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6-17-2015


County hands over operation
of golf course

Shiloh to be managed by Kemper;
county keeps maintenance responsibility
 

by Valerie Verkamp
Landmark assistant editor

Kemper Sports Management Inc. will manage the day-to-day services at the county-owned 122-acre golf course.

Beginning Wednesday, July 1, Platte County is scheduled to pay Kemper Sports Management $210,000 over a three and a half year period to operate and manage a wide variety of services at the golf course. Staffing and training, sales and marketing, as well as food and beverage are among the services that will be provided by Kemper Sports.

According to the details of the contract, Platte County will remain the sole owner of Shiloh Springs. As such, the county maintains the authority to conduct cash and inventory audits, as well as perform unannounced inspections of the property and equipment.

Platte County will also oversee the maintenance of the course and the grounds staff.

Kemper Sports will take over the all day-to-day managing operations at the golf course, such as scheduling tee times, membership sales and services, clubhouse operations, and employee payroll. A full-time marketing director will be brought on board to increase golf participation and the number of tournaments.

Brian Nowotny, director of parks and recreation, said Kemper Sports Management is a company based out of Illinois that operates a number of golf courses throughout the country. In the Kansas City metropolitan area, Kemper manages services at Hodge Park and Shoal Creek golf courses.

“We have a good golf course,” said Nowotny. “We offer a good program and have a good base of golfers. We had over 17,000 rounds of golf played last year. We had over 100 kids during the year play in golf programs. But we believe we can take it further and we can serve more people.”

Nowotny said allocating the obligation of marketing and sales to an outside party that has demonstrated an ability to “form a community” and attract new members to the club will be a huge benefit to the county.

Nowotny said Kemper Sports will also be able to expand upon the services currently offered at Shiloh Springs. Kemper Sports will implement a customer loyalty program and introduce non-traditional golf practices, including a program known as Starting New at Golf (SNAG).

Direct attention will also be placed on customer service aspects. After a game of golf, Kemper Sports will solicit feedback asking members how they can improve upon their services.

Stu Ostrander, of Platte City, questioned if outsourcing the management of Shiloh Springs Golf Course was a move in the right direction. Ostrander said he considers the golf course a recreational asset, similar to any other park or trail, which under normal circumstances is not regarded as a revenue generator.

Currently, the golf course is structured as an enterprise fund, which is a typical classification for a government run business with the potential of making a profit. County officials indicated to Ostrander that the course will continue to be classified as an enterprise fund.

It turns out that in 2014, Shiloh Springs operated at a net operating loss of $153,568. In 2013, the golf course had a net operating loss of $157,997.

Those net operating losses do not include expenses such as bond payments and depreciation.

This year, the county is budgeting for an operating loss of nearly $200,000. Part of that is due to the fact that $48,000 in operating expenses will go to Kemper for their management fee from July through December.

Kemper Sports believes it will reduce the net operating loss in the years ahead.

According to a financial sheet included in the contract documents obtained by The Landmark, Kemper Sports estimates a net operating loss of $82,095 in 2016.

Presiding Commissioner Rob Schieber indicated it is his ultimate goal to move in a direction that would eliminate the continuous need to subsidize Shiloh Springs Golf Course.

“From my perspective, I would like (Shiloh Springs) to move toward profitability,” said Schieber. “Kemper is a well-known and well-managed company. They've showed they can turn courses around in the city.”

“We have looked at the numbers very closely with Kemper Sports and they have put together an aggressive pro forma that shows continuing improvements in the financial aspects of the course,” said Nowotny.

Platte County has the discretionary authority to terminate the agreement with prior written notice, but can do so no earlier than Dec. 31, 2017.

The contract also allows the county the option to renew the contract an additional two years beyond the current term.

The renewal two-year term would cost the county an additional $135,000 total for that two year period.

From July 1 through Dec. 31 of this year, the county will begin issuing monthly payments to Kemper Sports in the amount of $6,000 for a total annual fee of $36,000.

In 2016, those monthly payments will be approximately $4,500 for a total annual fee of $54,000.

In 2017, the annual fee becomes $57,000 and in 2018 it becomes $63,000.

For the renewal term (if applicable), the annual fee becomes $66,000 for 2019 and $69,000 for 2020.

If the net operating income of the golf club is less than what is forecasted for the year, then Kemper Sports must pay back to the county a portion of the base management fee it earned during the golf season. That fee would be equal to the amount of the shortfall up to a maximum of $15,000 in a calendar year.

Schieber said he is pleased that Nowotny and Kemper Sports reached an agreement where the management fees are contingent upon Kemper Sports meeting the specified terms of the agreement.

On the other hand, should the gross profit exceed $650,000 a year, the county will be liable to pay Kemper Sports an annual incentive management fee that is equivalent to 15% of the amount exceeding $650,000.

At Monday’s meeting, the Platte County Commission voted unanimously to enter into the management agreement with Kemper Sports Management.

In March, county officials selected Kemper Sports over three qualified bids the county received following a request for proposal.

Shiloh Springs, located a few miles east of Platte City off of Hwy. 92, opened in 1994. It came under the direction of the Platte County Parks and Recreation in 2005.

Since Shiloh Springs became part of the long range Platte County Master Plan in 2009, the county says it has made vast improvements to the existing playing conditions and golf programs.

OTHER CONTRACT HIGHLIGHTS
Other highlights within the contract signed by the county and Kemper Sports include:

EMPLOYEES: Kemper shall hire, promote, discharge, and supervise all employees performing services in and about the club, except for the golf course superintendent and course and grounds staff, who shall remain employees of the county. All other employees at Shiloh shall be employees of Kemper.

MARKETING: Kemper shall make recommendations to the county as to green fees and other fees and rates. Kemper shall develop the ongoing marketing plan for Shiloh and define a schedule of marketing and advertising activities which will be submitted to the county as part of the operating budget. Kemper shall indicate on the premises that Shiloh is being operated by Kemper.

PAYROLL: As part of the operating budget, Kemper will establish a payroll account in Kemper’s name for the purpose of disbursing salaries, wages and payment of related taxes. Within three business days after processing payroll, Kemper shall provide to the county payroll summary reports for the period.

The county will advance $30,000 or at least one month’s estimated gross payroll obligations, whichever amount is greater. The county shall replenish the payroll account in order to maintain the payroll expense minimum in the payroll account.

On a bi-weekly basis, Kemper shall fund payroll and the gross payroll obligations from the payroll account and provide the county with a statement containing those funded obligations. Within 21 days after owner’s receipt of that statements from Kemper, the county will remit to the payroll account the amount set forth in that statement.