Most municipal golf courses are self-managed, principally in an Enterprise Fund.
Concession rental agreements (leases) vary widely between municipalities based on the size of the population, geographic location, and the deferred capital investment at the time of the agreement’s initiation. The average length is 30 years.
There is no “standard” agreement.
The most frequently observed option was leasing the pro shop, with the municipality retaining 100% of green fees revenues and the responsibility for maintenance (Albuquerque, Dallas, Louisville, Spokane).
The larger the city, the more likely the maintenance operation is to be leased, e.g., the City of Chicago, Forest Preserve District of Cook County, Indianapolis, Los Angeles County, and Mecklenburg County (Charlotte).
Concession agreements (leases), where the lessee is responsible for maintenance, rental payments to the municipality are likely to be:
- In smaller cities, up to 12% of gross revenue is on green fees and carts, 8% on merchandise, and food and beverage.
- In mid-size cities, rental payments, i.e., starting at 35% of gross revenue, will be payable after a defined level of revenues is achieved, i.e.,>$2,000,000. (Mecklenburg County)
- In large cities, rental payments, i.e., starting at 35% up to 50% of gross revenue, will be payable on total revenue with a minimum revenue guarantee exceeding $100,000. (LA County)
- Where deferred capital expenditures are large, the agreement will specify significant capital projects to be completed by the concessionaire with a nominal rental payment, i.e., <2% on gross revenues. (Indianapolis)
Third-party management agreements, as differentiated from leases, with an average length of five years, generate an annual fee starting at $100,000 with incentives based on performance. A developing trend is that the management fee is a percentage of revenue, i.e., 3% to 5%.
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