Dr. Christopher Keshock of the University of South Alabama gave a presentation to the Mobile County Commission last week showcasing the return on the taxpayers’ annual investment into Bayfest.
Unlike a majority of music festivals, Bayfest Inc. is a registered non-profit organization. It’s not affiliated with the city of Mobile or the county, though both entities do subsidize the festival each year with $243,000 and $200,000 contributions, respectively.
“Bayfest was originally meant to bring people downtown, but it has really grown into a tourism engine,” Bayfest President and CEO Bobby Bostwick said. “That’s why we hired Dr. Keshock. We wanted a really good and thorough economic impact study that we felt could hold up to any kind of scrutiny.”
Unlike many studies, Keshock’s was conducted over four years and took information from balance sheets, cash flow statements and a sampling of people attending the event. Keshock performed a similar study for the Senior Bowl.
“A lot of economic impact findings should be called economic benefit in most reports. To get a true number you have to subtract the direct spending amounts from the county and city,” Keshock said. “Some reports also do best guess estimates, use inflated multipliers and assume each individual is staying in and paying for a hotel room.”
Keshock said the figures produced from those studies are better than nothing, but don’t necessarily represent a true return on a city’s investment.
On average, more 200,000 people attend the music festival in downtown Mobile. According Keshock’s data, 57 percent of festival attendees live outside Mobile County and of those, 65 percent are traveling from outside the state.
The festival itself spends an average of $766,474 within the county each year, and based on survey data collected, each person visiting from outside of the county typically spends around $170.06 each night on food, beverage, lodging and parking.
“When city residents ask, ‘Why are we subsidizing Bayfest?’ — the return on that investment is justified by the tourism coming in,” Keshock said. “(The festival) generates between $280,000 and $320,000 in sales tax alone.”
In broad terms, the county’s return on its $200,000 investment is 41-61 percent, which is typically calculated by dividing net profit by total assets.
Because of the additional city sales taxes, the return on Mobile’s $243,000 investment is between 300-366 percent.
The range is reflective of several variables in the data, including in-kind tickets given out by the festival through sponsorships and promotions. Bayfest also allows children under the age of 12 into the festival for free.
Mobile County residents, though calculated separately, generate an additional $3 million in sales taxes. Seventy percent of residents surveyed said they would attend a music festival elsewhere if Bayfest didn’t exist.
In total, Bayfest generates between $20-24 million in the county each year and has generated more than $300 million in its 20-year history, according to the study.
Compared to the Hangout Music Festival in Gulf Shores, Bayfest generates slightly less income. But the Hangout Music Festival isn’t subsidized at any level by either Gulf Shores or Baldwin County.
“The services that are provided to (the Hangout) by the city and county, such as sheriff’s officers and sanitation, are reimbursed by the festival,” said Grant Brown, Director of Recreation and Cultural Affairs for the city of Gulf Shores. “We actually send a bill for the services and materials to the festival.”
Brown said city receives close to $700,000 in direct tax revenue for providing those services.
An economic impact study on the Hangout concluded the festival generates $31.2 million for the Gulf Shores area using a 1.5 multiplier. It also determined 90 percent of the festivals attendees are coming from outside of Baldwin County.
“There have been other reports submitted (on Bayfest), but I don’t know that any has been quite as complete and comprehensive as Dr. Keshock’s,” County Commission President Connie Hudson said. “That really helps us in terms of looking at our budget. There’s definitely a return on our investment.”
The commission is currently working on its budget for FY 2015, which Hudson said should be complete and approved sometime over the summer.
Hudson said she anticipates the county’s funding level for Bayfest will stay the same in next year’s budget.
Bostwick said the county and city’s contribution help sustain the festival, but only account for less than 10 percent of the festival’s $6-7 million budget.
According to Bostwick, the majority of the festival’s income is generated through the sale of tickets, which typically cost $60 for a weekend pass or $40 per day.
During its 20-year history, Bayfest generated a small stockpile of cash to help stage the upfront costs of the festival each year. But in 2013, Tropical Storm Karen hovered in the Gulf in the days leading up the Bayfest and caused a serious drop in ticket sales.
“Fifty to 60 percent of our tickets are sold the last eight days and last year during that period, sales pretty much stopped,” Bostwick said. “We lost close to a million dollars out of [a rainy day] fund and six of our nine stages weren’t put up at all.”
Despite the hit, Bostwick said Bayfest isn’t asking either of its public partners for additional funding.
Karen eventually came ashore and dropped a good bit of rain on Mobile, but Bostwick said the festival still generated some revenue despite a lapse in attendance.
“We very fortunate we had enough to go into this year’s festival,” he said. “We couldn’t stand many years like that. I don’t know anyone who could.”
Because only six of the nine stages were operating last year, several performers either couldn’t perform and some artists refused to travel to Mobile because of the tropical storm.
“Anybody that was scheduled last year and wasn’t able to perform has been sent a letter, and they will have the first option to play this year,” Bostwick said. “There’s only about three or four bands we haven’t heard back from.”
Bayfest 2014 is scheduled for the weekend of Oct. 3-5, but the lineup has yet to be announced.
Each year several local and regional bands are featured on the Launching Pad stages or are billed as opening acts for larger bands. These positions are applied for online.
A majority of those bands weren’t able to play last year, but Bostwick said they too have been extended an invitation this year.
“We’re going to fill a lot of those slots with the acts that didn’t get to play last year,” he said. “We just felt that was the right thing to do.”