Part 2: SOME THOUGHTS ABOUT STUDIES OF THE ECONOMIC IMPACTS OF DOWNTOWN ENTERTAINMENT VENUES

Posted on April 3, 2015 by DANTH

An Assessment, From a Downtown Perspective, of Economic Impact Studies Done on Downtown Arts Venues That Use I-O Economic Models (Multipliers) cont’d.

The Critical Geographic Problem. Downtowns, even in NYC, Chicago or L.A., are geographically far smaller than counties. Consequently, there is an inherent mismatch between the geographic area the I-O model impact studies utilize and the one downtowners are most concerned about. Furthermore, the nature of the available data needed to construct these models precludes their being built for impact areas smaller than a county. While there are data available for zip code areas — a geographic unit sometimes useful for looking at large downtowns — experts in their use strongly recommend that analyzing a single zip code absolutely should be avoided. Instead, they advise that the zip code data should mainly be used to look at custom defined geographic regions that are not congruent with one or more counties, though sometimes they also can be used to cover part of a county (or counties) if enough zip codes are to be analyzed (7). C3D, for example, has done some studies on arts organizations that use a multiple zip code approach to define their impact areas (8).

According to Ben Davidson, Americans for the Arts’ (AftA) senior director of research services: “Our I-O models are generally constructed at the county level (obviously), and then aggregated for larger regions. But our proprietary model also allows us to customize it to specific local economic characteristics such as a city-based lodging tax“ (9). Each model is the basis of an Excel spreadsheet “calculator” that can estimate the impacts of a specific arts venue or of a community’s entire arts industry on the number of full time jobs, household incomes, local and state tax revenues.

One probably unintended and undesirable consequence of using county-centric I-O models is that the related off-site expenditures of county residents are often basically discarded and the analytical spotlight is focused solely on daytime and overnight tourists. The explanation given for this exclusion in a study done for the Los Angeles County Museum of Art (LACMA), which is similar to what can be found in many other large arts venue impact study reports, is that:

“Ancillary spending of local visitors (i.e., residents of Los Angeles County) is excluded, since these visitors would have spent these same monies elsewhere in the region, making their expenditures related to LACMA a displacement of local spending and not new spending attributable to the Museum.” (10).

For downtowners, a significant percentage of their counties’ residents will be in their trade areas and very important customers. They absolutely cannot be ignored. Another fact that cannot be ignored is that making a downtown again successful means it must recapture the expenditure dollars of its trade area residents. PC puffery may attempt to hide that fact, but its veracity will remain unrefuted. Information about an arts venue’s ability to draw trade area residents downtown and their demographic characteristics, lifestyles and spending patterns (how much and for what) would be very valuable pieces of impact information for downtown EDOs and merchants. There are surveys of arts audiences that provide such information. For example, the audience surveys done by AftA, which are done on site and only ask a limited number of questions, has provided such information about many arts venues and, in many ways are a model of how they should be done.

The heavy emphasis the I-O impact studies place on tourists also can be harmful. It can lead to downtown businesses over targeting tourists in their marketing and merchandise selection to the detriment of local shoppers, with seriously negative consequences in terms of sales and customer relations. It can also help generate bad town-tourist vibes that, in turn, can have undesirable political consequences. Over the past decade, DANTH has visited a number of small and medium-sized communities with penny-wise pound-foolish growth strategies: local merchants and politicians mistakenly placed far more attention and resources on attracting more tourists than on improving their abilities to serve local residents. Of course, merchants that fail to well serve their resident customers are not likely to succeed with tourists.

Arts/culture tourism certainly can be a valuable revitalization asset, but not every town can be an arts tourist mecca. As the growing success of downtown Valparaiso’s entertainment/hospitality niche is demonstrating, a strategy targeting that market segment is probably best used when local residents are also being well served by downtown merchants. Getting a good handle on the proportion of downtown retail, hospitality and entertainment sales that arts tourists are most likely to provide can help determine the level of attention and resources it deserves.

Audience Expenditures: It’s Critical to Get Good Data for This Critical Variable. Besides arts venue expenditures, the other variable that arts venue I-O model impact studies start from is audience expenditures. It also is a variable that, in and of itself, is highly likely to be of considerable interest and value to downtowners — even without the benefit of the information an I-O model can provide about how it is respent. Moreover, in many, perhaps most cases, downtowners will benefit more from audience direct expenditures than from the arts venue’s direct expenditures. Both downtowners and I-O models need or want good data on audience expenditures. The I-O model uses estimates of audience expenditures provided by other sources as an input. For downtowners, audience expenditures represent a very important impact. Downtowners do not need, nor can they use, an I-O model to get reliable and accurate information about audience expenditures.

Nonetheless, it is often a very troublesome one to research. The best way of obtaining reliable, acceptably accurate data on how consumers spend their money is to survey them. However, such surveys require substantially more methodological skills and resources than most other kinds of surveys. For many consumer items, the relevant information must be obtained close to the points in time when the expenditures are made, lest memories of them quickly fade. For example, the Bureau of Labor Statistics (BLS) probably sets the gold standard for this type of research and it has half of its 14,000 survey respondents keep diaries of their expenditures and interviews the other half 5 times over 15 months.

In contrast, too many of the arts impact studies do a secondary analysis of surveys conducted by an organization other than the one doing the impact study. These surveys are seldom done to BLS’s methodological standards and usually have far fewer respondents. Their ability to establish the causal connection between respondents expenditures and their arts venue attendance is usually weak or non-existent. Surveys done in the same community can produce very dissimilar expenditure estimates, leaving their wiser clients to be uncertain about their accuracy and reliability.

Forced to used surveys designed by others for other research objectives, the impact analysts often must make numerous assumptions or stipulations if they are to be able to use the “other research house” surveys for their own arts venue related research purposes (11). For example, the original survey may have been of the expenditures of all tourists visiting the community. The secondary analysts must figure out how to deal with an impact attribution problem: how much of this type of spending can be attributed to the tourists visiting the arts venue whose impacts are being studied, but who have not been surveyed? Of course, there will be other unanswerable issues such as: are the venue’s tourist visitors sufficiently similar to those tourists who do not visit the venue that the secondary use of the data is warranted?

Such impact research thereby becomes more and more of a modeling exercise, with each assumption or stipulation bringing in another unknown error factor and their interaction being potentially exponential rather than additive. For example, in the LACMA study:

“(V)isitors who have traveled from other parts of California, as well as from other states …are assumed to spend at least one additional night in Los Angeles County in order to visit LACMA…..International visitors to Los Angeles …are also assumed to have spent one additional day in the region in order to visit LACMA” (12).

The average expenditures for one day for these two types of tourists, as determined by the “outside” general survey of tourists, were then applied to estimate the economic impacts of the comparable tourists who visit LACMA.

Of course, most researchers and decision-makers live in a world of imperfect data and limited financial resources for obtaining the information they would like to use. Doing the necessary survey work may be beyond their allotted time and financial resources. Very often, they then find that making assumptions enables a kind of modeling exercise that, though admittedly imperfect and capable of only yielding ballpark type findings, still may promise sufficient enlightenment to be worth doing and for its findings to be seriously, if cautiously, considered. Such exercises, however, should come with some standards and responsibilities. For example:

Are the assumptions really reasonable? Re the LACMA study’s assumptions: Are tourists really likely to spend a full day or most of it at LACMA? Could they not also walk to the La Brea Tar Pits next door, or the other museums nearby on the “Miracle Mile or shop at The Grove just a 15 minute walk away– or get in their rented cars to go look at the Hollywood sign or the beach scene in Venice on that same day? Are they really spending a day in town just because of their visit to LACMA – so the motive not the behavior is the justification for the assumption? Or are they going to LACMA to fill part of a day they already planned on spending in LA and they then plan on also eating dinner, say at Spago, because they are not only are art lovers, but also restaurant tourists, etc.? In a world of multi-tasking, is uni-motivation for a day’s schedule really reasonable? Why then should a full day’s spending be attributed to the LACMA visit if its visitors – or at least a good number of them –are likely spending only a fraction of the day there and going to other destinations they might highly value in the remaining hours? Should portions of their daily expenditures be allocated to these other venues? If so, then by what formula? Will the assumptions produce answers that are sufficiently accurate to be usefully informative?
Are the consumers of the research being told about its data and methodological limitations and overtly adequately cautioned about its conditional value and utility?

Expenditure estimates based on iffy assumptions and that arrive without adequate and overt cautions about their use should be treated as probable horse puckey.

The LACMA study also provides a good example of just how much estimates of visitor expenditures can vary in one community, in this instance Los Angeles. Its analysis uses the following data, based on research published by TNS TravelAmerica in 2010, about visitor off-site spending per day: $53 those from Southern CA; $75 those from other places in CA; $75 those from other places in the US and $116 international visitors (12). However, the authors then note that:

“These estimates are conservative. In comparison, the estimates used by the Los Angeles Convention Center and Visitors Bureau for international visitors are at least four times as high, and those for domestic non-California visitors are five times that shown in the exhibit” (13).

The variation in these survey findings speaks more to the variation in their researchers’ skills and methodologies than to visitor expenditure patterns.

Realizing that its I-O models would be far more accurate and useful with accurate and reliable estimates of audience expenditures, AftA has made an enormous and impressive effort to get to surveys of arts audiences completed in each of the study areas for which it has generated an I-O model. The arts induced daily expenditures reported by AftA for the nation and in its 139 study regions are considerably lower than those cited in the LACMA study, though they still show a good deal of variation. Nationally, nonprofit arts attendees averaged arts induced daily expenditures of $24.60 per person (admission costs excluded) in 2012, with local audience members spending $17.42 and non-locals spending $39.96 (14). As can be seen in Table 6, the average resident daily expenditure across the six study region groups ranged from $16.55 to $21.89, with the highest community average within each group ranging from $24.69 to $39.39. Much the same is the case for non-residents, though the expenditures are, as to be expected, about twice as high. (It should be remembered that the non-arts related downtown expenditures of local residents may well easily erase this discrepancy.) The average individual expenditure ranged among the study region groups from $32.26 to $53.95, with the highest community average within each group ranging from $49.97 to a Colorado ski resort town’s $191.81.

AftA’s survey data across 139 communities and the data cited by the LACMA report indicate that there is so much potential variation in visitor daily expenditure estimates that data not gathered specifically for and in the subject arts venue is likely to be too error prone to warrant any useful and actionable conclusions. Secondary analysis of someone else’s survey of guest expenditures certainly should not be the preferred way to go.

For Downtowners, Audience Surveys Provide Much Richer Information About an Arts Venue Impacts Than I-O Models. Downtowners in the communities that did AftA directed surveys and have arts venues in their districts are likely to find the information collected and the way it is presented to be very useful, indeed. In these instances, the data describe the total arts induced spending that arts visitors bring along with them into the larger community (e.g., the large city, county or region) when they visit downtown arts venues, but not what they spend downtown. In other words, these data detail the sizes and types of spending pies (e.g., meals, clothing, gifts, ground transportation, etc.) downtown merchants can go after (see Table 7). They do not address how big a slice downtown merchants have won of each pie, though the survey has established that the respondents have visited the downtown, and the merchants’ geographic proximity should give them some competitive edge. This is similar to the information benefits merchants in downtown North Adams can get from the I-O model C3D used because AftA survey data for comparably sized communities were entered into that model.

Importantly, the survey data detail a number of other interesting audience characteristics, e.g., the visitors’ household incomes, education levels (see Table 8) and their reasons for visiting the community. For the vast majority of downtown business people and EDOs, these surveys provide much more useful and simple impact-related information (the characteristics and spending patterns of people brought downtown are the impacts, the arts venue is the “impacter”) than any I-O model can. Undeniably, the I-O models cannot function properly without them, since data about audience spending are a critical initial impacting force variable.

Looked at another level, the AftA data on the 139 study regions constitutes a unique database in which the audiences of many more than 139 arts venues (study areas can contain more than one venue) have been surveyed using the same questionnaire and in similar settings. It can facilitate the drawing of general conclusions about the impacts of arts venues. For example, Table 7 indicates that arts venue induced spending is most likely to go for “need” type purchases, such as food and drink away from home and lodging, while apparel and accessory shops might not win as many sales dollars or benefit so much from the arts venue’s downtown presence. Table 8 shows just how strongly arts venues attract well-educated visitors. True, these conclusions were long generally held within the economic development community, but never before has such strong systematic evidence been gathered in their support.

Downtowners and their EDOs also can learn a lot from AftA’s survey techniques:

Survey people on-site at the venue being studied
Don’t ask too many questions (but make sure that the respondents zip code is one of them)
Have a lot of respondents
Do it over enough calendar time to account for variation in events and weather
Make it easy for people to respond by asking about recent situations and actions, about things that are easy to know or remember, e.g., about purchases that were made recently.

These are also characteristics that should be found in the surveys downtown EDOs do of people employed in their districts or attending a college there.

A Closer Look at the Audience Expenditures Impact Attribution Problem. Impact attribution is a problem that plagues many entertainment niche element impact analyses, not just those in the arts. It derives from the essential tasks of logically establishing and/or measuring the causal linkage between an entertainment venue and some effect, sometimes when compared to other potential impacting factors or agents. For example, in earlier articles in this series, questions arose about:

How much of the improvements on Division Street Plaza (in Somerville, NJ), could be attributed to its conversion into a pedestrian mall and how much was the result of the general revitalization of its downtown?
How much of the revitalization of Manhattan’s Upper West Side, especially the Lincoln Square area, was due to the creation and growth of Lincoln Center and how much was due to the revitalization of Central Park and/or the area’s proximity to the Midtown CBD and strong transportation assets?

A similar problem also frequently arises regarding the spending of arts venue visitors, a critical variable for I-O impact analyses: how much of their local spending can be attributed to their visit to the venue? This was, for example, the challenge that prompted the LACMA study to make various assumptions about non-resident museum visitor spending. Making assumptions is one approach to establishing the causal linkage. A more effective one is to undertake an audience survey structured so that the respondents essentially report the causal linkages they have made between their arts venue visits and the local expenditures. Unfortunately, the impact attribution problem also can crop up in such surveys.

Americans for the Arts, as an advocacy organization, wants to show that arts venues and local arts industries provide strong economic benefits for their communities. It knows that its survey respondents are arts venue guests and so they just could be asked about their purchases in the community that day. But, their concern about arts impact attribution apparently is so strong that their survey asks the following two questions:

“2. Which of the following best describes your primary reason for being in this community today?

— I am a full-time resident/I live here

— I am a part-time resident (e.g., I own a vacation home)

— I am here specifically to attend this arts/cultural event

— I am here on a vacation/holiday

— I am here to conduct business (e.g., meeting)

— I am here for a combination of business & pleasure

— I am here on personal business (e.g., wedding)

— I am here to visit friends or relatives who live here

— Other (Please specify)”

“5. List below the estimated amount of money that you and the members of your immediate travel party have spent or plan to spend in this community specifically as a result of your attendance to this arts event. Remember to include money spent before, during, and after the event. If exact figures are not available, use your best estimates.

Admission tickets to this event
Refreshments and/or snacks purchased while at this event
Food, drinks, or meals purchased before or after this event (i.e., at a local restaurant)
Souvenirs, gifts, books, recordings, and/or art
Clothing or accessories specifically for this event
Local transportation (e.g., gas, parking, tolls, rental car, taxi or bus fare—not air fare)
Child-care specifically to attend this event
Overnight accommodations because of this event (e.g.,hotel, motel, bed & breakfast)
Other (Please specify):” (underline added) (15).

Question 2 allows residents and non-residents to be identified, though that can be equally achieved by another question that asks for the respondents residential zip code. More importantly, it allows the non-residents who are visiting specifically to attend an arts/cultural event to be identified. That helps measure the magnetism of the arts venue to attract tourists to the community. In building a downtown as a tourist center, venues that are strong tourist magnets are very important assets.

The question also enables non-residents who are visiting for other purposes to be identified. For these visitors, the arts venue is not a magnet, but more of a potential amenity. The arts venue, for them, makes the downtown “stickier,” i.e., it can pleasantly occupy visitors’ time and makes them want to stay longer and return. Successful downtowns are sticky, especially those targeting tourists. One well-known axiom about tourism is the “four times one rule, ” i.e., that “people will visit your community if it has activities that interest them, and that keep them busy four times longer than it took to get them there” (16). Entertainment venues are often recommended by tourism experts as good ways to make a downtown stickier.

