The Operating Structure of Privatized Golf Services

Abstract

Privatization has been used increasingly by municipalities to deal with budget constraints and the need to continue providing services at a level of quality that customers expect. Using qualitative case study methodology, this study examined three cities that privatized golf services, their goals for privatization, and the way the service delivery was structured to attain those goals. Administrators and employees were interviewed, and support documentation from each of the cities was reviewed to supplement the data obtained in the interviews. The administrators of the three cities listed as goals of privatization: (a) the introduction of competition into the service delivery, (b) the reduction of maintenance and capital improvements costs, and (c) the reduction of administrative costs. Whereas the stated goals were similar, the selected structures for service provision were different and the cities were successful to varying degrees in attaining them based on those structures, the political climate, and the economic situation in the city. City A hired different 11 different contractors to opeate the 13 city-owned golf courses. City B hired one contractor to operate all 5 of its golf courses, and City C created a not-for-profit corporation to operate its 5 golf courses. In City A, competition was introduced by requiring potential operators to bid for the contracts, in addition to the natural competition among the golf courses for the customers. In City B, competition was introduced only through the bidding system. Competition was not present in City C. However, without a profit motive, it is less likely that the not-for-profit corporation will use its monopoly privilege against the customer. All three cities were able to reduce maintenance, capital improvements, and administrative costs by delegating the management of the golf courses, totally orin part, to the contractedentiry. Thus, the cities were able to use privatization to attain goals thought unattainable with the previous service delivery system.