This is most important and should be given to all golfers,
including those that have played the course. The facility’s pace-of-play policy should
be explained and golfers encouraged to keep up with the group in front of them. This
creates an expectation with the golfer and can be done in a manner that is
professional and inoffensive.
• Integrated tee-sheet that will also store information about each golfer. This will allow
the facility to track usage by individuals and enhancing marketing opportunities.
• Ability to book tee times online. This is expected to be one of the biggest waves of
change in the golf industry over the next five years, and it is a win-win situation. It is
more convenient to the customer as it is not only faster, but accessible 24 hours per
day and seven days per week, and it is much more efficient for the operator, who
currently spends significant time on the phone taking tee times. We also note the
high number of comments in the golfer survey expressing a desire for this service,
especially at Harding Park.
• Management Tools: A good POS system will provide reports that are very useful in
making good management decisions. Further, the system will help the City keep up
with what any contractor or lessee is earning and assists in establishing appropriate
contract/lease terms.
It should be noted that the above mentioned system need not be expensive, as there are
companies in this business that offer integrated systems for less than $3,000/year, per facility.
Therefore, it is imperative that the City/management keep a very close eye on activity levels for
the balance of the fiscal year, and be willing to experiment with fees should the operating results
and the market dictate. One way to do this is to practice yield management, especially during off
peak periods such as weekdays. If management sees that the upcoming Tuesday is particularly
weak, an e-mail blast can be sent out promoting special prices for people who golf that day.
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Marketing Plan
Attracting supplemental play from the tourist/visitor and corporate markets is critical to
maximizing the economic performance of the San Francisco municipal golf system. Therefore, it
is imperative that the City/management place an increased emphasis on marketing, especially
after the recommended improvements are made to the golf facilities. We do not believe that the
San Francisco municipal golf system will be viable, regardless of who operates it, without a
greatly increased marketing budget (which is minimal now) and a strong focus on direct selling.
NGF Consulting recommends employing a dedicated full-time person whose sole responsibility
is to produce business for the golf courses through recruitment of new tournaments and direct
selling to the major hotels in San Francisco. As mentioned in the ‘Market Environment’ section
of this report, San Francisco has a very significant tourism and hotel market that is largely
untapped by area golf courses. Larger conventions would be outstanding candidates for large
weekday tournaments, and individual business and leisure travelers who are golfers would find
the convenience and quality (once improved) of the City’s municipal golf courses appealing. It is
anticipated that these visiting golfers would pay substantially higher green fees than are now
being paid, should Lincoln and Sharp Parks be rehabilitated (NGF research confirms that
traveling golfers are much less likely to be price sensitive than resident golfers).
Though the rehabilitation of Sharp Park and Lincoln Park are seen as necessary and critical to
such a marketing push, it is equally important that the relationship with the PGA TOUR be
sustained, both for marketing purposes and so that the lucrative non-resident rates at Harding
Park remain sustainable. In order to ensure this, the City/manager must be certain to maintain
Harding Park to the standards required of the master agreement between the two parties.
Issues covered in this report, such as the potential for increased problems with kikuyugrass,
ensuring that the grounds superintendent has appropriate experience, knowledge and
credentials, and maintaining an appropriate level of staff (including agronomic expertise) are
absolutely critical.
A second prong of the marketing campaign should be more oriented towards local golfers who
may have given up on the City courses. “Under new ownership” is a marketing theme that often
has little meaning, and gains little traction with consumers. However, given the relatively poor
course conditions documented in this report, golfers have taken their play elsewhere and
marketing that emphasizes how the courses have been improved should be highly effective (“try
us again for the first time”). Along these lines, a month-long “Grand Re-opening” event, featuring
special promotions and tournaments, will build good will and awareness in the market and give
the municipal golf courses a leg up on recovering market share.
The commitment to marketing must be evident as soon as the assets are improved, when
building awareness and stimulating trial are critical. Successful golf operations in the private
sector typically allocate about 3%-5% of their revenue to marketing. This would be appropriate
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 149
for the subject facilities once play has somewhat stabilized, but a higher initial budget is
recommended.
