This is the same institution that is opposing Grand Canyon University's entry into Division I athletics because, as a for-profit university, they are apparently not academically serious enough. For some reasons GCU's accountability to shareholders isn't as pure and wonderful as ASU's accountability to former customers who will never use their product again except perhaps to attend a football game (e.g. alumni).
Posts tagged ‘Arizona State’
Arizona State University (ASU) has always had a certain niche in the college world, a niche best evidenced by their making both the top 10 party school and top 10 hottest women lists in the same year. President Michael Crow has done a fair amount to, if not reverse this image, at least add some academic cred to the university. ASU has been creeping up the USN&WR rankings, has a very serious and respected honors college (Barrett) and hosts the Origins conference each year, one of the most fun public education events I have attended.
But Michael Crow is now upset that another Phoenix area school has been given Division I status in sports, a for-profit college named Grand Canyon University. This could really hurt both ASU's athletic recruiting in the area as well as dilute its revenues. But in the supremely hypocritical world college athletics, he can't say that. Instead, he says (Via Tyler Cowen)
The conference's 12 presidents signed and delivered a letter dated July 10 urging the NCAA's Executive Committee to "engage in further, careful consideration" about allowing for-profit universities to become Division I members at the committee's August meeting. In the meantime, Pac-12 presidents decided at a league meeting last month not to schedule future contests against Grand Canyon while the issue is under consideration.
"A university using intercollegiate athletics to drive up its stock value -- that's not what we're about," Arizona State president Michael Crow said in a phone interview over the weekend. "... If someone asked me, should we play the Pepsi-Cola Company in basketball? The answer is no. We shouldn't be playing for-profit corporations."...
"Our presidents have a pretty clear view that athletics works for the broader benefit of the university," said Pac-12 commissioner Larry Scott. "There's a discomfort with the idea that the sole accountability around athletics would be to a company that might use athletics as a marketing tool to drive stock price. There's a sense that changes the dynamics and accountability around athletics."
It is freaking hilarious to get lectured on accountability around athletics by the NCAA. This is an organization that has been making billions off unpaid workers for years, workers who think so much of the value of the compensation they do receive (a free education) that most of the best of them never complete it. I wrote more about the NCAA and athletes here. In short, though, all these schools use the athletic program to raise capital (in the form of donations), likely far more so than a private school's sports team would raise its stock value. Unless you grew up near the school, what do you know about well-known schools like Penn State, Ohio State, University of Miami, LSU, Alabama and even Notre Dame other than their athletics program?
Michael Crow reveals himself as just another incumbent that does not want competition.
In regards to Grand Canyon specifically, though, it would certainly appear that Crow, who's been spearheading the effort, is driven in part by protecting his own turf. Arizona State has long been the only Division I university in the Phoenix market. And in the bigger picture, it seems a bit self-righteous that the same group of presidents that in 2011 signed a $3 billion contract with ESPN and FOX -- and which last year launched a profitable television network of their own -- would play the "non-profit" card in calling out someone else's motives.
"It's different in the following sense," Crow said of the comparison. "Whatever income we generate from a television network goes to support the swimming team, the rowing team at Cal. We support thousands of athletes and their scholarships, their room-and-board, as part of the intercollegiate spirit of athletics. ... In the case of a for-profit corporation, those profits go to the shareholders."
His last point is a distinction without a difference. First, I am not sure it is true -- Grand Canyon also has other athletic programs that cost money but don't bring in revenue. They also have a women's swim team, for example. But who cares anyway? Why is a student interested in swimming more worthy of receiving football largess than an investor? Maybe Crow is worried that the people of Arizona that fund so much of his operations (and bloated overpaid administrative staff) might suddenly start wondering why they don't get a return for their investment as do GCU shareholders.
Postscript: Phil Knight at Oregon and Boone Pickens at Oklahoma State (to name just 2 examples) get an incredible amount of influence in the university due to the money they give to their football programs and the importance of the football programs to those schools. Boone Pickens says he has given half a billion dollars to OSU, half of which went to the football program. But it is clear he would not have given a dime if he had not been concerned with the football team's fortunes and the problem of his university's football team losing to other rich guy's teams. Is this really somehow better and cleaner than being beholden to equity markets?
The link in the original article is broken, so here is a better link to an article and video of how "non-profits" are spending their athletic money, on things like this palatial locker room for the Alabama football team that would make Nero's gladiators blush.
While this may be familiar territory for readers of this blog, I have a post up at the Privatization blog on the history of private operation of public parks. In this article I quoted one of my favorite over-wrought criticisms of private operation of parks, this time from the San Francisco Chronicle:
The question is, how will these agreements work over time? If parks remain open using donations, what is the incentive for legislators to put money for parks in the general fund budget? And who is going to stop a rich crook or pot dealer from taking a park off the closure list and using it for fiendish pursuits?
LOL. "Fiendish pursuits?"
I also had an article there a while back about government accounting systems and how they make such privatization efforts difficult:
Back when I was in the corporate world, "Make-Buy" decisions -- decisions as to whether the company should do some task itself or outsource it to companies with particular expertise or low costs in that area -- were quite routine. Even in the corporate world, though, where accounting systems are built to produce product line profitability statements and to do activity-based costing, this kind of analysis is easy to get wrong (in particular, practitioners frequently confuse average versus marginal costs).
But if these analyses are tricky in the private world, they are almost impossible to do well in the public sphere. Grady Gammage, a senior and highly respected research fellow at Arizona State University's Morrison Institute, has as much experience with public policy analysis as anyone in the state. Several years ago, he spent months digging into the financial numbers of Arizona State Parks, with the full cooperation of that agency. A critical question of the study was how much it actually cost to operate a park, vs. do all the other resource and grant management tasks the agency is asked to perform. Despite a lot of effort by Gammage and his staff, he told me once that the best he could do was make an educated guess --plus or minus several million dollars -- as to how much of the Agency's budget is spent actually operating parks vs. performing other tasks.
