Chambers Bay lost about $850,000 in 2011, but Pierce County says it will break even in 2 years

Four years after its heralded opening, Chambers Bay Golf Course continues to lose money – about $850,000 in 2011 – and still requires loans to cover its operating expenses and make debt payments.

But Pierce County officials say the links-style course is moving toward breaking even in 2014, one year before the  former gravel mine will capture the national spotlight as the site of the U.S. Open.

The deficit for 2011 was less than half the loss of $1.8 million in 2010, said Tony Tipton, of the county’s parks and recreation department.

The number of rounds played increased 19 percent from 2010, primarily because of a new annual pass. And revenue from the course’s restaurant grew by 15 percent, according to a county report released this week.

Deputy County Executive Kevin Phelps said the golf course in University Place is on target to break even in two years. That means it would have to generate enough revenue to pay its annual operating expenses and debt payments.

“What we’ve been on is a plan to get sustainable by 2014,” Phelps said. “We think we’re still on track for that.”

For 2012, the county projects another deficit of $841,550.

Meanwhile, County Councilman Dick Muri criticizes a major change made to the golf course budget last year, calling it a subsidy by sewer ratepayers.

In 2011, the county golf course fund used $1.7 million in revenues received from the sewer utility to pay golf course bonds and loan interest. Another $1.1 million transferred from the utility to the golf course fund remains unspent.

The utility last year started paying the golf course about $800,000 a year, retroactive to when the course opened in June 2007, said Brian Ziegler, Public Works and Utilities director. He said the payments were for “avoided maintenance costs” that were overlooked when the course opened.

The total is based on what the sewer utility would have had to pay to maintain the 225-acre golf course and surrounding trails as a nature park if the course hadn’t been built. Golf course maintenance expenses are about $2.5 million per year, he said.

Ziegler said the sewer utility is meeting a legal requirement to pay back the golf course for maintenance. Because the utility owns the golf course land, those annual payments will continue.

“This is a not a subsidy for the golf course,” Ziegler said. “This is a legitimate expense to the sewer utility and should be paid by utility funds.”

Muri, R-Steilacoom, said he doesn’t like his constituents subsidizing a high-end golf course with any portion of their sewer payments.

“That’s not the way it was sold to the public,” Muri said.

“Let’s be honest,” Muri said. “The golf course loses money. The sewer utility subsidizes it.”

Muri was the only County Council member to vote against building the golf course at a cost of $21 million.

“It cost so much money to build,” Muri said. “That’s the bottom line why the golf course is losing money. It’s the principal and interest that we have to pay every year that makes it too expensive.”

County Executive Pat McCarthy said the golf course is on track to break even. But she points to a bigger picture: the goal of bringing multiple U.S. Opens to Chambers Bay and the recreational benefits of the golf course and its surrounding trails and beach.

“I applaud the fact that we took that piece of moonscape and turned it into the potential for a revenue generator, and more importantly, a beautiful public space for the public to enjoy,” McCarthy said.

The golf course hasn’t broken even since 2008, when rounds played hit their peak.

The course even lost money in 2010, when it attracted national exposure by playing host to the U.S. Amateur. The tournament itself made a profit of $15,615 after subtracting the loss of green-fee revenues from the course’s 18-day closure to the public, Tipton said.

Other planned revenue sources for the course – a hotel, clubhouse and restaurant – have failed to materialize because of the bad economy, Phelps said.

For its operating budget alone last year, the course nearly broke even with a deficit of $70,943. Revenues reached $4.78 million.

Included in expenses was about $300,000, a one-time cost that covers the county’s 25-percent share of improvements the United States Golf Association is making to three holes for the U.S. Open. No further major course improvements are planned; if any develop, the county and the USGA would have to negotiate the costs, Ziegler said.

Tipton said the golf course hasn’t generated enough revenue to cover $850,000 of its annual debt service payment of $1.5 million. The course’s construction was funded with $21 million in bonds.

“That’s the part we’re working on diligently to increase our revenue,” Tipton said. “We need more golfers.”

The annual pass program started last year by Kemper­Sports, which manages the course for the county, generated more than 5,000 rounds and increased green fee revenue. About 100 people paid up to $2,900 to play the course as often as they like.

As the U.S. Open approaches, Phelps and Tipton expect the major championship will generate more rounds, including out-of-state players who pay the course’s highest green fees – $205 a round in the summer.

Golfers want to play where Tiger Woods or Phil Mickelson will be hitting their shots, Tipton said.

“We know historically at other courses that as we get more and more national publicity about the U.S. Open coming here, that our rounds will increase,” Phelps said.

He stressed the course’s financial performance is improving as shown by the decline in the deficit from 2010 to 2011.

“The overall golf industry has struggled where our picture is actually improving,” he said. “Even though we’re still losing money, it’s still improving.”

Steve Maynard: 253-597-8647

steve.maynard@thenewstribune.com

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