3. Hold the artificial turf manufacturer / contractor to the warranty on materials and
installation of these components.
4. Undertake an evaluation of the drainage system installation and longevity of this system;
including an appraisal of any needed additions.
5. Address safety concerns as part of a City-wide master planning process for all of the
City’s golf course assets.
1. Create an overall master plan for the facility. Develop a Master Plan addressing
design, features, paths, trees, safety, turf quality, irrigation, drainage and the
potential for resurrecting one or more golf holes that originally existed along the
ocean; master plan components should address items listed below.
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i. Developing a viable management plan to rectify drainage associated with the
Laguna Salada, Saddle Pond and the entire upstream and pumping system to
evacuate water to the sea. As noted, this work should be undertaken as part of
the master plan process, but should involve a civil engineer familiar with resource
management plans in this area. (Note: A pending management plan for rectifying
this problem has already been commissioned and sits in wait at the City. Further
reports indicate that approval was once received for dredging of the clogged
lagoon system, but for varying reasons, the City chose not to act.)
ii. Integrate the drainage (lagoon) solutions to the master plan for all golf elements and
areas.
iii. Study the eventual possibility of re-establishing one or more holes in areas along the
existing sea levee where golf holes used to be positioned (cost not assumed in
recommended improvements).
iv. Be sensitive to the design ideals of Alister Mackenzie, working to preserve and
restore any documented features possible as the master plan is prepared.
5. Cart Barn – A new cart barn need to be added for new electric carts.
7. Increase the full-time maintenance staff to about 10, in addition to seasonal and
/or part-time help as needed.
8. Study the potential to integrate additional trails along the golf course for public
recreation.
1. Create an overall master plan for the facility. Develop a Master Plan addressing
design, features, paths, trees, safety, turf quality, irrigation and drainage.
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5. Renovate clubhouse structure (details later in section).
7. Cart Barn – A new cart barn need to be added for new electric carts.
8. Increase the full-time maintenance staff to at about 10, in addition to seasonal and
/or part-time help as needed.
1. Create an overall master plan for the facility. Develop a Master Plan for the
facility. Included should be a look at teeing area additions and a study of whether
the change in hole sequence was an appropriate modification by the operator of
the concession.
4. Study opportunities to open the facility at night. We are told that this has been
explored by the operator, but has not been feasible due to opposition from the
Audubon Society. Options may include special evening golf programs using
lighted fairway markets, glow balls, etc.
Gleneagles GC Recommendations
The NGF Consulting recommendations for Gleneagles GC are noted below. We note as this
facility is presently under lease and these recommendations could be completed either by the
City or the lessee. Detailed cost estimates for each item are presented at the end of this section.
1. Create an overall master plan for the facility. While this facility is leased, the
City is still encouraged to develop a master plan document that can form the
basis for approval of improvements. Such a document would also allow for
prioritization of improvements, establishing a road map for the City and lessee to
follow as the course ages.
2. Re- Establish the #1 green. It may be possible to re-establish this original green
and retain the upper green as an alternate green; such a design characteristic
would be suitable, especially at Gleneagles.
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5. Invest in cart path improvements, specifically a planned system of paths with
appropriate base that can withstand use and solve some drainage problems.
8. Develop means to partner with the lessee in regards to arbor care, taking the
burden of tree thinning and removal away from the lessee and allowing those
funds to be spent on other important areas.
