Prospects of WestWorld of Scottsdale appear to hinge on public investment

WestWorld of Scottsdale is at 16601 N. Pima Road. (File photo)

While the numbers show WestWorld of Scottsdale continues to function at an operational deficit, that’s not stopping officials there from asking for $879,500 worth of tax dollars to cover expansions and improvements event promoters say they can’t live without.

But some officials believe the investment is worth the cost. Citing the facility’s popularity with several high-profile events — and it’s potential to draw even more events and attract even more tourists to the city — some believe the old adage that to make money, you have to spend money.

Scottsdale City Council is expected to consider at its Oct. 10 meeting nearly $1 million in improvements to WestWorld of Scottsdale. The funds would primarily support two key events: Barrett-Jackson — The World’s Greatest Collector Car Auction and the Arabian Horse Show, both of which are held annually at the WestWorld facility.

The Barrett-Jackson auto auction. (file photo)

According to city officials, most of those capital improvements won’t be paid for with revenue from the city’s General Fund, but instead, will be covered by taxes derived from hotel rooms, gasoline purchases and local sales taxes.

Tourism officials, event organizers and city officials all agree both events bring hundreds of millions of dollars into the community year after year — an assertion they claim is consistently bolstered by numerous economic studies.

In Barrett-Jackson’s case, the numbers are undeniable as its car auction sales have a direct impact on sales tax remits, officials say.

“What we are looking to do there are (enter into) three independent contracts, (and) two of them have direct parallel ties and are significantly important to the Barrett-Jackson event,” said WestWorld of Scottsdale General Manager Brian Dygert in an Oct. 3 phone interview.

“We, the staff, are asking the city council to approve the use of tourism funds on a one-time expenditure basis to pay for the city side of this — with the exception we have by the $200,000 we have from Barrett-Jackson. If we can fulfill the needs of these two signature events then we can fulfill the needs of events that are beneath that.”

But while the ancillary economic impact of both Barrett-Jackson and the Arabian Horse Show are unquestioned within municipal chambers the numbers show the venue where both keynote attractions appear is operating at a deficit — and has been since fiscal year 2014-15, according to records obtained by the Scottsdale Independent newspaper.

In fiscal year 2015-16 WestWorld recorded $4,422,499 in operating revenue but accumulated annual operating expenses during the same period of time of that totals $6,202,145, which represents a $1,779,646 shortfall, a statement of operations shows.

Final expense numbers were not provided for fiscal year 2016-17, but data does show WestWorld of Scottsdale was provided a total General Fund budget of $6,921,135 but actual expenses reported for that time period were not provided.

However, this fiscal year, which started on July 1, 2017, WestWorld of Scottsdale has a total General Fund budget of $5,839,903 but is expected to be revised by fiscal year end to $7,209,427 once utilities costs have occurred.

Meanwhile, the city of Scottsdale continues to pay debt service on municipal property corporation bonds that total just over $54 million for the construction and expansion of WestWorld a handful of years ago. Debt service payments are:

  • In fiscal year 2013-14 the total debt service payment was $3,559,251.
  • In fiscal year 2014-15 the total debt service payment was $3,794,278.
  • In fiscal year 2015-16 the total debt service payment was $3,797,802.
  • In fiscal year 2016-17 the total debt service payment was budgeted at $3,811,082.
  • In fiscal year 2017-18 the total debt service payment is expected to be $3,793,591.

Scottsdale Councilman Guy Phillips says numbers aside, WestWorld of Scottsdale is a beacon for the community’s No. 1 industry: tourism.

“The city of Scottsdale has invested millions of dollars into the renovation of Westworld in the hopes of securing signature events from all types of entertainment, not just during the winter months but all year long,” said Councilman Phillips in an Oct. 3 statement.

Guy Phillips

“Westworld is now one of our greatest assets and will continue to bring tourist-related events, which significantly benefits our local economy. The success of Westworld is crucial to our tourism industry in Scottsdale and we are constantly looking for new venues and ways to improve the property so those venues can expand and grow as well.”

But to make money, you have to spend money, Councilman Phillips contends.

“With any capital project of this magnitude and scope we will have long-term debt but, of course, the reasoning is that eventually we will start seeing a greater return to debt ratio,” he said of the debt service attached to WestWorld of Scottsdale. “Scottsdale is a tourism city and we derive a large percentage of tax dollars from those tourists, which in turn, pays for the amenities our residents have grown used to. With the alternative being higher property and sales tax, we as a city should do whatever is prudent to nurture and expand tourism.”

Councilman Phillips says all roads lead to the tourism industry and that rising tide lifts all economic vessels.

“I expect Westworld to continue growing as a major contributor to our overall tourism tax base and I will work diligently to realize that goal. I am proud of Scottsdale and want the best for our residents,” he said. “Bringing unique and unparalleled events to our city is to me the best way to accomplish that. Just like the expansion of Fashion Square, Westworld will always be a work in progress as it expands and changes to the needs of new event producers as well as our established ones.”

