WOOD DALE PARK DISTRICT – COMMUNITY ACTION …wdparks.org/pdf/11-salt-creek-golf-club.pdf · WOOD DALE PARK DISTRICT – COMMUNITY ACTION PARK PLAN Salt Creek Golf Club Salt Creek

WOOD DALE PARK DISTRICT – COMMUNITY ACTION PARK PLAN

Salt Creek Golf Club

Salt Creek Golf Club The Wood Dale Park District purchased Salt Creek Golf Club in 1987 and it has operated as a municipal daily-fee golf course since then.

The Golf Industry: An Historical Perspective

Within the past 25 years and particularly during the golf boom of the 1980s and 1990s, golf operators made decisions to “branch out” that, at the time, seemed to be sound business. Significant capital improvements were undertaken by many facilities including the addition of new/expanded clubhouses to offer dining (restaurant), golf

outings, meetings and other functions, and an array of special events.

Typically, the industry responded to what were presumed to be unequivocal opportunities to grow the business by making these decisions often without staff input or contradiction, as at the time, many competitors, both publicly and privately owned, touted the success of the addition of food/beverage and special events departments with word spreading rapidly throughout the marketplace. Often these “success stories” were not accompanied by the hard facts of bottom-line financial results; restaurants/special events, when evaluated as stand alone businesses, frequently produced negative net

cash flows to the overall enterprise. This was because the introduction of the food/beverage/special event focus to a golf course operation inevitably leads to an entirely more expansive and expensive organizational structure. The golf course was historically viewed by many as a cash cow generating sufficient revenues in excess of expenses to overcome operating deficits in the food and beverage operation. Additionally, many courses operated as Enterprise Funds had the additional challenge of covering debt service. It is our understanding the Salt Creek Golf Club historically did not generate sufficient net operating income to cover debt service on the purchase and improvements to the golf course.

XISalt Creek Golf Club

158 Wood Dale Park District Community Action Park Plan

The expense of the operations often could not be covered by the gross revenues generated. During golf ’s boom time, from the mid-1980s through early 2000s, the financial success of the golf course operations masked the underlying negative financial issues that restaurants/special events often created. Financial statements remained positive; therefore, publicly owned/operated facilities with ancillary facilities could be justified.

Fast forward 10 years, and most publicly owned golf facilities are experiencing a drain on cash from these multifaceted operations. Since the turn of the century and especially over the past 10-12 years, the typical golf facility has experienced volume of play declines of 20% to 50%, with a corresponding revenue decline. This has been the case both locally and nationally, as supported by data within report after report from the National Golf Foundation. Salt Creek Golf Club is no exception. The Chicagoland golf industry during the swashbuckling ‘80s and ‘90s experienced tremendous growth in the number of golf facilities, and additions of all types from 9-hole/par-3 to executive 9-hole to regulation/championship 18 numbered more than 100. This occurred at a time when industry self-promotion created super-sized expectations for golfers and golf industry employees, full-time, part-time and seasonal. This in turn created larger operating and maintenance budgets as each course competed to be “better” than its neighbor, which still holds true today.

Unfortunately, the increased number of facilities in Chicagoland, indeed throughout the United States, was only temporarily accompanied by an increase in the number of golfers, which by 2004 numbered more than 26 million, or just under 9% of the U.S. population. Since then, the number of golfers has dropped by almost 20%. More

facilities and fewer golfers over the past ten years has created an oversupply versus demand curve, paving the way for steep discounting and rate suppression during a period of overall modest inflation but more significant price increases in the golf industry, which heavily uses gasoline and petroleum-derivative products like chemicals and fertilizers. Food-and-beverage products and many other supply costs have also risen significantly during this period.

Completing the “perfect storm” for golf, a host of socio-demographic and lifestyle changes have also impacted golf negatively, among them the rise of the “soccer mom/dad” phenomenon, family units with both parents in the workplace, the pressure of time constraints in our fast-paced society and dwindling corporate/organizational support of business entertainment expenses.

The aforementioned issues have required operators in the golf industry to reinvent

their businesses and change the operating and maintenance culture, focused on expense retrenchment and staffing efficiency. In general, the privately-owned public sector and some private country clubs have been at the vanguard of taking measures to remain financially viable. The publicly-owned public sector (park district, municipality, etc.) generally has more difficulty in managing and requiring change, since the agency/unit of government in question may possess a more holistic mission other than or beyond the financial; in fact, providing a service at a certain level, or resident resistance, may inhibit dramatic change.

