Overview - 'The Money'

This will have to be a very incomplate section for the moment. The economics of large-scale, public projects is huge and complex (that is, when 'complexity' is not simply being used to obscure elements of slick deals from public view and understanding). We have a few things to say, and the CEAV Project proposal suggests a very different course of financing and sustaining its concept from that of CX/NBA plan (see The CEAV Project Proposal pp. ii and 5, for example)

In any case, it will be a matter for experts in the areas of land and project economics to provide the analysis which will determine the soundness of our approach (or, reveal weaknesses in the CEAV concept) and its general assumptions and intuitive insights into methods for long-term economic stability. We are not economists specializing in these complex issues, and we don't pretend to be.

What we do already know is that the economic underpinnings of the CX/NBA notion are shakey at best. A peer review by Gruen + Gruen Associates, which Cal-Expo commissioned, raised a number of serious reservations about the basic economic assumptions of their plan. (for a summary, see the Gruen + Gruen ERA Summary Review . For a full report, see our documents index .)

We also know that the economics of sports-complexes and arenas have been called into serious question over the past decade or so, especially in terms of public value and the long-term benefits to the municipalities that host them. Even with Cal Expo's assurances that the project will not be built with public funds, the 'hidden' costs to the public can be enormous. As well, 'tax-increment' schemes, which Cal Expo is including in its plan are, in fact, new taxes, much of which is destined for the pockets of the developers and investors, rather than the public. California, indeed, is reported to have the highest tax-increment debt in the nation. Many of the downsides to sport-complex economics is detailed in Dr. Judith Grant Long's report to the United States Senate Subcommittee on Governmental Oversight ( "Diversion of Public Funds" ) and is also included as an exhibit in the CEAV proposal document.

Evidentally, Cal Expo has chosen to ignore all warnings and is proceeding forward with uncommon haste. Frankly, we have difficulty in understanding their determination to proceed with a plan that is so economically doubtful from the outset. It would almost appear as if some flim-flam salesman has sold them a bill of goods that they cannot bring themselves to admit.

Be that as it may, CEAV will be asking for real economic appraisals of its own ideas; and we will not shrink from taking a hard look at every possible obstacle to a successful outcome. We will wish to know far more than Cal Expo seems to care to know about the economics of its current plan.

For one thing, we will be asking questions about the real future interests and needs of both the emerging public and emerging markets and commercial sectors upon whom the success of any large-scale project depends. Indeed, it is our assumption that a fatal flaw in the CX/NBA plan is their complete misjudgement of the public interest, and their assumpution that carnival entertainments, sideshow amusements (even future sports interest) are going to be sufficient to carry the day in the 21st century.

We think not. We believe, although such diversions and nostalgia will always garner some affection in our culture, things are changing dramatically. We believe the fairgoer of the future is going to want far more for their money (be they exhibitor or attendee) than a sales pitch and a couple of rides for the kids. We do not think "Weird, Wild & Whacky" (Cal Expo's most recent marketing ploy) is going to induce many future visitors to come to Sacramento and spend their time and money at the "Fair".

We also believe that Cal-Expo has overplayed its hand about the "weak economy" being the source of its present financial difficulties. We think its outdated ideas about what a State Exposition and Fair ought to be, coupled with its own inability to properly manage its affairs, have had far more to do with its failures than some vague 'out-there economic climate'. Undoubtedly, the economic mess has taken its toll. But the fact remains that good managment and foresight has been no less important for large-scale enterprises to maintain solvency than it has been for home-owners to keep their homes and pay their mortgages. In this, we have yet to hear a single word from the Cal Expo management or Board that suggests they take ownership of their own responsibility for the difficulties in which they find themselves.

We will have much more to say about this, here and elswhere, in the coming months. For now, we can only say that the bedrock of a solid economic foundation for Cal Expo will rest with the real value that the California Exposition & State Fair offers to its clients, be they exhibitors, fairgoers or the people of California. A little momentary entertainment, respite and a banner proclamming its buildings use "state-of-the-art green technology" simply aren't going to cut it in the future. The people of the 21st century will simply be smarter, more discriminating and more interested in real accomplishment than to buy into the transparent packaging and sales hype of the 20th century. Had the present managment of Cal Expo realized this, we wouldn't even have needed to come up with the CEAV Project. They would have come up with something like it on their own.