2005 study showed millions in fair revenue, research will look at 2014

PALMER — That next deep-fried Twinkie could go straight to your waistline, but it could also go straight to the wallets of area businesses.

Officials with the Alaska State Fair organization say they have re-hired a consultant firm to update an economic assessment of the fair’s business impacts last conducted in 2005. The aim is to better understand the financial benefits and costs associated with the fair operations.

McDowell Group, an Anchorage-based market research firm, plans to provide an update to the 2005 report later this year based on figures from the 2014 fair, said senior manager Donna Logan.

The assessment will focus on both the fair’s direct business result (how much money is spent on the fair) and indirect economic result (how much money is paid to employees of fair vendors).

“We’re doing a survey of vendors and gathering information about their business,” Logan said. “We’ll be getting some information from the State Fair themselves about attendance, concert attendance, parking and all those kinds of things.”

Part of the picture is the windfall in sales tax receipts reaped by Palmer officials. In 2005, the city collected $82,000 in sales tax receipts ($100,000 in 2014 figures).

The firm may also interview fairgoers about their spending habits in order to better gauge how dollars are spent past the gates, Logan said.

“We look at all these parts and pieces, and we assess the direct impact in terms of spending and payroll,” she said. “Then we conduct a multiplier analysis to determine the indirect and induced effects.”

A multiplier analysis is a way of analyzing the effects of salaries and other money as it ripples out from paychecks into travel businesses.

The analysis is useful when the non-profit Alaska State Fair group seeks grants from the state, said Director of Marketing and Communication Dean Phipps. It’s also a way of telling stories, which sometimes stretch over the Chugach and Talkeetna mountains.

The Gathering Place, for example, is a new attraction designed to emphasize Alaskan Native Culture, and features a grill operated by two sisters from Nome. The success of that grill also contributes to potential economic growth in Nome.

Opportunities for skills and education are also part of the value of the fair, Phipps said.

For example, several electrical students with the Alaska Job Bank provided the electrical wiring for eight new vendor facilities constructed for this year’s fair, under the guidance of a master electrician, Phipps said.

Another group, the Alaska Blood Bank, also benefits in part because people are more relaxed and comfortable at the fair, Phipps said.

Organizers are also mindful of costs (though many weren’t included in the report), whether from increased law enforcement, or from indirect costs or effects, like school attendance. The fair is working with the school system to coordinate youth-targeted promotions around in-service days so carnival rides won’t prove an educational distraction, Phipps said. For example the fair’s 12 and under promotion was held Friday, on the same day Mat-Su schools had an in-service, Phipps said.

Some families face a trade-off between economics and education, Phipps said.

“School starts early now, but there are a lot of families working during the fair because they need that income,” he said.

Fairgoers in 2005 spent $12.7 million at the event (about $15 million adjusted for inflation). That amount works out to more than $25,000 for each man, woman and child in the U.S. Census Bureau-estimated 2010 population of Palmer, though the money is often deflected to places outside the community.

They spent about 70 percent of that amount ($9.2 million) on booths and activities, but also spent $2 million on parking alone, which is more than the $1.5 million spent on area businesses off of the fairgrounds, according to the report.

Each 2005 State Fair attendee spent about $47 (about $57 adjusted for inflation).

The fair also did a brisk repeat business, with fairgoers attending an average of twice over the 12-day schedule.

The fair is also an engine for jobs. The 461 vendors at the 2005 fair hired almost 1,500 people. By way of comparison, about 2,400 people volunteered at the fair, which also serves as an invaluable opportunity for not-for-profits, faith groups and other community-oriented entities to turn heads.

About 23 percent of all vendors relied exclusively on volunteers, while 26 percent said they involved no volunteers.

While that’s a certainly a lot of jobs, many don’t pay enough to retire on. The average payroll for a vendor at the fair was $1,685. About 35 percent reported payrolls between $2,001 and $20,000. A single vendor reported a payroll greater than $20,000 in 2005.

Vendors themselves spent $1.1 million at local Palmer businesses.

The report also includes general facts and figures about fairgoers themselves.

They were generally a bright lot (ill-advised adventures in deep-frying aside). About 60 percent had at least an associate’s degree. They boasted an average annual income greater than $72,000. Half came from Anchorage, about 40 percent were Valley residents, and the remaining 10 percent came from elsewhere in Alaska or the United States.

Contact Brian O’Connor at 352-2269 or brian.oconnor@frontiersman.com.