Costs to host Tour have risen steadily

Cities like exposure but can’t always justify the expense

clambert@thetribunenews.comDecember 8, 2012 

Officials in cities throughout the state say the Tour of California cycling event has filled hotel rooms and generated millions in revenue, even though the cost to host a tour stage has been increasing.

But the exact economic impact the stage finish will have on Avila Beach and San Luis Obispo County is not easily calculated.

Some tourism officials said the area will benefit from the wide exposure the tour brings to an area. This year, the race was broadcast in 216 countries and territories around the world and watched by 2 million spectators during its eight-day course, organizers said.

“You do it this year, and it translates into additional business five years down the road,” said Mike Testa, senior vice president of convention sales and business development for the Sacramento Convention & Visitors Bureau.

The organization estimated that about 30,000 spectators watched the stage finish in Sacramento on May 16, 2011, the last time the city hosted the event.

The economic impact was estimated at about $3.6 million, though the number was derived from a formula that’s used to calculate the impact of convention groups, not sporting events.

San Luis Obispo and Paso Robles have hosted the tour several times in the past six years, but neither city studied its financial impact. Both cities decided not to participate in 2012 because of a $140,000 fundraising commitment for each.

“The tour brought notoriety to Paso Robles and significant exposure to overseas and bicycle enthusiasts,” Paso Robles City Manager Jim App said in an email. “From a community event perspective, it was ‘priceless.’ ”

The tour cost Paso Robles $125,000 in 2009 and $140,000 in 2011, with the cost paid entirely by private donations, App said.

He said Paso Robles was approached to host a 2013 stage but declined.

“It was an extraordinary amount of work and fundraising — all at a time when the organization and community resources are/were seriously stretched by the recession,” he said in the email.

San Luis Obispo spent about $16,200 to host a stage finish in 2006, said Lindsey Miller, marketing director for the San Luis Obispo Chamber of Commerce. Sponsors covered the cost of portable toilets and security, according to a city staff report.

The 2007 stage event cost about $30,000 to $40,000, she recalled. In 2008, the local organizing committee fell $20,000 short of its fundraising efforts and relied upon savings from the previous year’s sponsorships, a grant and existing city resources to cover the $37,300 in direct costs, according to a staff report.

San Luis Obispo didn’t apply to be part of the 2011 tour, saying it was “simply too expensive” at that time.

Solvang officials have also noticed a similar trend during the four years their city hosted the tour’s time trial stage.

In 2007, the city raised $68,000 through sponsorships and events. The cost jumped to $76,000 in 2008, $91,000 in 2009 and to $125,000 in 2011, Solvang City Manager Brad Vidro said. A 2013 stage was estimated to cost about $140,000.

“When they first came through, they paid for most everything,” Vidro said. “As the tour gained popularity, they started asking for more for the privilege of being a host city.”
Vidro added that Solvang struggles “with how much revenue we can gain to offset that. You’ve got to be creative in this time of economic strife.”

However, the event generated about $1.1 million countywide in 2007, the only time an economic impact report was completed, said Tracy Farhad, executive director of the Solvang Conference & Visitors Bureau.

She said increased tour demands, including requirements for additional hotel rooms, and the new south-to-north route of the tour, made it difficult to host the event.

However, according to past news reports, including in the Santa Cruz Sentinel, the Tour of California has not been able to break even and so hasn’t been able to lower its demands on cities.

“We’ve yet to cut our losses under seven figures, but we continue to support this race because of the impact we have on the state and the sport,” AEG spokesman Michael Roth said.

AEG, the Los Angeles-based company that owns the Tour of California, estimates that the tour has an estimated economic impact of $100 million on the state each year.

Santa Rosa officials also have seen costs increase since 2006, but the city views it as an investment, said Raissa de la Rosa, an economic development specialist for the city.

The city has used the weeklong race to help brand itself as a cycling destination. Over the years, several new bike shops and related businesses opened, and a popular annual ride — Levi Leipheimer’s King Ridge GranFondo — was started.

Hosting the tour on a near-annual basis took persistence and dedication, de la Rosa said.

“We started talking about revenue generation,” she said, “so that when people are frustrated … you can tell them, ‘These are the people paying for your road repair.’ ”

Santa Rosa hosted the overall start this year, at an estimated cost of about $550,000. About $100,000 came from the Santa Rosa Tourism Business Improvement Area, which receives an assessment from lodging businesses in the city. The rest was covered through private donations.

The start brought an estimated $6.8 million in direct and indirect spending, including money the organizing committee raised for rooms and meals, de la Rosa said. An additional $81,500 was raised in sales and transient occupancy tax.

Next year’s overall finish in Santa Rosa is expected to cost about $325,000.

The Tribune is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service