Chambers Bay on track for best year since 2008

The county-owned Chambers Bay golf course in University Place made money during the first nine months of this year, is on pace to have its best year since 2008 and may be close to escaping a cycle of borrowing to pay off debt.

Operating revenue jumped 24 percent compared with the same period last year, boosted by increases in rounds played and merchandise sold.

County officials say the 2015 U.S. Open, now just 18 months away, is drawing more golfers from outside the county and the state who want to try the links-style course. And that’s increasing revenue. Out-of-state players pay the highest greens fees — $219 a round during the peak summer season.

Golfers are reading and hearing about the tournament coming to Chambers Bay in June 2015, said parks and recreation director Tony Tipton. They want to test their skills on the course where players will compete for one of professional golf’s four major championships, he said.

And because the county-owned course is public, golfers have that rare chance to play where stars such as Tiger Woods and Phil Mickelson will tee it up.

Chambers Bay broke even in 2008, fueled by the initial interest of the course’s opening in June 2007. But it landed in the red each of the next four years, requiring a loan from the county’s equipment rental and revolving fund to make debt payments.

The annual deficit peaked in 2010 at $1.8 million, despite attracting national exposure that year by hosting the U.S. Amateur Golf Championship.

Among the financial improvements through September of this year, compared with the same period in 2012:

• Number of rounds played increased 15 percent to 32,572. Rounds played by golfers from out-of-state increased by 8 percent to 4,929.

• Green fees revenue rose 27 percent.

• Merchandise sales jumped 40 percent, driven by demand for U.S. Open shirts, sweaters, hats and other items.

• Food and beverage sales increased 11 percent.

Revenue for golf course operations shot up by nearly $1 million, primarily because of the increased play and sales. Those are significant improvements, Tipton said.

“It’s certainly above our expectations,” he said.

And it beats state trends. Through July, the number of rounds played at Chambers Bay had increased 18 percent over last year, compared with a 7 percent spike at courses statewide, according to the National Golf Foundation. In July alone, the number of rounds played statewide dropped slightly, while Chambers Bay increased 12 percent.

“I really think we can deduce that this is a result of the impending U.S. Open in 2015,” Pierce County Executive Pat McCarthy said.

She said the numbers for the nine-month period are the first time “we’ve seen the kind of returns we were hoping for.”

Through September, golf operations at Chambers Bay made about $740,000.

Still, it’s unknown for now if the golf course will break even for the year, generating enough money to pay the course’s debt service, Tipton said.

Deputy County Executive Kevin Phelps said it’s possible the course will break even and not need a loan.

Through November, no loan money was needed to pay for course operations or debt service, Tipton said.

But the final interfund loan figure for 2013 won’t be available until the end of December. No matter what, Tipton expects it will be significantly less than the $1.1 million that was budgeted for the year.

The outcome depends on the fourth quarter, and conditions such as last week’s freezing temperatures don’t help. Playing in frost can damage the course, especially the greens, said general manager Matt Allen.

The course was closed Thursday and Friday due to heavy frost.

By one measurement — tax revenue — Chambers Bay is an economic driver. The golf course has collected $4.2 million in state and local government taxes from its opening in 2007 through October 2013. Total taxes collected in 2012 were $610,642.

Still, the course has lost money every year since 2008.

Until this year, it had generated only enough revenue to pay about half of its annual debt service of $1.5 million, Tipton said. The course’s construction on a former gravel mine was funded with $21 million in bonds.

The course hasn’t been able to pay its debt service despite receiving about $800,000 annually in “avoided maintenance cost” from the county’s sewer utility. Golf course maintenance expenses are projected to be $2.5 million for this year, Tipton said.

The $800,000 total is based on what the sewer utility — the landowner — would have had to pay annually to maintain the 225-acre golf course and surrounding trails as a nature park if the course hadn’t been built.

Critics have called the annual payment a subsidy. County officials say it’s not a subsidy but meets a legal requirement.

Last year, Chambers Bay lost about $730,000. It required an interfund loan to pay for debt service, even though golf operations generated a slight profit of $19,939, Tipton said.

Phelps said he’s optimistic the momentum built this year will carry over into 2014.

And several factors indicate Chambers Bay may have the wind at its back.

Besides the draw of the U.S. Open, Tipton said the improved economy has helped boost golf operations this year.

Allen, the general manager with KemperSports, ranked another factor ahead of the U.S. Open. — dependable playing conditions.

This year, Chambers Bay had its first peak season — the period from June to September — without any course construction work resulting in temporary playing conditions, Allen said. The United States Golf Association, which puts on the U.S. Open, reshaped some holes in 2011 and 2012 in preparation for the championship.

The USGA says the biggest increase in interest from the U.S. Open will hit in the second half of 2015 and beyond, after golfers see the tournament and course on television, Allen said.

“The U.S. Open factor has been there all along,” he said. “Yes, we would expect it to be building.”

Steve Maynard: 253-597-8647