Sending $114,000 to DeSoto County: The Economics of Brad Paisley

Country recording artist Brad Paisley is performing in concert at the Lander’s Center, in Southaven, Mississippi on January 22, 2015. Based on information obtained from the venue's website, tickets appear to be selling well for the event.  Adding in the fact that the Memphis / Mid-South region is a strong walk-up market; the show should be a sell-out.

A sold-out show of 7,964 patrons would generate a total box office (including service charges) of $394,502.40, which in turn, results in sales tax collected of $36,491.47 (TABLE TWO).  Adding in parking fees, venue rental fees, venue merchandise percentage fees and sales tax charged on merchandise sold, the State of Tennessee and City of Memphis stand to lose almost $114,000 (TABLE ONE) to DeSoto County due to a closed Mid-South Coliseum. For total revenue lost calculations, venue concession sales were not considered.

The University of Memphis Tiger football program charges $20 per car for parking at the Fairgrounds. Using an estimate of four people per car, a parking fee of $40,000 would be generated for the Brad Paisley concert.

An applicable venue normally collects a negotiated percentage of artist merchandise sold during the performance. State and local sales taxes are also charged on the merchandise sold. Percentage collected on merchandise sold at arena-sized venues generally ranges from 15% – 35%. The Wall Street Journal has stated that country star Kenny Chesney generates $8 –  $12 per head on merchandise sold. For the Brad Paisley concert, a 25% merchandise fee and $8 per head sales amount will be used for calculations. This equation would generate $15,928 in venue merchandise fees and $1,473 applicable sales tax.

The venue also charges the concert promoter a rental fee and in some cases, a variable percentage of the total gross tickets sold. The average cost of renting a arena-sized venue is $20,000.
 

How long will the City of Memphis allow revenue that would normally go to the Mid-South Coliseum to flow to either the Lander's Center or Snowden Grove in Mississippi?

 

 

TABLE ONE:
Sales Tax Collected	36,491.00
Parking Fees	40,000.00
Venue Rental	20,000.00
Merchandise %	15,928.00
Merch Sales Tax	1,473.00
Total	113,892.00

 

 

TABLE TWO:

 

Arena	Total			Calculated
Section	Seats	Price	Fees	Total
Pit 1	70	57.50	12.35	4,889.50
Pit 2	70	57.50	12.35	4,889.50
Floor 1	356	40.00	12.35	18,636.60
Floor 2	220	40.00	12.35	11,517.00
Floor 3	220	40.00	12.35	11,517.00
Floor 4	215	40.00	12.35	11,255.25
Floor 5	215	40.00	12.35	11,255.25
104	207	40.00	12.35	10,836.45
105	376	40.00	12.35	19,683.60
106	384	40.00	12.35	20,102.40
107	376	40.00	12.35	19,683.60
108	237	40.00	12.35	12,406.95
109	163	40.00	12.35	8,533.05
110	164	40.00	12.35	8,585.40
111	203	40.00	12.35	10,627.05
112	64	40.00	12.35	3,350.40
113	203	40.00	12.35	10,627.05
114	164	40.00	12.35	8,585.40
115	163	40.00	12.35	8,533.05
116	237	40.00	12.35	12,406.95
117	376	40.00	12.35	19,683.60
118	384	40.00	12.35	20,102.40
119	376	40.00	12.35	19,683.60
120	207	40.00	12.35	10,836.45
205	165	30.50	12.35	7,070.25
206	256	30.50	12.35	10,969.60
207	165	30.50	12.35	7,070.25
208	172	30.50	12.35	7,370.20
209	136	30.50	12.35	5,827.60
210	122	30.50	12.35	5,227.70
211	88	20.50	12.35	2,890.80
212	112	20.50	12.35	3,679.20
213	88	20.50	12.35	2,890.80
214	136	30.50	12.35	5,827.60
215	136	30.50	12.35	5,827.60
216	169	30.50	12.35	7,241.65
217	177	30.50	12.35	7,584.45
218	215	30.50	12.35	9,212.75
219	177	30.50	12.35	7,584.45
Totals:	7,964.00			394,502.40
Tennessee Sales Tax Lost				($36,491.47)