What's the cost of WEG to Kentucky?

View from the suite level, with the private seating outside each suite shown at left, on Wednesday, July 15, 2009 at the ribbon cutting opening for the new Kentucky Horse Park Indoor Arena in Lexington.  The $46 million arena seats 5500.  Photos by David Perry | Staff
View from the suite level, with the private seating outside each suite shown at left, on Wednesday, July 15, 2009 at the ribbon cutting opening for the new Kentucky Horse Park Indoor Arena in Lexington. The $46 million arena seats 5500. Photos by David Perry | Staff

Organizers estimate it will take as much as $70 million in private funds — mostly from business sponsorships and ticket sales — for a private foundation to run the Alltech FEI World Equestrian Games.

But public tax dollars are still footing much of the bill for the state and region to put on the most prestigious equestrian event ever held on U.S. soil.

A Herald-Leader analysis found that more than $107 million in state, local and federal money has been spent on improvements at the Kentucky Horse Park and other infrastructure projects specifically for the Games. An additional $151 million is going to projects that already had been planned — some for decades — but were expedited so they'd be finished in time for the Games.

In March, University of Louisville economist Paul Coomes estimated the economic impact of the Games for Kentucky at $167 million, with $96.5 million in direct spending on such items as hotels, restaurants and tickets. Additional indirect benefits consist of items such as increased taxes and impact on other industries.

The real economic impact won't be known until long after the Games. Economists say it can be extremely difficult to predict the overall economic effects of large sporting events.

Games supporters believe that the taxpayer dollars are an investment that will reap benefits for the state after the 16 days of WEG, in tourism dollars, new business relationships, an enhanced profile for Kentucky around the world and lasting improvements in roads and other infrastructure.

"It has the potential to be very good for Kentucky," said Rep. Bill Farmer, R-Lexington, a fiscal conservative. "The potential is people will want to come back to Kentucky, and we could be seeing residual benefits five to 10 years down the line."

But the public spending also has some asking whether a financially strapped state can afford or should subsidize an event taking place in Kentucky's wealthiest area, the so-called Golden Triangle between Lexington, Louisville and Northern Kentucky.

"I do not think the economic benefits are going to help most people, except the people around the Fayette County area," said Rep. Rick Nelson, D-Middlesboro. "I don't see any benefit the citizens of Bell or Harlan are going to get from this. ... It's good for Lexington; it's bad for everywhere else."

Most of the direct and related costs are for large construction projects such as new arenas, new roads and a $7.8 million biking and walking trail from the Horse Park to downtown.

The costs to taxpayers do not include other WEG-related public costs, such as security provided by Kentucky State Police at the Kentucky Horse Park, or the $375,000 the Tourism Arts and Heritage Cabinet has spent on travel and promotion since Kentucky got the bid for the Games in 2005.

The tourism cabinet will spend about $150,000 for part of the $1.6 million bill for the 25,000-square-foot pavilion called the Kentucky Experience, which will be a free exhibit about the state at the Games. Most of those costs have been raised through sponsorships, officials said.

In addition, the Cabinet for Economic Development has paid the World Games Foundation $110,729 for promotional materials and travel allowances, which include tickets, hospitality, parking and hotels for business people who might be considering moving their companies to Kentucky.

"The Games are an obvious venue to showcase Kentucky's assets and can help bring additional economic development opportunities to the state," said cabinet spokeswoman Mandy Lambert.

Horse Park construction

The bulk of public investment was spent at the Horse Park on Iron Works Pike, where new construction included a $40 million indoor arena and a $25 million outdoor stadium. About $14 million was spent to upgrade roads and sidewalks at the park.

Horse Park Director John Nicholson said the improvements were needed anyway, and the economic development is already reaping benefits. Mainly, the indoor arena now allows the Horse Park to host more events in the winter.

"We have booked a number of events that would not have been here if we had not had these facilities," Nicholson said.

In the past two weeks, the park has hosted a huge hunter-jumper horse show, the North American Young Riders championship, and a reining event, which have brought between 2,000 and 2,500 horses to the park. That's more than the 600 horses estimated to be here for the Games. Nicholson said previous studies have estimated that each horse can bring as many as three people in its wake, people who stay in hotels and eat in restaurants.

In addition, the 35 equine organizations with offices at the park employ 350 people.

"It has been our goal to make the Kentucky Horse Park the finest equestrian facility of its kind in the world and it's certainly arguable that we have achieved that," Nicholson said. "This is becoming an increasingly important component to our horse industry."

Most of the other WEG projects involve new road construction, including a $15 million widening of Newtown Pike between Iron Works Pike and Interstate 64/75, and the creation of an extra turn lane from I-75 onto Newtown Pike.

"We needed to facilitate all the traffic that will be going to and from the Horse Park," said Chuck Wolfe, spokesman for the Kentucky Department of Transportation. "We got the projects done that needed to be done; other things are being put off until afterwards in order to avoid construction during the Games.

Local funds of $726,785 are being used for 100 signs to guide visitors around Lexington and Fayette County.

Expedited projects

Many of the projects have been planned for a long time but were accelerated to be finished in time for the Games.

The $33 million face lift to repair streets and sidewalks of the core of downtown Lexington, including South Limestone, was finally scheduled in order to be finished before Sept. 25.

The section of the Newtown Pike Extension between Versailles Road and West Main Street is scheduled to be finished in the next two months.

"The millions invested in our downtown, airport, roads, trails and at the Horse Park will benefit this community for many years to come," Lexington Mayor Jim Newberry said.

Blue Grass Airport is getting $66 million in renovations, including a relocated runway for private planes.

That relocation was in the airport's 1995 master plan, said spokesman Brian Ellestad. The other renovations — a new entrance and curbside improvements — were also planned but finished in time for the Games. "The airport is the first impression visitors get when they arrive in the region," Ellestad said.

Scott Kelley, director of the University of Kentucky's Sports Marketing Academy, said that, at least in Lexington, everyone will benefit from the infrastructure improvements.

But overall benefits are tough to quantify clearly. "It's such a complicated thing to untangle," he said. "We're getting new roads and people are employed who might not have been. There's a lot of different pieces of the puzzle."

Ultimately, whether the public investment will pay off for the whole state won't be known until long after the Games are over.

Peter Hille, director of the Brushy Fork Institute, a community development program at Berea College, says he works with communities in Rockcastle County that are trying to connect their tourism to the Games, hoping that people will make the trip down I-75 during the Games.

"If we make this investment and only get one-time economic benefit out of it, then it won't help the state," Hille said. "If a whole slew of people come who have never been here and decide to come back, that's where I think you get the real benefits."

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