This article was written by Joseph A. Schultz who, at the time of the events described here, was the Internal Consultant at the Baltimore Gas & Electric Corporation. It was posted on his website, "Needed Opposition," on September 22, 2013. It is re-printed here with the kind permission of Mr. Schultz.

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Baltimore Municipal Golf Corporation (BMGC) was created more than two decades ago to, among other things, replace the City’s operation of its five municipal golf courses. I was there. . .

A Request from the Mayor

Baltimore Mayor William Donald Schaefer came to Bernie Trueschler, Chairman of Baltimore Gas and Electric Co., with a problem. He had just been informed by his recently hired Director of Recreation and Parks, that the City’s five course golf operation was losing more than $500 thousand a year. The Mayor’s immediate response was quoted to me by Bernie as, “The taxpayers cannot afford to subsidize the golfers to the tune of half a million dollars a year.” [The real number may have been significantly higher. The half million dollar loss only included costs directly assigned to the golf operation. Other costs, e.g., general management and overhead items certainly existed but were not included.]

The Mayor asked Bernie to form a “Blue Ribbon Committee” [Blue Ribbon Committees were a popular tool of the Mayor. They were groups of executives from private industry (usually within the City) that came together as volunteers to develop and often implement a solution to a City problem.] to study the problem and tell him what to do.

My Investigation

While the Blue Ribbon Committee was being formed and the meetings were occurring I spent a great deal of time traveling from course to course and sitting and talking to whoever would talk to me, the cashiers and superintendents and, sometimes, the people who may have played but mostly just hung out at the clubhouses. I asked for their ideas and opinions and, after they began to trust me, their thoughts poured out. They told me what they knew and what they suspected. I simply listened—attempting to separate the wheat from the chaff and trying to piece the puzzle together. It was from this mosaic that I assembled my plan.

[People intending to do wrong should take note that the little people, the people in the small jobs around the transaction they think is so well hidden, are not stupid. They see what is going on and form opinions, often negative opinions, of the character of those persons considered to be their betters. The plan was, because my name was at the end, characterized as my plan. Really, it was a combination of small ideas, sorted, cleaned, shaped and assembled, gathered from these people who cared but did not have the power to change what was going on.]

A Corporate Solution — My Plan

At that time I was Internal Consultant at BG&E. I reported directly to the Chairman solving problems that didn’t fit in any of the Vice Presidents’ boxes and fixing problems where the assigned VP had failed. Bernie put me on the committee.

The first two committee meetings were filled primarily with presentations by members of the Parks Department. At those meetings it quickly became clear to me that the non-BG&E members of the committee were disinterested and the committee was going nowhere. [This must, in retrospect, have been a common circumstance with such committees. Most of the executives making up the committee had real jobs back at their own companies. They may or may not have had the necessary expertise to come up with a viable answer; but they did not have the motivation. Only one company and one person, in this case BG&E and Bernie Trueschler, were on the hook with the Mayor to come up with an answer.]

I wrote a report to Bernie that was to become the Plan for Baltimore Municipal Golf Corporation (BMGC). Based upon my investigation the Plan, along with a lot of changes in the operations at the courses, recommended four major actions:

1. Creation of a not for profit corporation;
2. Turning over of the courses, via long term lease, to the corporation;
3. Assigning to the corporation the all contracts associated with the golf course operation; and
4. Establishing a transfer date of March 15th of the following year.

Bernie loved the Plan and took it to the Mayor. When he returned, he called me in, told me that the Mayor had approved the plan and then said, “Take care of it for him.”

First Steps

The Mayor assigned an experienced and talented city attorney to work out the details with me. [He was both competent and practical. He took on and quickly completed the drafting and filing of the paperwork to create and make BMGC a 501(c)3 corporation.] The two of us sat down and jointly drafted the lease of the golf courses that confirmed items 2, 3 and 4 above and added an important 5^th, i.e., giving the corporation the right to contact and hire any City employee then in the golf course operation. This addition dramatically eased the transition. The attorney indicated that this addition had been approved (perhaps suggested) by the Mayor. [I am sorry that neither my memory or my research has given me the name of this excellent attorney.]

About this time I was informed by Bernie that Henry Miller, then a Vice President at BG&E, would be the Chairman of BMGC. I had had no real contact with Henry in my time at BG&E; but, I was to learn that he was the perfect choice for the job. [Henry had a gruff, no-nonsense demeanor. He valued his personal integrity above all other things. And, underneath, deep underneath, that gruff exterior, he was a pussycat. He was, and I am sure, still is, a very good man.]

The Underlying Problem

During my investigation in preparation for writing the plan I had learned that the numerous financial problems at the courses were merely symptoms of a serious underlying issue — rampant corruption. In retrospect I am confident that the Mayor and Mr. Trueschler were aware of this situation. From their perspective the creation of BMGC was a simple tool through which they could end the corruption without the necessity of public exposure of the people involved.

The Existing Operation

When viewed from the grass roots the existing picture was both unattractive and odiferous. It had contractors, golf pros, who operated the pro shop, cart operation and, at Pine Ridge, the driving range, rent free, for their own benefit. Technically no one was in charge of the operation of the individual golf courses. That meant there was no opposition when the pros handed out free play to their political cronies, cart people, etc. in exchange for their services to the pro’s businesses.