Salt Creek Golf Club as marketed and managed over the last 15 years is in the throes of difficult times that will require decision-makers to grapple with tough choices on a variety of matters. These matters include, but are not limited to the following:1) Financial factors.

Wood Dale Park District Community Action Park Plan 159

2) Staffing.

3) Maintenance levels.

4) Facility mission.

5) Clubhouse strategy.

6) Golf as a program opportunity.

7) Capital improvements (golf/District-wide).

As a player in the local golf market, the Wood Dale Park District must understand the historical perspective. Existing long-term staff, created few if any, of the existing challenges facing the District. The problems resulted from an overzealous industry that dramatically miscalculated the demand and misinterpreted the needs, with the outcome being an increasingly competitive marketplace with not much optimism for resurgence to any previous level of participation.

Clubhouse Operations

Salt Creek Golf Club is unique. While this is not inherently a negative, it would be helpful for marketing/promoting to bring some definition and clarity. In fact, in reviewing the clubhouse operations, one question came to mind recurrently: What IS Salt Creek? That must be determined, first and foremost? Salt Creek Golf Club is a multi-function facility like many other municipal and park district golf courses. This again is not a bad thing but should begin by determining what business it is in.

Is it a restaurant? A banquet facility? A golf course? At present, it is neither fish nor fowl. The clubhouse configuration does not provide adequate separation in the food service between golf and banquets unless partition walls are maneuvered, this lack of adequate separation does not afford the level of privacy generally

desired for special events.

The golf shop does not appear to be lavishly stocked, wisely so. The golf operation uses the Club Prophet POS system and GolfNow booking engine, reflecting a staff that has stayed abreast of technology and trends. The staff, and the District, has done a good job tracking the data — rounds, revenues, etc. — required to effectively evaluate the operation on a year over year basis.

Fee Structure

Within the spectrum of comparable golf courses, Salt Creek’s rates fall within the lower tier of 9-hole green fees. Pricing represents a bargain for residents and is very competitive with other 9-hole courses for non-residents. The Park Board has historically reviewed and established greens fees for the golf course. The apparent intent was to maintain competitive fees.

Maintenance Review

Over the course of four visits made to Salt Creek Golf Club during autumn 2014, observations revealed a satisfactory golf product being presented to customers that seemed to meet golfer expectations. The decline in golf play here over the past 10 years has been a result of market factors, weather and time, not the level of maintenance. Conditions could be improved in the future with modest modifications to existing programs and the preparation of an improved plan of action. Visual examination of the golf course revealed a need for attention to details, to provide the clean, crisp look that in turn reflects “pride of ownership.” From an outside perspective, the current financial difficulties limit funds available for staff and affect maintenance activities negatively. Staff in these situations need to reaffirm commitment to the product, understand maintenance alternatives are possible,

and prioritize actual practices. Currently, there seems to be marginal planning and adherence to accepted maintenance standards.

To improve maintenance operations, the staff at the golf course and within the Park District might endeavor to establish a program at Salt Creek Golf Club that embraces the “5 Ms” of golf course management as follows:

1. Management — The general manager and golf course superintendent represent the leaders for the District who must define standards and affect conditions. The District should encourage and direct these key staff to improve maintenance/conditioning of the property by preparing a plan to achieve the goal of an improved presentation. The development of this plan may require additional tools and equipment such as maintenance management software.

2. Marketing — The operating and maintenance staff need to better understand that successful facility marketing relies upon the quality of the golf facility; its maintenance and first impressions. Marketing is not just promoting via advertising, e-mail blasts, social media, etc., but in fact depends upon the product and its position in the marketplace. Quality impression, conditions defined by detailed checklists, and professional supervision/follow-up are key, and no additional funding is necessary.

3. Money — Golf course maintenance funding is and will continue to be a matter for debate. In today’s financial environment for golf, it has become necessary to “do more with less,” and this will continue to be the mandate. Those staff who cannot or will not adapt to the revised golf culture will be replaced by


those who are well-organized and flexible. The complaint that more funds are required to do a specific job or carry out an adequate maintenance program will be, and should be, challenged by ownership. Salt Creek Golf Club encompasses 68 acres and available resources, both manpower and materials, must be carefully scrutinized. Costs can be contained while conditions are improved.

