On the arena: Fisking the Whirled

A direct comparison between the Ford Center and the Convention Center arena is disingenuous. Tulsa now has five arenas capable of hosting concerts -- Convention Center Arena, the Mabee Center, the Reynolds Center, the Pavilion, and the new UMAC. Tulsa has several large theatre-style concert venues as well: The Brady Theatre, the PAC, TCC's PACE. Outdoor concerts have been held at Skelly Stadium, Driller Stadium, and the River Parks Amphitheatre. And Oklahoma City doesn't have anything like Cain's Ballroom. To be sure, metropolitan Oklahoma City has other facilities, too, like the old Myriad and the Zoo Amphitheatre. Take a look at scheduled events in the Tulsa area and Oklahoma City. The schedule is dominated not by the big arenas, but by smaller theatres and clubs. The biggest names on either calendar are playing Cain's Ballroom. And you'll notice a lot of duplication between the Oklahoma City and Tulsa lists, as acts hit smaller venues in both cities.

A 1-cent sales tax proposal before voters Sept. 9 includes construction of a $125 million, 18,000-seat events center and a $58 million modernization of the Tulsa Convention Center. Although it is a consideration, passage of the measure is about more than whether we're able to attract a Billy versus a Barney. A lot of residents wouldn't go to see either. But they still would benefit from construction of an arena and improvement of convention and meeting facilities.

An assertion: We'd all benefit from this $183 million project. Let's look at Julie's reasoning.

This is why: Every time that arena filled up, it would generate $1 million in gross sales of which $91,000 would be sales tax. That sales tax would go into the general fund to pay police and firefighter salaries, to fix streets, sewers and parks, to fund programs.

Her math is all wrong: $1,000,000 would only generate $20,000 for the City of Tulsa's general fund, and another $10,000 for the City's capital improvements (third penny) fund.

She attempts the economic argument, but there are several key parameters she leaves out: How much does it cost each time the doors are opened and the lights are turned on? How much do you have to pay the folks who maintain and operate the facility? How often will you fill the arena and how much will the seats cost? Unless facility revenues exceed expenses, the City of Tulsa will have make up the operating deficit with general revenues, taking money out of public safety and other city services. At $30,000 per sell out, it will take 33 sellouts to cancel out a potential operating deficit approaching $1 million a year.

$1 million in gross sales for an 18,000 seat arena assumes that each seat will generate $55 in gross sales. I can't afford a $55 ticket to an event. Can you?

So let's add in other spending: Conventions, Sports, and Leisure, the firm that performed a feasibility study of the proposed arena earlier this year, didn't expect that we'd fill this arena very often. They estimated that the new arena would host 10 concerts a year with an average attendance of 7,500, and per capita spending of $40.50. (That number would fit comfortably into three of Tulsa's arenas.) Multiplying that out, then multiplying it by the 3% city operating sales tax -- it comes to a grand total of $136,687 in sales tax for the entire year, again well short of the facility's likely operating deficit.

DelCour began this article with a reference to Billy Graham's appearance at the Ford Center. Although he filled the arena to overflowing, all the seats were free -- no money was collected for tickets, and no sales tax was generated, except perhaps on concessions.

The CSL study estimates $3,400,000 in facility expenses each year, and $4,581,000 in revenues. That revenue forecasts rests on some big "ifs", however. It assumes that 20 Tulsa companies will pay $32,500 a year to watch minor league hockey from luxury suites, and that another 2000 Tulsans will pay $1,100 a year for "club seats" -- the right to buy a ticket to events (the ticket itself is extra). If they can only sell 5 luxury suites and 500 club seats, revenue drops by $2,145,000, and the facility loses $964,000 a year, nearly a million dollars that has to be taken out of the general fund.

Let's put aside for a moment the fact that big acts like the Rolling Stones ignore Tulsa because it doesn't have a large enough events center. Instead let's focus on what else is bypassing Tulsa -- the $82 million a year that is spent else where because conventions and trade shows, those bread-and-butter economic generators, won't come here.

Since 1997, when voters originally turned down a measure to build a new arena and improve our convention center, the number of annual conventioneers has fallen from 835,274 to 500,000. We're not only getting snubbed; we're getting drubbed economically.

But the CSL survey of convention planners shows that even if we expand and improve our convention center, the lucrative national conventions and tradeshows still won't come, for reasons that are mostly beyond our control -- we don't have a beach, we aren't a tier one city.

The term convention center here has become an oxymoron. Last year, Tulsa didn't qualify for 90 percent of the nation's convention business because its facility is too cramped and too antiquated.

The 100,000 sq ft of exhibit space at the downtown convention center is ample enough for over 80 percent of conventions and tradeshows. The 400,000 sq ft at Expo Square is ample enough for 96 percent of conventions and tradeshows.

By having an arena and a renovated convention center, more events could be held simultaneously. The convention center would offer a 25,000-square-foot, state-of-the-art ballroom, the largest such facility in the area, for trade shows, exhibits and meetings as well as smaller conference rooms.

Tulsa's Renaissance Hotel and Convention Center has a 28,800 sq ft ballroom, which would still be the state's largest.

Renovation of the Tulsa Convention Center, while not as costly, should be as important to voters as approving money for a new arena.

Unfortunately, Tulsa voters can't choose one and not the other, although it is possible to build the recommended improvements to the Convention Center without tearing down the arena.

