The National Western Stock Show & Rodeo likely would form a for-profit subsidiary to handle business unrelated to the stock show’s 16-day January run, a proposal that has raised questions from at least one Denver City Council member.
The National Western wants to build a complex that would accommodate year-round events, such as concerts, minor-league sports, trade shows and family shows.
The National Western’s operating profit for 2010 was $1.2 million. It’s projected to increase to between $2.4 million and $3.9 million with a redeveloped facility, according to an analysis by Convention Sports & Leisure that was included in the business plan it submitted to the city in December.
“As our revenues grow across a 12-month operation, IRS guidelines stipulate that once we’re generating a certain percentage of revenue that’s not specifically related to the mission of the stock show, we need to form a for-profit entity,” said Paul Andrews, president and chief executive of the stock show.
The National Western’s mission is to preserve the Western lifestyle through education. It provides more than 74 scholarships to future agribusiness leaders and rural medical practitioners annually.
But establishing a for-profit entity could make it more challenging for the National Western to get public funding to build a new facility.
“It’s a significant game-changer in terms of what our public participation should be,” said Robin Kniech, an at-large Denver city councilwoman. “Their model is to expand beyond their charitable mission and promote concerts and trade shows. That vision is driving the need for land mass and public finance. It’s not our role as a city to finance for-profit businesses.”
The Denver Urban Renewal Authority is reviewing the National Western’s business plan and expects to submit its analysis to Mayor Michael Hancock in May, said Tracy Huggins, the agency’s executive director. She declined to comment on the prospect of the National Western creating a for-profit subsidiary because she has not completed the analysis.
Paul Ryan, the city’s director of regional affairs who has been involved in the stock show discussions, said it’s too soon to tell whether creating a for-profit entity is a possibility for the National Western.
“We’re really going to look at all aspects of the thing,” he said. “While that’s a piece of it, we can’t really look at one part in an isolated way. We’re really counting on DURA grading the stock show’s homework to give us an analysis, not a recommendation.”
If the National Western wants to relocate, Denver must agree to let it out of its lease on the complex north of downtown, which runs through 2040. Stock show officials have said they are considering asking Denver voters to approve a $150 million bond issue to pay for the move.
It’s not unusual for a nonprofit organization to establish a for-profit business. But it’s unclear from the National Western’s business plan how the profits from the business would be used.
“It would depend on how the business is structured,” Andrews said. “It’s impossible to answer that question today. At this point, we’re simply going through the details of the business plan with DURA.”
Kniech said a partnership with the city’s Arts & Venues division could make sense. Arts & Venues operates city-owned venues such as the Red Rocks Amphitheatre, the Colorado Convention Center, the Denver Performing Arts Complex, the Denver Coliseum and the McNichols Building.
“We need to move from a posture of responding to a posture of planning,” Kniech said. “This should be a partnership. Government has a significant role in cultural and entertainment venues.”
Kniech said she’s also asked the Denver Urban Renewal Authority and Mayor Hancock to do an analysis of events similar to the stock show across the country, rather than rely on the CSL report.
The National Western wants to own, operate and program a new complex year-round. However, most of the stock show’s biggest competitors, including Houston and San Antonio, share facilities with professional sports teams and are not responsible for booking other entertainment events or maintaining the facilities they use. They also have larger attendance during their stock shows than the National Western does, though with the exception of Houston’s Reliant Park, none is on more than 300 acres — the size stock show officials say they need to remain competitive.
Margaret Jackson: 303-954-1473, mjackson@denverpost.com
$3.9 million
Projected potential National Western Stock Show operating profit with a redeveloped facility able to host concert performers such as Carlos Santana, left$1.2 millionOperating profit for 2010 Source: Convention Sports & Leisure