4. Machinery — A review of equipment inventory was unimpressive. The District lease-purchased numerous pieces of much-needed equipment in 2014. Additional equipment needs to be added to the inventory to properly and efficiently maintain an 18-hole golf course and amenities. The additional equipment and resources will play a significant role in developing the effective management plan identified above.Even though the scope of this review did not include a detailed investigation of the equipment our review revealed a veritable junkyard of older equipment stored in/around a maintenance area that showed no signs of cleanliness/organization/repair — a depressing situation that requires attention soon. We understand that this condition developed over the years as financial pressures forced cannibalization of old equipment in order to keep some equipment operational. The golf course maintenance staff has effectively done more with less. It is now necessary to reconsider that strategy and develop a capital equipment replacement plan to replace equipment on a more regular schedule.

5. Maintenance Building — The District recently acquired the golf course maintenance building from the Forest Preserve District of DuPage County. Prior to

the acquisition the District hesitated to invest in a facility and property it did not own. Now that the building and 4 adjacent acres have been acquired the District should initiate planning efforts to review the specific needs at the maintenance building and develop a phased implementation plan to be included with all WDPD capital improvement needs

Marketing

From a golf perspective, an 18-hole executive course is an enigma. Although a course like Salt Creek holds appeal for juniors, seniors, women, the time-constrained and others who may desire to play a shorter course; it will never draw from the full spectrum of golfers. Nor is Salt Creek the only offering in its market niche as numerous 9-hole/executive courses exist within a 10-mile radius. Although these courses are drawing from a highly populated area, this category of facility is never a “destination” course so the market is limited to the local suburban area.

In today’s environment of Internet dominance and limited marketing budgets for golf, the facility Website is often the cornerstone of a facility’s marketing program. Salt Creek’s Website appears to be hosted by GolfNow/Golf Channel. The homepage at present is a hodgepodge with the pleasing aesthetics of the photo gallery and “hot buttons,” and the branding “A Little Slice of Heaven,” compromised by posting of the lengthy Commonwealth Edison notice and the “Did You Know” bulletin. The Com Ed information understandably needs to be prominent; however, it would be more effectively presented as a hot link. The homepage is very “noisy” and difficult to scroll. Vital information gets buried in the clutter.

The E-Club link appears to be slow to load or inactive causing user frustration and in some

cases avoidance, so it is unclear how one registers to be on the club’s e-mail list. The availability of e-commerce again underscores that staff are staying on top of technology and encouraging online sales. The Events calendar reflects creative and varied programming that engages the community beyond the golfing population (e.g., bingo night, fish fry, Bears tailgates, veterans’ breakfast, Santa brunch). In order to utilize effectively the internet and e-commerce capabilities the golf course could benefit from additional information technology (IT) support for website design, updating, and management.

Communication is consistent and sound with production of monthly newsletters posted online and archived for retrospective reference.

Staff at Salt Creek should ensure that the facility is availing itself of all marketing vehicles available through the District. As alluded to in the Clubhouse Operations comments, resolving the facility’s identity crisis will assist with branding and where to focus marketing efforts. Cleaning up and refining the Website, especially the homepage, and ensuring data capture is live on the Website, will enhance this critical marketing tool.


Financial OverviewThe following operating review is based on data and information supplied by the Wood Dale Park District as either audits or monthly financial statements.

As expected, the financial oversight of the Wood Dale Park District has allowed for generation of an array of spreadsheets that provide over 10 years of historical financial results, both audited and non-audited. The data present a clear understanding of the financial challenges that Salt Creek Golf Club confronts in both the golf operation and food/beverage department. The drop in rounds (46%) has been more precipitous than gross revenues (25%) over the past 12 years.

The data also suggests that revenues have been relatively flat over the past six or seven years with annual increases/decreases most likely the result of weather conditions. The actual numbers can be scrutinized from every perspective and an objective analysis points to one serious conclusion: Salt Creek Golf Club is losing money and must be subsidized to assure positive net operating income. Combined, the golf and food/beverage operations annual losses over the period 2008-2013 average $192,000 before depreciation and the Top Golf subsidy. The key question is: Can negative financial results be turned around?

