Showing posts with label Madrid. Show all posts
Showing posts with label Madrid. Show all posts

Friday, February 05, 2016

Selling Emotion: City branding

Madrid. What does it stand for? If you have any suggestions, you may wish to direct them to Carlos Chaguaceda. He is the director-general for tourism in the community of Madrid, which is the region of Madrid as opposed to just the city.

Interesting chap, Chaguaceda, as he doesn't seem like the normal type you would expect to be appointed as a regional government's head of tourism. He is, dare one say, a professional. Which is not to say that there have never been other professionals in similar positions in other Spanish regions, such as the Balearics. But which is to say that they haven't necessarily been obvious.

Chaguaceda's CV includes having been the director of corporate communications for Coca-Cola España. In other words, he knows a thing or two about marketing. He also been Brussels correspondent for Antena 3 Televisión. He knows a thing or two about journalism and the media.

Last November, a manual written by him was published. Its title in English is "You Can Be News". In explaining the book he observed that in the world of the media, if you're not in the media, then you don't exist. Everything, where the market is concerned (whatever this market might be or how it is defined), is dependent upon communication. From what is communicated comes the prestige that is wished to be created. But it isn't enough to be visible in the media, there has to be an understanding of the roles played by advertising, social media, creating viral communications and so on.

All this should be obvious, but sometimes it does require someone to state the obvious. And there is more. Another book that Chaguaceda has penned translates as "The Happy Monkey". It is more scientific in that it explores brain functions in generating emotions and in considering how there is a common process for finding happiness.

This latter book might all sound rather obscure and technical and perhaps it is, but its message is not. Its application is what Chaguaceda is now considering within the broad context of media management and marketing for the community of Madrid. He wants to make an emotional connection between visitors, the city of Madrid and its surrounding areas.

Though his geographical responsibility is broader, the city is of course crucial. It bears the same name as the region and so it is what the outside world recognises. But while there is recognition and visibility as well as there already being high numbers of visitors, what is that Madrid represents? What does it stand for? What or where is the emotional connection and the impulse towards visitor happiness?

Chaguaceda says that a brand (in this case a city or region) means creating an experience, an expectation and an emotional relationship. But what emotion is Madrid associated with? Indeed, what is it associated with full stop? Other than Real Madrid, in global terms, it's a struggle to think what this might be. The same cannot be said of other major European cities, such as London, Paris or Rome, or even certain cities in the next tier, like Milan or Amsterdam.

Madrid is already a successful city, meaning that the region is successful, but success needs to not only be consolidated it has to be enhanced. What Chaguaceda is aiming to do should, therefore, be of interest to Palma and to Mallorca. If one were to ask the same questions of Palma as of Madrid, then what would the answers be? What actually does Palma stand for? What is it that creates an emotional bond? What is its iconic imagery?

With Palma, though, I would suggest that the challenge is different to the one Chaguaceda is grappling with. While Palma is known and is visible, it is the region (Mallorca) which is far more known and visible. It is also something with which one is well aware that there is an emotional bond, and one that has existed for decades. The same, I would argue, doesn't apply to Palma. Chaguaceda says that co-operation with the city has been straightforward because essentially the city and region are promoting the same thing. In Mallorca, however, it can appear as if Palma is tangential to the rest of the island and is overlooking the strength that the Mallorca "brand" gives it as a city.

Communication for Palma has been getting better, and the city is becoming more successful, but the communication is still well short of what it should be. The same can most certainly be said for Mallorca as a whole and for individual municipalities, whose communication is, in overseas terms, all but non-existent. The two - the city and island - need to dovetail. They draw strength from each other and not separately. The icon of Mallorca is the emotion of decades. The marketers (and politicians) might do well to remember this.

Thursday, July 02, 2015

Con Ustedes, Los Beatles: 50 years ago



This was the set list. 1. "Twist And Shout". 2. "She's A Woman". 3. "I'm A Loser". 4. "Can't Buy Me Love". 5. "Baby's In Black". 6. "I Wanna Be Your Man". 7. "A Hard Day's Night". 8. "Everybody's Trying To Be My Baby". 9. "Rock And Roll Music". 10. "I Feel Fine". 11. "Ticket To Ride". 12. "Long Tall Sally".

When this set list had been played in other European cities, the songs would not have been heard above the screams. This was the set list for the first performance of The Beatles in Spain. The day was 2 July, 1965. The place was the Plaza de Toros de Las Ventas in Madrid. There was to be only one other concert in Spain, the next day at the bullring in Barcelona.

It is said that the atmosphere and the sound were better in Barcelona, but neither concert was like it would have been in cities in countries that were not living under the repressive instincts of the Franco regime. At 10pm on the night of 2 July, the introduction was made - "señoras y señores con ustedes, Los Beatles". "Ustedes" summed it up: the formal form of you. The arena was only half full. Potential attendees had been deterred by concerns of police surveillance and bans by their parents. There was another reason for the low attendance: The Beatles weren't anything like as well known as they were in, say, Germany, France or Sweden. For a kick-off, their records couldn't be openly bought. Radio disc jockeys of the time had to go to London to acquire them.

