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Financial Woes Jeopardize Utah State Fair; Manager Asks State for Emergency Aide

2/17/2014

By Timothy Herrick

Photo courtesy of Grace Elizabeth

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In 2013, the Utah State Fair  promoted its 158th anniversary, but this year the ability to reach its 159th anniversary is now in doubt. Rainy days ruined the bottom line of last year's fair, an 11-day span that opened on September 5th. Last week, Michael Steele, Director, Utah State Fair, appeared before a state legislative committee to request emergency funding so the fair and its 65-acre Fairpark can maintain operations. 

The fate of this southwestern fair tradition now in the hands of a conservative state legislature, renowned for tight-fisted fiscal policies. In addition, Steele's funding plea is the latest in a series of financial woes currently afflicting the Utah event, a situation that may make the Utah legislators reticent to continue financial support for the fair.  A year ago, the Utah State Fair receiPhoto By Grace Elizabethved extra funding and now, concurrent with the emergency request, a study was released finding crucial fairground buildings required expensive repair.

$750 K Emergency
On February 6th,  Utah State Fair Director Michael Steele appeared before the Natural Resources Agriculture and Environmental Quality Appropriations Subcommittee to request $750,00 in a one-time, emergency appropriations  in order to sustain fair operations through this year. "I'm a tax payer myself, so it is a very difficult decision to go the legislature, but we had no choice," Steele Told Carnivalwarehouse.com.  "As I told the committee, this is our first time asking for this and the last place I want to be asking for this."

The issue of emergency funding is further complicated by the unique and even gray area the Utah State Fair has operated under since 1995, when the state incorporated the fair, mandating the event to make a profit. "We are very sensitive to the issue and this is the first we have asked for tax payer money since we've been incorporated," said Steele.

2013 Rainout
The Utah State Fair's descent into dire straits may be partially attributable to the idiosyncrasies of the Bee Hive State, but the issues of inconsistent state funding and severe weather ruining a fair's economical performance are all too familiar to most fair industry professionals.

Nine out of the 11 days of the fair were rainouts. "Some days were clear then the rain would come, it was unpredictable," said Steele. "The fair could never really get going."

The irony is that drought conditions continue to afflict the Southwest, including parts of Utah, but it seemed in September (the fair runs September 5th to the 15th), Mother Nature made an exception for Salt Lake City.

Fair attendance was down 65,827 from its projected attendance of 325,000 - a dip of 65,827, roughly the seating capacity of a University Football Stadium.  The fair projected a spending average of $12.20 per attendee - the average turned out to be $10.90 ($1.30 less than the budgeting forecast). Once the multipliers were factored in, the grim news was that the fair under-performed by $1,140,226.96.

Past & Present
This was the inaugural year at the helm of the Utah State Fair for Steele. Confident in Steele's abilities to improve the fair, the state fair committee approved a much needed $1.3 million for general repairs and upgrades. Fair officials dipped into a "reserves" account for these funds, which improved infrastructure at the fair. The spending supported the anticipation of a robust  2013 event. "We made improvements to bathrooms and some buildings, and general fair operations, said Steele. We were ready to have a great fair."

Steele finds himself in the awkward position of going hat in hand two years in row, asking for money from the same legislative body that mandated the Utah State Fair become a self-sustaining, profitable entity.

According to an article on KSL.com, the website of a Utah broadcaster, "Legislative staff told lawmakers the fair is "broke" and slated to run out of money at the end of March."

Steele quibbled with this reported prediction, insisting "there will be a Utah State Fair in 2014," although he would not elaborate on how operations will be sustained if the $750,000 is not approved. The Utah Legislative session runs 45 days, beginning on the 4th Monday of the month of January (January 27th). Extensions and special sessions are possible, but the reality is time is ticking away for the 2014 Utah State Fair.

Deadlines have also begun looming for the basic contracting with all the vendors, a process that usually begins by mid-February. According to Steele, all the vendor contracts are for one year terms, which means dozens of agreement are usually either made or renewed a the start of Spring. "We have a letter of credit so we can still enter into agreements for 2014," said Steele. "But we will delay or postpone this year's process, but only by a week or two."

Rainy Day Fund
Steele also said there is a "Rainy Day" fund of $300,000 that since 1995, is annually set aside by the Governor to cover shortfalls of the fair. The amount hypothetically covers about two days of  lost revenue. In what has become a tradition, "that money is set aside, but we never use it and it goes back to the Governor," said Steele. The hope is that legislators will take into account this track record of never using the set-aside funds, evidence of the fair's revenue generating capacity, when they consider fulfilling Steele's emergency request.

Condemned Barns
Just as the disastrous reality of the losses the 2014 fair experience were being realized, forcing Steele to plead for money before the committee, another drastic financial need at Fairpark was revealed. Soon after the 2013 fair, three large agricultural barns, more than a century old and which Steele claims are necessary for the fair, were condemned by building inspectors. "Without these barns, we cannot have a fair," said Steele.

In addition to the fair, the barns also bring in much needed revenue as a winter storage facility for boats and RVs - a loss of about $70,000. Josh Haines, director of the Utah Division of Facilities Construction and Management, has identified the rehabilitation of this trio of exhibition spaces as a top priority, estimating that $2.5 million will be for the project.

The $2.5 million is in addition to the $750,000 emergency fund request caused by the 2012 rain-induced shortfall and comes at the heels of the other unprecedented request of $1.1 million in upkeep repairs the Utah State legislature agreed to fill just one year ago. This confluence of unexpected expenditures, Steele calls, "a perfect storm."

"I am very distressed that we are being asked to bail out operations," said State Senator John Valentine, at the hearing. "I am not sure I support a large increase until you get these issues resolved,"

"We are working with Senator Valentine and sending him all the relevant materials," said Steele. "I understand his concern and we are addressing the issues he raised. We are sending information to all the elected officials."

Industry Support
Steele emphasizes that he has received support from many officials, who recognize the importance of the family friendly tradition of the fair to Utah taxpayers and the important role the event plays as a showcase and meeting opportunity for the agricultural community. "I'm told agriculture is an $18 billion industry in Utah," said Steele. "Agricultural leaders are among our chief stake holders and they are supportive of the fair."

Steele added that outside of the funding mechanism created in the complicated 1995 incorporation of the Utah State Fair,  agricultural components benefit from annual legislative appropriations. The Utah Dairy Council, Utah Beef Council, Utah Wool Growers Association, and the Utah Farm Bureau all sponsor exhibits at the fair, which also features a "Utah's Own" Food Court, serving locally grown and prepared foods from around the state.

"The Utah State Fair is a good fair and has a great following," said Steele. He cited that even with the meager attendance of the 2013 rainout, an outside survey company gauging customer satisfaction found a huge jump in three important indicators - cleanliness, safety and customer service. "We were up 80 percentage points over the 2012 fair, so the improvements we made was money well spent. "

The news of the Utah State Fair problems has reached the rest of the fair industry and Steele was gratified by the overwhelmingly positive response by the industry to his plight. "They are very understanding, and we have received a lot of support," said Steele. " Many of our vendors asked how they can help and are sending letters and calling officials. John Hanschen of Mighty Thomas Carnival, who ran our midway, has been calling and giving us great ideas. The industry has really responded."

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