It is highly unlikely that future financial results will improve substantially because the industry has changed, with a significant oversupply/stagnant demand issue. There are no indicators in the market that point to any return to the activity level experienced in the 1990s and early 2000s. Thus, revenue will continue to be flat as both volume of use and rate will be affected.

Relative to expenses, the historical data indicates an attempt to curb costs but inflationary factors

for management, labor and operating costs have made the task extremely difficult. An examination of cost to revenue ratios demonstrates the future challenge facing the facility. To wit, important comparisons are as follows:

Golf Course/Food & Beverage

Based on the historical information provided by the District, payroll costs to gross revenues average 68% for golf and 55% for food & beverage whereas the industry business standard is 45% for golf and 35% for Food and Beverage (F/B) if the departments are to be profitable. A competent and dedicated staff is in place, yet the challenge is overwhelming because revenue

generation (increases) is limited with marginal opportunity for improved operating results.

Historical Data Review

The scope of this analysis included review of historical information provided by the WDPD both audited and unaudited including rounds of golf since 1999. The following chart identifies annual rounds played at Salt Creek Golf Club.

During this fifteen-year period, the golf industry has endured two significant economic recessions. The first beginning in late 2001 and was a direct result of the terrorist attacks on the World Trade

Figure 1: Salt Creek Golf Club Round 1999-2014


Center.

Rounds peaked in the year 2000 at 73,154 and have shown a steady decline since the peak in 2000.

In the seven year period from 2000 to 2007 rounds fell by more than 6% per year and declined by 35.42% overall. As can be seen in Figure 1, play remained stable for the three years from 2007 through 2009 then continued a downward trend for another two years. Total play declined by more than 46% between 2000 and 2011. Play increased by 1.7% in 2012 before

continuing in another downward trend. Play has declined by over 50 percent since the high in 2000.

When comparing Salt Creek Golf Club with national trends, nationally golf has seen a decline in play since 2000. In recent data from the National Golf Foundation (NGF) play has declined from year to year in most years since 2004 with the exception of 2007 and 2010.

Figure 2, based on publically available data, compares Salt Creek Golf Club with National Golf Foundation regional data for Illinois and the

Chicago Metropolitan area. It should be noted that when compared to the region in 2005 and 2006 both the region and Salt Creek were down in rounds. While in 2007 the region showed a slight increase Salt Creek showed a continued decline. Play was down for both the region and Salt Creek Golf Club in 2008, and up in 2009.

In 2010 the local area suffered a significant rain event over a weekend which significantly impacted play at Salt Creek Golf Club, while overall the regional average was flat over the previous year. In 2011 the local area was again affected by significant weather which was more widespread affecting play in the entire metropolitan region.

These play statistics reflect the average for the region. The overall region is not as sensitive to localized weather events similar to the one affecting Salt Creek Golf Club in the summer of 2010. Play at all golf courses is sensitive to weather and will vary from year to year. In addition to this seasonality, Salt Creek Golf Club has a significant portion of the course within the regulatory floodplain and is more sensitive to weather anomalies than a typical golf course within the region.

Figure 2: Percent Change Comparison


Over the past several years the National Golf Foundation has modified and more specifically targeted the various regions for tracking levels of play. The NGF data for 2005 and 2006 NGF data is for the Lower Midwest region identified by the National Golf Foundation, while the 2007 and 2008 NGF comparison is for Illinois specifically. The NGF refined their regions in 2009 and the 2009-2011 NGF data is for the Chicago Metropolitan area specifically.

There are several methods available for planning and projecting future revenues and expenses. One technique utilizes revenues per round of golf. Including total golf revenue, greens fee revenues, proshop sales, and club and cart rental a simple function of projected rounds and revenue per round results in an estimate of golf revenues.

The projected rounds is not an exact science and should rely on historical trends including recognition of previous weather anomalies to avoid over or under estimating play.

The following Revenue per Round of Golf following chart depicts the historical Salt Creek Golf Club relationship between rounds of golf, total golf revenue, greens fees revenue, proshop sales revenue, and club and cart rental revenue.

