Municipal Golf Courses - A Level Playing Field?
Recently, I read an article where several participants in the Atlantic City (NJ) golf market were interviewed about the state of the market. Of great interest were the varying perceptions of the health of the market between those in the private sector and those operating municipally owned golf course facilities. Each of the owners interviewed related a similar story of stiff competition for rounds and downward pressure on green fees. Conversely, the one municipal course representative quoted in the article told a different story of a market rebounding and expressed a very positive outlook.
Given these different perceptions, I couldn't overlook the obvious competitive advantage owned by municipally owned courses as compared to the private sector. There are two main areas: Real estate taxes are a big one. In many jurisdictions, especially if the facility is not privately managed there is no real estate tax liability. In many instances, that is a six-figure ($100,000+) advantage that allows the municipal course to either enhance conditions, add services or reduce fees and compete. The second advantage is the availability of favorable debt financing through municipal bonds. With interest rates far below that offered by commercial banks and secondary market lenders, another significant and usually "six-figure" advantage is in the court of the municipalities. Reportedly, the municipal course mentioned in the article has lost at least $400,000 per year and been subsidized by the township. It's no surprise that the private sector owners aren't pleased.
How do owners and their communities resolve this conflict? We want to know what you think and welcome your comments. If you're a golf course owner or operate a municipally owned course and would like to share your comments, Email your comments to me.
