HomeMy WebLinkAbout1. Request for Proposal 8.13.2020
REQUEST FOR PROPOSAL
PORT TOWNSEND MUNICIPAL GOLF COURSE
MANAGEMENT AND OPERATIONS
REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
Contents
Introduction .................................................................................................................................................. 3
Overview ................................................................................................................................................... 3
Purpose ..................................................................................................................................................... 3
Area Information ....................................................................................................................................... 3
Golf Course Description ............................................................................................................................ 3
Background ................................................................................................................................................... 4
Financial Data ............................................................................................................................................ 4
Schedule of Events ........................................................................................................................................ 4
Objectives ..................................................................................................................................................... 5
Scope of Work ............................................................................................................................................... 5
General Responsibilities ............................................................................................................................ 5
Proposal Guidelines ...................................................................................................................................... 6
Due Date and Delivery Methods ............................................................................................................... 6
Proposal Content ...................................................................................................................................... 7
Evaluation of Proposals ................................................................................................................................. 8
Qualifications and Experience................................................................................................................... 8
Business Plan ............................................................................................................................................. 8
Transition Plan .......................................................................................................................................... 9
Interview and Reference Checks............................................................................................................... 9
Terms and Conditions ................................................................................................................................... 9
National Golf Foundation Report Attachment A
Golf Course Map Attachment B
2
REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
Introduction
Overview
The City of Port Townsend invites the submittal of written proposals from qualified firms or
individuals s interested in providing golf course management and operations at its municipal
golf course and ancillary facilities.
The Vendor selected to enter into a contract with the City will be expected to manage all golf course
operations, services, and maintenance consistent with modern management trends in the golf
industry.
Purpose
The purpose of this Request for Proposal (RFP) is to utilize a competitive bid process to select the most
qualified vendor to manage, operate, maintain, and improve the golf course.
Area Information
The City of Port Townsend is located on the tip of the Quimper Peninsula in the most northeastern
corner of the Olympic Peninsula in t
approximately 9,800 with an additional 22,000+ outside of the city limits in Jefferson County. Nearby
cities include Sequim (7,600 population) and Port Angeles (20,000 population), both also on the Olympic
Peninsula to the west, and Poulsbo (11,000 population), Bainbridge Island (25,000 population), and
Bremerton (41,000 population) to the south in Kitsap County (271,000 population), on the Kitsap
Peninsula.
Port Townsend is approximately 2 hours from Seattle via the Seattle-Bainbridge Island ferry or the
Seattle-Bremerton ferry. It also has direct connection to Whidbey Island (67,000 population) via the
Port Townsend-Coupeville ferry.
Additional and more detailed market description can be found in the NGF report (Attachment A)
Golf Course Description
The Port Townsend Municipal Golf Course is located at 1948 Blaine Street and is a regulation length 9-
hole golf course with driving range that sits on approximately 59 acres centrally located within the City
limits. It has a clubhouse for retail sales, commercial kitchen, banquets and special events, and
maintenance buildings for equipment and supplies storage.
The commercial kitchen is currently operated as a restaurant (The Dusty Green Café), and functions as a
sub-lessor to the current golf operations and management vendor.
The golf course is used by local organizations and service clubs for annual fundraising events and is used
by the Port Townsend High School golf and cross-country teams.
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
Background
The Port Townsend Municipal Golf Course was developed in 1904 and originally operated as a private
golf course. It was converted in 1927 to a public course and was first administered by Jefferson County.
Today, the golf course is owned by the City and has been managed through a contract for services lease
agreement with local businesses. The current lease will expire on December 31, 2020 with all extension
options exhausted.
In advance of the lease expiring, the City contracted the National Golf Foundation (NGF) in 2018 to
conduct an analysis of the current state of the golf facility, the business operations, and feasibility of
continuing golf services. The NGF report (Attachment A) found that the golf course physical
infrastructure needed capital investment, had a challenging market demographic, and showed a
downward trend in use and economic sustainability. Nonetheless, the NGF report also found that
continuing with golf is possible but making it sustainable would require significant capital investment in
the course and facilities, an expansion of the user market, and a public financial subsidy. Additionally,
the report recommended the City pay for the capital needs and begin operating the golf course as a City-
run program. After reviewing the viability of this recommendation, City Council declined to pursue it
because the City does not have the money to invest in either the capital improvements or the
operations. City Council then directed staff to publish an RFP for continued management and operation
of golf services as well as engage the community in a conversation about alternate use ideas for the golf
course. Results and findings will be presented to City Council in October so a forward decision may be
made.
Financial Data
The following represents the most recent 5-year span of reported sales from the current operator:
Year Gross Revenue
2015 $209,718
2016 $168,243
2017 $146,705
2018 $130,615
2019 $130,764
Additional and more detailed financial reporting can be found in the NGF report (Attachment A).
Schedule of Events
The City intends to follow the following schedule of events for this solicitation:
Publish RFP August 12, 2020
RFP Question Period Open August 12, 2020
RSVP for Site Visit August 21, 2020
Site Visit August 26, 2020
RFP Question Period Ends August 31, 2020
RFP Question Responses Posted September 7, 2020
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
Proposal Due Date September 30, 2020
Review and Evaluation October 1-7, 2020
Proposer/Vendor Interviews October 8, 2020
(Anticipated) Presentation of Results to City Council October 12, 2020
(Anticipated) Presentation of Results to Parks, Recreation, and Tree October 13, 2020
Advisory Board
(Anticipated) Presentation of Recommendation to City Council October 19, 2020
(Anticipated) Contract Negotiation October 20-December 31, 2020
(Anticipated) Contract Start Date January 1, 2021
Objectives
1.Serve the resident and guest golfers of Port Townsend with a well-managed golf operation.
2.Provide professional and friendly customer service and provide a notable golf experience.
3.Optimize gross revenue by balancing revenue per available tee time and rounds played.
4.Provide quality merchandise, golf lessons, and food operations.
5.Maintain the course, buildings, and infrastructure in a manner consistent with or better
than the existing conditions.
6.Develop a short and long-term marketing plan that includes attracting visitors into the City.
7.Develop a short and long-term capital plan that includes self-funding needed capital
improvements.
8.Provide maintenance activities that are environmentally responsible and sensitive to the
protection of the native prairie and designated wetland on the course.
9.Be accountable to the City and the Port Townsend community.
Scope of Work
General Responsibilities
1.The Vendor shall act as an independent contractor and will be expected to provide, without
the assistance, all staffing, business office equipment, marketing, maintenance and
repairs, and services for the complete operation and maintenance of the property and facilities
(clubhouse and two maintenance buildings).
2.The Vendor shall be responsible for all expenses required for golf course operations including
all utility costs (electricity, water/sewer, irrigation water, etc.).
3.The Vendor shall set the rates and fees for all items of sale including greens and other playing
fees (with City approval), retail sales, rentals, and food service. The Vendor shall be
responsible to maintain all required Washington state liquor licenses throughout the term of
the agreement.
4.The Vendor shall be responsible for identifying capital improvement projects that are needed
to improve the overall operation, maintenance, and sustainability of the golf course. The
Vendor shall gain City approval prior to engaging in any capital projects and will follow all City
and State building and permitting laws and practices.
5.The Vendor shall be responsible for the cost of all capital improvements or repairs to the
course, buildings, fixtures, and structures.
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
a.The NGF report (Attachment A) indicates a variety of capital improvements are needed
to make the golf course more sustainable. The City does not have the necessary funds
to invest in these needs but is also not mandating that the Vendor be responsible for
them. Though, if a Vendor believes the improvements in the NGF report or others are
required to make their proposal successful (i.e. irrigation replacement, course
improvements), the cost will
City will retain the agreed-upon revenue-sharing payments in a dedicated account for
reinvestment in the golf course. The City may act as partner with the Vendor for
capital improvements to leverage grant and other opportunities that may not be
available to the Vendor.
b.If the vendor is interested in pursuing a course modification (i.e. conversion to a par-3
course) to better match a new business model, the City is amenable to considering such
business model; the City does not have funds available to assist.
6.The Vendor shall provide visitation, usage, revenue, expenditure, and other operational data,
as negotiated in the contract, on a monthly basis to the City.
7.The Vendor shall propose a revenue-sharing strategy with the City.
8.The Vendor shall provide payments on a monthly basis to the City.
9.The Vendor shall provide all necessary equipment, such as mowers and golf carts, for the
maintenance and operations of the golf course; the City does not own any of golf course
maintenance equipment.
10.The City shall be responsible for the maintenance and development of a well and wellhead. The
Vendor will ensure access to the well is not impeded. The well is intended to supply the
irrigation system to offset use of City potable water but is not yet in use. The water right is for
150 gallons per minute (gpm) with an annual quantity limit of 51-acre-feet per year to be used
between March and November. Pump test results produced 125 gpm and water quality testing
showed slightly elevated salinity in the water.
11.The City shall inspect the golf course and facilities on a regular basis to ensure proper care and
maintenance is occurring.
Proposal Guidelines
Due Date and Delivery Methods
Proposals are due by 5:00pm on September 30, 2020. Proposals may be submitted in one of the
following ways:
Hard Copy. Please mail 3 printed proposal copies to:
City of Port Townsend
Golf Course RFP
Attention: Alex Wisniewski
250 Madison Street
Port Townsend, WA 98368
Electronic. Please email PDF proposal to:
awisniewski@cityofpt.us
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
Proposal Content
The following items must be included in all proposals:
1.Letter of Transmittal/Cover Letter that includes the following:
a.Name of Individual, partnership, company or corporation submitting proposal
b.Contact information for proposal submittal questions
c.Statement that all terms and conditions of the RFP are understood and
acknowledged by the undersigned
d.Signature(s) and title(s) of the representative(s) legally authorized to bind
the Vendor
2.Description of Vendor including, but not limited to:
a.At least three (3) examples of your operations management success specific to golf
course management or similar activities
b.A summary of key staff and their experience and qualifications for operations and
management
c.Description of financial capacity; response may include (but is not limited to):
i.A current, audited financial statement for the most recent three fiscal
years of the Vendor, including balance sheet, income statement and
statement of cash flow
ii.Most recent Dunn and Bradstreet Comprehensive Insight Business Report
iii.Tax returns for the most recent three fiscal years
iv.List of current investors and their financial capacity
v.Any other information that is applicable and demonstrates
d.Description of legal history (including, but is not limited to):
i.Any history of claims, litigation, arbitration and termination for a cause
associated with any work contracted on any project in the past ten (10)
years
ii.Any contracts the Vendor had that were terminated for default within the
past ten (10) years
iii.Any lawsuits, requested arbitration, or litigation concerning contract
activity the Vendor has been involved with in the last then (10) years
iv.Any judgments, claims, arbitration proceedings, lawsuits, or litigation
pending
v.Any filings for Chapter 7, 11 or 13 bankruptcies in the past ten (10) years
3.Proposed business plan; must include (but is not limited to) the following:
a.Proposed marketing plan
b.Proposed maintenance plan
c.Proposed capital plan
d.Proposed financial plan (including but is not limited to):
i.Proposed fee schedule for all services
ii.Projected pro forma operational and capital budgets
4.Proposed transition plan for assuming operations and management of the golf course
5.A list of three (3) references that can describe your previous performance in the
management, operations and facility maintenance for services comparable to those
described in this RFP
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
Evaluation of Proposals
Proposals will be evaluated on the following criteria:
Qualifications and Experience 20 points
Proposed Business Plan
Proposed Marketing Plan 10 points
Proposed Maintenance Plan 10 points
Proposed Capital Plan 5 points
Proposed Financial Plan 15 points
Proposed Transition Plan 10 points
Interview and/or Reference Checks 30 points
Total 100 points
Qualifications and Experience
Vendor must demonstrate experience and ability to manage a golf course. Items to reference include
(but are not limited to):
Marketing and promotion of golf facilities, course and driving range
Customer service including Internet-based tee-time reservations and pace- of-play
improvement strategies
Pro shop operations and merchandise sales
Player/customer development and other programs
Environmentally-friendly golf course maintenance practices.
Financial reporting
Management of food and beverage operations
A comprehensive listing and description of all municipal and non- municipal golf courses
operated by the Vendor over the past five years. Please provide detailed information, e.g.,
course name, type (municipal, daily fee, resort, private), and location of the course, dates
served, and the nature of services provided
Indication of how your organization has elevated the sustainability of another course you
operate
It is preferred (but not mandatory) that the Vendor has or can obtain a Class A Professional
Golfers Association (PGA) of America or Ladies Professional Golf Association (LPGA) Golf
Professional to manage and operate the golf course.
It is preferred (but not mandatory) that the Vendor has or can obtain a Class A Superintendent
(GCSAA) to be the primary maintenance manager on site to supervise all golf maintenance
activities.
If the Vendor has experience in other golf-related fields, the Vendor is encouraged to submit
information on that as well.
Business Plan
Marketing
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
The Vendor shall outline the components of a marketing plan summary regarding their intent to
increase rounds of golf played. Examples may include strategies to increase memberships, attract
tourists, advertising and promotional platforms, etc.
Maintenance
The Vendor shall outline a plan for maintaining the landscape of the entire site to promote and support
operations at a level consistent with a quality, daily-fee golf facility including, but not limited to: tees,
greens and green collars, fairways, irrigated and non-irrigated rough, native and wetland area
protection, bunkers, cart paths, practice area putting/hitting surfaces, fencing, and turf, and signage.
Maintenance plan shall include description for invasive weed control and chemical application.
The Vendor shall also outline a facility maintenance program for the clubhouse, commercial kitchen,
and ancillary maintenance buildings.
Capital
The Vendor shall outline a plan for capital improvements including (but are not limited to) priority of
need based on maintaining long-term viability of golf course, funding mechanisms proposed to
accomplish improvements, and experience performing or managing capital projects.
Financial
The Vendor shall outline its approach to the financial management of the golf course operations to
prove its business model is solvent and sustainable. Examples include (but not limited to) detailing how
the fee schedule was determined, estimated rounds sold based on market analysis, and outline
estimated annual expenses and future investment. As a part of the financial plan, the Vendor shall
propose a revenue-sharing strategy with the City.
Transition Plan
The Vendor should submit a transition plan indicating how they will assume the services provided by
the current operator in a smooth and orderly manner. The Vendor should discuss their approach and
methodology.
Interview and Reference Checks
After an initial review and evaluation of the proposals, the City may conduct interviews with one or
more of the highest ranking and qualified Vendors. This will provide the City an opportunity to meet
the Vendor and ask questions regarding the contents of their proposal and will score the interviews
accordingly. Alternatively, if the City determines there is a clear leading qualified Vendor, the City
retains the right to bypass the interview process and proceed directly to award.
Terms and Conditions
1.The City reserves the right to reject any and all proposals, as well as to waive minor
irregularities in any proposal.
2.The City reserves the right to request clarification of information submitted and
request additional information.
3.The City reserves the right to award the contract to the next most qualified operator.
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REQUEST FOR PROPOSAL: PORT TOWNSEND MUNICIPAL GOLF COURSE
4.The contract resulting from acceptance of a proposal by the City shall be in a form
supplied by the City and shall reflect the specifications in this RFP. The City reserves the
right to reject any proposal that does not conform to the specifications outlined in this
RFP, which is not approved by the City Attorney.
5.The City shall not be responsible for any costs incurred by the applicant in preparing,
submitting, or presenting its proposal to the City.
