Monday, February 06, 2012

Super blow to municipal budgets

Living in a material world
The Forbes travel editor--whose accommodations and meals were bought and paid for by the City of Indianapolis--tries to convince us that big-time sports (in Indy's case, Super Bowl XLVI) are a big-time return for the risk cities take in hosting them:

"Ten years from now, I think we will look back on this one single day as the tipping point in tourism and perception for the city,” said Chris Gahl, Vice President of Marketing for the Indianapolis Convention and Visitors Association.

Several years ago when the city decided to go for the 2011 Game (it ended up with 2012), the bid process required $25 million in non-taxpayer funds, and several big Indy area companies, including Eli Lilly and Cummins, stepped up and provided it in the form of donations. Last weekend paid off that investment handsomely on both sides of Gahl’s equation: Conventions and Visitors ....

While the media exposure surrounding the big game and word of mouth from the 150,000 visitors should help Indy attract more tourists, the city may win even bigger on the convention side, thanks in part to all the experience and infrastructure it has hosting huge, complex events. “About 65% of the ticket holders for this year’s Super Bowl were corporate decision makers,” said Gahl. “And I think our message to them is very clear – if we can host the world’s largest single-day sporting event for over a century, the Final Four regularly, and the Super Bowl –we can handle your convention.”

Of course, the Forbes editor is long gone and Indianapolis administrators have to deal with the actual costs, which cannot be cosmetically pimped by fluff and marketing. The Indianapolis Business Journal more honestly explains the hit the city will take in real accounting terms:

Scores of businesses in and around Indianapolis are licking their chops in hopes of scoring a windfall from the city’s hosting of the Super Bowl on Feb. 5.

But the city entity that manages Lucas Oil Stadium, where the game will be played, expects to lose money.

The Capital Improvement Board of Marion County is budgeting for total Super Bowl expenses of $8 million and revenue of nearly $7.2 million, leaving a loss of $810,000 ....

Hotels and restaurants, however, won’t be taxing National Football League employees. They’re exempt from paying, according to an Indiana Department of Revenue directive.

The NFL is using its tax-exempt status as a 501(c)(6) to avoid paying the taxes, in addition to fuel, auto rental and admissions taxes ....

CIB also won’t receive food-and-beverage tax money from concessions sold inside Lucas Oil Stadium and the Indiana Convention Center as it normally does. Instead, the National Football League will pocket that chunk of change.

The NFL, though, has agreed to reimburse CIB $4.1 million for labor costs associated with game events, helping to shave the projected shortfall to $810,000.

That's sweet of the non-profit NFL to help defray Indianapolis's expected debt. (Does the NFL really strike you as "non-profit"?) Wouldn't it be great if cities could be the major players instead of the chumps in the pro-sports hustle?

1 comment:

  1. Included in your "zero-sum game" should be some acknowledgement that by taking kids out of the regular public schools, charter schools reduce teacher workload and infrastructure cost, as well as make the public schools more attractive via smaller class size, while leaving the large majority of public funding for that child with MNPS.

    That said, I'm from Missouri when it comes to charter schools.