Pease Golf Course turns profit by avoiding debt
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(Newington, NH) While municipally-owned golf courses in Concord and Manchester are leaning on taxpayers to cover for losses, the publicly-owned Pease Golf Course continues to turn a profit. When the Air Force left Pease in 1991, the State of New Hampshire took over the property, managing it through the Pease Development Authority. Pease Golf Course has been run as a self-sufficient business within the PDA ever since, according to PDA Finance Director Irving Canner.
Pease has avoided having to ask taxpayers to subsidize its operations in part by avoiding debt. Manchester’s Derryfield Country Club brings in more in revenues each year than it spends in operation expenses, but debt service for a recent round of capital improvements have forced taxpayers to chip in $1.1 million in recent years. The Concord City Council recently approved $141,000 to help the city-owned Beaver Meadow Golf Course pay its bill this year.
But Pease managed to rebuild its clubhouse without borrowing money. PDA Executive Director Dave Mullen says the golf course set aside its annual profits, and used those accumulated earnings to pay for overdue capital projects.
“The Golf Course carried us in the early years, and we had a payback due to keep it in a quality state,” Mullen says.
And the since Pease had the money to pay for clubhouse construction upfront, it isn’t carrying debt service payments now. Mullen says the course ended Fiscal Year 2012 with $329,000 in retained earnings, and expects to deliver $250,000 to $300,000 in annual profits.
A closer look at the annual revenue and expense reports provided by Pease shows the public golf course has increased revenues, but seen profits shrink during the current economic downturn. Not including depreciation costs, which Mullen says don’t impact the golf course’s cash flow, Pease expenses have grown nearly 42% since Fiscal 2006, while operating revenues have grown by 21%.
Mullen says much of that growth has come from the clubhouse’s improved restaurant.
“We brought in a new vendor for the restaurant, and he upgraded his service and food,” Mullen adds.
Net revenues from concessions have exploded from $34,000 in FY06 to over $127,000 last year.
Mullen says the course isn’t immune from the slow local economy, and tries to remain competitive with privately-owned public golf courses in the Seacoast region. Pease Golf Course members have been playing more rounds in recent years, but non-member rounds account for three times the revenues as members, and two-thirds of total operating revenues.
While Pease Golf Course, and the PDA itself, remain part of New Hampshire government as a free-standing authority, Canner says his mission is to keep taxpayers from ever having to pay to keep them running. He says the PDA has been able to meet its expenses, and build up a small surplus in the event of an unprofitable year.
“The first alternative is in prior year reserves,” Canner says.
Instead of turning annual profits back to the General Fund, the PDA reinvested them in the golf course. He says using prior accumulated balances for the clubhouse project helps keep the course profitable by avoiding ongoing debt payments.
“We paid for that with profits, not borrowing,” Canner adds. “Their expenses and revenues paid for themselves, all for the benefit of the property.”
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