Notice that the differentiators being looked for here are specific motivations; surveys are essential for capturing information about them. The reported behaviors of traveling to the community and attending the event cannot do the job by then turning into assumption burdened surrogate variables.

Q5 aims at establishing a very clear causal link so AftA can claim their findings show: “The total direct expenditures made by arts and culture audiences in each participating study region as a direct result of their attendance to nonprofit arts and culture events…” (underline added) (17). The question enables the art venue visitors — not the impact analysts — to make the connection between their expenditures and their visits. The arts impact attribution is very clear.

Downtowners, of course, will wish that the AftA surveys had asked about expenditures in the arts venues’ downtowns, something they can fix when they do their own surveys of their arts audiences. For some downtowners, the filter AftA used to establish the impact attribution may be too clear, perhaps finding that the wording in question 5 would exclude purchases that they would want to know about and see as causally related to visits to the arts venue. For instance, what about a desk or antique lamp purchased in the downtown that trip , but shipped to the home of the arts event attendee? Q5 does not ask about home furnishings or antiques. Also, what does “a direct result of your attendance” mean? Is the wording clear enough that respondents will not be confused or puzzled? Does the article of clothing purchased have to be worn at the event or simply purchased on the trip to attend the event for it to be counted? However, issues about question wording are, of course, endemic in survey research. Nevertheless, while the AftA surveys are understandably not perfect for downtowners, downtowners can learn much from their methodology and from the findings of all the surveys done in communities of comparable size to their own.

That said, it is still necessary to also keep in mind that surveys asking about how people spend their money are very error prone because of respondents’ memories and their concerns about confidentiality. Items that cost a lot ( e.g., a TV, computer or car) or are repetitive payments (e.g., rent, car payments) are best remembered. Smaller transactions are less well remembered. Survey questions that ask for expenditures in categories, such as the AftA survey asks, essentially require respondents to work, to remember individual transactions and then add them up in their heads. Consequently, the data produced by AftA type surveys are likely to have more erroneous responses, the extent of which cannot be determined. Nevertheless, they still may be the best information we can get about arts audience expenditures and still useful if we treat them as pretty good ballpark estimates, rather than some kind of precise statistical photograph of the real situation. Such estimates very likely will be good enough to meet the needs of decision-makers who are thinking in the ordinal measurement terms of everyday language (e.g. none, some, most, all) that inherently lack rigorously defined boundaries.

The essential question of whether or not such data are good enough really can only be answered by their potential end users and the people to whom they are accountable. For those of us who live in a world filled with imperfect data, this is not an unfamiliar question.

Up Next: Part 3 of this article will focus on analyzing the economic impacts of downtown parks.

ENDNOTES

7. Telephone conversation with Implan’s technical support.

8. See, for example, its research on the Casita Maria Center for Arts and Education (Bronx, NY) at: http://web.williams.edu/Economics/ArtsEcon/Casita.html

9. Quoted from an email message to the author

10. Christine Cooper, Shannon M. Sedgwick, and Somjita Mitra THE TRANSFORMATION OF LACMA: AN ECONOMIC IMPACT ANALYSIS. Economic And Policy Analysis Group, Los Angeles County Economic Development Corporation. January 2014, pp.17, p.9. (Hereafter referred to as LACMA study,)

11. For a good example, see: Economic Development Research Group, “The Economic Role and Impact of Lincoln Center,” September 2004, pp.49, p.18

12. LACMA study, p. 11-13

13. LACMA study p. 12

14. Americans for the Arts, “Arts Facts…Spending by Arts Audiences.” http://www.americansforthearts.org/by-program/reports-and-data/legislation-policy/naappd/arts-facts-spending-by-arts-audiences-2012

15. Americans for the Arts, “Arts & Economic Prosperity IV: National Statistical Report,” pp. 377, p. C-27

16. Roger A. Brooks, Maury Forman, “Twenty-five Immutable Rules of Successful Tourism,” Kendall/Hunt Publishing Company, 2003, pp. 55, p. 46.

17. Americans for the Arts, “Arts & Economic Prosperity IV: National Statistical Report,” p. B149

Three Informal Entertainment Venues in Smaller Communities: Bryant Park Series, Article 4

Posted on December 14, 2014 by DANTH

Posted by N. David Milder

Introduction

Over the last few years, my thinking has increasingly focused on how, under the new normal for our downtowns, it is increasingly important to strengthen the central social district functions of all downtowns and the challenges faced by downtown revitalization efforts in smaller communities. Strong entertainment niches, which can have formal and informal components, help assure the vitality of central social districts. So far in this series of articles on informal entertainment venues, the focus has been on Bryant Park (BP) as a model of that type of venue. In the previous parts of this series, the data and arguments presented supported the proposition that these informal venues can be more affordable to create and operate than the formal entertainment venues and consequently better able to serve as early cornerstones upon which a strong entertainment niche can be built. Since BP is located in our nation’s largest city, many may question its relevance for smaller communities where populations, attendance, and resources are likely to be substantially thinner. Consequently, this article will take a closer look, often using BP as a lens, at the three informal venues in smaller communities that were presented in Parts 2 and 3: Central Park Plaza in Valparaiso, IN; Mitchell Park in Greenport NY and Division Street Plaza in Somerville, NJ (1).

The Roles of the Informal Entertainment Venues in the Three Smaller Communities.

Before looking at the three informal entertainment venues, it is useful to look at the communities where they are located to get both a sense of the roles these venues play in their downtowns and an idea of why I selected them for analysis.

Valparaiso, IN. Earlier this year, I searched the Internet for the best public spaces in smaller communities. The most useful result I found was a list on the Planetizen website naming the 100 best public spaces in the nation. However, among those listed, I could not find any in communities with populations under 35,000 that were appropriate (2). I then sent out emails to people I know who are either consultants specializing in public spaces, the coordinators of state Main Street programs, or consultants who specialize in smaller communities, asking for information about really good public spaces they knew of in smaller communities.

The sole reply was from Bob Kost of SEH, who had designed the Central Park Plaza in downtown Valparaiso IN. Bob and I recently had worked together on a project in Gering NE. My follow-up research revealed that the park had significant attendance and just a few months after its opening, in 2011, it had won so much popular and political support that the city committed to its expansion (which is now under construction). In September 2014, I visited the park and met with local officials, who graciously have provided me with the information I pesteringly requested (3).

Valparaiso is located in northwest Indiana, about an hour’s drive from Chicago and is the county seat of Porter County. It has a population of about 32,000. “Valpo” is a real middle-income town: its households have a median income of $50,182 that, nationally, is in the 3^rd income quintile. About 2,472 people are employed within a quarter mile of Central Park Plaza, with 41% working for the county or the city (4). The four largest employers in the city are the health system, the university, the local school system and the county government. The downtown residential population is, unsurprisingly, not dense, though the available units, located mostly above shops, have few vacancies. The local chamber claims that in recent years the city has seen substantial economic growth, with “…$40 million in public investment, nearly $700 million in private investment, redevelopment of a five-block downtown area, and two key corridors into the city” (5).

The city’s leadership sees downtown revitalization as critical to the economic health of the whole community. For example, at the groundbreaking for Phase 2 of Central Park Plaza, Mayor Jon Costas stated:

“Years ago when we started thinking about how we could make Valparaiso stronger, one of the things we identified was the downtown. I knew intuitively that the downtown is the heart of our city, and the heart has to be healthy for the whole body to function”(6).

Moreover, the city leaders are strategically savvy about how to accomplish that goal: by building a strong “hospitality niche” in which Central Park Plaza is seen as an essential cornerstone. Restaurants and watering holes are the other key downtown components of this niche. The leadership’s aspirations for growth as a tourist destination are levelheadedly calibrated, focusing regionally on the NW Indiana market area in which they believe they already have significant recognition and penetration. Also, they seem to understand that entertainment events and opportunities will draw far more people than can just the performing or visual arts, though the performing arts are certainly given a significant place on the park’s event schedule (7).

Greenport, NY. To find the other informal entertainment venues I needed for this article, it seemed best to look at those in smaller communities that I knew about and liked. Mitchell Park in Greenport, NY was one of them. My wife and I have been going out to Greenport NY for day or weekend trips since 1988. Over the years, I had observed the troubled waterfront properties, then watched as they were turned into Mitchell Park and since stopped by the park on every return visit. I was taken by the fact that a community this small could complete such a large, complicated and attractive project. Victor Grgas and I gave a presentation at the IEDC’s 2006 annual conference in which Mitchell Park was one of three downtown projects I discussed. To prepare for that presentation, I interviewed several residents and local merchants as well Mayor David Kapell, who provided information about the park’s development challenges, costs, attendance and impacts. For this article I revisited the park in July 2014, when I spoke to the village administrator and people who were managing the marina and carrousel.

Greenport is located on the North Fork at the eastern end of Long Island. It has a significant waterfront with docking facilities for pleasure boats, a small fishing fleet and a ferry to Shelter Island. It also has the terminus for an important line of the Long Island Railroad located near the ferry and the park. Within easy drives of the village are over 40 wineries that attract heavy tourist traffic to their tasting rooms. There are three of historical sites abutting or near the park including a working blacksmith shop and a maritime museum. It is a significant tourist destination and transit point.

Greenport has a year round residential population of 2,200, but its daytime population increases significantly during the tourist season with transient guests and the return of second homeowners. While its median household income is $48,578, the spending power present in the community increases noticeably with the return of second homeowners and the influx of boat owners and other financially comfortable transient tourists. The seasonality of the local economy is reflected in many of the shops and restaurants closing for the winter, something that happens in many other tourist dependent communities. Only about 399 people normally are employed within 0.25 miles of Mitchell Park (8).

The properties that eventually became Mitchell Park occupied a geographically strategic position on the waterfront in the downtown’s core. They also were on Front Street, the village’s main entry corridor and close to or abutting the historic sites, the ferry, waterfront restaurants, the movie theater, the post office and many shops and eateries. Decades back, the site was occupied by a successful restaurant and marina business. In 1979 it burned down and the site remained blighted for over 15 years. It also had some serious brown field issues. It was viewed by many residents as a “cancer” on the community (9). The process to revitalize it took 14 years and was often arduous, conflictual, and political. After a design competition, SHoP was selected as the park’s designer. Its planning process had considerable public input. The development of the park was done in three phases and finally completed with the opening of the marina in September `2006.

After the post WW II closing of two shipyards and the decline of its fishing fleet, the village’s economy sputtered for decades. The Mitchell Park project was seen by many local leaders, especially Mayor Kapell, as a critical component of the village’s economic revival. Making the park a strong attraction for local children and families was understood, in effect, as a means of strengthening the village’s downtown as its central social district, as Greenport’s version of a Roman forum. That became the project’s primary goal. However, there were some local residents who argued for condo development on the site because of the potentially large tax revenues for the village (10).

Drawing more tourists was another important goal of the Mitchell Park project, with the business community pushing for a new marina as the means of achieving it:

“In addition to the park, the adopted plan included redevelopment of the shoreline of the property as a transient recreational boating marina and a major deep-water pier to accommodate tall ships and other large visiting vessels. This component was widely viewed by the business community as essential to strengthening the village’s increasingly tourist-based economy” (11).

The revived waterfront has certainly proved to be a strong asset for attracting tourists. For example, an annual three-day Maritime Festival reportedly draws about 40,000 visitors and the less frequent, multi-day Tall Ships events can attract over 60,000.

Somerville, NJ. This borough, with a population of about 12,000, is the county seat of Somerset County, which has a population around 323,000. The county’s residents are relatively affluent. Their median household income of $98,571 squeaks them into the nation’s top income quintile. There is also a strong presence in the county of people in “creative class” occupations, though they tend to be the mature creatives who have nested and not so much the young, single hipsters. DANTH estimated that in 2011, about 39% of the county’s workforce were in creative occupations, as were 51% of its residents, the highest percentage for any county in NJ (12).

Somerville has a median household income of $72,271, placing it in the nation’s second highest income quintile. The borough was the second downtown in NJ to create a SID, NJ’s version of a BID, that is managed by the Downtown Somerville Alliance (DSA). However, for many years, its downtown’s revitalization did not keep pace with other communities such as Westfield, Englewood and Cranford. Recently, however, that pace has quickened, with some major mixed used projects, a new supermarket and a parking garage being either completed, under construction or planned. Downtown residential growth may be significant. One important factor in this surge of redevelopment is that Somerville will now have direct rail service to Manhattan on NJ Transit’s Raritan line. All over NJ, the provision of this service has sparked downtown residential development and a general lift in property values near the stations.

According to Beth Anne Macdonald, the executive director of DSA, Division Street is strategically important because: “It is located in the geographic heart of the Downtown, it was (and is) critical for it to be a heart full of life. It used to act as a visual and physical deterrent for foot traffic and it now acts as a magnet” (13). It is a two-block long side street that provided easy access to the local post office and commuter rail station that has 622 boardings per day. With an aging infrastructure, a 30% street level vacancy rate and a 50% rate for second floor commercial, it was considered a blight in an otherwise healthy downtown (14). In 2008, Division Street was designated as the arts district for Somerville and a pop-up art gallery event was created to combat vacancies.

In 2011, the Borough Council, municipal planner and DSA began to think about more substantial and permanent changes. This eventually resulted in the implementation of a plan to focus on one 420-foot long block, to be named Division Street Plaza. That block, the Plaza, was rebuilt in 2012 and closed to traffic for a trial period of one year. In effect, this created a trial pedestrian mall. In 2013, after that trial was officially deemed a success, it was closed permanently to traffic. A new one block long pedestrian mall was officially born. That does not happen too often these days.

During this birthing period, the DSA became increasingly responsible for the Plaza and instrumental for its success. It was designated as the Plaza’s manager, responsible for its events and maintenance, except for snow removal. Most importantly, it was the DSA that came up with the plan for programming the Plaza in terms of both events and infrastructure, and it was responsible for the plan’s implementation. In this regard, two big influences on DSA’s thinking were PPS’s Porch Project in Philadelphia and BP – the Plaza’s chairs, tables and umbrellas are just like those in BP. Remarkably, there had not been any planning about event and infrastructure programing until DSA took on the task.

Division Street Plaza caught my attention back in 2013 because its apparent success countered my long held skepticism about pedestrian malls. True, some of my favorite downtown places — e.g., Church Street in Burlington, VT, Fremont Street in Las Vegas and the Third Street Promenade in Santa Monica, CA are thriving examples of such spaces. However, I have witnessed many others that failed and still others that were deeply troubled at one time or another, e.g., the one block-long 165th Street Mall in Jamaica Center, NY. Furthermore, research has consistently shown that the vast majority of the pedestrian malls that were built — perhaps as many as 89% — had to be closed or repurposed (15)!

Some research indicates that pedestrian malls are more likely to succeed if they are:

Located near to or integrated with a major anchor such as a university or hospital
Close to a beach
Short in length, only 1-4 blocks long
In a town/city with a population under 100,000
Located in a major destination for tourists (16).

Based on my own field observations over the years, I also would argue that pedestrian malls rarely are the cure for a declining commercial corridor, an objective that motivated the creation of many, if not most, of them. Instead, when successful, pedestrian malls play a role akin to a supercharger in a car — not its engine — and allow a commercial corridor of modest success to provide visitors with a new, distinct and improved experience that produces even greater commercial success.

I have visited Somerville several times since the late 1980s, most recently in October 2013, when Macdonald gave me a tour of Division Street Plaza. She has since graciously responded to my information requests.

The Plaza’s success – that is supported by a number of indicators discussed below — makes it a rare, interesting bird. It also is a noteworthy example of a “third place” informal entertainment venue that was cobbled together and now operates on a relatively modest amount of financial and staff resources. However, recent research findings do not seem to adequately explain the Plaza’s success:

While short in length and located in a low population town, it lacks the types of very strong nearby anchors other observers have suggested are essential for a pedestrian mall’s success
The prior conditions on Division Street seemed to require a lot more than a “supercharger” to remediate.

One conclusion, though, seems certain: some very right things are being done to cause/facilitate/nurture the Plaza’s current success. My hunch is that the Plaza’s short length is definitely a factor as are the proximity of the Post Office and 2,100 downtown workers. However, the DSA and the Borough’s actions, in some ways, also have helped. The physical improvements and activation of the space through the Plaza’s events probably helped. I suspect that the impact of the legitimation it received from its successful performance trial on the way the public saw and felt about it was another important factor — and one likely to be overlooked.

