No. 33 Should Governments Own Convention Centers?
Taxpayer-financed convention centers have become increasingly popular with state and local government officials. Centers have been built or planned in most large cities and in many metropolitan suburbs and small cities and towns. According to the International Association of Auditorium Managers, the convention industry's trade association, "work was completed or started . . . on 250 convention centers, sports arenas, community centers and performing-arts halls at a cost of more than $10 billion" between 1975 and 1985. Billions more may be spent during the 1990s. The enthusiasm for convention centers shows no signs of abating.
Why have government officials developed such an attachment to convention centers, during a period in which other government-run business activities are being returned to the private sector? Are taxpayers getting their money's worth, as feasibility studies conclude? Or do government-supported convention centers represent a subsidy for businesses, paid for by hard-pressed taxpayers?
Correct ways of analyzing these questions are not difficult to find. All that is required is careful thought and common-sense economic principles. This Heartland Policy Study addresses convention center issues by just such methods. A brief review of the issues is presented in Part I. In Part II, the author discusses the measurement of convention center construction and operating costs, while in Part III he explains how "multipliers" are used to predict convention center benefits. Part IV expands the analysis with a discussion of government management of convention centers.
The analysis points to several key conclusions, most notably that convention center construction, ownership, and management are business activities best left to the private sector. Government-owned and -operated centers rarely cover their annual operating costs, much less their capital costs. Contrary to popular belief, government subsidies to convention centers do not "multiply" into unique economic benefits that cannot be achieved by the private sector. Thus, in Part V the author recommends a course of action that includes an immediate moratorium on public financing of convention centers and privatization of existing government-owned and -operated facilities.