Source: Omaha World-Herald (Nebraska)
When it comes to golf, being "in the hole" is a good thing.
Not so for a Papillion golf course.
Papillion city officials thought when the municipal Eagle Hills golf course opened in May 2000 that it would become self-sustaining and generate a profit of hundreds of thousands of dollars annually.
Instead, the course has run up a cumulative deficit of $ 507,158 since the spring of 2001, city officials say. They are scrambling for a way to keep taxpayers from subsidizing the course.
The 18-hole course southwest of 48th Street and Cornhusker Road has never met revenue forecasts, officials say. As a result, the city can't pay off the construction bonds it issued in the late 1990s based on those forecasts.
The city has been using reserves it saved from profits at Tara Hills, the city's other golf course, to cover the shortfall.
City officials are considering a range of remedies, including rewriting the course manager's contract so he shares the risk as well as the success of the course.
The contract with B.D. Bengston Inc. is up for renewal this year.
"Under the current arrangement, we will soon have to start using taxpayer dollars to pay for the golf courses," Papillion Mayor James Blinn said. "I do not want that to happen. That means you either cut services or raise taxes."
Blinn faults revenue projections provided by the management company during construction.
In 1998, the city issued $ 3.9 million in construction bonds based on the company's projections of 52,500 golf rounds a year. At that time, officials expected the practice holes to bring in $ 25,200 a year and the driving range $ 107,625.
But a year later, the projections were revised upward, allowing the city to issue another $ 1.83 million in construction bonds. The course then was forecast to bring in 53,000 rounds, the practice holes $ 50,000 and the driving range $ 200,000.
According to Blinn, actual numbers haven't come close.
Last year, 39,026 rounds were played, he said. The city is forecasting a deficit for the course of $ 195,493 this year.
Doug Bengston, who manages both city courses, said his revenue projections were a guess based on the success of Tara Hills at the time. Now, he said, there's a glut of courses and none are prospering.
"That was back in the '90s, before all these golf courses opened in Omaha, and Tara was growing by leaps and bounds," he said. "Projecting and using that data, I arrived pretty much at the only conclusion you could, considering they (city officials) weren't going to hire a company to do a market analysis."
"Who knew at the time that in 2000, five new golf courses would open up?" he said.
Papillion City Councilman Tom Mumgaard said the projections, made during a "golf boom" in the metro area, were clearly inaccurate. But Mumgaard said part of the problem has been a general decline in golf play in the Omaha area.
"The optimism as to the revenue just did not play out," he said.
Bruce Lubach, executive director of the Nebraska section of the PGA, said the situation at Eagle Hills is not unusual.
The game of golf is suffering from too many courses in the market and too many other pastimes competing for people's time, Lubach said.
"We've built more golf courses, and with more golf courses we haven't kept pace with growing the game of golf," Lubach said.
Lubach expects that in the next two to three years a Nebraska golf course could close because of the inability to attract enough rounds of golf.
"That's just reality," he said.