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Revenues below par at Palo Alto's new golf course

Slumping merchandise sales cut into bottom line at Baylands Golf Links

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Since it reopened to the public in May 2018 after a two-year closure, Palo Alto's reconfigured and refurbished golf course in the Baylands has seen a healthy surge of players and plaudits.

Revenues, however, remain below the city's projections — a function of weaker-than-expected merchandise sales and the difficulty of getting to the course during weekday commute hours, according to city staff.

The Baylands Golf Links, which replaced the former Palo Alto Municipal Golf Course at 1875 Embarcadero Road, saw overall revenue targets fall about 6% below projections, according to a report that the Parks and Recreation Commission received on Dec. 10.

In accordance with the renovation plan approved by the city, the reconfigured golf course design was developed to enhance wildlife habitat, improve wetland areas and reduce usage of potable water, pesticides and maintenance labor for turf and landscaping.

Prior to reopening, the city sought a proposal from golf management companies to oversee all golf course operations, including golf play, course maintenance, practice facilities, merchandise sales and food and beverage services. Upon City Council approval, OB Sports was selected to manage the new golf course, Baylands Golf Links.

When the course reopened, green fees were based on "dynamic pricing," with rates fluctuating depending on the time of day, day of week and demand. Additionally, green fees were tiered with Palo Alto residency, Bay Area residency and visitor rates. The combination of both dynamic and tiered pricing has resulted in strong green fee revenue to support operating costs.

"The dynamic pricing is the key factor in maintaining our revenue stream," Open Space, Parks, and Golf Superintendent Lam Do said.

According to the latest data, while green fee revenue exceeded projections, revenue from merchandise sales fell below target. As a result, when considering overall revenue, golf operations ended fiscal year 2019 at 6% under target. Since OB Sports operates the Baylands Cafe under a lease, food and beverage sales are not factored in the golf course's operating budget.

Commission member Jeff LaMere raised a question about repurposing the sales floor for other uses such as an educational space or socialization area. Do said they are working to make better use of the space for everyone and are looking into bringing in more traffic through teaching simulators.

With numerous retail and online vendors competing for golf merchandise sales, it comes as no surprise that the golf shop revenue trails behind. But that doesn't explain why golf rounds played were below projected rounds.

City officials expected the total of rounds played to be lower than ideal at first but then continue to grow over several years as golfers either returned to the links-style course or new players discovered it.

The report notes that 54,619 rounds were played in fiscal year 2019, higher than each of the three years prior to course closure. The former golf course showed a steady decline in rounds played, which went from 46,527 in 2014, to 42,048 in 2015 and to 35,354 in 2016, respectively.

Overall tee time utilization for Baylands Golf Links is at 72% compared to 56% for local municipal courses. Do said that there is room for improvement but it is a fine line to balance more people on the course without compromising pace of play.

"It's a tough line to manage, we want to get more players on the course but we also want to make sure there is proper pace of play," Do said.

From July to September 2019, weekend utilization of the course was 81% while weekday usage sat below at 67%. To not impact the pace of play on the weekends, Do said the city would like to see increased utilization during the weekdays where there is more availability.

But, the challenge of weekday play comes from dealing with commuter traffic. Given that the course is situated along the U.S. Highway 101 corridor, players usually have to deal with traffic congestion either on their way to or from the course.

According to the report, player residency on the new course consisted of 80% from Santa Clara and San Mateo counties. Palo Alto residents made up 27% of golf rounds played compared to about 13% on the previous course.

To promote more golf play, OB Sports is offering its membership program, known as LinksCard, at a discount rate and offering certain tee time slots for non-members at discounted rates.

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Comments

2 people like this
Posted by Marc
a resident of Midtown
on Jan 6, 2020 at 4:39 pm

How does the current weekday/weekend utilization compare to that of before the renovation? Traffic has been bad for years I don't think it has suddenly gotten worse to get to that side of 101 since 2018.