The reasons that this is so hard is that the parks agency's budgeting process was not set up to determine true net operating gains and losses at parks. It was set up, like most public accounting systems, to enforce accountability to different pools of money that have been allocated by the legislature for certain tasks. This tends to lead to three classes of problems that cause public make-buy decisions, as well as ex post facto third-party analyses, so difficult. Since I am most familiar with the parks world, I will discuss these three issues in the context of parks:
Back in August, when I wrote the first section of this guide, I was sitting in Long Island at a baseball recruiting camp. Now that my son has completed the process, I want to share the rest of our experience for others who, like myself, have an athletic kid but no idea how the college sports recruiting process works.
Some reminders. First, this is baseball-specific -- other sports work differently, I presume. Second, this is the experience of a kid with good baseball skills but not good enough to have been scouted by a Division I baseball power like Texas or Arizona State. Third, my son was not looking for scholarship money. He was looking to play baseball in college, and to parlay his baseball talent into admission in a top academic school. We were looking at division III (DIII from now on) schools like Williams, Amherst, Haverford, Pomona and a few DI Ivies. Finally, our experience is heavily colored by the fact that he plays for one of the smallest high schools in the state, so getting attention and recruiting advice was much harder than if he had played for a baseball powerhouse.
Here were some of the lessons from our first episode:
- The DIII baseball recruiting process does not really even begin until the summer between Junior and Senior year. My son landed a good spot without a single coach even knowing he existed as of June 1 before his Senior year of high school. As late as January of his senior year he was still getting emails from coaches asking him if he might be interested in their school.
- In baseball, coaches mostly ignore high school stats and records unless it is a school with which they are very familiar. They use their eyes to pick talent - ie from video or watching kids play at recruiting camps (more on the video and camps in our first episode)
- As we will see in a minute, only about three things my son did in recruiting really mattered -- see the first episode for more detail on what we did
- He proactively contacted coaches to tell them he was interested
- He sent coaches a 5-10 minute video of himself pitching and hitting. We made it from game film but I think most of the videos are just taken in a cage (you can see a bunch of these on YouTube, or email me and I will give you a link to ours)
- He went to several camps, which fell into two categories: School camps, at schools he was really interested in; and multi-school camps run by third parties. Of the latter, I am convinced the Headfirst Honor Roll camps are the best if you are interested in DIII or DI "smart schools" (e.g. Ivies, Duke, UVA, Stanford).
OK, so we left off with my son at a two-day baseball camp. My son sent out emails afterwards to the coaches that were at the camp and from schools in which he was interested. Basically he said "nice to have met you, still really interested in your school; now that you have seen me, I'd like to know what you think." He had a few good conversations with coaches at the camp, but after that we really did not hear much until after Labor Day. In retrospect, this delay is probably because the coaches have lots of camps and they want to synthesize their prospect list after all the camps before talking in earnest with players.
We really did not know what to expect. Would coaches call, and if they did, what were the next steps? It was only later that we learned what outcome we should be hoping to hear: Basically, each coach is given some spots by the admissions office (the average seems to be 5 for the baseball guys). If your kid can make that list, then two good things happen: a) it means the coach wants the kid on the team. And b) it generally means the kid will get a good shove to help him through the admissions process, not an inconsequential thing at a school like Princeton or Amherst.
Here is what happened next. This was just our experience, but since it was repeated at five or six schools, almost identically, its a good bet this is a fairly standard process at colleges with high admission requirements:
- The coach asks my son to send his transcript and SAT scores early to the Admissions office.
- The Admissions office vets these, and gives the coach a reading -- for us, that reading was generally "if you put this kid on your short list, coach, he very likely will get in."
- The coach then passed this message to my kid, saying there are no guarantees (etc. etc.) but all the kids with this same read from the admissions office who have been on his list have gotten in in the past.
BUT, there is a bit of a catch. The coach will say that he can only put my kid on his list if we will commit to applying early decision. Early decision (ED) means that one applies in November and hears in December (so well earlier than the April 1 regular admit date), but it is a binding commitment to attend if admitted. This means that one can only apply to one school early decision. Coaches aren't dumb. They can't afford to waste the few recruiting spots they have on kids who aren't going to come. So there is a quid pro quo - the coach will commit to the kid and help him through admissions, but the kid has to commit to the program.
But we only learned this later. When coaches started calling, we weren't sure what to expect. A couple called early to say that my son would not be on their list. I have to give kudos to Coach Bradley from Princeton -- he called and told my son he wouldn't make the list. It was not the news we wanted to hear, but he was up front and honest with us so we did not waste our time. He was also the one who really explained all the stuff I wrote above, so we were more knowledgeable when other coaches called.
Soon, however, we were getting floods of interested contacts. Many were from the coaches he had proactively contacted. Some were from schools we never had heard of, and some were from very good schools but in parts of the country that weren't in his college search area (e.g. Kenyon, Grinnell, Carlton in the midwest). Many of these coaches asked for him to come to campus (on our own dime, they were not paying) for a visit, including an overnight stay with someone on the team. Eventually my son scheduled visits at Wesleyan, Bowdoin, Vassar, and Haverford. He chose these in some cases for the school and in some cases because he really liked the coach. All four of these offered him a spot on the short list for admissions if he was willing to go ED.
It was at this point that we hit the highlight of the whole process. Like many parents, I just want to see my kid gain life skills. My son will never be a good sales person. He is really, really hesitant to cold call adults to ask them for something. This process was good for him in that sense, because he began to see the fruits of having proactively cold-called these coaches earlier in the process. But I still had to poke and prod him to do it.
