LOUISVILLE PARKS AND RECREATION FEBRUARY 15, 2019 LOUISVILLE PARKS AND RECREATION 2018 GOLFER SURVEY RESULTS 22,936 SURVEY REQUEST FROM GOLF AND REC. TRAC LIST 1,939 TOTAL REPONSES CONDUCTED BY: J.J. KEEGAN, GOLF CONVERGENCE INC., AUGUST 2018 What is your gender? 100.00% 90.00% 80.00% National Avg is 77% 70.00% 60.00% 50.00% 40.00% 30.00% National Avg. is 23% 20.00% 10.00% 0.00% ©2018 JJKeegan+ Male Female What is your age? Average 55.0 40.00% 35.00% 30.00% National Average is 54 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% ©2018, JJKeegan+ Up to 17 18 - 23 24 - 34 35 - 44 45 - 54 55 - 64 65 + What is your household income? Average $84,378 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% ©2018, JJKeegan+ National Average $99,202 What best describes your race? 100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% ©2018, JJKeegan+ African-American AsianAmerican Caucasian Hispanic American Native American Pacific Islander Respectfully, decline to answer Are you a resident of JeffersonCounty? 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% ©2018, JJKeegan+ Yes No What best describes your affiliation with the Louisville Park and Recreation's Golf Courses? 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% ©2018, JJKeegan+ Annual Pass Holder Regular Daily Fee Player SeasonPass Holder Junior Annual Pass PM Annual Pass Fiesta Pass Holder Holder Holder Have not played the City's golf course within the last three years At what level should Louisville Parks and Recreation invest in capital improvements and repairs for the golf course? 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% ©2018, JJKeegan+ "Critical" RepairsOnly Capital investment & repairs to ensure facility remains "Competitive" "Comprehensive" investment & repairsto ensure facility is among the best golf courses in region What is your interest level ingolf? 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Have no interest in the sport ©2018, JJKeegan+ Do not play golf but will Occasional (Play less than Core (Play 8 to 24 rounds watch the sport on TV 8 rounds per year) per year) Avid (Play more than 24 rounds per year) If Necessary, Which Course Should Close 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% ©2018, JJKeegan+ Bobby Nichols Sun Valley Cherokee Crescent Hill Shawnee LongRun Iroquois Charles Vettiner Quail Chase Seneca LOUISVILLE PARKS AND RECREATION Fw? can Sneca Golf Course'lf Seneca Golf Course Seneca Golf Course Economic Performance FY-18 $700,000 Critical Investment Need: • The current irrigation system is 80 years old and is constantly breaking. Major problem for the city’s most profitable course. • Bunker improvements to properly place, drain and stabilize the bunkers. Estimated cost: $2,000,000 $659,407 $600,000 568,407 $500,000 $400,000 $300,000 $200,000 91,000 $100,000 $0 Revenue Expenses Profit ine Golf Course 5.11.0. -bmkn . .. .m 5:32 0.0: 00:HAHV . . ?313? 592,3- 3M?w Vetti Vettiner Golf Course Economic Performance FY-18 $450,000 $420,165 Critical Investment Needs: • Drainage improvements to make the course more playable and improve turf health. • Redesign and repair the cart path between holes 16 & 17. 402,997 $400,000 $350,000 $300,000 $250,000 • General Cart path repair $200,000 Estimated cost: $600,000 $150,000 $100,000 $50,000 17,168 $0 Revenue Expenses Profit Google Earth 2013 Google Quail Chase Golf Course Economic Performance FY-18 $450,000 $425,041 $400,000 378,539 Critical Investment Needs: • Fairway grass conversion to a variety that will be sustainable. (Lo Mow Bluegrass or Sodded Zoysia) • Stream restoration, holes 1&4 on East course. • Bunker renovation to place and drain bunkers properly and add sand. Estimated cost: $1,500,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 46,502 $50,000 $0 Revenue Expenses Profit Iroqu . I 2 . . .4 a Iroquois Golf Course Economic Performance $400,000 357,245 $350,000 Critical Investment Needs: • Major drainage improvements needed. $324,653 $300,000 $250,000 • Bunker renovation to place and drain bunkers properly and add sand. $200,000 Estimated cost: $800,000 $100,000 $150,000 $50,000 $0 Revenue ($50,000) ($100,000) Expenses Loss -32,592 I A 1 if. I @9500 60 E: EmommLo I . 9382 1.: 0.0: 005mm Crescent Hill Golf Course Economic Performance FY-18 $250,000 Critical Investment Needs: • Fairway grass improvements 225,024 $200,000 $191,139 • Drainage work is needed. $150,000 Estimated cost: $200,000 $100,000 $50,000 $0 Revenue ($50,000) Expenses Loss -33,885 5?s: .: .