10
Business Analysis
of the
Port Townsend Golf Club in
Port Townsend, WA
Prepared For:
City of Port Townsend
250 Madison Street, Ste. 2
Port Townsend, WA 98368
Prepared By:
501 N. Highway A1a
Jupiter, FL 33477
(561) 744-6006
January 2019
Table of Contents
EXECUTIVE SUMMARY
........................................................................................................... 1
Introduction And Purpose .................................................................................................... 1
NGF Review 2018 ............................................................................................................ 2
Overall Summary of Findings .............................................................................................. 3
Key findings on Port Townsend Golf Club..................................................................................... 3
External Environment .......................................................................................................... 4
NGF Recommendations ...................................................................................................... 5
Basic Oversight and Golf Course Management ............................................................................ 5
Operational Recommendations ..................................................................................................... 6
Physical Improvements / Capital Investment ................................................................................ 6
Financial Analysis ............................................................................................................... 6
NGF Projection Results ................................................................................................................. 7
Summary Statement ........................................................................................................... 8
SUBJECT FACILITY PORT TOWNSEND GOLF CLUB
........................................................ 9
Port Townsend Golf Club Facility Review ...........................................................................10
Location, Access and Surrounding Elements ............................................................................. 10
Summary of NGF Findings on Port Townsend GC ..................................................................... 11
Port Townsend GC Capital Investment Considerations .............................................................. 15
Review of Golf Operations .................................................................................................16
Lease Management Review ........................................................................................................ 16
Lease Assumption Issues ........................................................................................................... 18
Staffing ........................................................................................................................................ 18
Technology and Marketing .......................................................................................................... 20
Golf Playing Fees ........................................................................................................................ 20
Food and Beverage Operation .................................................................................................... 21
Merchandise Operations ............................................................................................................. 21
Organized Events and Player Development ............................................................................... 22
Cart Rentals ................................................................................................................................. 23
Port Townsend GC Operational Performance ....................................................................23
Summary Port Townsend Golf Club ................................................................................24
EXTERNAL FACTORS AFFECTING THE OPERATION OF PORT TOWNSEND GC
.............25
Demographics, Economy and Weather ..............................................................................25
Demographic Analysis Local Permanent Residents ................................................................ 25
Key Economic Factors................................................................................................................. 26
Golf Market Supply and Demand Indicators .......................................................................27
National Golf Industry Overview .................................................................................................. 27
Market Definition Primary and Secondary Trade Areas ........................................................... 29
Local Golf Demand ...................................................................................................................... 29
Other Demand Drivers................................................................................................................. 29
Local Golf Supply ........................................................................................................................ 30
Golf Course Market Supply / Demand Summary ........................................................................ 30
Local Competitive Golf Market ...........................................................................................31
Competitive Public Access Golf Facilities Map ........................................................................... 31
Summary Information .................................................................................................................. 32
Key Findings Competitive Golf Market ..................................................................................... 35
External Factors Summary .................................................................................................36
RECOMMENDATIONS FOR CITY OF PORT TOWNSEND
.....................................................37
NGF Observations on Port Townsend Golf Club ................................................................37
Basic Oversight and Structure ............................................................................................38
Structure Options ......................................................................................................................... 38
NGF Recommendation ................................................................................................................ 40
Operational Recommendations ..........................................................................................40
Technology and Marketing .......................................................................................................... 41
Food and Beverage ..................................................................................................................... 42
Player Development and Programming ...................................................................................... 42
Physical Improvement Recommendations .........................................................................43
ANALYSIS OF EXPECTED PORT TOWNSEND GOLF CLUB FINANCIAL PERFORMANCE
.................................................................................................................................................44
Summary of Port Townsend GC Projections ......................................................................44
Basic Assumptions PTGC Performance Estimates (Year 1 Year 5) ..................................... 44
Economic Performance Projections ............................................................................................ 45
Summary Discussion NGF Projections ............................................................................46
Limiting Conditions ...................................................................................................................... 47
APPENDICES
...........................................................................................................................48
Appendix A Golf Course Life Cycle .................................................................................49
Appendix B - Local Demographic, Demand and Supply Data .............................................50
Demographics ............................................................................................................................. 50
Supply .......................................................................................................................................... 51
Supply- Demand .......................................................................................................................... 52
Appendix C - National Rounds Played Report ....................................................................53
Executive Summary
The following is a summary of significant findings made by the National Golf Foundation in its
study of the Port Townsend Golf Club. The supporting text and tables are found in the body and
appendices of the attached report. Some items are repeated from the full report.
INTRODUCTION AND PURPOSE
cility
range operation, an evaluation of the long-term potential of this facility, and recommendations to
enhance economic performance. The following report details findings on the Port Townsend
GC, with analysis of the physical and economic condition of the club and the market
environment within which it operates. Based on these findings, NGF has provided a set of
recommendations to the City and its operator that we believe will improve overall operations and
economics of the popular golf facility. We remind the City that the NGF had completed a similar
review of the PTGC in 2004, after the City undertook some basic operational changes.
Port Townsend Golf Club is an historic and popular golf facility that includes a regulation-length
9-hole golf course, a driving range and modest clubhouse. The City has chosen to operate the
facility via lease contract with a private vendor (Gabriel Tonan Golf Shops, Inc.) that is in charge
of the day-to-day operation of the facility and responsible for all operating expenses and the
payment paid by the operator to the City, although this payment has declined considerable in
the last ten years, falling from over $19,800 in 2008 to under $5,000 in 2018 (75% decline).
PTGC reported total top-line revenue of just over $125,800 in 2018, an amount significantly
lower than the average 9-hole facility in the U.S. (about $500,000). The total on-site operating
expenses total about the same $125,800, which includes the cost of sales, taxes, lease fee and
a payment for lease acquisition. However, the NGF must state that operating data on PTGC
provided by the current golf professional was very limited, thus the level of confidence in the
reported numbers is very low and further forensic review by the City is recommended. What is
expenses to operate PTGC are well below any reasonable standard expected
clear is that
for properly maintaining a 9-hole golf facility, resulting in PTGC being operated on a very
tight budget with no new capital going to address deferred maintenance items that could
cause problems in later years.
The current financial condition is comparable to most public
sector golf operations in the U.S, as NGF expects that the majority of public-sector golf courses
are not able to cover all on-site expenses, capital and other expenses.
Of particular interest to the City is a review of the lease agreement in place at PTGC, and the
fact that the current lessee is actually a sub-lessee with an ongoing lease arrangement that
GC. The current sub-
lessee is paying the actual leaseholder for the rights to the lease, taking much needed
resources away from the golf operation and facility maintenance. The NGF review in late 2018
shows a golf course facility in generally poor maintenance condition that is being operated with
outdated infrastructure, sub-standard equipment, a large reliance on untrained volunteer staffing
and a general lack of appropriate golf facility management expertise in senior leadership.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 1
NGF REVIEW 2018
In 2018, the NGF was retained by the City of Port Townsend to evaluate the golf club, and to
make recommendations to help establish the long-term viability of the facility if the City were to
-
It is expected that the results of this NGF study will be used by the City as a guide for the future
of the golf course, and to help identify the appropriate amenities and management structure that
would make the subject PTGC a sustainable enterprise for the City over the next decade and
beyond. The review includes an evaluation of the facility as it is presently operated, potential
changes that could be made to the operation, and ideas for structural changes that could also
be made to help improve overall performance.
The findings and recommendations presented by NGF in this report are based on NGF
Consulting experience, knowledge of golf industry best practices, and a review of the Port
Townsend GC facility in 2018. NGF activities completed to date include meetings with City staff,
interviews with golf course management and staff, visits to and profiles of other area golf
courses and a review of the very limited operating data provided by PTGC. The NGF team also
completed a comprehensive inspection of the facility and all its components.
The key components and issues of this report include:
Overall condition and operating efficiencies of Port Townsend GC.
Status of the broader Port Townsend market area, with focus on external issues that
affect public golf operations, including the balance between demand and supply.
A comprehensive review of the subject PTGC and its present physical condition and
capital needs.
A preliminary estimate of the cost of improvements that may be needed at PTGC.
Review of the current lease/management structure and recommendations on the
appropriate structure, including lease terms, that would help the City achieve the
goal of maximizing the economic performance of PTGC.
Recommendations on the most appropriate amenity package, quality of services,
help improve the operation.
Helping the City understand the expected impact of the declining golf market on the
long-term economic potential of the PTGC, and to establish reasonable parameters
for revenue and expense expectations for the Facility over the next 10 years.
The NGF consulting engagement was managed by Richard B. Singer, Senior Director of
Consulting Services, and Edward Getherall, Director of Consulting Services, with assistance
from Associate Consultant Mark Miller, ASGCA and NGF Consulting Administrator Jodi Reilly.
In addition to meetings with City officials and golf course personnel, the NGF consultants
collected materials to aid in understanding the local market area, weather data, other regional
municipal golf operations, and golf operations in general. NGF also collects considerable
h
of this information and data is presented throughout this report.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 2
OVERALL SUMMARY OF FINDINGS
Port Townsend GC. The recommendations NGF set forth in this report are in consideration of
the tenuous economic and physical condition of the Port Townsend GC, and the need to
improve the overall economic performance of the facility if it is to remain open and viable as a
City recreation asset. This review and attendant findings and recommendations must also be
considered within the context that the economics of all golf courses are subject to uncontrollable
factors, such as yearly weather variations, competitive factors and unexpected expenses.
This executive summary -a-
the main findings and NGF recommendations for the Port Townsend Golf Club. Additional
details and support data can be found in the full body of our report and its appendix.
Key findings on Port Townsend Golf Club
Port Townsend GC is a small, 9-hole golf course located in Port Townsend, a somewhat
isolated Washington City with a population of only about 10,000+/- permanent residents. With
its mix of facilities, PTGC has features that are common in the golf industry, and can correlate
with economic success. However, with its small population, golf demand among Port Townsend
residents may never be fully sufficient to sustain operations at PTGC, and thus the key to long-
term sustainability of the PTGC lies in its ability to consistently attract golf demand from the
The overall physical condition of the PTGC property appeared to be generally poor
and in decline. In particular, the NGF observed an aging golf facility with much of its
basic infrastructure at or beyond its expected useful life. As such, if the City is to
continue with golf at this location, considerable investment in improvements and
modernization will be necessary at PTGC.
The specific upgrades that were identified by NGF included all key areas of basic
infrastructure like irrigation and drainage, along with other golf course improvements
like turf conditions (greens, tees, fairways, etc.) and addressing the aging tree cover
and many rock outcroppings that impact the play of golf. PTGC has insufficient
equipment to operate and maintain golf course playing areas and the NGF found
considerable disrepair in the clubhouse facility as well. In all, the NGF is estimating a
total of least $1.2 million in facility upgrades will be required to bring the PTGC to a
generally acceptable level of condition and help establish its long-term viability.
PTGC is managed by a third-party vendor via lease agreement with the City that
runs through December 31, 2019. Specifically, the lease in place involves a sub-
former operator (Mike Early Golf Shops) for a fee agreed upon by the parties. This
fee to purchase the lease is upwards of $20,000 per year, an amount that is 20%-
25% of total operating expenses in the facility that is being removed from the
operation to pay a former lessee. This arrangement has led directly to reductions in
staffing and maintenance in order to meet lease obligations in a declining market.
The staff in place at PTGC is much smaller than industry expectations, and many
golf privileges. A review of expenditures shows a much lower proportion of total labor
cost in the PTGC operation than industry expectations. This is a result of operator
budget cuts needed to meet the lease obligation, but may be impacting the service
and long-term condition integrity of the golf course facility.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 3
The marketing of PTGC appears to be minimal, with PTGC primarily targeting its
efforts to an ever-shrinking market of resident golfers, with very little effort to attract
non-resident participation. As the facility is located in a market with a small
permanent population, the adoption of a modern marketing program will be
necessary to attract the new customers and sustain (or grow) rounds and revenue.
Playing fees for golf and concessions are very low at PTGC, and clearly place the
facility as the lowest cost provider of golf in this area. In addition, PTGC is attracting
a very large share of discounted rounds of golf, mostly related to a high share of
urrent lessee is not actively
recording all rounds played by type, complete review of revenue and an estimate of
the total ADR collected at PTGC is well below the golf industry standard of 65% total
ADR compared to peak green + cart fee.
The food and beverage operation at PTGC was not functioning at the time of the
NGF inspection. Staff reported that the grill equipment failed a County inspection and
was shut down pending a required repair. Given the tenuous economic situation at
PTGC, the operator has postponed this repair (estimated to cost roughly +/-$3,000),
resulting in the lack of a grill operation at PTGC. As some form of grill operation is an
appropriate complement to
competitive disadvantage by not being able to offer proper F&B service.
The limited financial information provided to NGF shows a very lean golf course
operation with only $125,000+/- in total revenue generated by the golf facility in
2018. This amount is considerably lower than the average 9-hole golf facility revenue
recorded by NGF of roughly $500,000 per year. The operating expenses total
$103,000 (excluding cost of sales, taxes and sub-lease fee), an amount that is also
well below the average 9-hole golf facility expense recorded by NGF of roughly
$500,000 per year. Total net income to the operator after all taxes and lease
payments was very close to $0 (break-even), although this is very misleading as
PTGC is operated on a very tight budget with no capital to address deferred
maintenance items that are clearly causing problems in facility condition.
EXTERNAL ENVIRONMENT
The NGF market analysis shows that while golf is not a particularly important component in the
greater Port Townsend area, there is a modest contingent of resident and visiting golfers to
support area golf courses. However, we do find that this contingent of golfers is relatively small
(both resident and visitor), and unless there is growth in golf demand, the NGF has a
reasonable expectation that substantial growth in rounds and income from current (2018) levels
Trends in the golf industry will present challenges to PTGC in continuing golf course
is declining along with them. NGF has also documented rapid inflation in expenses to
operate golf facilities, especially related to the cost of course maintenance.
The Port Townsend area economy is driven by tourism and visitation, with few
permanent industries and large employers in the market. Generating golf from these
visitors will be key to sustaining golf operations at PTGC, as local resident demand is
likely not enough to support operations.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 4
The overall balance between supply and demand for public golf is very unfavorable
in the Port Townsend area. There are far fewer households and golfers available to
support each golf course in the market, and as a result the golf courses in this area
tend to host fewer rounds than average. NGF estimates that there are about one-
third the number of golfers per 18 holes in the PTGC market than the NGF-identified
success threshold.
Other competitive golf courses in the market area have felt a reduction in demand
and increasing competition. There is a short golf season during which demand is
strongest and the highest fees can be charged. The greater Port Townsend market
has been affected by the same trends that have led to a downturn in golf demand
nationally; including the difficulty the sport has had in attracting younger golfers to
offset the natural attrition of older players.
The physical amenities at PTGC are clearly inferior to its immediate competitive set
of golf courses. These competitive golf courses are operating within a varied range of
fees, with the subject PTGC at the lower end of public golf courses. The competitive
nature of the regional golf market places constraints on the ability to raise fees, and
almost all public golf in this market has a peak fee below $50.
In addition to the declining demand and competitive nature of public golf in this
market, the relative limited accessibility of the area to automobile traffic severely
-
result, the PTGC will have to attract a much larger share of overnight stay visitors in
order to generate the kind of activity and revenue that will continue to support the
operation of the PTGC.
NGF RECOMMENDATIONS
NGF Consulting has prepared a schedule of specific recommendations to be considered by the
City and its operator. These recommendations have been organized into: (1) basic oversight
and structure; (2) physical enhancements; and (3) operations.
Basic Oversight and Golf Course Management
The NGF reviewed several options for the continued on-site management and oversight of the
Port Townsend GC, and these options are reviewed in detail in the body of this report.
Considering the type of facility, the small and local primary service area, the desire for continued
community support and the likelihood that the continued operation of the golf course would
result in economic losses, the NGF has concluded that some form of City self-operation
(possibly with a separate F&B concession) is the most viable plan for PTGC going forward. The
proposed new City-run system should include a few basic components, such as:
The inclusion of properly trained senior staff, with a PGA (or LPGA) golf professional
to oversee golf course operations and a GCSAA-trained superintendent to oversee
all golf course maintenance activities.
Utilization of proper maintenance equipment and golfer power carts, to be acquired
via lease and included in operating budget.
An operation with specific focus on player development and growing the game.
Enhanced marketing, with focus on electronic marketing (email, website, social
media, etc.).
National Golf Foundation Consulting, Inc. Port Townsend GC Report 5
Operational Recommendations
NGF has identified some operational adjustments that are detailed in the body of this report.
When implemented, these concepts should result in increased rounds and revenues at PTGC,
notwithstanding the needed physical improvements and management changes outlined in this
report. These ideas focus on: marketing strategies; better utilization of available technology;
website improvements; and player development & programming. The operational
observed in the golf industry to improve service, and increase rounds and revenue.
Physical Improvements / Capital Investment
The comprehensive NGF inspection of PTGC completed in October 2018 showed considerable
deficiencies that will need to be addressed if the facility is to remain viable as a public golf
course. Specifically, the NGF team identified upgrades to basic golf features (tees, greens,
fairways, bunkers) through direct improvement and upgraded irrigation. The facility would also
benefit greatly from enhancement to its maintenance infrastructure (facilities and equipment)
and the clubhouse. Although numerous items are referenced for repair / replacement in the long
competitiveness in the market place and / or have a positive impact on long term management
practices by reducing operational costs. The recommended physical improvements in priority
order:
Port Townsend GC
NGF Recommended Upgrades by Type
Low High
Initial Capital Investments Estimate Estimate
Irrigation System and Pump House $588,000 $735,000
Trees and Stump Removal 45,000 75,000
Maintenance Equipment 100,000 120,000
Rock Outcroppings 6,000 7,000
Cart Paths 80,000 90,000
60,000 90,000
Tee Improvements / New Tees
30,000 60,000
Clubhouse Repair (restrooms, pro shop, etc.)
Bunker Renovation / Restoration 26,000 52,000
Grand Total of Capital Projects (all High Priority) $935,000 $1,229,000
last 3 years that
have been provided to allow for preliminary planning. These amounts may or may not reflect actual costs for Port Townsend, and the City
should engage appropriate research to cost out specific projects. cy= Cubic Yard; lf = linear feet; sf= Square Feet; Ac = Acre
NGF recommends that City of Port Townsend, as part of the due diligence process before any
decisions are made or work undertaken, retain a golf course architect and/or structures architect
to complete a conceptual plan and get hard dollar cost estimates for any golf course, clubhouse
or new structure changes proposed for PTGC.
