Sports leaders say commission, state fund could help Arizona with mega events
Thursday, April 30, 2015
Leaders in the Valley’s sports community say Arizona could benefit from a central sports commission and state fund to recruit and produce mega events like the Super Bowl and the Final Four.
The 2015 Super Bowl kicked off an unprecedented run for the Phoenix metro area as the host of mega-sporting events. But if the Valley is going to continue to lure Super Bowls, NCAA championship football games and Final Fours, leaders in the sports community say the current system needs to be improved.
“We’re playing with a bow and arrow and everybody else is playing with a howitzer,” said Jon Schmieder, founder and CEO of the Huddle Up Group that is based in Phoenix and consults with sports commissions across the country.
The howitzer belongs to cities like Dallas, Houston, New Orleans and Miami that have deep pockets and one central sports commission with full-time staffers.
Phoenix, in conjunction with Glendale, Scottsdale, Tempe and Mesa, won bids for high-profile collegiate and professional events without the benefit of a unified sports commission to spearhead the effort. The successful bids were the results of hard work by dozens of people around the city, none of whom work together under one roof on a regular basis.
Phoenix might be in danger of falling behind other cities if it doesn’t update the system used to organize these events.
In 2016, the College Football Playoff National Championship Game will be played at University of Phoenix Stadium. One year later, the Men’s Final Four rolls into the Valley.
These rotating events complement the annual large-scale sporting events that call the Greater Phoenix area home. For more than 40 years, college football pageantry has descended on the Valley with the Fiesta Bowl and, more recently, the Cactus Bowl. Phoenix International Raceway hosts two NASCAR races every year. The Waste Management Phoenix Open at TPC Scottsdale is arguably the most raucous and fan-friendly tournament on the PGA Tour.
And the city hosted two Super Bowls in seven years.
When the pieces fit together, the picture seems clear: Phoenix has carved out a place among the major host cities of the nation’s biggest sporting events.
The question now becomes: Can the metro area maintain its hot streak?
David Rousseau, president of the Salt River Project and chairman of the Arizona Super Bowl Host Committee, worries the current system of assembling a different committee each time a new event comes to town could hinder future attempts to secure and produce the events.
“That (system), at some point, is going to start to be this frayed, fragmented effort,” he said. “I think there’s some value in just continuing to improve upon and refine that effort and you can only do that if you have that one platform model as opposed to startup efforts every time a new bid opportunity comes by.”
Only one person served on both the 2008 and 2015 Super Bowl host committees. Several members of the 2015 committee have transitioned to the Arizona Organizing Committee that will produce the college football championship game. But the majority of the Super Bowl host committee members have taken other jobs and gone their separate ways.
Each loss means some institutional knowledge gained from valuable experience is siphoned off, but the lack of overall consistency in personnel from committee to committee doesn’t necessarily mean a drop in the quality of the event.
By all accounts, the 2015 Super Bowl was a major success for the Valley. Rousseau hopes the economic impact report being produced by Arizona State University’s W.P. Carey School of Business will show numbers that equal or exceed the half-billion dollars of direct-spend money he said was captured around the 2008 game.
“We’ve never been better in terms of customer satisfaction than we are right now but we don’t have a staff to go ahead and go forward and secure that commitment for future bids,” Rousseau said.
Tom Sadler, president of the Arizona Organizing Committee, shined a positive light on the current model but also acknowledged there might be a better way to operate.
“I wouldn’t say it puts us at a disadvantage when we are bidding head to head … because at the end of the day we’ll rise to the occasion,” he said. “Could it be more efficient to have an overarching commission overseeing this so we’re not reinventing the wheel every year? The answer is yes.”
Sadler is a busy man in the landscape of mega-events en route to the Valley. As president and CEO of the Arizona Sports and Tourism Authority, he is the head of the group that oversees the operation of University of Phoenix Stadium. He was also co-bid chair for the Final Four.
“I would like to see an organization that would respond to not just the big three mega events – Super Bowl, college champ, Final Four – but soccer events, entertainment events, to be an agency that’s nimble enough to be on the leading edge of competition with these other cities,” Sadler said.
Cities that perennially host major sporting events in the country are the competition: Miami, Tampa Bay, Atlanta, New Orleans, Houston, Dallas, San Diego, San Francisco and Indianapolis. The New York Super Bowl opened the door for so-calledcold-weather cities to host the game.
Minneapolis was awarded the game in 2018, to be played in a new domed stadium.
Those cities, as well as many others in the rotation for at least one of the big events, have one central sports commission to oversee the recruitment and coordination of events of all sizes. The size and scope of the commission varies from city to city.
Individual committees can be formed on an as-needed basis or the commission itself can double as the host committee, as is the case with the Dallas Sports Commission.
“The sports commission is the local organizing committee (for the 2017 Women’s Final Four),” said Larry Kelly, communications and marketing manager for the Dallas Sports Commission. “It varies event to event but on all the collegiate and amateur events that we bring in, we’re the local organizing committee. And then on the major professional events, depending on the event, there will be a larger committee involved.”
The oldest sports commission in the country is the Indianapolis Sports Corp. Founded in 1979, its website lists close to 30 full-time employees who run departments like business development, finance and events.
Miami’s sports commission is one of the smallest, though the city is obviously a prime destination. The staff is comprised of only two people but the commission’s large board of directors, which includes ESPN college football analyst Desmond Howard, helps bring in all types of events.
