Barrett-Jackson auction

(Special to the Progress)

Scottsdale’s WestWorld has hosted the Barrett-Jackson automobile auction since 1989. In that time, event attendance has grown from roughly 40,000 to a peak of 350,000 in 2016.

Since returning to Scottsdale in 1989, the Barrett-Jackson Collector Car Auction – which begins Saturday – has been an economic boon for the city, but the relationship goes both ways.

Scottsdale has provided numerous financial incentives so the auction stayed put over the years.

The auction, started in 1971, came back to Scottsdale in 1989 and was held at Horseworld, now known as WestWorld, the city-operated entertainment venue located off the Loop 101 and Bell Road in northern Scottsdale.

“What began as tens of thousands of people increased to around 125,000 in 1999, and today some 350,000 people attend our Scottsdale event,” read a statement provided by Barrett-Jackson. “Our 30th anniversary at Westworld … is a milestone that will be celebrated by Barrett-Jackson.”

The then-four-day auction’s attendance was around 40,000 in 1988 and jumped to around 50,000 in 1989, according to reports published at the time.

The event, which now spans nine days, saw its attendance peak at 350,000 in 2016 before dipping to 320,000 in 2017 and 325,000 in 2018, according to figures released by Experience Scottsdale.

Despite that dip, Barrett-Jackson continues to see growth year over year in both the number of vehicles sold and the total money spent on them – a number that bodes well for the governments, including Scottsdale, that reap the sales tax rewards of those sales.

Last year, 1,721 vehicles were sold at the auction for approximately $106 million, according to Experience Scottsdale.

According to an economic impact study commissioned by Barrett-Jackson and the city in 2016, the auction company generated $167.8 million for the state that year.

Barrett-Jackson was responsible for $1,640,400 in primary revenues for Scottsdale, including sales, lease, property and bed taxes along with state shared revenue.

The bulk of the company’s impact came from the auction itself, generating $131.2 million in economic output for the state and accounting for $440,000 in sales tax revenue for Scottsdale, according to the study. The state and city also derive benefit from Barrett-Jackson’s headquarters and a car showroom, both located in Scottsdale.

“Barrett-Jackson Collector Car Week inevitably means big business for Scottsdale’s hotels, restaurants, bars and small businesses, as well as the Scottsdale taxpayer that sees all of this activity generating multiple millions of dollars in sales and bed tax revenue for the city treasury,” Barrett-Jackson said in its statement.

The company also pays rent to Scottsdale for use of  WestWorld. The company and city continue to operate under yearly extensions of a rental agreement signed in 2000 that calculates a base rental fee based off Westworld’s standard rent and multiplying the percentage of the facility used by the auction by the number of days of the event.

The contract also includes an escalator based on the consumer price index and a 20 percent “signature event” discount for WestWorld.

The overall rent paid by Barrett-Jackson has grown significantly over the years as the event has expanded to nine days and Scottsdale has increased its fees at WestWorld. The city is required by an agreement with Bureau of Reclamation to update its WestWorld fees at least every five years.

Under its contract with the city, the auction paid a base rent of $41,600 in 2000 when the auction was four days long.

In 2018, the now nine-day Barrett-Jackson auction paid $372,819.91 in base rental fees to the city, including the 20 percent Signature Event discount that amounted to $93,204, according to an invoice provided by the city.

Overall, Barrett-Jackson paid Scottsdale $694,003 in 2018 to host the auction at WestWorld, including base rental fees, labor, electrical fees and other charges.

The city has long recognized the value of signature events and provided monetary contributions to promote those events over the years. The city has spent over $500,000 in bed tax funds since 1990, in annual increments between $12,000 and $30,000, to promote Barrett-Jackson.

Other signature events that have benefited from these disbursements for advertising and promotions include the Arabian Horse Show, Sun Circuit Quarter Horse Show, Russo & Steele, Women’s Half Marathon and Scottsdale Fashion Week.

The event’s impact on Scottsdale has made Barrett-Jackson – along with the Arabian Horse Show, Arizona Quarter Horse Association and Bentley Scottsdale Polo Championships – one of WestWorld’s premier tenants.

“They all have financial commitments in our infrastructure improvements,” WestWorld General Manager Brian Dygert said. “They have been our best partners, clients and all of that.”

Repeat high-volume renters are critical to WestWorld.

 The facility has been a lightning rod of controversy in Scottsdale over the years, first because of the city’s decision to hand over operations to a private company in the late 1980s and early 1990s and then because of WestWorld’s inability to turn a profit after the city bought back control in 1996 for $4.4 million.

WestWorld operated at a $2.76 million deficit in 2016-2017, with operating expenses of $7.47 million versus revenues of $4.71 million. With debt service for several recent renovations and expansions factored in, that deficit ballooned to $6.57 million.

Though some of the recent renovations and expansions were applicable to multiple events held at WestWorld – such as the $52 million construction of the Tony Nelssen Equestrian Center in 2012 – others were done at Barrett-Jackson’s behest.

The TNEC expansion received much criticism from residents and City Council members as the original $42.8 million budget ballooned by nearly $10 million.

That increased cost included an extra $4.2 million the City Council approved in December 2012 to expand the center’s North Hall that housed the Barrett-Jackson auction, according to a published report in 2014.

In 2017, the City Council approved a plan to pave a dirt lot at Barrett-Jackson’s request. Craig Jackson, the company’s co-founder, told the WestWorld Subcommittee that muddy and dusty conditions were not desirable for the high-end auto auction.

The paving project also included the purchase of rubber matting that can be placed over the paved surface during equestrian events, according to a City Council memo.

The total cost was $530,000. Barrett-Jackson provided $200,000, which brought the city obligation to $330,000.

The city has also agreed to allow the auction continued use of a large tent that had drawn the ire of local residents and become costly to maintain.

The City Council directed city staff to sell the tent in 2016, citing maintenance costs, the need to replace the fabric every 10 years and resident feedback.

However, it ultimately agreed to a deal with Barrett-Jackson to keep the tent in place for an additional year with Barrett-Jackson paying the city $100,000.

In his proposal to the council, Jackson suggested leaving the tent in place long enough to let users continue to benefit from it but not so long that the city would have to replace the tent fabric at an estimated cost of $1.5 million.

The annual maintenance cost for the tent, with the prospect of replacing tent fabric removed, is approximately $40,000, according to city documents.

A city spokesperson said the tent remains in place at WestWorld on a year-to-year basis.

Though the tent agreement is a yearly one, the City Council has begun the process to ensure the auction stays put. As part of the 2016 tent agreement, the council directed city staff to begin work on a WestWorld Masterplan that includes a long-term lease agreement with Barrett-Jackson.

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