Zurik: Under the hood of Louisiana’s Indycar boondoggle

Zurik: Under the hood of Louisiana’s Indycar boondoggle
Published: Feb. 25, 2016 at 7:16 PM CST|Updated: Feb. 26, 2016 at 8:27 AM CST
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The study's breakdown of the direct and indirect economic impact from Indycar
The study's breakdown of the direct and indirect economic impact from Indycar
The study's breakdown of average daily spending by local and non-local spectators
The study's breakdown of average daily spending by local and non-local spectators

NEW ORLEANS (WVUE) - You may want to buckle up; we're about to tell you about millions of dollars of your money, poured into the tanks of high-speed automobiles - an investment that left taxpayers in the dust.

This big investment came with a big promise from Governor Bobby Jindal: a $100 million economic impact on Louisiana.

"So they think they've got successful races already," then-Gov. Jindal said in May 2014, "but our commitment, our promise, our prediction is that their best race ever, in the entire series, will be held right here in Jefferson Parish, Louisiana."

The state showed the Indy racing series the money - millions of dollars - to lure the Indy Grand Prix of Louisiana to the NOLA Motorsports racetrack in Avondale.

But Jindal's prediction and reality don't align.

"That's been a poor use of our money," says state Senator Dan Claitor. "In my mind, no, it wasn't worth it."

Claitor's talking about the state's commitment to NOLA Motorsports park at Avondale, for an Indycar race.

The race for your money began in 2014, at a legislative meeting in Baton Rouge. Lawmakers voted to give $4.5 million to bring Indycar to Jefferson Parish.

"We're taking money away from the disabled community and giving it to motor sports?" asked Claitor at that committee hearing.

"The answer to your question, senator, is yes," a colleague responded.

Claitor says his colleagues picked cars over caring for people in need. "I'm flipping through the amendments rather quickly, taking a look," he says, "and I see that funds for the developmentally disabled crowd has been cut and that funds have been inserted, as it relates to the NOLA sports track."

Here's where the money went:

  • $1 million to Indycar for a sanction fee
  • $200,000 paid for advertising and marketing
  • $700,000 went to the event promoter, Andretti Marketing
  • $2.6 million went toward improvements to the track, to make it Indycar-ready.

The thought was that the investment would be a long-term one: The race would return to Jefferson Parish, it was hoped.

Instead, Indycar at Avondale was one and done; they have no plans to come back.

"You've got to look at the economics of it," Claitor warns us. "What we put up, do we get a fair return for it?  What we put up for this racetrack, we obviously did not get a fair return."

Every year, the state gives away millions of dollars of money just like this to events, projects with little analysis.

"That's where a lot of people have some heartburn," says Lt. Governor Billy Nungesser, "where we gave this group a bunch, we gave this group a lot of money... How do we justify that, and what is the benefit for the event and for the state."

The legislature decides where such monies are spent.  But in many cases, those funds come out of the lieutenant governor's budget.

"They put the money in the budget for me and tell us where it's going to go," Nungesser says.  "You know, Bayou Classic, $250,000; Fore!Kids Foundation, $314,000."

Nungesser wants his office to have more control over its own money. "We have asked to eliminate the pass-throughs so we can, in good faith as our job in the lieutenant governor's office, bring those tourism officials together and decide what's the best way to promote Louisiana with the limited funds we have," he tells us.

Annually, lawmakers send $250,000 of those limited funds to the Bayou Classic to pay for television advertising.  The Southern University Foundation receives the money; they never responded to our question about the benefit to taxpayers.

Another $315,000 goes to the Fore!Kids Foundation, which puts on the Zurich Classic golf tournament.  Records show part of the purpose is for the lieutenant governor's office to purchase a suite for the tournament. Last year the office failed to use 32 of the tickets and 27 parking passes - taxpayer money, spent by the legislature that essentially went unused.

Nungesser has only just finished his first 30 days as lieutenant governor.  In response to the Zurich Classic tickets, his office told us, "With the significant number of tickets received, it is not surprising that all were not used."

"In the past, we've been very sloppy about our approach on these things and haven't looked them on a case-by-case basis," Claitor says, "and have just said, 'We've got plenty of money and we could do these things.'  So it's a great time to put sunsets on all these things, and to review them."

A review of the Indycar records raises more questions. The race had to submit a post-event economic impact report to the state. A Boulder, Colorado company estimated a $22 million impact.

We had Tulane economist Toni Weiss review the study, which claims to be based an attendance of 32,000 people over the long weekend - race activities spanned three days.

Media reports estimated race day attendance, one of the three days and normally the highest attended day, between 8,000 and 10,000.  Weiss says the report assumed a new, unique set of fans showed up each day.

Essentially, the study's authors suggest that there were 10,000 people at the track on the first day, a different set of 10,000 the next day, and yet another group of 10,000 on the final day.

"No, it doesn't happen that way," Weiss tells us.

The study splits the attendees into three groups: locals, non-locals who didn't stay overnight, and non-locals who stayed. And when you are doing an economic impact study, you generally see that non-locals spend more than locals.

But this study figures locals spent an average of $701 per day; non-locals, $526 or $593, depending on whether they took hotel accommodations or not.

"I just find those numbers to be really hard to believe," Weiss says of the study's conclusions.

To calculate the overall economic impact, the study factored in locals spending money shopping, on entertainment and on food and drinks.  So, if a local race watcher went to dinner that weekend, went shopping for clothes or paid a club cover charge to hear a live band, the Indycar race got credit for the money spent - which Weiss suggests helped inflate the race's economic impact.

"All those dollars that they are attributing to this car race, by those locals, you just can't," she warns. "They're going to spend those dollars somewhere else."

The report even calculated that locals spent $61 a day - for transportation.

"Where are they getting a $61 transportation figure for locals, for driving their own cars?" Weiss wonders.

According to this study, transportation spending cost more for locals than non-locals.  Locals also spent more on food, more on shopping, more on entertainment and more on incidentals.

"None of these numbers seem to make any sense," Weiss says.

The study reports 10.6 percent of interviewed spectators said they either planned to or had already visited New Orleans' Garden District - roughly a 30-minute drive from Avondale. That would suggest that some 3,200 people went to the Garden District to take tours.

Weiss laughs at the suggestion. "That's a lot of people walking around the Garden District," she says.

The company that did the study, Sponsorship Science, told us by email, "Our unique spectator count is over a three-day period, not just the race… The $22 million includes direct and indirect economic impact. Within the indirect impact you also have money invested in the facility."

The group also told us the question about going to the Garden District did not assume attendees definitely took a tour. They say some did in fact answer they had already been, while others revealed they planned to go to the Garden District.

Nonetheless, Sen. Claitor thinks the legislature made a mistake with this $4.5 million investment.

"When the legislature or the governor makes a mistake, we don't always like to go back and review it," he acknowledges. "But you can always learn something from it."

Again, the state estimated the economic impact of the event at $100 million. The study measured it at $22 million - a number our economist still called high.

For years, lawmakers have been living life in the fast lane, sending money to events and projects with little review of whether the spending has been worth it. Some elected officials say it's time to slam on the breaks and evaluate what taxpayers are getting in return.


Data tables originally presented by Sponsorship Science appear in this report.

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