- .1 $500 60 $on50 Cherokee Golf Course Economic Performance FY-18 $300,000 $250,000 235,057 Critical Investment Needs: • Fairway grass improvements • Clubhouse is in bad condition $200,000 $150,000 $136,949 $100,000 Estimated cost: $300,000 $50,000 $0 Revenue Expenses Loss ($50,000) ($100,000) ($150,000) -98,108 Google r: IJI - . .3 5" If); Shawnee Golf Course Economic Performance FY-18 $500,000 Critical Investment Needs: $400,000 • Eliminate bunkers due to nearly yearly flooding that contaminates and ruins the bunkers. $300,000 • Major drainage work is needed to deal with flat golf course that flood frequently. Estimated cost: $500,000 378,194 $239,277 $200,000 $100,000 $0 Revenue Expenses Loss ($100,000) -138,917 ($200,000) . . LongaRun Golf Course Google Earth Image USDA Farm Service Away. in?ux: - Long Run Golf Course Long Run Golf Course Critical Investment Needs: • Drainage work to be able to improve fairway Grass quality and make the course playable after a storm event. Economic Performance FY-18 $500,000 380,930 $400,000 $300,000 • Clubhouse area appearance upgrade • Bunker renovation to place and drain bunkers properly and add sand. $230,940 $200,000 $100,000 Estimated cost: $700,000 $0 Revenue Expenses Loss ($100,000) -149,989 ($200,000) Gaogle Earth 9201_"wd . I - ?n h? In '7 a. Bobby Nichols Golf Course \nA- c! m: . t' Bobby Nichols Golf Course Bobby Nichols Golf Course Economic Performance FY-18 $300,000 266,466 Critical Investment Needs: $250,000 • Cart Path improvements and repair. $200,000 • Bridge repair is critical. $150,000 • Bunker renovation to place and drain bunkers properly and add sand. $100,000 $101,621 Estimated cost: $500,000 $50,000 $0 Revenue Expenses Loss ($50,000) ($100,000) ($150,000) -164,845 ($200,000) un Valley Golf Course Sun Valley Golf Course Sun Valley Golf Course yin/mm I a Sun Valley Golf Course Economic Performance FY-18 $400,000 367,327 Critical Investment Needs: • Lake bank stabilization • Drainage improvements $300,000 $200,000 $157,514 • Cart path repair $100,000 • Bunker renovation to place and • drain bunkers properly and add sand. $0 Revenue Estimated cost: $1,700,000 Expenses Loss ($100,000) ($200,000) -209,813 ($300,000) LOUISVILLE PARKS AND RECREATION CAPITAL IMPROVEMENTS SINCE YEAR 2000 • • • • • • • • • • • • • • New Clubhouses at Charlie Vettiner and Long Run Golf Courses New irrigation pump stations at Long Run and Quail Chase Golf Courses New Sand installed in bunkers at Quail Chase Golf Course Clubhouse improvements at Quail Chase Golf Course Redesign of Holes 1 and 10 at Seneca Golf Course Convert Fairways to Zoysia Grass at Charlie Vettiner Golf Course Driving Range redesign and new pavilion at Seneca Golf Course New kids course, driving range improvements and practice area at Shawnee Golf Course New greens construction on holes 12, 14 at Shawnee Golf Course New practice green at Charlie Vettiner Golf Course New greens on holes 5, 11 at Sun Valley Golf Course New 9- hole kids course at Seneca Golf Course Sprigged zoysia grass into the fairways at Sun Valley Golf Course New 3 hole kids course at Long Run Golf Course CURRENT CHALLENGES • • Organizational structure on which golf courses are operated is flawed. Only one City of Louisville Golf Course exceeds the national median benchmark of ($532,353) green fees earned annually. The deferred capital investment to render the courses competitive exceeds$20 million. Bunkers, signage, tees and greens need ongoing investment to remain viable. • $0 is currently being invested in deferred maintenance fund. • Equipment needs exceed $2 million ©2018 JJKeegan+ CRITICAL EQUIPMENT INVESTMENT IS NEEDED JUST TO SUSTAIN OPERATIONS AT CURRENT LEVELS OR WE CAN’T GO ON. 361,060 miles equivalent ©2018 JJKeegan+ 426,790 miles equivalent Negative Revenue Trend Downward - 4.4% 2012 –2017 -10.5%if youcount2018 -5.8% decline in golf participation nationally over same period 2012 2013 2014 2015 2016 2017 2018 Annuals -183,291 -191,189 -180,550 -170,200 -172,995 -157,627 -150,000 Bobby Nichols -103,398 -98,457 -96,969 -129,331 -128,593 -111,706 -101,621 Charles Vettiner -450,521 -438,541 -445,291 -453,433 -482,711 -474,852 -420,165 Crescent Hill -233,949 -206,671 -210,730 -202,451 -204,563 -192,467 -191,139 Cherokee -161,269 -149,333 -142,052 -117,558 -131,396 -129,348 -136,949 Iroquois -434,048 -396,031 -373,208 -359,889 -347,564 -345,440 -324,653 Long Run -248,240 -227,545 -234,582 -248,774 -260,367 -248,203 -230,940 Seneca -581,987 -584,908 -600,472 -605,769 -669,328 -677,097 -659,407 Shawnee -347,169 -386,527 -384,737 -310,918 -336,897 -284,279 -239,277 Sun Valley -190,582 -174,189 -170,971 -150,467 -173,830 -167,757 -157,514 -2,751,164 -2,662,204 -2,659,011 -2,578,589 -2,735,249 -2,631,148 -2,461,666 -3.23% -0.11% -3.02% +6.07% -3.80% -6.44% Total Revenue decreases exceeding 15% between 2012-2017: Cherokee (-19.8%), Crescent