A recent article in the Detroit Free Press laments the sorry state of the city’s publicly-owned golf courses, which barely avoided closure in March. Renovations and upgrades to the courses would cost a combined $18 million, according to a report prepared by the National Golf Foundation (NGF) last year.
A subsequent NGF summary of the state of the city’s public courses tellingly placed blame on “a city that didn’t value” the courses’ “presence” and “long-term capital needs.”
Brad Dick, director of Detroit’s General Services Department, hopes to get the city’s three operating courses (the fourth is closed entirely due to its poor condition) back in the green. To put the $18 million in capital expenditure in perspective, the courses could be generating “about $40,000” in profit over the next couple of seasons.
Detroit has long outsourced operations and management of its golf courses to the private sector. Because the city desperately needs to attract private sector capital investment, the terms of the arrangements under which they outsource management deserve scrutiny.
Certainly, the new two-year $180,000 contract awarded in March to Signet Golf should result in a financial improvement from the month-to-month arrangements NGF noted in its 2017 report. Unfortunately, the necessary $18 million in capital investment will require a longer commitment to incentivize the investment of such a massive sum relative to the size of the four golf courses’ expected revenue.
The continued municipal ownership of golf courses, which serve a small percentage of Detroit’s overall population and hardly qualify as a “public service,” raises questions of its own.
While the land of Detroit’s Rackham course was deeded to the city with the condition that a private entity never own it (a stance later settled by the state’s court of appeals), solutions do exist that could provide the needed capital without a sale of public lands.
Golf course land can be leased to private entities for decades at a time, allowing for a much greater time horizon for operators to recoup capital investments in improvements to the courses, and therefore attract other investors.
While seeking separate arrangements for each individual course may be enticing, a large agreement covering multiple courses (which could include selling one or more courses, as well as a leasing Rackham) will likely attract greater capital by allowing for more creativity in proposals from prospective operators.
Undoubtedly, Detroit’s public golf courses need a great deal of investment if they are to remain an effective source of revenue. That investment is necessary even if the land is repurposed for a different use.
Before any meaningful investments can happen, the city must give its private operators long-term arrangements that can begin to justify the massive private capital expenditure needed to make essential improvements. Allowing long-term, multi-course lease arrangements appears to be the only way Detroit will find the $18 million that is said to be necessary for course upgrades.
Until that happens, Detroit’s once-popular public golf courses will continue to fall into disuse and disrepair.