FINANCIAL ANALYSIS
NGF has prepared a projection to show the potential economic performance of the Port
Townsend GC under its most ideal conditions of local market dynamics, professional operation
and improved physical condition. All NGF projections are based on a set of assumptions that
National Golf Foundation Consulting, Inc. Port Townsend GC Report 6
optimum performance of this facility based on our complete review of the operation and market
environment. The NGF projections assume that the City will adopt other recommendations
related to self-operation of the facility, improved physical conditions (all recommended upgrades
are completed), improved marketing, enhancing operations and actively seeking to grow golf
activity and revenue. The NGF projection does not include any debt service or direct capital
costs to complete any upgrades being considered, as these are assumed to be funded
separately from the golf operation (i.e., through Public Facility District proceeds or other another
City source).
NGF Projection Results
The results of the NGF financial projection analysis show that with the completion of NGF
recommended improvements, direct operation by the City and bringing total rounds played up to
a reasonable 18,000 level, we expect Port Townsend GC to improve operations and create total
revenue in the range of $400,000. This is the level of revenue that NGF estimates will be
-operationally on the PTGC facility, assuming City operation and a basic
This would put the operation back into a status that is more in line with industry standards, and it
includes some adjustment in expenses to ensure proper management and maintenance of the
facility. However, it is important for the City to understand that it is highly unrealistic for the
PTGC to be able to cover any form of large-scale capital improvement or debt service to
amortize any improvements made to the facility for the foreseeable future.
Sensitivity Analysis
NGF has reviewed the impact of this projection assuming significant changes in rounds activity.
This shows the performance of PTGC under a worst case (10,000 rounds), expected case
(14,000 rounds) and best case (18,000 rounds). The results are shown in the table below:
Sensitivity Analysis of Projected Cash Flow
Port Townsend Golf Club After Enhancement
Worst Case Expected Case Best Case
Total Rounds 10,000 14,000 18,000
Total Facility Revenue $251,000 $343,000 $460,000
Less:
Total COS $27,000 $37,000 $50,000
Total Operating Exp. $367,000 $376,000 $400,000
Operating Income (Loss) ($143,000) ($70,000) $10,000
National Golf Foundation Consulting, Inc. Port Townsend GC Report 7
SUMMARY STATEMENT
Port Townsend Golf Club is an aging golf facility located in a small market with a mix of
marketable amenities. As we begin 2019, the facility is challenged by its declining physical
condition and somewhat remote location that limits its potential market support. In addition, the
operating structure in place at PTGC is adding to the stress of the facility with a taxing sub-lease
arrangement that is further restricting the amount of money the operator has to properly
maintain the property. As such, the City faces a unique, but not insurmountable, challenge in
continuing to operate the PTGC, and it is only with new investment and a change in operating
structure can this golf facility become a sustainable amenity for the City.
In summary, NGF believes that the City can improve the operational condition and economic
performance of the Port Townsend Golf Club through action on the following NGF
recommendations:
1. Make new investment in the PTGC facility, focusing on improving the condition of the
golf course and clubhouse (estimated cost $1.2 million+).
2. Change the operating structure by not renewing the operator lease and committing to
a form of City self-operation (possibly with a F&B concession).
3. Hire the appropriate senior staff to manage and maintain the facility, including a PGA
(or LPGA) designation for operations oversight and GCSAA designation for golf
course maintenance oversight.
4. Improve the marketing of PTGC, especially in technology, improved website, email
program and direct initiatives with Port Townsend lodging establishments.
5. Commit to a new focus on attracting less-traditional segments into golf (women, kids,
minorities, etc.) through enhanced player development programming.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 8
Subject Facility Port Townsend Golf Club
The subject property is the Port Townsend
Gabriel
The facility includes an historic 9-hole
regulation-length golf course, along with a full-service clubhouse and driving range. The facility is
located on approximately 60+ acres, less than one mile south of downtown Port Townsend. The
golf facility was originally developed in 1904 as a private golf club, and was converted to a public
golf course in 1927 (first owned by Jefferson County and then the City). The golf facility is operated
as a public-access golf course in Port Townsend, available for use by any golfer on a daily fee
basis or through the purchase of a seasonal pre-paid green fee (membership).
Port Townsend GC includes a mix of amenities that is common in public golf, and correlates well
with economic success. However, the current condition of the property was not ideal at the time of
the NGF inspection for many reasons, including aging and declining infrastructure and limited
operating budget. The overall property condition was clearly worse than was observed by the NGF
consultant who inspected the property in march 2004. It appears that this neighborhood golf facility
is serving the basic needs of golf demand among Port Townsend residents and a few additional
golfers visiting the Port Townsend area during the year, with the peak of this visitor demand
occurring in the June-August summer season.
Preliminary performance reports provided to NGF in late 2018 show the Port Townsend GC
generating approximately $125,800 in total revenue, down significantly from the $183,600 reported
in 2014 (31.5% decline). The data presented by the PTGC operator did not include any breakdown
of revenue by source (green fees, memberships, driving range, merchandise, F&B, etc.) so NGF
cannot provide any context of revenue and how they are generated at the facility. The lease
agreement in place at the facility provides payment to the City each year, with just over $10,500
paid in 2014 and just under $5,000 paid in 2018. All expenses to operate the PTGC are borne
directly by the operator, and these expenses have fallen from about $166,000 in 2014 to $103,000
in 2018. When all expenses are considered, the total bottom line income to the lessee (Tonan,
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necessary to sustain the operating vendor. The current financial condition is comparable to most
public sector golf operations in the U.S, as NGF expects that the majority of public-sector golf
courses are not able to cover all on-site expenses, capital and other expenses.
In our review of the Port Townsend GC, the NGF Consulting team found a public golf course that
could potentially provide a level of good quality and affordable recreation to Port Townsend golfers
and visitors, but the current operating and economic structure of the facility is limiting its
maintenance requirements and revenue potential. The lease arrangement in place at the facility
appears to be removing any risk or responsibility from the City, but placing a significant burden on
the lessee, contributing heavily to the observed property condition in 2018.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 9
PORT TOWNSEND GOLF CLUB FACILITY REVIEW
Port Townsend GC is an older 9-hole golf facility with a rich history and a location less than one
mile from the center of downtown Port Townsend. The demand for PTGC has been in decline for
many years, and the result is a small public golf course facility with rounds and revenue in 2017
clearly not sufficient to sustain operations at an adequate level. The facility includes an 9-hole golf
course with modest length, a golf support service building (clubhouse), and somewhat older and
inadequate maintenance facilities. Still, Port Townsend provides an appealing golf course design
and appropriate support amenities that could support a high volume of play, if the demand was
sufficient. However, its present (2018) condition and substantial capital needs make the attraction
of an adequate number of golfers difficult to achieve.
This golf facility is popular among a select group of local Port Townsend golfers who find the layout
appealing and the affordable price a good match. Of particular concern for NGF are large-scale
infrastructure projects that will be needed at this site in order for the course to remain open, all
while operating in a small market with few permanent resident golfers, meaning that attraction of
non-local visitor play will be key to the long-term future of the PTGC. As such, the City will have to
carefully weigh the investment required to bring PTGC to an acceptable level so as to attract this
out-of-town golfing contingent, in light of other City of Port Townsend fiscal priorities and the
market realties at this location.
Location, Access and Surrounding Elements
PTGC is located in the immediate vicinity of downtown Port Townsend and all associated
attractions. The facility is accessed via the entrance on Blaine St., located less than one mile from
City Hall and the Monroe St / Water St intersection. Coming from the south on Highway 20 or
th
Discovery Rd., Discovery Rd. connects to 19 St. and to Blaine St. Overall, the immediate area
surrounding Port Townsend GC is characterized by the general residential character that defines
Port Townsend, but with low density and volume. The implication for the golf course is that PTGC
must be able to attract non-local golfers to the course to generate rounds. Port Townsend has
about 60+/- total parking spaces, comparable to the NGF-recommended 72 spaces per 9 holes.
Site Positives
Access:
The PTGC location is immediately proximate to, and convenient from, all
areas of Port Townsend and close to downtown.
Topography:
The site has outstanding topography, which leads to positive feedback
from golfers and provides a high degree of inherent potential for golf improvement.
Site Negative
Location:
The negative aspect of the PTGC location is the lack of proximity to key
elements that add economic support to a golf course, such as large numbers of golfers
and strong economic activity.
Site:
With about 60 total acres, this facility is large enough to support the existing 9-
hole golf course but limits any modification of expansion possibilities.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 10
Aerial View Port Townsend GC
Google Earth image showing PTGC and direct surrounding elements. This view shows the land-locked nature of the golf
layout and the immediate proximity to residences in Port Townsend.
Summary of NGF Findings on Port Townsend GC
Port Townsend was originally developed as a private club in 1904, was closed in 1911, and then
re-opened in 1927. The basic golf design and layout has remained mostly intact since this time. A
new clubhouse was added by the City in later years, with only minor modifications over the past 15
years. It is reported to NGF that this course has been under-performing on rounds and revenue for
many years, although proper historical operating data on rounds played and revenue was not
provided to NGF for this analysis. The recommendations proposed by NGF consider the
investment that it will take to bring this facility back to a quality level that would have market
appeal, and whether this investment is warranted given the local market realities.
Golf Course
Port Townsend GC includes a core golf course, with a park-style layout built on a gently sloping
site. This 9-hole course has at least two tee positions on each hole, allowing golfers some variety if
they play the course twice for 18 holes. Yardage for the front is 2,782, and yardage for the back is
2,902, with a total yardage playing to 5,684. The course appears to be a good walking course, and
the majority of the holes play either uphill or downhill. The course features ample tree-lined
fairways and small challenging greens. Amenities include a putting green, a chipping green and a
full driving range. The clubhouse has a small pro shop, a small sitting area, a bar, a small outdoor
patio area and a basement for larger parties.
The golf course is routed in a circuitous clockwise direction, which is most desirable in keeping
errant shots (right to left fade or slice) contained within the property. The course is rugged, but has
course. Every hole plays in a different direction, with a nice downhill and uphill rhythm to the
sequencing of holes. There is nothing odd about the routing, like 90-degree doglegs or back-to-
National Golf Foundation Consulting, Inc. Port Townsend GC Report 11
back par 3s. The course starts off with a nice downhill par 5 (the only par 5 on the course) and
ends with a gentle uphill par 4 that is probably one of the more difficult holes on the course. The
routing is wide open in areas and a little tight in others, adding to the variety.
Existing Conditions Review
Turfgrass:
The golf course turfgrass consists mainly of Poa Annua with some areas of
creeping bentgrass, most notably on the greens. Annual bluegrass reseeds itself
consistently throughout the season and seems to have taken over completely, except
for the greens. There are areas of weeds that have encroached and are being mowed,
likely due to a combination of limited herbicide budget and poor irrigation. As noted, the
overall property is about 60 acres, which includes the clubhouse area, practice facilities
and a sma
Greens:
The existing greens average between 2,000 and 4,000 square feet (sf) in size,
which is relatively small for a regulation golf course., but also minimizes the
maintenance requirement. PTGC greens are fairly strategic, with movement and
challenging pin locations designed into several greens. Almost all greens slope back to
front with subtle, tricky breaks that can prove to be difficult when the greens are cut for
faster rolling speed. PTGC greens are not designed to United States Golf Association
(USGA) specifications, but rather soil based push-up greens that have been sanded or
top dressed over the years. The predominant grass type is Poa Annua, and appeared
to be healthy, but with a few bare or rough spots on several greens, likely due to limited
fertilization.
Fairways:
The fairway and rough turfgrass is mainly Poa Annua, and appeared
generally healthy. However, there are a variety of weeds and other grasses that are
present in the fairways, and have increased over time (more than previous NGF visit in
2004). This is likely a result of poor irrigation and lack of funding for fertilizers and
herbicides to control quality. With this said, whatever grows is being mowed and
maintained, and is playable for golfers but not desirable. Staff reports to NGF a
schedule for aeration of twice per year, and also verti-cut, which is a good practice for
healthy turf. Although most fairways are tree lined, the course does not feel overly tight.
The tree roots are a problem on some fairways and around some greens. The City may
find that some tree removal would make this golf course much more playable and
enjoyable, and the turfgrass would be much healthier (more below).
Tees:
The existing tees are well located, but are minimal in size. Each hole has at least
two separate tee boxes, with an additional forward tee marked in the fairway. The tees
are generally rectangular in shape and are adequate but uninspiring. The par three hole
#2 has taken advantage of the lake edge for tee space, providing an ample amount of
long narrow banana shaped teeing areas, although it often floods or is unusable due to
the cattails that have taken over the lake and blocked the views to the green. The
condition of the tee surfaces is old and worn, and at a minimum will need to be leveled
and resurfaced with a sand cap to provide proper conditions. Additionally, we
recommend new forward tees should be added to provide a shorter golf course and
better accommodate the less-skilled players.
Cart Paths:
The cart paths for this course are gravel, with some in better condition than
others. In general, the cart paths are in acceptable condition although improvement is
recommended. Cart paths at PTGC might be less important that other golf courses due
to the lower cart use and high number of walking golfers.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 12
Sub-Surface Rocks:
The fairways can be very bumpy and uneven in places. Many of
the fairways have exposed rock, which are actually the tops of giant buried boulders.
They are too big to be removed, and thus should be covered with soil, turning them into
mounds. This should be done consistently throughout the course, as well as grooming
some of the bumpier areas.
Bunkers:
There are 12 green-side bunkers and one fairway bunker on the PTGC golf
course. In general, the bunkers are well maintained, with fairly sharp edges and decent
sand. However, PTGC bunkers do not have drainpipes installed in them, but staff
reports that they all drain well due to the underlying existing soil. The bunkers are a nice
added feature to the golf course and serve a purpose to add more challenge to the
approach shot. The bunker shapes are not very creative or interesting, but they are well
located and provide strategy to the holes.
Trees:
Although trees provide a great amount of safety between holes for this course,
there are many that are detrimental to the safety and functionality of the course. For
example, Lombardi poplars bordering (and within) the course, are tall, brittle and a
could pose danger to golfers. They also have extensive root systems that encroach and
disrupt areas off play and wreak havoc on underground utilities, mainly the irrigation
system. Many of these trees have been cut down but the stump and root system still
remain. A tree inventory and removal plan is recommended for the safety, welfare and
playability of the golf course.
Course Drainage:
We did not notice any subsurface drainage on the entire course.
However, given the naturally sloping site, everything surface drains well with the
exception of the lowest point on the course around the pond on hole #2. Staff reported
and showed photographs of high-water conditions when the pond will overflow and
flood almost the entire second hole, including the teeing area and the green site on the
other side of the pond. The existing road adjacent to the property acts like a dam and
traps the water, so when this area floods it must dry up on its own through the ground
and transpiration.
Course Safety and Player Comfort:
As mentioned, tree removal would make a big
difference in the comfort and safety of the golf course. We recommend creating a safer
environment by removing old growth, brittle trees. In addition, the green on hole #4 is
extremely close to the road and could be relocated to help keep errant shots contained
within the golf course. Other than these two issues the course is comfortable and safe
for golfers.
Irrigation:
Water for the irrigation system comes from the City potable water supply, but
the City is not currently charging the golf course for the water. There is a potential well
that could be used but the City thinks the well water may be high in chlorides and not
compatible with growing turfgrass. According to golf course staff, the irrigation system
has not been updated since its original installation in 1987 (31 years). Staff reports
spending considerable time addressing irrigation problems (line breaks, damaged
heads, etc.), thus taking time away from other maintenance activities. It should be noted
that some of these problems are related to tree root issues noted above. In addition,
aging irrigation lines are no longer able to handle the appropriate pressure needed to
fully irrigate the course, and thus some areas are not receiving adequate water. It does
appear to NGF, that a full irrigation system replacement is required to provide the
highest quality golf conditions and prevent a total system failure that could force
shutdown of the golf course.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 13
On-Course Services:
PTGC does not have on-course services such as restrooms or
drinking fountains, with one exception of an old water fountain by hole #5 that is no
longer working and port-a-potties for restrooms.
Clubhouse and Other Structures/Facilities/Amenities
Clubhouse:
The golf service support at PTGC includes a 2,700sf building that includes
the golf service support functions, pro shop, snack bar and separate bar area. The
facility is functional and provides a very basic level of support for a public golf course,
with a minimal F&B operation and limited seating. However, at the present time the
snack bar is not in operation due to inadequate grill conditions (shut down by County
health department in 2018). There is a lower level with the same basic floor space, but
currently unused except for a small area used for a classroom. The lower level
restrooms were not functioning during the time of the NGF visit. The clubhouse has a
small outdoor deck that has space for about 10-12 patrons and is popular with golfers.
Maintenance Facility and Private Cart Storage:
The current maintenance facility is
located directly across from the clubhouse and all operations are in view of the golfing
public. On a positive note, the building is fairly new and in good shape and is easily
accessible. The maintenance area is less than half acre in size. The yard includes a
2,300sf barn for storing equipment. There is also a 1,300sf cart barn in this area for
Maintenance Equipment:
All of the maintenance equipment used to maintain PTGC is
at least 15+ years old and in declining condition. The operator reports that PTGC is
employing a mechanic, along with additional volunteers to provide repair services to
keep aging equipment operating. Although PTGC seems to have the minimum of what
is needed to maintain the course, there is no back-up equipment to cover broken pieces
or when replacement parts for older equipment cannot be found. PTGC is in need of
replacing the older greens mower, fairway mower and other miscellaneous implements
and pieces of equipment in order to provide adequate maintenance conditions on the
golf course. However, it appears that the limited budget is preventing any improvements
in this area.
