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World Cup costs ranneth over

Publication Date: Wednesday Sep 20, 1995

COMMUNITY: World Cup costs ranneth over

In final analysis of last year's games, city says it lost $400,000

by Peter Gauvin

The city of Palo Alto was confronted with some sobering news this month about last summer's samba-laced World Cup soccer games.

World Cup officials had predicted a virtual bonanza for local economies at the nine United States venue locations. While figures show some shopping centers experienced up to 17 percent increase in revenue, when the final receipts were counted, the city actually ended up losing about $400,000 from the affair.

A half million soccer fans from around the globe attended the six games played at Stanford Stadium. But a city report indicates that the city's costs to prepare for its role in "the world's largest sporting event" exceeded revenues from hotel and sales tax, banner sales, and the reimbursement the city received from the World Cup host committee.

Vicci Rudin, Palo Alto's assistant to the City Manager, who tallied up the costs in the report, said the city's more conservative estimates were more accurate.

"The preparation time in order for the whole event to go smoothly was not readily apparent to the community," Rudin said. "We started preparing months and months before the games."

Far and away the city's largest expense was police time. The Police Department spent more than $545,000 trying to prepare in advance for the massive traffic jams on game days and other law enforcement challenges such as crowd control, security and public information. The department totaled more than 13,570 working hours for World Cup alone.

The city received $170,198 in reimbursement from the San Francisco Bay Area World Cup Host Committee to cover the estimated police and fire department overtime on game days, training costs and for the additional police assistance from Los Altos and Mountain View.

The deal was negotiated 18 months before the games. "We battled hard just to get that much money," Rudin said.

As far as revenues, the city netted $6,900 from the sale of World Cup banners that were put up around town. Two of the corporate sponsors were persuaded to donate some of the banners to the city to sell as souvenirs to the community. The proceeds have been earmarked to purchase new permanent soccer goals and nets for Greer Park and other soccer field improvements.

From the 1,800 hotel and motel rooms in Palo Alto, the city took in about $115,000 more from its 10 percent transient occupancy tax in June and July last year than it did in June and July 1993. However, only 12 of the 27 hotels that reported indicated that they had experienced significantly higher occupancy rates during the World Cup. The city estimates that World Cup was directly responsible for about $75,000 in increased revenue from the hotel tax.

"We did a lot of business (during World Cup), but this June and July we did about the same," said Dieter Schulz, general manager of the Holiday Inn. "Was it successful? Yes. Did we make a lot of money? No."

Schulz said their prices were too reasonable for the demand. "We didn't take advantage of the crowd. Next time, we'd certainly increase the prices. But it was the first time and probably the last time."

The World Cup is held only once every four years and last year was the first it was held in the United States in its long history.

Because sales tax is reported on a quarterly basis rather than monthly basis, it's a bit harder to gauge the World Cup's impact. But figures show that the city's 1 percent sales tax were substantially higher for liquor stores, restaurants, drug stores, service stations and miscellaneous retail sales.

In sum, the city figures approximately $98,000 in sales tax revenue was attributable to World Cup.

Town & Country Shopping Center benefitted most, as would be expected given its proximity to the stadium and a CalTrain stop. It also became the unofficial party spot for Brazilian revelers. Sales tax revenue was up by as much as 17 percent, figures show.

University Avenue and El Camino Real south of Page Mill Road also saw significant increases in sales tax, up to 9 percent. Stanford Shopping Center and California Avenue saw only slight increases.

While the World Cup crowds weren't a gold mine for most local businesses, neither did they appear to keep regular customers away as some businesses feared, Rudin said.

Overall, the city spent $763,000 on World Cup and estimates it received $363,000 in revenue and reimbursements, leaving a $400,000 balance.

However, there should be some lasting benefits to the city, Rudin noted. The worldwide coverage gave Palo Alto increased visibility that is apt to generate future business and tourism. Local businesses established new ways of working cooperatively. And approximately $500,000 was raised by the World Cup to be used as a legacy for youth soccer in the Bay Area.

Susan Frank, executive director of the Chamber of Commerce, agreed: The long-term good of World Cup should far exceed any short-term losses.

"From a pure number's perspective the city lost money, but from a long-term point of view--with the international exposure and the shear number of people that came to the city that had never been here before--I think that money will come back to the community.

"The city did an excellent job in a situation they had never been in before," Frank added. "This was the Super Bowl of all Super Bowls. It was like hosting six Super Bowls in a row." 

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