"...they can go ahead and do it."

Those are the words of City Commissioner, Diane Jovick-Kuntz, in response to the fact that three major golf tournaments have been canceled for lack of signups (two more didn't even seek permits this year). Or, more completely, she said: "If they want to cancel their tournaments, they can go ahead and do it."

This is in response to the City's imposing a new $14.00/day tournament fee. If the customer doesn't like the price, the customer can go to hell.

So much for running government like a business.

It sounded for a while like Commissioner Jovick-Kuntz understood the concept of demand elasticity, (and here) but since she was a "vocal advocate" of higher fees, she has apparently dug her heels in. Customers be damned, I guess.

Kudos, by the way, to George Geise for apparently asking the right questions:

Steve's Best Ball, set for May 20-21, was canceled when only a handful of two-person teams signed up. Steve's Best Ball has been played at Eagle Falls for more than 30 years, and usually attracts 150 players or more. About 100 of them would have been pass-holders, estimated Eagle Falls pro Connie Cramer-Caouette, so the city could have reaped about $1,000 in additional revenue if the $5 fee had been charged. But the city got nothing when the event was canceled.
What permeates the article, though, is Jovick-Kuntz and Patty Reardon's (acting Park and Rec director) justification of past actions, rather than analyzing decisions in the real world and responding accordingly. That is the difference between government and business.

Look, if demand elasticity doesn't work for you, let's look at it like a cost accountant would. A cost accountant would tell you (as would an economist) that, as long as you can cover the variable, or marginal, cost of each participant and contribute anything to your fixed costs, you should go ahead and do it.

Let's assume that the golf courses cost the City $1,000.00 per day, whether they are open or not. Let's assume further that, each golfer costs the City $.99 in cost, i.e. service costs, electricity, etc. Under a cost accounting analysis, the City should operate at green fees as low as $1.00, because even if only one golfer shows up, it is better to lose $999.99 in a given day than $1,000.00, right?

I don't know what the numbers are. But my point is this: We pay people to do these sorts of analyses. What does our "management" have to say about elasticity? What are the fixed and variable costs at the golf courses? Is anyone minding the store?

1 comment:

a-fire-fly said...

Once again, met with dead silence.