WestWorld costs far higher than expected

Equestrian events involve far more labor costs than other big events at WestWorld, according to the city audit. (City of Scottsdale)

Scottsdale’s beloved WestWorld event center is costing taxpayers millions of dollars per year to operate.

That was the findings of an audit of the facility released to the council’s audit committee on Nov. 14.

The 386-acre equestrian and special event facility in the northeast corner of town is operated by the City of Scottsdale on federal land under an agreement with the Bureau of Reclamation.

It hosts a number of events that draw big crowds, including the All-Arabian Horse Show, the Barrett-Jackson Auto Auction and the Parada del Sol Rodeo.

The audit found that the way the facility management kept its books in the past, it looked like WestWorld is making money most years – though the 2019-20 fiscal year showed a loss $257,100.

However, WestWorld’s accounting practices did not take into account certain direct expenses such as certain overhead costs and asset depreciation, the audit said.

When that is taken into account, WestWorld is expected to fall short of paying for its operating expenses by an estimated $5.6 million dollars this fiscal year. That shortfall will be covered by the city’s General Fund.

There’s no way to figure how much the facility lost in previous years because staff have not tracked those expenses, City Auditor Sharron Walker said.

The main culprit? WestWorld’s fees are too low, according to the report.

“We recognize we want these events and all the economic impact that they have,” said Councilwoman Solange Whitehead, who sits on the audit committee. “Still, we are Scottsdale,. We can charge market rate. We’re worth it. It’s such a wonderful facility.”

The fact that WestWorld is not a money maker was not a surprise to Councilwoman Kathy Littlefield, who chairs the audit committee.

“It’s been a long time since WestWorld has had an audit,” she said.

An ideal situation does not include WestWorld making money, she said. Ideally, Littlefield would like to see it break even.

The real money to be made is in all the tourism the facility brings to town, she said. It brings thousands of people who stay in local hotels, eat in local restaurants, shop in local shops and find other ways to part with their cash in the city.

“It’s a huge money maker because it brings in very wealthy people,” Littlefield said. “You don’t have a string of Arabian horses and care for them and feed them and travel around showing them if you don’t have a lot of money.”

The report came up with four major findings. They are:

• Individual equestrian events are charged less for the use of WestWorld facilities than other events despite using $140% more facilities on average than other types of events. They also require nearly 174% more labor hours from WestWorld staff.

• Detailed service charges complicate the operational and billing process. In addition to facility charges, WestWorld has specific rates and fees for individual services, such as portable ticket offices, Internet connections, light towers, microphones, telephones and bleachers. Certain fees require more tracking and operational work than others.

• Westworld’s daily RV rates need further analysis to ensure they are based on cost recovery and market comparisons. WestWorld’s recreational vehicle parking rate is $35 per day.

That is cheaper than virtually every other comparable trailer park in the area. For instance, Desert Shadows RV Resort in Phoenix charges about $72 per day and Pleasant Harbor RV Park in Peoria runs about $66 daily.

• When proposing its current fiscal year rates and fees, WestWorld management stated on budget forms that the recommended fees would cover 94% of its operating costs.

However, the underlying rate analysis only included budgeted direct costs and did not incorporate city overhead, depreciation or amortization for equipment and the facilities.

Some capital improvement projects represented significant city investments, such as expanding, enclosing and climate controlling the Tony Nelssen Equestrian Center.

The committee requested an update to the situation once the report’s recommendations are implemented.

Those recommendations are:

• Develop a sliding scale for discounting facility rates based on the amount of other related guaranteed revenues and prepare and retain analyses that support additional discounts provided.

• Evaluate ways to include the routine event services into facility rates, such as telephone and Internet or require guaranteed minimums, such as horse stall counts, to streamline the operational and billing processes.

• Conduct a more thorough recreational vehicle rate analysis including other event facilities and the local market area. As well, evaluate whether recreational vehicle fees are needed to address no shows and extensive cleanup activities.

• Use full-cost calculations when developing facility rates and fees. These full-cost rates should then be evaluated against the competitive market rate limitations before recommending rates and fees for the city council’s approval.

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