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City of San Francisco Golf Course Study: Recommended Investments
Year 1 Year 2 Year 3 Total
System-wide Investments
On-call Golf Course (Fees) 175,000 175,000 175,000
Pesticide Study (Fees) 75,000
Irrigation Planning (Fees) 20,000 20,000 640,000
Harding Park Golf Course
Outside Agronomic Consultant (Fees) 15,000
Drainage System Evaluation (Fees) 7,500
Restroom Facilities (2) 80,000 102,500
Lincoln Park Golf Course
Develop Master Plan (Fees) (1)
Irrigation Planning (Fees) (1)
Irrigation System Upgrades 700,000
Drainage Improvements 150,000
Cart Path Improvements 200,000
Practice Area Development 450,000
Clubhouse Improvements 2,000,000
Re-build Maintenance Facility & Cart Barn 1,200,000
Maint. Budget Override (Corrective Actions/Materials) 125,000 125,000 4,950,000
Sharp Park Golf Course
Develop Master Plan (Fees) (1)
Civil Engineering/Environmental Consulting (Fees) 150,000
Lagoon Improvements 800,000
“Lost Holes” Study (Fees) (1)
Irrigation Planning (Fees) (1)
Irrigation System Upgrades 900,000
Drainage Improvements (Non-lagoon Areas) 200,000
Cart path Improvements/Repairs 150,000
Re-build Maintenance Facility & Cart Barn 1,750,000
Re-build Hole No. 8 - 60,000
Public Trails Study (Fees) (1)
Maint. Budget Override (Corrective Actions & Materials) 250,000 4,260,000
Golden Gate Park Golf Course
Develop Master Plan (Fees) (1)
Re-build Maintenance Facility 350,000 350,000
Gleneagles Golf Course
Develop Master Plan (Fees) (2) (1)
Re-establish Original No. 1 Green (2) 100,000
Evaluate Irrigation System Needs (Fees) (2) (1)
Drainage Improvements (2) 200,000
Path Improvements (2) 150,000
Practice Venue (3) 60,000
Maintenance Facility Repairs (3) 25,000
$535,000
Grand Total 607,500 7,220,000 3,010,000 $10,837,500
(1) Included in System-wide Investments (Fees)
(2) Recommended Investment by City (Fees)
(3) Recommended Lessee Investment (Fees)
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Projected Economic Performance for the
501(c)3 Corporation
The key activity associated with this NGF Consulting study effort was to be able to take all of the
findings, recommendations, assumptions, capital improvements and individual golf course
financials, and evaluate the impact they would have on the overall health of the City of San
Francisco Municipal golf system. In doing so, NGF Consulting has made several assumptions
that will be presented before the projected performance of each facility and the overall 501(c)3
corporation (the “Corporation”) are presented, through the end of FY2012.
KEY ASSUMPTIONS
In preparing these financial projections for the golf courses, NGF Consulting has made several
assumptions on the operation and condition of these facilities, the most important of which is
that all of the recommendations presented in this study, including the creation of the 501 (c)-3
corporation, will be implemented. Further, we note that since Gleneagles (McLaren Park) is
operated under an appropriate lease agreement, this lease should remain in place for the new
Corporation framework. NGF Consulting has also assumed the City RPD would retain all
revenues from the sale of resident ID cards.
Assumptions related to staffing, expenses and revenues for each facility appear in the sections
that follow. Other key assumptions that apply to all facilities are listed below:
• All of the NGF Consulting’s management, physical and other recommendations are
enacted by the City of San Francisco, including the retention of an on-call golf
architect to assist with master plans for the upgrade of facilities in an orderly and
efficient manner.
• The financial pro forma concentrates on operating cash flows and assumes that the
new 501(c)3 would not have any additional debt associated with improvements, as
all funding would come from other sources. Additional debt will be necessary if the
combination of private donations and capital invested by the ultimate operator(s) of
the golf courses is not sufficient to fund improvements and short-term operational
deficits.
• Lincoln Park and Sharp Park golf courses are upgraded as recommended by NGF
Consulting as soon as practical. We note that this is not a full-scale renovation as
was completed at Harding Park in 2002-03, but rather a serious ‘face-lift’ for the
City’s two most physically troubled golf courses. Although we are not recommending
a full-scale renovation and golf course closure during renovation, NGF Consulting
has assumed for the sake of conservatism that no revenues will be collected on
these courses for the one year they are under repair. The improvement / upgrading
schedule would be as follows:
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Lincoln Park will be closed (no revenue earned) for FY2007-08 to complete
upgrades to the irrigation, drainage, and cart paths, as well as the addition of
a practice area. The clubhouse would be renovated and a new cart barn will
be added to accommodate clubhouse and new (required) electric carts. A
small grow-in maintenance and administration expense is assumed during
the year the course is closed for upgrade.
