Whirled pumps up BOK Center impact

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I happened to get a look at Sunday's Tulsa World, which I don't often do, and noticed the front page headline: "BOK Center pumps up tax revenue".

The implication of the headline is that the opening of the BOK Center in September resulted in a dramatic increase in local sales tax revenue over previous years.

But that's not what the story says. The story is that, for ticket, concessions, and souvenir sales for events held in September, the BOK Center remitted $428,498 in sales taxes to the Oklahoma Tax Commission. What we don't know from this story if how much of that represents new dollars coming into the City of Tulsa and Tulsa County from out-of-town visitors and how much represents the reallocation of the disposable income of local residents, who would otherwise have spent the money at other entertainment and dining establishments.

To get an answer to that, we have to look at another story in the same edition, in which we learn that Tulsa County's October sales tax check, generated by sales in late August and early September -- the first sales tax check that would reflect the BOK Center -- are up only 3.1% over last year at the same time. Receipts from earlier in the summer were up 12.6% (May-June), 7.4% (June-July), and 10.7% (July-August) over the previous year.

While sales tax receipts grew from $7.7 million to $8.4 million between July-August and August-September in 2007, sales tax receipts actually fell over the same period in 2008, from $8.6 million in July-August to $8.4 million in August-September.

What about the City of Tulsa, which owns the BOK Center? The August-September receipts were down 1.4% from the previous month, from $18.6 million to $18.3 million.

It's not conclusive proof, but those numbers would suggest that the BOK Center is not yet bringing new dollars into Tulsa.

(This webpage has the Oklahoma Tax Commission's monthly reports of sales tax payments to cities and counties, going back to 2002.)

As we drill down in the BOK Center story, we learn that the BOKarena finished its first quarter of operation over $500,000 in the hole:

For the first three months, the venue brought in $944,623 in income through rental and service charges, facility fees attached to tickets, food and beverage sales, and other sources.

While it amassed $1,573,096 in operating expenses during that same period, the building was not operational the first two months of the fiscal year.

We'll have a better idea whether the arena will make or lose money after the next quarter. The revised profit projected for the year is already lower than the original projection by almost $11,000.

Remember that the arena was justified in terms of economic growth for the City of Tulsa and the entire region. The impact should be measured by comparing sales tax growth rates for the city and county to the overall rates for the state and to historical trends, adjusting by any revenue that operation of the arena returns to or drains from the city coffers.

The BOKarena may yet bring in the promised growth -- although the experience of other cities suggests otherwise, and the lack of development near the arena isn't promising. Whether it does or not, the Whirled's story presented the initial numbers in a way that seems intended to make the public believe that it already has.

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5 Comments

mad okie Author Profile Page said:

The BoK will never bring in "new" dollars to Tulsa as it is a loss leader. problem is we paid more for it than we will see in return. who cares if we bring in $1,500,000 in out of town money if it cost us $200,000,000 to get it.

Bob said:

The Arena will provide a form of "economic growth"......it will grow the bank accounts of the Manhattan Construction Co. and Flinto, the primary beneficiaries of the heavy construction project.

They split the $200,000,000 in new tax gravy.

Twice turned down by voters in 1997 and 2000, thanks to new Tulsa County Commissioner Karen Keith as the 2003 Vision 2025 salesperson, we have the privilege of paying for the Arena for the next 9 more years.

Enjoy!

sbtulsa Author Profile Page said:

there are two aspects to judging the arena. one is increased tax revenue, the other is the operating profit or deficit it incurrs.

as far as the deficit, I agree we will have to wait until we have a full quarter of events to go with the full quarter of expenses.

but the idea that taxes on ticket sales and the entertainment district type jobs, those in restaurants and bars are somehow ecconomic development is ridiculous. No one moves to Tulsa to take a job in those kind of establishments. The owners do, but employment in them does not generate enough income to buy a house, new cars regularly, etc. you might get that with a two paycheck household?

I haven't seen that new hotel built yet. I haven't seen a lage scale movement to downtown residence. I've been to two events at the facility and I didn't stay for food (ate a sandwich in the arena not outsdie), drink (I don't) or any other form of entertainment. And I hate the parking situation from personal experience. I will overcome that to see TU/OU in December.

The World lost credibility with this headline.

Bob said:

Public facilities solely paid for by taxpayer monies do not conform to normal business Return-on-Investment models.

If computed as a Return-on-Investment, the net profit generated by the Arena versus a $200,000,000 taxpayer "investment" is a terrible ROI.

The principal reasons a plethora of arenas have been built around the U.S. is really rather simple:

Very powerful alliances of:

--Heavy construction and associated architectural companies;
--Sports stadium/arena promoters like HOK Sports;
--Team owners; and,
--POLITICIANS, who love to keep the concrete flowing because it keeps their campaign contributions flowing, and associated grafting possibilities flowing for them and their cronies.

Really, a very simple business model called:

Robin Hood-in-Reverse.

Jeff Shaw Author Profile Page said:

C'mon Michael don't spin the numbers like that.

Many of us citizens don't care to have the real numbers in front of us. We only want the numbers that make us feel good. That is all that matters.

When we are faced with a property tax increase or sales tax increase to pay for maintenance on the arena after the Mama Bear Street Plan has been "completed," we will campaign against the naysayers who won't put Tulsa First, and say Yes to grafitti removal and foundation repair.

Does anything ever really change?
Predictable anyone?

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This page contains a single entry by Michael Bates published on November 17, 2008 11:19 PM.

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