In the past year, the Michigan Economic Development Corp. shelled out more than $1.1 million in state money to help attract and host eight big events, including Jehovah’s Witnesses conventions at Ford Field in Detroit and the soccer match earlier this month between Manchester United and Real Madrid at the University of Michigan’s Big House.
On Tuesday, the Michigan Strategic Fund authorized spending $1 million more to extend the state’s Large Special Events fund through September 2015. It was created in April 2013 to make cash available to help Michigan communities compete against other states and cities in attracting major events.
Why do we spend public money on stuff like this? Because many other states, notably Texas, shell out big bucks to bring in big events. And the payoff in hotel-motel and other taxes from out-of-state visitors is substantial, according to MEDC figures.
In a memo, the MEDC said it had committed $1,130,878 so far to help attract and host eight national and multistate events for a total of 68 event days.
The amount of state tax revenue expected to be generated by those events was $20,103,387. That calculates to a handsome yield of nearly 18-to-1 — if we accept as gospel that the Jehovah’s Witnesses might have spurned the state without the deal-closing carrots, or that the big soccer game wouldn’t have come to Ann Arbor otherwise.
There’s room for doubt there, of course. But as usually happens, it’s difficult to sit idly by when competing states and cities are trying to grab all the goodies.
Key criteria for events worthy of support would be attendance over several days — on a sliding scale — with at least $5,000 for metro Detroit events, $2,500 for Grand Rapids and as little as $800 for some other markets, said Larry Alexander, president of the Detroit Metro Convention & Visitors Bureau.
At least 50% of the money predicted to be spent at the event must come from non-Michigan businesses or residents.
The state support varies with the size and complexity of the events in question.
For the two Jehovah’s Witnesses conventions, each brought about 45,000 people to Detroit, the bureau got $300,000 in state money to help with the cost of hosting the groups.
The Ann Arbor Area Convention & Visitors Bureau got $40,000 to help with a welcome celebration in town the day before the Aug. 2 Guinness International Champions Cup soccer game that packed U-M’s football stadium.
To better compete with other states, Michigan officials at first contemplated legislation to create a similar fund, but opted instead to work out a memorandum of understanding with MEDC chief Mike Finney.
The MEDC would provide $1 million a year, and the fund would be administered by the Detroit bureau — but all convention and visitors bureaus in Michigan would be eligible to receive support.
“Texas is the granddaddy of all states in this area, with several different specific cash funds they use to close deals for athletic events, large conventions, motorsports,” Alexander said, “and until recently, we had nothing like that.”
For example, when Detroit sought to host the 2009 NCAA Final Four basketball tourney, Alexander said, Rick Wagoner, then the CEO of General Motors — and a former Duke University basketball player — chaired the host committee and raised $4.5 million in private donations to cover the cost of hosting the big dance.