During the year that Lincoln is closed for upgrade, we assume that the
conditions at Sharp Park would be improved as a more efficient maintenance
team is in place, and preliminary improvements begin.
After completing and re-opening the improved Lincoln Park GC, in FY2008-
09 the Sharp Park Golf Course would be closed for its upgrade. Rounds at
Sharp Park would be diminished in FY2007-08 due to the extra half year that
will be required for the Sharp Park upgrade.
The Sharp Park upgrade is very similar to Lincoln except that the Sharp plan
does not involve a clubhouse upgrade, but does involve extensive Laguna
Salada improvements.
• Upon re-opening after upgrades, both Lincoln and Sharp would experience
increased play levels and higher average revenue per round.
• Most fees and charges are assumed to grow at an annual rate three percent (3%),
unless otherwise noted, representing a system-wide commitment to keeping fees in
line with the CPI, with actual adjustment no less than every two years. Although we
do project expenses to grow faster, the 3% growth is projected for revenues through
2012.
• Ancillary fee revenues are estimated based on actual performance at the subject City
golf courses adjusted as average revenue per round.
• The maintenance expenses estimated by NGF Consulting for all courses assume
that some new maintenance equipment is leased (expense included); maintenance
expenses also include water costs.
• Direct cost of goods sold (COGS) for all courses are assumed at 75% for
merchandise and 60% for food and beverage. This is based on similar percentages
experienced by other municipal and daily fee courses in the market and profiled by
NGF Consulting in this study.
• All expenses are assumed to increase at a rate of four percent per year through
2012. This amount approximates the actual expense increases observed at the
subject facilities, with the exception of personnel costs. It is assumed that the new
501 (c)3 will be able to contain costs to match the growth in other expenses.
• In keeping with the conservative posture taken for this operations study, a five
percent (5%) contingency is assumed at all courses to account for any unforeseen
changes in expenses.
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Justifications for Projections
NGF Consulting believes the financial projections created for this City municipal golf system,
under the management of a newly created 501(c)3, are wholly achievable and even somewhat
conservative in nature. NGF consulting believes this due to the following reasons:
• The city/peninsula is somewhat of an insular market, with few local golf courses
(especially given that the state of some of the City courses) to service the dense
population. NGF research confirms that the city has a higher-than-average number
of households available to support each 18 holes of golf in the City, and the City is a
large net exporter of rounds played to outlying areas such as the East, South, and
North Bays. Improving the golf course will allow them to capture back market share,
especially among City residents.
• San Francisco golfers, as confirmed by the golfer survey results, are very passionate
about the City’s golf courses, which scored very unfavorably with exception of
Golden Gate (even Harding scored average or worse on many measures, perhaps
due to higher fees or disappointment after the renovation). It is NGF’s conclusion that
many of these passionate customers would return to the City courses, or play more
frequently, if they were better managed and in better condition.
• The golfer survey results also indicate, overwhelmingly, that residents would be
willing to pay moderately higher green fees in exchange for better course conditions
at Lincoln and Sharp.
• The golf courses, with the exception of Harding Park, are all currently operating at
much less than capacity, and at much lower levels than the regional average for
municipal golf courses. Additionally, they have all shown the potential in the recent
past to achieve much higher activity levels.
• In addition to increased rounds that will result if the courses are improved as
recommended in this study, the Corporation can re-position Lincoln and Sharp to
significantly higher price points for non-residents, especially out-of-state tourists who
are typically not price sensitive. The seeming inelasticity of Harding Park’s demand
since the September 1, 2006 price increases is encouraging in this respect.
• In addition to the City and Bay Area resident populations, the municipal golf system
has an enormous untapped supplemental market from which to draw play – San
Francisco’s 15+ million annual tourists. NGF Consulting believes that this market
shows enormous potential, once the maintenance conditions of the courses,
especially Lincoln and Sharp are improved. There seemingly has been no organized
effort on anyone’s part to tap this market. Even if San Francisco cannot successfully
be branded as a “golf destination”, tourists and business travelers will play the
courses much more frequently when they are here
• In 2005, the San Francisco Convention & Visitors Bureau booked more than 2 million
confirmed group room nights for future years. A direct selling effort to hotels for
tournaments, as well as a cooperative marketing effort between the Corporation, the
City, and the C&VB should be very successful in drawing high fee visitor rounds.
