WestWorld of Scottsdale is having its worst financial performance since 2001 as its operating costs have increased by more than eight times from a year ago.
Scottsdale projects the cityrun special-events and equestrian park will have a revenue shortfall this year of $627,148 and $1.3 million next year.
Amid the financial woes remains a lot of uncertainty surrounding the future of the 120-acre facility best known as the home of Barrett-Jackson Classic Car Auction and Scottsdale All-Arabian Horse Show, among other events.
The Scottsdale City Council met behind closed doors Tuesday to discuss negotiating strategy and possible agreements for the sale or lease of property related to Barrett-Jackson, which has renewed its contract for the 2008 event but has not inked a long-term deal with the city.
A June 2005 joint statement between the two sides said the goal was to reach an agreement within three months, although that never occurred and Councilwoman Betty Drake said she saw Tuesday’s closed-door meeting “as restarting the process as far as the council is concerned.”
Earlier this month, the future of an $80 million multipurpose building that would be used by Barrett-Jackson and others — an idea that’s been on the table for years — was again put on hold by the council until it determines how to proceed with Barrett-Jackson negotiations.
Some council members proposed pushing that decision off to the voters in a potential November 2008 bond issue election.
Instead, the council chose to spend $2.5 million to replace the controversial — and damaged — American flag tent covering and make other improvements, such as horse barn repairs as it continues to try to balance the sometimes competing interests of the equine community and major WestWorld events that have taken on a greater role in recent years.
As the negotiations drag on, WestWorld continues to operate without a general manager following the resignation of Brad Gessner in January 2006. Gessner was credited by council members for reducing the annual operational deficit from more than $763,458 in 2001 to a low of $77,580 in 2006 as the center added more high-profile attractions, such as Cirque du Soleil, the Home and Garden Show and the McDowell Mountain Music Festival.
The facility has always shown operational losses for the city since it took control a decade ago, although the gap over recent years was narrowing, only to go in the opposite direction this year.
The City Council plans to discuss the proposed 2007-08 operational budget on Thursday.
“It’s a difficult area to break even or come close,” Scottsdale City Manager Jan Dolan said. “We keep trying to have the facility maintained to fit the need of the users and fees set in such a way that it won’t drive users away.”
Scottsdale Councilman Bob Littlefield said WestWorld should operate as an enterprise fund, such as water or the airport, that sustains itself without help from the general fund.
“It should be an enterprise fund, with as much money that is running through that place,” Littlefield said. “Why shouldn’t it at least break even?”
Tax revenue collected at Scottsdale hotels and restaurants as a result of visitors to WestWorld is not included in the facility operations.
Scottsdale chief financial officer Craig Clifford said the increased operational costs are likely a result of fewer highprofile events, such as Cirque du Soleil. Clifford said he did not think the facility should be turning a profit.
“It’s not an enterprise fund and it never will be,” Clifford said. “The rates and fees are not designed to pay operating and indirect costs.”
The main issue hanging over the future direction of WestWorld is the potential long-term deal between Barrett-Jackson and Scottsdale. Craig Jackson has asked for the city to sell up to 9 acres of land so he could build his own auction house, television studio and corporate headquarters.
Jackson is also seeking a guaranteed 20,000 parking spaces that could withstand rain, spokesman Jason Rose said, and updated telecommunications infrastructure.
Other issues that the sides must agree on relate to fees, liquor licenses, scheduled dates of events, length of the deal and a potential penalty if the auction is sold or canceled.
Dolan said negotiation options were to be presented to the council during the closed session, which she said was necessary because of recent individual or small-group meetings between Craig Jackson and members of the council.
Although the vote was unanimous to hold the session, some council members complained that the city has not been forthcoming with reasons for the drawn-out nature of the negotiations.
“I prefer to have a public presentation and dialogue with Jackson and other interested parties before we go into executive (closed) session,” said Councilman Tony Nelssen, who said the city has lost the public relations battle.
BARRETT-JACKSON OFFER TERMS
• Purchase up to 9 acres of cityowned land to build an auction house, television studio and corporate headquarters
• Up to 220,000 square feet of building space
• 20,000 guaranteed parking spaces
• Updated telecommunications infrastructure
• Flexibility of event dates