Dennis RomeroUPDATE at 11:55 a.m. Monday, Jan. 5, 2015: The mayor declares victory. The City Council president wants the festival back next year. Details below.
The Jay Z-curated Made in America (MIA) festival took over downtown streets and Grand Park for two days at the end of August and cost taxpayers $170,000 in unrecouped costs for policing, street closures, trash pickup and other expenses.
But a new city-commissioned report by consulting firm Economic & Planning Systems, Inc. concludes that the city ended up profiting in the amount of $31,302.
The new figure includes tax revenue the city earned—”sales and use tax, transient occupancy (hotel) tax, and parking tax”—as revelers spent cash at and around the concert, according to the report.
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Even if the books aren't cooked here, it's still a pretty sad deal for the city, which provided much of the venue as downtown citizens had to drive around closed streets and some businesses had to do without customers for the weekend.
Most venues negotiate for a piece of concessions and alcohol sales, which didn't appear to be the case here. Mayor Eric Garcetti, who championed the event that featured Kanye West, Iggy Azalea, Steve Aoki and more, argued that the party would be good for downtown business.
Even his own report seems to cast some doubt on that notion.
These upbeat analysts nearly bite the hand that feeds them, suggesting the city didn't strike the best possible deal with concert promoter Live Nation:
… The City may want to consider charging rental or contract fees to promoters / producers of events held on City property that approximate the actual costs incurred by City departments for providing necessary services (e.g. public safety, sanitation, facility maintenance). This analysis suggests that the MIA event generated a net surplus to the City's General Fund only after accounting for sales, hotel, and parking taxes or fees paid by visitors. However, the actual rental or contract fees paid by the event promoter fell short of the City's direct costs for providing necessary public services, maintenance, clean-up and the like.
Overall, the report seems to agree with Garcetti's dream that, if you build a stage (or two or three), they will come.
Following MIA's inaugural event in Philadelphia in 2012, an analysis touted by the Greater Philadelphia Tourism Marketing Corporation claimed the street party there created a $10 million benefit to the City of Brotherly Love.
Garcetti's report nearly topped that: It claims $14.8 million in “total economic activity” and $9.2 million in “value added” to the area, including 150 jobs and $6.9 million spent by concert promoter Live Nation and its subcontractors.
Credit: City of Los Angeles
These kinds of city-booster reports, however, can be fictional, as academic experts have pointed out many times. And even Economic Planning and Systems, Inc. admits that much of what it came up with was pulled from thin air.
The “analysis of MIA relies heavily on the findings from “a Los Angeles Tourism and Convention Board report on a 2013 BET concert at LA Live, “since no survey of attendees was conducted during the MIA event,” the report says, incredulously.
That this relied on a booster organization's estimations should sound alarms. The MIA document says that each of the more than 35,000 people that attended the Jay Z-curated concert each day spent about $111 in addition to the tickets they purchased.
It was an all-ages event. Somehow we have a hard time imagining 17-year-olds spending $111 on top of $100-plus-per-day tickets.
The MIA report explains, under a section titled “caveats,” how very thin its evidence is:
EPS conducted a brief telephone interview with Live Nation, the event producer, but requests for event-specific data went unfulfilled. Further, little is known about the MIA attendees, since no survey of the concert goers was administered. Accordingly, EPS has relied on secondary sources of information, including other relevant economic studies, industry data, media sources, and interviews.
So these figures of $14.8 million in “total economic activity” and $9.2 million in “value added” action are just guestimates based on “secondary sources of information” and the like. Sure.
And, about that city profit of $31,302? Twenty-one downtown businesses responded to the EPS' survey, apparently including one “limited-service restaurant” with no waiters a quarter mile away, the report says.
The report claims “hotels in the immediate area reported high occupancy rates” but that “hotels located outside the half-mile radius reported no significant change in response to the event.”
Credit: Timothy Norris/L.A. Weekly
How many hotels reported higher occupancy? Doesn't say. And that's worth thousands in tax dollars? Guess so.
But the report does note, very subtly, that closing down streets might not have been so good for local businesses (thus somewhat contradicting the idea that this boosted revenue for local entrepreneurs):
In the future, Grand Park events might be able to reconfigure or reduce road closures to reduce the impacts on local businesses.
Really? And leave all that money on the table?
UPDATE at 11:55 a.m. Monday, Jan. 5, 2015: Mayor Garcetti and City Council President Herb Wesson today weighed in on the report. Their comments clearly indicate what this is all about—giving Live Nation a similar deal next year.
Garcetti:
We achieved our goals to boost our local economy, provide attractions for our residents and visitors to enjoy, and show that city government can cut red-tape to host world-class events in Los Angeles.
Wesson:
It's gratifying to know that the event provided a significant return for our local economy while providing jobs and creating a very well-attended event. Ultimately the city's economy grew and so did our city budget. Let's do it again.
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