Year of Publication

2013

College

Martin School of Public Policy and Administration

Executive Summary

There has been a growing trend in the United States for governments to invest in infrastructure specifically for sporting events. Proponents believe that arenas and large scale events will lead to economic development in an area. Contrary to this expectation, there is a large body of literature that contends that the economic impact expected from these projects does not generally come to fruition.

Lexington, Kentucky hosted the World Equestrian Games (WEG) in 2010. WEG is an international competition that features equestrian events and is held every four years in between the Summer Olympic Games. In order to prepare for the games, public expenditures were made to improve infrastructure both inside and outside the Kentucky Horse Park (KHP), where many of the events were held. The arena was necessary for the KHP to have the facilities to accommodate the games. The arena was also justified via the claim that the arena would allow the KHP to attract new sources of revenues via new events.

While there is a large body of research focused on the effects of arenas built for the Olympics and for professional sports teams, there is little with regard to infrastructure created in similar situations as those that surrounded the Kentucky Horse Park. The purpose of this analysis is to study these factors to put together a full picture of where the park was before the games, how it stands currently, and recommendations for the park to improve and remain financially viable in the future. In order to do this, I study the financial data of the Kentucky Horse Park in order to gain an understanding of the changes brought about by the infrastructure improvements. Fiscal ratios will be used to get a better understanding of strengths and weaknesses and whether these have changed over time.

The Kentucky Horse Park saw large growth in net assets from 2005-2012 primarily due to the capital improvements that were paid for by bonding authority granted by the state of Kentucky. Despite a limited marketing and personnel budget, the park is having success at utilizing its new facilities. There has been an increase in Fiscal Year 2012 in revenues as a ratio to assets and improvements in liquidity, leading to a better ability to handle accounts payable. For the park to continue increasing revenues, the park would be best served by an increase in the marketing budget comparable to similar facilities and an increase in administrative staffing positions.

Because of the marketing of Lexington as the Horse Capital of the World, keeping the park operating at the highest levels is necessary. While the park is aiming to find private and local funding for the park, the General Assembly may want to consider funding the park at slightly increased levels in order to assist the park in adjusting to the changes it has seen in the past several years. This would allow for increased marketing and staffing. Further research should be conducted at regular intervals to monitor the progress of the park to study where and how the organization can make improvements.

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