Aspen takes golf course operations in house
October 20, 2009
ASPEN – The city of Aspen is taking over the municipal golf course operations and plans to spend $200,000 in start-up costs for next season.
The Aspen City Council agreed Monday to let Steve Aitken, director of golf, and Jeff Woods, parks and recreation manager, oversee the operation.
Colorado Ski and Golf, which is the parent company for Aspen Sports, also known as Specialty Sports, had run the golf pro shop for the past 30 years. But when the lease came up earlier this year, the company decided not to bid for the business again.
And because the city wasn’t able to attract a suitable and qualified operator, the municipal golf department was forced to take the pro shop operations in house.
The golf department will borrow $200,000 from the city’s parks fund to cover the start-up costs, and the loan will be paid back over 10 years.
The money will be used to buy operational equipment and retail inventory, as well as to pay a head golf professional to set up operations on a contract basis.
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Equipment, which includes the fleet of golf carts, rental sets and other items associated with the operation, will be sold to the city by Specialty Sports for $86,875.
Another $100,000 will be spent on stocking the pro shop with retail goods and other merchandise. The contract for the golf professional will cost $13,125, which will cover that individual working two days a week prior to coming on full time in mid-March.
Once hired full time, the head golf pro would be paid about $70,000 for a seven-month golf season. That includes $52,000 in base salary, $10,000 in incentives and $8,000 in benefits. Incentives are proposed at 2 percent of green fees revenue over 23,000 rounds, 2 percent of retail sales over $120,000 and 5 percent of lessons.
City officials estimate that green fees revenue will increase $50,000 next year. This year, Aitken projects that $450,000 was generated in green fees.
The increase in revenue won’t be from a rate hike, but rather the golf department’s attempt to get more people on the course.
“In this economy, you can’t charge more for golf,” Aitken said.
Woods noted that the city had the authority to charge up to $125 for an 18-hole round but only charged $100 during peak season.
Woods said in years’ past, between 26,000 and 27,000 rounds of golf were played at the municipal course. In 2008 and 2009, that figure was between 23,000 and 24,000 rounds.
While the city will lose about $100,000 in revenue from Specialty Sports’ lease to rent the 1,250-square-foot space, officials say they can make it up in other operations from which the private company made money. Specialty Sports paid 16 percent of all gross sales revenues in excess of $625,000, according to the current lease.
Aitken and Woods conservatively estimate that the city will make $550,000 in revenue from golf cart and club rentals, the driving range, lessons and the retail operations.
Some council members noted that Aitken and Woods’ estimate of $120,000 in retail revenue for 2010 is conservative given that Specialty Sports brought in $267,000 last year.
Woods said because he and Aitken are new to it, the numbers are a moving target.
“We’ll adjust as we get our feet wet and we know what we are doing,” he said. “Everything is on the table … we want to grow, and we are looking at an entirely new business plan.”
Woods added that Specialty Sports captured an average of $10 per person while at the golf course. Private courses capture about $7, and most municipal courses get $5 a head.
Under the city’s plan, the golf shop is projected to net about $120,000 annually – $70,000 more than prospective lease holders were offering for the operation.