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GOLF OPERATIONS PERFORMANCE BY FACILITY
NGF Consulting has created cash flow models for each of the five golf facility operations,
operated within the framework of the Corporation, through the year 2012, under the
assumptions detailed in the body of this report and noted above. These tables show the
projected cash flows for the full operation through 2012, or the next five years that NGF
Consulting can project with confidence. Each category of revenue has been listed separately,
and an estimate of the projected average revenue per round has been provided. The full
system-wide cash flow statement will follow the individual facility projections. The full system will
include additional administrative and marketing expenses for the Corporation, peaking in the
early years ($507,000 in FY09) when the system is new and would engage in a strong
marketing push. Decreases in marketing expenses would reduce the overhead expenses to just
over $400,000 in FY2012.
Below are NGF Consulting’s projected operating expense structures, as well as associated
assumptions, for each of the five golf facilities expected to be included in the new 501(c)3
corporation. Estimated salaries are market- and industry-based (NGF, our parent company, has
done extensive research related to golf industry salary/wage norms for various classifications),
and do not reflect the City of San Francisco wage/salary/benefit structure.
• Ancillary fee revenue is assumed to be comparable with actual 2006-07 figures with
three percent (3%) growth expected through 2012. An exception is food and
beverage revenue which is projected to increase 10 to 12% for FY 2008-09 to
account for continued success in growing this business at Harding Park.
• Rounds are projected at a stable 115,000 rounds per year, with increases in non-
resident play expected in the next five years.
Other Expenses
Expenses associated directly with revenue centers such as merchandise, food and beverage,
have been assumed based on historical patterns established at regional and national golf
facilities of this type. Expenses associated with operating a fleet of 80 golf carts has been
estimated based on an accepted industry estimate of roughly $2,000 per cart per year.
Clubhouse expenses have been estimated to be $600,000 in 2007-08, growing at four percent
per year to about $702,000 by 2011-12. This line item includes clubhouse-related supplies,
repairs, custodial services, and professional services, as well as a salary for a Building
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Maintenance Supervisor. Food & Beverage expenses have been estimated to be $800,000 in
2007-08, growing at four percent per year to about $936,000 by 2011-12. This line item does
not include cost-of-goods-sold, but does include salaries for a Food & Beverage Director,
Assistant F&B Director, Catering/Banquet Manager, five full-time kitchen staff (Chef, assistant, 3
cooks), and various part-time/seasonal workers.
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Harding / Fleming GC Projected Financial Performance (FY2008-12)
501(c)3 Corporation
Harding/Fleming Projected Golf Course Performance (FY2008-2012)
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Rounds – Harding 69,000 69,000 69,000 69,000 69,000
Rounds – Fleming 46,000 46,000 46,000 46,000 46,000
Total Rounds Played 115,000 115,000 115,000 115,000 115,000
Expenditure
Golf Course Maintenance $2,700,000 $2,808,000 $2,920,320 $3,037,133 $3,158,618
Golf Administration $800,000 $832,000 $865,280 $899,891 $935,887
Golf Cart/Equipment Expense $160,000 $166,400 $173,056 $179,978 $187,177
Clubhouse Expense $600,000 $624,000 $648,960 $674,918 $701,915
Food/Beverage Expense $800,000 $832,000 $865,280 $899,891 $935,887
Contingency (5%) $253,000 $265,650 $278,933 $292,879 $307,523
Expenditure Total $5,313,000 $5,528,050 $5,751,829 $5,984,691 $6,227,007
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SHARP PARK GC PROJECTED FINANCIAL PERFORMANCE (FY2008-12)
Sharp Park GC Revenue Assumptions (FY2008-12)
• In establishing new average revenues per round, NGF Consulting has assumed
prime-time, non-resident weekday fees in the range of $57 and $65 weekends
(including cart). Resident discount percentages would remain as today. Projected
rounds and fees for 2009-10 are as shown in the table below. Three percent (3%)
annual growth is estimated through 2012.