The chart indicates total revenue per round is trending upward, which is good. This indicates players are spending more each time they play. The course should strive to increase sales by utilizing the approach of numerous big box stores by trying to get $1 more in sales for every customer. This added sales moves quickly to the bottom line as the cost to generate (labor and materials) the additional $1 is typically minimal.

While rounds of golf declined by more than 44% over the period 2002-2014 total golf revenue per round increased (+22.6%), green fee revenue per round increased (+7.41%), and club and cart rental per round increased (+125.7%), while proshop sales (-30.4%) decreased significantly over the period. These increases can be attributed to a combination of increases in fees, round played, and more spending per visitor/player. The golf course should develop both incentives to capture players before and after their round

as the additional sales would require minimal additional expenses resulting in quick additions to be bottom line. The drop in proshop sales is not unexpected as golfers relied more on big box stores and the internet for purchasing the golf supplies and equipment.


Figure 3: Revenue Per Round of Golf Trends


The following analysis compares Restaurant and Banquet Revenues per round of golf.

Figure 4: Restaurant and Banquiet Revenue Per Round of Golf


This analysis normalizes golf revenue, restaurant and banquet revenues to a round of golf to permit comparisons with other golf operations and future planning.

Total Restaurant and Banquet Revenue has declined by 7.62% from a high of $748,930 in 2005 to $691,801 in 2014. The Restaurant and Banquet Expenses increased by 9.65% from $718,573 to $787,978 over the same period. The trend is for expenses continuing to increase at a

faster rate than revenues. The Salt Creek Golf Club management staff recognizes this trend and has indicated they have been implementing various cost saving measures over the past several years including adjusting staff levels, hours of operation, and purchasing programs.

Figure 5: Restaurant and Banquet Revenue/Expenses


Salt Creek Golf Club

Salt Creek Golf Club is a par 63 18-hole executive golf course with multiple tees permitting players to play from 3,946 yards or 3,641 yards located on 67.9 acres. A Commonwealth Edison Transmission Line traverses the course. A significant portion of the golf course is Salt Creek floodplain which can adversely affect play at certain times of the year.

The following is a map of the course courtesy of the Wood Dale Park District’s website.

In 1992, the Wood Dale Park District entered into a lease agreement with the Forest Preserve District of DuPage County (FPDDC) for a portion of the FPDDC’s Salt Creek Marsh. This lease was renewed continually until 2014. In 2014, the Wood Dale Park District acquired approximately 4.4 acres of land previously leased from the Forest Preserve District of DuPage County for $318,000 plus $50,000 interest for repayment over a period of ten years. The golf course service center was located on this 4.4 acres. It appears the Wood Dale Park District was hesitant to invest in the service center infrastructure because it did not own the property. The WDPD’s 2014 audit identifies this purchase and indicates it would now be considered in the WDPD’s future capital improvement planning.

Enterprise Fund Accounting

The Salt Creek Golf Club golf course and clubhouse is the subject of an Enterprise Fund. Governmental entities utilize Enterprise Funds to account for operations operated and financed in a manner similar to private business enterprises. The intent is that the costs (expenses, including depreciation) of providing goods or services to the public would be financed or recovered


primarily through user charges; or the governing body decides that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

Data provided by the Wood Dale Park District for the fiscal and calendar years of 2002 through 2014 serves as the basis for the following analysis.

Business Operation - Golf

In the period 2002 and 2003 the golf course operation showed income in excess of expenses and depreciation of $126,300 (14.1% of golf revenue) and $64,538 (7.5% of golf revenue) respectively. Beginning in 2004, the golf operation began to show income falling short of covering operating expenses and depreciation. Initially these operating losses were relatively minor averaging a little over 3% of golf revenues. Beginning in 2007, these operating losses increased substantially averaging 12% of golf revenues through 2014.

Driving Range Income

The Salt Creek Golf Club operated a driving range on the southern 5.5-acres of the property until 2007 when the WDPD entered into the TopGolf lease agreement.

During the five year period from 2002-2006 the driving range generated average gross income of $81,690. This revenue stream was replaced in 2007 and subsequent years by TopGolf Income.

TopGolf USA

In early 2007, the Wood Dale Park District and TopGolf USA entered into a long-term lease agreement (30 years). This lease agreement included renovation and expansion of the driving

range area at Salt Creek Golf Club. TopGolf constructed a state of the art golf driving range and mini golf course adjacent to the Salt Creek Golf Clubhouse and parking lot. This facility opened in October 2007.