Driving Range / Practice Amenities
The practice amenities at Port Townsend GC are consistent with modest quality public golf and
should support the operation of the golf course, especially in programming and new player
development. Practice amenities at PTGC include:
Driving Range:
The driving range at PTGC is good quality and can handle a relatively
modest volume of activity. The range includes 12 grass stations and six stations with an
artificial mat surface. The range has more than 250+ yards of length, which is adequate
the pro shop, which can also serve to limit range activity (as opposed to an automated
range dispenser). The automated system is preferred by both golfers and range
operators as easier to use; it also provides better revenue opportunity.
Other Practice Amenities:
PTGC also includes very modest practice amenities with a
small chipping area and a practice putting green. The variety of practice amenities at
PTGC has appeal for both beginners and seasoned players, and fits well to support
vibrant lesson and junior golf programming.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 14
Port Townsend GC Capital Investment Considerations
Port Townsend GC would benefit from upgrades to basic golf features (tees, greens, fairways,
bunkers) through direct improvement and upgraded irrigation. The facility would also benefit
greatly from enhancement to its maintenance infrastructure (facilities and equipment) and the
clubhouse. Although numerous items are referenced for repair / replacement in the long term,
outlined below are the items that are recommended high priority capital expenditures that would
rket place and / or have a positive impact on long
term management practices and reduce operational costs:
Irrigation System and Pump House:
The addition of a new irrigation system to
replace the outdated and mostly broken system in place. Cost for a basic system
without extras is estimated at approximately $12-$15,000 per acre (derived from a
prominent irrigation designer, using $7-$9,000 per acre for materials + $5-$6,000 per
acre for installation. NGF estimated cost = $588,000 to $735,000 (49 acres @ $12-
$15,000/acre).
Trees and Stumps:
Removing trees and stumps from previous tree removal. NGF
estimated cost = $45,000 to $75,000 (30-50 trees at $1,500/removal).
Maintenance Equipment:
replacement of aging and outdated maintenance equipment,
with most important pieces including a greens mower, fairway mower and other
miscellaneous equipment. NGF estimated cost = $100,000 to $120,000 (lump sum).
Rock Outcroppings:
Adding imported fill to cover rock outcroppings and create
mounds to add appeal to the golf course. This will involve obtaining a dirt permit (cost
estimated at $1,000). The unit price for this level of improvement involves imported fill
at about $500-$600 per rock outcropping. NGF estimated cost = $6,000 to $7,000 (10
units @ $500-$600/unit + $1,000 for permit).
Cart Paths:
The golf course has some cart paths that could be improved to provide
smoother surface. The cart path improvements will direct traffic and minimize wear and
tear to green and tee surrounds. NGF estimated cost = $80,000 to $90,000 (5,000lf @
$16-$18/lf).
Tee Improvements / New Forward Tees:
Improvement of tee boxes include soil
enhancements, leveling, alignment and the addition of new tees. All of the 10,000+/- sf
of tees need to be enhanced, plus an additional 5,000sf of new tees added. The unit
price for this level of improvement is higher than other re-surfacing, or about $4.00 to
$6.00 per square foot. NGF estimated cost = $60,000 to $90,000 (15,000sf @ $4-
$6/sf).
Clubhouse Enhancement:
rt building could be
improved to take better advantage of the limited existing space, improve the basement
and fix snack bar/grill deficiencies. Other improvements to flooring, ceilings/roof and
restrooms would be helpful as well. NGF estimated cost = $30,000 to $60,000 (based
on 3,000sf @ $10 to $20/sf).
Bunkers:
Renovation and/or restoration of bunkers in selected non-penal/strategic
locations should be implemented to enhance the aesthetics, challenge and overall golf
experience. The unit price for this is about $2.00 to $4.00 per square foot. NGF
estimated cost = $26,000 to $52,000 (13,000sf @ $4.00-$5.00/sf).
National Golf Foundation Consulting, Inc. Port Townsend GC Report 15
Port Townsend GC
NGF Recommended Upgrades by Type
Low High
Inputs
Initial Capital Investments Estimate Estimate
Irrigation System and Pump House 49Ac @ $12-$15,000/Ac$588,000 $735,000
Trees and Stump Removal 30-50 removals @ $1,500/removal 45,000 75,000
Maintenance Equipment Lump Sum 100,000 120,000
Rock Outcroppings 6,000 7,000
10 units @ $500-$600/unit + $1,000 for permit
Cart Paths 5,000lf at $16-$18/lf 80,000 90,000
15,000sf @ $4-$6/sf60,000 90,000
Tee Improvements / New Tees
3,000sf @ $10-$20/sf 30,000 60,000
Clubhouse Repair (restrooms, pro shop, etc.)
Bunker Renovation / Restoration 13,000sf at $2.00-$4.00/sf 26,000 52,000
Grand Total of Capital Projects (all High
$1,229,000
Priority) $935,000
last 3 years that have been
provided to allow for preliminary planning. These amounts may or may not reflect actual costs for Port Townsend, and the City should engage appropriate
research to cost out specific projects. cy= Cubic Yard; lf = linear feet; sf= Square Feet; Ac = Acre
REVIEW OF GOLF OPERATIONS
In the following section, the NGF provides a review of key areas of the PTGC operation, including
management contracts, oversight, staffing, technology, fees, ancillary centers, organized activities,
marketing and other issues key to the future of the operation.
Lease Management Review
beginning December 31, 2014, continuing through December 31, 2019. This existing lease is
actually an assump
1987 and was renewed in 2002 and 2005.
Key Provisions
Key details and provisions of the contract are summarized below.
Lease Terms and Compensation
Initial Lease Term:
Mike Early Golf Shops, Inc. initial lease was from February 1, 1987
January 31, 2002, with a new lease on May 11, 2004 for approximately 10 years to
expire on December 31, 2015, with possible extension for one successive five-year
renewal. On December 31, 2003 the lease was sold to Gabriel Tonan Golf Shop, Inc.
Monthly Rent:
(Total annual rent to City was estimated at $20,000 in 2006)
8 % of the 9-hole and 18-hole daily fees including senior and twilight discounts and
annual and monthly membership fees
5% of driving range, cart rental, gross pro shop sales, snack bar sales (including
food service anywhere on the premises), and 5% of gross receipts not identified
above
Only exclusion are sales and use taxes and income derived from private lessons.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 16
Lessee Responsibilities
Key details on the responsibilities of Gabriel Tonan Golf Shop, Inc. (previously Mike Early Golf
Shops, Inc.) are summarized below.
General Duties and Responsibilities:
Render all services in accordance with the PGA Code of Ethics.
Implement and utilize principles and practices of golf course management.
Be or employ a PGA Class A Professional.
Furnish the personnel, material, supplies, equipment, services, supervision and
administration to operate and maintain the golf course, driving range and all facilities.
Responsible for the reasonable operation, management, and supervision of the pro
shop and food and beverage services to include to include furnishing and adequate
stock of merchandise and/or food and beverage supplies for such services.
Maintain the premises, building and other improvements solely for the purpose of
operating, managing, maintaining and preserving a municipally owned golf course
facility, and for no other purpose.
The contract specifies specific standards that must be maintained at PTGC, including
golf course maintenance standards (tees, fairways, greens, etc.), chemical storage,
maintenance equipment, irrigation system and general upkeep of premises.
Insurance (City must be named as an additional insured on the policy):
Commercial general insurance
Automobile insurance
City Responsibilities: (Maintenance and Repair)
Key details on the responsibilities of the City are summarized below.
Maintain the structural aspects and systems of the clubhouse (i.e. roof, foundation,
exterior walls, heating electrical and plumbing services)
Replace border trees and shrubs and other vegetation around the Golf Course and
maintain the native plant preserve signs.
Maintain and repair the mainline, all service lines and control boxes for the irrigation
system and provide parts as determined necessary by the Public Works Director.
Capital improvement and maintenance to the parking area and ponds as set forth in the
agreement
City has the right to make whatever Capital improvements it deems necessary or
desirable at any time without expense to Tonan.
Contract Summary
In reviewing this agreement, the NGF finds that on paper the agreement reads as a fairly standard
golf management lease between a private party and municipal entity. The fixed portion of the lease
fee would amount to 5%-8% of total revenue, which is within the 10% standard expected by NGF.
A summary of actual lease collected by the City since 2008 is shown below:
National Golf Foundation Consulting, Inc. Port Townsend GC Report 17
Port Townsend Golf Club
City Lease Collections (2008 2018)
Year Lease Collected by City Annual % Change
2008 $19,860.98
-3.7%
2009 $19,132.75
-10.0%
2010 $17,216.98
-6.2%
2011 $16,148.83
-4.2%
2012 $15,469.05
-2.8%
2013 $15,030.30
-29.8%
2014 $10,546.39
26.6%
2015 $13,347.04
-20.8%
2016 $10,564.37
-6.4%
2017 $9,883.15
-49.9%
2018 $4,949.16
-3.7%
Grand Total Collected / %
$152,149.00 -75.1%
Change (2008-2018)
Lease Assumption Issues
The current lease in place with Tonan involves a purchase of the original City lease agreement
with
City with a consent to release and assumption agreement in December 2003. In review of this
involved a cash buyout whereby Tonan is paying Early approximately $22,000 per year for the
lease buyout and associated equipment. We note this amount is higher than Tonan has paid the
City in any year since 2008 and is essentially the highest individual line-item in the PTGC budget.
Considering the low total revenue generated by PTGC, it seems that this payment has put a real
fiscal burden on the golf operation and has prevented other needed operating, maintenance and
capital investments from taking place.
Staffing
All employees at PTGC is employed directly by Tonan and the club is operating with a very lean
staff as reported by the lessee. PTGC reports having only one full-time employee, the principle
lessee Gabriel Tonan. All other staff are part-time, seasonal employees, some of which are
the golf facility well under-staffed to provide basic maintenance and services, but volunteers are
actually performing maintenance duties that could be considered hazardous, including the
operation of golf maintenance equipment. Senior staff at PTGC includes the positions noted below:
Staffing Summary
Senior Partner
Gabriel Tonan is a golf professional (in the apprenticeship to become
a PGA professional), on-site manager and principle lessee. The individual in this
position provides senior management oversight for the golf course and maintenance
operation, and is also the high school golf coach.
Assistant Golf Professional/Maintenance
The less
member primarily responsible for overseeing the golf course maintenance operation.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 18
There is only one full-time (FT) position and a strong reliance on part-time staff at PTGC, which is
common in public golf, although not typically to this extent. Given the family-nature of the operation
NGF to estimate an
appropriate full-time equivalent (FTE) staffing model for use in comparison to industry averages. In
general, it is clear that the
golf course in the U.S., especially when considering the compensation arrangement at PTGC.
Total reported payroll was just over $23,800 in 2018, indicating a very low level of wages for PTGC
employees. It is through the use of the golf play incentive that Tonan is able to manage the facility
given the low revenue and lease / assumption requirement.
There are no industry standards that can be referenced to determine the appropriate staffing levels
for a golf operation. The size of the staff needed for a particular golf operation depends on several
factors, not the least of which is budget considerations. Personnel costs typically represent the
largest single expense item in a golf course operation, as is the case for Port Townsend GC. The
NGF data on public golf operations in 2016 show averages for full-time staffing at 18-hole public
golf courses nationwide (table below). This level of staffing represents a reduction from 2009
figures as a result of declining income and the need to reduce expense.
City of Port Townsend Golf Club
Total Facility Identified Staffing 2018
Operations Staff Maintenance Total Staff
Facility
(FT / PT) * Staff (FT / PT) (FT / PT)
Port Townsend GC (9-H) 1.0 / 1.5 0.0 / 2.0 1.0 / 3.5
per 18 holes)
Total U.S. Average 3.0 / 16.0 4.0 / 8.0 7.0 / 24.0
* The national standard for operations staff includes administration and F&B.
Volunteer Support
PTGC allows many volunteer golf course employees to play golf at no cost through what is
-for-
to provide direct financial compensation, providing golf rounds as compensation instead. The
program considers all positions in maintaining and managing the course operation, including
counter staff, starters, rangers, cart attendants, range pickers and even maintenance activities
such as landscaping, equipment operation and golf course repairs.
This system is providing the facility a level of service to customers that otherwise would have to be
noted above, this system appears to be functioning for the facility (we note that FTE comparisons
services to golf customers is common in public-sector golf, although it does appear that the PTGC
is far too reliant on volunteers and having volunteers on maintenance equipment is not at all
common and may pose a financial risk to PTGC and the City (should be reviewed carefully by the
City of Port Townsend). In many ways, it seems as though the predominance of play at PTGC is
league and tournament play.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 19
Technology and Marketing
Technology Platform / Digital Marketing
PTGC utilizes Golf Channel technology to power the website and POS reservation systems. This
company is one of the leading providers of Point-of-Sale (POS) technology in the golf industry.
of the POS system for customer segmentation and marketing purposes, and no mobile app.
Website
The PTGC website (www.porttownsendgolf.com) has been designed by Golf Channel, and
includes most all of the key features and user touches that NGF typically sees in successful golf
facility websites, although it would add a nice touch to incorporate more pictures of the facilities
and people using them and having fun. The address appears to be easy and should be findable in
any web search (such as golf in Port Townsend, Port Townsend golf, etc.). The information
included matches closely to NGF recommended information, and includes links to book tee times
and provides e-club sign-up.
Marketing
ws that an average of about $1,800 per year has
been spent on advertising and marketing. Traditionally, NGF recommends marketing budgets for
golf courses equivalent to 1-2% of total gross facility revenue, or an amount comparable to the
$1,900 spent in 2018. Our review indicated that the golf course primarily focusses its marketing
budget on print advertisements in the local Port Townsend newspaper and some brochures for
hotels and other service areas in the City. Beyond this basic marketing, PTGC is relying mostly on
word-of-mouth and the internet to promote the facility.
Golf Playing Fees
Daily Green Fees
The table below provides a summary of PTGC fees in 2018. PTGC offers a simple golf fee
weekday/weekend and additional discounts
be too high given the overall quality of the golf course product (more in Recommendations section
to follow).
Port Townsend GC 2018 Green Fee Rates
9 Holes WD/WE 18 Holes WD/WE
Daily $16.50 / $16.50 $25 / $25
Senior $14 / N/A $20 / N/A
Junior $7 / $7 $10 / $10
Working Person Special (>3:00) $14 / N/A $20 / N/A
Super Saturday (>1:00) N/A / $14 N/A / $20
Cart Fee $9 / $9 $13 / $13
Range Prices
Small / Large Bucket $3.50 / $6.00
WD= Weekday; WE= Weekend
National Golf Foundation Consulting, Inc. Port Townsend GC Report 20
Membership Fees
The table below provides a summary of membership fees at PTGC in 2018. The membership
program is essentially providing a pre-paid green fee for active players, as there is very little other
providing a way to stimulate activity while providing more affordability to regular-play local Port
Townsend golfers (more in Recommendations section to follow). What is not known by NGF in
completing this review is the exact mix of member vs non-member activity and any ability to
accurately estimate the average earned revenue per round from various players (members / non-
members). This information would be very helpful in understanding the revenue potential of this
facility if it were to be upgraded as suggested by NGF.
Port Townsend GC 2018 Membership Rates
Annual Monthly
Single $1,025 $150
Family $1,275 $190
Senior Single $975 N/A
Senior Family $1,125 N/A
Junior (June-Aug) $100 $40
Range Pass $500 N/A
Private Carts
N/A
Covered Storage $300
Un-Covered (trail fee) N/A
$100
Private (trail fee) N/A
$100
Food and Beverage Operation
Tonan, Inc. is operating the food and beverage service at PTGC with basic services consistent
with a golf course snack bar operation. However, at the time of the NGF review, the grill for the
snack bar was not in operation due to a reported failed inspection of grill equipment. Staff reported
that to support F&B operations during the time of Grill closure the idea to bring in food trucks was
considered, although this may be against City policy. The adjacent bar area was in operation so
the F&B service at PTGC in the Fall of 2018 included full beverage service and the sale of pre-
packaged snack items.
Food and beverage operations at golf facilities tend to achieve two goals: (1) provide direct
revenue; and (2) help increase the overall volume of rounds and other revenues at the facility. The
primary focus of public golf course F & B service is to serve the needs of the golfers, with an
occasional non-golf customer. The typical 18-hole public golf course will earn about $6.10 per
round in food and beverage, less direct costs. The industry standard for direct cost of sales at golf
course F & B operations is around 40%. The NGF was not able to complete a review of the F&B
operation at PTGC given the limited financial information provided to the consultants that did not
include any breakdown of revenues and/or expenses for the F&B revenue center.
