The Real Problem with Advertising in Parks

I am not a huge fan of advertising in public parks to increase revenues.  I don’t tend to be anti-advertising per se, but the number one reason, ahead of all others, for public lands to be public is so a public agency rather than the operation of markets can determine the use of, access to, and character of the land.  Advertising could undermine that character, though it certain can be debated.

But here is my real problem with advertising as a solution to park budget woes:  It is symptomatic of public parks agencies focus on the wrong side of the income statement.  In almost every state I have worked with, parks agency management works very hard to avoid scrutiny of its expenses, and attempts to shift the discussion to revenue enhancements as the path to budgetary salvation.

But this is a chimera.  In most cases, the revenue improvement initiatives are an order of magnitude smaller than potential expense reductions.

Let’s take one state that will remain nameless.  It rejected out of hand private concession proposals to operate whole parks and said it would focus on private concession proposals to increase revenues by paying concession fees, in this case seeking a private company to rent bicycles in the park.  So let’s look at the park:

Park gate fees:  $500,000
Park expenses  (probably missing some stuff):  $800,000
Situation:  The park requires at least $300,000 a year of general tax funds to stay open.  These are going away, so this gap must be closed or the park will close.

Proposal #1:  Revenue Enhancement.  A private company will be enticed to open an equipment rental (bicycles, etc.) in the park (there is already a store).  In the best case, this might net $100,000 a year in revenue for the private company which would pay the state 10% or $10,000 in annual concession fees.  The state’s $300,000 loss is reduced to $290,000

Proposal #2:  Expense Reduction.  A private company proposes to take over all expenses of the park in exchange for keeping the park gate fees, paying the state a 10% concession fee.  This is entirely possible in this example, as private concessionaires often have 50% or more cost reductions for the same or better service levels in operating parks  (remember, most of park operations is cleaning bathrooms and mowing the lawn).  In this example, the park’s $300,000 loss is reduced to zero, and in fact the state now receives $50,000 in concession fees from the park which can cover supervision of the concessionaire and perhaps some improvements to the park.

Hopefully, this helps explain my issue.  Focus on revenue enhancement, and taking risks with the character of the park through things like advertising, have almost trivial impact on park financial sustainability when compared to addressing the expense side of the equation.