Division Street Plaza

Looking at the Three Essential Functions of Informal Entertainment Venues. Our analysis of BP as a model informal entertainment venue showed that such venues can perform three important and essential functions:

Providing visitors with a green refuge for resting in peace and quiet;
Providing infrastructure assets and programs that stimulate visitors to engage in activities (i.e., to “perform”)
To present events visitors can attend (17 ).

The Refuge Function. BP performs this function by providing lots of chairs, tables, attractive greenery and both shaded and sunny areas where people can sit, relax and observe.

Among these amenities, appropriate seating is the most basic. If you want people to stay in your informal entertainment venue, they will need a place to sit. As William H. Whyte wrote: “The most attractive fountains, the most striking designs, cannot induce people to come and sit if there is no place to sit” (18)

Smaller communities obviously have smaller populations, lower commercial density, lower pedestrian flows and less hustle and bustle. People who live in or visit these communities usually do so precisely because of these characteristics. Consequently, one might expect informal entertainment venues in these communities will have a much lower demand for and consequently tend to put a much lower priority on providing a refuge for peace and quiet. Many of them do just that. For example, Washington Borough, NJ, (population 6,460), recently opened a downtown pocket park that has no chairs, benches or tables and little shade. Still others provide some seating, but little shade.

Figure 16. Division Street Plaza’s Cafe Tables and Bistro Chairs

Division Street Plaza, though in a small town, probably has a need for refuge function amenities because it is a pedestrian mall. The successful pedestrian malls all provide these amenities. Also, DANTH very recently estimated that the Plaza’s integrated 30 businesses attract between 116,000 to 128,000 shoppers annually (roughly 380 to 420 per business day), many of whom may appreciate a place to rest or relax. The Plaza has the amenities to meet such needs: 16 cafe? tables, 64 bistro chairs, 8 market umbrellas, 21 planters and 13 hanging baskets (see Figure 16). Additionally, some Plaza eateries have outdoor seating.

These amenities have also helped improve the physical appearance of the block.

The “Engage in Activities” Function. Currently, this probably is the Plaza’s strongest function because it now is succeeding as a pedestrian mall. Visitors come to shop, dine, attend a dance or yoga class, see a doctor or accountant, etc. However, it is important to note that, as the prior blighted condition of this block indicates, this strength is dependent on something quite other than the mere presence of commercial activities. The creation of the Plaza has created an urban ecology that somehow has enabled commercial entities to be more prosperous and/or attract stronger firms. In turn, this has helped attract more visitors.

This integration of commercial activities into an informal entertainment venue is not confined to the pedestrian mall variant; BP and many other urban parks have food related enterprises present year round, while a growing number now have something akin to BP’s seasonal Winter Village of numerous retail and food operations occupying corridors of kiosks.

Aside from the limited opportunities provided by some events, such as the heavily child-oriented Festiville, the Plaza currently lacks other activity opportunities for visitors, though I believe seasonal ice-skating is being considered. BP offers a myriad of such opportunities, e.g., a carrousel, ping pong, petanque, chess and many other board games, and ice-skating. Mitchell Park has a carrousel, ice-skating and a shoreline walk. Grand Central Plaza has a spray pad and soon will be adding an ice rink and possibly “climbing art.” The DSA will face several understandable challenges, if it wants to expand its visitor activity opportunities. They are largely defined by the Plaza’s small physical size and the DSA’s relatively small budget: Where can the new activity opportunities be placed on the Plaza? How can their development and operations be funded?

While spray pads, carrousels, ice rinks, and shoreline walks require considerable costs to create and operate, it is interesting to note that none of the three informal venues analyzed here have provided the lower cost activity opportunities, e.g., ping pong, chess and other board games, boules, etc. found in BP. My suspicion is that it would be hard to justify the cost of the staff required to, for example, supervise the distribution and return of equipment given, the probable modest use levels and revenue potentials typical of these low density environments. A carrousel and ice rink can charge user fees and win sponsorships; rentals of chess sets and board games likely have far lower earning power.

BP involves related outside groups with a lot of its activities, e.g., chess, petanque, bird watching. Perhaps these informal entertainment venues in smaller communities can involve social organizations in their communities, e.g., local chess clubs, seniors groups, women’s organizations, etc.

Another possibility is the installation of equipment that is comparatively affordable, can be used directly by visitors and does not require staff to monitor or supervise. The climbing art being considered for Central Park Plaza is one possibility. Swings for adults are another (19). I’m sure they will raise questions about liability, but both have been installed in numerous public spaces in the US and Europe.

The “Present Events” Function. These events are probably the most visible part of DSA’s Plaza involvement. DSA runs events on 50 days during the year and reports they attract around 100,000 visitors annually. That averages to an impressive 2,000 people per event day. Events include movie showings, FestiVille (see Figure 17), art shows, concerts, a Farmers Market, a beer festival and holiday festivities. Macdonald also reports that:

“In addition to our own events, we have had several downtown businesses host events on Division Street as well as outside businesses come to us wanting to use it. We have an entire application process now for events (loosely based on Pioneer Square in Portland” (20).

Figure 17. The Plaza’s FestiVille Event

Most events are free, though modest fees are charged for things like children’s rides and petting zoos during Festiville.

Because the Plaza is an outdoor venue, its events schedule thins during the colder winter months. This is a problem that BP, Central Park Plaza, Mitchell Park and many other informal entertainment venues around the country also faced and, in response, all opened or will open ice rinks. The DSA, I believe, would like to follow suit. Because the Plaza is a pedestrian mall it has a version of BP’s Winter Village already built in.

Management and Budget. Of the three venues in small communities, the Plaza is the smallest in area and cost the least, about $675, 000, to create. Financing came from an NJ-DOT grant, municipal investment and DSA funding. However, while the NJ-DOT grant for $500,000 was awarded, it has not been paid and may not be, since the street was permanently closed. The Borough may be left with that funding responsibility, in which case, it may then try to offload the obligation onto the DSA.

The DSA, which is mainly funded by Special improvement District (SID) assessments, now manages the Plaza, responsible for its programing and maintenance. Just as happened with BP, the stewardship of the venue shifted sectors, from public to private. This shift certainly was fortuitous when it came to the Plaza’s programing, both event and physical. One of the most important contributions the DSA made was to broaden the Plaza’s positioning from being an arts district to an entertainment venue in which the arts would still have a significant role. This repositioning is consistent with national market trends and how BP, Grand Central Plaza and Mitchell Park are all positioned (21).

In my opinion, the Plaza venture probably would have failed without the DSA’s taking on its programming and management. The Borough, though, is to be commended for bringing about that shift.

According to the DSA, it spends about $62,500 annually on the Plaza, including staff costs. Again, this is the lowest of the three venues being analyzed. The DSA’s Plaza program, however, is relatively young and still establishing itself. I believe it is very likely that the DSA, in the near future, will want to provide more activity opportunities for visitors to engage in as well as to make its events even more robust. These improvements obviously will require additional staffing and revenues. Following the BP model as well as what Central Park Plaza and Mitchell Park have done, perhaps the DSA might then look to ways of monetizing its offering through fees, admissions, sponsorships, naming rights, etc.

The Plaza’s Impacts. The DSA has assembled a good deal of evidence about the Plaza’s impacts and I find them impressive, especially for a pedestrian mall:

Within two years the street changed from being blighted, somewhat scary and a pedestrian desert to a location where annually businesses are attracting 116,000 to 128,000 patrons and events are attracting about 100,00 visitors. It has transitioned from being a potent liability to a strong asset
Within 18 months of completion, the street went from having severe vacancy problems to a 100% first and second floor commercial and residential occupancy rate
Commercial offerings grew to include vintage clothing, bridal store, cigar bar, lingerie boutique, yoga studio, retro arcade, artisan shops, and ethic restaurants. Macdonald also notes that many of the newcomers are skilled merchants who also have locations in NJ’s suburban Class A downtowns
In all, 10 new businesses located on Division Street in less than two years creating 40 new jobs, generating $150,000 in construction permits and over $1,500,000.00 in total private investment (22)
The Plaza’s positive impact has apparently splashed beyond its boundaries. In a survey, 47% of the downtown’s merchants reported that they saw an increase of foot traffic since the Plaza opened. Potential tenant interest in nearby commercial spaces on Main Street is reportedly much stronger (23).

An interesting and important question is how much of Division Street’s economic improvements can be attributed to the creation and operations of the Plaza? After all, downtown Somerville is now experiencing a welcome wave of redevelopment. In response, Macdonald argues that these improvements all appeared before any of these other projects – e.g., a new supermarket and the multi-use Somerville Town Center – were completed.

Too often impact analyses use “multipliers” generated by input-output models. From a downtown revitalization point of view, it can be argued that the information DSA provided is far more relevant and probative than any multiplier generated analyses. The Plaza’s erasure of blight, its visitation numbers and lowered vacancy rates speak directly to the critically important status of downtown Somerville’s urban ecosystem — a system that is influenced by social, psychological as well as economic factors. In contrast, the “multiplier” determined estimates of the direct, indirect or induced impacts of the jobs and expenditures generated by the Plaza would speak mostly to a geographic area reaching well beyond the downtown, Somerset County, and to a short list of economic variables.

Many downtown organizations do not accumulate impact related information. Those, like the DSA, that are affiliated with a state Main Street program are much more likely to gather and use such information. Downtown managers, like Macdonald, who have experience recruiting retailers and developers, are also more likely to appreciate the value of such information and to gather it.

Central Park Plaza

Figure 18. Orville Redenbacher Statue at Entrance to Central Park Plaza, With Amphitheater in Background

Looking at the Three Essential Functions. Central Park Plaza (CPP) is a larger space, with more physical features than Division Street Plaza and has a significantly higher level of annual expenditures. As a celebration of Indiana born Orville Redenbacher and popcorn, downtown Valparaiso has been the location of a popcorn festival since 1979. From 2011, it has been held in CPP –in the above photo, that’s a sculpture of Orville sitting on a bench at the park’s entrance. The event is a very strong attraction – see Figure 19’s “before” photo of its September 2014 crowd. In 1999, the downtown business organization merged with the organization running the popcorn festival, and it is now known as Valparaiso Events (24). It runs the CPP’s events. Combining this organizational expertise with an attractive amphitheater, it is not surprising that the CPP currently performs these three functions with a very heavy emphasis on events.

Figure 19. CPP Before and After the September 2014 Popcorn Festival

The Refuge Function. Valparaiso’s population is roughly 2.6 times larger than Somerville’s and the downtown has serious aspirations of being a regional tourist destination. Added to this are the 2,472 people who are employed within a 5-minute walk of the park, a very important pool of potential noontime guests, and the uncounted folks who visit nearby city and county offices. Together, these factors point to a potential demand for seating where people can just sit, rest and observe The new downtown housing city leaders are hoping for could add to that potential demand. I would argue that tourists might especially appreciate that opportunity – even more so if tied in with access to clean and safe restrooms. The number of refuge seeking visitors to CPP may never be more than small fraction of BP’s, but for downtown Valparaiso, it still could be significant. However, currently there are no available data on how many people visit CPP just to rest and relax in a pleasant green location.

As can be seen in Figure 19’s “after” photo, there are a number of benches placed throughout the park. CPP also has restrooms. Most of the seating now is in sunny areas, but that will probably change as this young park’s young trees grow. The CPP’s warmer weather shaded area will also grow when a key feature of the park’s expansion, a “Pavilion,” is completed. It will shelter a skating rink during the colder months.

The “Engage in Activities” Function. The CPP’s strongest current infrastructure feature for stimulating visitors to become active and perform is a spray pad for children, see Figure 20. Unfortunately, there are no statistics on how many children use the spray pad.

Figure 20. CPP’s Splash Pad. Photo by SEH

The new skating rink to be built in CPP’s Phase 2 will certainly strengthen the park’s assets in this functional area. It will also give people a good reason to visit the park during its currently slow winter season.

Consideration, at one point, was given to adding climbing art during the park’s expansion as another attraction for children. If that idea has been discarded, I hope that some other feature that can activate children, preferably year round, will be adopted.

Shopping opportunities are available at the Central Park Plaza Market two mornings a week, June through September. The Market offers: “fresh local produce, handmade products and beautiful plants and flowers” (25).

There are several in-event opportunities for people to be active, not just passive audience members. They seem to especially revolve around eating and drinking: e.g., the Popcorn Festival, the Valparaiso Brewfest and the Valparaiso Wine Festival.

CPP has also become a popular location for private events in which attendees might be active, such as weddings, parties, business meetings, church services, etc. The CPP is rented out for these occasions through the Valparaiso Department of Parks and Recreation (VDPR). The CPP’s expansion will include a new building for skate rentals and for holding these private events year round.

Figure 21. A Concert on CPP’s Porter Health Amphitheater. Sale of Naming Rights is an Important Source of Income.

The “Present Events” Function. Today, this is the CPP’s strongest informal entertainment venue function. The attractive amphitheater (see Figure 21) is a critical asset for holding successful events and, through naming rights, an important source of income.

According to Valparaiso Events, CPP is the site of events on 80 days during the year and last year they attracted about 130,000 people. That was a very substantial increase over the 100,000 of the prior year (26).

In 2014, the CPP’s events included: Central Park Plaza Market, outdoor movies, Summer Rhapsody Music Festival, Summer Jam Music and Food Festival, Valparaiso Wine Festival, Valparaiso Popcorn festival, Valparaiso Brew Fest, the Great Downtown Tailgate, Fall Harvest Festival, and Holly Days.

In other years, plays have been performed on the CPP’s stage and I believe one is scheduled for 2015. However, within about a 3-minute walk of the CPP is Valparaiso’s Memorial Opera House. Its website calendar indicates that it has about 40 to 50 performances a year, including musicals, symphonic and chamber orchestras, cabaret type events, etc (27). Though there is some overlap between what the CPP and the Opera House do, they appear to differ in some important ways:

Most of the Opera House performances occur during the cooler months when the CPP’s event schedule is leaner
The Opera House’s events lean toward the arts, while the CPP’s focus more on broader entertainment.

As is the case with the vast majority of informal entertainment venues, admission to most of CPP’s events is either free or low cost. However, a few events have a kind of stratified admissions structure with fees reaching into the $30-$60 range (28). These higher admission fees surpass those for the Opera House’s performances, may appear at odds with the solidly middle incomes of local households, and, more generally, are unusual for an informal entertainment venue. This type of fee structure poses some interesting questions about if and when less affordable fees for admission or participation in an event (e.g., higher fees open access to more expensive beers and wines or better seats) are appropriate for a municipal venue.

According to Tina St. Aubin, the executive director of Valparaiso Events:

“Most of what we do is family friendly, and most of what we do is also free to attend. We have a few ticketed events but those funds help keep everything else free. So when someone buys a ticket they are indirectly helping the market, the movies, everything else we do” (29).

Adequate funding for venues such as the CPP is always an important issue and many – e.g., BP and Mitchell Park – have also tried to develop streams of earned income. Without such revenue, the venue’s attractions, drawing power and service to the community would be severely diminished. As St. Aubin argues, the CPP’s higher fees make a number of other events financially feasible.

Nevertheless, the friction between a venue’s need for earned income and the public’s need for affordable admission fees is not one that I think can be settled permanently. Venue managers probably will continually have to grapple with it based on the array of current economic, social and political conditions they face.

Management and Budget. By the 1970s, In NYC and many other cities, parks owned by the municipality had fallen into decline with the local government being unable to manage or fund their proper maintenance and improvement. In response, nonprofits emerged to take over the physical maintenance and programming of the parks based on their abilities to use effective management techniques and to mobilize substantial funds from the private sector. While the municipality retains title to parks and may contribute funds and some services, these nonprofits really run these operations. The Central Park Conservancy and BP are two good examples of this trend in NYC.

Public Private Partnership. In Valparaiso, a kind of hybrid model has been adopted for managing the park in which the public sector has a stronger role. The Valparaiso Department of Parks & Recreation (VDPR) has responsibility for the overall management of CPP, its physical maintenance and renting it out for private events, e.g., weddings, parties, etc. Valparaiso Events, a nonprofit that basically has the mission of marketing the downtown, has been brought in to handle the CPP’s events that are open to the general public. This arrangement is a great example of a public-private partnership, one that inherently acknowledges and capitalizes on the relative strengths and weaknesses of each sector in Valparaiso. It also shows that the strengths of the public and private sectors may vary considerably in different communities, with accompanying important implications for the management organizational model best suited for the local informal entertainment venue.

