We knew it was coming but it still stings. Art Basel this week announced the cancellation of its December 2020 fair due to the coronavirus pandemic.
“Given the current situation regarding the pandemic’s impact, which spans from South Florida to other parts of the country and the world; limitations and uncertainty about the staging of large-scale events; international travel restrictions and bans, as well as quarantine regulations within the United States and internationally, alongside other factors, Art Basel has no other option but to cancel the 2020 edition of Art Basel in Miami Beach,” organizers announced this week.
The annual event was scheduled to take place at the Miami Beach Convention Center from December 3 through 6. Following the cancellation of the Art Basel fairs in Hong Kong and Basel, all eyes were on Miami Beach.
Noah Horowitz, Director Americas, Art Basel said: “It is with great regret and disappointment that we announce the cancellation of our December show in Miami Beach, as we know how crucial our show is for our galleries, as well as for the greater Miami arts community and economy.” So important that the City of Miami Beach renovated its Convention Center around it.
While the impact will be widespread – felt by local businesses and organizations – what does the cancellation mean for the City’s budget which continues to be challenged by the pandemic?
At the most recent budget meeting in July, Miami Beach CFO John Woodruff said that with cost saving measures taken in the initial stages of the pandemic and in the ensuing months, he projected the City would need to use $2.8 million of its reserves to balance this year’s budget. For FY 2021 which begins October 1, he told City Commissioners $8 million would likely be needed. That would leave a balance of $69.8 million “well above two months of reserve,” he said at the time.
In an email this week, Woodruff wrote, “The cancellation [of Art Basel] will result in lower than projected resort taxes. We don’t have an exact number but a safe high level estimate is over a million dollars of resort tax revenue. If needed, we will likely extend the use of temporary cost saving measures (ex. savings from non-essential expenditures, hiring freeze, etc.) instead of using more of the General Fund reserve.”
There may be some savings, he noted, to “hopefully offset a portion of the revenue loss by not having to spend additional money to support such a high impact week.” He expects to update revenue projections in the November/December timeframe “to re-validate or change our projected numbers for FY 2021.”
Contingency plans to protect the Convention Center’s Reserve Fund from further depletion will now kick in. Due to the cancellation of events, Woodruff told Commissioners in July that while the fund balance stood at $12.9 million at the end FY 2019, the Convention Center could “burn through $8.8 million of that reserve.”
With no events through September 30, $4 million is needed from reserves. That number assumes $2.2 million in revenue from the U.S. Army Corps of Engineers for the Alternate Care Facility that has been at the ready since April to handle any overflow of COVID-19 patients from local hospitals though no patients have been treated there. (The numbers were calculated before the Corps indicated it would extend its lease through October 8 with an option to renew for another 30 days.) An additional $4.8 million in reserves is projected to be used during FY 2021 to balance the budget due to the continuing impact of COVID-19 on events.
Unknown at the July budget meeting was what would happen with Art Basel. “In the first quarter of next fiscal year (Oct thru Dec) we have 17 events with a net revenue of $1.7 million at risk and approximately half of that is for Art Basel so that loss will be approximately $850,000,” Woodruff explained. “We have a contingency plan with Spectra, the operator of the Convention Center, to cover that lost revenue through additional expense reductions. This should help us avoid having to use any more of the Convention Center fund reserve.”
In an email to Commissioners in July, City Manager Jimmy Morales said the contingency plan was for "expense reductions [to] include $1.1 million in personnel cost savings (frozen positions, furloughed positions, no merit/COLA) and 600,000 in operational savings (reduction in capital expenses and various other areas).”
The next edition of Art Basel in Miami Beach will take place from December 2 to December 5, 2021, with preview days on December 1 and December 2, 2021. Art Basel’s commitment to the City runs through 2023 with an option for an additional five years at the Convention Center.
Art Basel is Canceled. Now what for the City’s budget?:
Expect further “cost saving measures”
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Among the properties that could be named, the Convention Center