Los Altos Opinions Exchange

RE: Theater Economics

Issue: Downtown Parking
Date of Posting:3/24/01
Author: Bob Perdriau
Email:bobp@marketwriter.com

I share John Rees’ concerns about the economic viability of a theater in Los Altos. I think many of the problems in the industry have been around for some years, are difficult to solve and are endemic. The problems are not related in much of any way to the economy, good or bad.

So - I think a theater is a suspect business proposition, but my larger issue is with income to the city. First let’s look at the theater industry. Then we can consider income to the city.

Yes, as King Lear points out, many of the companies facing bankruptcy have taken on large debt loads. My reading of the history indicates they were forced to in order to try and survive in an industry with a great deal of oversupply, dwindling attendance and rising costs for the product (movies). Hence the investments in new theaters, stadium seating, large screens, expensive sound systems, gourmet snacks and so on. All are attempts to be the last man standing. The industry appears ripe for massive consolidation.

Can anybody say Dot Com?

While I haven’t yet seen figures specific to the movie industry, there are a number of studies documenting that people are watching dramatically less television today. Theater attendance is likely falling for many of the same reasons: too many other interests competing for a limited amount of time and a very demanding workload for many people.

King’s comments about a lovely downtown, safe, walking to shops etc are true. The problem is I don’t think anyone would claim that Los Altos has anything resembling a real nightlife. Would a theater change this? Well, University Avenue in Palo Alto has had a real nightlife for a long time and a theater hasn’t been able to survive there. Not even with a large student population near by.

The case for income, and therefore a hotel, is more compelling.

I have a concern with the lack of income to the city from even a successful theater operation and also with the fall back position should a theater fail. The last thing the city needs is more offices, particularly those that are less than grade A. And, again, these do not bring in income to speak of.

Having recently witnessed the city’s struggle to provide competitive pay increases for its employees and funding issues involving pools, gyms, schools and other desired facilities it is very clear to me that Los Altos must find additional sources of income. A hot potato in this town, to be sure, but something that needs to be faced unless we think it can be done through tax increases. I’d guess we have pretty much proved that won’t work.

I doubt the anonymous donor of $1 million will keep it up year after year just so he can go to the movies. (Not to mention the ethically challenged aspect of even a single donation.)

So, the income from a hotel appears very attractive and not something I’d like to see lost to an “iffy” proposition such as a failed theater falling back on office space.

If I were traveling here on business I would find a “non-cookie cutter” hotel at that location very attractive as a place to stay. It would have easy access to the Stanford Industrial Park, to Stanford itself and to industries in Palo Alto, Mountain View, Santa Clara and Sunnyvale. It would also offer the traveler access to the ambiance of downtown Los Altos and likely do as much or more for merchants than a theater ever would.

Finally, the city invested tax money in buying the property. It has, no doubt, appreciated but there is no way to realize anything from that appreciation unless the city can use the property to produce income.

A hotel will do that. A theater won’t.

Maybe the question to ask in telephone polls is: Would you rather the city of Los Altos have income for building gymnasiums, swimming pools and other civic ammenities or would you rather see a movie theater downtown?


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