Two major hazards stand in the way of private operators managing city-owned golf courses, making it unlikely the city will find a playing partner, said a Calgary golf management consultant.
Councillors are getting an update on the Request for Proposals (RFP), along with real estate opportunities at Maple Ridge and Shaganappi Point golf courses and the city’s golf course sustainability framework, at Tuesday’s Priorities and Finance Committee meeting.
In November, councillors agreed to hear urgent business asking for the development of an RFP to secure a long-term management contract for the operations and service of City of Calgary golf courses.
David Forma, principal and managing partner with Calgary’s Venture Vision Consulting, specializing in golf management strategies, said until certain operations restrictions are lifted, golf course operators won’t even look at the properties.
“I’m not sure as the model is currently constituted… how anyone would be interested in touching it under the current model,” Forma said.
Progressive pricing needed to help Calgary golf courses
The two primary problems for potential operators are inflexible pricing and wages that are nearly double the industry average, said Forma, who’s spent the last three seasons working with Calgary’s Windmill Golf group and, in particular, on the Mickelson National Golf Club in the community of Harmony.
“I think when you look at the general marketplace, as far as public golf is concerned, in order to compete today, you have to look at more progressive strategies around what I phrase, ‘the right day, right time, right price, right golfer,” said Forma.
He said the city, in providing a recreation opportunity to a certain level of golfer, fixes the prices in service to the player and the taxpayer.
Forma said the reason why the Shaganappi location makes money is the amount of volume it drives. It has 27 holes and pushes groups through regularly. It has a driving range. Essentially golfers are getting good value for the money. The challenge is in creating that opportunity at all the courses, he said.
Dynamic pricing, Forma said, allows these smaller courses fill the timesheet based on time and conditions.
Wage issue a ‘pink elephant’ for city golf courses
In November, Coun. Ward Sutherland mentioned wages as a major issue in sustainable city-owned golf courses.
“The wages are not even close to market. And because they’re not even close to market, they’ve gone from a profitable position to a negative position and will get even worse, not better,” Sutherland said at the time.
Forma called it the ‘pink elephant’ in the room. He said first off, the minimum wage rise put a $250,000 annual dent in the bottom line of some Alberta golf course operators for grounds crew staff.
Looking at double that to pay for the same staff, the math just doesn’t work, he said.
“How do you compete with that structure? It becomes very difficult. There’s only a certain number of games (annually) in the Calgary market – and that’s even shrunk in the last few years,” Forma said.
“If you don’t have the ability to be nimble in what you’re doing, especially with revenue management, and you’re paying big wages, that’s a tough equation.”