These Are Significant Organizations. These two organizations provide CPP with the organizational capability that is essential to its success. VDPR manages several parks and two golf courses. It is not negligible in size or annual expenditures and has many business-like operations. It has 28 full-time employees, 185 part-timers and, many, many volunteers (30). Its expenditures in 2013 totaled around $3.6 million. The VDPR knows how to run earned income operations. Earned income is an important part of its revues, with fees bringing in about $1.35 million annually (31). John Seibert, VDPR’s director, reports that fee-based revenues from the CPP cover almost all of his department’s $100,000 annual operational costs for the venue. The naming rights for the CPP’s amphitheater now brings in about $67,500 annually, but Seibert believes that soon could increase substantially. I was surprised by how much income naming rights could raise in a city of Valparaiso’s size. Other communities with downtown informal entertainment venues might want to take a closer look at this revenue source.

Its CPP partner, Valparaiso Events, also is not of negligible size for a downtown organization in a city having a population of 32,000. It has annual expenditures of $663,000, with at least half probably going to support CPP events. During the event busy summer, it has five full-time employees, with two full-time and two part-time during the rest of the year (32). According to St. Aubin: “The city gave Valparaiso Events a $175,000 grant for 2013. Other funding comes from sponsorship, membership and event revenue” (33).

Together, the VDPR and Valparaiso Events annually spend over $460,000 on the CPP. This is a relatively substantial budget. My sense is that both organizations are consequently trying to find new earned income streams and increasing the yields of existing ones. The CPP’s expansion may provide good opportunities to do that with:

The ice skating and skate rental fees
Increased rental fees from private events that will able to be held year round; the new facility also will allow more complex and higher revenue producing private events, possibly like a catering venue
A large shaded space that can be used, instead of tents, for summer public events, and its increased weather protection and fire pits might increase the number of months in which they can be held.

Funding the CPP’s Construction and Expansion. Phase 1 of the CPP cost about $3.256 million (see Figure 22) and it came from four basic sources. Two of them were local and accounted for 52% of the total: about $1.5 million in TIF funds (47%) and around $160,000 in private donations (5%). Federal stimulus funds of about $226,000 accounted for 7% of the total. Major Moves, a State of Indiana program, contributed about $1.347 million, 41% of the total.

The cost of Phase 2 is more than double that of Phase 1, around $8 million. All of it will be raised from local sources. One family has already donated $3 million and other private donations are expected to raise another $1 million. The remaining $4 million will come from TIF funds.

While few smaller communities might expect similarly large private donations, many are in states where the TIF legislation allows this incentive to be effectively used, even in smaller communities. Indiana type TIF laws in NJ and NY would have made the funding to create Division Street Plaza and especially Mitchell Park much easier and more certain.

The Impacts of Central Park Plaza. When I asked Patrick Lyp, the city’s Economic Development Director, for data related to the impacts of the CPP, he replied that they did not collect them in any formal way because the downtown had seen a lot of projects and it would be hard to isolate which had what kind of impacts and how much of each impact could be attributed to the CPP. For example, all the city officials I spoke to felt that their ability to get more “3-way” liquor licenses enabled the downtown to attract more and stronger eateries and watering holes, which now anchor the downtown’s hospitality niche and they, in turn, also have had a great impact on the downtown’s ability to attract visitors, other firms and new investors. Today, they also have a mutually reinforcing relationship with the CPP. He and the other city officials, however, felt very certain that the CPP’s impact was very positive and very strong. While Lyp did not have statistics on before and after rents, vacancy rates, new jobs or investments, etc., he knew, from what he has personally heard and observed, that the CPP is extremely popular among city residents and in the downtown business community — and the large crowds its events attract are undeniable evidence of this. But how much of the increased interest in investing in downtown projects, or the almost full occupancy of downtown housing can be attributed to the CPP or the new eateries and watering holes or to the new liquor licenses he felt was hard, if not impossible, to determine.

These Valpo city officials correctly put their fingers on the serious “attribution” problem that so often arises in downtown impact analyses. Their position also spotlighted that downtown impact analyses must look at a lot of other variables besides sector jobs and sales that are well beyond the scope of an I-O economic model.

Mitchell Park

Figure 23. Aerial View of Mitchell Park .

Looking at the Three Essential Functions. Mitchell Park (MP) stands out in a number of respects from the two other informal entertainment venues in this analysis. Though located in, by far, the smallest of their three communities, MP has the highest attendance, about 390,000/yr. In part, this is because it alone has the development gold of an active waterfront (see Figure 23) and the strong tourist traffic that can bring. It was the most expensive to create and very probably is the most expensive to operate. However, MP has the strongest earned revenue streams, and they very probably cover most of the park’s annual expenditures.

This array of factors has helped sculpt both the degree and manner in which MP performs the three essential functions of an informal entertainment venues. For example:

The “engage in activities” function is dominant in MP anchored by an antique carrousel, a marina, a waterfront walk and a wintertime ice rink (see Figure 23)
The refuge function has a much more obvious presence in MP than in the other two informal venues
There is no venue management organization, such as the DSA and Valparaiso Events, that runs the events in the park, yet MP is a location for a good number of events.

The “Refuge” Function. Given Greenport’s small population, on summertime visits I expected that. except for event days, I would be likely to find a pretty empty park, save for those few who might be riding the carrousel or going to and from from their boats in the park’s marina. I did not expect to see the numbers of people sitting, resting, relaxing, observing other visitors, looking at the waterfront scenery or the rest of the park. Their numbers certainly did not rival BP’s level of refuge seekers, probably never exceeding 25 or 30 people. Nevertheless, they were enough to make MP look active and attractive. The photos in Figures 23 to 26 were taken over the same Friday afternoon last July in different parts of MP.

Figure 24. Resting and Relaxing UnderTrees by the Carrousel House.

Figure 25. Resting and Relaxing by the Marina

Figure 26. Resting and Relaxing on the shaded benches.

My MP field observations found that, just as in BP, shaded seating areas were greatly appreciated by a lot of people and that some benches were never used because they were never shaded. Many of the visitors were local residents, with a high proportion of them being teenagers. However, a large number of the MP visitors were also tourists. To me, this all suggests that, despite their communities’ low populations and cultural aversion to urban hustle and bustle, outdoor small town informal entertainment venues need to have the infrastructure to perform the refuge function, just as do their larger cousins. This means ample comfortable seating, with a large portion of it shaded.

The “Engage in Activities” Function. This is MP’s strongest function. The antique Carousel is probably its strongest attraction, with 100,000 riders annually that generates $200,000 in revenues from ticket sales. It was built by the Herschell-Spillman Company in 1920 and donated to the village by the Northrop Grumman Corporation in 1995. It is open most of the year, though its hours are reduced during the colder months.

Figure 27. The antique carrousel was built in 1920 and donated to the Village in 1995.

The carrousel is an obvious attraction for tourists during the summer, but it probably still draws from eastern Suffolk County when open during the colder months.

However, the park’s biggest money maker is probably its marina. It has become very popular among boaters. I would not be surprised to learn that the marina’s revenues exceed $500,000/yr.

The park’s main draw during the winter is its ice skating rink (see Figure 28). Having a children’s hockey league and renting it out for parties increases usage at a time of the year when skaters are likely to come from the Village or nearby.

Figure 27. Ice Rink in Front of the Carrousel House.

Figure 28. Ice Rink in Front of the Carrousel House.

Another activity generating feature is Harbor Walk. It runs through the entire park and links it to the ferry, train station and Maritime Museum on its western flank and piers and commercial establishment on or near Main Street to its east.

Figure 29 shows part of this walk — and one of the probably unintended uses of this park. On several visits over the years, I have noticed that teenagers have found the park’s varying topography and surfaces make it an irresistible place for riding their bikes.

Figure 29. Unintended use?

Figure 30. The park’s unique camera obscura

In Victorian England, many estates had “follies,” a term used to describe “extravagant buildings that serve no purpose.” However, in more modern times, follies often have proven to be “curiosities” and something of a tourist attraction. One of MP’s intended activity opportunities, its camera obscura, seems to have turned out to be a folly/curiosity. Housed in a pleasantly mysterious looking, windowless building, this optical device, with a 2,000 year old ancestry, is able to capture something akin to a photographic image of the outside. MP’s is one of the few in the world putatively open to the public. However, in all of my visits to MP, I have never, ever seen anyone going in or coming out of that building. That is probably because It is only open by appointment and if the weather permits. But, the camera obscura does seem to have some strength as a curiosity; I have often heard people ask about that “funny looking building.”

My hunch is that local leaders may be proud of having such a rare device in the history of photography, but find it a pain in the butt to make it more accessible to the public, given the combination of entailed staff costs and probable modest demand for its use. In contrast, for example, both the carrousel and the marina are staffed – but, they generate revenues that probably are more than sufficient to cover these staff costs.

The operating hours of the Maritime Museum and Blacksmith Shop, both located very close to MP, are also rather sparse and probably also explained by the probable low demand and staff costs. Over he years, I have visited a number of other small town museums and other attractions in NY, VT, MA, OH, WI and NC that are similarly hindered.

Greenport’s Farmers Market does not use Mitchell Park. There also are no BP-like commercial activities in the park. Attempts to establish them would probably provoke strong opposition from nearby merchants.

Much like Central Park Plaza and Division Street Plaza, MP does not offer the type of activity opportunities that have relatively low capital costs, such as board games, ping pong, boules, etc. The associated staff cost is probably one strong explanation. Counter intuitively, these three examples suggest that capital costly activity opportunities now are more viable in small town informal entertainment venues than the less expensive ones because they can generate enough revenue to cover staff costs. However, this might be countered by providing facilities that do not require staffing such as adult swings (see Figure 31) or climbable art.

Figure 31. Swings for adults in Tel Aviv

Similar to Valparaiso’s Department of Parks and Recreation, the administration of the Village of Greenport is experienced in managing operations that yield streams of earned revenues. In 2013, the Village’s electric, water, sewer and recreation operations had revenues around $6.14 million; recreation accounted for about 17% of the total (34). Small towns with comparable municipal management experience and capability are probably good candidates for successfully developing and operating streams of earned revenues for their informal entertainment venues.

The “Present Events” Function. Communities of Greenport’s size tend to have relatively few business establishments. Even those that swell in number during the tourist season are inclined to thin in the off- season. Consequently, their local business organizations usually have modest budgets, little or no paid staff and limited capabilities to carry out programs and events.

The local chamber for Greenport, officed in Southold, is the Greenport Southold C of C. It is nested within the larger North Fork C of C – evidence that chamber type functions need to have a larger geographic area from which to draw members, if the organization is to be financially viable. However, there is the Greenport Village Business Improvement District. It has been around at least since the early 1990s (35). For a BID, it has a very modest annual budget of about $45,000, of which about 20% ($9,000) is “allocated for a marketing/social media/public relations program” (36).

With this very limited budget and apparently no paid staff, the BID has adopted the strategy that very savvy BID directors employ when faced with meager resources: they get someone else to do it. On its page on the Village’s website, the BID announces: “Event Funding: Greenport Village Improvement District offers funding for events that benefit the Village” (37). That offer does not mean that the events will be entirely funded by the BID, but the offered dollars could provide the needed incentive for other organizations or individuals to put on events in the Village and probably in MP.

Other organizations do get involved in MP’s events. The North Fork Chamber, for example, held an arts show in MP a few years back. However, the organization that apparently leads the charge on the most important events held in the Village, the Maritime Festival and the Tall Ships, is the East End Seaport & Marine Foundation. It acts in partnership with the Village of Greenport and the BID on these events. The foundation also runs the Maritime Museum and Blacksmith Shop in Greenport.

The Maritime Festival is quite complex. It …”attracts over 40,000 people annually, features nautical arts & crafts, classic wooden boats, activities for children and families, music, pirate shows, local produce and seafood, wines and craft beer, fireworks, and excursions to Bug Light, (the foundation’s) lighthouse” (38).

Figure 32. Dancing in Mitchell Park. Katharine Schroeder Photo

Figure 33. Greenport Band concert in MP

Figure 34. Maritime Festival activities in MP

Figure 35. The inverted use of the park’s amphitheater

The Tall Ships events do not occur annually. The last one was in 2012 and the next one will be on the July 4th weekend of 2015. However, they attract the most visitors, an estimated 60,000 for the multi-day event. Greenport apparently has significant recognition among the tall ships. Next July it will be visited by the Hermione, a replica of Marquis de Lafayette’s 18th century frigate. The other ports the Hermione will visit are: Yorktown, Va.; Washington, D.C.; Annapolis, Md.; Baltimore, Md.; Philadelphia, Pa.; New York, N.Y.; Boston, Mass.; and Halifax, Nova Scotia (39). Not bad company for Greenport to be in.

The Maritime Festival and the Tall Ships are events too big to be confined to MP, though it definitely is a location used by them. However, it seems very likely that most of their very large crowds would walk through the park at some time during their visit, given its strategic waterfront location and attractiveness.

The Village’s calendar over the summer indicated that the park was used for two recurring events: public dancing in the park (see figure 32) and concerts by the Greenport Band (see Figure 33). From the information I have been able to gather, MP seems to have less than 30 event days in 2014, but the attendance on some of the days associated with the Maritime Festival and Tall Ships may be in the 5,000 to 10,000 range.

MP has an amphitheater that is basically a very large tiered area with bench-like seating that faces the marina and harbor. It lacks a formal stage, such as the one in Valparaiso’s Central Park Plaza. That has led to situations such as the one pictured in Figure 35. Some events, e.g., dancing in the park, do not use the amphitheater at all.

Management and Budget.
When I asked the village administrator about MP’s budget, he replied that the park was not an entity that the Village’s financial system reported on. I thought this was telling:

On one hand, from our brief conversation, I am pretty sure that they know how each of the park’s “enterprises” (carrousel, marina, ice rink) are doing on a profit and loss basis
Yet, there apparently is no one person like a Dan Biederman, a Beth Anne Macdonald or a John Seibert who is managing an organization that is charged with taking overall care of the park
This was consistent with the decentralized way that events are done
Perhaps the Village’s governmental structure is so small and the park is so important that overall responsibility and supervision is in the hands of the mayor, the village administrator and the village board
The park shows little sign of failure or decay. All signs indicate a continued success
This all can happen in Greenport, because it is so small that interpersonal networks where everybody knows everybody can be meshed with a small group of political and administrative decision-makers who have the needed competencies — or know how to acquire them.

Piecing together various bits of information, my guess is that MP’s annual income exceeds $700,000 and probably operates in the black.The funding for building MP, which occurred in three phases, was very complicated. It came from three types of sources. One was the Village, which had plenty of skin in the game. The Village spent a total of $4 million of its own money on the $14.9 million project. It also acquired part of the the site from a bank that had foreclosed on the property, using funds raised from a $1.2 million general obligation bond offering. Park development was also funded with $1.5 million from the Village’s Capital Improvement Fund.

Grants were another source, and they provided most of the money. The Village obtained 25 grants from a wide range of local, state and Federal agencies. One can only imagine the time, energy and money this required. The need for fewer grants might have also significantly cut the time needed to complete the park.

Finally, there was some private funding.The estate of Pauline Mitchell, of the family for which the park is named, provides funds for park maintenance. The Northrop Grumman Corporation donated a full-sized, antique carrousel that has become a critically important park attraction (40).

Figure 36. Next to MP is the 35 – room Harborfront Inn that opened in 2004, induced by the park’s creation

Mitchell Park’s Impacts.
Induced by the creation of MP, a new 35-room motel, the Harborfront ( see Figure 36), was built before the final Phase 3 work on the park was completed in 2007. Together, they improved the waterfront and filled some very unattractive holes in a long blockface on the important Front Street downtown entryway that also has the post office and the town’s movie theater. The improved appearance certainly made this part of downtown Greenport a more desirable business location. My observations, which friends living in the Village support, are that the quality of the nearby retail shops and eateries have improved since work on MP was completed. MP’s attractions — e.g., the carrousel and ice rink — also have drawn visitors from well beyond the Village’s borders in eastern Suffolk County. However, I cannot provide statistical information to support these observations.

The limits of MP’s possible impacts are demonstrated by this essential fact: many of Greenport’s merchants still close during the colder months because there is not enough customer traffic for them to stay open.

Over the past 15 to 20 years, the North Fork of Long island has become increasingly popular as a place to visit and own second homes. This, too, has had an impact on business and real estate conditions in downtown Greenport. As a consequence, any analysis of MP’s impacts will have a significant attribution problem: how much of an impact can be attributed to the park, how much to regional economic growth?