However, with these other visits set up, my son was apparently thinking "these would all be good schools, but they are not in the top tier of my aspirations." He was thinking about skipping ED, and trusting his grades and resume to the regular admissions process so he could still take a shot at his top choices (places like Princeton and Stanford).
He decided that the ideal choice for him would be Amherst - he loved the school, it was top-notch academically, had a great baseball tradition and an engaging coach. That was the school he would be willing to go ED for. He had met the Amherst coach on a school visit and at camp and Coach Hamm had been very nice. But in the Fall,we had not heard anything from him. (I have to insert a story here -- way back in March my son was on the Amherst campus and dropped by without an appointment at Coach Hamm's office. At that point, Hamm did not know who my son was -- for all he knew he might have been the strikeout leader in T-ball. But he spent a whole hour with Nic showing him around the facility and later at practice.)
This is where the breakthrough came. Without my prodding or even involvement, my son contacted Coach Hamm one more time, to say he had not heard from Amherst but he was still really interested and he would be touring other nearby colleges in a week or so and would still love to meet with him.
We will never know exactly what happened. Perhaps the coach was late in kicking off his recruiting. Perhaps another kid on his list dropped out. Perhaps he just wanted to sit back and see which kids were the hungriest. Whatever the case, Coach Hamm wrote back immediately and said he would love to meet my son on campus (he actually changed around a trip to be there). The process described above played out (grades to the Admissions office, offer to be on the "list", ED application) and long story short, Nic will be at Amherst next year.
As I mentioned earlier, there was no money offered for baseball (nor could there be in leagues like the Ivies or the NESCAC which ban athletic scholarships). Amherst has a great financial aid program, and there are great possibilities for scholarships, grants, and tuition discounts -- but these are offered to all admits, not just to athletes.
I hope this is helpful to some folks who are just starting this process -- I know it would have been a huge help to us to understand in advance.
Postscript: One of the hardest things in the world is to get a good honest reading on your son's talent, particularly if he does not play for a top high school team. People have told my son that he should not have gone DIII, he could be playing DI or he should be in front of pro scouts. You have to take all this stuff with a grain of salt. Sure, you don't want to cut off an opportunity, but on the flip side, sort of like the fox and the cheese, you don't want to lose a good thing chasing the illusion of something better (we know folks this happened to in other sports).
I don't know how to solve this, maybe people have experiences they can put in the comments. For us, being from a small school, several summers playing club ball in a wood bat leagues with the big school kids finally convinced us our son could play at a high level (I say convinced us as parents, our son does not lack confidence so he always knew).
PS#2: Fun Amherst facts
Fred Singer offered to debate Richard Somerville and Naomi Oreskes in January in San Diego. Both declined. Oreskes said she didn't want to debate someone "with a known record of promoting public misrepresentation of science."
This is used as an excuse to avoid debate by climate alarmists all the time. But it makes no sense. If someone is either a) using really bad arguments or b) spreading misrepresentations, I would definitely want to debate them.
Last week my speech at Arizona State on privatizing the operation of state parks was turned into a debate between myself and the most vocal opposition to the approach, the head of the Arizona Sierra Club. When asked if I would be willing to debate rather than speak, my answer was "hell yes."
You see, I am actually confident in my arguments. I was longing to have a face to face debate on this topic. In fact, I was incredibly frustrated that opponents of using private companies to help manage public recreation were constantly arguing against a straw man that doesn't actually exist in reality. You can see that in spades in the debate below (I am the second speaker, the Sierra Club person is the third). Note how, despite nearly a year in Arizona of public discourse on this topic (pushed mainly by yours truly), opponents are still criticising the model based on hypothesized implementations, rather than observation of actual examples within an hour's drive of where we were speaking.
I start at 19:45, which I am sure everyone wants to watch ;=) And yes I talk too fast, to make it a debate they cut my 45 minutes down to 10.
Some of you may have seen me on Glenn Beck today. If you are like me, and don't do stuff like that very often, you may be wondering just what being on such a show is like.
The process began with a call from one of Beck's assistants. She spent over an hour with me in multiple calls to make sure she absolutely understood all the issues and could communicate them to Beck. She also called the PIO at Arizona State Parks several times to get their perspective. Then she had me come into the Fox local station in Phoenix. This is where the process went a bit different than I expected.
First, I was still sitting in the green room about 9 minutes before I was supposed to go on the air, and thus was getting a bit nervous. When they came to me, I expected to be taken to some tiny studio. Instead, I was led out to the busy news floor, in the middle of all the desks with people working. There, I found a camera and a stool. They miked me and put on my earpiece. Hearing the feed was a bit of a challenge, because people were on the phones at all the desks right near me.
Doing the interview is more like doing radio. It may look on TV like we see each other, but I can't see Beck and can't pick up on his body language. We end up talking on top of each other several times. At one point, the lady at the desk next to me goes into a drawer for stapes or something and bangs my butt, ripping out my earphone and effectively disconnecting me from the show.
Anyway, it was fun and if given the chance, I expect to be better next time. I will post a link to the video when I find it.
In opposition to a proposal for park privatization in Utah:
Mary Tullius, director of the Division of State Parks and Recreation, doesn't think so. She says the state prides itself on giving Utah families affordable destinations like state parks. And if those destinations were made private, the quality would suffer.
"History has told us that whenever you privatize something people are so focused on making money that they don't pay attention to the infrastructure or to the maintenance of the facility. What happens after five years and they've run something and they haven't taken care of it and they turn back to the state? And then the state has a much bigger problem," she said.
