December 11, 2015
Fast greens, championship-style bunkers and a clubhouse with a view all debut next month at a west Phoenix golf course that, until recently, lost the city hundreds of thousands of dollars each year.
Leaders at Grand Canyon University are finishing a $10 million transformation of Maryvale Golf Course, which will take the university’s name when it reopens to the public Jan. 1. With new tees and extended yards come plans to staff the site with students, bolster junior golf programs and invite neighborhood kids to fish in the relined lakes.
That vision shows the potential for reinventing a public course that could have been shuttered or sold a few years ago to address millions of dollars in debt racked up by the city’s golf program, said Vice Mayor Daniel Valenzuela, whose district includes the area. Instead, the city approved a controversial plan to keep Phoenix’s six municipal courses open.
The city recently paid off the last of roughly $15 million in losses, which had accumulated over more than a decade, by borrowing from a fund earmarked to improve Phoenix parks and preserves. Golf-program leaders are still searching for ways to make the courses profitable.
Critics question the need for city golf as demand for the sport lags and private courses are prolific in the region. They say paying back the borrowed money could be a lengthy process or fear it won’t happen at all, depriving Phoenix of what could have been spent on new park equipment or more land for its preserves.
But the plan is working, supporters say, as the city finds better and cheaper ways to run its courses — including through university partnerships. Courses that were collectively losing more than $2 million annually when the plan started are projected to need a roughly $450,000 subsidy from the city this fiscal year.
The program could break even in the next few years, according to projections, and turn a profit after that.
“We’re not finished,” Valenzuela said. “There’s a lot more work to be done.”
There’s hope in GCU’s ambitious plans for a course that was recently losing about $250,000 each year, before the city approved a partnership with the university.
The 130-acre Maryvale Golf Course opened in the 1960s and attracted generations of golfers with its large trees and parkland setting. But the course’s popularity waned in recent years and needed major improvements the city couldn’t fund.
Last year, Phoenix approved a 30-year agreement with GCU to cut the losses. Phoenix still owns the course, but the university covers the costs of improvements, renovations and operations. The renamed course will be the new home of its golf teams for practices and tournaments.
The course also will reopen to the public after about a year of closure. GCU President Brian Mueller envisions it launching as a premier, championship-style course a few miles from the university campus.
“It’s going to be a top-notch experience,” Mueller said.
About $7 million went into renovating a course that had been deteriorating, he said. Architect John Fought — known for his work on the golf course at the Phoenix Country Club — redesigned it with changes like new bunkers and elevated greens.
The university spent about $3 million to replace the old clubhouse with a 22,000-square-foot building that includes team meeting rooms and a pro shop. A new restaurant staffed by university students and local workers also will be on site.
The course already is getting attention from major tournaments and will host one in January associated with the College Football Playoff championship game, said Mueller’s son, Jesse, who played the sport professionally and started as the university’s director of golf about a year ago. He said the university's name recognition will help a course already familiar to area golfers.
And GCU intends to turn a profit. An aggressive marketing plan will aim to bring the course to 55,000 rounds in its first year, Brian Mueller said. Maryvale Golf Course recorded fewer than 38,000 rounds the last full year it was open.
“This is not charity,” he said. “This is definitely an investment.”
The renovation will help the city beyond just golf, Valenzuela said. It could raise property values in west Phoenix, draw more visitors to the area and eventually pay dividends.
GCU will keep the profits from the course until the university recuperates its investment. After that, the city will receive 10 percent of the net revenue.
“This is a win for every taxpayer in Phoenix,” Valenzuela said.
Years of losses
The partnership comes as one of many changes to a golf program that Phoenix taxpayers are still subsidizing.
The city started an enterprise fund for its golf program in the 1980s to run the courses separate from other recreation programs, like softball or swimming. The intent was for courses to be profitable and not need help from the general fund, which pays for many city services.