The Wood Dale Park District and TopGolf amended the original lease agreement in January 2009 to include provisions for the Park District to receive a percentage of gross revenues each year from the TopGolf operations.

TopGolf ’s business has continued to grow with the Park District receiving increased revenues above the guaranteed monthly lease income of $212,866 in fiscal year 2013-14. The District expected the annual revenue stream combined with the anticipated increase in business would support the operations of Salt Creek Golf Club and capital projects.

The District realized TopGolf revenues beginning in 2007. Golf revenues continued to increase in 2008 and 2009 until the second economic recession since 2000 began to affect the golf industry. Golf revenues peaked in 2009 at $770,164 declining at an annualized rate of just under 5% since then. Golf revenues are volatile and sensitive to weather conditions. In 2010-2011, golf revenues dropped significantly with a direct correlation to significant flooding that occurred during the summer of 2010, effectively closing the course for a period of time.

Business Operation – Restaurant/Banquet

During interviews and analysis of the Salt Creek Golf Club operations, District personnel expressed a significant concern that the TopGolf operation has adversely affected the lunch and restaurant businesses of the clubhouse and the driving range revenues of the golf course.

In utilizing the data provided by the Wood Dale Park District, we did not find the perceived adverse impact. In 2011, TopGolf negotiated to expand their lunch menu, host banquets, and sell spirits. The WDPD in return received increased rent from TopGolf.

Our review of restaurant and banquet revenues during the pre-TopGolf era and post-TopGolf era did not find a significant post TopGolf impact on restaurant revenues. During the five years pre-TopGolf restaurant revenues averaged $460,704 while the eight years since TopGolf restaurant revenues averaged $446,395 a little over a 3% decline in average restaurant revenues.

Banquet revenues pre-TopGolf averaged $122,309 from 2002 through 2006, while the eight years post TopGolf the Banquet revenues average $162,268 an actual 32% increase in banquet revenues.

It appears the issue may be on the expense side of the equation, the data comingles the restaurant and banquet expenses as a single line item, making it impossible to analyze each cost center. Our review will address the restaurant and banquet as a single profit/cost center.

Reviewing the salary & wages for the five years from 2002-2006, shows an average of $262,284 in salaries and wages (44.9% of restaurant and banquet revenues). It is our opinion that salary and wages at 44.9% of restaurant and banquet revenues are above industry standards of 35-40%. While the salaries and wages were above the industry standards through 2006, the result was close to break-even.

This average for salaries and wages increased significantly beginning in 2007 to $359,394 (59.1% of restaurant and banquet revenues) a more than 37% increase, with the result falling


well below the break even point showing an operating loss on average of 18.3% of restaurant and banquet revenues.

The District recognizes this trend and should consider taking measures to reduce these significant operating losses as subsidizing these losses adversely affects the District’s ability to fund other District operations or capital improvements throughout the District.

Elgin-O’Hare Expressway Construction

The Elgin-O’Hare Expressway construction is well underway with plans being developed and refined for the mainline and access points adjacent to the Salt Creek Golf Club.

Initially conceptual plans depicted a cul-de-sac for Thorndale Avenue significantly affecting access to the facility from points of Wood Dale east and southeast of the golf course. The plans called for a realignment of Prospect Avenue with access to Salt Creek being a right-in and right-out entrance.

In response to this initial plan the District initiated discussions with the City of Wood Dale (City) and the Illinois State Toll Highway Authority (ISTHA). Currently the plans will include an extension of Thorndale Avenue with an access to the golf course from the south; however, the main entrance will continue to be a right in/right out intersection with Prospect Avenue.

In addition to the access configuration that the City, ISTHA, and the District are refining, the impact during construction is likely to be significant as would be typically realized during road construction along the facility access.

It is beyond the scope of this master plan to evaluate the overall impacts to the golf, restaurant, and banquet businesses at Salt Creek during

the next 2-3 years during construction of the Elgin-O’Hare Expressway. It should be expected to have an impact on the business operation consistent with typical road construction impacts.