/marc


6 people like this
Posted by Need Ming's for golfers
a resident of University South
on Jan 6, 2020 at 8:22 pm

Without Ming's open, I wouldn't want to go golfing there either. Open Ming's back and maybe you can attract golfers.

Plus, the golf club doesn't offer a fine dining experience. You know what course offers you an amazing experience? Cinnabar Hills in New Almaden. Plus the golf club has a full-sized ballroom for weddings. Today, the destination has to be where the "experiences" are, not just moving a person to place A, and then back out to place B. Many new companies and restaurants are failing (and for other financial reasons) because they forget that Americans like to value their experiences.

So what if you don't have money like Disney or Landry's, all you need is to sculpt (without those horrid Tolix chairs) a dining experience that doesn't use slabs or wood or toaster pans with tissue paper; that uses actual ceramic plates, that has great music, comfortable chairs; and most importantly is designed for your guests:

If you're targeting Indian guests they love grey paint, red and orange. If you're targeting Chinese guests, they love bright red, gold and black colors. If you are targeting Middle Eastern guests, they love turquoise, purple, fuschia, and gold. If you are targeting the rest of America, go with an actual theme - maybe one that involves tall trees- as "palo alto" means tall trees. In addition, pictures of Bay Area golf players are great. Maybe offer music options when playing golf for the players with silencing wireless headsets, and the occasion bottle of beer, water, or champagne glass while they are playing.

Just some ideas...


15 people like this
Posted by AvidGolfer
a resident of Barron Park
on Jan 6, 2020 at 9:50 pm

54,619 rounds in the first full year of operations for Baylands Golf Links is tremendous.

Golfweek recently rated Baylands the #13 public course in the entire state of CA:
1. Pebble Beach GL, Pebble Beach (No. 8 c)
2. Pasatiempo, Santa Cruz (No. 37 c)
3. Spyglass Hill, Pebble Beach (No. 29 m)
4. Rams Hill, Borrego Springs (m)
5. Torrey Pines (South), San Diego (c)
6. Rustic Canyon, Moorpark (m)
7. CordeValle, San Martin (m)
8. PGA West (Stadium), La Quinta (m)
9. Barona Creek, Lakeside (m)
10. Links at Spanish Bay, Pebble Beach (m)
11. Torrey Pines (North), San Diego (c)
12. Poppy Hills Golf Course, Pebble Beach (m)
13. Baylands Golf Links, Palo Alto (m) *

No worries about lower merchandise sales. High dollars with low margins doesn't help the bottom line.

Baylands Golf Links is a huge asset to the City of Palo Alto, a great place for families to learn and play golf.


2 people like this
Posted by musical
a resident of Palo Verde
on Jan 6, 2020 at 11:08 pm

Parking can be tight with fewer than 200 spaces.
Shoreline/Michael's has almost twice that number.


16 people like this
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jan 7, 2020 at 3:05 am

I'm not a golfer, or a private airplane pilot, but I do like to hike and walk out by the Baylands.
Is it really fun for golfers to play golf at the Palo Alto course with airplanes taking off every 30 seconds to a minute?
The airport ruins the whole area, and the golf course is a waste of this area, but at least golf does not disrupt and annoy everyone in the whole area.


8 people like this
Posted by Rational
a resident of Downtown North
on Jan 7, 2020 at 6:28 am

Like some others, I am not reading this data as “bad” at all. Retail sales aren’t what they used to be, low margin and cost of inventory and so many/online options. The points about dining are right on though, that is the best lever to boost revenue.

The whole area is very cool — the Baylands bike/ hiking paths, the airport ... which is a center for economic activity and recreation. More could be done there to bring more people to the Baylands — I always find the trails and nature center could support more visitors. Maybe a yatch club/ boating facility that doesn’t disturb the wetlands? Maybe a couple eateries on the water?

Also, housing in that area could also work well. Presently it’s only low-level businesses. Potential!!

