There seems to be so much acrimony within our community concerning the courses and the incredible amount of financial resources that are required to keep the courses operating. But the ill feelings, I believe, are warranted. It is my opinion that the non-golfing community is getting fleeced.
I recently did an analysis, and I estimate, that approximately $425,000 was transferred from the HOA to the LLC during the 4th quarter of 2023 and the 1st quarter of 2024. Additionally approximately $100,000 was transferred in April 2024 making the total of $525,000 transferred from 4th quarter 2023 to date. The $425,000, in my opinion, could only come from Discretionary Reserves and the $100,000 was cash balance remaining from a previous special assessment.
My analysis and findings were verified by a retired, professional accountant. But the point is, the courses are a serious financial burden to our community. I think everyone agrees to that.
Sometimes if you simplify a problem the answer becomes obvious. So lets define this problem as a simple equation:
$ Profit = $ Revenue - $ Cost
Substituting in actual values:
($30) = $35 - $65
To translate, our courses sell a round of golf for $35 on average, yet it costs $65 to produce that round of golf. The result is, our community looses $30 on every round it sells. And remember, the $35 is a "blended rate", an average annual rate. During the summer off-season, a round of golf is sold for a much lower price, increasing the loss per round.
Keeping it simple, I see two solutions. We can either work the "cost side" and lower cost or we can work the "revenue side", and increase revenue. As we all have witnessed, there has not been much success working the revenue side. In fact, I have been informed that management now agrees our product is a "value" product and needs to be priced accordingly. This means management realizes "our product" can not command premium pricing in the marketplace.
Let's first look at the cost side.
Maintaining 36 holes is costing us approximately $2.2 million a year. Closing 18 holes and re-configuring the remaining course would probably drop course maintenance down to approximately $1.3 to $1.4 million annually. If we can maintain 33,500 rounds of play, maybe even increase it with the benefit of focusing on one course, to say 35,000 rounds annually, our costs would drop to $37 - $40 cost per round.
On the revenue side, we need to raise revenue to $65 a round to breakeven. But if we close 18 holes, then we only need to increase prices to $40 a round. This is the posted rate that was in last month's community bulletin.
So this is now a very simple problem with a simple solution. Here's our choices:
1. Close 18 holes and reduce total costs down to $1.3 - $1.4 million, resulting in a reasonable per round cost of approximately $37 - $40 a round.
2. Increase price of a round to a minimum of $65 per round.
Most residents seem to agree, if a person wants to golf, they should pay the fair price of a round of golf. If golfers want 36 holes, it will cost $65 a round -- and that is to just break-even.
If golfers want cheap golf, fine, you can have cheap golf, but cheap golf does not pay the bills and this community is not going to continue subsidizing each and every round of golf. Costs will have to be cut.
All's we need to do is chose one or the other. Now wasn't that simple.
Stay healthy. Keep the faith and keep your eye on the ball.
Plantation RESIDENTS need to show that they are not fools, they MUST be given the FULL TRUTH of what the HOA is doing, fees, and spending need to be completely defined.