Sub-par golf revenues trouble city officials

Photo By Rick Harris
Poor weather, a sluggish golf economy and rising expenditures have kept the Elizabethton Municipal Golf Course in the financial rough in recent years.
By Thomas Wilson

   Elizabethton elected officials and city administration hope the Elizabethton Municipal Golf Course can rebound from bleak economic times that have seen the course run deficits in recent years.
   General Manager of EMGC, Steve Howard, said poor weather coupled with a limited economy have stagnated revenues in the past year. "This year, weather has hurt all golf courses," said Howard, who talked to the Star on Wednesday. "I think it is from the golf economy in this area.
   "We are kind of stuck in what we can charge because of what competitors charge."
   Although owned by the city government, the golf course functions separately as an enterprise fund, which requires the entity must be self-supporting financially. The course is governed by a board of directors and oversees its own financial operations.
   In its annual audit for the 2003 fiscal year, the Blackburn, Childers and Steagall accounting firm, found that the golf course posted operating revenues of $613,000 and operational expenses of $661,000 resulting in a net loss of roughly $45,000.
   While one year does not make or break the course, the course has finished in the red three out of the last four years, according to financial records - a trend city Director of Finance Bradley Moffitt finds disturbing.
   "One trend is over the past four years, they lost about 38 percent of their fund balance," said Moffitt. "That is something you cannot make up in volume." Over that four-year period, EMGC golf revenues have dropped roughly one percent while course expenditures have risen 11 percent. Heavy rainfall also translated to additional maintenance expenses for the course.
   Given the city's own fiscal situation, news of the latest EMGC audit report did not sit well with some City Council members. "If ETSU can dismiss football, the city of Elizabethton can dismiss golf," Councilman Richard Sammons stated during a council workshop this week.
   Sammons is correct. As owners of the EMGC and its real estate, the City Council has the power to summarily disband the board of directors that govern EMGC operations. The City Council took ownership of the course after creating the Public Benefit Corp. in 1988. The golf course shares the same health insurance provider with the city and its debt service, which comes from the golf course's equity fund.
   Howard also said auditors mistakenly estimated the course's depreciation costs last year that resulted in the $25,000 shortfall. "I was expecting a loss, but not that big of a loss," said Howard.
   Golf course administration advised city officials in November funds were not available to pay the debt service - a loss that will result in the city paying the $25,000 bill.
   He also said he had been unaware of the federal government accounting standards involving enterprise funds until two years ago. Howard said the number of full-time employees at EMGC dropped from nine to six last year. The course had laid off one salaried employee in August, cut another full-time employee to part-time and did not fill a position vacated by another employee who resigned to take a new job.
   Moffitt acknowledged that unseasonably rainy weather has resulted in diminished revenues for golf courses around the region during the past 12 months. He estimated revenues were likely down up to 10 percent across the board for public golf courses.
   The board of directors sets policy including membership fees, which were increased by $50 this year, Howard said. A single annual membership for the 2004 fiscal year is $798. The golf course derives 40 percent of its budget from membership dues and fees. Greens and cart fees paid by non-members comprise additional revenues brought in each year.
   "We've eliminated about $60,000 from the payroll," Howard said. "I see what the city is concerned about and we are, too."
   Despite the shortfall, Moffitt said the course plays an important role as a recreational and economic draw for the city. He also said the organization's troubles are not at a critical point yet.
   "It can still be fixed," he said, "but it is going to require a change in the way the golf course conducts its business operations."