Merchandise Operations
It appears that there is some modest level of merchandising at PTGC, but probably consistent with
a recent decline in sales at on-course retailers nationally. The NGF was not able to complete a
review of the merchandise operation at PTGC given the limited financial information provided to
the consultants that did not include any breakdown of revenues and/or expenses for the
merchandise sales revenue center. NGF data shows that the industry standard is $2.48 per round
National Golf Foundation Consulting, Inc. Port Townsend GC Report 21
for merchandise, with a
merchandise. However, as the total margin on merchandise is only around 30% (best case), the
net income will never be significant in merchandise sales. Rather, this is a service to golfers to
make the round more enjoyable and help bring them back for more.
hats, towels and other small counter items. The course is selling shirts, golf shoes and some
equipment, although this makes up a small proportion of actual sales. The items that tend to sell
best at facilities like the PTGC are the obvious impulse items as noted above. With limited space
and limited rounds activity at PTGC, the NGF does not expect that sales of merchandise will ever
be a large part of total net revenue for the facility or its operator.
Organized Events and Player Development
Cultivating new golfers is not only key to the future of golf, it has also proven to be an immediate
PTGC to be active in player development programing and maintain activity in key -the-
initiatives. In 2018, the NGF observed very limited player development activity at PTGC, with some
basic individual golf lessons and no formal programming ongoing at the facility. The NGF has
observed that smaller courses like PTGC are an excellent venue to introduce new players to the
game of golf and shorter, 9-hole courses should be at the forefront of player development
initiatives (especially when owned by a municipality).
Player development programs at golf courses are important for generating interest in golf and
creating future customers, thus total revenue derived from the programs is much less important
(more in recommendations). Still, the PGA of America has estimated that actively engaging in new
player development programs can develop as many as 200 to 350 new golfers per year for a golf
course. The PGA goes on to estimate that if each new golfer produced 10 rounds of golf per year,
it could add upwards of 2,000 new rounds of golf per facility, or as much as $40,000 in new
revenue per year at an average of $20 per round of golfer spending.
Organized Golf Activities
One of the keys to successful public golf operations and generating green fee revenue is the
continued promotion and hosting of group activities such as leagues, outings and tournaments.
These activities are a key to maximizing rounds activity at public golf courses and NGF has shown
strong correlation between an active calendar of organized events with strong economic
performance. These events tend to stimulate activity and encourage repeat play, generating more
rounds per golfer than without the event calendar. NGF notes an active calendar with a specific
organized event for each day, with specials that often include and F&B component.
PTGC is very limited in this area, with only a handful of small charity tournaments hosted during
the year (most participation comes from members) and a modest and active league component.
Staff reports PTGC hosts a total of 20-24 events of this type annually, or about one-per-week
during the golf season. - participants in 2018, down
significantly from the 120+/- members in 2008. The presence of these leagues and clubs provides
a strong level of support for the facility even though most activity is from lower-priced 9-hole
rounds. PTGC is also the home course for the local high school golf team that is coached by the
PTGC manager.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 22
Cart Rentals
PTGC is operating a very small fleet of only five (5) gas-powered carts, all of which are in poor
condition and disrepair. There are also a dozen or so private carts owned by local golfers who
store them at the PTGC facility for a small annual fee ($390/yr. for covered and $100/yr. for
uncovered). The industry standard for the number of golf carts that is appropriate for a 9-hole golf
course is around 36 total carts, indicating that PTGC is well short, even when private carts are
considered. However, the PTGC is a good walking course and walking is popular with golfers in
this region. Still, it is uncertain just how many rounds are being lost to potential patrons who might
otherwise play the Port Townsend golf course if a cart in good condition was available to them.
PORT TOWNSEND GC OPERATIONAL PERFORMANCE
Th
and financial performance. The information provided to NGF included only a summary of revenues
and expenses without the line-item detail needed to complete a more thorough analysis of this
business. What was provided by the PTGC operator is summarized below:
Port Townsend Golf Club
Reported Operating Revenue and Expense (2014-2018)
2014 2015 2016 2017 2018
Avg ('14-'18)
Total Revenue $183,603 $209,718 $168,243 $146,713 $125,818 $166,819
14.2% -19.8% -12.8% -14.2% -31.5%
Less Cost of Sales: (COS)
Merchandise $27,728 $44,775 $32,109 $27,047 $24,465 $31,225
Food/Bev. $13,036 $11,068 $21,021 $15,988 $11,986 $14,620
Total COS $40,764 $55,843 $53,130 $43,035 $36,451 $45,845
Gross Margin $142,839 $153,875 $115,113 $103,678 $89,367 $120,974
Operating Expenses
Payroll
Officer Wages & Benefits $18,153 $20,300 $20,300 $12,800 $6,400 $15,591
Staff Wages & Benefits 19,072 21,017 15,379 15,848 15,033 17,270
Payroll Taxes 4,379 4,599 3,971 3,264 2,383 3,719
Total Payroll 41,604 45,916 39,650 31,912 23,816 36,580
Operating Expenses 23,630 15,144 13,811 14,901 10,893 15,676
Utilities 11,829 12,806 10,248 11,730 11,748 11,672
City Lease 11,649 14,587 12,423 10,650 9,004 11,663
Supplies & Services 15,579 11,951 12,583 6,476 3,229 9,964
Other G & A 3,959 8,152 2,811 2,558 4,310 4,358
Marketing 1,729 2,009 1,385 1,291 1,937 1,670
Other 1,178 1,385 1,554 1,511 1,228 1,371
Total $111,157 $111,950 $94,465 $81,029 $66,165 $92,953
0.7% -15.6% -14.2% -18.3% -40.5%
Net Operating Income $31,682 $41,925 $20,648 $22,649 $23,202 $28,021
Interest Expense $2,273 $1,948 $1,614 $1,276 $932 $1,609
Amortization $6,137 $6,695 $6,695 $6,695 $0 $5,244
Depreciation $6,032 $13,280 $8,214 $6,405 $0
Facility Net (EBITDA) $23,272 $33,282 $12,339 $14,678 $22,270 $21,168
Source: Gabriel Tonan Golf Shops, LLC
National Golf Foundation Consulting, Inc. Port Townsend GC Report 23
SUMMARY PORT TOWNSEND GOLF CLUB
Port Townsend GC is a small, 9-hole golf course located in a somewhat isolated Washington City
with a population of only about 10,000+/- permanent residents. With its mix of facilities, PTGC has
features that are common in the golf industry, and can correlate with economic success. However,
with its small population, golf demand among City residents may never be fully sufficient to sustain
operations at PTGC, and thus the key to long-term sustainability of the PTGC lies in its ability to
consistently attract golf demand from the large and growing tourist base in the City. Other findings
The overall physical condition of the PTGC property appeared to be generally poor and
in decline. In particular, the NGF observed an aging golf facility with much of its basic
infrastructure at or beyond its expected useful life. As such, if the City is to continue with
golf at this location, considerable investment in improvements and modernization will be
necessary at PTGC.
The specific upgrades that were identified by NGF included all key areas of basic
infrastructure like irrigation and drainage, along with other golf course improvements
like turf conditions (greens, tees, fairways, etc.) and addressing the aging tree cover
and many rock outcroppings that impact the play of golf. PTGC has insufficient
equipment to operate and maintain golf course playing areas and the NGF found
considerable disrepair in the clubhouse facility as well. In all, the NGF is estimating a
total of least $1.2 million in facility upgrades will be required to bring the PTGC to a
generally acceptable level of condition and help establish its long-term viability.
PTGC is managed by a third-party vendor via lease agreement with the City that runs
through December 31, 2019. Specifically, the lease in place involves a sub-lease
operator (Mike Early Golf Shops) for a fee agreed upon by the parties. This fee to
purchase the lease is upwards of $20,000 per year, an amount that is 20%-25% of total
operating expenses in the facility that is being removed from the operation to pay a
former lessee. This arrangement has led directly to reductions in staffing and
maintenance in order to meet lease obligations in a declining market.
The staff in place at PTGC is much smaller than industry expectations, and many key
privileges. A review of expenditures shows a much lower proportion of total labor cost in
the PTGC operation than industry expectations. This is a result of operator budget cuts
needed to meet the lease obligation, but may be impacting the service and long-term
condition integrity of the golf course facility.
The food and beverage operation at PTGC was not functioning at the time of the NGF
inspection. Staff reported that the grill equipment failed a County inspection and was
shut down pending a required repair. Given the tenuous economic situation at PTGC,
the operator has postponed this repair (estimated to cost roughly +/-$3,000), resulting
in the lack of a grill operation at PTGC putting the facility at a competitive disadvantage.
The limited financial information provided to NGF shows a very lean golf course
operation with only $125,000+/- in total revenue generated by the golf facility in 2018,
with comparable total expenses. This amount is considerably lower than the average 9-
hole golf facility revenue and expense recorded by NGF of roughly $500,000 per year.
Total net income to the operator after all taxes and lease payments was very close to
$0 (break-even), although this is misleading as PTGC is operated on a very tight budget
with no capital to address deferred maintenance items.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 24
External Factors Affecting the Operation of
Port Townsend GC
In this section of the report, NGF will provide a summary of important external factors that have
direct effect on the operation of Port Townsend Golf Club. This includes a review of local
demographics and the economy, national golf industry trends, and a specific estimate of golf
demand in the Port Townsend market. NGF will also provide a review of other golf courses in the
market area that compete with PTGC for market share. We will then provide a summary of these
factors and how they relate to the continued operation of the PTGC.
DEMOGRAPHICS, ECONOMY AND WEATHER
The subject PTGC is located in Port Townsend at the northeastern tip of the Olympic Peninsula in
Washington. The City is a familiar tourist region, known for the many 19th century Victorian
buildings, numerous annual cultural events and as a maritime center for marine-related industries
and crafts. The Port Townsend Historic District is a U.S. National Historic Landmark District. Given
this basic characteristic, it is expected that the continued support of any golf facility in this location
will rely on participation from golfers not residing close to the golf course, including the many
tourists and visitors who migrate to the area each year.
Demographic Analysis Local Permanent Residents
Appendix B
The table in summarizes key demographic measures of population, income and other
trends that relate to golf participation. The table below provides a summary of key demographic
and golf demand measures for various market rings around the subject PTGC and the State of
Washington and the total U.S. A summary follows:
Market Data Comparisons 2018
60-Minute
5-Mile Radius 10-Mile Radius Washington Total U.S.
Port Townsend GC Drive Time
Population Est. 2017 14,963 31,194 90,042 7,280,533 324,310,011
Population 2022 Proj. 15,274 32,361 95,393 7,824,203 337,744,388
Med. HH Income (2017) $51,027 $56,327 $59,288 $68,515 $59,240
Median Age (2017) 57.1 56.7 54.2 38.1 38.1
Household Participation Index 69 73 83 85 100
Number of Golfers 1,002 2,086 6,327 498,025 23,832,510
Rounds Potential (res.) 32,898 68,854 183,090 8,689,495 455,965,500
Source: NGF Consulting, Tactician Corporation, Applied Geographic Solutions. N/A = not available
The local market around PTGC shows a small permanent population, with around
31,000 to 32,000 permanent residents in 2017 and 2022. The lower-than-average
incomes tend to coincide with lower golf participation, but the much older age
demographic is predictive of higher golf demand. In all, the demographics suggest a
relatively small population of permanent resident golfers, most of whom would be
considered price-sensitive golfers seeking low-priced public golf.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 25
The NGF estimates there are a total of just over 6,000 golfers potentially demanding
over 183,000 rounds of golf annually (28.9 rounds per golfer per year) within a 60-
minute drive time radius around PTGC (includes Port Townsend west to Sequim and
Port Angeles, southeast to Port Ludlow, Port Gamble and Poulsbo). It is expected that
this golf demand would be serviced by the golf facilities available in this market radius.
The local market around the PTGC shows generally lower-than-average golf
participation and rounds demand. Some of this may be related to the shorter golf
season in the area, as well as lower incomes. Combined with a small permanent
population, it is clear that the PTGC will need some level of external (non-resident)
support to generate adequate rounds of golf and revenue to sustain operations.
Key Economic Factors
Port Townsend is located at the extreme northeastern end of the Olympic Peninsula, on
the north end of a large, semi-protected bay. Port Townsend is adjacent to the
Admiralty Inlet and a trio of state parks built on retired military installations (Fort
Worden, Fort Casey, and Fort Flagler). The Hood Canal Bridge connects Port
Townsend and Jefferson County to Kitsap County, and the Coupeville-Port Townsend
route of the Washington State Ferries connect the area to Whidbey Island in Island
County, Washington. Port Townsend has an estimated population of 9,527 permanent
residents (2016 estimate), while Jefferson County shows a total population of 29,872
(2010 census). Below, the NGF provides observations on the key economic drivers of
the area and the potential impact on golf activity at PTGC:
Port Townsend is a small market city with modest economic drivers, the most important
of which include tourism, visitation and some small industry. The largest employer in the
City is Jefferson Healthcare (operates Jefferson Healthcare Hospital) and the Port
Townsend Paper Mill. Other industries include maritime trades, manufacturing, tourism,
and timber. Port Townsend has a large number of lodging properties and dining
establishments for a City of its size, generally more than a 10,000+/- population City
would normally support. This indicates the heavy reliance on non-resident visitors to
support the economics of Port Townsend, and the golf courses.
Given its location at the northeastern tip of the Olympic Peninsula, Port Townsend is
somewhat isolated for auto transportation, thus potentially limiting its appeal as a
single-day destination. In addition to road links to the south and west, Port Townsend is
accessible via ferry from the Washington State Ferry system. Ferries go from the Port
Townsend ferry terminal to Coupeville, Washington, on Whidbey Island. Auto
transportation to Sequim is roughly 40-45 minutes and over 1.5+ hours south to the
Tacoma Narrows Bridge. This location and modest auto accessibility will serve to limit
the potential non-resident demand to those lodging (or otherwise staying) in Port
Townsend, as opposed to demand from single-day golfers.
Climate
As with any outdoor recreation, weather will have impact on golf participation. NGF data estimates
that almost all golf is played with temperatures between 50- and 90-degrees Fahrenheit. The data
suggests that golf in Port Townsend can be comfortably played in a seven-month golf season (May
October), with a modest shoulder season (March, April & November), and very little activity
expected in December February, except in unusually warm years. With an annual average of
±19 inches of precipitation, this market is prone to a reduction in playable hours/days. The
following table presents a summary of monthly weather data for Port Townsend based on 50-year
recorded trends:
National Golf Foundation Consulting, Inc. Port Townsend GC Report 26
Climatological Data
Port Townsend, WA
Average
Temperatures
Precipitation
Month Length of
Inches
Average High Low
Day (Hours)
Annual 48 55 41 19.2 12.8
January 39 42 35 2.3 9.5
February 41 46 35 1.7 10.8
March 44 50 37 1.6 12.5
April 48 55 41 1.4 14.3
May 53 60 44 1.5 15.9
June 57 66 48 1.3 16.7
July 60 69 50 0.8 16.2
August 60 69 50 0.8 14.8
September 57 66 48 1.1 13.0
October 50 57 44 1.6 11.3
November 44 50 39 2.5 9.8
December 41 44 35 2.6 9.0
Source: Weatherbase.com, Port Townsend, WA
GOLF MARKET SUPPLY AND DEMAND INDICATORS
National Golf Industry Overview
Despite the significant negative press, the golf industry remains healthy and golf continues its
macro trend toward stabilization in 2018. Considering the severity of the most recent recession and
its lingering effects on discretionary income and time, golf has held up rather well. Multiple NGF
studies of golfers since 2008 attribute the gradual decline in golfers and rounds since peak
not
participation primarily to the impact of lower job security and concern over personal finances,
waning appeal for the game
. Total spending on golf and club memberships will always be
vulnerable to outside forces such as the economy, but the game remains popular and is fortunate
to have a deep well of interested prospects. Some findings from NGF:
Participation
- The national golfer number (participation) continues to show some net
attrition, primarily among occasional/less committed golfers. Overall, NGF research
indicates 23.8 million people in the U.S. that played at least one round of golf in the
pr
golfers remain in the game. This compared to the reported declines in rounds at PTGC,
Golf Course Supply
- The correction in golf course supply continued in 2017 at a level
comparable with previous years, falling 1.5% (205.5 18-hole equivalent permanent
closures and 15.5 18HEQ new openings). According to NGF data, since the market
correction in golf course supply began in 2006, there has been a cumulative net
reduction of golf courses equivalent to 7%. For perspective, golf supply grew by 44% in
the previous 20 years (1986-2005). NGF data shows some decrease in the Port
Townsend market, with a reduction of 18 holes in Jefferson County since 2009,
including 9 holes closing at the Resort at Port Ludlow (18 holes remain open) and the
closure of the 9-hole Morningtide Golf Club in 2010 both assumed to have closed for
economic reasons.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 27
Rounds Played 2017-2018
Nationally, 456 million rounds of golf were played in
2017, representing a -2.7% decrease year-over-year. In Washington, the results were
more severe, with the state recording a decrease of -5.3% for the year 2017, with a
slight increase in the Seattle market (includes Port Townsend) of 4.8%. YTD through
September 2018 national rounds are down -3.3%, but Washington State is up 7.8% and
Seattle is up 7.2% through the end of September 2018. (data source: Golf Datatech
Appendix C
see ).
