The Chatter Class: Negating the naysayers on the Music City Center

Sunday, April 26, 2009 at 11:00am
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Here we go again. Naysayers are selectively trotting out information to make a case that a new convention center will be a colossal blunder that costs taxpayers money.

All their carping suggests that Nashville should simply give up on an industry it spent two decades building into a part of the city’s economic fabric, particularly after the Opryland theme park closed.

There have been plenty of naysayers during Nashville’s convention history. In 1982, a councilman called supporters of building the current center idiots for wanting something he said would always be secondary to Gaylord Opryland Resort & Convention Center. He called it a “pink elephant.” He turned out to be wrong.

The convention business is like any other industry: It’s a beast that must be fed and nurtured or alternatively killed. And Nashville leaders have chosen not to kill it. Hotels and attractions pay millions in property taxes based on the value of business they do. If they sit mostly empty, their value drops and they generate less revenue for the city.

Supporters of the Music City Center purposely created revenue streams from visitors so residents won’t have to pay for it. Credit former Mayor Bill Purcell for that.

The current convention center has had operating deficits. But covering them has not used one penny from the general fund. The hotel tax fund has taken care of that.

And to say that is bad is taking a narrow view: The fact that the hotel fund has had a balance would suggest the convention center has helped produce profits because of the hotel nights it generates.

No one is denying the MCC could also have an operating deficit. But you can’t underestimate the power of parking to cover the shortfall. As one observer put it, the late parking magnate Monroe Carell didn’t build a children’s hospital at Vanderbilt University because the parking business was bad.

Lowered hotel tax revenue projections don’t include incremental sales tax revenue from the Tourist Development Zone around the center. Gravy perhaps.

There’s a great deal of skepticism from some quarters given national attendance figures and the addition of convention space around the country. That’s warranted. But it’s also instructive to take a deeper look at local trends along with the types of conventions that are tracked in the national numbers.

The National Hardware Show, for example, will never come to Nashville because it’s an iconic show that has stayed in one place, Las Vegas. Its falling attendance is Vegas’ problem, not Nashville’s.

What is forgotten is a bulk of the conventions and meetings rotate among cities chosen years in advance. Attendees typically don’t like going to the same city over and over again. There’s only so much Disney World you can take.

Associations are in the business of attracting membership and retaining them. Keeping them happy and entertained is key.

Several conventions that have cycled through Nashville have rung up record attendance compared to meetings elsewhere. Take, for example, the Passion Conferences in 2006. The group brought 16,000 people to downtown, almost 7,000 more than its record in a different city.

Apparently, people like the affordability. Higher taxes haven’t hurt. And, there are a whole lot of country music fans out there. Look at how top country acts draw at concerts and the number of country radio stations.

Discussions of other cities’ failures rarely take into account why. St. Louis, for instance, stumbled after trying to buy in big without the track record to back it up. Boston built its new center too far from hotels.

And there are cities that probably should reconsider their plans. Cleveland, for example, is close to building a $425-million convention center. But going to Cleveland for a four-day convention? The Rock and Roll Hall of Fame and a river that caught fire back in the day are about the only attractions. Talk about a day trip.

So maybe after the MCC opens and is full its first few years, Mayor Karl Dean will be able to kick back and blow the smoke from a fine CAO cigar at today’s naysayers.

31 Comments on this post:

By: nashbeck on 4/27/09 at 12:24

Great article Mr. Lawson. There is no guarantee that the MCC will be a success or failure, therefore we have to look at history. Our current convention center did not cost the taxpayers a dime. It was funded the exact same way this MCC is being funded.

We have already booked over 130,000 hotel rooms, and the convention center hasn't even been fully approved yet.

Build this convention center, create jobs, create more revenue for the city!

By: bfra on 4/27/09 at 12:53

If all these rooms are booked, as you stated, then you should be able to print the names of the persons or companys that booked them. This should be interesting, unless you are blowing smoke!

By: nvestnbna on 4/27/09 at 4:49

Richard, I guess you got invited to lunch or dinner by MPF after the Scene article last week - shame. Good bye SoBro.

By: arkay61 on 4/27/09 at 6:00

Guess what pal, Nashville isn't much more than a day trip either. A strip of bars, an over priced museum and the Ryman all sitting on a muddy river that smells like a sewer in the summer heat. If you're over 50, the museum and the Ryman be of interest. Oh, I forgot to mention that we just came in at #9 on Forbes most dangerous city list . I noticed the local papers never printed that story. But I guess we can be thankful we aren't Memphis...yet. They came in at number 2.