This is hilariously wrong. As readers probably know, my business is the private operation of public parks. The number one problem we have in taking over government parks is that they are usually terribly run down. By the time the government is finally willing to turn to private companies for help (generally in the category of "last resort") the government has typically been ignoring the capital maintenance needs of the parks for years. As I have written before, government is terrible about appropriating sufficient amounts of capital maintenance dollars. We see it in everything from parks to the Washington metro.
Nowadays, as a condition of taking over the operation of public parks, our company is generally asked to make a large up-front contribution to tackling deferred maintenance in the park. In fact, in our newest contract with the Tennessee Valley Authority, we actually have rebuilt the entire park and campground from the ground up.
I am sure there are some private operators who have let things run down, but in general this has occurred when the public authority has insisted on giving the operator a series of 1-year contracts rather than a real 10-20 year contract. Who is going to replace the roof if the contract only lasts for another 6 months. On the other hand, who is going to fail to keep things nice if he knows he is going to be there for another 15 years?
I hear this kind of rant from people within the government all the time. They seem to believe it, but it is hard to find an example where it is true. When I worked for an oil company, they planned on having to totally rebuild their retail stations every 20 years or so. What legislature plans for this kind of expenditure?
Due to budget cuts, Arizona State Parks is closing 13 of its 22 state parks. This last week, I have been making the rounds of the state government, from the state legislature to the head of Arizona State Parks, with a proposal to keep the 7 largest of these closed parks open, and pay the state money for the privilege. Unfortunately, we have had only mixed success with a proposal that seems to me to be a win-win for everyone. Our local newspaper editorialized against my proposal, without even knowing the details (my response here). So in this post, I am going to give the details of our proposal, and solicit your feedback, especially those of you in Arizona. All I ask is that you read the whole thing, and not just leap into the comments section having just read and reacted to (positive or negative) this first paragraph about private operation of public parks.
Our company, Recreation Resource Management (RRM), is over 20 year old, and we operate over a hundred public parks under concession agreement for the US Forest Service, the National Park Service, the Tennessee Valley Authority, California State Parks, and many others. Traditionally, park concessions used to be limited to private companies running the gift shop or the bike rental inside a park. And we do some of that (for example we run the store and marina at Slide Rock and Patagonia Lake State parks). But our preferred niche has always been to run entire parks on a turnkey basis. We run a huge variety of facilities that largely parallel anything we might find in the Arizona State Parks system -- including campgrounds, day use and picnic areas, boat ramps, hiking trails, wilderness areas and historic buildings. The largest parks we run are twice as busy as Slide Rock or Lake Havasu and four times as busy as any of the parks we are proposing to manage. We currently run parks today literally right beside some of these Arizona State parks. All of this is to say that the parks in Arizona are absolutely normal and typical resources that we manage.
A concession contract works much like a commercial lease. We sign a contract allowing us to run the park for profit, and then pay the state a rent in the form of a percentage of fee revenues. The typical operating agreement includes over 100 pages of standards we must conform to, from fee collection to uniforms to customer service to bathroom cleaning frequency to operating hours.
At all of my meetings this week I made three offers, each of which we were willing to commit to immediately (we could actually be up and running with about 21 days notice):
- RRM offered to keep some or all of six parks open out of thirteen on the current closure list. These parks are Alamo Lake, Roper Lake, Tonto Natural Bridge, Lost Dutchman, Picacho Peak and Red Rocks (park but not the environmental center). Not only could these stay open, but we could pay rent as a percentage of fee revenues to the state, money that could be used to keep other operations open. While these parks represent about half of the closure list by number, by visitation they represent well over 90% of the closure list. Combined these parks had a net operating loss of $659,000 to ASP, which we propose to turn into a net gain for the parks organization.
- RRM offered to operate five parks that are currently slated to stay open but where we could pay rents that are higher than the net revenue figure ASP showed for FY2009. These parks are Patagonia Lake, Buckskin Mountain, Dead Horse Ranch, Fool Hollow and Cattail Cove. Combined, this group of parks lost money for ASP in 2009 which we propose to turn into a solid net gain.
- While we would need to do more study, RRM suggested it might take on some of the smaller, money-losing parks beyond those mentioned above if they were packaged in a contract with some of the other parks listed above
To avoid problems with the procurement process, we offered to take as short as a 1-year contract to give ASP time to prepare a longer-term bid process. We also agreed to maintain all current park fees for the next year without change (in contrast to ASP current plans to raise fees), and agreed that no fee could be changed without ASP approval. The only help we asked for was
- We perform rules enforcement, but we need law enforcement backup form time to time
- We perform routine maintenance and keep the park safe and attractive, but many of these parks have substantial deferred maintenance problems that we cannot take on with only a 1-year contract (but would be willing to invest capital to repair under a longer term arrangement)
And if the ability to keep almost half the parks slated for closure open was not enough of a value proposition, we proposed one additional benefit. Any parks that are put under private concession management immediately cease to be a political football. For years, parks organizations have closed and opened parks in a game of chicken with legislators, with the public as the victim. Parks under private concession management no longer are subject to such pressures, as they are off the budget. Back in the 1990's, when the new Republican Congress squared off with President Clinton over the budget, the government was shut down for a while, including all federal recreation facilities -- EXCEPT those under private concession management. We got calls from the media saying, why are you open? To which we replied -- hey, you have now discovered one benefit of private concession management -- the parks we manage are no longer political pawns.
So far we have had really good and positive reactions from Arizona legislators (I have not been able to see any of the Governor's staff).
