41st Anniversary Special: Bilking the links

Public-golf revenue is up millions of dollars. But a costly public-private contract has swallowed most of the money
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news@sfbg.com

By now, even most nongolfing residents of San Francisco have heard the dire refrain coming from City Hall: San Francisco's public golf courses are sucking millions of dollars from the city treasury! Dozens of media stories have trumpeted this bleak pronouncement, and city leaders are using the shortfall to push for outsourcing control of the century-old open spaces. But a Guardian review of the Golf Fund shows that the links are not nearly as down-and-out as pro-privatization forces have led us to believe.

Recreation and Park Department accounting documents we obtained show revenues at the city's six publicly owned golf courses last year were up nearly $1.5 million from 2005 to 2006 and more than $2.2 million dollars from 2004 to 2005, an increase of nearly 30 percent. But the cost of a lavish contract with a large, out-of-state golf-management corporation has risen precipitously over the same time frame and drained most of these new funds.

For the 2006–07 fiscal year the city shelled out more than $3.25 million to Kemper Sports Management to operate the pro shop and clubhouse at the Harding Park Golf Course and its nine-hole neighbor, Fleming. By comparison, in 2004–05, Kemper's tab at Harding and Fleming was a still eye-popping $2.07 million, but that number is nearly $1.2 million less than what the city had to pay last year. These increased costs, as well as a hefty loan repayment for Harding Park's botched remodel in 2002 and 2003, have eaten up the links' improved revenue and forced the city to throw in an extra $1.4 million from the General Fund to keep golf solvent.

"What's going on up at Harding is a disaster," Bob Killian told the Guardian. Killian ran the city's golf operations profitably for two decades until 2001. "When I was in charge we had contracts with various managers for the pro shops and the restaurants, and they made us money. They paid us. Now, Harding is run at a deficit. Where the fuck is the money going? What's it for? Nobody knows. It's all this big secret.... It's a scandal."

Kemper's seven-year deal is unique, to say the least. At every other publicly managed course, the city leases control of the pro shops and clubhouses to outside companies. In exchange for a flat fee paid into city coffers, those companies bear all of the risk and reap most of the rewards of operating the facilities. But at Harding, the city pays Illinois's Kemper $192,000 per year, regardless of its performance, to act as an on-site manager, plus a 5 percent incentive fee for gross revenues over $6 million. But those guaranteed sums are only the beginning of the bill.

Kemper hires staff, rents golf carts, and orders the supplies to be sold in the pro shop and the clubhouse. Unlike in the city's lease arrangements at other courses, though, the company bears none of the risk. It simply invoices the city for its expenses, and the city signs the tab. And the tab just keeps growing.

One public-golf insider who declined to be identified for fear of retribution said, "They've got this enormous staff there, managers and assistant managers and assistants to assistants of managers. It's a golf course, not a hospital! I hear the payroll for the restaurant alone is like $600,000. And it's only open for one shift a day.... They stock their pro shop with top-of-the-line gear that just sits there. If they order 20 Arnold Palmer shirts and only sell two, who cares? The city still pays for all 20."

In an e-mail to the Guardian, Kemper's general manager at Harding, Steve Argo, told us it has between 60 and 80 employees, depending on the season.

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