An overview of WestWorld of Scottsdale that articulates the wide open spaces at the tourism event hub. (Photo courtesy of the city of Scottsdale)

The scope of work

WestWorld officials are seeking to pave what officials and event promoters call “G Lot” at a total cost of $530,000. Barrett-Jackson is kicking in $200,000 to help shoulder the costs.

In addition, a $160,000 project focused on upgrades for an electrical component in “Lot H” needs is being pursued to accommodate additional tent space for consigned cars during the Barrett-Jackson auction while WestWorld officials are looking to expand the RV parking pedestals.

“The city’s tent is at the end of its life so there is a point in the future that will leave Barrett-Jackson, how do I say, in a precarious situation,” he said of why a new power source configuration is needed and more pavement is set to be laid.

“And, as I understand it, there is some significant volatility in the tenting business right now — there is less tenting available and there are fewer people in the business. With all of that said, they are buying their own section of 200-feet-wide tenting, which begins to position themselves better when the city tent goes away.”

Mr. Dygert says the city tent is likely to be functional into spring 2018, which is based on council direction made in spring 2017.

“The electrical boxes are at a spot where the 200-foot-wide tent would be, so rather than trying to find an ideal spot for them, the simplest, most efficient thing is to underground them,” he pointed out of the above-ground electrical service stations at the site in question.

“This was based upon Barrett-Jackson’s request because of the volatility of the tent rental industry and this is buying us all some time,” he said of Barrett-Jackson shouldering the cost of paving and the tent expansion.

Mr. Dygert contends the city of Scottsdale has been chasing a national RV event he believes would come to WestWorld of Scottsdale if more RV spots were available.

“The limitation (to us) getting this national event has been our capacity,” he explained. “These improvements would begin to position me better to talk to new events. What we are trying to do is provide flexibility with our facility to help us stand apart.”

The golden goose

In the city of Scottsdale tourism is big business.

“Our firm has represented Barrett-Jackson for almost 20 years,” said Scottsdale Public Relations Executive Jason Rose in an Oct. 3 phone interview.

Jason Rose

“Barrett-Jackson, according to the most recent economic study, directly generates $167 million in economic impact. And, that is direct — that means multiple millions of dollars into the city of Scottsdale and WestWorld exposure on the world stage. One of the reasons it has increased its economic impact in the last decade is the number of consigning cars, which has been from 800 to 900 to 1,700-plus last year. The more consignees that come in the greater the economic impact.

Mr. Rose is co-founder of Rose, Moser & Allyn Public and Online Relations.

“This is a good thing for the Valley,” he said noting that while WestWorld is the site for Mr. Rose’s polo championships none of these improvements impact next month’s Bentley Scottsdale Polo Championships.
“These improvements were unanimously endorsed by the WestWorld subcommittee and they were unanimously approved by the Tourism Development Commission. This is a one-time capital improvement investment with the usage of bed tax funds.”

Councilman Phillips echoes a similar sentiment.

“The WestWorld subcommittee, to which I am a member, advises the city council on WestWorld matters,” he explained. “In the case of the recent suggested improvements we have weighted the pros and cons as well as taken feedback from other vendors and have concluded the improvements we will bring to council will allow vendors to expand their respective events, which in turn brings the city greater revenue.”

Experience Scottsdale President and CEO Rachel Sacco explains a major reason why hotel rooms get booked is for events like the Barrett-Jackson classic car auction and the world famous Arabian Horse Show.

Rachel Sacco

“Special events are of critical importance to Scottsdale’s tourism industry because they lure thousands of visitors to Scottsdale each year,” she said.

“According to Longwoods International, 9 percent of overnight visitors come to Scottsdale for special events, which is higher than the U.S. norm. WestWorld plays host to some of the area’s largest events including Barrett-Jackson Collector Car Auction and Scottsdale Arabian Horse Show, both of which draw more than 300,000 attendees each year.”

Ms. Sacco confirms tens of thousands visitors attend Scottsdale special events and they do spend their dollars within city limits.

“An Elliott D. Pollack study determined the 2016 Barrett-Jackson event attracted visitors from all 50 states and more than 15 nations and injected $167.8 million into Arizona’s economy,” she explained. “And, because WestWorld is activated throughout the year, there are even more opportunities for visitors to travel to and spend money in Scottsdale. For example, more than 11,300 people attended the Bentley Scottsdale Polo Championships last year.”

WestWorld gives Scottsdale another venue to realize tourism opportunities and providing investment into that venue is a smart thing to do, Mr. Sacco contends.

“Numerous investments have been made in WestWorld over the years to create a more desirable venue,” she said.

“WestWorld gives Scottsdale the opportunity to host important special events, and with additional investment, we could attract even more large-scale, tourism-driving events and secure the long-term success of our current signature events. Experience Scottsdale’s board of directors considers WestWorld a priority and supports the use of bed-tax dollars to make improvements to the venue.”

A view of an arena at WestWorld of Scottsdale where the National Cutting Horse Association will host events in both 2017 and 2018. (Photo Courtesy of the city of Scottsdale)

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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