The reaction from Arizona State Parks has been more muted. While they are publicly open to all proposals, in reality this is the absolute last thing most of their organization wants to do (you should see the body language in some of our meetings, it is a lot like trying to sell beer at a Baptist picnic). They have not said so explicitly, but from long history with this and other parks organizations I can guess at some of the issues they have:
- Distrust of and distaste for private management runs deep in the DNA of the organization. Many join parks with a sense of mission, seeing unique value to public ownership of parks and lands. I attempt to explain that this value still exists, that what they are turning over is operations, not management and control, but I don't get very far. I try hard to give the new management of Arizona State Parks a clean slate, but I can't help but be affected by something I saw their previous director say. Back in about 2004 we hosted a breakfast at a convention of state parks directors up in Michigan, I believe. Someone must have forgotten to throw us out of the room, because we witnessed the head of Arizona State Parks stand up in front of his peers and demand that they all hold the line against private management as one of their highest priorities. It was made clear that state organizations that stepped out of line would incur the wrath of other states. This summer we participated in a series of meetings in California called by Ruth Coleman, who is the head of the parks organization there and someone I admire. She was trying to break the organization out of its old culture, but it was very clear in roundtable discussions that the rank and file would rather see the parks closed to the public than kept open using private concession management.
- I mentioned earlier that private management brings a benefit to the public of keeping the parks from being a political football. But the parks organization feels like it needs that football. Without the threat of park closures, it feels like its budget will be gutted like a fish. And, now that its budget has been gutted, it still holds out hope its money will be restored and needs the park closures to keep up the pressure. As long as there is even the slightest hope of budget restoration, a hope which I am pretty sure will "spring eternal," my proposal, no matter how much it makes sense for the people of Arizona, will never be adopted.
Again, these are just guesses. Renee Bahl of Arizona State Parks has told me they are open to all new ideas, and I will take her at her word.
Those of you who know me to be a libertarian might wonder how I function in this environment. The answer is, "with difficulty." I have a strong philosophic passion to bring quality private management to public services, and this opportunity is a good one. And I am not adverse to making money while doing so. But I am adverse to rent-seeking, and there is admittedly a thin line between trying to make positive change and rent-seeking in this case.
I generally avoid this by insisting on short initial contracts (in this case 1 year) to prove out the concept and to allow time for the public agency to figure out how to put this beast through a procurement process that probably was not well designed for this type of thing. This is what I did when the US Forest Service approached us with an idea to bring private management to the snow play area at Wing Mountain near Flagstaff. We took it on a one-year contract (which grew to 2 years) and then the contract went out for public bid - which we won - for 10 years. We are very good at what we do and are not at all afraid to compete. The only time I will not compete is when I perceive someone has a political connection that gives them an inside track. After two or three losses in Florida counties to a company with no experience but a brother-in-law on the County commission, I realized it was just a waste of time to bid on these situations.
Please give your reactions and concerns in the comment section. For those who disagree with private management of public resources, I will be honest and say you are unlikely to change my mind, as I have dedicated all my time and my life savings to the proposition. But you may help me better understand and tailor our service to address public concerns. I will try to keep the FAQ below updated based on what I am seeing in the comments. If you are in Arizona and know someone you think I should be talking to, drop me an email at the link above.
Does your company take ownership of the park? No. The parks and all the facilities remain the property of Arizona State Parks. We merely sign an operating lease, with strict rules, wherein we operate the park, keep the fees paid by the public, and pay the state a "rent" based on a percentage of the fee collections. Even when we invest in facilities, like this store building and cabins, they become the property of the public at the end of the contract.
How can the state afford to pay you if they have no budget? We are not paid by the state, and receive no subsidy. 100% of our revenue is from fees paid by visitors to the park we operate. If we don't run a good operation that is attractive to visitors, we don' t make any money.
Doesn't the state lose out if you keep all the fees? No. Mainly because in all the parks we have proposed to take over, the state has net operating losses of up to $200,000 or more a year. By taking over the park, their losses go away AND they receive extra money in the form of rents we pay. We are able to do so because we have developed efficient processes for managing campgrounds and have a flexible and dedicated work force.
Are you going to build condos and a McDonald's? No. The fact that this is such a common question is amazing to me, as we operate over 100 parks in this manner across the country and you would not be able to tell the difference between the facilities we manage and any other public park. Under the terms of our operating contract, we cannot change fees, facilities, operating hours, or even cut down a tree without written approval form the parks organization.
Are you going to just jack up fees? No. We have committed in our offers to keep fees flat for the next year. We cannot raise fees without state approval, and we work hard to keep public recreation affordable. Last year was a very good year for us because, in a recession, our low-cost recreation options gave many families on a budget a chance to have a quality recreation experience.
Why just a one year contract? We would actually prefer a longer contract, as this allows us to actually make approved capital improvements to parks (for example, we have installed many cabins in public parks we operate). However, we have offered to take these under an initial contract that is just long enough to allow longer-term contracts to be fairly offered on a competitive bid basis.
Maybe no one trusts you because you are small and unproven? Well, perhaps. But last year our total fee revenue was nearly $11 million, making us slightly larger than the Arizona State Parks system. We have a proven record with decades of positive performance reviews from government agencies around the country. For example, for those of you form Arizona, if you have stayed at a US Forest Service developed campground near Flagstaff, Sedona, Payson, or Tucson, or sledded at Wing Mountain, you probably have stayed in a facility we operated. We already operate two concessions in Arizona State Parks, and have a great record working with the organization.
The AZ Republic has an editorial today saying that privatization is not the answer for the Arizona State Parks budget woes. On the plus side, they did actually call me for my opinion yesterday before they published it. On the down side, they ignored everything I said. Here is my response:
I run one of the larger private parks management companies in the country, which is based right here in Phoenix. Like many Arizona residents, I am a frequent visitor to our state parks and am sympathetic to their current budget pain. Further, I am not one to offer up privatization as a panacea for all the park's woes -- the state parks organization fulfills a variety of public missions that cannot be undertaken well privately. But I think you missed a couple of important considerations in your editorial today counseling against privatization options.
