Part 2 — What does a new Event Centre add to the economy?

The answer to this question is simple: Not much. The location decision is important though. Location affects how much of a subsidy the Event Centre will need. I’d like to share some observations location and marketing.

There are four main sources of revenue for Event Centres: sports teams, conferences, trade shows, and touring performers. The economics of each of these favours downtown.

The key factor in location is attracting a local audience. The big contribution of an Event Centre is that it improves the quality of entertainment in a community. For the people who go to events, it is good thing. It may also help keep people in Sudbury or help attract new residents.

An Event Centre for Sudbury is not a money-maker. No matter where it goes it will not bring a lot of money into the community. The city subsidizes the current arena. It will subsidize any replacement that goes downtown. It will subsidize Dario Zulich’s proposal if that goes ahead. That isn’t a reason not to build a new Event Centre if we want one.

But lets look at the marketing issues for each of the major users of an event center.

Sports

Sports teams depend on local fans. The bigger the local base, the more revenue they can bring in. Unfortunately the revenue all comes from the local economy. Sports teams simply capture a share of the local entertainment budget.

The only important question economically is whether which location will draw the most attendance. This is important because the better the attendance, the more the team will pay to use the facility and the smaller the deficit for the City to cover.

Ideally a sports facility is located the population is concentrated. In Sudbury that is where the current arena is located. As you move the facility away from the centre, attendance will drop off. There is a good reason most pro arenas are situated in their city cores.

It is true that a small number of fans come from other areas for home games. It is also true that local fans go to other towns for away games. The net effect is nearly zero. It is also true that a new facility might support new professional teams. The big issue is still location.

Road access is extremely important to the success of an Event Center. Downtown has roads coming in from five directions - possibly six. That makes for quick access from everywhere in the region. With many exits drivers leaving an event can get home quickly. Since sporting event are usually in the evening downtown has a large and very flexible amount of parking available. I am not an investor, but I would not put my own money into a sports facility outside of the downtown. This is especially so in an area with a declining and aging population.

Conferences

Conferences can be a source of outside money. There has been talk for at least 30 years about needing a conference centre. Since no private operator thought that it would generate profits, we still do not have a large conference facility. We do have hotels, a university and colleges that handle smaller conferences. These organizations would benefit if the city could attract larger conferences, but the market is very competitive, and Sudbury is very badly located. It cost a lot to get here. The airport is a long way out of town, which makes it even more costly compared to - for example, Thunder Bay, where the airport is right on the edge of town. Large conferences run downhill toward larger population centres like Toronto - not uphill to places like Sudbury.

Improved conference facilities can bring in some new revenue. Ideally that revenue would help existing businesses. With a shrinking population we need to make sure existing hotels restaurants and entertainment facility can survive. A downtown location reinforces existing businesses. Locating a major magnet outside of the core will undermine the existing businesses.

Some of the conferences that we can attract are related to the university. This is true of many of the mining events. The closer to the university the easier it will be to attract these conferences. That in turn strengthens the university, and the university is a major revenue earner for Sudbury. With 9000 students, each worth half a job, Laurentian is actually one of the largest economic drivers in the city.

Finally downtown offers conference planners much better 'amenity' than peripheral locations. It has the best restaurants, performing arts, Science North and walking access to Ramsey Lake. A downtown location is likely to add more to the economy than any other site can. And if conference facilities downtown are expanded there will be more pressure to improve and beautify the downtown.

Trade Shows

Trade shows help pay for a facility, but they only bring in net revenues when they attract visitors from outside of the region. Trade show travellers have greater spending power than typical business travellers and they typically spend a longer time at a destination. The big winners are hotels and restaurants. That suggests a downtown location.

Many exhibitors, however, pay fees that so they can sell things. Sellers want to make a money. Where does most of the money come from? Usually local people. Outside exhibitors are there to take money out of a community. The fraction of local spending that leaves the community is a loss to the local economy. The rest is simply money moved around within the community.

Touring Performers

Performers also visit Sudbury to make money to take home. We want touring performers, not because they bring money to us, but because we want to enjoy their performances. We spend part of our entertainment budget to import their services. And if we as taxpayers want to build a facility to have them perform, that is fine. No one should pretend that these performances contribute economically to the community.

The people who pay for tickets help pay for the facility, though, so a venue for touring shows should be designed to attract as many patrons as possible. That will usually mean picking a central location with very good access.

Conclusions: Downtown is the best location in terms of marketing and serving the local population. Municipal Event Centres generally don’t make money for their communities, but they lose less when they are located downtown.