Big league city indeed. We need more foundation, less window dressing. Give folks a REAL reason to visit, then build the accommodations instead of building them first and hoping someone shows up.

By: JohnBirch on 4/27/09 at 7:15

Richard,
I realize this is an opinion piece so facts are not really necessary but can you clear something up for me? Are you suggesting that because Monroe Carell has parking contracts AROUND THE WORLD and thus has lots of money to donate to Children's hospital, the 1500 space parking garage at the MCC will make all the money necessary to cover operating losses?

By: JeffF on 4/27/09 at 7:26

Lets see meetings are coming, the current facility accommodates them just fine. Lets build an even bigger one? Or, lets abandon the current facility that has been "successful" in making a Nashville a top convention draw and costs us nothing but maintenance and instead lets buy a shiny new building that will be paid for over 20-30 years that probably will not pull in no more than 2-5% more people (the trend for new and larger centers).

The wise investment would be to keep the still young building and use the tourism taxes for government purposes. A convention center located on Broadway near the arena, riverfront, Tootsies, and several hotels makes a lot more sense than the carpet bombing of several city blocks south and west of the arena and then having to publicly pay to build a whole new set of hotels and parking facilities.

By: JeffF on 4/27/09 at 8:17

Team MFP must be in a staff meeting this morning. Their absence this morning is pretty obvious. Maybe the Music City Marathon is a client and they are busy spinning that sad story.

By: SirKnight on 4/27/09 at 8:21

Wow. Someone is sure drinking the kool-aid. (I know this is a worn out phrase these days!) Plain and simple this is just NOT the right time to move forward on a new convention center - economically and financially! It's just not!

I still think Nashville should put this entire decision process off for another four to six years, when all the lights are green. Right now there are too many reds and yellows. Mayor Dean, please focus more on what is REALLY important - budget issues, a potentially reduced police force and a under-performing education system.

By: nashbeck on 4/27/09 at 9:00

SirKnight-
Wait 4 to 6 years when construction prices will be much, much higher than what they are now?

By: Richard_Lawson on 4/27/09 at 9:04

JohnBirch -- The Carell family owned a good bit of the parking in downtown Nashville, managed even more, so not just what's around the world. JeffF I'm not sure how many times I have to write it, the tourism taxes CAN'T be used for anything other than tourism related activities. If you visited another city, would you want to be helping pay for a school system or other government services of another city? The current center won't always accommodate the conventions coming now. That's like saying let's keep the two-lane road and quit maintaining it. Bottom line is does Nashville want to stay in the convention business over the long haul? Or do you let an industry die? Like I wrote, the industry is a beast that was created a decade ago. When you create it, you have to feed it otherwise you let the industry die.

By: JeffF on 4/27/09 at 9:30

Feeding it may simply mean the current building. The current building hosts meetings and does so well enough to be on the top 20 list. All meetings are shrinking even the mentioned Hardware show (dropped by 2/3 over the last 15 years). Meetings are not growing toward the larger facilities, they are shrinking toward the smaller ones. We are at a long-term competitive advantage to other cities with a building with no debt service. it allows us to have the state change the revenue law to invest in the city and make it more attractive to businesses and tourists. It allows us to heavily discount (a common industry practice) and not lose our shirts doing so.

The larger, newer facilities are running at lower usage rates. Nashville's remains high and supposedly this means we need a new facility. Nashville is top 10, the building is paid for, the facility is not being over or under utilized, there are no guarantees that a billion dollars of new building will lead to any new success, and several city blocks will be forever removed from the tax rolls never to be developed into anything resembling a vibrant neighborhood. I fail to see where the upside is for all of Nashville.

The law dedicating the tax receipts can be changed. All it takes it real leadership standing up to this forever dependent private enterprise. How many other enterprises are dependent on government's to built their facilities, pay the salaries and benefits for their promotional employees, and collect the taxes from tourists not actually using these facilities in order to hide their operations deficits?

Convention Centers do not pay for themselves when they use tax money collected from non users to pay the bills. Convention Centers pay for themselves when they charge enough to users to cover operations and debt service. Just like for every other business in the world.

Right now many want to exempt the convention center from the rules of wise business. Wal Mart provides a huge economic impact to communities but non one wants to build them their buildings and charge rental car customers to pay for it.