First, from my experience with public recreation agencies around the country, these budget pressures on parks organizations never really end. Recreation is almost always a key pawn in budget fights, and even if Arizona State Parks funding is restored this year, we likely will be fighting the same battles in a few years. Private concession management of parks has the advantage of taking parks off the budget, so they no longer can fall victim to budget fights. For example, in the famous 1995 federal government shutdown, private concession run facilities in the US Forest Service were the only federal recreation options that remained open through the whole budget battle.
Second, while small low-visitation parks, on a standalone basis, may not represent a very good business opportunity, there are a variety of ways to handle privatization of smaller parks. We run approximately 175 public parks and campgrounds across the country, and well fewer than half of these stand on their own as private business opportunities. But many public agencies have learned to package smaller, low-visitation parks with higher-visitation parks into multi-park packages that both provide operators a business opportunity as well as meet the public's goal of keeping all of its parks open. Further, states like California have found many creative ways to keep historic sites open using private management. These solutions, at places like Columbia State Park, not only keep historic buildings open to the public but also create events and services that bring history alive and make it more interesting, particularly to children.
I know that private management is often sloughed off with statements like, "they would just build a McDonald's or put in a bunch of billboards." But thousands of parks nationally are managed privately, and this never happens. In part, this is because business people should get some credit for intelligence, and they understand what attracts people to outdoor parks in the first place and don't want to mess with the ambiance. In addition, we often have 100+ page operating agreements in place that carefully set out the quality of our services and the approvals we must obtain to make any changes to the facilities.
Further, it is sometimes suggested that private companies would just jack up the price. Well, Arizona State Parks is proposing to raise the Slide Rock entrance fee to $20. In contrast, we run nearby picnic and day use areas at places like Grasshopper Point and we rapacious capitalists only charge $8.
I am not advocating that Arizona State Parks turn off the lights and throw the keys to a private company; but I do think that private concession management could offer a piece of the long-term solution to keeping state parks open, both now and in future budget battles.
For the last year, I have watched in total frustration as Arizona State Parks threaten closure after closure to fix budget problems. This is, of course, when they are not begging for new taxes to be dedicated to them.
For those who don't know, my company is in the business of privatizing public recreation. At the moment, we are so swamped with requests from public authorities to keep parks open that I don't really bother going out and seeking new business. But it is frustrating for me as an Arizona resident to know that many of these parks could remain open (and user fees kept reasonable) under some sort of private concession management.
I know this may seem weird to you given that I work so much with governments, but I have no idea how to lobby government. Unlike, say, John Murtha related enterprises, we get all the business we need simply responding to inquiries from public authorities who need help and submitting proposals in response to RFP's**. In fact, if I had to lobby to keep the business running I would shut it down first.
So I have had no idea how to approach those involved in the Arizona parks debate to tell them there are alternatives. I get frustrated each day as I see folks in the parks organization tell the media that private management would not work because none of their parks would make good business opportunities, when I know for a fact this is not true (I operate stores in two of the parks and am familiar with several others, and have sent them unsolicited management proposals to run these parks -- again, I am not necessarily seeking the business, but I want to give the lie to the statement that private companies would not be interested). Interestingly, two of the largest private recreation managers in the country are located in the Phoenix area, and neither of us have ever gotten a media call on this issue.
Of course, I am not completely naive. I know there is a tried and true kabuki dance here where parks departments threaten to close down the Washington Monument in a bid for public sympathy that will either deflect budget cuts or spur new taxes. I also know that state parks directors have sworn a blood oath together never to let private concessionaires run whole parks, even if the parks have to be shut down (our company runs whole parks for folks like the US Forest Service and TVA, but most state parks only let concessionaires run the store or marina, not the whole park). I know this anti-private law of omerta exists, because our company once sponsored a breakfast at a national state parks directors conference and we were in the room (unknown to the speakers) when this no-private-company discussion was held.
I have called and sent letters to nearly everyone in the state, but have not gotten any response. To assuage my frustration that no one is even reading them, I will reprint one here just to say that someone, even if it is a reader in Australia, actually looked at it:
Janice K. Brewer, Governor; Reese Woodling, Chair, Arizona State Parks Board; Maria Baier, State Lands Commissioner; Rene Bahl, Arizona State Parks Director
Many of the state parks currently proposed for closure could easily be kept open to the public under private concession management. I run one of the larger operators of public recreation concessions in the country, and our company is the current store and marina concessionaire at Patagonia Lake State Park and Slide Rock State Park. I know from experience both with public recreation in general as well as with Arizona State Parks that these parks (as well as many other in the ASP system) could easily be operated by a company like ours, retaining high quality recreation options for the public while converting a liability for the state into a financial asset.
For years we have urged the management of Arizona State Parks to consider private operations of more than just the stores in these parks. For example, we operate whole parks turnkey for the US Forest Service, the National Forest Service, the Tennessee Valley Authority, the United Water Conservation District (CA), and the Lower Colorado River Authority (TX). By operating the park to high quality standards but at a lower cost, we are able to make a profit for ourselves and pay an annual rental fee (usually contracted as a percentage of sales) to the government authority that owns the park.
I find it tremendously frustrating that the private concession option has not even been put on the table for discussion, or gets sloughed off with tired clichÃ©s such as "private companies would just put up a McDonalds." When we operate any public park, we operate under a strict and detailed operating agreement, typically running over 100 pages, that sets procedures for everything from bathroom cleaning frequency to approvals for fee changes. We operate busy day use facilities such as Grasshopper Point and Crescent Moon along Oak Creek in Sedona side by side with Arizona State Parks at Slide Rock, and we maintain these facilities in at least as good a condition, while keeping fees to $8 (vs. $20 at Slide Rock) and still paying rent to the USFS for the concession.
