Did ‘Made In America’ Make America Anything?

September 4, 2012 — 1 Comment

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This past weekend was a big one for Philadelphia. The city played host to Made in America, a two day music fest, which was billed as something like a huge block party. The slate of entertainers, headlined by mega-star Jay-Z (yes, Beyonce was in attendance, too, although she didn’t perform), also included such acts as Pearl Jam, Eve, Calvin Harris, Drake, Run DMC and Philly’s own Jill Scott – even President Obama made a surprise onscreen visit. The fest drew 40,000 to the Parkway on what is traditionally a slow tourist weekend in the City of Brotherly Love; the event was also streamed live via YouTube to those who didn’t make the trip.

When it was over, Jay-Z told the crowd that he’d see them next year… but will he?

Despite ticket prices in the range of $75 (for a Single Day Earlybird pass) to $350 (for a two day General Admission pass), Geoff Gordon, regional president of Live Nation, who booked the talent and promoted the concert, indicated to the Philadelphia Inquirer that the tour would still be “in the red.” What wasn’t clear was how much of the loss would fall to the City.

For his part, Philadelphia Mayor Nutter was pleased with the event, noting healthy ticket sales and packed hotels and restaurants. More importantly, perhaps, for a day or so, Philly was the height of musical cool (Bruce Springsteen was also in town over the weekend, playing at Citizens Bank Park). The City was literally atwitter – despite a temporary tech shortage brought on, according to Verizon, by too much cell phone usage – with the sounds of music. And that might be worth something. But how do you value that something? And is it worth the tax dollars used to pay for it?

It’s a bitter pill for many Philadelphia taxpayers to swallow in a climate where belt-tightening has been preached for months. Cuts have been particularly drastic over the last year with respect to services, including in education: teachers have been let go, schools have been cut and support staff, including security, have been fired (you might remember my reaction to the cuts at our school). As spending gaps loom, cuts to the firefighter budget are still being considered, as well as slashing funding for the streets department and recreation centers. To pay for continued services, City Council has passed a recent budget, which calls for an increase in property taxes of 3.6%, the third property tax increase in three years. Also slated to increase? The City’s Use and Occupancy taxes, which are borne by local businesses.

This means that taxes are increasing as cuts are increasing. It has been painted as a dire picture if we don’t acquiesce to the cuts and tax boosts. But apparently not so dire that we can’t pitch in to pay the costs associated with a major, for profit event. Nobody’s talking numbers when it comes to what the City is bearing in terms of costs but it’s clear that Philadelphia took something of a hit. Organizers are quick to call it an investment, saying that packed hotels and restaurants can only mean good things for the local economy.

It’s the same argument that professional sports teams make when asking for taxpayer funding for stadiums (remember the Vikings?) and developments like casinos (a la Donald Trump‘s tax credit coup). The thought process is that spending money now will lead to bigger dollars pumped into the economy later. But is it accurate? It’s hard to say especially when those dollars tend to be paid out – at least in a public way – to celebs, sports stars and entities located outside of cities, counties and states footing the bill for these events.

But what about the intangibles, you know, the buzz factor? Is the “buzz” from this weekend’s concert going to rub off on other artists and tourists? Did Jay-Z’s party on the Parkway make you want to come hang out in Philly?

That’s the part that’s hard to measure. What sort of value does being the cool kid – if only for a day or a weekend – actually bring?

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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