But by the late 1990s, the golf program was losing money. Rounds of golf started decreasing as more courses opened in the Valley. The loss in revenue was exacerbated by debt from buying the Palo Verde Golf Course in central Phoenix and building Aguila Golf Course in south Phoenix.
The courses were losing more than $2 million each year when the city started public hearings and a citizens' committee to address the program's future. By the 2013 fiscal year, the golf-fund debt had grown to about $14.8 million and was projected to worsen.
Some residents criticized management of the program and questioned whether taxpayers should foot the bill. Others said golf should be treated financially more like other recreation activities, like city pools or parks, and that keeping courses open was also a matter of neighborhood preservation.
The council voted on a solution that included paying off the debt, keeping the courses open and running the courses more efficiently. The general fund now subsidizes the program until it breaks even.
The city paid off the debt over several years by borrowing some of the money in a voter-approved fund called the Phoenix Parks and Preserves Initiative. The Parks and Recreation Department received about $30 million from the initiative last fiscal year.
The sales tax is intended for park improvements and buying land for preserves. The city committed to paying back the fund once the golf courses make money, though profits at first will be used for improvements in the courses.
David Hockett, who started as the city’s director of golf about a year ago, said his goal is to run the courses more like a business.
“We want to make sure we’re not a burden to the taxpayer,” he said.
The financial status of Phoenix's golf program is markedly better than before, though the courses still lose money.
All of the city's courses are still open, with two now operated in partnership with universities. The city signed an agreement with Arizona State University last year for Papago Golf Course, near the Scottsdale and Tempe borders.
The university already is using the course for its golf teams and pays the city rent. ASU will also invest $9 million in a new clubhouse.
Outsourcing course maintenance — an early change under the plan — has since saved the city about $1 million a year, Hockett said. Revenue also is up.
The program has steadily decreased the subsidy it needs from the city, going from a $1.1 million subsidy budgeted in the 2013 fiscal year to $450,000 in the current year. Hockett is still looking for ways to “trim the fat,” he said, and projects the courses should be breaking even in a few years.
Finding a company to advertise on score cards and pencils could save about $17,000 a year, for example. Cutting two operating hours a day during the summer could save $25,000 over four months. Adding last-minute deals for open tee times could keep the courses more active.
The mission of the program also changed, Hockett said, from providing an affordable golf experience to one that focuses on value. Upping city marketing could get new people to the courses while offering a better experience will keep them coming back, he said.
Getting the city’s 18-hole courses to 65,000 rounds of 9- or 18-hole golf a year would make them profitable, Hockett said. Those three courses — Aguila, Cave Creek and Encanto — averaged about 55,000 rounds of 18-hole golf in the 2014-15 fiscal year.
“You’re trying to maximize your capacity on any given day,” Hockett said.
But critics question the program's long-term outlook.
Despite the improvements, the city's golf courses are still costing taxpayers money that could be going to other services, said Councilman Jim Waring, who voted against the plan to keep all of them open.
“It’s great we’re losing less every year,” he said. “But we’re still losing a lot of money on our golf courses."
Also concerning is the prospect of paying back the fund used to retire the previous debt, Waring said. Parks and Recreation Department leaders say they can’t commit to a specific timeline — a concern of some residents who say the money should have never been borrowed to begin with.
“My professional opinion is that it’s not going to happen,” Waring said.
Recent presentations to City Council members and the Phoenix Parks and Recreation board left some members encouraged but without a guarantee of the golf program's financial future. They haven't set a deadline to consider other options.
Even if the courses become profitable, they still need at least $9 million in major improvements like irrigation upgrades, Hockett said. Those investments to keep the courses playable would be addressed before the recreation fund is repaid.
Supporters like Valenzuela say they are pushing for other innovative ideas, like partnerships or sponsorships, to keep the courses afloat. While public golf courses have the most potential to reach the community, the sport is in a competitive market, Hockett said.
The program should soon be able to sustain itself, he said, but he doesn't foresee ever reaching the profit margins of earlier days.
“I think it’s impossible, for the supply that’s out there,” Hockett said.