I am not looking for any special consideration for our company. I know such contracts must be competitively bid and we don't shy away from such competition. However, I know that the management of Arizona State Parks has, for whatever reason, been resistant to the idea of private concession operations of entire parks, and I was afraid that this option may not have been presented to you as a viable alternative to closing these facilities.
I would be happy to discuss private concession management any time with you or your staff.
Postscript: Interestingly, the most open state parks director to these ideas was Ruth Coleman in California. Contrary to what one might expect, California State Parks is actually one of the more innovative and creative parks organizations out there in terms of privatizing certain functions and seeking private capital (Texas, on the other hand, is one of the worst -- go figure).
Ms. Coleman was very supportive of our making investments in California Parks (example: Cabins here) where no other park system has been so open. She was nice enough to allow our company to sit on a panel of folks looking at potential solutions to the California Parks budget issues. But her organization was openly hostile to any private participation, and essentially said they would rather see parks closed than remain open under private management. For example, here was probably the most supportive comment we got: "Well, I guess I could accept some private companies in the parks as long as we didn't allow them to make a profit." Again, that was the least hostile statement.
**Footnote: The typical lifecycle of this business is that a public agency runs to us begging to take something over to keep it open. We do so on a quickly negotiated contract, and then find ourselves spending a ton of money to fix all the deferred maintenance problems left by the public agency. About when we finally get the place cleaned up and public trust restored and finally have the prospect to make a little money at the location, the public agency decides it is time to seek competitive bids. Everyone who refused run the place when it was a mess now come out of the woodwork to bid on running the facility now that its fixed up, several of whom seem to have oddly close relationships with senior officials of the public agency. We bid, some of which we win and some of which we lose. If we win, we get to enjoy the fruits of our labor. If we lose, we shrug and try again.
I am always amazed at the lengths to which some folks will try to put lipstick on the light rail pig. One example I found today. Michael Graham Richard wrote on treehugger in June:
The sprawling city of Phoenix, of all places, is showing us how light rail should be done. They just opened a 20 mile line with 28 stops last December, and ridership statistics are beating all forecasts (evidence that the same might be true in other cities where they are afraid to invest because their forecasts are too low) with 40,000 daily riders instead of the 25,000 expected.
But here are the ridership figures from Valley Metro, who runs Phoenix Light Rail. This is weekday ridership (actually number of daily boardings) -- weekend ridership is much less:
- Jan: 30,617
- Feb: 35,277
- Mar: 34,376
- Apr: 37,386
- May: 33,553
- Jun: 29,469
- Jul: 26,554
It is hard to see where one gets a 40,000 figure, especially since a true daily rider/boarding figure would have to average in the lower Saturday/Sunday numbers.
And who cares if it meets some sandbagged forecast or not? Is 40,000 even a reasonable number? Note that even at the higher 40,000 figure this implies just 20,000 round trip customers. This higher ridership number would still make the capital cost of the $1.4 billion line to be $70,000 per round trip rider, and ABSURD subsidy.
Update: The ridership numbers will likely pick up when Arizona State is back in school. ASU and the baseball stadium are about the only major destinations on the line through dispersed, low-density Phoenix (it goes through our "downtown" but that is not saying much -- it is not a big center of employment). Did we really build light rail as another subsidy for ASU students?
Update #2: Let's say there are 50,000,000 big city commuters in the US in cities outside of Boston/NY/Chicago with large transit systems. Serving these commuters at $70,000 each would create a capital cost of $3.5 trillion for light rail. Who on the planet really thinks this is reasonable? Sure, you would get some network effects as you built out lines that increased ridership, but these would be offset by diminishing returns (presumably the first Phoenix line was built on the most promising corridor, and all future corridors will be less promising).
Megan McArdle writes:
Let's be honest, coastal folks: when you meet someone with a thick
southern accent who likes NASCAR and attends a bible church, do you
think, "hey, maybe this is a cool person"? And when you encounter
someone who went to Eastern Iowa State, do you accord them the same
respect you give your friends from Williams? It's okay--there's no one
here but us chickens. You don't.
Maybe you don't know you're
doing it. But I have quite brilliant friends who grew up in rural
areas and went to state schools--not Michigan or UT, but ordinary state
schools--who say that, indeed, when they mention where they went to
school, there's often a droop in the eyelids, a certain forced quality
to the smile. Oh, Arizona State. Great weather out there. Don't I need a drink or something? This person couldn't possibly interest me.
from a handful of schools, most of them hailing from a handful of major
metropolitan areas, dominate academia, journalism, and the
entertainment industry. Our subtle (or not-so-subtle) distaste for
everything from their entertainment to their decorating choices to the
vast swathes of the country in which they choose to live permeate
almost everything they read, watch, or hear. Of course we don't hear
it--to us, that's simply the way the world is.
I have written before that I go out of my way not to mention my
double-Ivy pedigree within my business dealings because it tends to cause my
employees (who often have no degree at all) to clam up. I absolutely
depend on their feedback and ideas, and those dry up if my employees
somehow think that I'm smarter than they are and they start to be afraid to "look stupid."
But McArdle's post causes me to think of another reason not to be snobbish about my eastern degrees. I meet a lot of rich and succesful people out here in the Phoenix area, and I can't remember the last one that had an Ivy League degree. I am thinking through a few of them right now -- ASU, ASU, Arizona, Kansas State, Tulane, no college, San Diego State.... Getting uppity about my Harvard MBA around here only leaves me vulnerable to the charge of "Person X went to Montana State and is worth $10 million now -- what the hell have you been doing with that Harvard MBA?" Here in flyover country, college degrees and family pedigree are not really strong predictors of business success.