It had cashiers with cash registers that did not total. Money came in but no one but the cashier had any idea how much. I was told, but was unable to confirm, that members of the City Council had private arrangements with one or more of the pros under which they supplied materials to the courses, etc.

Meanwhile the golf maintenance operation languished on short funding. New equipment was nonexistent. The superintendents survived by begging for and borrowing equipment from other courses and trying out equipment from suppliers until it either broke down or was repossessed.

Nay Sayers

There were plenty of “nay sayers” at the beginning. The press was openly negative, suggesting that unpaid debts would be run up and that the courses would be turned back to the city in even worse condition than before. The Mayor was roundly criticized by both those who had suffered financially from the change and their unofficial friends. But the golfers themselves were openminded, intrigued, even hopeful.

I attended a meeting of the men’s golf club at Mt. Pleasant [one of the courses] to explain why a small portion of that course adjacent to the 2nd fairway had to be given up for a City bus facility. I was told to expect a very negative reception. At the meeting I ended up talking only a short while about the bus facility and at great length about BMGC and what we were going to do. I was given a standing ovation. It was thrilling.

The New Operation

Startup

Before the takeover I was given $20 thousand by BG&E to help with the startup. I spent the entire amount on five new Sweda cash registers. [Four thousand dollars apiece was a very big number at the time; but it was necessary. I selected Sweda because they were the registers then used by McDonald’s. You didn’t enter an amount. You hit a button for an item. It posted the amount to be charged, kept track of the number of items of each type sold and generated a ticket to be delivered to the starter. I learned later from our new accountant that the registers could be programmed to call up headquarters at night, establish a connection and download the daily information into the headquarters computer.] This new system gave us the ability to generate daily sales data by item and income and other statements on a daily basis. Our accountant and I knew day by day exactly how we were doing.

We took over the courses on March 15th for a reason. It was the unofficial opening day for the season. Normally, as if scheduled for that day, winter weather would subside, players would come out and money would start to fill the cash register. Because the money started immediately and the workers didn’t get paid until the end of the week or month, we had enough to pay them when payday arrived.

Well before the start of the season I terminated the contracts of all five previous golf pros. Because they still had serious political allies, I offered each of them a salaried job as a golf professional and also offered to purchase their golf carts at a reasonable price. All five refused the job offer. We had no difficulty finding new pros to work as BMGC employees.

The golf shop, carts and driving ranges were to be managed by the new pros as BMGC concessions. The pros were also made responsible for course operations, i.e., cashiers, starters and marshals. The new pros, especially Kim Hand, now the pro at Pine Ridge, were very helpful in setting up the new systems and accepted Henry’s firm management style with a minimum of grumbling.

One potential problem was the natural graft associated with operating a pro shop. In order to get shelf space at the pro shop suppliers would give the golf professional free goods, e.g., shoes, bags, sets of clubs. I told each of the pros personally that they should take the goods; but if they kept them and I found out, they would be fired. They were to turn in the items to headquarters. None of them got fired and a whole lot of good stuff was turned it.

Financial Results

At the time I likened the previous golf operation to a colander (a bowl with a lot of holes in it). Money would flow in but shoot out just as fast through the hundreds of small, and some not so small, leaks. I knew we had staunched a few of the larger holes and had added some sources of revenue; but I did not really know how much water our repaired colander would hold. The results were startling. We went into the black almost immediately. Despite our low greens fees and increased overhead and maintenance expenses, the money level in the colander kept rising.

We renovated a City owned home on the edge of Mt. Pleasant Golf Course as the new corporate headquarters. We bought new maintenance equipment and an expensive machine to sharpen the blades of our mowers. . . . And still the money level rose. By year’s end we had made about $600 thousand — a million dollar a year turnaround.

Identification of a the GOLDEN GOOSE

Each month I would analyze the accounting data and go over the numbers for the previous month with the Board. We developed a detailed course by course budget and analyzed the actual numbers against that budget. With these numbers in hand it was easy to see that Pine Ridge and the driving range at Pine Ridge were carrying the corporation. Pine Ridge was the golden goose in this gaggle.

The Christmas Party

For me the highlight of the first year of operation was the Christmas party. We were given the top floor at the National Aquarium rent free for the event— an extraordinarily nice gesture, one not for profit to another. It was a large crowd. We invited along with our board and all of our staff all the friends that had helped us along the way and, of course, the politicians and even the press that had been so negative. As I recall there was a cash bar; but the food . . . We spent almost $25 thousand on the food and it was spectacular. We gave away all that merchandise that had been turned in by the five golf shops as door prizes.

It seemed like there were a hundred speeches. Most were short — no one was going to get elected there. The most offensive to me were the ones from the press — the ones claiming that they had foreseen this success — that they had known all along how it was going to turn out. [I gritted my teeth but smiled and clapped like a dutiful politician.] Henry was perfect in his role as host. This party was a truly fine end to a great beginning.

JAS

* * Copyright © 2013 Joseph A. Schultz. All rights reserved. Reprinted here with the kind permission of Mr. Schultz.