LANSDOWNE STREET, a Boston nightlife mecca, is about to get a makeover. For $14 million, club mogul Patrick Lyons intends to replace Avalon and Axis, two of the city's most popular nightspots, "with a modern entertainment complex that would include restaurants, sidewalk seating, and a terrace looking toward Fenway Park," as the Globe reported on April 21. The new facility will be able to accommodate up to 2,500 visitors, and will feature "a larger stage, better lighting, more amenities . . . and a sound system 'as good as we've had' or better."
In another story the same day, the Globe reported that the Hynes Convention Center on Boylston Street is also slated for a sprucing-up. James Rooney, executive director of the Massachusetts Convention Center Authority, wants to plow $18 million into a renovation that would add 30,000 square feet of retail space, replace the building's carpeting and drapes, and update its safety, energy, and technology systems.
Two places of public accommodation; two multimillion-dollar upgrades. On the surface, these face-lifts might appear to be equivalent. In fact, they couldn't be more different.
Lansdowne Street will be renovated with private funds. Lyons runs a profitable enterprise, and his $14 million investment is intended to keep it that way. If he turns out to be wrong about what nightlife consumers want and will pay for, he is the one who will suffer the loss.
Rooney and the MCCA, on the other hand, are going to spend public dollars to dress up the Hynes. The convention center is a notorious money-loser, and it will still be one after the renovation is finished. But that's not a problem for Rooney and his colleagues: It isn't their funds that will be at risk.
By all accounts, Rooney is diligent and well-regarded. But that doesn't change the fact that government-owned and -operated convention centers are a mistake. Rarely do they generate enough revenue to cover the cost of building them; few even cover their operating costs.
The Hynes is a case in point. In 1979, Mayor Kevin White unveiled a plan to transform the old Hynes Veterans Auditorium into a far larger convention center. Estimated cost: $35 million. By 1983, the estimate was up to $150 million. When the state auditor added up the total tab in 1990, it had reached $475 million. The Hynes finally paid off its bonds last year, but it remains a money pit, surviving only by means of a generous annual subsidy from Joe and Jane Taxpayer. According to Rooney, that subsidy last year came to $7.8 million.
It was bad enough when the Hynes was Boston's only government-run, loss-making convention facility. Three years ago the state opened another one -- the Boston Convention & Exhibition Center in South Boston. A larger space than the Hynes, the BCEC generates larger losses, too. Last year it needed a $10 million bailout.
The standard defense of red-ink operations like the Hynes and BCEC is that they trigger a "multiplier effect," stimulating so much new economic activity for the region that their own financial losses shouldn't matter.
But that presumes that the hundreds of millions of dollars that have been extracted from the public to pay for these convention centers wouldn't have been spent more fruitfully by the people who earned those dollars in the first place. Given everything we know about government decision-making, it would be absurd to presume any such thing. And lest we forget, there is a negative multiplier effect, too: the cumulative impact of everything that didn't get built, wasn't funded, couldn't expand, isn't making money -- because the state grabbed the dollars and spent them on convention centers instead.
In the real world, losses do matter. Businesses that keep losing money eventually go bankrupt. If the successful management of convention halls were one of the unsolved mysteries of our time, there might be an argument for turning the job over to the government. But there are plenty of private, profitable exhibition venues that have figured it out. Two of Boston's biggest are the Bayside Expo Center and the World Trade Center.
Rather than sink another $18 million into the Hynes, the state should auction it off to the highest bidder. Let the free market determine how best to use the site. If a convention hall on Boylston Street makes economic sense, private investors will gladly step up to the plate. If it doesn't make economic sense -- as 25 years of red ink would suggest -- Boston will be better off without it.