The Salt Creek Golf Club property faces a severe challenge in 2016-17 when the expressway construction begins adjacent to the property. This construction will limit access and will deter golfers and aggravate others who will simply not want to fight the traffic and more difficult access. The probability exists that 15% to 25% of the customer base will find other golf courses and special event facilities to use. A drop of even 10% would equal a revenue loss of $130,000 to $150,000 annually — a direct negative impact on the bottom line of the facility for a temporary period.

Salt Creek Golf Club Recommendations The current trend of golf business operations requires a subsidy (transfer from other sources) to balance revenues and expenditures. The District management team has recognized this and provided the direction that this trend is not acceptable and District must act to reverse the trend and move the golf operation to a self sustaining position where revenues meet or exceed expenses plus depreciation.

Currently, the year ending April 30, 2014 shows actual golf course fund revenues falling $52,593 short of actual expenses plus depreciation, while the clubhouse fund revenues exceeded expenses by $3,823 (just under 0.5% of total revenues). While the clubhouse revenues exceeded expenses, the salaries & wages plus medical insurance and retirement fund contributions total slightly over 52.5% of total revenues.

There are generally three ways to rectify these imbalances:• Increase revenues• Decrease expenses• Combination of increased revenues and

decreased expenses

It is our opinion that balancing the operating budgets for the facilities will require a combination of increased revenues and decreased expenses.

To increase revenues:• Increased and improved marketing – identify

core business and focus on identifying target market for this core business

• Initiate a market study to identify specific target markets for the Salt Creek Golf Club clubhouse operation. Determine the “business” that the Salt Creek Golf Club should be in, i.e. golf banquets, weddings, golf outings, etc.

• Pricing structure – Initiate an in-depth study of market and service area to determine competition and to determine the specific price-point for the restaurant and banquet operations.

• Pursue potential additional revenue sources to enhance or expand the current revenue streams with positive net income. These added revenue streams could be such as video gaming.

To decrease expenses:• Conduct personnel study to determine

appropriate staffing level and expenses based on core business objectives

• Initiate an in-depth study of current business practices in the clubhouse restaurant and banquet areas to determine appropriate staffing levels for the size of the facility and to ensure staffing type and level is consistent


with core businesses identified in the target market analysis.

• Initiate an in-depth study of salaries and wages for the Salt Creek Golf Club to ensure consistency with industry standards for size and scope of operation.

Additional Management Strategies

• Develop monthly management reports identifying revenues, income, cost of goods sold, gross margin, labor expenses, and other expenses for the period. This should be on the accrual basis so revenues and expenses are matched providing the most accurate picture of the course’s business activities. These reports should be for the period, for year to date, and percent of budget data for managers to actively monitor progress and permit monthly corrective actions

• Develop flexible expense budgets based on actual monthly revenues/sales

• Conduct strategic planning session with senior management staff to address potential impacts of Elgin-O’Hare Expressway construction on the business operations

o Evaluate alternative business models for Salt Creek Golf Club

□ Model 1 – Reduce Hours of Operation

□ Model 2 – Reduce Business Units and Scope

□ Model 3 – Temporary Closure of Business Units

□ Model 4 – Temporary Closure of Facility

General Recommendations

In the short-term the following general recommendations are offered:

• The WDPD should continue to utilize $81,690 in TopGolf Income as a “driving range gross income replacement” to offset the gross revenue lost with the development of the TopGolf Facility.

• Based on the target market study to determine which business Salt Creek Golf Club should be in, conduct an in-depth analysis of the physical plant to ensure the building form will follow its re-defined function.

• Quality product – Community-wide survey indicated satisfaction with Salt Creek GC. There appears to be a disconnect between the public perception of the facility and the actual business operation. It is our opinion the public is not aware of the golf course’s business status. The District currently subsidizes numerous existing recreational programs and activities where the cost to produce the program or activity is greater than the revenue generated by program registrations. The District could determine that the present operation of the Salt Creek Golf Club is a similar “program” that is a critical core activity that should be provided. The District could view this core activity as a service where the District subsidizes the activity. The level of subsidy could be either a percent of gross revenue or a not to exceed dollar amount.

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Documents

WOOD DALE PARK DISTRICT – COMMUNITY ACTION …wdparks.org/pdf/11-salt-creek-golf-club.pdf · WOOD DALE PARK DISTRICT – COMMUNITY ACTION PARK PLAN Salt Creek Golf Club Salt Creek