By Doug Epperhart
A phrase popularized by Mark Twain—“lies, damn lies, and statistics”—popped into my brain as I read the report on costs and “benefits” associated with the Michael Jackson funeral last July at the Staples Center.
Responding to a city council instruction, the report issued by the Chief Legislative Analyst and City Administrative Officer provides personnel costs, broken out by department. Total for the Jackson services: approximately $3.2 million. Most of that (nearly $2.8 million) was for police.
Based on the notion of charging only for that which is beyond normal staffing, the Jackson “memorial event” actually resulted in an additional $2 million burden on the city’s treasury. No mention, by the way, of those expensive lunches provided to city employees.
So much for the statistics portion of the report.
For some council members, this report is intended to justify the taxpayer subsidy of Jackson’s celebrity funeral. These individuals sought vindication by asserting that the 20,000 who showed up spent piles of money in LA restaurants, hotels, and shops.
In a July CityWatch article, I pointed out that each of the 20,000 would have to spend a lot of money to generate enough direct revenue (hotel and sales taxes, for instance) to cover the costs to Los Angeles. Based on the report’s $2 million extra cost, this would be about $100 per person.
The city’s share of sales tax is one percent. You’d need to go on a $10,000 shopping spree for L.A. to get $100. At 14 percent for room tax, you would have to spend at least one night in a $700 accommodation for the city to recover its extra expenses.
Save your outrage. Governments don’t care about actual cost recovery. They operate on a nebulous “economic benefit” theory that any money spent by anyone for anything within, say a 10-mile radius, should be counted.
Here’s what the report actually says (and my comments):
“LA Inc. conducted a survey of hotels and restaurants in the downtown area. Revenues from hotels totaled approximately $1.2 million.” (Over how many days? Does the $1.2 million count all revenue or just that attributed to the Jackson event?)
“Yellow Cab reported that business was better than usual bringing customers to and from the downtown area. Companies that offer tours of celebrities’ homes also reported a slight increase.” (Better than usual—by how much? Does slight increase mean one, two, or three percent?)
“Jack Kyser, Chief Economist, Los Angeles County Economic Development Corp., indicated that LACEDC did not conduct a study of the economic benefits of the event. However, based on the number of visitors that came to Los Angeles, including celebrities who likely stayed in hotels on the Westside and used transportation and other services, he estimated that revenues generated by the Memorial exceeded $4 million for business, restaurants and hotels throughout the city.” (Westside—I’m sure it’s “likely” that doesn’t include Beverly Hills, West Hollywood, or Santa Monica.)
Whether the report’s claims about economic benefits constitute lies or damn lies, I’ll leave to the reader.
Apparently, Kyser did not look deep enough into his crystal ball to determine how much of the alleged $4 million ended up in the city’s coffers. Let’s be generous and peg it at 10 percent—about $400,000.
No self-respecting accountant, attorney or business professional would accept this report. Yet L.A.’s elected officials will, no doubt, point to it as proof the city made money on Jackson’s memorial. After all, the chief economist of LACEDC said so!
(Doug Epperhart is a publisher, member of the Coastal San Pedro NC board and is a contributor to CityWatch. He can be reached at This email address is being protected from spam bots, you need Javascript enabled to view it ) ◘
CityWatch
Vol 7 Issue 95
Pub: Nov 20, 2009