Neeraj.


5 people like this
Posted by AvidGolfer
a resident of Barron Park
on Jan 7, 2020 at 6:33 am

@musical
If the pilots that fly in/out of Palo Alto airport and the tech workers from across the Embarcadero would stop parking in the golf course lot, there would be ample parking for the golfers. Carpooling to play golf wouldn't hurt either.


6 people like this
Posted by Jones
a resident of Midtown
on Jan 7, 2020 at 9:38 am

@Mark
Tee time utilization of 78% looks like a very good number. Well used, but still available.

"Palo Alto residents made up 27% of golf rounds played compared to about 13% on the previous course." This is a great statistic for success from the perspective of providing a valued amenity for city residents. That is twice the value of the old course.


7 people like this
Posted by Mutti
a resident of Adobe-Meadow
on Jan 7, 2020 at 9:51 am

Younger people aren't golfing. It's time to give up the golf course and build the southern connector from 101 to Dumbarton Bridge in that space instead. All those people plowing down University Ave in EPA so that rich white people can hit a little white ball around the water-guzzling grass is just stupid. (I know the water is recycled....)


6 people like this
Posted by Neighbor
a resident of Old Palo Alto
on Jan 7, 2020 at 10:25 am

I can tell you exactly why this golf course is failing. My husband used to play it all the time, but stopped after the new configuration which involved taking out a ridiculous amount of trees, which ruined the wind break. They should have talked with actual golfers before doing this because they pretty much downgraded the course in a way i don't think they can fix now.


5 people like this
Posted by Kev M.
a resident of East Palo Alto
on Jan 7, 2020 at 11:13 am

I'm actually surprised that the utilization of the golf course is actually as high as it is. Adults with lots of spending money and free time these days don't want to golf. They'd rather play Mario Golf for the GameBoy Color. And they want it ported over to the Nintendo Switch. Or maybe just make something like it for iOS. And instead of going to golf practice in their spare time, adults these days would rather build software or learn valuable life skills like cooking and personal finance and how to become great at dating.


2 people like this
Posted by By White People
a resident of Crescent Park
on Jan 7, 2020 at 11:15 am

[Post removed.]


4 people like this
Posted by Visitor
a resident of Midtown
on Jan 7, 2020 at 12:10 pm

Also the rates of the course are high. Non-residents will not want to spend that kinda of money on a course like this. Is the course nice? yes of course but the rates are high and I feel a lot of people would rather go elsewhere


11 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Jan 7, 2020 at 12:17 pm

I'm surprised that they bother trying to sell retail merchandise. Amazon has destroyed retail profits everywhere. They should just leave merchandise sales out of any future budget projections.


15 people like this
Posted by PhotoOp
a resident of Palo Verde
on Jan 7, 2020 at 12:50 pm

A few thoughts from a resident senior golfer.....

I play golf between 2 and 3 times a week.... before Baylands, I would drive up to 45 minutes each way to get to a course that I wanted to play..... now I play almost all of my rounds at Baylands.... driving out of Palo Alto is now the exception not the norm.... of course that is due to the new design. The course layout is wonderful, each hole is unique and the green complexes are sophisticated by municipal course standards.... My only concern is will the course be well maintained if the city starts cutting budget to make their budget goals. The only way they can maintain current price points is if the course conditions remain top tier, otherwise, most regular golfers will go elsewhere. Saving money by cutting maintenance costs would be short sighted. Already, in the winter when the fairways go dormant the course is a bit of a mess....

The main takeaway from the article is that there was really over aggressive assumptions regarding product sales.... My understanding is that OB doesn't really care about equipment sales, so the clubhouse is basically for apparel. Once you have one or two branded shirts, what else is there to buy? Balls/gloves/tees are best bought at a discount store or online. To me, this is more of a statement of bad planning assumptions vs. bad performance.....

