Mark McDermott

El Segundo TopGolf proposal comes under fire

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George Pitts, a longtime regular at The Lakes’ driving range, practices Monday afternoon. “It’s a crying shame,” he said of a proposal to change the range operation. Photo by Mark McDermott

A proposal to drastically revamp the driving range at The Lakes in El Segundo municipal golf course has come under fire from golf pros and longtime users who want to preserve the existing facility.

TopGolf, a Texas-based company expanding throughout the nation, hopes to enter its patented, high-tech reinvention of the traditional driving range into the Southern California market through a $15 million reconfiguration of the El Segundo driving range. TopGolf uses microchip-embedded balls and field sensors to make a driving range into a game that tracks every shot a golfer makes. Additionally, TopGolf facilities include a social component, with as many as six players able to play together while being served food and drinks in a high-end lounge-style environment.

TopGolf’s initial proposal was received enthusiastically by the City Council in July. But as the city’s public input process has unfolded, opposition has emerged, including a “Save the Lakes” Facebook page with more than 700 followers. Members of the local golf community argue that the TopGolf proposal would chase away many longtime driving range users and that the new business model would turn the facility into more of an entertainment complex and less of a youth-oriented teaching venue.

“There is a whole lot right with the existing facility,” said Lew Murez, a local resident who has played at The Lakes for nearly 40 years. “There has been a huge public outcry in support. It is busy and does make good money for the city now. Yes, it can do more, but it’s not broken.”

Josh Alpert, a PGA teaching pro and founder of the Good Swings Happen Junior Academy, worries that Top Golf’s entertainment components would take the focus away from the facility’s longstanding history as a place to learn golf. He noted that the Junior Academy currently employs nine golf pros, has been growing by leaps and bounds, and last year taught more than 2,500 youth.

“I think the distinction at the root of it is the fact that this is known as one of the best teaching facilities in the state, really, and everything here is conducive to learning – more than anything for kids, but certainly for everyone,” said Alpert. “The model TopGolf offers is much more rooted in entertainment, and the goal of their facilities isn’t so much to teach and educate.”

Craig Kessler, the director of government affairs for the Southern California Golf Association, said his organization is not taking an official stand on the issue but is very supportive of the existing programs offered at The Lakes.

“The Lakes at El Segundo is really an exemplar in matters of junior golf and player development,” Kessler said.

TopGolf director of development Randy Starr said he believes the company’s business model is not well understood locally and is in fact very much educationally oriented.

“TopGolf is very family friendly and youth-oriented,” Starr said. “We do have a social and an entertainment aspect and that’s not something we are trying to hide from. We think it’s a great thing and one of the reasons the city was excited about this – we appeal to a wider demographic than your typical driving range, and currently a very small percentage of El Segundo residents actually use that facility.”

Starr said he is very respectful of the current youth programs and said that something like Alpert’s Junior Academy fits exactly within TopGolf’s mission. He acknowledged that TopGolf was unaware of the academy when in its initial discussions with the city and said otherwise the company would have reached out specifically to Alpert and other local golf pros before making its proposal.

“We really want people like Josh Alpert – that’s the ironic thing, someone like him is exactly who we want on our team,” Starr said. “We want someone who wants to teach kids and gets out there and gets beyond current structures and reaches a lot of people.”

Another concern among local golfers is the possible cost increases for hitting golf balls at the range. Currently, a small bucket of 30 balls is $3.50 and a large bucket of 90 balls is $9. At TopGolf’s other facilities, a bucket of 20 balls can cost $6 or $7.

Murez said the South Bay has already lost two driving ranges in the last two years and the cost increases would drive he and other longtime regulars away.

“Our costs are going to go up three or four times,” he said. “We understand the need to make more money, but we have been supporting this thing 20 or 30 years. We are a very loyal group here.”