By: Richard_Lawson on 4/27/09 at 11:08

You can't simply feed the existing building. After awhile the the customer wants something new. You can only spruce it up for so long. It's apples and oranges to compare the attendance of the Hardware show to the attendance of the shows that come here. There is a decent sized list of conventions that come here in which attendance to that particular show increases when it comes here whether downtown or Gaylord.

Again why the hell would visitors to Nashville want to pay for our school system. How many other enterprises are dependent on government's to help build? Easy. Gaylord. The company hasn't expanded or built new without something from the government anywhere. The rest of that question is nonsense. Visitor taxes pay for the CVB. Also, it's a portion of its budget now comes from membership dues.

The convention center does pay for itself. If it generates the attendance that pays the taxes that are used to pay for the center, then that's good. If the hotels are busy, they pay more in taxes. The hotels also help underwrite the rent on some shows to help get them here. The economic models for convention centers across the country would have to change dramatically to do as you suggest, public or private.

By: nvestnbna on 4/27/09 at 11:23

Richard, why don't you do a story on why businesses aren't locating downtown? Over at the Tennessean a little while ago I watched the Tony video on May Center. Interesting.

The reason is it doesn't appear to be much of a priority. Do Nashvillians want to come downtown - to this? Build a huge inactive widescraper - just like what we have now just worse. Who occupies the least active corner at 5th and Broadway? Name a few businesses on that bustling thoroughfare Commerce Street, a better description is 'no Commerce Street", thanks CVB!!!

This is a "Hail Mary" project that will do more development damage than good for downtown. I wish them the best, but from as a Urban energizer viewpoint, we need look no further than the history of energizing of our current center. They feed off others energy. So long SoBro. So long street grid.

By: JeffF on 4/27/09 at 11:39

Gaylord is part of the industry that always needs government money so using them in your argument only reinforces my point.

The convention industry and the convention industry has as much to do with total tourism revenues in Nashville as the parking lot around Opry Mills. I would say Opry Mills itself but it probably brings in more real visitors than the convention center. Lets say 5-10% of visitors to Nashville are here for the convention centers events. That is probably overstating it considering all the meetings spaces at all the other area hotels and meeting centers. That still leaves 90% of people being taxed for something that absolutely has nothing to do with them. So the convention center can claim them as part of its "paying for itself" argument? Please.

The convention center is simply an idealized self-image of the tourism industry. Money comes in from the rest of the industry in order to have a cathedral better than the other cities unfortunate to get sucked into the CVB "Mine is bigger than yours" contest. Those contests do not care about breaking even or even success, it is about image. Right now our convention industry has "convention center" envy because ours looks small compared to everyone else. Never mind the fact that the others are on IV nourishment and life support.

By: JeffF on 4/27/09 at 12:00

Where are the McNeely, Piggot, & Fox standard bearers today? Richard didn't you work with David Fox?

By: forlinjd on 4/27/09 at 12:39

If the convention industry is a beast that needs continual feeding, and we now have to feed it $600+ billion, what will we have to feed it 2 decades from now?

What happened to the recommendations made by the Civic Design Center to maintain the street grid and line the Center with a variety of uses?

How will another massive public facility impact the pubic realm? Will this enhance the human experience or quell it? How does this Center fit in with what we know creates great places - small scale, incremental growth, walkability, variety, building diversity, mixed-use?

How does this Center increase the diversity of our economic base that is so critical in the fluctuating economic climate?

Where do convention centers fall on the lists of assets for the greatest cities in the world?

By: Richard_Lawson on 4/27/09 at 12:44

I've never worked for David Fox of MPF. The David Fox I worked with now runs the school board.

You asked what enterprise and Gaylord was the answer. Then you wrote that the convention center defies wise business. So which is it? Basically you are suggesting Gaylord should go out of business as well.

Convention business adds a tremendous amount to tourism here. It picked up a lot of the slack when Opryland went away. It's much more than 5-10%. I think it's closer to 50-60%. You should have been arguing against all this 20 years ago. That's the point I was making in case you didn't read the column closely. You can't keep the current convention center for 100 years. At some point, it must be leveled.

You're flat wrong about the penis envy. If it was just that, the study Purcell (who wasn't eager to build a new CC) would have called everyone out on that.

In short, I think I get what your saying. No city anywhere should ever have a CVB or any government supported structure, publicly or privately operated. Then we wouldn't have hotels that would want more. But this is much more complex than you are making out to be. The only black and white issue here is whether you want to be in the convention business or you don't. That decision was made 20 years ago. The decision now is to feed it or kill it.

