There just ain’t enough catchy country tunes about economic development projects gone awry.
Jilted lovers and broken-down pickup trucks make for better lyrics. But Shania Twain has the opportunity to break new musical ground now that the Shania Twain Centre in Timmins, Ontario has shut down for good, despite over $10 million in economic development funding from various government agencies.
Shania Twain is, and this is from Wikipedia so it must be true, the biggest thing ever to come out of Timmins. She has sold well over 75 million albums, won five Grammy awards, is a member of the Order of Canada and has been named by PETA as the “sexiest vegetarian alive.”
You can see why the Shania story would get politicians and economic development officials excited in economically challenged Timmins. According to the Canadian Press, project boosters forecast 50,000 annual visitors by 2005 as they convinced municipal, provincial and federal agencies to sink money into the plan.
Sadly, visitor numbers never got over 15,000. Apparently break-even was around 33,000 visitors. So the centre had an annual deficit that needed to be covered, and never got close to recouping the initial investments.
In the end, the Canadian Press says that in effect every resident of Timmins was paying $7 per year just to keep the doors open. That’s over $300,000, which takes a bite out of a town’s budget. Apparently it worked out to a subsidy of $33.72 per visitor in 2010.
“That don’t impress me much,” to quote Shania herself from her 1998 hit single of that title.
The funny thing is that the idea of a Shania Twain Centre is not a bad one. In fact, Twain has set up shop in Vegas at the Colosseum for the next two years. There’s a website, gift shop, merchandise, Twain memorabilia and so on. Tickets for her performances range from $50 to over $250. One supposes this does not include a $33.72 per person subsidy from the Las Vegas economic development agency.
However, Timmins is not Vegas. Fewer people live there. Many fewer people visit. The ones who do probably have smaller travel and entertainment budgets. People probably enjoy the Vegas experience, which includes Shania actually singing live, more than seeing her old dresses or learning about her life story at the Shania Twain Centre in Timmins.
I spoke to a former denizen of Timmins who summed it up succinctly: “What were they thinking?”
Indeed. You know how Canadian engineers wear those little iron rings? According to legend, it was inspired by the collapse of an iron bridge in Quebec, and the rings serve as reminders to do a good job.
Well, economic development officials should probably start wearing Shania Twain T-shirts.
This is the kind of project that gives economic development a bad name. It wasted scarce public money that could have supported a more viable project. Treasury Board officials in Ottawa remember projects like this when they recommend future budgets.
It is difficult to balance hope and aspiration versus the need to be responsible with taxpayer money. Often there are multiple levels of government involved, plus project boosters, and it is much easier to go with the flow and keep nodding rather than be the person who asks the tough questions.
But tough questions there must be, or you can end up owning your own version of the Shania Twain Centre.
If you are reviewing an economic development proposal, the first questions have to be about the proposed business case.
In particular the “value proposition,” or what the project will offer its customers. Is seeing old Shania Twain dresses and some exhibits on her career really interesting enough to bring in the crowds? Will people pay $10 and then tell their friends they had a great time?
Then there’s the financial part of the business case. Are the revenue projections realistic and, if so, do they cover the likely expenses. Even if there is a government grant to start the project, will it be sustainable on an operating basis?
It’s always good to pressure test the revenue projections. What percentage of visitors to Timmins had to visit the centre for it to break even? Twenty per cent? Fifty per cent? Maybe 150 per cent? Did the centre need to draw thousands of new visitors to the region to meet its goals? And, if so, was its value proposition powerful enough to do so?
Unlike, say, a government-subsidized sporting facility or power plant, the centre didn’t serve the local market to cover part of its costs. Few Timmins residents would have visited more than once. The business case relied almost entirely on attracting out-of-towner visitors, but the centre just wasn’t enough of a pull.
Then come the really awkward questions. What happens if the projections are wrong? Is there a backup plan? Can we cut costs or do something else to make revenue cover costs? Or is the backup plan just another grant application?
Which brings up the final, and scariest, question. If the backup grant application gets turned down, who is left holding the bag?
Despite millions in federal and provincial funding, the Shania Twain Centre ended up in the lap of Timmins city council. They had to pay the annual shortfall, and make the painful decision to pull the plug.
In the end, Timmins got a little lucky. Taxpayers will get some of their money back because a mining company thinks there’s gold under the Shania Twain Centre. The next project this flawed won’t be so lucky.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels.