By Duncan Nixon
Correspondent
Much to the surprise of the golfing community at Lake Monticello, the LMOA Board of Directors recently released a proposed new fee schedule developed by Billy Casper Golf (BCG) that BCG apparently projected would cut LMOA losses on golf in half in 2021.
Leading individuals in the golf community at the Lake were taken aback. According to Board chairman Jay Hinkle, BCG, which is already handling the golf course maintenance and the food and beverage service, came to the Board and proposed that it take over golf operations as well. Hinkle said in a recent interview that the idea would be to develop a master management contract with a single payment to BCG for golf course maintenance, golf course operations and food and beverage services. This would be a better deal for LMOA than having individual management contracts. When the Board made the BCG proposed fee schedule public, it was news to LMOA’s own Golf Committee, the officers of the Gray Foxes group, the women’s golf groups, the Monday night golf group, and the very active Hardin golf group, that any talks were in the works for BCG to take over the Lake’s golf operations.
At a public meeting, on Oct. 29, the leaders of the Lake golf groups gave the Board of Directors quite an earful of opinions, about the Board’s procedures and about the proposed new fee schedule. Board chairman Jay Hinkle said at the meeting that operating losses are currently running at about $250,000 per year. In addition, this figure does not include capital costs that include planned improvements projected out over a 30-year period.
The proposed fee schedule offers all kinds of combinations and permutations. For instance, the daily fees for a single round of golf actually go down under the proposal, but the annual contract fees go up a lot. One calculation for a golf playing couple that practices on the driving range shows an increase of 28 percent. A calculation for a single player playing three 18- hole rounds a week and practicing regularly on the range shows an increase of 46 percent. The cost for an associate single member (i.e. non-resident) goes up by 65 percent.
Regarding the annual operating loss, a little perspective is in order. The Lake is fortunate to have a large base of dues paying units over which to spread this cost. The subsidy of the golf course per dues paying unit comes to about $60 a year, or $5.00 per month. In the event that the Lake were to lose or abandon its golf course, it is fairly certain that property values would be negatively affected to some extent. Prospective buyers looking for a house at a golf course community would look to Spring Creek and Old Trail and skip over Lake Monticello. Housing prices would obviously not tumble, but a loss of a couple of percentage points for most homeowners would make the $60 a year cost look piddling. Nonetheless, Hinkle says the Board is committed to improving LMOA finances and making the golf course break even or profitable would be consistent with that goal.
Most of those commenting on the new fee schedule told the Board that the schedule appeared to reflect a lack of knowledge of the make-up of the golf playing community at the Lake. The demographics of players at the Lake may be significantly different from the demographics of the golf playing communities at other courses managed by BCG. Comments were quite uniform in their view that if the proposed fee schedule is adopted without change, a portion of players will walk away from the course. If that were to happen, it is very hard to imagine how BCG could cut losses in half in year one. Golf courses around the country are generally not making money and golf demand is highly elastic, meaning that if golfers perceive that prices are too high, they may turn to other courses or hang up their clubs. It was clear from the comments that the proposed fee schedule would have a significant negative impact on the golfers who play most regularly. On the other hand, the proposed fee schedule would be beneficial to the casual, occasional player. In a recent interview, Hinkle said that the Board is committed to working on the fee schedule with the regular, high volume players. He noted that currently, 53 percent of total golf course revenue comes from these players.
While the reaction to the Board’s negotiations and the proposed fee schedule was entirely negative, the fact is that most golfers at the Lake have been very happy with the way in which BCG has handled golf course maintenance at the Lake in recent years, and with how it has handled food and beverage management of late. Furthermore, BCG is a highly successful golf course management company, managing approximately 160 different courses all around the country. The Board apparently believes that it cannot go wrong in turning golf operations over to BCG. Hinkle said that one thing that BCG might do is try to integrate the golf course into the community more fully with events to bring in non-golfers. He also suggested BCG is very committed to promoting lessons and youth golf, two areas in which the Lake Monticello golf course is already quite strong.
If a more realistic fee schedule can be worked out, it is possible that the Board’s proposal to turn golf course operations over to BCG could be approved at the November, or December Board meeting. The November Board meeting is scheduled for Nov. 19.