Nvestnbna, businesses have moved downtown just not in the droves that have moved to the suburbs or elsewhere in the county. And actually businesses would locate near a new convention center because of the people who would be there. Broadway gets a lot of help from the current convention center. Also the street grid is being protected. It was one the desires of the planning director.

By: Richard_Lawson on 4/27/09 at 12:55

forlinjd, even Vancouver, Canada, considered one of the best cities in North America, has a convention center. It's on the waterfront on the same side of the river with downtown. And we aren't feeding it $600 million (not billion, that would be one helluva convention center). The visitors are. All of your other questions have be answered in the preliminary planning. Whether they've been answered to everyone's satisfaction is another matter. It seems so right now.

By: JeffF on 4/27/09 at 1:23

It is a billion dollars with the "much needed" convention center hotel that follows every new convention center project. Nashville tourism leaders have been more up front than those in other cities telling us already that a hotel will follow.

The moment this is issued without general obligation debt of any type then that will say whether we are really paying for this or not. It sounds like proponents are needing our bond rating to get a cheap rate on their debt. That raised borrowing costs for our projects. It will also help to defeat our arguments to have CVB and convention center employees not be part of Metro's own payroll and to not have metro fund any of the infrastructure construction in that area.

The center cannot say it is not on the public dole because it hides its expenses in various places on the Metro budget and CAFR. It also hides under its property tax exemption for that huge property that will still require public services even without paying for them. In many cities the most crime prone areas are around convention centers. I found that one in USAToday a couple of years ago. That requires more police patrols around a building not bringing in any property taxes and eats up its own sales taxes and hotel/motel taxes.

Make this project foreclosable upon default and I and many others will be happy.

By: nvestnbna on 4/27/09 at 1:24

"Nvestnbna, businesses have moved downtown just not in the droves that have moved to the suburbs or elsewhere in the county."

Why?

"And actually businesses would locate near a new convention center because of the people who would be there. Broadway gets a lot of help from the current convention center"

Like on "No Commerce Street" -- did you not notice these 'visionaries' located their 'backside' (loading docks, no public circulation, etc) on Broadway twenty years ago - not unlike Gateway with the current design, they've had four public meetings on the design, have you had a chance to look at it? When Broadway really needed the CVB's "help" the CVB delivered - their ass end. Today, these CVB folks claim to be the Broadway re-development engine. No, they followed rather than lead on that one.

"Also the street grid is being protected. It was one the desires of the planning director."

You might want to review the "planning director's" desires and concerns with this facility, I really don't have the time or room to go through all the 'planning' related problems including wiping out any semblance of an active street grid within this eight block foot print.

By: producer2 on 4/27/09 at 1:34

Richard,
Thanks for the article and your replies. Deaf ears are hard to convince but you must consider the source. JeffF and friends are more infatuated with their visions so they fail to take time to look at the big picture. Same is true for our friends at the Scene. The writer was so transfixed (as is JeffF) on Heywood Sanders article they forgot to look into the fact that he’s a professor in San Antonio. During the time their homeboy expert had been telling everyone the convention center industry is overbuilt, the city of San Antonio has expanded twice and built a dome. I guess you have to be from out of town to understand these things. For crying out loud, even his hometown doesn’t buy his “research.”

By: JeffF on 4/27/09 at 1:49

There they are. Must have been a long meeting.

By: Richard_Lawson on 4/27/09 at 2:17

The folks you were looking for are in Denver. No doubt they are looking at the convention center there.

By: producer2 on 4/27/09 at 2:43

JeffF can't stand it that actual unpaid citizens are for this project. Even though I work in this industry I am also a homeowner downtown and would be for it without my profession. But I guess his dig was the only thing he could come back with since he has not rebutted anyof the statements made with facts.

By: govskeptic on 4/27/09 at 2:54

There is more smoke being blown over both revenue and benefits from this center than 2 pacific volcanos. Chatter says the reason for this temporary name of "Music City Center" is so everyone can think how progressive we are until the name changes to the more permanent "Metro Pink Elephant". We'll all be driving to Cool Springs to eat and drink to avoid the "Center" taxes. Regular travelers and the thousands of business visitors will also quickly learn that will be the place to base during their trips. The voices for this are those that are finally attached.