If an events center is built, can it possibly compete with the Ford Center? Can two similarly sized facilities 100 miles apart survive?

A six-month feasibility study shows large enough population bases in and around both cities to support both events centers. At least 4.8 million people, mostly from eastern Oklahoma, southeast Kansas and northwest Arkansas, live within a 150-mile radius of Tulsa. Oklahoma City's 150-mile radius includes 4.6 million people. There is some overlap between the two population bases but there also is enough business, enough quality entertainment acts, promoters say, to keep both venues busy.

The promoters interviewed by the CSL study said that even if Tulsa built a new venue, they wouldn't use it, because we didn't have the market to support it. The Mabee Center, at 11,000 seats, is big enough for Tulsa's market.

I suppose by cleverly choosing radii, you could come up with a case in which Tulsa's market exceeds OKC's. But OKC's metro area is 25% larger than Tulsa's. Casting the net more widely, the area within a three-hour drive of the Ford Center includes about 8 million people, because it includes most of the Dallas/Fort Worth metroplex. The same criteria for Tulsa grabs about 4.8 million people, and the overlap between the two areas is nearly 3 million people. 90% of Oklahoma's population is within that three-hour envelope of downtown OKC.

It's not hard to imagine a north Texas fan of a major act leaving work early and zipping the three hours up I-35 to see his favorite band in OKC, then driving back the same night, ready for work the next day. I doubt the same fan would drive the extra 90 minutes each way to get to downtown Tulsa.

If Tulsa waits yet again for the perfect time and the perfect place to build an arena, another city or area, such as the fast-growing northwest Arkansas area, is likely to fill the gap and benefit greatly.

Northwest Arkansas already has a big arena. Bud Walton Arena in Fayetteville seats 19,200 fans. Unlike the proposed downtown Tulsa sports arena, Walton Arena has major tenants -- the University of Arkansas Men's and Women's Basketball teams.

While public arenas or events centers often don't make money directly, the centers justify themselves because they generate millions of dollars in direct economic impact.

To justify itself, the arena would need to generate enough new, visitor spending to raise sufficient sales tax to make up the expected operating deficit, and produce enough extra to pay back the taxpayers with interest for the initial capital costs, in the form of additional tax revenues that would go to pay for basic city services -- the kind that can be enjoyed for free. Let's insist that this thing pay for itself by the time we finish paying taxes for it -- a 13 year mortgage. At a paltry 3.75% interest rate, a $125,000,000 "loan" would have annual payments of $12,163,537. Add that to the operating deficit ($964,000) and divide by the city and county sales tax rate (3.417% currently) an arena would need to generate $375 million in direct, new visitor spending annually to justify the cost. (Local spending doesn't count, because money spent by a Tulsan at the arena is money that would have been spent at a local restaurant, movie theatre, or nightclub.) Assume a visitor drops $100 in town every time he comes to see an event here -- a very generous assumption. You'd need 3.7 million outside visitors to come to Tulsa each year -- an arena half-full of out-of-towners every night of the year. That's beyond the wildest fantasies of the yea-sayers.

In Tulsa, that economic impact is expected to total $92 million annually, with sales and local tax revenues of almost $6 million. And, as in Oklahoma City, hundreds of millions of dollars in private investment -- hotels, restaurants, nightclubs and shops -- can follow construction of the publicly funded arena and improved convention center.

So far, Oklahoma City has seen $300 million in private investment. Another $247 million in new and rehab downtown construction is under way. Of that, $140 million is private investment.

$92 million in spending only generates $3.2 million in city and county sales taxes, not $6 million. And $92 million is an overall estimate -- not an incremental number. The important figure is how much more money Tulsa would make from visitors to the county than we do now with our five existing arenas (Downtown, Mabee, Reynolds, Pavilion, UMAC).

Ms. DelCour ignores the millions in private investment that preceded construction of OKC's arena. Bricktown was well established and popular long before the Ford Center opened, and is busy nearly every night of the week, whether the Ford Center or the Ballpark has an event or not. Which is a good thing, since the Ford Center doesn't have much going on for the next 12 months.

A Tulsa arena, built by 2007 on land between First and Third streets from Denver to Frisco avenues, is expected to generate at least $1 million in surplus revenues per year that could go back into the center for operation and maintenance.

See above for the extremely optimistic luxury seat sales numbers that go into that projection of surplus revenues. A million dollar loss is more likely.

Voters should consider Package 3 -- which includes an arena and updated convention center -- as carefully as they consider the other three parts of the Vision 2025 proposal. This isn't just a public investment, it's a personal one.

We have only to look at Oklahoma City, more far-flung than Tulsa, to see that turnarounds are possible. Residents have something to do there. They have a vibrant downtown. They have big acts coming to town. Convention business is growing. What does Tulsa have that they don't have? A dinosaur.

Post hoc ergo propter hoc -- the logical fallacy of the Cargo Cultist. There's plenty to do in Tulsa for those who seek it out -- just look at Urban Tulsa or the Whirled's Spot.

Big acts coming to town? Tulsa has bigger acts coming to the Cain's Ballroom this fall than the Ford Center has for the next 12 months.

OKC has only one national convention, the National Rural Water Association, scheduled for the next several months. Most of their conventions are less-lucrative state groups.

And by the way, Barney is appearing in Oklahoma City, too.