A growing number of studies are concluding that the 1992 Chicago World`s Fair would draw fewer people, cost more, earn less, lose more and return fewer benefits than its organizers predict.
Among other things, the studies say the Chicago 1992 World`s Fair Authority assumes without evidence that the federal government would pick up $66 million of the fair`s cost and is forecasting the spending habits of millions of fair visitors on interviews with only 22 people.
Among the studies` conclusions:
— The fair would be more likely to draw about 35 million visitors than the 45 million forecast by A.D. Little Inc., the Massachusetts consultant hired by the fair authority to analyze the fair. The studies accused the Little analysts of serious errors that undercut their predictions.
— Because the fair`s income depends on the number of people it draws, fewer visitors means lower revenues. At the same time, cost predictions are based on so many assumptions and unknowns that they probably would soar, in the manner of costs at other recent world`s fairs.
— Almost none of the benefits promised the city by the fair authority are included in its budget. Instead, these ”residuals” were to be paid for by the city or private business, with the city expected to give up some $26 million to $33 million per year in taxes to pay off the fair`s debt.
— The fair could lose even more than the $350 million that the Little report foresaw as a possible result.
”If, in June of 1985, we`re talking about a deficit of $350 million, what`s the real deficit seven years from now going to be?” asked City Planning Commissioner Elizabeth Hollander.
Most of the studies come from the computers of economists and statisticians at Northwestern, the University of Chicago and other local universities. Some are finished, some not. All are being rushed to completion in time for the make-or-break debate in the General Assembly this month over future state funding of the fair.
Some studies are going to the Chicago city government or to Illinois House Speaker Michael Madigan (D., Chicago). Others are being done for such critics of the fair as the 1992 Committee and Taxpayers Against the Burnham Harbor Site (TABS).
Most of those analyzing the fair complain that the authority and its general manager, John Kramer, change their plans and forecasts so fast and so often that keeping track of the figures ”is like following a pea under a shell.”
”They`re peddling one fair that will be all things to all people and then budgeting another fair altogether,” complained Rep. Barbara Flynn Currie (D., Chicago), chairman of the House Fair Committee. ”It`s been a movable feast and hard to pin down.”
The attendance figures have attracted the most attention because Little`s study on attendance came out first and because everything at a fair depends on how many paying customers come through its turnstiles.
Part of the Little forecast was based on a nationwide telephone survey of 903 people, asking them their attitudes about fairs in general and the Chicago fair in particular.
At least four separate studies of the Little attendance report zeroed in on the tone of Question 26, which described the Chicago fair this way:
”This Fair . . . will invite visitors to experience the best that man has created, and his vision of the future. . . . Fairgoers will catch a glimpse of life in the 21st Century. . . . The Fair will be a landmark educational and entertaining experience. It may change the way we think about the world and ourselves.”
The respondents were asked, first, whether they would be interested in attending such a fair and then whether they would be likely to come to the Chicago fair.
But this description ”is a booster description of the fair,” said Anne Shlay, a Cornell University professor and investigator for the Woodstock Institute of Chicago. ”A reasonably objective survey should eliminate any potential bias which might sway the respondent`s answer.”
”We worked very hard on that question,” replied Harry G. Foden, the Little vice president who directed the study. ”I feel we were right down the middle on that.”
Other questions asked the 903 people whether they had attended theme parks or other world`s fairs in Knoxville and New Orleans and, if they had, how much they had spent there. The idea was to predict visitor spending at the Chicago fair.
Detailed statistics, not included in the Little report, showed that, of the 903, only 22 had visited one of the fairs–13 in New Orleans, 9 in Knoxville.
”Now you`re really dealing with numbers that would make a methodologist nervous,” said Arthur Lyons, author of a study to be issued soon by the 1992 Committee. ”There`s not too much credence in projecting from 22 people what 45 million people are going to do when they get to the fair.”
”This is a scientifically selected sample,” Little`s Foden replied.
”Twenty-two is part of a subset. We feel it is (ample).”
”Everything that this fair depends on–namely, its attendance projections–is magic,” said Lyons, a former University of Illinois professor who is director of the Institute on Taxation and Economic Policy.
The Little report also argued that fair attendance can be predicted on the basis of how many major exhibitors buy space at the show.
Shlay attacked this as ”overly simplistic and unbelievable; in a complicated world, much more than simply the number of exhibitors actually influenced people`s decisions whether to attend or not.”
Shlay accused the Little team of ”truly sloppy” errors, and other statisticians said they found basic mistakes in the calculations.
Shlay argued that, by using the Little methods, ”one could probably get any number one wants.”
Using various figures, she predicted fair attendance as low as 31.25 million people. Researchers working on another study expected within a week said a ”more accurate forecast is 32 (million) to 34 million.”
Northwestern University professor Frank S. Koppelman came up with ”the strong possibility that actual attendance at the fair may be substantially less than 40 million.”
In comparing the Chicago fair with five previous fairs, Koppelman said, the Little team included three fairs that ran for two years, even though the Chicago fair is scheduled for six months. Koppelman calculated that this may have caused an overestimation of the Chicago attendance by 9 million to 13 million people.
