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Looking at numbers to try to figure out how much money and liquor flow into Lawrence during a Final Four
Some of the strongest memories I have of KU’s past two Final Four appearances involve a Patton-like army of beer trucks invading downtown Lawrence. I was doing daytime journalism on both national championship game days in 2012 and 2008 and still remember the caravan of beer trucks downtown getting all the bars stocked for the evening game.
We’ll see what memories are made this time. An early contender: realizing I’m no longer hip enough to understand why a large number of people are standing in line for a band called Panic! at the Disco. In case you were wondering, that is why a line of people stretched around the block outside The Bottleneck in downtown Lawrence today. (If they want to see panic at a disco, tell my wife to let me wear my open collar disco shirt.)
I’m guessing the beer trucks, though, also will be a Final Four memory again. Liquor is big business all year in Lawrence, but it becomes even bigger during the Final Four. I’ve spent some time crunching numbers to try to give you an idea of some of the financial impacts a Final Four appearance has on Lawrence.
First, let’s look at the liquor side of things. I looked at figures from the state’s liquor enforcement tax. To be fair, I’m not an expert in this tax. In fact, I only like one of the three words. But the numbers from 2012 and 2008 — the last two times the Jayhawks were in the Final Four — do provide some evidence of the bump in liquor sales. This tax is charged to people who buy liquor at a liquor store, or bars and restaurants that buy it wholesale.
In 2008, the big bump came in March. It showed that there was a 22 percent increase in liquor enforcement tax collection in March 2008 compared with March 2007. The more fun number, though, is the total increase in sales. The numbers suggest liquor sales in Douglas County increased by $581,200 in that one month. But remember, only a portion of that amount represents retail sales. A good amount of it represents wholesale purchases made by bars and restaurants. So the actual retail value of all the additional liquor sold in that month would be significantly higher.
Fast forward to 2012, and the big bump in tax collections showed up in April, when liquor enforcement tax collections jumped by about 17 percent. That equated to about $617,000 in additional sales, with the same caveat that a good portion of that amount is wholesale purchases.
Those two months both produced about $50,000 in additional tax collections. You might think that is a nice bump in revenue for the city, which will cause some state tax collector to laugh at you. You silly person, the state does not share liquor enforcement tax revenue with cities. It keeps all of that.
However, there are other types of taxes that the city does benefit from during the Final Four. There is another type of liquor tax called a drink tax that bars and restaurants serve on liquor that you buy at their establishments. The city does get a share of that money.
The other tax, of course, is the general sales tax. That catches lots of items, including the Final Four T-shirts you buy, the semitrailer of Doritos, the 15 new big-screen televisions and other entirely reasonable supplies needed for a Final Four party.
Those numbers historically haven’t soared as much as you might think. In 2008, sales tax collections during the prime Final Four period actually were flat to slightly down. In 2012, there was a decent increase of about 5.5 percent during the Final Four period.
But there is also some evidence that even when spending does go up for the Final Four, consumers maybe pull back a little bit later in the year. For instance, the 2012 Final Four bump didn’t result in a big increase for the year. City collections were up 5.2 percent for the entire year. That is a really good sales tax year, but there have been plenty of years when sales tax collections in Lawrence have increased by 5 percent or more even when we are not in a Final Four. In 2008, sales tax collections for the year were up 3.8 percent.
The bottom line is that it takes a lot of T-shirt sales and party trays to move the sales tax needle in a big way in Lawrence.
Now, enough of that talk. I have to start unloading the Doritos truck. Have fun and be safe this weekend.