By: JeffF on 4/27/09 at 2:57

No, you just ignore the facts and come back with estimated economic impacts and all sorts of summaries of sunk costs. No one has ever justified why it is okay to have government involved with this industry over possible involvement with every other industry. The only thing I see in arguements is regarding its importance. Every industry is important. Every industry can justify its spending its own money on its own projects. No one has tried justifying the continuing upkeep of private business with government acquired tax money and debt capacity.

The entire company is in an upraor over loads and subsidies to the auto industry. Even proponents are against this being a long-term or ongoing event. Yet tourism never gets off the dole. The convention industry in this country has been on food stamps and free cheese for going on 25 years now. Yet no one has told these welfare queens to go get a job and get out of the projects. They actually are askign for and are going to get more cheese. In fact, many are taking the cheese selling it and paying for lobbying for still more cheese.

20 years of "investing" should have paid off by now. Self sufficiency has to begin somewhere.

By: Richard_Lawson on 4/27/09 at 3:09

It is self sufficient just not in the way you want it to be or think it should be. If it was done that way, there's no way even the current center could compete with any other city. If all cities chose that model, then perhaps. But it is not to be.

Though Nashville's visitor taxes are third highest in the country apparently, the overall affordability remains strong.

The guy who coined the pink elephant turned out to be wrong. The downtown center thrived despite Gaylord. Why? Because there are two markets for conventions -- downtown and suburban self contained.

Again Jeff, you really don't want a convention and tourism industry in Nashville. You'd prefer to see empty hotels rotting downtown, paying much lower property taxes.

It's one thing to say the convention center is on the dole if we, the Davidson County taxpayers are footing the bill. Very very few would agree to such terms. But the dole as you call it is visitor taxes.

How about toll roads? You against those too. If I don't commute why should I subsidize those who do?

govskeptic, locals can avoid those taxes by simply not going to the new center, if it's built, to eat and drink.

By: govskeptic on 4/27/09 at 5:01

Richard: These restaurant taxes are going to be an add on to the existing taxes in a particular area of a certain number of miles around the center. I"m not interested in the taxes just inside the center. The Pink Elephant was not in reference to the existing center, but the one that's going to cost over twice as much as the existing. Let me ask who has read the tea leaves to know when this slow down is going to become so vibrant again. This could take many yrs. to come out of. By then we might build this for one-third the present projections, of course, the Bronze Plaque attached to the entrance would have a different group of praising name on it.

By: Time for Truth on 4/27/09 at 5:41

What a surprise! Richard is one of the cheerleaders for this thing. What Richard is totally ignoring in his 'please feed the pig' outcry to build is that the convention business isn't growing. Feeding people on life support is a moral and Christian thing to do, feeding a business on life support-with other people's money is not. This building will sit half empty within a decade of its construction and be a blight rather than a boom for this city.

nvestbna, Jeff, Caleb Hannan and I are not idiots, as the mighty tourism experts seem to imply here. You are the ones who can't see the forest through the trees. Dean wants to build for a dying industry while important needs are being shorted. And in the process, the potential for the 8th and Sobro area will be squandered and existing tourism facilities may actually be hurt by competing with the government.

Except for the 800 pound gorilla on the river, who is getting yet another slice of the taxpayer pie as they have for years. Gaylord has done as much to harm Nashville as help it, yet they are always first in line to get into the taxpayers' pockets.

By: Richard_Lawson on 4/27/09 at 7:08

The restaurant taxes aren't an add on miles around the center. The TDZ encompasses mostly downtown and out to Music Row and up West End some. The increment in sales tax goes toward the MCC. That is, if there's a $100 in sales taxes at restaurants within the TDZ now and they grow to $125, the $25 goes toward MCC. It's tax increment financing with sales taxes.

And of course the new one is going to cost a lot more than the existing one. The existing one was built 20 years ago. Additionally, there's no chance in the world that down the road this thing would cost a fraction of what it would cost now. Costs rise. If it were, look out, because that would be the economy would be in a seriously bad situation. Costs are down now with the fall of homebuilding and other construction projects.

TNT I'm glad you can see the future so well. I hope you are a stockbroker or something making a lot of money.

By: nvestnbna on 4/28/09 at 6:53

Still no comment on the design impact. Richard, let us know when you get a chance to review that. Or, are we just going to leave the development of South SoBro to the CVB like we did NoBro twenty years ago - don't you just love to stroll down 'No Commerce Street' and window shop?