Sharp Park GC
Fee Schedule and Expected Rounds
After Renovation (2009-10)
Rounds Fee Fee
Type Weekday Weekend Total Weekday Weekend
Standard 4,950 3,850 8,800 $57 $65
Resident 5,500 11,000 16,500 $27 $31
Senior 11,000 3,850 14,850 $18 $25
Junior 550 550 1,100 $14 $23
Tournament 2,750 3,300 6,050 $70 $85
Twilight 2,750 1,650 4,400 $24 $30
Back 9 1,100 2,200 3,300 $14 $18
55,000
Overall average $36.00
• Ancillary fee revenue is assumed to be comparable with actual 2006-07 figures with
three percent (3%) growth expected through 2012, after closing in 2008-09 for
renovation.
• Rounds are projected at a stable 55,000 to 58,000 rounds per year after reopening in
FY 2009-10. Increases in non-resident play expected through 2012.
Other Expenses
Expenses associated with operating a fleet of 75 golf carts has been estimated based on an
accepted industry estimate of roughly $2,000 per cart per year. Clubhouse expenses have
been estimated to be $300,000 in 2009-10. This line item includes clubhouse-related supplies,
repairs, custodial services, and professional services, as well as a salary for a Building
Maintenance Supervisor. Food & Beverage expenses have been estimated to be $350,000 in
2009-10. This line item does not include cost-of-goods-sold, but does include salaries for a
Food & Beverage Director, Catering/Banquet Manager, two full-time kitchen staff, and various
part-time/seasonal workers.
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Estimated Golf Course Maintenance Expense
Sharp Park GC – 2009-10
Salaries & Wages
Full-Time Employees
Course Superintendent $70,000
Assistant Superintendent 50,000
Irrigation Specialist 50,000
Mechanic 50,000
9 Crew Members @ $42,000 each 378,000
Benefits & Taxes @ 25% 149,500
Part-Time Labor
5,200 hours @ $14.00/hr. 72,800
Total Salaries & Wages $820,300
Utilities (incl. Water) 100,000
Equipment Lease 115,000
Seed, Sod & Sand 80,000
Supplies (Chemicals & Fertilizer) 30,000
Professional Services (Plumbing/Agronomy) 40,000
Repairs & Maintenance 20,000
Fuel & Oil 35,000
Maintenance Administration 10,000
Total Course Maintenance Expense $1,250,300
Source: NGF Consulting estimate 2007
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Sharp Park GC Projected Financial Performance (FY2008-12)
501(c)3 Corporation
Sharp Park Projected Golf Course Performance (FY2008-2012)
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Rounds Played 45,000 0 55,000 58,000 58,000
Closed for
Total Green Fee Revenue $946,049 Renovation $1,980,000 $2,150,640 $2,215,159
Expenditure
Golf Course Maintenance $1,000,000 $300,000 $1,250,000 $1,300,000 $1,352,000
Golf Administration $250,000 $100,000 $350,000 $364,000 $378,560
Golf Cart Expense $80,000 $0 $150,000 $156,000 $162,240
Clubhouse Expense $200,000 $0 $300,000 $312,000 $324,480
Food/Beverage Expense $250,000 $0 $350,000 $364,000 $378,560
Contingency (5%) $89,000 $0 $120,000 $124,800 $129,792
Expenditure Total $1,869,000 $400,000 $2,520,000 $2,620,800 $2,725,632
National Golf Foundation Consulting, Inc. – City of San Francisco, California – 163
LINCOLN PARK GC PROJECTED FINANCIAL PERFORMANCE (FY2008-12)
Lincoln Park GC Revenue Assumptions (FY2008-12)
• In establishing new average revenues per round, NGF Consulting has assumed
prime-time, non-resident fees in the range of $54 and $61 weekday/weekends
(including cart). Resident discount percentages would remain as today. Projected
rounds and fees for 2008-09 are as shown in the table below. Three percent (3%)
annual growth is estimated through 2012.