Well, the Arizona Republic has done it again. It has published yet another first-section front page water article (this makes about 50 in a row) discussing ways to make demand match supply without once discussing price. This time, the reporting centers on a new online water supply and demand simulation model (here) introduced by Arizona State University. With the model, the public gets to play dictator, implementing all kinds of policies and restrictions on individual consumers to see what effect these command and control steps have on water supply and demand. And it is almost anti-climactic when I tell you that price does not enter in any way into the model.
I probably don't have to remind readers that Phoenix has some of the cheapest water in the country, with prices less than half what they are in, say, water-logged Seattle. Don't you think that might have a little to do with why supply and demand don't match?
Let's say there are about a 1000 key raw materials we use in modern society -- oil, natural gas, iron ore, uranium, bauxite, titanium, gold, silver, etc. Of these, how do we match supply and demand? Well, for 999 of the 1000, we use this thingie called the price mechanism. The exception is water. And it is incredible to me that not one but dozens of articles could be written by our newspaper about matching water supply and demand and not one of them could mention price, the mechanism we use to match supply and demand for 99.9% of commodities. Remember when Hillary suggested a while back we need a special academy for government workers? This is what they would teach -- that all problems can only be solved by government command and control. As I wrote before:
In their general pandering and populism, politicians are afraid to
raise water prices, fearing the decision would be criticized. So, they
keep prices artificially low, knowing that this low price is causing
reservoirs and aquifers to be pumped faster than their replacement
rate. Then, as the reservoirs go dry, the politicians blame us, the
consumers, for being too profligate with water and call for ... wait
for it ... more power for themselves, the ones whose spinelessness is
the root cause of the problem, to allocate and ration water and
I am a big supporter of the work FIRE does to support openness and individual rights in universities. Today, FIRE turns its attention on Phoenix's own Arizona State University:
State-sponsored racial segregation has found a home at Arizona State University
(ASU). ASU's ironically named 'Rainbow Sections' of English 101 and 102 have
been advertised on flyers and on the university's website as being open to
'Native Americans only.'
The Foundation for Individual Rights in Education (FIRE) has written to the
university to demand that the classes be opened to all students. Shockingly,
this marks the second time in less than four years that FIRE has been forced to
protest a racially segregated course at ASU.
It is appalling that ASU would resurrect segregated classes five decades
after Brown v. Board of Education," stated David French, president of
FIRE. "The idea that a class can be 'separate but equal' was discredited long
The 'Rainbow Sections' of English 101 and 102, ASU's freshman composition
courses, were advertised as "restricted to Native Americans only" on the faculty
webpage of Professor G. Lynn Nelson, the course instructor. A flyer
addressed to 'Native American Students' states that they 'are invited to enroll
in special Native American sections of ENG 101 and 102.' It also discusses some
of the differences between the special sections and the 'standard First Year
Composition classes,' making it clear that the special sections offer a
different educational experience.
Anyone heard of Brown vs. Board of Education here? I wouldn't have a particular problem with private groups offering such education with these restrictions, after all I have said many times that the right of free association implies a right not to associate with whoever you want. But public institutions have different obligations in this regard. Its actually not that hard to deal with, and even ASU knows what the solution is:
FIRE last wrote
to ASU in April 2002 to protest a segregated Navajo history class that
limited enrollment to Native American students. At that time, ASU simply dropped
the racial restriction in response to FIRE's letter.
Its OK to have different versions of the same coursework, and probably OK to advertise one version as specially targeted at a particular group, as long as you let individual students make the final decision on which of the University-sanctioned versions are right for them.
Congratulations to Edward Prescott, our hometown hero from Arizona State, who shares this years Nobel Prize in Economics.
Why is it that the Nobel committee gives its highest economics prizes to people who consistently put more intellectual nails in the coffin of socialism, then go out of their way to give the "soft" prizes, such as literature and peace, consistently to communists, socialists, and enablers of totalitarianism?
Marginal Revolution has a good roundup on what exactly this economics prize was won for. I should have been more specific when I said "more intellectual nails in the coffin of socialism". The link explains it better, but one argument against free markets is that recessions are proof of market failure and a "better" system would not have them. Prescott and Kydland, among other things, show how:
Recession may be a purely optimal and in a sense desirable response to natural shocks. The idea is not so counter-intuitive as it may seem. Consider Robinson Crusoe on a desert island (I owe this analogy to Tyler). Every day Crusoe ventures out onto the shoals of his island to fish. One day a terrible storm arises and he sits the day out in his hut - Crusoe is unemployed. Another day he wanders out onto the shoals and finds an especially large school of fish so he works especially long hours that day - Crusoe is enjoying a boom economy. Now add into Crusoe's economy some investment goods, nets for example, that take "time to build." A shock on day one will now exert an influence on the following days even if the shock itself goes away - Crusoe begins making the nets when it rains but in order to finish them he continues the next day when it shines. Thus, Crusoe's fish GDP falls for several days in a row - first because of the shock and then because of his choice to build nets, an optimal response to the shock.
This is very timely. Our new Nobel Laureates did a lot of work on short term / long term economic paradoxes. For example, they work a lot with problems such as prescription drug regulation, where people can be made happy in the short term (lower prices) but really unhappy in the long term (via forgone research and therefore fewer new drugs). Interesting given that Kerry/Edwards are advocating just such a short term fix that would lead to long-term disaster. The press made a big deal out of how the Nobel Committee slapped Bush in the face with its Peace Prize to Jimmy Carter. Don't hold your breath waiting for anyone to point this one out.