Jefferson Review

"Your Liberty is Our Interest"

Home /  Archives / Links / Quotes / Book Reviews / Advertise /Contact us / Subscribe / Calendar

Magical kingdom not so enchanting after all

By Joel Peyton

Too often, politicians offer grandiose visions of government-subsidized convention centers to taxpayers. “It’s magic!” they proclaim. “Build one of these magical palaces and your town will reap lucrative events and new businesses!”

To hear Gov. Ernie Fletcher talk about Pikeville’s new Eastern Kentucky Exposition Center, for example, one would think that such facilities have magical powers. As he tries to build support for a new $299-million arena in Louisville, Fletcher claims Pikeville’s palace will produce supernatural-like investments in the surrounding kingdom. However, rock-solid research exposes this “magic” as an illusion.

A recent report by the Brookings Institution should cause elected officials to think twice about using state taxpayers’ dollars to build Louisville’s Magic Kingdom – despite whatever tricks the politicians can pull out of their hats.

Attendance has declined at convention centers across the nation. Many cities have seen attendance fall by as much as 40 to 50 percent since peaking during the late 1990s. Some researchers point to technological advances and present security concerns in this (age of terrorism) as having contributed to declining attendance at arenas and convention centers.

Politicians may promote such facilities as Kentucky’s equivalent of the Land of Oz. There was only one Land of Oz; however 44 new or expanded convention centers are planned across the country.

More convention centers result in increased competition. And like any other sector, the market for arenas risks becoming oversaturated as government officials build subsidized kingdoms when insufficient demand exists for them.

Not only do plans call for taxpayers in every nook and cranny in Kentucky to pay for it, but a new facility would compete directly with Freedom Hall. Officials say they hope University of Louisville basketball games and concerts featuring big names will perform at a new arena.

Freedom Hall already serves those purposes. The facility contains seating for more than 19,000 people and hosts U of L home games, wrestling matches, concerts and horse and trade shows. It’s possible that competition from the new arena and other sites could leave Freedom Hall virtually empty.

Besides, if there’s really a need for a new arena, private investors would embrace the opportunity to fully fund it. The resulting demand would make such a venture profitable.

The issue of competition also affects the Pikeville center’s chances for success. Most large and financially rewarding events will take place in urban areas like Lexington – 140 miles away – and Louisville. Yet, the expo center’s seating capacity engulfs a larger number than Pikeville’s entire population.

Huntington, W.Va. with its urban population of 51,475 sits only 50 miles east on I-64. Pikeville residents can travel less than an hour to attend concerts, trade shows and ice skating at the Big Sandy Superstore Arena.

Dorothy traveled a long way to see the Wizard, but we find it unlikely that urban-dwellers from cities like Lexington or Huntington will make the trek to rural eastern Kentucky to spend their hard-earned entertainment dollars.

Already concerned about the fiscal success of this venture, Pike County officials are asking the state to subsidize the expo center’s operations. Deputy Judge-Executive Karen Sue Ratliff told reporters that the county does not own the center and cannot afford to pay the cost of operating it. Ratliff knows that it will take much more than one Larry the Cable Guy show – who recently performed at the arena – for the center to “get'er done.”

If Ratliff gets her way, taxpayers will bear the brunt of new taxes that will soon wash over all of Kentucky when the foundation of this magical kingdom – like a house built on sand – washes away.

– Joel Peyton is a research analyst for the Bluegrass Institute, Kentucky’s free-market think tank.

Weather (Louisville) / Mapquest /  White Pages / Business Search / CNN / Dictionary / E-card / MSN