Lincoln Park GC
Fee Schedule and Expected Rounds
After Renovation (2008-09)
Rounds Fee Fee
Type Weekday Weekend Total Weekday Weekend
Standard 6720 10800 17520 $54 $61
Resident 4800 8160 12960 $21 $25
Senior 3840 960 4800 $13 $20
Junior 480 480 960 $11 $19
Tournament 1440 1920 3360 $65 $80
Twilight 3120 3120 6240 $19 $24
Back 9 720 1440 2160 $12 $16
48000
Overall average $38.00
• Ancillary fee revenue is assumed to be comparable with actual 2006-07 figures with
large, 20-25% increases in the first two years after renovation to account for an
upgraded clubhouse at Lincoln with enhanced food and beverage revenue due to
increased event and meeting business.
• Rounds are projected at a stable 50,000 to 52,000 rounds per year after reopening in
FY 2008-09. Increases in non-resident play expected through 2012.
Other Expenses
Expenses associated with operating a fleet of 55 golf carts has been estimated based on an
accepted industry estimate of roughly $2,000 per cart per year. Clubhouse expenses have been
estimated to be $250,000 in 2008-09. This line item includes clubhouse-related supplies,
repairs, custodial services, and professional services, as well as a salary for a Building
Maintenance Supervisor. Food & Beverage expenses have been estimated to be $300,000 in
2008-09. This line item does not include cost-of-goods-sold, but does include salaries for a
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Food & Beverage Director, Catering/Banquet Manager, two full-time kitchen staff, and various
part-time/seasonal workers.
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Lincoln Park GC Projected Financial Performance (FY2008-12)
501(c)3 Corporation
Lincoln Park Projected Golf Course Performance (FY2008-2012)
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Rounds Played 0 48,000 50,000 52,000 52,000
Closed for
Total Green Fee Revenue Renovation $1,824,000 $2,100,000 $2,288,000 $2,356,640
Expenditure
Golf Course Maintenance $300,000 $1,100,000 $1,144,000 $1,189,760 $1,237,350
Golf Administration $100,000 $350,000 $364,000 $378,560 $393,702
Golf Cart Expense $0 $110,000 $114,400 $118,976 $123,735
Clubhouse Expense $0 $250,000 $300,000 $312,000 $324,480
Food/Beverage Expense $0 $300,000 $350,000 $364,000 $378,560
Contingency (5%) $0 $105,500 $113,620 $119,301 $125,266
Expenditure Total $400,000 $2,215,500 $2,386,020 $2,482,597 $2,583,094
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GOLDEN GATE PARK GC PROJECTED FINANCIAL PERFORMANCE (FY2008-12)
Golden Gate Park GC Revenue Assumptions (FY2008-12)
• Average fee revenue at Golden Gate Park is assumed to be comparable with actual
2006-07 figures, with three percent (3%) growth expected through 2012.
• Ancillary fee revenue is assumed to be comparable with actual 2006-07 figures with
three percent (3%) growth expected through 2012.
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Administrative & General Expense
Salaries & Wages
Full-Time Employees
Director of Golf/Head Golf Professional 60,000
2 Assistant Golf Professionals @ $30,000 60,000
Benefits & Taxes @ 25% 30,000
Part-Time Labor
Shop Clerks, starters, rangers, etc.
(3,120 hours @ $12.00/hr.) 37,440
Advertising & Promotion 12,500
Insurance 30,000
Supplies 10,000
Miscellaneous 10,000
Total Administrative & General Expense $249,940
Source: NGF Consulting Estimate 2007
Other Expenses
Expenses associated with leasing maintenance equipment has been estimated based on the
short length and small acreage of Golden Gate, and is expected to be $25,000 in 2007-08,
growing at four percent per year to about $30,000 by 2011-12. Clubhouse expenses have been
estimated to be $50,000 in 2007-08. This line item includes clubhouse-related supplies, repairs,
custodial services, and professional services. Food & Beverage expenses have been estimated
to be $50,000 in 2007-08. This line item does not include cost-of-goods-sold, but does include
payroll expenses for kitchen staff.
