ANALYSIS SUGGESTS CHANGES AT BUFFALO PEAK
By Alice Perry Linker
Observer Staff Writer
Buffalo Peak Golf Course must make "drastic changes" to improve its financial picture, according to an evaluation prepared by a professional consulting group.
A report from NGF Consulting, a firm that specializes in analyzing golf courses, states that without changes, Buffalo Peak "will continue to lose money at a significant pace."
The consultants say that several issues, including mismanagement and poor controls, have damaged the course's ability to become profitable.
The other issues:
Opening too soon.
The course play was too tough for the first nine months of operation. Three holes, Nos. 1, 4 and 10, are termed "unfair."
Lack of money for capital improvements.
Lack of statistical information, such as reports and surveys.
The City of Union, using grants and loans, built the golf course as a way to use clear wastewater from its sewer treatment plant and keep treated water out of Catherine Creek. The course opened Sept. 8, 2000.
With no investment capital, the combined cost of operations and debt service became too expensive last year for the city to support, and it turned the operations over to Union County.
Dennis Spray, the county's general services director, and Marlene Perkins, administrative officer, have been coordinating golf course management and operations for the past several months. The county accounting office handles the golf course's financial matters, including payroll.
Of the original $2.9 million debt, only $50,000 has been paid. Annual payments are $250,000, with $200,000 of that interest, Perkins said. Revenues from the course are insufficient to pay debt service and operations costs, she said. For example, the course earned about $29,000 in April, enough to pay operations but not enough to pay debt service, as well, and the winter months generate virtually no revenue.
"We've been paying salaries," Spray said. "We're doing pretty well. The revenues are keeping up with the current expenses, but the back bills are keeping us in the hole."
The city had originally hired a management company for the golf course, but NGF Consulting criticized the company, saying the "management company does not seem to be providing any guidance or direction to the club."
Spray said the county ended the agreement with the management company, Classic Golf, and is now looking for another firm. He said the county hopes to have a contract before the summer is over.
According to the NGF, the Union course is not generating its share of play among the four public golf courses in the region.
"We estimated that Buffalo Peak should capture a little less than 30 percent of the total market, or 25,055 rounds per year," the consultants wrote.
Last year, 11,656 rounds were played.
The difficulty of the course, especially its narrow fairways, may cause amateur golfers to become discouraged and not return after one round of play, the consultants wrote.
Spray said that since the report was written, Buffalo Peak has widened the fairways by mowing the rough beside each and cutting back the tall native grasses. The costs of re-designing certain holes is prohibitive at this time, but he said the county has made low-cost changes.
The quality of the golf cart paths from hole to hole also brought criticism. Spray said the paths are often dusty and erode easily. The goal to rebuild the paths cannot be reached until more capital funding is available.
The three-day Memorial Day weekend earned $7,500 from golfers, Spray said.
"Where we need to be is at $5,000 per day," he said. "We're doing about half what we should be."
Membership is up this year, from 45 to about 65, he said.
Marketing is essential for the success of Buffalo Peak, as golfers from outside a 50-mile radius are important to the course's support, according to the NGF report. Spray said about $30,000 has been budgeted for this year's marketing, and the course has hired a small firm to do some advertising and promotions. A billboard will be placed on Island Avenue to attract tourists coming into Union County from Wallowa Lake.
The county is looking at ways to lower the debt service, Spray said. One answer may be to get a loan from the state's Economic and Community Development fund. The current bond holder, Eaton Vance Management, has agreed to suspend principal and interest payments until the end of June, Perkins said.
If agreements can be reached to allow the state to hold the golf course bond, the state may be willing to defer payments for about three years, giving Buffalo Peak a chance to increase its revenues.
"We've got to get more exposure," Spray said. "People need to come and play the course."