Local golf pro suggests ways to improve BMGC’s bottom line
Swenson says city-owned course should be treated as ‘for-profit business’
November 29. 2013 6:00AM
Earlier this year, golf course consultant Mark Amundson asked the Brandon City Council how they view the city-owned course: An an amenity or as a for-profit business?
Brandon Municipal Golf Course general manger Zane Swenson believes the operation should be treated as a for-profit business first and as a city amenity secondly.
“I hear quite a bit that the golf course is draining the city and costing the taxpayers,” Swenson said.
But with an average loss of $30,000 over the last six years, Swenson argues the cost is minimal to subsidize the BMGC at $9 per year per household.
In 1997, Swenson said the BMGC was doing $400,000 of business. Today, that figure has jumped to $1.2 million.
The increase in business stems from a variety of sources, he said. Swenson helped to revive what was then a defunct golf association, which now sports more than 230 members, and since the new clubhouse was built, 500 wedding receptions have been held there.
“For 22 years, the clu house operated out of a donated house, which was Fred C. Sanford’s house,” he said.
Earlier this month, Sioux Falls businessman Tom Walsh submitted a proposal to lease the BMGC with option to buy. Walsh suggested a yearly lease fee of $400,000 and put a $1.2 million price tag on the purchase price. The written proposal also dictated the annual lease fees and cost of any capital improvements made during the lease period would go toward the purchase price.
Walsh, who suggested about $500,000 in capital improvements, told the Council that the course could be profitable if run in the private sector.
Swenson agreed with several of Walsh’s suggested capital improvements, but estimated $300,000 of improvements should be considered.
“The Council needs to ask first, is it necessary, and second, is it going to make you money,” Swenson said.
One example Swenson presented was the $60,000 spent to repair hole No. 13. “It didn’t make us more money, but it was necessary,” he said. “We just need to prioritize where we want to spend the money and do a little bit each year.”
Swenson agreed with Walsh’s suggestion for more cart paths, and said that need could possibly be done with volunteer labor and donated materials. “Our golf association has 230 members, so I’m confident we can get some people together and do one hole a year, maybe two,” he said.
Swenson offered other suggestions for improving the BMGC’s bottom line, but said ultimately the revenues need to be increased and expenditures decreased.
The BMGC has three sources in which to pull its revenue from: golf operations, the lounge and the community room.
In the past, Swenson said city officials have simply relied on raising fees to improve revenue. “Now, to rent a cart and play 18 holes, it costs $50,” Swenson said. “There’s going to come a threshold when people won’t pay the price. What that is, I don’t know.”
But instead of merely raising golf rates, Swenson said he could aggressively go after golf outings, offer corporate memberships and bring in video lottery.
The lounge profit, Swenson, is largely dictated by golf, which is weather dependent.
“When the golfers are gone, so are our lounge customers,” he said.
Business in the community room is up 36 percent this year, showing a 103 percent profit through the end of October, and 40 weddings are booked for 2014, which is a new record, Swenson said. The weekly church services held there have also helped to improve the community room profit.
“We could raise beverage and room rent costs,” Swenson said, adding that video lottery could be brought in there as well.
With eight years to go on the clubhouse mortgage, Swenson suggested refinancing the balance to extend the payments.
“If I was a for-profit business, the first thing I would do is restructure that debt, not borrow more money, but extend it out 20 years to free up more cash flow,” Swenson said.
That move, he estimated, would free up approximately $60,000 each year.
Swenson said the BMGC’s bottom line could also be improved by taking away some of the employee benefits, such as health insurance and the annual standard 3 percent across-the-board wage increase. “There are not many public courses that pay health insurance and we can also look at cutting wages,” he said. Swenson estimated those suggestions would allow the BMGC to operate in the black, cutting about $17,000 out in health insurance expenses and $20,000 to $30,000 in annual wage increases.
“If we did those things, I’m confident the course could operate in the black,” he said. “These are things that I believe a for-profit business would do. … We can keep this great asset we have in the city, and the main thing is the city can maintain control.”
At the conclusion of Swenson’s presentation, Mayor Larry Beesley left his peers with the following thought: “I think Zane is absolutely right. We, up here, have to decide if it is an amenity or a for-profit business.”