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Golden Gate Park GC Projected Financial Performance (FY2008-12)
501(c)3 Corporation
Golden Gate Park Projected Golf Course Performance (FY2008-2012)
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Rounds Played 48,000 52,000 53,000 54,000 54,000
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present lease, which is absorbed by the new 501 (c)3. The estimates assume stable rounds
activity with a modest (2%) annual increase in average golf revenue per round. This estimate
shows that Gleneagles can earn revenue in excess of the $737,337 required to add an
additional two percent (2%) to the lease payment. Under this scenario NGF Consulting does not
expect Gleneagles to earn revenue sufficient to reach the $860,050 revenue level required to
add an additional one percent (1%) to the lease.
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SYSTEM-WIDE GOLF OPERATIONS PERFORMANCE
501(c)3 Corporation
Complete 4-Course Golf System (FY2008-2012)
Rounds Played FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12
Harding 69,000 69,000 69,000 69,000 69,000
Fleming 46,000 46,000 46,000 46,000 46,000
Sharp 45,000 0 55,000 58,000 58,000
Lincoln 0 48,000 50,000 52,000 52,000
Gleneagles 35,000 35,000 35,000 35,000 35,000
Golden Gate 48,000 52,000 53,000 54,000 54,000
Total System Rounds 243,000 250,000 308,000 314,000 314,000
Expenditure
Golf Course Maintenance $4,375,000 $4,601,750 $5,727,758 $5,961,002 $6,203,783
Golf Administration $1,400,000 $1,544,500 $1,854,905 $1,931,857 $2,012,026
Golf Cart Expense $240,000 $276,400 $437,456 $454,954 $473,152
Clubhouse Expense $850,000 $926,500 $1,304,085 $1,356,800 $1,411,650
Food/Beverage Expense $1,100,000 $1,184,500 $1,620,405 $1,685,772 $1,753,782
Contingency (5%) $378,250 $409,213 $552,518 $578,944 $606,643
501(c)3 Corporation $493,750 $507,500 $421,313 $397,691 $406,638
Expenditure Total $8,837,000 $9,450,363 $11,918,439 $12,367,021 $12,867,675
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FINANCIAL PROJECTIONS SUMMARY
The results of NGF Consulting’s cash flow model for the municipal golf system under direction
of the 501(c)3 corporation, assuming our recommendations are enacted, show the improved
golf facilities with enhanced marketing and more efficient maintenance are capable of growing
total revenues to $15 million with only slight increases in rounds activity and modest (40% three
years after renovation) increases in average revenue per round. Additionally, modest savings
(25%) in overall system expenses combined with more efficiency in operations should allow the
whole four-course system (excluding Gleneagles) to reach a profitability level of over $2.0
million within three years of 501(c)3 management. This level of surplus would be sufficient for
the new 501(c)3 to take over the repayment to Open Space AND allow for excess revenues to
be set aside for future capital improvements that will eventually become necessary.
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Summary Statement
In summary, NGF Consulting’s inspection of the City of San Francisco municipal golf courses,
and our review of the golf system, has revealed an impressive portfolio of beautiful golf course
assets that have been neglected and fallen into disrepair. For a variety of reasons enumerated
in this report, the golf system now suffers from large operating deficits, and ever-deteriorating
assets, with the exception of the flagship Harding Park Golf Course.
However, we have also concluded that the system is salvageable, mainly due to the high quality
and potential of these golf courses, which was cited by nearly every golfer and golf industry
professional we came in contact with during the course of this study. In order for the assets to
be rehabilitated and the system to return to profitability, the golf courses must be managed by
people who have the experience and expertise to do so, free of political interference. We
believe that a 501(c)3 organization (perhaps one already created) provides the best means of
achieving this goal. The non-profit organization will ensure that best business practices are
implemented and followed, and that the golf courses will once again offer affordable quality golf
for the residents of San Francisco. The Corporation will also be much better equipped to
perform the stewardship role for these assets, assuring that they maintain a high standard of
quality. However, in order for this to happen, the City must have the political will and foresight,
as well as the desire, to preserve these urban jewels, which someday should again reflect well
on this proud city.
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