ENDNOTES

1- See Pt 1: https://www.ndavidmilder.com/2014/08/bryant-park-the-quintessential-downtown-informal-entertainment-venue-part-1.html

Pt 2: https://www.ndavidmilder.com/2014/09/bryant-park-part-2-a-comparison-to-other-entertainment-venues-on-attracting-tourists-user-frictions-and-costs-to-create-or-significantly-renovate.html

Pt 3: https://www.ndavidmilder.com/2014/11/bryant-park-part-3-a-comparison-to-other-entertainment-venues-on-annual-expenditures-and-annual-expenditures-per-visitor.html

2- Tim Halbur, George Haugh, Ethan Kent, Sarah Goodyear, “The Top 100 Public Spaces in the U.S. and Canada,” Planetizen, October 27, 2011, http://www.planetizen.com/toppublicspaces

3- I want to thank John Seibert, Director of the Dept of Parks and Recreation; Patrick Lyp, Economic Development Director; Bill Oeding, City Administrator and Tina St. Aubin, Executive Director of Valparaiso Events for their assistance and cooperation.

4- Census Bureau, OnTheMap

5- From Chambers website: http://www.valpochamber.org/community/index.php

6- Pam Antonetti, “Groundbreaking Held for Central Park Plaza Expansion,” Valpolife,com, Spet 29, 2014, http://www.valpolife.com/community/parks/46238-groundbreaking-held-for-central-park-plaza-expansion

7- Personal and phone conversations with Valparaiso officials.

8- Census Bureau’s OnTheMap

9- David Kapell, “Creating The ‘There’ In Greenport,” Build A Better Burb at http://buildabetterburb.org/creating-the-there-in-greenport/

10- Telephone interview with David Kapell.

11- See endnote #9.

12- N. David Milder, “So…Surprise! You have a lot of suburban creatives…” The Downtown Curmudgeon, July 3, 2013, https://www.ndavidmilder.com/2013/07/so-surprise-you-have-a-lot-of-suburban-creatives.html

13- Email from Beth Anne Macdonald

14- Ibid.

15- See: Cole E. Judge, “The Experiment of American Pedestrian Malls:Trends Analysis, Necessary Indicators for Success and Recommendations for Fresno’s Fulton Mall,” Downtown Fresno Partnership, November 11, 2013.

16- Ibid

17- See Bryant Park Pt 1 referenced above in endnote #1.

18- Cited in Lawrence Houstoun, “Watching All the Crowds Go By” http://lhoustoun.wordpress.com/public-spaces/chapter-2-watching-the-crowds-go-by/

19- See: Winnie Hu, “Mom, Dad, This Playground’s for You,” New York Times, June 29, 2012. http://www.nytimes.com/2012/07/01/nyregion/new-york-introduces-its-first-adult-playground.html?pagewanted=all&module=Search&mabReward=relbias%3Ar%2C%7B%221%22%3A%22RI%3A7%22%7D

20- Email from Beth Anne Macdonald. I also want to thank Beth Anne for all the information she provided as she patiently responded to my questions.

21- See: N. David Milder, The New Normal’s Challenges to Developing a Downtown Entertainment Niche Based on Formal Entertainments: Part 2 the audiences ,The Downtown Curmudgeon, https://www.ndavidmilder.com/2014/03/the-new-normals-challenges-to-developing-a-downtown-entertainment-niche-based-on-formal-entertainments-part-2-the-audiences.html

22- Email fromBeth Anne Macdonald.

23- DSA’s 2013 Community Survey, n=600.

24- Heather Augustyn, “History of Valparaiso Events – Past, Present and Future,” nwitimes.com, September 04, 2014. http://www.nwitimes.com/news/local/porter/valparaiso/history-of-valparaiso-events-past-present-and-future/article_34213756-41a7-5544-8e49-eeba164a0be6.html

25 – http://www.valparaisoevents.com/central%20park%20plaza%20market/

26 – Telephone conversation with John Seibert

27 – See: http://www.memorialoperahouse.com/events

28 – See for example: http://valpobrewfest.com/main.html . Note the mention of VIPs.

29 – See endnote #24

30 – Valpo Parks 2013 Annual Report

31 – ibid.

32 – Se endnote #24

33 – Email from Tina St Aubin.

34- Incorporated Village Of Greenport, New York Financial Report, May 31, 2013, p. 17, http://villageofgreenport.org/annual-financials/Final%20Fin%20Stmt%20Greenport%202013.pdf

35 – See: http://www.greenportvillage.com/business-improvement-district/ .

36 – Jen Nuzzo, “New Greenport BID board members elected,” The Suffolk Times, 11/25/2012,http://suffolktimes.timesreview.com/tag/greenport-bid/

37 – See endnote #35

38 – See: http://www.greenportvillage.com/maritime-festival/

39 – Jen Nuzzo, Replica of Lafayette’s ship Hermione visiting Greenport at Tall Ships, The Suffolk Times, 11/14/2014 http://suffolktimes.timesreview.com/2014/11/53887/lafayettes-ship-hermione-visiting-greenport-at-tall-ships/

40 – Funding information from 2006 telephone conversation with Mayor Kapell

Bryant Park Part 2: a comparison to other entertainment venues on attracting tourists, user frictions and costs to create or significantly renovate

Posted on September 27, 2014 by DANTH

Posted by N. David Milder

Introduction

Part 1 of this article focused on showing how Bryant Park is a model informal downtown entertainment venue. That entailed describing how it performed three key functions:

Providing visitors with a pleasant, green refuge from a downtown’s hustle and bustle
Offering opportunities for visitors to engage in fun activities, with their resulting performances entertaining nearby people watchers
Holding entertaining events for park visitors that are performed al fresco, often on “flexible use” locations within the park, using impermanent infrastructure, e.g., stages, movie screens, ice rinks, etc. Here the visitors are usually observersrather than participants (1).

Part 1 also demonstrated that Bryant Park is a very strong entertainment attraction for the Midtown Manhattan CBD. In terms of annual attendance, it either closely rivals or surpasses such world-class formal entertainment venues as the Lincoln Center for the Performing Arts (LCPA), the Metropolitan Museum of Art (Met), the Museum of Modern Art (MoMA), Madison Square Garden (MSG), Yankee Stadium and Citi Field. Bryant Park’s magnetism demonstrates the powerful contribution an informal downtown entertainment venue can provide for a district’s entertainment niche as well as for its economic well-being.

Part 1 can be found at: http://tinyurl.com/kv36u4s

Here, in Part 2, the discussion will continue comparing Bryant Park to some formal entertainment venues from a downtown economic development perspective by focusing on:

Bryant Park’s comparative strength as a tourist attraction in NYC
Its user frictions compared to other major NYC entertainment venues
The cost of its rebirth in 1992 compared to how much it cost to create 18 other significant entertainment venues — or to do a major renovation of them.

Because covering those topics requires about ten pages, I now am planning on writing a Part 3 of this article that will cover:

A comparison of the total annual operating expenditures of the corporation that operates Bryant Park to those of the organizations that operate 20 other major entertainment venues located across the nation
A look at Bryant Park’s economic impacts compared to those of other major entertainment venues. This comparison will occur within a discussion I have subtitled: Arts Venues’ Economic Impact Studies – Watch Out for the Horse Puckey.

Comparing Bryant Park to Some Formal Entertainment Venues from a Downtown Economic Development Perspective (continued from Part 1)

The Tourist and Local Audience Mix. Tourism is a major component of the New York City economy, as it is for many other communities across the USA — be they large or small. In 2013, for example, the direct spending of tourists in NYC was about $39.4 billion, with their overall economic impact valued at $58.7 billion (2). Consequently, Figure 11 takes a closer look at Bryant Park’s ability to attract tourists by comparing it to other major NYC entertainment venues. The selection of these comparable venues was simply a function of finding those for which the needed data were available (3). They were not easy to find. Also, the available data are not uniform: MoMA, the Guggenheim and the Joyce Theater categorize guests who come from beyond the NY Metro area as tourists, while the other venues define guests who come from beyond NYC to be tourists.

Compared to the Guggenheim’s 87%, the Met’s 75%, MoMA’s 75% and the Broadway League’s 66%, Bryant Park scores much lower on the percentage of its visitors who are tourists, 20% to 40%. In this regard, it stands with the other public park listed in the table, Central Park, which has tourists accounting for 30% of its annual attendance. However, when we look at the absolute numbers of tourists who visit each venue, it is Central Park that is the hands down winner with 12 million tourist guests annually. Bryant Park also shows significant strength: it probably has more tourist guests than the Guggenheim and likely is giving the formal entertainment venues at LCPA and MoMA a run for their money. Bryant Park is not just an “amenity” for people employed in nearby buildings or local residents.

Downtown entertainment niches can be strategically tasked to attract more visits and capture more dollars from tourists as well as from locals (e.g., trade area residents and people who work in the downtown). All too often, in our meetings in smaller downtowns that have had some measurable success with penetrating the tourist market:

We’ve heard leaders describe the dissatisfaction local residents have with the downtown’s tourist-oriented retail, food and entertainment establishments that are seen as catering to outsiders rather than the local community’s tastes and needs
There is an unspoken assumption that vibrant public spaces are really for “the locals,” while formal entertainment venues—e.g., PACs, theaters, museums, arenas – are much more capable of attracting tourists and consequently better able to bring in lots of outside money and serve as the cornerstone of a downtown entertainment niche.

The data in Figure 11 support concluding that both Bryant Park and Central Park are able to serve the local community while also attracting significant numbers of tourists. This suggests that informal downtown entertainment venues have the potential for achieving comparatively similar success in other communities, even in smaller ones. This is not to say that such success is assured, but to argue that it is worthwhile to seriously consider an informal downtown entertainment venue as a tool to bring both more tourists and more local folks downtown.

The Brooklyn Academy of Music and the Joyce Theater are well-known and very highly regarded cultural institutions that have been around for several decades. Their comparatively modest penetrations of the tourist market demonstrate that a formal entertainment venue may not always be an effective strategic vehicle for attracting tourists, but it still can be popular with local residents. It may even be that the managements of these two organizations, and their donors, prefer focusing on their local audiences. One might suspect that, across the nation, a significant number of the managers of downtown PACS, theaters and museums have a similar preference. In our firm’s experience, dreamer arts advocates – not venue managers — are usually the ones who see formal entertainment venues as the path to capturing tons of tourist dollars.

That the Met, MoMA, the Guggenheim and the Broadway League’s theaters have tourists –of which a high percentage likely come from abroad — accounting for the vast majority of their audiences probably contributes to their being considered world class institutions. These museums are also legendary fundraisers, mostly from very wealthy local and regional donors who often have substantial national or international reputations. One might reasonably suppose that these donors strongly support the orientation of these institutions toward a world audience and their having the “products” to win substantial amounts of prestige and market share in it. Relatively few other arts organizations in the USA are in a similar position or can even hope to get there. That also suggests that few of them can realistically hope to bring in comparatively huge numbers of tourists into their downtowns or communities by becoming world-class institutions.

Furthermore, the importance of “location, location, location” frequently comes into play, providing important limits on the size of the potential tourist market. The locations of many communities make it difficult for them to tap the national tourist market because their interstate highway, rail and airline assets are relatively weak. Also, many communities frankly lack other strong assets, such as scenic beauty, places of significant historical import, sports activity opportunities, attractive hotels and restaurants, etc. Few communities can grow into a Las Vegas, Nevada or a Branson, Missouri – and many do not want to. It is much easier for an entertainment venue in a small town or small city to capture tourist patrons when there are lots of tourists already visiting other places in its market area, than for the entertainment venue to become the magnet that will be the area’s primary tourist attraction.

Small town and small city entertainment venues probably can be more successfully positioned within a regional tourist market. However, then regional consumer entertainment preferences also can come into play. For example, a few years ago, we visited a very interesting and attractive downtown museum in a midwestern city with a population of over 100,000 people. Its county’s tourism agency reports servicing about 85,000 sports tourists annually, averaging out at about 282 per day. In our opinion, the museum’s holdings were unique, high quality and impressive; many other museums would probably love to have holdings of comparable quality. Yet, we were surprised to find, on Thursday and Saturday afternoon visits, that we only could count fewer than 20 other guests on each occasion. In this, and many other communities across the nation, high brow arts-based events and venues may be far weaker customer magnets than other entertainment venues.

Frictions on Visitation. Entertainment venues, be they formal or informal, face a varying array of non-physical constraints that help structure when and how often people will visit them. Some of these frictions are:

Their operating hours – the days and hours they are open to receive guests. If they are not open, guests cannot be received and a substantial part of the venue’s potential impact on local businesses cannot be felt directly
Their admissions. The higher the fees, the more guests are likely to be people with lots of disposable income. Also, venues in larger cities featuring sports events, concerts and Broadway shows often sell tickets in a way that leads to a large percentage of them being resold at substantially higher prices by brokers or individuals in a secondary market. This can both increase the skew towards those with more discretionary dollars and annoy the hell out of those who are less affluent. If and when admission fees/tickets need to be obtained, the more lines one has to stand on and the longer they are, the more annoyed a potential customer can get
The need for an “appointment.” Scheduled events like shows, concerts and sports games really require the user to make something analogous to an appointment that, too often, only is available when it is convenient for the other party. The more one likes a performer, the more one is likely to adapt to the performance’s dates by altering one’s own schedule and by paying a premium ticket price
They require a lot of time. Because of the length and timing of most scheduled events, they cannot capture a very important segment of a downtown’s entertainment demand: the people who, mainly during the daytime hours, are looking, in a spontaneous and unplanned manner, for entertainment opportunities that last 45 minutes or less. Those with a short-time period type of entertainment demand can include nearby residents, people employed in the downtown who are within a 5-minute walk of the venue and tourists. Office workers and adults with children are especially likely to appreciate daytime downtown entertainment opportunities that last less than 45 minutes. Downtown office workers are most likely to visit a nearby informal entertainment venue on their lunch hours. These days, their lunchtime out-of-office trips only last about 45 minutes (4). Also, research has suggested that parents often need to find an entertaining activity for their children that will last for less than about 45 minutes (5).

Figure 12 describes where Bryant Park stands on these four factors, while facilitating a comparison to some of Manhattan’s other major formal entertainment venues. Bryant Park – as is the case with other informal downtown entertainment venues – poses potential users with far fewer obstacles to visitation than the formal entertainment venues:

It is open 15 to 16 hours a day, daytime and evening, daily, almost year round
There are no admission fees
Most visits are driven by the users’ schedules. Those wanting to attend the Park’s scheduled events will, of course, have to adapt to their timing. But, there are lots and lots of other things to do in the park for those who spontaneously decide to visit
The park definitely attracts a lot of users who stay for 45 minutes or less. Visits can be short or long, depending on the individual’s needs and desires. The lunchtime peak in Bryant Park’s visitation suggests that a large proportion of the visitors are employed in nearby buildings and they probably are office workers. My field observations and recent chats with park users support that conclusion. My field observations also suggest that a lot of the mid-morning and mid-afternoon park users stay for less than 45 minutes.

Movie theaters cannot accommodate those with 45 minutes or less to fill, but they are open during both day and evening hours, their admission fees are affordable and their films have frequent showings that facilitate match-ups with a potential guest’s schedule. The formal venues of the Met and MoMA can meet the needs of those with only 45 minutes or less to fill, and guests’ schedules can drive the timing of their visits during the daytime. However, the museum’s admission prices are about twice that of local movie theaters.

The venues that present concerts, shows and sports events are those that have the strongest user frictions. All of these events last longer than 45 minutes, and it is usually difficult to spontaneously gain admission to them — unless one is prepared to pay a high dollar premium. Their events are mostly scheduled for evenings and a few weekend afternoons. Their average ticket costs are magnitudes higher than that of the average nearby cinema that my recent purchases in NYC found to be around $13. For example:

At Lincoln Center, the average ticket for an evening at the opera costs $156; tickets for the New York Philharmonic, at series subscription prices, range from $29 per concert for a highest tier, nosebleed seat, to $112 for a seat in the more preferable orchestra section (6)
The average seat for a Broadway show during the 2012-13 season was $98.44. However, a good number of the Broadway tickets are resold in the “secondary market” where prices can soar, with some reaching $1,000+ (7)
The costs of concert tickets through Madison Square Garden’s box office will vary with the performer, but generally are close to the range of the $64 to $124 charged for a Billy Joel concert. The average box office prices for NY Knicks basketball games and NY Rangers hockey games are $125 and $78 respectively. However, lots of the tickets to these MSG events also end up being resold in the secondary market where prices can exceed $1,000 per ticket. (8)

Obviously, these are New York City prices and the premium dollars extracted in our secondary ticket markets are less likely to occur in much smaller towns and cities. However, the prices for shows and concerts in such locations can still be several times the price of a local movie ticket. For example, in one city with a population of about 17,000 that is located in a state with a population under one million persons, a movie ticket costs about $6.50, while the ticket costs to some concerts in the downtown’s attractively restored theater are:

Aaron Neville $44.75 to $49.75
BB King $65.75 to $95.75
Jazz at Lincoln Center $74.75 to $84.75
Season pass to Metropolitan Opera HDTV performances $160 to $200.