”How can you take a two-year fair and average that and say that`s what you`re going to get in six months?” Lyons said. ”What you have here is a house of cards.”
The Little team also assumed that if the person who answered the telephone said he would go to the fair, then everyone in his family also would go.
”This is not a reasonable assumption,” said Koppelman, whose study has been seen by City Hall officials analyzing the fair.
A shortfall of 10 million in attendance could cost the fair $100 million in revenue, one researcher said.
This researcher, working on a still-unpublished report, said the Little predictions were based on a fair that charged a $15 basic admission price and focused on pavilions and exhibits sponsored by corporations and foreign governments. Little, in fact, said a higher price and fewer pavilions would bring attendance down.
But since then the fair authority, in one of the rapid shifts that has characterized planning for the exposition, has raised the ticket price to $16.50 and shifted its focus from exhibits to ”events”–sports and entertainment–in an attempt to draw more corporate sponsorships. But many of the events would cost $4 to $10.50 extra.
Kramer said this could be minimized by selling cut-rate package tickets to the fair and show. He insisted that the shift in focus would not reduce exhibits but would simply add revenue from firms, such as beer or soft-drink makers, who are more inclined to sponsor events.
The Little report said the fair authority`s cost figures were $220 million too low, in part because the authority had assumed that the federal government would pay $43.6 million for a realignment of Lake Shore Drive and $20 million for improvements to Meigs Field, and that private firms would handle parking and the fair`s amusement area.
The authority, in its financing plan released last week, agreed to pay for the parking and part of the amusement area but ignored the rest of the Little assessment.
It also said that it would pay interest of $160 million to $179 million on bonds to finance the fair, well under the $200 million to $250 million estimated by Little.
Many other items do not appear in the fair authority`s budget, or they appear to be lumped in one of four ”contingency funds” set by up by authority.
These include subsidies beyond rent reductions that the Little report said are necessary if the fair is to draw more than half of the expected 43 foreign exhibitors; any cost overruns or expenses caused by delays; or changes that may be required when the fair`s environmental impact statement is issued this year.
In addition, Little criticized the unglamorous buses the authority plans to use to move visitors around the fair site, and urged purchase of an expensive but ”innovative” system. That also is not in the budget.
One item that appears to be out altogether is a Women`s Pavilion urged earlier by women`s groups. There is no provision for one in the budget, and Kramer said it would ”require sponsorship” to be built.
Lyons said the authority appears to have underbudgeted for tearing down or ”decommissioning” buildings at the end of the fair. The U.S. Pavilion alone would cost $7.4 million to $19.8 million to modify and renovate at the fair`s end if the city wants to keep and use it, according to Little figures. So far, Lyons said, the fair authority has budgeted only $5.2 million for all building demolition.
The authority has insisted the fair would show a profit, if added tax revenues are counted. But the Little report warned of a deficit of $50 million to $350 million.
”I`m feeling very skeptical at this point,” Rep. Currie said. ”That $350 million loss assumes that there are no delays in construction and there is excellent management.”
Other indirect costs have not been counted at all. Currie said Meigs Field, which is to be closed during the fair, has been credited with adding $40 million a year to the Chicago economy. There would be other, intangible costs from the traffic tie-ups connected with the fair: The Little report warned that the Kennedy Expressway would be jammed ”above maximum capacity” when fair traffic is added to normal rush hour traffic.
Ronald J. Krumm, assistant professor at the University of Chicago, noted that increased tourism to Chicago in 1992 would probably be offset by fewer tourists the year before, since those who would have come in 1991 would postpone their trips until the fair year.
Restaurants that expect to benefit from the 1992 crowds may be disappointed, according to a study of the Los Angeles Olympic Games by the consulting firm Laventhol and Horwath. The study found that 80 percent of Los Angeles restaurants reported declines in business during the Olympics–a complaint also heard among New Orleans restaurants during the World`s Fair there last year.
”Not even a mega-event of worldwide importance will automatically . . . produce clear-cut economic benefits for the hospitality industry,” the report concluded.
The area of greatest controversy probably is the ”residuals” that would be left to benefit the city and the area after the fair is over. The city has demanded ”great legacies,” but so far the fair authority has agreed to pay only for two improved beaches, some park improvements, new bridges over Lake Shore Drive, a new marina, some beautification projects, a landscaped buffer along the Illinois Central Gulf tracks and similar amenities.
City officials have complained that none of these is a priority and even some of the new bridges might not be properly funded. Besides, they say, the improved beaches would be closed during the fair, depriving residents of a place to swim.
”I haven`t yet seen a plan for the re-use of the core site that makes it worth it to tear up the lakefront for six years,” Hollander said.
The authority has said the fair would act as a ”catalyst” to create a new domed stadium, a revitalized Navy Pier, an expanded McCormick Place, larger museums, a new performing arts center, housing on the near South Side and development in ”satellite sites” around the city and throughout the state. But it has included none of these in its budget beyond $75 million in
”seed money” that would not begin to cover these large projects.
An interim report by the group appointed by House Speaker Madigan asked:
”If Illinois is looking for facilities, would it be more effective to simply build them without a fair?”