Looking Ahead - Baby Boomer Effect
As Baby Boomers age and retire over the
next 15 years; we expect to see a measurable increase in total rounds played in the
U.S. Boomers - born between 1946 and 1964 - are currently 53 to 72 years old. About 6
1/3 of all rounds. Boomers started turning 65 in 2011, and already 1 million+ golfing
Boomers have reached retirement age. The Social Security Administration reports that
10,000 or more Boomers retire every day. And ~300,000 Boomer golfers will turn 65
each year for the next 15 years. Retired Boomers (age 65+) play about twice as much
as younger, non-retired Boomers (40 rounds vs. 21 rounds).
Other Measures of Health
Other perhaps equally important metrics to consider when measuring the health of golf include:
Investment in Facilities:
Investment in major renovation projects has replaced new
construction as the largest source of U.S. golf course development activity. NGF
tracked just under 1,000 major renovations completed since 2006, representing at least
$3 billion. New development activity also remains in the pipeline, with NGF tracking 37
facilities currently under construction and another 55 in planning stages.
Engagement:
Several years ago, NGF developed a scale to gauge engagement/
passion for golf. NGF annual golfer survey research indicates that the number of
engaged golfers has remained steady at 20 to 21 million for the past four years. These
engaged golfers are responsible for ±95% of rounds played and equipment spend.
Those more engaged are significantly more likely to continue playing.
Increasing Diversity:
The junior golf population remains relatively stable at 2.9 million
and continues to show a transformation in diversity. One-third of golfers age 6-17 are
females, up from 17% in 1995 (in sum, 24% of all golfers are women). Also, 27% of
junior golfers are non-Caucasian, up from only 6% in 1995. A similar trend is observed
among young adult (18-34) or Millennial golfers, of which 29% are female and 24%
non-Caucasian. The highest diversity is among beginning golfers, at 34% female and
32% non-Caucasian.
Beginners:
The number of beginners rose to a record 2.5 million in 2016, surpassing
the record set in 2000 when Tiger Woods was in his prime and drawing newcomers to
the game in unprecedented numbers. Since 2011, the compound annual growth rate
(CAGR) in beginners is an impressive 10.8%.
Off-Course Participation:
Driven primarily by the popularity and growth of Topgolf, a
non-traditional form of golf entertainment, there were an estimated 20 million off-course
(involves only those activities that involve hitting a ball with a golf club) participants in
2016, about 40% of whom did not play on a golf course.
Latent Demand:
Overall interest in playing golf remains very high. NGF survey
research indicates that the number of non-
taking up golf has doubled over the last five years to 12.8 million people.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 28
Market Definition Primary and Secondary Trade Areas
For purposes of the market analysis, NGF has defined the primary trade area for the PTGC as a
10-mile radius around the site, with a secondary trade area as the 60-minute drive-time market. In
reality, NGF believes that the vast majority of play at PTGC comes from Port Townsend residents,
with a few from the secondary market and the rest from area visitors who reside beyond these
markets. The NGF expects that the PTGC facility could broaden its effective market if the course is
improved and upgraded as proposed by NGF.
Local Golf Demand
The following are some summary NGF observations regarding key golf demand measures for the
Appendix B.
local golf market. Please see the supporting tables in
NGF estimates that at there are at least 1,000 golfers living within five miles of PTGC,
and over 2,000 golfers living with 10 miles of PTGC in 2018.
NGF estimates that resident golfers could demand about 32,900 annual rounds of golf
in the 5-mile market and upwards of 68,800 in the 10-mile market around PTGC. In
Jefferson County overall, NGF estimates demand potential of over 67,400 rounds of
golf annually, to be distributed over all (public and private) courses. This equates to
approximately 22,460 rounds per 18 holes in the market, roughly 2/3 the total U.S.
average of 30,900+/- rounds per 18 holes.
The golf demand indices for the local 5-mile and 10-mile markets around the PTGC
indicate golf participation and rounds demanded rates that are about 20% to 30% lower
than U.S. benchmarks, indicating a smaller proportion of golfers in Port Townsend.
However, this finding is mitigated by two key factors that impact Port Townsend golf
performance: (1) the weather and relatively short golf season; and (2) the much lower-
than-average cost to play golf in Port Townsend that lowers golf course earned
revenue.
Latent Demand
- People who express an interest in playing golf but have not yet
started include former golfers and those who have never tried. The demographic profile
of latent demand tends to be more female and younger than the population as a whole.
Surveys show these golf-interested non-golfers cite several barriers to entry in golf,
including the cost and social aspects (no one to play with). The latent demand
population is comparable to the golfer population, and NGF estimates as many as
10,000 interested non-golfers in the 60-minute drive-
prospective new golfers).
Other Demand Drivers
Supplementing go
public employers; and (2) Visitors to the Port Townsend area (City estimated over 1.0 million
visitors to Ft. Warden in 2017). NGF research shows that roughly one-third of all golfers participate
in the activity while traveling, playing 0.557 rounds per day of travel. Though PTGC as presently
situated would capture only a small proportion of these incremental rounds from visiting golfers,
supplemental play from visitors drawn by a strong marketing program (e.g., through state park tie-
ins and hotel offerings) could be an important element in making PTGC financially viable,
assuming the level of quality was appropriate (more later in this report).
National Golf Foundation Consulting, Inc. Port Townsend GC Report 29
Local Golf Supply
The broader defined 60-minute drive-time market is home to eight total golf facilities, including
seven public and one private club. This shows how the golf market in this area of the Olympic
Peninsula is dominated by public-access golf, many of which are driven by demand from non-local
tourist golfers. Of the seven public facilities, only one (Resort at Port Ludlow) is at the NGF-defined
-$70),
segment (under $40). This is compared to the overall U.S.,
where 53% of public courses in the country are value (29% in this market).
last decade in this area, with a net loss of 18 golf holes. This represents about 7.1% of current
existing supply (the U.S. has seen the net closure of about 4.6% of supply over the previous
decade). The NGF database shows no new golf courses either in planning or under construction in
the local Port Townsend market area.
The following table displays data showing the relative supply of golf courses in the various defined
Appendix B
market rings and Jefferson County overall. The supporting tables in provideadditional
statistics for smaller market rings.
City of Port Townsend Golf Course Supply within Defined Markets and Jefferson County
Public
# of # of # of
Total # of Total Total
# Premium Standard Value Total
Public Private Public Private
Facilities Facilities Facilities Facilities Holes
Facilities Facilities Holes Holes
(> $70) ($40-$70) (< $40)
5 Mile Radius 2 2 0 1 1 0 27 27 0
10 Mile Radius 2 2 0 1 1 0 27 27 0
60-Minute Drive Time 8 7 1 4 2 1 117 108 9
Jefferson County 3 3 1 1 1 0 45 45 0
Golf Course Market Supply / Demand Summary
Using the most basic measures of golf demand and supply, we note four possible combinations for
rable demand and favorable supply
demand ratios and unfavorable supply ratios.
Golfers per 18 holes
NGF has also evaluated the relative strength of the Port Townsend golf market with a comparison
The Future of Public Golf in America,
-mile radius, with
The NGF has estimated that there
4,000 identified as a key target for projected financial stability.
are only about golfers per 18-hole course in the Port Townsend GC market
1,390, thus
lowering chances for successful golf operations, all other factors being equal. The importance of
this metric is mitigated somewhat in markets with a high annual influx of visiting golfers, but further
stresses the importance of continued support from non-resident golfers.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 30
LOCAL COMPETITIVE GOLF MARKET
NGF has analyzed the public access golf market in the Port Townsend, Washington market area,
with particular emphasis on determining the current position of PTGC as a public-access golf
course, and prospects for sustaining and/or building market share in the future. On the following
pages, we list operating information for a group of selected competitive golf facilities within the
defined 60-minute drive-time market around Port Townsend. This list was not meant to be totally
exhaustive or to account for all of the potential public golf competition to PTGC, but rather, to offer
a frame of reference in evaluating actual performance of the subject as compared to other golf
facilities noted by PTGC staff and golfers in the NGF survey as key competition.
Competitive Public Access Golf Facilities Map
The map below shows the relative locations of the facilities selected as comparable to the PTGC.
The list of facilities is intended to be representative, but not exhaustive.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 31
Reported Annual
Rounds (2018)
18,00028,00030,00024,00038,00016,000
9,800
32
Port Townsend GC Report
The following tables provide summary information for PTGC and a selection of other comparable / Competitive golf facilities.
Range Stations
1840162515
86
send Golf Club
National Golf Foundation Consulting, Inc.
Relative PTGC
Location
(Miles)
5.4
28.9
13.914.918.118.5
0.0
Expected Primary Competitors to Port Town
Front Tee/
4,781 / 5,6843,799 / 6,6655,086 / 6,8614,695 / 6,0235,088 / 6,5294,460 / 6,6056,078 / 6,334
Back Tee
Par / Slope
70 / 12372 / 12472 / 14072 / 12272 / 12472 / 122
-
72 /
Year
Open
1927192519751964200219691926
mile; actual driving distances will likely be greater.
-
Facility Summary Information
RR 18HRD 18H
JG 18HJG 18HJG 18H
JG 9H
JG 9H
Type
-
-
---
--
DF
DF
DFDFDF
DFDF
Port Townsend
Port Townsend
Location
Port Angeles
Port Ludlow
SequimSequimSequim
Summary Information
-
*Air miles from subject site, rounded to half
Municipal
Port Townsend Golf Course
SunLand Golf & Country Club
Dungeness
Discovery Bay Golf Club
Daily Fee; MU
SkyRidge Golf Course
Resort at Port Ludlow
Peninsula Golf Club
at
The Cedars
Golf Facility
Type: DF
18) if they
belong to the WSGA
Green Fee only
or under)
Junior $10 / $10$12 / $12$16 / $18
WD / WE
33
$15$15
N/AN/A
-
(age 15
$5 (Age 6
Port Townsend GC Report
Green Fees & Cart
$23 / $23$40 / $40
WD / WE
Senior
-
$33 /
N/AN/AN/AN/A
National Golf Foundation Consulting, Inc.
18H Green Fees & Su
4:59pm $30 /
5:00pm $25 / $25
Super Twilight
-
Th $39 / Fri
$30 / $30
WD / WE
Cart
$30$41
N/AN/AN/A
N/A
Primary Competitors
-
-
4:00
Mon
18H Green Fees & Cart
Super Saturday after Su $45
WD After 3pm $33 /
-
Th $42 / Fri
Twilight
$25 / $25$48 / $53$44 / $44$38 / $38$40 / $40
1pm $33
WD / WE
Summary Fee Data
-
Mon
11:59am $68 / $73 1:59pm $58 / $63
7:59am $53 / $578:59am $63 / $67Su
18H Green Fees &
-
Prime Time Th $59 / Fri
$38 / $38$29 / $29$56 / $56$43 / $43$53 / $53
WD / WE
Cart
$66
-
-
--
Mon
-12:00
7:308:00
9:00
Su
9H Green Fees &
-
Prime Time
Th $36 / Fri
$25.50 $25.50
$19 / $19$32 / $32$28 / $28$30 / $30
WD / WE
Cart
$39
N/A
-
Mon
1. Rates shown are fall rates.
Program not available
t Port Ludlow
Port Townsend GC
1
Discovery Bay GC
SunLand G & CC
t
a
GC
SkyRidge GC
The Cedars
Dungeness
Peninsula
a
Resort
N/A =
Club
34
Port Townsend GC Report
Annual
Senior
$975
N/AN/AN/A
Cedars at Dungeness
per round rates of $30 at Peninsula Golf Club and $34 at The Cedars at Dungeness
Aug. (age </= 29) $109 monthly
Junior
Only
$100
N/AN/A
-
June
Offer a Members Club with Cedars at Dungeness (starting at $130 a month)
Offer a Members Club with Peninsula Golf Club (Starting at $130 a month)
National Golf Foundation Consulting, Inc.
Members get 20% off all golf for one year, good from date of purchase
Associate $3,550 / $2,275
Resident $2,876
PGC Members pay per round rates of $28 at Peninsula Golf Club and $34 at The
Annual $1,275
Military $1,416
Equity $5,751
Family
N/AN/A
Primary Competitors
-
Offer a Player's Club ($125)
Non
Unlimited / Limited
Membership
Sept April
-
-
Resident $150 Oct
Resident $321 May
Executive $242
Signature $394
Seasonal $394
(monthly)
Fee Data
Couple
N/AN/A
N/A
Membership
-
-
Non
Non
Sept
April
CAD Members pay
Associate $2,470 / $1,517
$230 (monthly w/ cart)
$2,2029
-
-
Resident $118 Oct
Resident $214 May
Summary
Equity $4,057
$170 (monthly)
Executive $172
Signature $253
Annual $1,025
Seasonal $253
Military $945
(monthly)
Single
Resident
-
Non
-
-
Non
Non
N/A = Program not available
t Dungeness
t Port Ludlow
Port Townsend GC
Discovery Bay GC
SunLand G & CC
a
GC
SkyRidge GC
The Cedars
Peninsula
a
Resort
Club
Key Findings Competitive Golf Market
NGF Consulting research indicates the following significant findings for the key primary
competitors to Port Townsend GC:
Based on our review, the NGF has identified Discovery Bay GC as the most
immediate and direct competitor to the Port Townsend GC, followed by two Sequim
area courses Cedars at Dungeness and Sky Ridge GCs as secondary competition.
The current maintenance quality of these three main competitors is far superior to
the Port Townsend GC, and thus putting the subject PTGC at a severe market
disadvantage in attracting non-local play. In addition, the fact that PTGC is only a 9-
hole course adds to the disadvantage, as NGF research shows the market area draw
for 9-hiole courses is much smaller than for 18-hole facilities, all else being equal.
Total rounds activity among golf courses in this market has declined since a recent
peak around 2008, and the long-term peak around 1999-2000. Rounds activity is
now mostly under 30,000 total rounds for 18-hoole courses, with the market leader
golf course is hosting under 10,000 rounds, far fewer than any other competitor in
this golf market area.
Green fees among the competitive set we profiled show a wide range of fees, with
the subject PTGC not the lowest-priced public golf course in the market, despite its
9-hole layout and less desirable conditioning. All of the market competitors are
offering various forms of discounting for day of week, time of day, juniors and
seniors. Considering its various discounts, the subject might be priced a little too high
in some time periods, with $25.50 for a walking 9-hole round of golf.
Pre-paid green fee arrangements (memberships) are common at public golf courses
in the market, and PTGC pricing is among the lowest among this competitive set.
When considering the limited amenity package at PTGC, the cost of membership is
very affordable, with the off-set being that the course is not fully private and public
golf is allowed.
The competitive nature of the regional golf market places constraints on the ability to
raise fees. This is evident in the fee structures of the primary competitors; despite
some high quality and well-
courses keep their peak weekend rates below $56. The only exception is the Resort
at Port Ludlow charges up to $73 for a peak weekend morning before noon on a
high-quality golf course.
recent years, although other facilities have kept up with minor capital investments
such as irrigation improvements and other
courses have made improvements to clubhouse facilities (Sky Ridge and Peninsula
GCs). As a result, PTGC is lagging behind in providing a high quality of golf service
for a public course in this market.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 35
EXTERNAL FACTORS SUMMARY
The NGF market analysis shows that while golf is not a particularly important component in the
greater Port Townsend area, there is a modest contingent of resident and visiting golfers to
support area golf courses. However, we do find that this contingent of golfers is relatively small
(both resident and visitor), and unless there is growth in golf demand from these golfers, it is
hard for NGF to imagine that both golf courses in Port Townsend can be supported with activity
and revenue sufficient to properly maintain the property. The NGF has also observed that there
are other golf courses in the area to service the demand, and many of these businesses are
struggling to retain golf patrons. As such, the NGF has a reasonable expectation that while the
market will provide support for continued operation of a public golf facility in Port Townsend,
substantial growth in rounds and income from current (2018) levels is unlikely. Other key
The overriding trends in the golf industry will present challenges to PTGC in
continuing golf course operations. The total number of golfers in Port Townsend is
declining and total spending on golf is declining along with them. Similarly, the cost
to maintain and operate golf courses had increased in recent years (equipment,
labor, resources, etc.), leading to a difficult economic environment for public golf
courses.
The Port Townsend area economy is driven by tourism and visitation, with few
permanent industries and large employers in the market. The subject PTGC is
immediately proximate to all of the Port Townsend visitor attractions and lodging
establishments, adding to the possibility of attracting patronage from this segment.
Generating golf from these visitors will be key to sustaining golf operations at
PTGC, as local resident demand is likely not enough to support operations.
The overall balance between supply and demand for public golf is very unfavorable
in the Port Townsend area. There are far fewer households and golfers available to
support each golf course in the market, and as a result the golf courses in this area
tend to host fewer rounds than average. NGF estimates that there is about one-
third the number of golfers per 18 holes in the PTGC market than the NGF-
identified success threshold.
Other competitive golf courses in the market area have felt a reduction in demand
and increasing competition. There is a short golf season during which demand is
strongest and the highest fees can be charged. The greater Port Townsend market
has been affected by the same trends that have led to a downturn in golf demand
nationally; including the difficulty the sport has had in attracting younger golfers to
offset the natural attrition of older players.
