As we read in the Gazette-Times on Feb. 27, the Benton County Fair Board is considering a proposal to spend $2.2 million to convert its arena, largely used by locally supported groups (4-H, equestrian teams, dog agility groups, etc.), into a facility that will hopefully attract larger (presumably nonlocal, for-profit) customers.
If you didn’t read the article, the general notion is that spending $2.2 million (not sure where this money is coming from) may generate more revenue, though at the expense of local citizens who funded and have supported the facility since inception.
I definitely appreciate the importance of being financially sustainable and I’m sure others have and will discuss donor intent and other ethical considerations, so let’s take a moment to focus on the business plan.
The proposal aspires to earn an additional $83,000 per year ($110,000 proposed vs. $27,000 currently). This is a return on investment of 3.8 percent. At this rate, the fairgrounds will recoup the cost in 27 years, IF their building and operating estimates are accurate. I’m not sure what was budgeted for overhead impact; don’t be surprised to see the fairgrounds needing an “event coordinator” in the near future if this plan comes to fruition. If $2.2 million is readily available to the fairgrounds, a conservative portfolio can easily yield north of 4 percent, likely more than 5 percent without need for additional overhead and with much less risk.
There are two sides to every story. My hope is the Fair Board will better elaborate on the seemingly high-risk, low-return proposal.
Philomath (Feb. 28)