Bryant Park has many fewer frictions to entry and use than any of the NYC formal entertainment venues it has been compared to in this analysis. It presents nowhere near the economic barriers to entry that the formal venues do, and it most readily accommodates spontaneous visits of fewer than 45 minutes. In these respects, Bryant Park exemplifies some of the important advantages informal downtown entertainment venues have over the formal venues, even in small and medium-sized downtowns.

Comparing the Costs to Create, Expand or Renovate Downtown Entertainment Venues. What has really struck me over the past few years, as I looked into downtown entertainment venues, is how many reports have been done since the early 1990s on the positive economic impacts performing and visual arts venues have on their communities and how much media attention they have attracted. In contrast, there has been relatively little discussion about the comparatively high costs of creating and operating these arts venues. Also, it should be remembered that an organization’s strong economic impacts do not necessarily correlate with its financial viability. For example, in 2008, the Big Three automakers were on the verge of bankruptcy, but they directly and indirectly supported 3 million jobs, many of which were well-paying.

This focus on the robust economic impacts also was surprising since — as I have detailed in prior articles in this series — there now are two disturbing trends in the arts, one for consumer demand to be far more uncertain, changing and often in decline and another for donations and grants from government, foundation and corporate sources to be falling-off and far harder to obtain. These trends support the hypothesis that a downtown organization wanting to create or strengthen an entertainment niche might want to identify the types of venues that require the fewest financial resources to first create and then operate.

The data presented in Figure 13 are related to the costs of the creation or major expansion/renovation of 20 entertainment venues in towns and cities of all sizes, though the largest number are located in NYC (9). To facilitate comparison, I have presented these capital costs in 2014 dollars. The data are neither exhaustive nor systematically collected. They are presented because a discussion about them can be, though not definitive, nevertheless suggestive and useful.

The cost for the critical renovation of Bryant Park that was completed in 1992 is presented in two ways: the far larger estimate includes the cost of putting book storage space for the NY Public Library under the six acres of Bryant Park that are behind the library’s building. This was included because a pre-publication reader maintained that the work on the library’s book stacks probably reduced, to some unknown degree, the cost of renovating the park, most likely related to demolition work. The $57.9 million number is presented in recognition of that possibility, but the lower number will be used in the analysis since I believe it is much closer to the true renovation cost.

Comparing the cost of renovating Bryant Park in 1992, $13.9 million (without the subterranean library improvements), to the other projects in NYC shows that it was:

About as much as renovating one of Broadway’s major theaters ($11.3 million – $13.2 million)
Less than two percent of what it cost to expand MoMA in 2005, $1 billion
Far less than the $1.2 billion needed for the LCPA renovation completed in 2012
Also far less than the cost of the 2014 renovation of MSG, $ 1 billion.

If we look at projects listed under “Elsewhere” in Figure 13, the costs to renovate all but one the theaters and to create the PAC in South Orange, NJ are in the same league as the cost to renovate Bryant Park. This suggests that lots of other communities can mobilize the funds to create their own version of a Bryant Park.

If we look at the three Newark projects, again we find that the informal downtown entertainment venue, Military Park, had renovation costs, $5 million, that were a small fraction of the $431 million needed to build the Prudential Center sports arena or the $277 million spent on creating the NJPAC. To some degree, this cost differential may be due to the fact that the city already had possession of the park, so there was no land acquisition cost. However, I doubt that accounts for a significant amount of the differences. The Military Park renovation is very recent and it will be interesting to see how its attendance in five years compares to NJPAC’s and the Prudential Center’s.

Looking at Millennium Park in Chicago, we see an entirely different situation. The full cost of building the park, in 2014 dollars, was over $605 million. That’s about $25 million per park acre. It cost considerably more than the new Modern Wing of The Art Institute of Chicago, $277 million. This, of course, demonstrates that creating an informal downtown entertainment venue will not always cost less than creating a formal entertainment venue. However, taking a closer look at the situation suggests that the high costs are inevitable when two factors are involved:

There are numerous and very complicated infrastructure improvements that are considered essential to the project. In Millennium Park, for example (in 2006 $s):
- $105 million was spent on an under the park garage that can accommodate over 2,100 vehicles
- $60 million went to improve the under the park superstructure for Metra’s commuter rail system
- $14.5 million went for the BP Pedestrian Bridge—designed by Frank Gehry
- The Nichols Bridgeway, designed by Renzo Piano, that connects the Lawn of the Pritzker Pavilion to the third floor of the Art Institute’s Modern Wing, was built at a significant, but unpublished cost
- $7 million was spent for the Exelon Pavilions’ four solar energy generating structures
There are a lot of expensive fixed attractions and fixed event venues for visitors. For example, in Millennium Park:
- The Jay Pritzker Pavilion, an outdoor amphitheater with 4,000 fixed seats, cost $60 million and also was designed by Frank Gehry
- The Harris Theater (that is mostly underground because of height restrictions) also cost about $60 million
- The Crown Fountain cost $17 million
- The Cloud Gate sculpture, a.k.a, The Bean, cost $23 million
- Lurie Garden cost $13. 2 million
- Boeing Gardens, outdoor art exhibition spaces, cost $5 million (10).

The significance of these two factors is also attested to by an informal downtown entertainment venue, Mitchell Park, in the small community of Greenport, NY (population 2,200). That four acre waterfront park cost $14.9 million to create (in 2014 $s) largely because of serious brown field issues that had to be resolved, land acquisition costs and a design calling for a 60+ slip marina, a glass building to protect a full sized carrousel, a camera obscura and a building to provide offices for the park and harbor master as well as a viewing point of the harbor.

On the other hand, Division Street Plaza in downtown Somerville NJ (population 12,000) and Central Park Plaza in downtown Valparaiso, IN (population 32,000) show that effective informal entertainment venues can be created at significantly lower costs, $0.6 million and $3.39 million respectively. I will go into greater detail about the Greenport, Somerville and Valparaiso informal downtown entertainment venues in an article scheduled for late October 2014.

The differences between Bryant Park and Millennium Park are probative and go well beyond the vastly different costs of renovating/creating them. For example, Millennium Park has many expensive fixed infrastructure elements that enable visitors to attend events and connect the park to other adjacent attractions. In contrast, Bryant Park’s infrastructure for events is basically temporary and cost far less. It also is firmly embedded in Midtown Manhattan’s street grid and consequently does not require connecting bridges. Much of the seating in Millennium Park is fixed (about 4,000 seats); in Bryant Park it is flexible, with visitors able to move their chairs to wherever they want to put them. Bryant Park provides copious opportunities for visitors to perform by engaging in activities ranging from ping-pong to chess to yoga, while Millennium Park encourages visitors to behave more like observers.

Fundamentally, these differences probably are based on the divergent professional backgrounds of those who had the strongest influences on the designs of these two great parks. Millennium Park’s design was most influenced by famous architects. In contrast, the design and programming of Bryant Park were the products of urbanists who believed that public spaces should be designed to reflect how people are likely to behave in them.

Take Aways

Bryant Park is admittedly not the strongest tourist attraction in NYC, but it certainly holds its own compared to some of the city’s best-known formal entertainment venues, e.g., MoMA, LCPA and the Guggenheim Museum. Its strength with tourists demonstrates that informal entertainment venues can be important magnets for tourists as well as for downtown workers and trade area residents. That ability should be of strategic interest to downtowns that want to create or strengthen their entertainment niche, especially those in small and medium-sized communities.

In many key respects, Bryant Park is far more user friendly than NYC’s major formal entertainment venues. You can pretty much use it when you want or need to. There are no admission fees to pay or lines to stand on. Your visit can last three hours or ten minutes, depending, again, on your wants and needs. Your visit does not require an “appointment.” As a result, Bryant Park can attract the many tourists and other downtown users who have less than 45 minutes to spend in an entertainment venue. Here again, it exemplifies a trait of informal entertainment venues that should be of strategic interest to downtowns that want to create or strengthen their entertainment niche.

The 1992 renovation of Bryant Park was not its creation, but more akin to its recreation. The cost of that recreation, whether you chose the number that includes the cost of the NYPL’s subterranean 40 miles of bookshelves or the smaller and more probable amount, is dwarfed by the costs of renovating NYC’s formal entertainment venues that can compete with it in terms of attendance. While Chicago’s Millennium Park demonstrates that this is not always the case, Bryant Park does demonstrate that informal entertainment venues capable of attracting very strong visitor flows can be created for far less money than formal entertainment venues. For any downtown that wants to create or strengthen its entertainment niche, this should be an important strategic consideration — most especially for those in small and medium-sized communities, where financial resources are likely to be limited.

Endnotes

1. Given some reactions by readers of Part1, I want to clarify that: a) I am a very frequent patron of all of the NYC entertainment venues I discussed, save MSG and the Broadway theaters and b) I think that the venues I do not visit frequently still are strong economic assets for NYC and I am glad that we have them.

2. Michael Howard Saul, “New York City Sees Record High Tourism in 2013: Hotel Room Rates, Bookings Up; Number of International Visitors Doubled in 12 Years,” Wall Street Journal, Dec. 10, 2013 http://online.wsj.com/news/articles/SB10001424052702304744304579250521791383050

3. Most of the data on the tourist component of an entertainment venue’s attendance came from: http://www.thirteen.org/metrofocus/2012/08/tourists-help-the-nyc-arts-economy- thrive/ . However, some tourist data was obtained directly from an organization’s staff or its website

4. ICSC 2003 survey of office workers

5. Randy White, “The shifting nature of leisure time and expenditures”, “Leisure eNewsletter – January/February 2008,”

6Daniel J. Wakin “The Met Will Lower Ticket Prices,” New York Times, February 26, 2013. http://www.nytimes.com/2013/02/27/arts/music/metropolitan-opera-to-reduce-ticket-prices-next-season.html. Info on ticket costs for the New York Philharmonic taken from its website http://nyphil.org/

7. The Broadway League, “Broadway Statistics at a Glance 2013,” http://www.broadwayleague.com/editor_files/broadway_statistics_at_a_glance.pdf

8. Claire Suddath, “Billy Joel Will Play Madison Square Garden for the Rest of His Life,” BloombergBusinessweek, Dec 4, 2013. http://www.businessweek.com/articles/2013-12-04/billy-joel-will-play-madison-square-garden-for-the-rest-of-his-life; Forbes. NBA Team Valuations: New York Knicks. http://www.forbes.com/teams/new-york-knicks/ ;Forbes. NHL Team Valuations: New York Rangers. http://www.forbes.com/teams/new-york-rangers/

9. A wide range of sources, both on the Internet and in personal conversations and communications was used to obtain this data. Paul Goldberger’s May 3, 1992 review of Bryant Park gave me $8.9 million as the cost of its renovation, which I have converted to 2014 $s. Another NYT article around that time gave me the cost of NYPL’s subterranean work, that I turned into 2014$s and added to the updated Goldberger number to get the highest cost estimate. (All of the other cost numbers I found were also updated to 2014 $s.)The cost of the SOPAC project comes from an “Evaluation of SOPAC” done by Harac Consulting in 2011. The cost of Division Street Plaza in Somerville comes from an email from Beth Anne Macdonald, the executive director of the Downtown Somerville Alliance. Mayor David E. Kapell, who spearheaded the development of Greenport’s Mitchell Park, gave me the cost for creating it in a July 2006 telephone conversation. The costs of the remaining projects were obtained from Internet sources, mainly local newspaper articles

10. All of the cost estimates for specific parts of Millennium Park come from an article in Wikipedia: http://en.wikipedia.org/wiki/Millennium_Park . However, I found other sources that confirmed each of them.

DOWNTOWN FORMAL ENTERTAINMENT VENUES PART 4: MOVIE THEATERS

Posted on May 25, 2014 by DANTH

By N. David Milder

Introduction

The importance of downtown movie theaters. One of the most distinguishing characteristics of the “new normal” for our downtowns is the importance of having strong Central Social District (CSD) functions. Dynamic downtown entertainment niches contribute mightily to having a strong CSD. Movie theaters will play important roles in many of these entertainment niches, often serving as niche cornerstones in many smaller and medium-sized communities. Movie theaters usually differ from other downtown formal entertainment venues, such as theatres, concert halls and PACs, in some critical respects:

They show films during the daytime as well as evenings almost every day of the year – though this is less likely in very small communities
Their admission fees are relatively low and affordable – averaging $8.13 in the US and Canada in 2013 (1)
They are very likely to have a larger potential audience than the other formal performing arts venues: about two thirds of the US/Canadian population aged 2+ went to the movies at least once in 2013. This dwarfs attendance at other formal performing arts venues, theme parks and MLB, NFL, NBA and NHL games (2). For example, only about 49% of adult Americans attended a performing arts events (plays, operas, concerts) or visited visual arts venues ,e.g., museums, art galleries in 2012 (3)
They appeal to minority groups: for example, Hispanics represented about 17% of the population in 2013, yet accounted for 25% of the movie tickets sold that year and their attendance is growing (4)
More downtowns are likely to have a movie theater than a “legit” theatre, concert hall or PAC. In smaller communities they are often “…built right into the fabric of the main street, and they pretty much serve as the anchors. If those buildings were shuttered or torn down, it would affect the look and feel of the downtown area” (5).

Because of their long operating hours and ability to win an audience that is socioeconomically and ethnically diverse, movie theaters not only bring a lot people downtown through most of the day, but also stimulate their patrons to take a psychological stake in the downtown and make it their downtown.

Downtown movie theaters have long been under threat. Downtown movie theaters can be very important assets, but they have long been subject to forces pressing for their closures. When some of these forces wane, others seem to rise to take their place.

Back in the 1940s, 60% of Americans went to the movies every week. That level of attendance fell dramatically when TVs became a staple in every home during the 1950s (6). That, combined with the flight to the suburbs, led to the closure or repurposing of many downtown theaters. Nationally, though individuals went to the movies less frequently, through the 1980s and 1990s movie attendance continued to increase because of population growth until 2003 when a pattern of decline set in. By the end of 2013, attendance had fallen 13.9% from the 2002 peak. (7)

Within the movie theater industry there has long been a preference for theaters with more screens. This has led to a pattern of increasing screens, a steady decline in the number of movie theaters and larger cinemas with more screens. For example, between 2000 and 2012, the number of indoor movie theaters decreased by 18.8%, while the number of screens increased by 9.4% (8). However, this pattern was uneven. Some downtowns, usually the larger ones with some significant revitalization success stories, saw large new multiplexes open, while many others saw their 1-5 screen theaters close. The smaller theaters, with fewer screens were increasingly marginal. Even more marginal have been the smaller, few screen theaters in low population market areas.

In 2008, a DANTH, Inc. research paper summarized the challenges then facing downtown movie theaters:

Their hold on adult audiences was small and diminishing. Attendance was down and a Pew Research Center survey found that by a 5 to 1 ratio, Americans watch more movies on their TVs and electronic devices than in a movie theater
Even the most frequent moviegoers, a group whose behaviors are critical to the industry’s success, preferred home viewing
Many theaters had low operating margins based primarily on revenues from concession stands and screen ads
A relatively modest reduction in paid attendance by a small group of frequent moviegoers could easily erase these meager margins. The frequent moviegoers did not have to completely stop visiting movies theaters for the impact to be devastating. This was an important point.
The frequent movie-goers had demographic characteristics that highly correlated with the use of computers and other electronic home entertainment equipment. Such equipment could greatly facilitate a shift in their movie viewing from theaters to home and mobile distribution channels
Many theaters lacked amenities such as many screens, large screens, first run films, stadium seating, clean restrooms and clean theaters floors
US theaters provided a very small revenue stream for the major movie studios, e.g., an estimated 13% of their total revenues in 2003 (9). Consequently, the studios are incentivized to make decisions that will help other film distribution channels that are more profitable although this may hurt the theaters (10).

