SDMGA: Estimate of Losses to Golf Enterprise Fund.
November 20, 2008: Below is a summary of U.S. Open finances showing a gross loss to the city on the U.S. Open of $ 9.184,629 including the original renovation costs and a loss of $5,784,629 but not counting the South renovation costs.
_______________________________________________________________________
LOSSES TO THE GOLF ENTERPRISE FUND FROM THE U.S. OPEN
U.S. Open Expenses Incurred by Golf Enterprise Fund for Open: $10.38 million
Itemized expenses (in millions)
Original South Renovation: 3.4*
Course Prep as of June 10, 2007 3.0 1
Costs between June 10, 2007 and July 1, 2008 2.0 2
Lost Greens Fee Revenue from Course Closings (itemized, next page) 1.984.629
Total Expenses: $10.384.629
Total U.S. Open Revenues Allocated To Golf Enterprise Fund 1.2*
GROSS LOSS TO GOLF ENTERPRISE FUND $ 9.184,629
Note: The South Renovation which cost 3.4 million could be viewed as a capital expense. If so, the net loss to the enterprise fund would be around $5,784,629.
But it should also be noted that the Friends of Torrey Pines (FOTP) put up the money for the South Renovation and advertised to the public the renovations would be done “at no cost to the City.” See http://www.centuryclubofsandiego.org/city_sd.php. FOTP (or its alter ego the Century Club) then received a repayment of 950,000 from the City. (See minutes of Regular City Council Meeting, Monday, September 11, 2002. (See http://sdmga.com/centclubinfo_$950k.htm ). FOTP then made a successful bid to host the U.S. Open in which FOTP acted as a middle man between the USGA and the City. Using its role, the FOTP contracted with the USGA for the U.S. Open and negotiated a deal which rivals the Chargers stadium deal in being grossly unfair to the City.
The head of the FOTP is attorney Jay Rains. Attorney Rains had conflicting interests in the negotiations between the City, FOTP and the USGA. On the one hand, he was telling the City that having a U.S. Open would be great for the City. On the other hand, he was representing himself and other members of the FOTP who apparently all along planned to reimburse themselves for the money they laid out for South Course renovations out of U.S. Open proceeds and place the expense of the renovations on the City Golf Enterprise Fund. Finally, Mr. Rains was rewarded by being made a member of the USGA executive Board for negotiating a contract unconscionably favorable to the USGA (e.g. the USGA which grossed by some estimates 100 million on the Open at Torrey Pines did not pay a dime for business interruption of the North Course which as closed to 18 hole play for 7 months at a gross cost to the City of $1.569 million.)
Lost Greens Fees Calculated as follows:
Closing of North to 18 hole Play 2/1/08 thru 9/1/083 1,569,234
213 days = 58% of total days
8,422 WD Resident Rounds @ $34 = $286,348
9,750 WE Resident Rounds @ $43 = $419,250
7,372 WD Senior Rounds @ $24 = $176,928
4,334 WD Visitor Rounds @ $85 = $368,390
3,003 WE Visitor Rounds @ $106 = $318,318
Total 32,881 Rounds $1,569,234
Closing of South to Twilight Play 2/1/08 to 6/16/084 120,814
137 days (37.5% of total days) =
1236 WD Resident rounds @ $25 per round = 30,900
877 WE Resident Rounds @ $29 per round = 25,447
1166 SR Resident Rounds @ $27 per round = 31,482
554 Visitor WD Rounds @ $76 per round = 42,180
347 Visitor WE Rounds @ $95 per round = 32, 985
Total 4180 Rounds $120,814
Closing of South to all Play May 16 though June 165 294,581
One Month = 8.33% of total days
1174 WD Resident Rounds @ $42 = $49,308
1116 WE Resident Rounds @ $49 = $54,684
259 Senior Resident Rounds @ $27 = $6,993
790 WD Visitor Rounds @ $126 = $99,540
532 WE Visitor rounds @ 158 = $84,056
Totals 3,871 $294,581
Submitted by:
Professor Paul J. Spiegelman,
Director of Advocacy & ADR Programs, Thomas Jefferson School of Law
Co-Founder, San Diego Municipal Golfers’ Alliance
November 4, 2008
* See Tod Leonard, Open is big payday, but not for city coffers, June 10, 2007 http://www.signonsandiego.com/uniontrib/20070610/news_1s10golfside.html; this is figure Jay Rains gave to city in letter described in Tod’s article.
1 See Tod Leonard, Open is big payday, but not for city coffers, June 10, 2007 http://www.signonsandiego.com/uniontrib/20070610/news_1s10golfside.html
2 Guesstimate
3Based on National Golf Foundation Projected Rounds for 2007 for 18 Hole Play (NGF Consulting Report, p.93 Because there is 9 hole play during part of this period, for estimation purposes, twilight play is not counted as loss, nor is total closing for one month.
4 Based on NGF Consulting Report Projected Rounds for 2008 (NGF p.93)
5 Ibid.