Should Milwaukee County be in the Golf Business?

I saw in the JS today that it had been proposed that fare collection for the $7 greens fee for Milwaukee County's seven Par-3 public golf courses be changed to a "honor system" with people placing the fee in a locked box before teeing off. The move would save the costs associated with the County Parks workers that are currently required to collect the fares during operational hours.

Previously, I have been on the record noting that Milwaukee should privatize more of its assets, particularly when it comes to the parks. While big patches of open mowed grass are great, as a member of whatever generation I fall into, when it comes to public spaces, its more about quantity and quality of amenities, rather than the quantity of the space itself.

This had led me to previously question why Milwaukee County was in the golf business in the first place. Milwaukee County currently owns/operates 15 golf courses. A quick search on golflink.com identified an additional 11 Private Clubs and 10 Public courses. This brings the total golf courses in Milwaukee to approximately 36, with just over 40% owned/operated by the County.

My position with government operated assets, is that government should be involved in operations for the collective good or that as a society we have agreed should be subsidized. My point being that if the government makes money from something that it provides, we should consider privatizing it so that the government no longer has to worry about it and private industry can be developed, increasing our overall tax base. If the government loses money from something that it provides, then it should continue to provide the service and do so as long as we consider the loss to be an important service for public subsidy.

So where does golf fit in? Oddly enough, I wasn't able to find much current data on the financial structure of the Milwaukee County golf courses, but I was able to find data about five years old. According to a JS article from 2003, 70% of the Parks budget was spent on wages and benefits. Considering the article that prompted this post, it would seem that this is still the case, if not a greater percentage.

Next, I found a Milwaukee County Privatization Study from 2004. This is the most complete analysis of privatization efforts and considerations that I have seen from Milwaukee County, and therefore, if you are really interested, I would recommending taking the time to read it.

In the study, all 15 of the County golf courses were considered. Milwaukee County has already privatized management of its top four golf courses (Brown Deer, Dretzka, Oakwood, and Whitnall). In 2002, these four courses lost approximately $100k on just over $3.2M in revenue. The middle six courses (Currie, Grant, Greenfield, Lincoln, Hansen, and Warnimont) made about $650k on $3.4M revenue. Finally, the six par-3 courses lost $369k on $325k revenue.

Therefore, it appears that while the County makes money from its middle level courses, those gains are effectively negated by losses at the top and bottom end courses.

The other component of golf course operation is the clubhouse, and generally at the larger County course operations, this includes a pro-shop and restaurant services. Two courses sand out in the 2004 report, Currie and Dretzka, which both lost over $20,000 on their concessions. Now, it seems to me that concessions are something that the County should not be operating, and certainly should not be operating at a loss. Projects on the Lakefront, including Alterra, North Point, and Bradford Beach House, show the relative success that can be had when the County leases gets out of the concession / food business and lets someone with more expertise run the show.

Going back to the Par-3 courses, from the 2004 study, over 61% of the operating costs of the six par-3 courses was Labor costs. If the proposed farebox system eliminates half of the Labor costs, then even if this change came with a greatly reduced farebox collection, the County's loss on these courses would still be reduced (and lots of County residents would benefit from a free round of golf). If reduced fee collection is justified based upon reduced labor requirements, then the County could seemingly lease the courses for little or nothing (while also transfering maintenance duties of the courses), and be able to wipe these losses completely off of the books.

The question still remains, whether the County should be taking on the tasks of owning, maintaining, promoting, and operating 40% of the golf courses in the county, or whether these should be pass along to private enterprises. Based upon my criteria outlined above, the County makes money on its middle level courses, and these courses should be allowed to be privately operated in order to expand the tax base. Additionally, since the high level and low level courses operate at a loss, then we need to ask ourselves if high and low level golf is something that should be subsidized through taxes to the tune of over $.5M a year.

Since County owned courses make up just under half and 2/3 of the publically available golf courses in the County, golf course access isn't a current issue that needs to be addressed by public funds. Assuming that all or most of the County courses would remain in operation under private management, this means that between 60% and 70% of the golf courses (about 25) would be available to the public.

But wouldn't private operation price many County residents out of a potential lifetime activity? Currently, Milwaukee charges $7 for a round at a par-3 course. Comparatively, in Madison, privately owned Vintense Golfland operates a par-3 course and charges $7.95 a round. Presumably, this Vintense is able to offer par-3 rounds at this price since it can make money once golfers are there though a pro-shop, restaurant, and driving range. The point is that a similar (and from personal experience, I would claim superior) experience can be obtained from a privately operated golf course for a similar price as what is currently offered by the County at a loss to taxpayers.