Arizona Event Venues Don't Seem to Make Fiscal Sense, But City Leaders Say They’re Worth the Losses
Jen Fifield reports that cities across Arizona own event spaces that are expensive to build and manage and end up losing money. Mesa, Glendale, Phoenix, Tempe, and Scottsdale have public facilities whose bottom lines that have resulted in huge annual losses — from hundreds of thousands of dollars into the millions.
Cities make up the deficits through taxes and other funding. Some have turned over management to private companies or nonprofit organizations.
Arizona cities are willing to take a hit on these spaces because of what are seen as the larger benefits, says Fifield:
City officials across the Valley say looking simply at direct revenue the spaces bring in doesn't show the whole picture. The venues attract people to the city, who then spend money on food, travel and hotels. That outside revenue, city officials say, brings in more than enough to make up for the cost.
This phenomenon is not particular to Arizona. Cities across the country have ramped up construction of convention space, even when the cost is substantial and the demand is not apparent.
“[Heywood] Sanders has argued in academic papers and a book he wrote called ‘Convention Center Follies’ that although government officials always claim ancillary benefits from building, expanding and operating the spaces, they are expensive and rarely fulfill their promises,” says Fifield.