Our 2014 Deep Dive DANTH’s most recent assessment of the challenges and opportunities that downtown movie theaters now face shows that they now are probably stronger than in 2008, but still have to face significant uncertainties about both threats and opportunities. The good news: the shift to digital projection and distribution is done and very probably left a stronger group of movie theaters. The recent studio forced conversion to digital distribution and projection reportedly was going to cause a large number of closings among the smaller and financially vulnerable cinemas with fewer screens. For example, the National Association of Theatre Owners (NATO) estimated that as many as 20% of all cinemas in North America – about 1,000 — would be forced to close by the digital conversion (11). We could not find any reliable data on how many were actually forced to close by the end of 2013, though such information may become available later in 2014. NATO’s most recent data show a decrease of only 244 indoor cinemas from 2009 through 2012. However, the Motion Picture Association of America (MPAA) data in the above table show that there were still 2,981 analog screens, in an unknown number of cinemas, in 2013. If they did not convert to digital, then they would be very prone to being left out of the film distribution network and, if they have not failed, they have become even weaker. However, we have come across several reports of these small non-digital theaters still hanging on by still being able to get access to some new studio analog films, reducing their schedules and supplementing their revenues by on -stage events.

More encouraging are the unknown number of smaller, vulnerable theaters that have been saved in recent years by local communities organizing to own and/or operate them or help raise the funds needed by operators to bring them across the “digital divide.” We have come across reports of local communities organizing to save small cinemas in ND, NY, and ME. For example, of the 31 operating historic theaters in North Dakota identified by one researcher, 19 are community-run (12). In NY, the Adirondack Film Society and the Adirondack North Country Association (ANCA) created a Go Digital Or Go Dark program that won state grants and used the Razoo online crowdfunding service to raise matching funds from local residents (13). The funds raised by this program have been used to help six movie theaters in the region go digital: two have completed the conversion; four are still in the process of making the conversion, either still fundraising or awaiting the installation of the digital equipment. Three other theaters that the program initially contacted found other ways to fund their digital conversions. Only one theater has not been able to cross the digital divide; it was physically too small to accommodate the digital equipment. The owner now is looking for a new and larger location in the community for the theater (14). While the Go Digital Or Go Dark program has been very impressive in helping to raise the funds needed by many of its region’s theaters to go digital, it is probably prudent to consider it still as a work in progress until the four “in process” theaters actually complete their digital conversions. At that time it will be easier to measure its degree of success and to get a good handle on its potential transferability to other communities. Nevertheless, the proactive actions of these communities in North Dakota and the Adirondacks do demonstrate that if communities want their cinemas to be saved, their active involvement can be an important part in making that happen.

Also, we have found a few instances – in suburban and urban districts — where new theater operators, with capital and industry know-how, have been recruited by savvy landlords to upgrade troubled movie theaters – e.g., the Cedar Lane Cinemas in Teaneck, NJ (15).

Internet fundraising is an important tool that some small movie theater operators can use on their own. For example, in Westport, an entertainment district in Kansas City, MO, the owner of Tivoli Cinemas (the oldest movie theater in the city) used Kickstarter to raise $136,393 from 1,386 backers. The funds raised are to be used to make the digital conversion as well as physical improvements to the theater (16).

The downtown movie theaters that remain open today are probably stronger than their peers were five years ago because:

The fittest have survived and the really weak theaters and operators have largely been squeezed out by the financial pressures induced by the digital conversion.
Digital conversion helps theaters provide patrons with higher quality viewing experiences, an important element of making going to the movies a special occasion
There are interesting tools that communities now have successfully used to help save their movie theaters and that other communities might adopt or learn from. Indeed, for smaller communities that are often financially challenged, the organizational and fund raising tools used to save the movie theaters might also be effectively used to achieve other downtown revitalization objectives.

Even after the conversion to digital screens, the health of US movie theaters is mainly contingent upon the their ability to indirectly generate revenues for the movie studios. American movie studios have become increasingly focused on their international box office, because it has become much larger than the domestic box office: 70% of their film box office revenues now come from outside the US. Also, while US box office revenues only increased by 3% between 2009 and 2013 to $10.9 billion, the international box office grew by 33% to $25 billion (17). Today, most of the studios’ blockbusters earn at least two-thirds of their box office revenues in foreign markets and some producers are tailoring their films to the tastes of foreign fans” (18). It remains to be seen:

If the need for films to meet both American and international tastes can be accomplished without losing a significant portion of the current American audience
Or if the greater revenue potentials of international blockbusters substantially diminishes the production of “independent” films, such as the highly acclaimed Moonrise Kingdom, that only earned about one-third of its gross take in the international market and that targets an audience that has less interest in big action films, especially those based on comic books.

In addition, domestic movie theaters only account for a small portion of the movie studios’ domestic revenues: about 36% in 2010 according to one analyst (19). Most of their domestic revenues come from DVD sales, pay for view TV, online movie streaming, electronic games, amusement parks, franchises and licenses, etc. In recent years, DVD sales have nose-dived while increased revenues from movie downloads and streaming have not filled the gap.

Today, the importance of the movie theaters to the movie studios is not so much the dollars they bring in directly as the fact that they are the major marketing platform for generating studio revenues in the more profitable ancillary distribution channels! Domestic theater operators would be in a severely jeopardous situation should the studios find a more cost effective marketing platform for reaching their ancillary markets.

Persistent clashes between the studios and theater operators have occurred over when films are to be released into these ancillary distribution channels. Lately, the pressure for a shorter theatrical window has grown, because important movies now open in about 4,300 theaters versus about 2,000 twenty years ago and about 90% of theatrical revenue comes within the first four weeks of a film’s run (20). Distributing films earlier through the ancillary channels may not significantly hurt the revenues of first run theaters – though their operators still will fight it. However, the smaller and weaker second and third run cinemas that get the films weeks later– those that are likely to be in smaller market areas and smaller commercial districts – probably would not fare as well.

Where studios and theater operators agree: squeeze more dollars from each movie visit. Both movie studios and movie theater operators have decided that if US attendance is diminishing, then the best strategy for increasing revenues is to capture more dollars from every customer that walks through a movie theater’s doors:

For over a decade, the price of general admission tickets has steadily increased. In the 10 years between 2003 and 2012, ticket prices increased by 38%. In comparison the CPI increased by 25%, while, more importantly, median household incomes rose by only 17% (21). This means that ticket prices increased while the incomes of American households was not even keeping pace with inflation.
There has been a real push to have more films that can be shown on 3-D, IMAX and IMAX-like (e.g., in Cinemark theaters) projection systems. They command higher admission fees. Also, many industry leaders see these types of films as the best way to compete with watching movies at home or on mobile devices because of their ability to provide larger and more immersive viewing experiences. By 2013, about 36% of all movie screens in the US had digital 3-D projection capability, up from 8% in 2009 (22).
However, the popularity of regular 3-D movies is now in question. Several observers foresee them losing out to the large format films — about 75% them are also in 3-D (23). Smaller theaters often can accommodate 3-D projection systems and many do today after the digital conversion. However, one wonders how many could fit the large format screens into their buildings. On the other hand, one also has to wonder if smaller theaters in less densely populated areas and far from other and larger theaters, would really have to compete in this way. They had to go digital in order to stay in the distribution system, not so much because their competitors were digital. It seems doubtful that the studios similarly would force them to adopt the large screen format by refusing to distribute a lot of important films in regular digital format
For many years now, theater operators have been trying to provide a more pleasurable and unique experience for moviegoers. Stadium seating and Dolby sound systems are widespread. Some theaters have become dinner cinemas, where they serve viewers meals. The large AMC chain is among them. Theaters in some smaller communities also have successfully used the dinner cinema format. For example, the Gilson Cafe & Cinema in Winsted, CT, has been around for over 25 years (24). However, the large chains experimenting with this format is new. It remains to be seen if dinner cinemas will become more widespread
AMC is also experimenting with seating in 25 of its locations by providing each patron, for an increased ticket fee, with “ a person-and-a-half-wide, motorized, reclining, La-Z-Boy-style chair, upholstered in a glossy red leatherlike material” (25). These large recliners reduced the seating capacity in these theaters by 64%, yet attendance reportedly increased by 84% (26). Here, again, it remains to be seen if this type of seating will achieve greater adoption.

Will movie theater attendance continue to decline? Given that our current economy means middle-income households are suffering from stagnant incomes and filled with deliberate consumers, movie ticket price increases may have deterred moviegoing – especially among middle and lower middle-income households and those with children. As was detailed in an earlier article in this series on the markets of formal preforming arts venues, fewer discretionary dollars have been a major factor in lowering attendance at those venues. A few dollars increase in movie admission prices may not seem like much to those in the top two household income quintiles or to a young creative type or a teenager. However, for those with more modest incomes or a household with children, the same price increase can be much more meaningful, especially when combined with costly purchases from the concession stand. While households with children now represent just 32% of all households, they are still one third of the movie theater market. Continued ticket price increases that are substantially above rises in middle-income household spending power – not just the CPI– would be a growing threat to movie theater attendance. In some market areas, these increases could push the size of the movie audience down towards the much smaller audience sizes of the formal performing arts venues.

DANTH’s 2008 research report on downtown movies concluded that the then biggest threat to movie attendance would arise if frequent movie goers diverted more of their movie viewing from movie theaters to their home TVs and mobile devices. Since frequent moviegoers were also the highest users of mobile devices and technology products, the potential for such a diversion seemed to warrant significant concern. The MPAA’s 2013 market report indicates that not much has changed in this regard:

“Frequent moviegoers tend to own more key technology products than the general population (adults 18+). Nearly three-quarters of all frequent moviegoers (74%) own at least four different types of key technology products, compared to 51% of the total adult population” (27).

While viewing diverted to high tech ancillary channels may well substantially decrease theater attendance, it is doubtful that it would approach anywhere near a major collapse. The earlier impact TV had on attendance showed that while there was a very significant decline, Americans still liked going to the movies. Something comparable in scale may happen with the impact of the high tech gadgets and online services. Furthermore, the high tech based immersive viewing and sound experiences provided by 3-D and especially IMAX are quite popular with those who are high users of tablets, smartphones, laptops, AppleTVs, Netflix, etc., and they fit well into a high tech entertainment culture. Whether or not there will be a tech-induced attendance decline and what its magnitude might be remain unknown, but the digital-induced audience diversion must still be considered a substantial potential threat.

Some interesting changes have emerged in the demographics of the movie audience and frequent moviegoers. Caucasians are still the largest racial group among moviegoers, 59%, tickets bought, 54% and frequent moviegoers, 49%, but these percentages are below their population share, 63%. Moreover, the trend over the 2009-2013 period was for the Caucasian shares to decline across the three movie audience variables. In contrast is the Hispanic-Latino audience that now accounts for 32% of the frequent moviegoers, 25% of all tickets sold and 20% of all moviegoers, although they now comprise just 17% of the national population. Afro-Americans and other racial groups have been holding rather steady in their shares of the movie audience variables. Movie studios may well want to take this demographic composition of their domestic audience into consideration when they decide which films to green light for production and distribution.

Perhaps the most interesting column in the above table is the one on the extreme right that shows average per capita movie attendance between 2009 and 2013 for each of the demographic categories in the table. For downtown theater operators, the per capita data can be quite useful for generating meaningful estimates of what their total annual attendance will be as well as who in their trade area will be accounting for most of the tickets sold. It also should be noted that:

Among the racial groups, Caucasians have the lowest per capita attendance, 3.6 times a year, while the Hispanics’ rate is 69% higher at 6.1 movie visits per year. This may impact on where movie theater operators will want to locate their new cinemas as well as the revenues of existing theaters
The 12 – 24 age groups still have, as they have long had, the highest per capita attendance rates. Regardless of the fuss some commentators have recently made about increased attendance in the 2 -11 and 50-59 age groups, those cohorts still lag woefully behind the teenager/young adult crowd who will nevertheless command the primary attention of studio execs and theater owners (28). However, the Hispanic market is about the same size and strength and may viably compete for comparable studio and theater operator attention
As is well known, the Hispanic segment of the US population is growing rapidly. With the Hispanic high attendance rate, could this growth bring about an equal growth in moviegoing – and one that might actually result in a structural net increase in movie attendance?

The growing importance of making moviegoing a special event. In recent years, a number of famous and well-regarded Hollywood filmmakers, such as James Cameron and Jeffrey Katzenberg, have come out strongly in favor of 3-D and IMAX movie formats. They have done so, because they realize that the future of moviegoing in the USA is significantly dependent on cinemas being able to provide a differentiated experience that can successfully compete with watching movies on a home TV or mobile devices. They want to make moviegoing again a special event. The efforts of the movie theater operators to bring dining into the movie-going experience, to provide not only improved stadium-type seating, but large plush seating, and to make 3-D and IMAX viewing a more everyday viewing experience also have the same objective. Many savvy real estate developers also have signed on, such as Rick Caruso, who made access to a major restaurant a key design component of a large multiplex in The Grove in L.A.

Visits around the country have demonstrated the importance of easy access to food and drink as a means of differentiating and enhancing the moviegoing experience and consequently contributing to successful small movie house operations. These food and drink operations are not four or five star eateries. Nor are they pricey. Some may specialize, e.g., a pizzeria, an ice cream parlor, a sausage house or a brewpub. Affordable places, especially those that appeal to kids and families, can play strong support roles for adjacent or very nearby cinemas. They do not have to in the theater building, but having them there can strengthen the theater financially by providing an additional revenue stream.

Cinemart Theater, its restaurant’s outdoor dining, with Eddie’s in background

One example that we know quite well is the Cinemart in nearby Forest Hills, NY. It has been in operation at least since 1949. It now is basically a second run theater. About 10 years ago it opened a casual and affordable restaurant in its building, with outdoor seating when weather permits, that can be enjoyed by moviegoers, but also attracts many other customers. The eatery both broadens the potential moviegoing experience while providing the theater operator with another source of revenue. Within 150 feet of the Cinemart is Eddie’s Sweet Shop, a 100+ year old and very popular ice cream parlor. On weekends and in the weekday evenings one can observe platoons of patrons entering Eddie’s after each movie ends.

Our field observations in recent years also suggest that a healthy, well-activated, energetic commercial district offering visitors a variety of interesting and affordable things to do can help warrant a visit to a movie theater located in it because the experience would be sufficiently special and different from home or mobile device film watching.

Unfortunately, there is a potential conflict between the need to keep the moviegoing experience affordable and the need to make that experience special, since the latter is likely to involve more expensive tickets and/or add-on costs associated with food and drink or other “special” items. Such conflicts are least likely to occur in wealthy residential areas – e.g., those where households in the top income quintile reside – since for those residents the incremental costs associated with enjoying a special event excursion to a cinema would be relatively negligible. This conflict is more likely to emerge in residential areas where household incomes are in the middle and lower middle ranges.

Implications for Downtowns

District organizations in small and medium-sized downtowns as well as in urban neighborhood commercial centers should recognize that even though their movie theaters have successfully transited the digital divide, their futures are sufficiently uncertain to warrant attention, concern and perhaps even some preliminary contingency planning (29). These cinemas are such important assets that the significant negative impacts of their closures would ripple strongly through their districts and surrounding communities. Their importance was recognized by the communities around the country that organized in some manner to help them make the digital transition and survive.

However, a number of other district organizations did not become involved because they were either unaware of their theater’s situation, or thought it was the theater operator’s role – not theirs – to make the digital transition, or felt they did not know what they could do to help. In response, one might argue that:

As stewards, not just of the of their district’s physical condition, but also of its economic well-being, they should have been aware of their theater’s problems and done so within an actionable timeframe – especially since a movie theater is such a strong and irreplaceable asset
Though a district organization obviously had no obligation or role to undertake on its own a movie theater’s digital conversion, the cinema’s strategic economic importance certainly warranted the organization helping the theater operator to do so — or to facilitate bringing in a new operator who could
The experiences of towns in ND and the Adirondacks show a number of tools communities and district organizations might use. Crowdfunding is certainly one of them. Also, Josh Bloom has written about a number of community enterprise tools that might be used to help keep downtown and Main Street businesses open that could be applied to a movie theater (30). Furthermore, a number of states appear to have funding programs that can be tapped to help save movie theaters. An empty toolbox is no longer an excuse for inaction.

