Source: The Detroit News
Golfers swinging their sticks at Royal Oak's two, nine-hole courses won't notice much of a difference in operations this year, but the city will.
Instead of losing almost $200,000 over the last three years to manage and maintain Normandy Oaks and Royal Oak golf courses, the Oakland County suburb will add a guaranteed $50,000 to its coffers this year, and more in later years thanks to an outsourcing deal it signed with A.G. Housey Co.
The contract is smart for the city and eventually will pay dividends for golfers when improvements to the clubhouses and snack bar areas are completed.
New carpet, furniture and painting will transform the golf course buildings and grounds, which are more than 30 years old, says Tod Gazetti, superintendent of the city's Recreation Department.
A.G. Housey signed a five-year deal to take over control of the courses and now will be responsible for the utilities, maintenance, concessions and grounds. The company already is working at the courses and is taking over a lapsed contract from Stack Golf Management. It has two five-year options, which would provide continuity and a long-term revenue stream for the city if the contract is fully realized.
The percentage of gross revenue from green fees, cart rental and concessions that will be paid back to the city will increase each year until it reaches 12 percent. The minimum payments also will increase.
In addition to the guaranteed return, handing over control makes sense because cities shouldn't be in the golf business. It's a highly competitive market, and Michigan's weather often makes running a golf course a challenge.
Royal Oak has stemmed that tide and should see the benefit of its action on the course, but also on the balance sheet.