The Cavendish Beach Music Festival is expecting a crowd of 25,000 people to attend it's concert. Before I get into some obvious reasons of why this concert is good for PEI, here's some information on the concert.

The concert promoters are expecting 25,000 people to attend this three day event. Tickets are $59 for the first day, $79 for the second and third day or a three day pass is available for $159.

Since we are using the numbers provided by the Festival, let's use some conservative assumptions.

Let's say the concert flops and only 23,000 people attend to see Tim McGraw (Afterall Tim McGraw is the big name for this event) on July 11th at $79 and 2,000 get VIP tickets at $191. For conservative assumptions let's assume July 10th and July 12th end up being a total wipe out and no one shows up. I know it's far fetched but let's do it to paint the worst picture possible.

Tickets Sold	Cost	Revenue	PST Revenue
23,000 Adult Passes	$79	$1,817,000	$181,700
2,000 VIP Passes	$191	$382,000	$38,200
Totals
25,000		$2,199,000	$219,900

That's $2,199,000 in revenue for the entire event from just the ticket sales. But somethings not right. PST is suppose to be charged after the GST is added to the ticket price. Meaning, since we tax the tax, the total PST collected is going to be even more, about $29,445 more.

Using our horrible forecast that this show will only attract 25,000 in total, the total PST collected will be $248,445. The province put $200,000 into this concert therefore we are left with the province being in the plus by $48,445 from the PST collected alone.

But, I haven't painted a good picture. The province is actually due to collect more. After all, with all those bookings of cottages, hotels, and campgrounds the province will be collecting PST off those sales as well. Not to mention the income tax which will be collected from those working at this concert or the other economic spin offs.

Using my conservative figures, the province will be increasing their revenue by ensuring this concert goes ahead and that means the additional revenue would be able to go into other things like health care. The net gain of the sales from this concert alone makes it worth while without looking at other taxable income for the province.

And for that I say kudo's to the government for making this event happen. Let's hope the concert promoters continue this and the province funds another separate event next year to ensure the spin offs keep happening and we continue to increase our economy on PEI.

If we had two events like this every year (one near start of summer and one at the end), our tourism industry would no doubt see a huge boost and this would be a major plus to our economy and our province.

If the revenue for this concert is going to be, based on your lowest estimate, at least $2,199,000, why do you suppose the government is donating an extra $200,000 to the event organizers? In other words, what do you suppose that extra $200,000 is for?

Thanks for replying Hans.

Government is helping the promoters by building an industry. Just like they are wanting to build a bio park or like they built the ATC for the tech industry.

Offering incentives for concert promoters to bring concerts to the Island won't hurt them when more money is coming back in the form of PST revenue.

I also should point out that just because revenue is $2.1 million, it doesn't mean its all profit.

As for what exactly it is going to be used for, I would assume some sort of guarantee to the bands. Without this guarantee they might not come. But I can only speculate on that.

Yes, not being the government, you and I can only speculate. Your ideas in response to my questions seem reasonable. My main concern is that, since the $200,000 is "taxpayers' dollars", I would like to hear a clear explanation from the government (perhaps along the lines of your explanation) as to why they are giving such a grant and what they/we expect to get from it.

John,

Your numbers make sense, and I've explained it similarly myself. It's wise to use conservative numbers. I usually go one step further on the conservative side; that is, I take into consideration on-Island ticket sales. You have to assume Islanders who are spending their money on these tickets would otherwise spend it on something else here on the Island, thus it is revenue neutral for the province in terms of PST (unless the choice is Tim McGraw vs. RRSP, which I doubt).
So assume maybe 4-5000 tickets will be sold to Islanders. It doesn't affect your numbers too much but it gives you more conservative cred.

Great thinking Rob! I never included the conservative approach of what happens when people from PEI attend the concert. It really makes it even more conservative.

The flip side of this is that it could bring in more then $500,000 from PST collected alone.

Hans,

The Concert business is competitive, the grant is necessary to any promoter as every other venue makes similar offers. If PEI wants to reap the benefits, as articulated by the host, they have to compete. This means investing in a concert, and getting the reward. Even with Alanis included in the totals, the PST generated by concerts/festivals far outweighs the investment.

In business, when an investor invests money into a company, they do so with an understading of what they will be getting out of that investment. For example, many companies pay dividends and publish the rate of the dividend so that when a person buys shares in the company, they know what they get back for making the investment.

Let's consider this concert promotion stuff a business and let's consider the $200,000 taxpayer-funded grant as a an investment. I think its fair for the investors (i.e. the taxpayers) to hear from the investment broker (i.e. the government) what kind of return is expected on the investment. What is the reward you speak of? If the PST generated far outweighs the investment, let's get a clear financial statement from the concert promoters (i.e. the business taking our investment) for the Alanis Concert and the Cavendish concert as to the rewards flowing to the investors (i.e the taxpayers). I look forward to reading the good news come late July.

Hans: Your analogy is based on theory. In practice, even investors will get hurt every once in a while. Even the best of investors will end up getting burn.

If you calculate the return on all the concerts, and not just the miserably planned Alanis concert then you come up with an overall look at the investment as well.

Sure, investors get burned all the time, but investors have all the information available and are are able to assess the risk based on the information and then make a choice whether to invest or not. My point is that we don't have all the information. Your figures and suppositions may be correct, but it would be nice to see the facts, figures and calculations spelled out by government. To stretch my analogy some more, if we see the government as the "investment broker" who invests taxpayers dollars on their behalf then, win or lose on the investment, the investor still wants to see how the portfolio is doing. I bet a lot of people are going to their brokers these days asking what is going on and demanding higher performance. Its the same idea. If you entrust someone else, government or a broker, to make decisions on your behalf, it is fair to ask for accountability.

I agree with you a bit there Hans, especially in being open and accountable.

What information do you think the government should be showing?

My wish list would include:

-what financial info the promoter has (hopefully) shown the government i.e. projected sales, cost of tickets, pst per ticket and projected total pst.
-other projected spin-offs i.e. room rentals, liquor sales and the projected pst from the spin-offs.
-what the $200,000 is needed/used for.
-after the event, I would like to see numbers around actual ticket sales and pst estimates from actual evet-goers and visitors.
-Finally, how many event-goers are locals and how many are from out of province.

Thanks for the platform, John!

Are tickets still available for the Sunday show?
Can you pick them up at the gate? Are cameras and lawn chairs allowed?
What time does the Concert start and who is opening?