With the digital transition almost completed, movie theater operators no longer face an immediate threat to their survival – other than those arising from normal day-to-day business activity. Nonetheless, there are uncertainties present that might soon generate new meaningful threats:

Will the studios and theaters continue to increase ticket prices and to the extent that there is a growing reduction in moviegoing among deliberate consumers?
Will improvements associated with making watching movies in a theater a stronger special occasion translate into higher ticket prices that also reduce moviegoing among our deliberate consumers?
Will the studios shorten the “theatrical window” and release most new films much sooner into the ancillary distribution channels?
Will the studios’ focus on the international box office lead to films that do not appeal to significant domestic market segments?
Will technology produce new gadgets, e.g., virtual reality devices, that can make home or mobile viewing similar to watching a movie in a theater? Or will the costs of cable connections and streaming services rise so much that they make theater prices more competitive?
How do the changing rates of moviegoing among demographic categories translate into likely attendance in a downtown’s market area?

Happily, most downtown organizations now need not worry intensely about their cinemas, yet it is not the time for them to completely look away. During a crisis is not the time to figure many things out. It might be very useful for them now to:

Keep abreast of their theater’s situation – including changes in attendance rates — and alert to relevant happenings in the film industry
Explore how existing and planned district amenities and activity offerings can be marketed to make district moviegoing even more of a special occasion. Note: this way way of improving a cinema’s ” special occasion” capability does not entail costs that have to be passed on in higher ticket prices
Think about what they would do if their theater became endangered to help raise money, attract patrons, find another operator or create a new form of ownership for the theater
Give thought to other communities, local organizations and government agencies they could work with should a threat emerge.

ENDNOTES

1. Motion Picture Association of America. “Theatrical Market Statistics 2013.” P.10. Hereafter referred to as MPAA. http://www.mpaa.org/wp-content/uploads/2014/03/MPAA-Theatrical-Market-Statistics-2013_032514-v2.pdf

2. Ibid. and https://www.ndavidmilder.com/2014/03/the-new-normals-challenges-to-developing-a-downtown-entertainment-niche-based-on-formal-entertainments-part-2-the-audiences.html

3. See: https://www.ndavidmilder.com/2014/03/the-new-normals-challenges-to-developing-a-downtown-entertainment-niche-based-on-formal-entertainments-part-2-the-audiences.html . Hereafter cited as Part 2.

4. MPAA p13

5. Melissa Hart of the Adirondack North Country Association, quoted in Stephanie Garlock , “Why the Switch to Digital Projectors Means the End of the Small-Town Movie Theater,” Atlantic Cities, Aug 28, 2013 http://www.theatlanticcities.com/arts-and-lifestyle/2013/08/why-switch-digital-projectors-means-end-small-town-movie-theater/6625/

6. Source: Motion Picture Assn Worldwide Market Research. Cited by Edward Jay Epstein, “Hollywood’s Death Spiral: The secret numbers tell the story.” Slate, Posted Monday, July 25, 2005, at 2:48 PM ET

7. Part 2

8. Part 2, MPAA

9. See Epstein in endnote 6

10. N. David Milder, “DANTH’s FOURTH LUSTRUM DOWNTOWN TRENDS ASSESSMENT 2008 Part 1: Downtown Movie Theaters Will Be Increasingly In Great Danger,” Danth Inc., 2008, p.14 https://www.ndavidmilder.com/wp-content/uploads/2012/05/trends_p1_films_08.pdf

11. Michael Hurley, “We’re About to Lose 1,000 Small Theaters That Can’t Convert to Digital. Does It Matter?” Indiewire, February 23, 2012 http://www.indiewire.com/article/were-about-to-lose-1-000-small-theaters-that-cant-convert-to-digital-does-it-matter

12. Patricia Leigh Brown, ” Movie Houses Find Audience in the Plains,” New York Times, July 4 ,2010http://www.nytimes.com/2010/07/05/us/05theater.html?pagewanted=all&_r=0

13. Melissa Hart of the Adirondack North Country Association, quoted in Stephanie Garlock , “Why the Switch to Digital Projectors Means the End of the Small-Town Movie Theater,” Atlantic Cities, Aug 28, 2013 http://www.theatlanticcities.com/arts-and-lifestyle/2013/08/why-switch-digital-projectors-means-end-small-town-movie-theater/6625/ ; Paul Post, “Small Theaters in Adirondacks Face Choice in Switch to Digital: Pay or Perish,” New York Times, December 25, 2013, http://www.nytimes.com/2013/12/26/nyregion/in-switch-to-digital-small-theaters-in-adirondacks-face-choice-pay-or-perish.html and telephone interview with ANCA staff

14. Telephone interview with ANCA staff

15. See, for example: http://teaneck.patch.com/groups/business-news/p/teaneck-s-cedar-lane-cinemas-to-reopen

16. See: https://www.kickstarter.com/projects/613557145/tivoli-cinemas-in-westport-go-digital-or-go-dark

17. MPAA p.5

18. Richard Corliss , “Five Things We’ve Learned in Five Years of Box Office Reports.” 10:00 AM ET 040514 Time.com. http://time.com/49440/five-things-weve-learned-in-five-years-of-box-office-reports/

19. See: Information is beautiful. https://docs.google.com/spreadsheet/ccc?key=0Aqe2P9sYhZ2ndEtDWmVXNi1FWmN5ei0yMlUwdXBIZ1E&hl=en_GB#gid=1

20. Doug Stone, “How do studios decide when to release a DVD for a theatrical release_ – Quora. July 3, 2012. http://www.quora.com/Movie-Business-and-Industry/How-do-studios-decide-when-to-release-a-DVD-for-a-theatrical-release”

21. http://www.boxofficemojo.com/yearly/ and http://www.bls.gov/data/inflation_calculator.htm

22. MPAA p.26

23. Brooks Barnes, “Battle for the Bigger Screen,” New York Times, April 11, 2014, http://nyti.ms/ORPuJm

24. See: http://www.gilsoncafecinema.com/index2.htm

25. Anand Giridharadas, “The Screen Is Silver, but the Seats Are Gold: AMC Theaters Lure Moviegoers With Cushy Recliners.” http://www.nytimes.com/2013/10/18/movies/amc-theaters-lure-moviegoers-with-cushy-recliners.html?pagewanted=1&_r=0

26. Ibid.,

27. MPAA

28. See endnote 18 and MPAA

29. N. David Milder, “Many Downtown Movie Theaters Have Closed: Some Lessons For Downtown Organizations,” https://www.ndavidmilder.com/2012/12/many-downtown-movie-theaters-have-closed-some-lessons-for-downtown-organizations.html

30. Joshua Bloom, “Community-owned Businesses: How Communities Become Entrepreneurs,” Main Street Now, March/April 2010. http://www.preservationnation.org/main-street/main-street-now/2010/marchapril-/community-owned-businesses.html. See also Kennedy Smith, “Capital Thinking: Creative strategies to support at-risk businesses”, Downtown Idea Exchange, February 2012 http://www.downtowndevelopment.com/perspectives/dixperspectives020112.pd

The New Normal’s Challenges to Developing a Downtown Entertainment Niche Based on Formal Entertainments: Part 1

Posted on March 9, 2014 by DANTH

Posted by N. David Milder

Introduction

This is the first part of the third in a series of articles about the “new normal” for our nation’s downtowns. It focuses on the challenges many downtowns — especially those that are not very large — now face when they decide to bolster their central social district functions by creating and/or strengthening their venues for the performing and visual arts, e.g., performing arts centers (PACs), theaters, cinemas, museums, concert halls, museums, art galleries, etc. Part 1 deals with a general introduction of the challenges, a discussion of who can afford formal entertainments, and changes in the ways governments, corporations and foundations are funding arts projects. Part 2 will turn to changes in the ways Americans attend performing arts events and visit visual arts venues. Part 3 will survey a number of formal entertainment venues.

As noted in an earlier article on the new normal for downtown, successful formal entertainment venues undoubtedly can be strong assets for the downtowns in which they are located. However, the success of such venues has long been uncertain and challenged because, from their get-goes, they are the equivalents of loss leaders for their districts. Most are nonprofit operations that sell tickets to events/performances or charge visitors admissions fees that seldom cover their full costs. For example, among performing arts centers,, be they large or small, only about 40% of their operating costs usually are covered by performance revenues (1). To survive financially,they must be able to tap a number of “charitable” revenue streams, e.g., grants, bequests and other donations from government agencies, corporations, charitable foundations and individuals. This financial dependence makes them vulnerable. Evidence suggests that recent trends have made their financial success significantly more difficult to achieve. Funding for the arts took a big hit during the Great Recession, with its full recovery still in doubt, while research studies have consistently shown attendance at performing and visual arts venues has been changing, in some instances declining significantly for over a decade.

In the performing arts, the fees of performers — be they individuals or groups — are related to their popularity. The ability of a venue to attract them will depend on its seating capacity and the ticket prices it can command. Consequently, as more communities with comparatively limited market area populations and wealth try to develop such venues, they often find that their smaller potential audience base, seating capacity and financial resources require adjustments of their aspirations and a fine-tuning of their programs. In other instances, formal entertainment facilities have been built that just have too much capacity for their market areas or are weakened by new competing formal entertainment centers within their market areas

The arts as an engine of economic growth and downtown revitalization too often seems to have achieved the exaggerated status of a religious credo among downtown advocates or the unrealistic expectation among some of them of being the “silver bullet” solution path to economic rebirth. While the arts undoubtedly can contribute to economic growth, their ability to do so will depend on arts venues and programs being planned and designed in a manner congruent with local needs, behaviors and resources. This challenge is now made more complicated by the fact that these local needs, behaviors and resources may be subject to substantial change.

Consumer Expenditures for Entertainment Admissions and Fees.

Tickets admission fees are an important revenue source for the organizations that operate formal entertainment venues. The less revenues they realize from tickets and admission fees, the more they must rely on obtaining outside funds from government agencies, corporations, foundations, and individual donors. The fees can vary. For example, the Cincinnati Museum of Art has free admission; the Columbus Museum of Art charges $12; the Museum of Modern Art in NYC has a $25 fee; the ticket prices for Broadway shows and tickets for concerts by major attractions can reach well over $100 in prime venues. Obviously, the affordability of these

admissions is a function of both their prices and the incomes of those who would purchase them.

Formal entertainment venues that charge relatively high prices are in a sense targeting more affluent households and a downtown entertainment niche based on a cluster of such venues is likely to be a feature that helps draw affluent households or young people with a lot of discretionary spending power to want to live in or very near to the district. During the 1960s, 70s and 80s attracting such residents was just a long-term goal of many downtowns leaders. Today, in a growing number of downtowns, that goal has been achieved and they are stronger for it. Sophisticated formal entertainment venues that feature major attractions that have substantial admission fees are probably well suited for such downtowns. But, a lot of downtown users, be they current or potential, are being priced out of using these formal entertainment venues.

The table above shows that nationally, in 2012, 56% of the expenditures for entertainment fees and admissions came from those in the top 20% of the households sorted by annual incomes. The mean annual household income in this quintile was about $167,000. Those in the top two household income quintiles, with average annual incomes over $75,900, accounted for 77% (56% +21%) of all entertainment fees and admissions.

The general thrust of these findings is not new: the more affluent have long spent more on entertainment, especially the arts. What is new are:

The emergence of deliberate consumers in middle income households who have reduced discretionary incomes and for whom discretionary entertainment expenditures now are a lower priority than in years past (2)
The income stagnation and general economic decline of middle income households, a trend that preceded the Great Recession, but recently has become a hot political issue.

The implications for many downtowns are:

More than ever, ventures to establish new formal entertainment venues must be calibrated in their ambitions, designs and costs to the financial resources of local residents that might be tapped through admissions, fees and donations
Such ventures are more likely to succeed in communities that have greater residential wealth, especially if capital investments in new buildings, busy event/performance schedules and pricey admissions fees are involved
In smaller and less affluent communities such ventures are very likely to need strong long-term government subventions and grants from corporations, foundations and community organizations. Most downtowns are likely to fall in this category. In these communities, the presence or absence of very broad support among local residents, the business community and elected officials can be the deciding factor in whether this critical external financial support will be obtained. Often such strong support is mobilized around something or someone that is a source of considerable community pride or identity, such as the artist Grant Wood in the Cedar Rapids (IA) Museum of Art and life on the plains and the Oregon Trail in the Legacy of the Plains Museum in Gering NE.
Many of the downtowns with weaker financial resources to tap might do well to consider that many Americans see art exhibitions and attend performing arts events not only in museums, theaters and concert halls, but also in parks or other open air facilities, restaurants, bars, nightclubs, community centers, places of worship, college campuses, etc. (See table above).

Grants for Arts Nonprofits

Since the onset of the Great Recession, it has become more difficult for arts nonprofits to get the grants they need from public sector agencies, corporations and foundations. An unanswered question is whether this funding trend will turn around as the nation’s economy improves. Downtown leaders considering the development or expansion of formal entertainment venues might benefit from understanding the topography of these new financial support patterns for the arts.

Public Sector Funding. It is important to understand the magnitude of the public sector’s financial support for the arts. It now only accounts for about 7% of the revenues of arts nonprofits nationally and, adjusted for inflation, between 1992 and 2013 public funding declined by about 30%. FY2013 was the first fiscal year since FY2008 that aggregate public sector funding for the arts has increased, but it is still far below former high years (3). The National Endowment for the Arts (NEA) only accounts for about 12% of the public sector funding. Its expenditures are not expected to increase significantly anytime soon.

County and municipal governments account for 63% of the public funding for the arts and they recently have shown signs of increasing their funding levels as their economies improve and the impacts of natural catastrophes (e.g., Hurricane Sandy) abate. However, local governments in more densely populated areas often face a large number of requests for arts funding and that usually results in many relatively small grants.

Corporate Support. Unfortunately, data are unavailable for small and medium-sized corporations, but the major findings of a recent report by CECP and The Conference Board on giving in 2012 by large corporations are still illuminating (4): though large corporation giving increased by 42% from 2007 to 2012, funding for the arts decreased by about 40% during that period (5)!

On the hopeful side for a resurgence in corporate arts funding is the fact that giving to the arts remains popular among the corporations; it is the size of their contributions to the arts that have decreased. But, changes in corporate behaviors and preferences suggest that such a resurgence is not likely to happen any time soon:

Education and economic development have become much more important funding priorities
More corporations want to make in-kind donations and arts organization may find it difficult to benefit from bulk product donations
Corporations are increasingly seeing giving as part of their corporate strategy and less as charity
Corporations are increasingly reviewing their giving from a return on investment (ROI) perspective and nonprofits often do not know how to provide the needed metrics (6)

Foundations. Since about 81% of America’s larger corporations have foundations and they account for about 35% of their corporations’ total giving, there is some overlap between corporate and foundation funding (7).

In 2011, the last year for which there appears to be available data, there was a familiar pattern: while there was a 25.3% increase over 2010 in overall giving by 419 foundations, the increase for the arts was a marginal 0.5%. Here again, the arts’ share of the number of grants remained unchanged (8). However, a “larger share of arts grant dollars provided operating support than most other fields” (9).

Endnotes

1. Harac Consulting, “Evaluation of SOPAC.” October 2011, p.3. http://southorange.org/SOPAC-finalPDF.pdf

2. See: https://www.ndavidmilder.com/downtown-revitalization/the-deliberate-consumer

3. Ryan Stubbs “Public Funding for the Arts: 2013 Update,” GIA Reader, Vol 24, No 3 (Fall 2013): http://www.giarts.org/article/public-funding-arts-2013-update

4. CECP and The Conference Board, “Giving in Numbers: 2013 Edition.”

5. Ibid, page 20.

6. See:ARTSblog » Blog Archive » Michael Stroik. “Corporate Funding Came Back After the Recession, But Did it Leave the Arts Behind”_ (from The pARTnership Movement, an initiative of Americans for the Arts) posted Oct 4, 2013 and ARTSblog>> Judy Belk, “As Corporate Giving Bounces Back, Six Things Nonprofits Need to Know,” posted December 13, 2013.

7. See endnote 4, page 5.

8. Steven Lawrence and Reina Mukai, “Foundation Grants to Arts and Culture, 2011 A One-year Snapshot,” Foundation Center, GIA Reader, Vol 24, No 3 (Fall 2013), http://www.giarts.org/article/foundation-grants-arts-and-culture-2011

9. Ibid.

N. David Milder at DANTH, Inc.

Downtown Revitalization Specialist

Category Archives: BIDs

Part 2: SOME THOUGHTS ABOUT STUDIES OF THE ECONOMIC IMPACTS OF DOWNTOWN ENTERTAINMENT VENUES

The New Normal’s Challenges to Developing a Downtown Entertainment Niche Based on Formal Entertainments: Part 1

Introduction

Consumer Expenditures for Entertainment Admissions and Fees.

Grants for Arts Nonprofits