The Mountain Times

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What to do with the golf course

I'm pleased to say that I've had a sincere interest in the Town of Killington's Green Mountain National Golf Course since the beginning. It was with feverish effort that the finishing touches were put on the facility so that it could host Vermont's first Women's Professional Golf Tournament, which I and The Mountain Times were great supporters of.

The FUTURES Tour brought over 100 of the best up and coming women golfers from all over the world to compete on what was certainly one of Vermont's best new tests of golf. The FUTURES Tour grew her for several years and Green Mountain National's reputation grew with it.

But the FUTURES Tour ultimately failed to generate sufficient revenues to continue at Killington. So too has the general demand for golf lost in its appeal, while the number of golf facilities has grown. Supply and demand is currently out of balance, and there's no indication that our weak global economy is going to help matters.

If you look around the region you will find that many country clubs nationwide have financial difficulties. Those who are the most well off have alternate or supplemental activities that help balance their profit and loss statements. In or own neighborhood, those would include Killington Resort where golf is very much a secondary revenue generator; Woodstock Country Club where they are part of a major hotel and larger resort complex; and to some extent Rutland Country Club which enjoys year round dining, catering and party function business which generates more gross revenue than membership dues.

All business is about income and expenses, but it's also about cash flow. Income and expenses determine if you have the "gross profit" required to also make debt and mortgage payments and pay taxes, and stay in business.

Looking again at Green Mountain National they are suffering from nearly all of the maladies that promulgate financial difficulty. They're in a market with too much golf available. They're faced with a local competitor that can afford to underprice and out serve them without bringing disaster on themselves. They have no significant revenue away from golf. They have too much debt... and they are equally exposed to both the dwindling popularity of golf and the weakness of the economy.

Green Mountain National is a municipally owned facility. As a taxpayer, I understand that I'm ultimately liable, along with my neighbors, for it's financial obligations.

If Green Mountain National was a privately owned company it's most likely that we could negotiate with our creditors in some form of bankruptcy and dump a lot of debt. That, of course, isn't going to happen because the Town is not bankrupt, nor is any creditor going to give up a penny of obligation owed by government. This may happen to the government of Greece, but it isn't going to happen in Killington.

So what do we do?

One option is to lease the course to what may be a smarter group of operators, get rid of the burden of operation and hopefully end up with more cash to pay off debt. I don't think there are any takers on this one.

We could also try to sell the course, but again there would be few takers, and none of those would pay much for a weak cash flow generator.

Another option is to simply shut down the course, sell off what's left and pay off as much of the debt as possible with the proceeds. This, of course, wastes all of development costs to have built a championship facility.

In theory, so long as the operation of the facility generates any manner of significant positive cash flow, while maintaining the premises properly, it's best to keep it running. At the same time, the costs of operation MUST be minimized and the sources of revenue MUST be optimized. Any schemes at maintaining the status quo are ludicrous. There was a study done, but my understanding is that it's not enough new information to solve any real problems.

In the mean time, funds will most certainly be pulled away from the EDTC budget or costs will be added to your tax burden. There is no way around it... and we will just have to be happy that the golf course is a recreational asset that brings pleasure to residents and hopefully draws more tourists to come here and leave their recreation and tax dollars. Much has been tried in the past to overblow this aspect of the course's existence and we should be leery of manufactured data in the future. The most emphasis should be on further cost cutting, more competitive marketing and operations, and new and diversified uses for the facility. Everything else is out of our hands.


Tagged: Green Mountain National Golf Course, Royal Barnard