Are the Vancouver Fireworks Worth It?

| June 3, 2009

Image by: Stuart Davis / Vancouver Sun

When people make projections about the Van- couver fireworks, think about who's talking and what his motivations might be.

When calculating the value of massive public events like the Vancouver fireworks, who – and whose numbers – do you trust?

The butterfly effect, before it was a movie starring Ashton Kutcher, was a theory. A butterfly flapping its wings in the Strait of Juan de Fuca, it held, could in time cause a typhoon in Japan. The idea is propelled by the power of pure, abstract math: by the mysterious collusion of exponents and amplification, a tiny input can cause a dramatic output.

The idea, which in its economic guise takes the name “multiplier effect,” is familiar to British Columbians, who have for years been sold on the supposed benefits of large public projects. One cruise ship in a Vancouver port, for example, is said to be worth $2 million in economic activity. The new Vancouver Convention Centre will reportedly generate $2 billion in spinoff revenue. And, of course, the 2010 Vancouver Olympics: in 2002 Premier Campbell said they'd be worth $10 billion in economic benefit, an estimate he's since revised to $4 billion.

Are these figures verifiable? The question, according to UBC behavioural economist Marc-David Seidel, is beside the point. “When people start making multiplier-effect projections, you have to take a hard look at who it is and what their motivations are,” he says.

Enter the Vancouver fireworks, an event sponsors say costs $4 million and conveys $40 million in economic benefits to the city. Formerly the Benson & Hedges Symphony of Fire, English Bay’s annual summertime pyrotechnic extravaganza changed title sponsors in 1990, when federal regulations forbidding tobacco advertising came into force. And before the Keg stepped in this past March to help the event cover a $500,000 budget shortfall, the event, for the first time in its 28-year history, was cancelled.

There came an outpouring of sentiment. “I’m heartbroken!” cried Angelica, a 12-year-old commenter to vancouversun.com. “These beautiful fireworks make Vancouver one of the best cities in the world!”

Dr. Z, another commenter, was more circumspect. “Good!” he said. “When will us thick-headed humans realize that pouring carcinogens into our air is a celebration of stupidity and superficiality?”

The opinions of squeaky wheels aside, how do we make an accurate account of what big public events cost us and what they’re worth? Seidel says the question is fearsomely difficult to answer. Why? Because making projections using the multiplier effect is an exercise in pure speculation, and so inevitably falls prey to the motives of the speculator.

Admire the fireworks, and you’re likely to talk about how much more the restaurants, tour operators and convenience stores will make during the event. Detest the fireworks, and you’ll focus on the litter and policing costs, to say nothing of the ghastly pollution.

Can we put an actual number to the results? “Always distrust the politicians,” says Seidel. “But you can do all right averaging the utopian and dystopian fantasies together.”

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Theory of Chaos . . .

Submitted by Maurice Cardinal (not verified) on Wed, 2009-06-03 17:56.

Theory of Chaos . . . Interesting perspective John, but it's not the event ... it's how you leverage it. I discovered your article through your Tweet ... "Wishful math: are we getting hosed by the Olympics, fireworks, etc.?" Good question, and the answer is short. If you get hosed it's your own fault. VANOC has zero responsibility to make 2010 work for local businesses. It's your responsibility to make the best of it and compete with Olympic organizations in a friendly, social media style way. However, if you roll over and play dead . . . well, you will get hosed. Big time, and the folks on Cambie are proof positive. If you want it, you have to be aggressive and take advantage of these events because no one will hand it to you. The multiplier effect is based on the theory of chaos and a naturally recurring algorithm that generates bifurcation. In business terms - large events create a base for social media sales strategies. For example, large crowds create energy, and to use a water analogy, energy turns H20 into steam. Most people focus on the water, but the real potential occurs the moment the water changes it's molecular structure into a hot vapor. That's where all the action is, on the edge of change. Retail businesses on 4th Ave witnessed it first hand last September during the Red Bull Go Kart event. A few retailers did incredible business, while most simply got burned by the blast. In past years Kits Chamber promoted a go cart event aimed primarily at kids between about 8 and 16. It was moderately successful and attracted kids and their parents for an afternoon of festivities. Last year however, Red Bull took over the date and turned it into more of an adult extravaganza that attracted about 35,000 people - and maybe even more according to news media that pegged it at 50,000 plus. Red Bull did the hard work of attracting a crowd, with the tacit understanding local retailers would be smart enough to leverage the chaos. Unfortunately, 90% of the retailers were not prepared, so instead of harnessing the butterfly effect, many retailers experienced added costs that included property damage and increased shoplifting. 35,000 butterflies can do a lot of damage. The shops that did great business and leveraged the momentum were involved from the outset, and they used a social media style strategy to build a conversation with spectators. The companies that got burned naively assumed the crowd would flock into their shops and buy. The huge crowd on 4th Ave between Vine and Burrard created in some places a scary crush that took almost every single retailer by surprise. Quite literally spectators were stacked ten deep in front of open retail doors, but hardly anyone ventured inside, except of course for the smart companies who were prepared. I walked up and down the street all afternoon talking to shop keepers and taking notes on who did well and why. It really wasn't surprising. The companies doing great business engaged spectators through their websites well before the big event, and also as they walked by on race day. Selling cold water for a buck a bottle at the back of the store was all that was needed on a blistering day to entice shoppers inside. Smart retailers moved the excitement of the event from the street into their shops. A few set up shop right on the sidewalk and channeled spectators into their location. They didn't wait. They planned and executed. We put together a case study of the Vancouver Red Bull event and published it on our blog, so if anyone is interested in how to leverage a large crowd, fireworks or Olympic, you might want to take a quick look. http://www.area46.com/services/OlympicStrategies02.html