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Saturday, February 19, 2005
Setting the Message
Must have been a slow news day or you can expect a big series in the next couple of days from the Lake County paper, the News-Herald. This was the top of the page, headlined story today. A piece about how the City of Eastlake had a plaque on the Eastlake Ballpark taken down. The plaque was dedicated to former Mayor Dan DiLiberto that called the place, "The House that Dan Built." The most interesting thing, though, was at the end of the article. Andrzejewski and city Finance Director Michael Slocum met with The News-Herald's Editorial board last week to discuss financing of the stadium.
Slocum said if federal, state and naming rights funds that were anticipated do not come in, the total cost of the stadium is expected to come to $48 million, with about $26 million coming from the taxpayer-supported general fund.
Even if all anticipated revenue comes through, Slocum said about $15 million from the general fund will be needed. And there had been no mention of this meeting in the N-H Editorials to this point. The N-H was a big cheerleader of the project from the inception. The Editorials stuck to a party line to the extreme that the ballpark finances were not a problem for Eastlake. The evidence, even from their own stories continued to contradict that. Now, it looks like they are getting ready to modify their message. Let me go psychic for a moment with the following predictions as to what the message will be: 1) It's all the former Mayor and his cronies' fault.
2) This wouldn't have been so big a problem if the federal and state money that was "promised" would just come through.
3) It's all the former Mayor's fault.
4) The project was a good idea, and is good for the city and region, it just hasn't worked out as well as expected -- yet.
5) It's all the former Mayor's fault, the Eastlake City Council bears no responsibility.
6) The residents of Eastlake need to agree to raise their taxes.
7) Former Mayor Dan DiLiberto is the culprit. That should about cover it.
Convention Centers
George links to this column from Forbes about convention center construction all over the country and the so-called economic growth they are supposed to generate. Makes you wonder: With billions to be made, maybe private investors could build the convention hall?
But private investors are too smart to do that. They are at least dimly aware that the country is awash in convention centers and rental fees for the halls are collapsing. There is another article in the magazine talking about the ridiculous expansion and proliferation of new or expanded convention centers.
The projects are frequently backed by expensive feasibility studies from consultants that rarely give a thumbs-down. Forty-four new or expanded halls are in the works, in hot spots such as Las Vegas and not-so-hot spots like Albany, N.Y. Seven million square feet will be built in the next few years, adding to the 64 million square feet now standing.
Unmentioned at ribbon-cutting ceremonies is that the space will be impossible to fill. The biggest 200 shows, a rolling list measured by Tradeshow Week, are using the same amount of space they did in 1992. Attendance has fallen at most centers, even those with new space such as in Indianapolis, Chicago and Atlanta. The thriving destinations, Orlando, Fla. and Las Vegas (which just announced a $400 million expansion), are stealing smaller shows away from other cities, stuffing in several at a time. The smaller trade halls are discounting, even giving space away.
A common excuse of the convention center builders is that Sept. 11 cut travel. But trade show attendance peaked in the mid-1990s. Something more fundamental is going on: Shows in general are far less relevant. Consolidation in industries like manufacturing, retail and technology has left a smaller pool of exhibitors. And far more trade now gets done in China, which is rapidly adding shows and square footage of its own.
Newell Rubbermaid pulled out of the International Home & Housewares Show in Chicago in 2001 to target retailers more directly. It opened a sales office near Wal-Mart in Bentonville, Ark. Since 2001 the Nike Swoosh hasn't appeared on booths at any of the big retail shows like Magic Marketplace or the Super Show. Oracle no longer spends big bucks on trade show booths.
So why is the concrete getting poured in Jackson, Miss., Peoria, Ill. and Spokane, Wash.? Politicians, playing local hero, are incapable of finding reasons not to build. Even when voters reject new taxes, as in Portland, Pittsburgh and Columbus, Ohio, new space goes up anyway, backed by hotel taxes or bond issues. [Emphasis added.] This has been the excuse given enough times. For the sake of argument, pretend the point is actually valid, despite the fact that attendance had been falling prior, where is the information suggesting that it will actually improve and when? No one gives that answer. Instead the studies in favor of building often just give the nebulous statement about when the economy improves, and that the need to build is so that "City X" gets its "fair share" of the convention business. The article focuses heavily on Portland, Oregon and the Oregon Convention Center. They expanded their convention center to 368,000 sq. feet (the proposals for the new Cleveland Convention Center would be for 345,000).
Today, $116 million in bricks, mortar and carpeting later, Portland's trade hall is struggling. It lost $5.5 million last year on $15.3 million in revenue. Occupancy since the expansion has fallen from 71% to 43%. The Wood Technology Showcase, a Portland event for 34 years and one that expansion boosters cited as needing the enlarged venue, has been postponed because of lagging attendance.
...
The expansion was completed in 2003, with eco-friendly touches like an outdoor "rain garden." City fathers boasted of landing the 2005 National Square Dance Convention and its 10,000 high-steppers.
The euphoria was short-lived. Apart from big auto and gardening shows, last year's schedule was packed with what the industry dubs "smerfs," which stands for social, military, educational, religious and fraternal groups. These visitors typically pack four travelers in a hotel room and don't have corporate credit cards to blow on expensive meals.
By the end of 2004 the center's finances were in bad shape. To get 34 decent-size shows, the center had to indirectly waive rental fees for the organizers of 10 of them. The building would have lost $15,000 a day if not for $6 million in tax subsidies. Hotels are 60% occupied, as fewer than 30% of convention-goers last year came from outside Portland.
The fix, says center director Blosser, is a new 600-room convention hotel, backed by the city. "We lose a lot of shows because we don't have a big hotel. But it doesn't pencil out for a private company; a hotel here would need help," he says. Blosser commissioned Strategic Advisory Group, an Atlanta consultancy that specializes in convention center and hotel studies, to assess the idea. SAG says the new hotel will bring in annual spending of $116,000 per room.
Maybe Blosser should run those numbers past the folks in St. Louis. In 2003 St. Louis followed a $270 million convention expansion with a 1,081-room, $265 million adjacent hotel, paid for with public and private money. Hospitality Consulting Services projected 800,000 room-nights per year citywide with the addition of the Renaissance hotel. Instead St. Louis is getting only 400,000. There will always be an excuse as to why the numbers don't come anywhere near the assumptions. The fact is, the assumptions are a load of crap. Since there are no clear numbers, they can make the rosiest, most optimistic assumptions and no one can really offer counter-evidence. I mean, aside from the cold hard reality of every other expansion or new convention center in similar markets and size.
"But this one will be different," is the cry. Or as the Cleveland Plain Dealer Editorial Board bizarrely rationalized -- this is not expansion or building a new convention center, per se, it is just replacing the old one so Cleveland can better compete for the shrinking number of conventions.
That's the brilliant forward thinking strategy for Cleveland. Build a new facility to compete in an oversaturated market that is shrinking.
Friday, February 18, 2005
Never Happened
You know when there is a bad movie adaptation to a good book, story, or say comic book? My reaction, is to declare that it never happened and do my best to compartmentalize it from any association with the original source material. That is the case with the movie, Constantine. Constantine, directed by MTV auteur Francis Lawrence from a screenplay (based on the Hellblazer comics) by Kevin Brodbin and Frank A. Cappello, is borderline incoherent, theologically unsatisfying, and short to the point of dwarfism on suspense. Other than the character's name, I don't think there is anything that actually ties it to the comic book. Everything I've read, and unfortunately seen in trailer ads, convinces me of that. Even the eminently watchable Rachel Weisz cannot get me interested in seeing this thing.
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