“We have a very wide array of board members so that helps bridge a lot of the gaps and helps bring everyone together,” said Miami-Dade Sports Commission Associate Executive Director Mathew Ratner.
Despite the size and duties of a specific commission, the NFL requires each host city to form a new stand-alone committee to oversee the production of a Super Bowl. Even with an all-hands-on-deck mentality, the effort required for success is enormous.
“It is a herculean task put together an effective bid,” Sadler said. “It’s beyond herculean to execute these events when they come out.”
Two themes run through the discussion when the word “fundraising” comes up among metro-area leaders of the sports community: Arizona could benefit from a state fund for mega-events similar to the one used in Texas. Fundraising on an event-by-event basis is not a sustainable model for the future if Phoenix wants to remain competitive with other markets.
“Our fundraising focus was on largely (the) business community and I think we probably raised on the order of 70 percent of our dollars of the $30 million that it took to host the game from our business community,” Rousseau said.
With three mega-events landing in the Valley in consecutive years, the concern is each host committee must try to raise money from the same small pool of potential donors.
“We just can’t year in and year out count on the support from the private sector,” Sadler said. “I think it’s possible to do it for a few years in the short run, but year after year would be very difficult, and that’s why we need the state’s help.”
Texas has adjusted and amended its model over the years, but the concept has remained the same. If an event hosted in the state can prove a certain level of revenue was generated during its run, the state will reimburse the host committee for a percentage of its operating budget on par with the money earned.
The host committee can then pass some of those savings on to the rights holder of the event to hopefully ensure the event returns in the future and also roll some of the money over to pursue subsequent events.
Said Kelly: “The Texas Major Event Trust Fund program has been a tremendous success story for the city of Dallas and its ability to attract and retain major sporting events and certain citywide conventions to the state of Texas, and to Dallas.”
Texas has $50 million authorized for the fund for the 2015 fiscal year.
While many sports leaders in Phoenix agree a state fund would be beneficial, if not necessary, they also agree the $50 million figure is probably too high for Arizona.
“I frankly think that’s too rich of a model,” Rousseau said.
The exact dollar amount feasible in Arizona is debatable, but attempts to create such a fund have already begun.
In 2014, former state Rep. Tom Forese, R-Gilbert, introduced a bill that would have created a $10 million fund, though he and others were quick to say the fund must be carefully regulated.
“It’s a very competitive environment when you’re chasing opportunities like this, so you want to give the state every competitive advantage and yet you don’t want to be throwing money blindly at anything,” said Forese, now a member of the Arizona Corporation Commission. “So the model that we had was a revolving fund, and it was a fund that could be used in order to provide that competitive edge and then be reimbursed by the proceeds of the event.”
The bill did not make it through the Legislature, but Sadler, who helped promote the bill, hopes to keep the issue alive.
“Given the state’s current economic status, it wasn’t a great time to enter into that conversation, but we’re going to keep it on the front burner and see if we can get something enacted,” he said.
The challenges of raising money in the Valley can be daunting, and proponents of the fund say it would help ease the burden on both the host committees and local businesses.
The Phoenix metro area is home to only four Fortune 500 companies, according to the 2014 list compiled by Fortune magazine. By comparison, Dallas and Minneapolis both have 18 and Atlanta has 16.
Steve Moore, president and CEO of Visit Phoenix, has the unique experience of having worked with the Texas fund during his 14 years at the Houston Convention and Visitors Bureau and 14 years at the San Antonio Convention and Visitors Bureau. He has overseen Visit Phoenix for 13 years and sees the need for some kind of state fund for events.
“Those states that enjoy mega-event funding have clearly placed us at a disadvantage. It’s no longer just that our good weather is going to bring mega events here. It has to be an organized, consistent, well-funded effort that is a great business model, that is inclusive and aware, and abides by the sunshine (law) of open government.”
Questions without answers
The reason for a central sports commission, which would recruit and coordinate major sporting events in the Valley, seem plentiful. However, the idea is rife with questions.
Alan Young, COO of the Arizona Sports and Entertainment Commission, which primarily organizes youth and amateur events, sees several outstanding issues that would need to be addressed.
“I think the main question to ask is, what do the citizens believe?” he said. “What is the overall concept of this? Is building stadiums a drain on the economic impact of the community or is it a positive, is it a plus? Investing in these events – is it a drain on the citizens, the taxation, or is it a good investment? Is it a good business decision or not?”
Despite numerous questions, Young is in favor of a unified sports commission and a state fund.
“I certainly believe and our commission believes it’s a great business decision to invest in these types of events but getting the Legislature, getting the citizens, to buy into this has always been a difficult task,” he said.
Steve Moore speculated about the uses of a potential state fund for event production.
“Is this (state fund) something you’d use for a national political convention?” he asked. “That’s a partisan event. Would you use that for it? Is there an answer to that? That’s not a sports commission issue, but it’s a mega-event issue.”
Tom Sadler raised the issue of the year-round responsibilities of the prospective commission.
“What does this commission do between bids and between executing these bids?”
Opinions and theories are abundant in the sports community, and the discussion is ongoing. The goal, though, is the same for all.
“When we have these national sporting events … they’re massive economic drivers and so it’s much more than just sports,” said Commissioner Forese. “This is a way to put Arizona’s best foot forward, and also it’s a way to have people come and take a look at Arizona and consider moving here or moving their business here.”