Starr said that TopGolf tiers its pricing system – a bucket is half off during weekdays, and seniors, kids, and military veterans always received discounts. He also noted that Callaway provides free high quality golf clubs and said that because of the game-like nature the sensors and microchip golf balls create, golfers concentrate more, take longer per shot, and often develop more productive practice habits.

“It may not be quite as cheap as The Lakes, but what you get is a state-of-the-art facility and a very interactive experience,” Starr said. “What you find playing TopGolf is you hit less balls because you are focusing more. Once people try it, they see how rewarding it is to see feedback on your shots and how your focus and concentration improves.”

A TopGolf driving range in Allen, Texas. Image courtesy TopGolf

Beyond issues of cost or programming is the city’s ongoing financial difficulty in operating its golf facility in a profitable manner. Depending on how the accounting is done – whether or not the city’s own service charges are factored in – the facility either barely breaks even or loses $100,000 to $150,000 annually, according to El Segundo economic development analyst Ted Shove. By any accounting, the city has been unable to repay its general fund the $5.9 million borrowed a dozen years ago to refurbish The Lakes.

Although exact proposed lease terms remain confidential, Starr said that the facility would generate in excess of $10 million annually. A lease would be on a “triple net” percentage basis, thus the city would earn both a percentage of overall TopGolf revenues in addition to increased sales tax revenues.

“The city would have a cash inflow from that facility that it does not have now,” he said. “Also, we have a $300,000 marketing budget per year per site to generate buzz about the facility, and the name TopGolf El Segundo will get used a lot. They will benefit from that.”

Shove stressed that may or may not be the answer. But he said whatever happens, things are not likely to stay the same at The Lakes.

“I have a feeling, and I’m not trying to talk coy or anything, because there has been a lot of miscommunication since the beginning of this and it’s gotten a lot of attention – but the facility is not financially performing, and it probably needs to be looked at more closely,” Shove said.

Councilman Bill Fisher said one of the great advantages of TopGolf or another private operator is steady lease revenue, thus eliminating the city’s financial risk and taking the city out of the business of running a golf facility.

“This is an enterprise fund,” Fisher said. “It should stand on its own, and it never has….It has borrowed money from the general fund for much of its life. I am not sure government should be running golf courses – it’s not what government does best. Government paves streets and provides services.”

Fisher, who has served on the golf course subcommittee for six years, said the city has previously looked at other ways to bolster the financial stability of The Lakes facility, such as bringing in a private restaurateur. But the increased investment – and consequent financial risk – that this would require of the city has made such proposals languish.

All options, Fisher emphasized, remain on the table.

“We are in the middle of the process,” he said. “Not in the middle of making a decision.”

The process itself has also come under fire, even as TopGolf’s proposal has made the rounds at nearly a half-dozen meetings ranging from subcommittee hearings to the city planning commission.

Murez believes any change of the facility should go through a Request For Proposal (RFP) process.

“To the best of my knowledge, every city and county that owns a golf course that it wants to privatize in some way goes through some RFP process,” he said. “That way any and all ideas are in an open market – that is what free enterprise is all about. It strikes me and others as odd that the city, even though they are saying they are open to all things now – this thing with TopGolf seemed like it happened in secret for six months.”

Shove said the TopGolf proposal emerged from an economic development initiative. Unlike when the city seeks to purchase service, he noted, this process does not legally require an RFP. Moreover, he said, there are no competing companies who do anything similar to what TopGolf does.

“TopGolf has five international patents,” Shove said. “Not one other company on earth can do what they can do, legally.”

TopGolf’s proposal, Starr said, would create 130 fulltime jobs with benefits and another 200 part-time or seasonal jobs.

Fisher said that the city will proceed with an inclusive process that will hopefully end in a solution that addresses the needs of the city and the existing golfing community.

“We want to keep The Lakes a great facility for serious and casual golfers,” he said. “My view is it would be nice to have more families out there, and that is what is intriguing about TopGolf. But we are doing everything we can to vet this company and their services and will do everything we need to do to satisfy the community.”


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