One issue that wasn't mentioned was the money wasted in developing a short game practice area that cannot be used because of balls now entering into that area since they removed the trees lining the fence.... How much did that cost? Will it ever be remediated?

Honestly, as a retired senior, between the city investment in Baylands and the recently dedicated Pickleball Courts in Mitchell Park, I feel the city has made some decisions that actually improve my quality of life.... I typically don't get that feeling....




13 people like this
Posted by FYI
a resident of Palo Alto High School
on Jan 7, 2020 at 1:10 pm

Well, between PAO traffic and SFO bound planes, not to mention the occasional SJC bound commercial jets at 2000-3000 foot altitude, I cannot imagine playing at that refurbished golf-course. It cannot be a pleasant experience. The airplane traffic noise ruins it. Not to mention the inability this noise must cause to focus and putt properly.
Wake up, Palo Alto City Council, and do something about the airplane noise that ruins everything in this town, including golf courses. If you don't, what is happening with the golf course will happen with everything, including housing prices and property tax income.


14 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Jan 7, 2020 at 1:23 pm

NO freeway through the Baylands.
I think the course looks lovely, though I admit I’m not a golfer.


13 people like this
Posted by Paul
a resident of Palo Verde
on Jan 8, 2020 at 4:11 am

You can see the huge increase in rounds played. I’ve played the course with my family for the last 20 years? The course is beautiful. True to the links course experience. Removing the trees let’s you see the natural beauty of the area. The bay; the wind that keeps the course honest is now there right in front of you-placid at times and a windy fight for your golfing life at others.. Watching walkers and joggers around the course informs me that they enjoy atural beauty . The small planes that fly around the airport float nearly silently; watching them take off and descend is magical. The whole course has become magical! Take your kids there; learn to play; find the lessons in golf; take advantage of generous junior discounts. This is a public course; please utilize of this gem of a course and preserve it.


14 people like this
Posted by JR
a resident of Palo Verde
on Jan 8, 2020 at 7:49 am

Golf is a sport for all ages, all people, all income levels. The world's greatest golfer isn't white and wasn't rich before he started winning every golf tournament on the planet. If you come to any public golf course in the bay area (PA included) you will find a diverse range of players. Reality doesn't meet the false stereotype.

As for paving over the golf course and baylands to build a freeway on-ramp, that's probably the worst idea I have ever heard.


6 people like this
Posted by Avid Golfer
a resident of Midtown
on Jan 9, 2020 at 9:32 am

Comparisons should take into account the following:
-Number of rounds & revenue the previous 3 years before the change to a modified 18 hole under Brad Lozares.
- Current pricing whether dynamic or not is significantly greater than the average $47/round pricing under the Lozares era
- to maintain this premium significant focus on maintainer and playing conditions is critical
- Good conditions dependent on improved irrigation/drainage is the only way to continue to attract out of Palo Alto players, eg, Jerry Rice places weekly and this helps attract Bay Area luminaries
- The city needs to invest in raising the fence between the range the excellent short game practice area. This will attract juniors from around the area & help OB create a high level practice program


Like this comment
Posted by JB
a resident of Menlo Park
on Jan 9, 2020 at 8:54 pm

I would play more than once a week if rates were lower , like Sunnyvale


Like this comment
Posted by Joe Ferguson
a resident of Stanford
on Jan 13, 2020 at 4:50 pm

The course is very good. The staff is 1st rate. The prices are high. Just compare the rates with Shoreline. As nice as it is, $30 premium over Shoreline is excessive. And I am a Links Card holder.


Like this comment
Posted by Weekly Golfer
a resident of Los Altos
on Mar 16, 2020 at 6:52 pm

I play golf weekly and there are lots of golfers out there. I liked playing the new course and this is not the problem. Some people complained about traffic, this is also not a problem. It really just boils down to it’s over priced for the value. If they made the cost $60 all the time for all, that would bring a lot more golfers to the course.


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