The physical amenities at PTGC are clearly inferior to its immediate competitive set
of golf courses. These competitive golf courses are operating within a varied range
of fees, with the subject PTGC at the lower end of public golf courses. The
competitive nature of the regional golf market places constraints on the ability to
raise fees, and almost all public golf in this market has a peak fee below $50.
In addition to the declining demand and competitive nature of public golf in this
market, the relative limited accessibility of the area to automobile traffic severely
-
a result, the PTGC will have to attract a much larger share of overnight stay visitors
in order to generate the kind of activity and revenue that will continue to support
the operation of the PTGC.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 36
Recommendations for City of Port
Townsend
Based on our evaluation of the Port Townsend GC and the local market environment, NGF
has formulated recommendations that we believe will improve the overall economics of the
business plan changes that could help to maximize rounds and revenues for the facility,
while maintaining or enhancing the customer experience at PTGC. The objective of our
recommendations is to provide the City with a strategic vision for the future operation of its
golf course, and in consideration of changes that could be made to the facility, its operator
and the contracts to help strengthen the financial health of the facility and preserve the
service and long-term maintenance integrity of the golf facility.
NGF Consulting has prepared a schedule of specific recommendations to be considered by the
City and its operator. These recommendations have been organized into: (1) basic oversight
and structure; (2) physical enhancements; and (3) operations.
NGF OBSERVATIONS ON PORT TOWNSEND GOLF CLUB
The NGF team offers a quick summary review of the most important findings and observations
have reviewed the facility and find positive aspects that could make the facility more marketable
in this competitive market of public golf courses. What did stand out to NGF in this review was
the extremely small operating and labor profile at PTGC, showing the impact of lease
requirements on this operation. Other observations on Port Townsend GC from NGF:
The golf course appears to be in generally poor condition due to several factors,
including aging infrastructure (particularly irrigation), outdated design features and
excessive tree cover. Improvement will likely be expensive, perhaps as high as $1.2
million or more to correct all deficiencies.
The basic underlying design and mix of golf amenities at PTGC (9-hole golf course,
clubhouse, grill, driving range) should continue to have appeal for varied golfer
segments, and be conducive to active golf programming, including new player
development.
The location of PTGC will require a strong influx of golfers who do not reside close to
the golf course, which means PTGC will have to improve its marketing to local
businesses and golfers from a wide area of Port Townsend, including groups and
charities to use PTGC for golf tournaments and events.
The operating structure in place at PTGC that includes a sub-lease and lack of a
properly trained PGA golf professional is not ideal for the City and its attempt to
maximize the economic performance of the golf facility.
appeal, but is currently in poor physical condition with a grill that is not in use and
significant area of unused (or underused) space that could be transformed with new
investment. There is opportunity to improve F&B revenue at PTGC through an active
lunch business and increased golf outing and meeting business.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 37
BASIC OVERSIGHT AND STRUCTURE
The City of Port Townsend has chosen to operate its golf course via lease agreement, first with
Mike Early Golf Shops, LLC, which dates back to 1987 and was renewed in 2002 and 2005.
Beginning December 31, 2014, this lease was acquired by Gabriel Tonan Golf Shop, Inc., with
term continuing through December 31, 2019. As noted, this structure has been in place for over
30 years, but will need to be modified to reflect the changing golf market environment and
recent facility performance. While the outright lease of public-sector golf courses was common
in decades past, this form of operation is far less common in the 2010s in public golf. The
growing trend in privately-managed, public-sector golf facility operations is towards more
straightforward fee-for-service management contracts where the public agency retains the
operating risk, as opposed to leases where risk is passed on to a private operator.
NGF has prepared a review of options that are available to Port Townsend should it decide to
continue providing golf service at this location, and alter the operation of its golf course. There
are many options available to Cities in managing and operating golf courses, although most
municipal golf courses in the U.S. generally tend to be self-operated, professionally managed
via contract (lease or management agreement) or have some form of concession arrangement.
A general discussion of the common operating structures, along with key advantages and
disadvantages of each, is presented below.
Structure Options
Below are descriptions of the most typical management/operational options for public agency
golf courses. In our experience, there is no ideal operating scenario that fits all situations, and
each public entity must arrive at its own unique approach to operation and maintenance. The
most common management options are shown below (these are not intended to be exhaustive,
as there are hybrids and variations thereof), presented in order from most direct City
involvement to the least direct City involvement:
Self-Operation.
1. This would involve the City taking over the operation and staffing
the facility with City employees. A key challenge in this option is finding and retaining
qualified personnel, especially in key positions such as manager and superintendent.
The advantage to this structure is direct City control of the operation for maximum
benefit to the City, while the disadvantage is economic, as the City would have to
absorb all economic risk with the PTGC operation.
Concession Agreements
2. : These are similar to lease agreements and can come in
several types or combinations. The advantage is shifting some risk and payroll to a
private entity. The key areas of operation include Pro Shop, maintenance and/or
F&B, and involve the City contracting for one, some, or all of these services. One
subset of this concept includes multiple concessions, a system in which the City
creates multiple contracts with separate entities for each facet of the operation. The
most common concession agreements for public golf include:
Contract for Food / Beverage Services
a) involves hiring a separate operator for
the F&B, either through direct concession or exchange for capital investment.
Contract for Maintenance Services
b) involves contracting with a private entity to
provide golf course maintenance services in exchange for a pre-determined fee.
Multiple Concessions
c) involves creating multiple agreements for separate
entities for each facet of the golf operation (pro shop, F&B, and maintenance).
National Golf Foundation Consulting, Inc. Port Townsend GC Report 38
Full-Service Management Contract.
3. The concept of a management agreement is
for the City to hire a private management entity to operate all aspects of PTGC in
exchange for a management fee, typically around 4-6% of total revenue. The City is
earning all revenues, is responsible for all expenses (salaries, maintenance,
liabilities, capital) and pays a management fee to an operator. Some advantages to
this strategy are a shifting of labor expense from a public to a private structure, and
the expected benefit of professional management, including access to national
purchasing and marketing programs. The potential disadvantages are some loss of
City control and the fixed fee for service, regardless of yearly variations in
performance. This structure is far less common with smaller, 9-hole golf courses.
Operating Lease(s).
4. -
operation to a private operator in exchange for a lease payment. The lease has been
established to include certain requirements, standards and/or restrictions on fees.
The advantage of this option is a total privatization of the golf operation and full
shifting of risk away from the City. The disadvantage is that the operator must make
reductions in operating expenses to meet the lease and other required payments.
This can have a detrimental effect on facility condition, service and deferred
maintenance.
Most Viable Considerations
Based on our review of the various operational considerations for the City, NGF has identified
the two most viable options for consideration if the operating structure was to change at PTGC.
The most viable options for Port Townsend GC operation are:
City Self-Operation.
If the City is committed to retaining golf on the PTGC site, and
in consideration of the challenges posed by continuing with the current lease
structure, then the City can opt to re-take the golf operation in-house and run it as a
organization allowable in Washington. This structure would involve direct City control
of the golf operation, with all facility staff City of employees. This will also infer the
City making any investment needed to improve and/or modernize the facility.
One option to consider is making Gabriel Tonan a City employee and ending the
lease arrangement currently in place. Another consideration would be the F&B
operation and the liquor license required to continue with a bar at this site. Many
municipalities have shown success by creating a separate concession agreement for
the F&B operation, while still retaining self-operation in all other areas.
Multiple Concession Contracts.
The only other viable option for the City is to
create separate concession contracts for the continued operation of PTGC. This
includes contracts for the golf operation/pro shop, the F&B operation and golf course
for the basic economics of the facility (with some limitations as noted below),
although the NGF expects that all green fee and membership fee income would
accrue directly to the City. The NGF vision new concessions would include:
Golf Operations/Pro Shop
- A base concession to a PGA golf professional to
include all income from the pro shop, lessons, carts and the driving range. The
golf pro concessionaire would be responsible for all direct expenses associated
with these revenue centers. If necessary, a small percentage of green fees could
be paid to the golf professional as well to support additional support staff needed
in the operation.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 39
Food and Beverage
- A separate concession agreement for food and beverage
service to include approximately 10% of F&B income in compensation to the City.
The F&B concessionaire would be responsible for all direct expenses associated
with this revenue center, including capital to re-open the grill.
Golf Course Maintenance
- The City con enter into a contract with a private
company to provide basic golf maintenance services (likely to cost around $4,000
to $6,000 per acre) that should include maintenance equipment. Another option
would be for the City to self-operate the maintenance function and undertake the
other two contracts as noted above. This would require the City to acquire (or
lease) the appropriate maintenance equipment.
NGF Recommendation
In consideration of the type of facility at PTGC, the small and local primary service area, the
desire for continued community support and the likelihood that the continued operation of the
golf course would result in continued economic losses, we conclude that some form of City self-
operation (possibly with a separate F&B concession) is the most viable plan going forward. Port
Townsend GC has a chance to improve its basic economic profile under this scenario, but new
investment will be required for this facility to achieve its maximum potential. As these new
investments are likely to be too expensive for any private operator to recoup, the most logical
entity to complete needed upgrades to the golf course would be the City of Port Townsend. The
proposed new City-run system should include a few basic components, such as (economic
impact of these recommendations estimated in next section):
The inclusion of a properly trained PGA (or LPGA) golf professional to oversee golf
course operations and the pro shop.
The inclusion of a properly trained golf course superintendent (GCSAA) to oversee
all golf course maintenance activities.
Utilization of proper maintenance equipment and golfer power carts, to be acquired
via lease and included in operating budget.
An operation with specific focus on new player development and bringing new
players to the game of golf.
Enhanced marketing, with focus on electronic marketing (email, website, social
media, etc.).
OPERATIONAL RECOMMENDATIONS
NGF has identified some operational adjustments that, when implemented together, could lead
to improved activity (rounds) and/or revenues at PTGC. These recommendations require limited
help improve service, increase revenue, and/or control costs.
limited review of the operation and facilities. We also recognize that some of these items are
already being enacted to varying degrees and that economic and/or other limitations (e.g.
staffing) may prevent the lessee from implementing some of these items. Following are key
NGF operational recommendations for PTGC, based on our review in late 2018.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 40
Technology and Marketing
An effective marketing plan incorporates elements such as research, planning, strategy, market
identification, budget, timetable, and tracking (to gauge effectiveness of various campaigns and
arketing at PTGC, with reliance mostly on
attracting golfers through word-of-
recommendations for enhancing the marketing of PTGC include:
Prepare some printed materials like a three-page folded brochure that could go in
printed in bold and be at the top 1/3 of the front page to stand out in any rack of other
brochures. Any printed materials produced by PTGC should include information
about golf, the driving range, the clubhouse / bar and the availability of golf lessons
and new programming.
A commitment to conduct some direct, face-to-face selling to area businesses,
organizations, churches, civic groups, etc. to promote tournaments and outings at
Port Townsend GC. NGF has found that this direct approach is the best way to
enhance the tournament and outing business that is so important to the future
success at PTGC.
NGF believes that the PTGC website could use revision in both form and function.
Improvements recommended include more pictures of the facility, up-to-date rate
information, access to email and club sign-ups and the ability to book tee times
online.
Building, maintaining, and actively utilizing an email platform to practice yield
-mail marketing, with the exception of word-of-
mouth and free advertising, is the most cost-effective advertising possible. NGF
recommends that PTGC actively work to build a customer email database and
communicate regularly (no more than 2-4 per month) about activities, events,
tournaments, specials, etc. at PTGC. NGF recommendations for building the email
database at PTGC:
Emails should routinely be collected during golfer check-in for walk-in
golfers, with emphasis on players new to PTGC.
Create an eClub registration on the website.
Make some of the periodic promos/specials contingent on having an
email address on file, or providing one.
More comprehensive use of a modern POS system could help management better
understand its customer segments and provide assistance in marketing and
customer tracking. Some of the key features of industry leading POS systems - often
underutilized by operators include:
Loyalty program modules
Creation of customer profile segments, including play and spending
patterns
Enhanced target marketing, messaging and yield management utilizing
the customer database segmentation
Integration with social media forums such as Facebook, Twitter,
Instagram, etc.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 41
Food and Beverage
The recommendations for improving the F&B operation at PTGC center mainly on re-opening
the grill and providing basic meal service for golfers. Other ideas to enhance F&B revenue
include adding and promoting daily specials, theme days, etc., and increasing focus to attract a
larger volume of golf events and tournaments
as premade sandwiches, hot dogs, etc., be available as a standard best practice for golf course
F&B operations. Consider adding some pre-packaged food items to the beverage cooler near
golfers can help F&B sales at golf courses.
Player Development and Programming
As discussed in this report, PTGC is not very active with respect to player development and
programming. Cultivating new golfers is not only key to the future of golf but, as noted earlier in
the report in reference to PGA of America research, it has also proven to be an immediate
generator of revenues for facilities. NGF has found that the public golf facilities that are most
successful tend to be very active in adult player onboarding and development, as well as other
row-the-
players from segments (e.g., women, millennials) that represent strong latent demand for the
game but that may not prefer to be introduced to the game in traditional ways, such as individual
lessons. Below are some current industry best practice recommendations for enhancing player
development, onboarding and overall programming:
females are strongly represented among the latent demand cohort. At present,
women account for about 20% of golf participants, but 40% of beginners. There are
many reasons why female golf participation is low, but increasing participation from
women is one of the keys to maximizing revenue. The most common issues relate to
golf course difficulty, retail selection, on-course services (restrooms, drinking
Operators should work directly with the PGA of
America, LPGA, and First Tee on programs that have a proven track record, and
how to best implement and promote them. Examples include Get Golf Ready; Drive
Chip & Putt; PGA Junior League Golf; LPGA-
Teaching Her. Of course, a critical element to success is transitioning new players
from learning to playing is follow-up and encouragement.
Events:
Creative golf-themed events are becoming more and more popular with
operators looking to make golf more fun for less committed golfers, including many
observed at other facilities recently include:
9-holeScramble
A weekly that had 13 teams (52 participants) and
generated about $2,500 in direct revenue, plus additional bar revenue
before and after the event.
at the driving range. Participants pay a small fee for the
event, which can feature a keg and unlimited range balls for an hour, with
a golf professional providing quick lessons and tips.
popular and effective way to engage beginning women golfers and non-
golfers.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 42
Miscellaneous
:
Create programs to provide older, used golf equipment to always be
available free of charge for beginners, and possibly for other needy
prospects via donation or at a deep price discount.
Consider offering free lessons to adults on selected days or traditionally
slow periods. Be sure to market this idea in all materials and website.
PHYSICAL IMPROVEMENT RECOMMENDATIONS
The comprehensive NGF inspection of PTGC completed in October 2018 showed considerable
deficiencies that will need to be addressed if the facility is to remain viable as a public golf
course. Specifically, the NGF team identified upgrades to basic golf features (tees, greens,
fairways, bunkers) through direct improvement and upgraded irrigation. The facility would also
benefit greatly from enhancement to its maintenance infrastructure (facilities and equipment)
and the clubhouse. Although numerous items are referenced for repair / replacement in the long
competitiveness in the market place and / or have a positive impact on long term management
practices by reducing operational costs. The recommended physical improvements in priority
order:
Port Townsend GC
NGF Recommended Upgrades by Type
Low High
Initial Capital Investments Estimate Estimate
Irrigation System and Pump House $588,000 $735,000
Trees and Stump Removal 45,000 75,000
Maintenance Equipment 100,000 120,000
Rock Outcroppings 6,000 7,000
Cart Paths 80,000 90,000
60,000 90,000
Tee Improvements / New Tees
30,000 60,000
Clubhouse Repair (restrooms, pro shop, etc.)
Bunker Renovation / Restoration 26,000 52,000
Grand Total of Capital Projects (all High Priority) $935,000 $1,229,000
completed in the region in the last 3 years that
have been provided to allow for preliminary planning. These amounts may or may not reflect actual costs for Port Townsend, and the City
should engage appropriate research to cost out specific projects. cy= Cubic Yard; lf = linear feet; sf= Square Feet; Ac = Acre
NGF recommends that City of Port Townsend, as part of the due diligence process before any
decisions are made or work undertaken, retain a golf course architect and/or structures architect
to complete a conceptual plan and get hard dollar cost estimates for any golf course, clubhouse
or new structure changes proposed for PTGC.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 43
Analysis of Expected Port Townsend Golf
Club Financial Performance
Based on NGF analysis and recommendations, the consultants have prepared financial
projections to show the potential economic performance of the Port Townsend GC under its
most ideal conditions of local market dynamics, professional operation and improved physical
condition. All NGF projections are based on a set of assumptions that may or may not become
optimum performance of this facility based on our complete review of the operation and market
environment.
The NGF projections assume that the City will adopt other recommendations related to self-
operation of the facility, improved physical conditions (all recommended upgrades are
completed), improved marketing, enhancing operations and actively seeking to grow golf activity
and revenue. With many golf facilities competing at the similar price points, revenue growth
based on increasing average rates cannot be relied upon, so improvement in golf revenue will
have to be derived from increases in rounds activity. Market conditions and other factors likely
dictate that PTGC could produce rounds activity at a maximum of about 18,000+/- rounds per
year with total average revenue per round of around $25.50. The NGF does expect that facility
revenue can be enhanced with strategic marketing, increased awareness of the value the
course offers, and some enhancement to facilities to make the facility more competitive.