Hill (-18.0%), Iroquois (-20.4%), Shawnee (-18.1%) and Sun Valley (-17.3%) ©2018 JJKeegan+ Cycle of Decline Decreased Play Underpriced fees & high operating expenses (fringe benefits) Poor course conditions lead to eroding customer experience Low revenue Lack of capital improvements and maintenance Golf Course Economic Performance FY-2018 $800,000 $700,000 28,000 Rounds is National Avg. for Municipal Golf Course 49,920 Rounds $600,000 $500,000 28,355 Rounds 33,531 Rounds $400,000 26,227 Rounds 26,597 Rounds 13,521 Rounds 9 Holes $300,000 19,061 Rounds 16,321 Rounds 9 Holes 11,941 Rounds 9 Holes 15,201 Rounds $200,000 $100,000 $0 Seneca *Quail Chase Vettiner $1.63/round $.51/round Iroquois Crescent Hill Cherokee Shawnee Long Run ($100,000) Bobby Nichols Sun Valley ($200,000) ($300,000) $1.82/round $-1.26/rd. $-2.51/rd. Revenue * Estimated results for Quail Chase Expenses $-6.01/rd. Loss $-5.30/rd. $-7.87/rd. $-13.80/rd. $-13.80/rd. Golf Course Combined Economic Performance FY-2018 • Total Loss for Fiscal Year 2018 - $673,480 • Total Rounds- 240,675 • Average loss/round for all courses combined ($-2.79) • Green fee needs to raise $3.00 at all courses per round just to stop loss. Assumptions: Income, expenses and annual rounds remain the same. Golf Course Maintenance Expenses FY-2018 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Seneca Vettiner Long Run *Quail Chase Shawnee Expenses * Estimated results for Quail Chase Sun Valley Iroquois Bobby Nichols Cherokee Crescent Hill Golf Course Revenue FY-2018 $700,000 $600,000 Median Revenue Nationally at an 18 hole municipal golf course $532,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Seneca *Quail Chase Vettiner Iroquois Shawnee Revenue * Estimated results for Quail Chase Long Run Crescent Hill Sun Valley Cherokee Bobby Nichols Current Revenue Opportunities Golf Concessionaires City Green Fees+ SeasonPasses Carts Range Merchandise Food and Beverage ©2018, JJKeegan+ Current Expense Responsibilities Golf Concessionaires City Administration Cart Leases Maintenance RangeBalls Hard & Soft Goods Food and Beverage ©2018, JJKeegan+ The Implications of the Options Matrix of Decisions Self-Manage Management Lease Full Risk Full Risk No Risk Capital Investment Full Capital Full Capital No Capital, unless negotiated. Profits Full Profits Full Profits less a management fee No Profits other than “rent.” Risk 2018, JJKeegan+ Pros and Cons Of External Management Pros Professional management skills are more diverse and better refined. Proven systems, policies and procedures can be implemented faster, particularly in the areas of technology, marketing and staffing. Efficient labor structure in number of personnel used and wages paid. Flexibility in contract negotiation,and timeliness and cost efficiency of completing capital improvements. Stakeholders aligned more easilybetween City Council, City Management, Course Staff, Golfers and Taxpayers. ©2018 JJKeegan+ Cons Contract compliance. Requires retention of contract administrator. Financial stability. The ability of a third party to meet its contract obligations are predicated on having a firm financial position and the willingness to provide a superior product. Third-party management companies have often been categorized as “sucking the paint off thewalls.” Course Access. Tournaments and more dynamic pricing. Management Company – Revenue Opportunities Golf Management Company City Green Fees Carts Range Merchandise Foodand Beverage ©2018, JJKeegan+ Negotiated Fee + Incentive Management Agreement – Expense Responsibilities Golf Management Company CIty Administration All Transactions Are Posted on Their FinancialStatements Maintenance All Employees Are On Their Payroll – Reimbursed by City Cart Leases All Expenses Are Paid by Them Reimbursed by City Range Balls Hard and Software Goods Food and Beverage Capital Improvements ©2018, JJKeegan+ Lease – Revenue Opportunities Golf Concessionaires City 4% of Gross Revenue Green Fees + SeasonPasses Carts Range Merchandise Food and Beverage ©2018, JJKeegan+ Advantages of Operating Lease • Shifts the burden of operational risk to the lessee • Administrative overhead is eliminated • Municipality relieved of the day-to-day responsibility of maintaining and operating the facilities • Lease terms could require (or at least incentivize) the lessee to make, or at least contribute significantly to, needed capital improvements or perhaps profit sharing ©2018 JJKeegan+ Lease - Expense Responsibilities Golf Concessionaires City Administration Maintenance Cart Leases Range Balls Hard & Soft Goods Food and Beverage ©2018, JJKeegan+ Capital Improvements to Be Negotiated LOUISVILLE PARKS AND RECREATION