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Should Denver’s Big Air Be Free? 27 January 2011

Posted by magicdufflepud in Economics, Skiing.
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It’s not often that I find at topic at the intersection of skiing and economics. In fact, this might well be the first time. But here we are. I hope you’re as excited as I am. Anyway. As you may have seen on some network (I don’t know which one it was), over the course of the last two days Denver hosted America’s first municipal ski and snowboard Big Air competition. No US city had attempted anything like it, much less pulled in an FIS World Cup event–the kind reserved for places like Aspen or Innsbruck.

Denver, though, dumped money into the project, erecting a 106′ ramp in the middle of Civic Center Park, a downtown icon between the capitol and Denver’s city and county building. Copper Mountain provided the machines and crews to make (literally) tons of snow. Skiers and riders competed for thousands of cheering fans. Switchfoot played.

Thing was, Denver charged for it. General admission tickets for the viewing area went for $45. VIP passes, which included dinner and drinks, set visitors back up to $200. Fine, you might say, but in a front page story in the Denver Post, some folks in Denver howled about this misuse of a public space. After all, parks were public, they said. Here’s Larry Ambrose, c0-chairman of the Inter-Neighborhood Cooperation Parks and Recreation Committee:

“It would be much better if it was free. I am not sure our parks should be venues. . . . I don’t want to say it’s a terrible idea. It’s a little silly. If it were free, it might be acceptable.”

His concern about using parks as venues holds merit. Why not use Mile High instead? But it only makes sense that a city pursuing the Olympics might demonstrate its public snowsports chops by hosting an event like the Big Air. It becomes a civic undertaking and a matter of civic pride: Denver demonstrated to America that is could plan, support and draw crowds to a ski and snowboard competition–when no one else had even tried. I suspect it will appear as a bullet point in Denver’s Olympic resume, but I’m a poor judge of those sorts of subjective things.

I know better the economics of the situation, and I know when things ought to be free. Denver’s Big Air didn’t qualify. Consider the essential argument these folks employed in advocating for a free event: public spaces should be available for free to all, parks are public spaces, and therefore the event should be open to the public, free of charge. But why should we agree with the first premise? In fact, in all fairness to Denver taxpayers, events in the city’s parks should not necessarily be free, especially when they draw visitors from other towns as this one almost assuredly did.

Consider what’s fair in this situation. While Denver residents do indeed support city parks and common spaces with their tax dollars, the money needed to host the Big Air comp went above and beyond that level support–the level generally agreeable to voters. To raise the additional money, Denver sold sponsorships and tickets to willing participants, leaving taxpayers (mostly) off the hook for the production’s expense. That is, the people and businesses who wanted to be a part of the event were the ones asked to pay for it. Sound fair? If you think not, then consider the alternative: Denver’s half-million taxpayers supporting an event that the vast majority of them would never see. That’s the alternative.

There are, of course, situations in which it makes sense for governments to provide services for their citizens without making direct charges. In economic parlance, those are called “public goods.” To qualify, the good must be non-excludable and non-rival. But that likely means nothing to you. In real english, we’re saying that the government ought to provide a good where there’s no reasonable way of excluding people from consuming the it and that when one person does consume the good, it doesn’t harm another person’s ability to do so.

Take the example of a fireworks show. You can’t really stop people from seeing fireworks, unless maybe you’re Ted Turner and you set them off in the middle of your 10,000-acre ranch. And when one person sees the show, it doesn’t really take away from another person’s experience. For a private company, those two facts equate to a certain conclusion: no way to make money. How can you charge for an event that people will still see for free anyway? Without governments, resorts and theme parks, there would be no fireworks. The world would be a sadder, though nicer-smelling, place. For the exact opposite, consider a Snickers bar: you can keep people from buying by sticking it inside a vending machine, and when I eat, there’s not a Snickers bar left for you. Too bad for you, but good for the economy.

So back to Big Air. In an economically perfect world, the government would have left the event up to a private company. It would have taken place at Ilitch’s or Mile High or some other private venue. But for the reasons discussed earlier, our civic ego demanded government, not private, action. And from there on out, Denver handled the event as the private sector would have. They sought sponsorships. They charged for tickets to provide the service, using market tools to best allocate resources. They went to Groupon. And though you may not believe me, those solutions work. They provide the greatest total benefit to the consumers and producers, in this case the city and the attendees.

So “public” is not synonymous with “free,” nor should it be. Denver’s Big Air was worth the price.

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