SUMMARY OF PORT TOWNSEND GC PROJECTIONS
N
the implementation of NGF recommendations. In the tables that follow, NGF provides summary
projections for PTGC under the expectation that the facility will be enhanced both physically and
operationally as recommended by NGF (completed by the end of 2019). The NGF projection
does not include any debt service or direct capital costs to complete any upgrades being
considered, as these are assumed to be funded separately from the golf operation (i.e., through
Public Facility District proceeds or other another City source).
Basic Assumptions PTGC Performance Estimates (Year 1 Year 5)
The projections made for the operation of PTGC assume the most ideal physical and
operational conditions, and assume the first five years after completion of physical upgrades. As
Other key assumptions in the NGF projections:
The overall economic condition remains stable, without any sizable increase or
decrease in the Port Townsend area economy, employment, or visitation.
Port Townsend GC will alter its operating profile to include City staff in all key
positions (self-operation), with a possible exception of a F&B concession to a
qualified operator. NGF has also assumed professional management (PGA and
GCSAA certifications) and enhanced emphasis on marketing and attracting
increased share of golf rounds, range use and Grill sales.
The basic pricing structure will remain with slight increases in golf playing fees
each year to keep up with inflation, but never more than $0.50 for lower fees
National Golf Foundation Consulting, Inc. Port Townsend GC Report 44
(juniors, seniors, etc.) up to $1.50 increases in the highest fee categories.
Memberships will continue to be offered at the same rate and privilege as today.
NGF has assumed a schedule of rounds with an expectation of growth as
renovations are introduced to the market beginning in Year 1 (assumed to be no
earlier than 2020). The rounds and membership activity projected by NGF assume
Port Townsend GC Year 1 Year 2 Year 3 Year 4 Year 5
Number of Members 50 60 75 90 100
Non-Member Rounds 9,000 10,000 11,000 11,000 11,000
Member Rounds 2,500 3,000 3,800 4,500 5,000
Tournament Rounds 1,000 1,000 1,500 1,500 1,500
Comp / EE / Volunteer Rounds 500 500 500 500 500
Total Rounds 13,000 14,500 16,800 17,500 18,000
NGF has estimated the revenue potential of the facility using a baseline of $23.50
average revenue per round for daily fee players (includes green fees, range, pro
shop, F&B and other), plus additional membership revenue. We have assumed an
annual increase of 2.5% per year to reflect of a program of annual increases and
inflation. A summary of average rates is noted below (NOTE: this is an average rate
per round/member and is not intended to reflect actual fees):
Blended Average Revenue
per Round/Member Year 1 Year 2 Year 3 Year 4 Year 5
Member Dues / Member $1,000.00 $1,010.00 $1,020.10 $1,030.30 $1,040.60
Green + Cart Fees / DF Round $17.50 $17.94 $18.39 $18.85 $19.32
Range Revenue per Round $0.75 $0.77 $0.78 $0.80 $0.81
Merchandise Rev per Round $1.50 $1.52 $1.54 $1.56 $1.58
F & B (Concess) / Round $3.50 $3.54 $3.57 $3.61 $3.64
Other Rev per Round $0.25 $0.25 $0.26 $0.26 $0.26
The direct cost of sales for merchandise is held at 70% (industry standard). Total
cost of sales on F&B is estimated at the standard 45%.
NGF has estimated a total operations cost for PTGC of $100,000 in Year 1, and
assumes both full and part-time labor for basic pro shop operations.
NGF has estimated a total golf maintenance expense for PTGC of $200,000 in
Year 1, and assumes both all labor and materials in maintaining the golf course
playing area (or a maintenance contract).
Other expenses adjusted include equipment leasing (carts and maintenance) and
other basic operating expenses (insurance, utilities, contingency, and annual
capital). These expenses are based on accepted industry standards with some
adjustment to reflect a lean, 9-hole golf operation.
All expenses are projected to increase at 2.5% per year through Year 5 inflation.
Economic Performance Projections
NGF Consulting has utilized the previously mentioned assumptions to create the cash flow
model for Port Townsend GC for the first five years of operation after a facility upgrade and
change in operational structure. All figures have been rounded to the nearest $100 for simplicity.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 45
Projected Cash Flow Analysis
Port Townsend Golf Club
Base Assumptions City Self-Operation with Facility Upgrade
Year 1 Year 2 Year 3 Year 4 Year 5
Total Rounds 13,000 14,500 16,800 17,500 18,000
Revenue
Golf Fees $175,000 $197,000 $230,000 $236,000 $241,000
Annual Memberships 50,000 61,000 77,000 93,000 104,000
Driving Range 10,000 11,000 13,000 14,000 15,000
Golf Shop Merchandise 20,000 22,000 26,000 27,000 29,000
Food & beverage 46,000 51,000 60,000 63,000 66,000
Other 3,000 4,000 4,000 5,000 5,000
Total Revenue $304,000 $346,000 $410,000 $438,000 $460,000
Less Cost of Sales: (COS)
Merchandise $14,000 $15,000 $18,000 $19,000 $20,000
F & B $21,000 $23,000 $27,000 $28,000 $30,000
Total COS $35,000 $38,000 $45,000 $47,000 $50,000
Gross Margin $269,000 $308,000 $365,000 $391,000 $410,000
Departmental Expenses
Pro Shop / Operations $100,000 $103,000 $106,000 $109,000 $112,000
Maintenance 200,000 205,000 210,000 215,000 220,000
Utilities 12,000 12,000 12,000 12,000 12,000
Carts & Equipment 20,000 21,000 22,000 23,000 24,000
Insurance 10,000 10,000 10,000 10,000 10,000
Other 10,000 10,000 10,000 10,000 10,000
Annual Capital 10,000 10,000 10,000 10,000 10,000
Contingency 5,000 5,000 5,000 5,000 5,000
Total Expenses $367,000 $376,000 $385,000 $394,000 $403,000
($98,000) ($68,000) ($20,000) ($3,000) $7,000
Net Income before Other (Loss)
SUMMARY DISCUSSION NGF PROJECTIONS
The results of the NGF financial projection analysis show that with the completion of NGF
recommended improvements, direct operation by the City and bringing total rounds played up to
a reasonable 18,000 level, we expect Port Townsend GC to improve operations and create total
revenue in the range of $400,000. This is the level of revenue that NGF estimates will be
-
This would put the operation back into a status that is more in line with industry standards, and it
includes some adjustment in expenses to ensure proper management and maintenance of the
facility. However, it is important for the City to understand that it is highly unrealistic for the
PTGC to be able to cover any form of large-scale capital improvement or debt service to
amortize any improvements made to the facility for the foreseeable future.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 46
Limiting Conditions
The income estimates presented by NGF Consulting have been prepared based on existing and
projected market conditions, the quality of the subject facility and the intended segment of the
golf market toward which it is oriented. Particular focus was paid to the reality of the area public
golf market, which has fallen far from its peak over the last 15+ years. Proper uses of these
estimates include:
Establishing reasonable parameters for expected performance for the subject facility
Providing guidelines for realistic expectations of operating income and expenses
NGF Consulting is confident that some growth in activity and revenue can be achieved at Port
Townsend GC after the recommended facility and operational improvements. From a practical
standpoint, those managing the facility will need to respond to variable market conditions as well
as unforeseen maintenance needs. NGF Consulting is confident that the facility will be able to
continue to achieve results as presented in our analysis beyond the next five years of operation.
When projecting a realistic market share, it is important to realize that the total number of
rounds to be played on a golf course in any given year may be lower than the market
opportunity appears to suggest. Our estimates of performance for PTGC could change should
one or more of the following conditions occur:
Stronger Performance Weaker Performance
Future course closings New course openings
Faster population growth than projected Incorrect price levels
Positive regional publicity Poor customer service
Lack of loyalty to existing courses Deteriorating facility quality
Unforeseen surge in golf interest Regional economic recession
Excellent yearly weather conditions Poor yearly weather conditions
It is important to measure the performance of the golf course in such a way as to help City of
Port Townsend make financial decisions based on realistic expectations. It is obviously possible
that either more or fewer rounds will be realized. As we have noted, we do anticipate that it is
highly unrealistic that the golf course in the foreseeable future would be able to cover any form
of large-scale capital improvement or debt service to amortize any improvements made to the
facility.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 47
Appendices
A: Golf Course Life Cycle
B: Demographic, Golf Demand and Golf Supply Data
C: National Rounds Played Report
National Golf Foundation Consulting, Inc. Port Townsend GC Report 48
APPENDIX A GOLF COURSE LIFE CYCLE
National Golf Foundation Consulting, Inc. Port Townsend GC Report 49
APPENDIX B - LOCAL DEMOGRAPHIC, DEMAND AND SUPPLY DATA
Demographics
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tƚƩƷ ƚǞƓƭĻƓķ DƚƌŅ /ƚǒƩƭĻ
͵{͵
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{ǒƒƒğƩǤ 5ĻƒƚŭƩğƦŷźĭƭ
Population 1990 Census 9,875 21,123 56,930 20,145 4,866,670 248,584,652
Population 2000 Census 12,933 26,995 73,935 25,952 5,894,112 281,399,034
CAGR 1990-2000 2.73% 2.48% 2.65% 2.57% 1.93% 1.25%
Population 2010 Census 14,579 30,425 86,651 29,872 6,724,540 308,745,538
CAGR 2000-2010 1.21% 1.20% 1.60% 1.42% 1.33% 0.93%
Population Estimate 2017 14,963 31,194 90,042 30,580 7,280,533 324,310,011
Population 2022 Projected 15,274 32,361 95,393 31,428 7,824,203 337,744,388
CAGR 2017-2022 0.41% 0.74% 1.16% 0.55% 1.45% 0.82%
CAGR 2010-2022 0.39% 0.52% 0.80% 0.42% 1.27% 0.75%
Median HH Income (2017) $51,027 $56,327 $59,288 $54,693 $68,515 $59,240
Median Age (2017) 57.1 56.7 54.2 57.7 38.1 38.1
9ƷŷƓźĭźƷǤ
White 92.0% 90.9% 90.0% 90.5% 74.6% 70.4%
African American 0.7% 1.0% 0.8% 1.0% 4.2% 13.3%
Asian 1.9% 2.0% 2.5% 1.9% 8.6% 5.7%
All Other 5.4% 6.1% 6.7% 6.6% 12.7% 10.6%
IźƭƦğƓźĭ tƚƦǒƌğƷźƚƓ
Hispanic 4.1% 4.7% 5.5% 3.9% 12.4% 17.5%
Not Hispanic 95.9% 95.3% 94.5% 96.1% 87.6% 82.5%
CAGR = Compound Annual Growth Rate
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tƚƩƷ ƚǞƓƭĻƓķ DƚƌŅ /ƚǒƩƭĻ
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DƚƌŅ 5ĻƒğƓķ LƓķźĭğƷƚƩƭ
Total Households 7,855 16,114 41,308 14,983 2,853,101 124,506,607
Number of Golfing Households 752 1,619 4,744 1,476 334,567 17,175,900
Projected Golfing Households (2022) 745 1,628 4,803 1,488 348,779 17,934,830
Projected Annual Growth Rate -0.20% 0.10% 0.20% 0.20% 0.80% 0.90%
Seasonal Golfing Households 76 245 336 272 11,033 732,421
Latent Demand/Interested Non-Golfers 1,796 3,502 10,002 3,269 965,822 40,573,960
Household Participation Rate 9.60% 10.00% 11.50% 9.90% 11.70% 13.80%
Number of Golfers 1,002 2,086 6,327 1,896 498,025 23,832,510
Rounds Potential (resident golfers) 32,898 68,854 183,090 67,399 8,689,495 455,965,500
Estimated Course Rounds (in-market supply) 58,525 58,525 238,094 93,640 8,857,481 455,965,000
5ĻƒğƓķ LƓķźĭĻƭ
Golfing Household Participation Rate 69 73 83 71 85 100
Seasonal Golfing Households 165 259 138 309 66 100
Latent Demand/Interested Non-Golfers 93 85 89 85 106 100
Rounds Potential per Household (resident golfers) 114 117 121 123 83 100
National Golf Foundation Consulting, Inc. Port Townsend GC Report 50
Supply
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tƚƩƷ ƚǞƓƭĻƓķ DƚƌŅ /ƚǒƩƭĻ
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ƩźƓŭ ƩźƓŭ ķƩźǝĻ ƷźƒĻ /ƚǒƓƷǤ ğƭŷźƓŭƷƚƓ
DƚƌŅ {ǒƦƦƌǤ
DƚƌŅ CğĭźƌźƷźĻƭ
Total 2 2 8 3 266 14,754
Public 2 2 7 3 211 11,006
Public: Daily Fee 2 2 7 3 163 8,509
Public: Municipal 0 0 0 0 48 2,497
Private 0 0 1 0 55 3,748
tǒĬƌźĭ DƚƌŅ CğĭźƌźƷźĻƭ ĬǤ tƩźĭĻ tƚźƓƷ
Premium (>$70) 0 0 1 1 34 1,393
Standard ($40-$70) 1 1 4 1 106 4,087
Value (<$40) 1 1 2 1 71 5,526
DƚƌŅ IƚƌĻƭ
Total 27 27 117 45 4,230 250,146
Public 27 27 108 45 3,357 181,458
Public: Daily Fee 27 27 108 45 2,538 139,761
Public: Municipal 0 0 0 0 819 41,697
Private 0 0 9 0 873 68,688
Non-Regulation (Executive & Par-3) 0 0 9 0 486 20,277
bĻƷ /ŷğƓŭĻΫ
Net Change in Holes past 5 years
0 0 0 0 -153 -13,941
Percentage Total Holes Past 5 Yrs.
0.00% 0.00% 0.00% 0.00% 0 -5.30%
Net Change in Holes past 10 Years
0 -9 -9 -18 -234 -19,098
Percentage Total Holes Past 10 Yrs.
0.00% -25.00% -7.10% -28.60% 0 -7.10%
*Numbers may include courses under construction and temporarily closed at the end of the year.
National Golf Foundation Consulting, Inc. Port Townsend GC Report 51
Supply- Demand
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tƚƩƷ ƚǞƓƭĻƓķ DƚƌŅ /ƚǒƩƭĻ
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ƩźƓŭ ƩźƓŭ ķƩźǝĻ ƷźƒĻ /ƚǒƓƷǤ ğƭŷźƓŭƷƚƓ
{ǒƦƦƌǤΏ5ĻƒğƓķ wğƷźƚƭ
IƚǒƭĻŷƚƌķƭ ƦĻƩ ЊБ IƚƌĻƭ
Total 5,237 10,743 6,355 5,993 12,141 8,959
Public 5,237 10,743 6,885 5,993 15,298 12,351
Public: Daily Fee 5,237 10,743 6,885 5,993 20,235 16,035
Public: Municipal 0 0 0 0 62,706 53,748
Private 0 0 0 0 58,827 32,628
Premium (>$70) 0 0 41,308 14,983 75,082 73,716
Standard ($40-$70) 7,855 16,114 10,327 14,983 26,296 28,602
Value (<$40) 0 0 41,308 0 71,328 30,826
DƚƌŅźƓŭ IƚǒƭĻŷƚƌķƭ ƦĻƩ ЊБ IƚƌĻƭ
Total 501 1,079 730 590 1,424 1,236
Public 501 1,079 791 590 1,794 1,704
Public: Daily Fee 501 1,079 791 590 2,373 2,212
Public: Municipal 0 0 0 0 7,353 7,415
Private 0 0 0 0 6,898 4,501
Premium (>$70) 0 0 4,744 1,476 8,804 10,169
Standard ($40-$70) 752 1,619 1,186 1,476 3,084 3,946
Value (<$40) 0 0 4,744 0 8,364 4,253
IƚǒƭĻŷƚƌķ LƓķźĭĻƭ
Total 58 120 71 67 136 100
Public 42 87 56 49 124 100
Private 0 0 253 0 180 100
Premium (>$70) 0 0 56 20 102 100
Standard ($40-$70) 27 56 36 52 92 100
Value (<$40) 51 105 134 97 231 100
DƚƌŅźƓŭ IƚǒƭĻŷƚƌķ LƓķźĭĻƭ
Total 41 87 59 48 115 100
Public 29 63 46 35 105 100
Private 0 0 211 0 153 100
Premium (>$70) 0 0 47 15 87 100
Standard ($40-$70) 19 41 30 37 78 100
Value (<$40) 35 76 112 69 197 100
wƚǒƓķƭ ƦĻƩ ЊБ IƚƌĻƭ
Rounds Potential (resident golfers) 21,932 45,903 28,168 26,960 36,977 32,810
Estimated Course Rounds (in-market supply) 39,017 39,017 36,630 37,456 37,691 32,809
National Golf Foundation Consulting, Inc. Port Townsend GC Report 52
53
Port Townsend GC Report
National Golf Foundation Consulting, Inc.
RT
L ROUNDS PLAYED REPO
NATIONA
-
APPENDIX C
54
Port Townsend GC Report
National Golf Foundation Consulting, Inc.