Before the concerts, it was reckoned that, at most, 3,500 copies of Beatles' albums were owned across Spain. A Beatles' album in the UK would clear one million copies. This was one reason why Brian Epstein was reluctant to have the "boys" play Spain. He couldn't see there was any business advantage. Yet, of those 3,500 copies, some 2,000 were acquired by people who probably didn't even have a record-player; there were only 1,500 registered sales at that time. It was this fact that promoter Francisco Bermúdez used in persuading Epstein. If people would buy records even if they didn't have the means to play them indicated a demand, to which could be added the "underground" of listening to what were meant to have been forbidden foreign radio stations. 

Bermúdez had stuck his neck out in bringing The Beatles to Spain, and the promotion was certainly not plain sailing: not anything like it. A further reason for low sales was that tickets and posters were seized by the authorities which had sought to prevent the concerts going ahead. They were only released a week ahead of the Madrid concert, the regime having had a change of heart and the interior ministry having finally given permission. To have banned the concerts, the regime concluded, could have provoked a diplomatic row with Britain: the members of The Beatles had just been named in The Queen's birthday honours list.

Bermúdez also had to contend with fierce criticism from the Catholic Church and almost all the press. Threats to morality, threats of revolutionary thought, threats of "riots", threats to the regime and to "Spanishness". It is remarkable, given all the background, that the concerts ever went ahead.

John, Paul, George and Ringo arrived at Madrid airport at twenty to six on the afternoon of 1 July. Wild scenes of their arrival at other airports were not replicated, though somehow some 200 fans had managed to congregate to greet them, despite the heavy police presence. They stayed at the Hotel Fénix - now the Gran Mellá Fénix - in suites 123, 223, 323 and 423. There were no parties, no real going out, though it is said that Brian went to the Bourbon club, one of the few with a "gay" ambience. They did receive one notable visitor, though: the bullfighter El Cordobés, who wanted his photo taken with them. There were other photos to pose for. One that seems amazing now was with two officers from the Guardia Civil: John and Paul are saluting them.

The press coverage featured one double-page spread under the headline: "Los Beatles, Inhibición". There is a photo of two or three girls running with a banner which says "love you", another of five or six people dancing, a further one of The Beatles performing, John with the Cordoban hat that he wore throughout the concert. It lasted barely an hour and that was pretty much that, save for moving on to Barcelona for the second performance. It was, except for three concerts during a mini-tour of Germany the next summer, the last time The Beatles performed in Europe.

Last night at the Gran Mellá Fénix a special fiftieth anniversary occasion would have cost up to 1,425 euros. In 1965, the concert cost as little as 75 pesetas.


Tuesday, May 12, 2015

The Interest In Death

San Isidro, Sant Isidre, Saint Isidore. There are two Isidores. One was Isidore of Seville, the Archbishop of that city from the seventh century, considered to be "the last scholar of the ancient world". The other was Isidore the Farmer, aka Isidore the Labourer and so in Spanish, San Isidro Labrador. He was born in Madrid, probably in 1070. There is some uncertainty as to when he died. Almost certainly it was in 1130, though the only known official documentation of his death suggests that it was in 1172, which represents a fair difference. Isidore the Farmer was someone of great piety who performed miracles and who didn't, unlike many a saint, meet a gruesome end; nor did Isidore of Seville either. When his end came, and despite the 42 year variance in the year of his death, it was on 15 May. Feast days often celebrate death, and Isidore the Farmer is no different.

Among other patronages, Isidore is the patron saint of farmers (naturally enough) and also of Madrid, again naturally enough. He has lent his name to the city's Feria de San Isidro, which started last Friday. The fair will go on for a whole month. It is one that has been called the greatest in the world, but it depends what is being considered when granting the fair this accolade, for the fair is, more than anything, a celebration of bullfighting: on every day from 8 May to 7 June, there is a bullfight in Madrid.

The significance of the fair is enormous. It symbolises everything about what might be dubbed an "old" Spain and a "new" Spain and about political clashes and rivalries between the Castile of Madrid and the Catalonia of Barcelona, which have their roots in centuries past. When Catalonia banned the bullfight, the ban was denounced by bullfight supporters as a political act, one against "Spain". To an extent, the ban was precisely that, though the impulse behind it had been popular legislative petition.

While the fair symbolises changes in attitudes of Spaniards - bullfighting as a whole is now less popular than it once was - it can also be said to be symbolic of attitudes of foreign observers. There has never, as far as I am aware, been a survey of tourist and foreign resident opinion, but were there to be, the finding would almost certainly indicate opposition to the bullfight. Yet, there was a time when such foreign attitudes were different, and Ernest Hemingway voiced them better than anyone.

Hemingway's support of bullfighting - one of only three sports in his estimation (along with motor racing and mountaineering) - has to be viewed in the context of the time when he was writing and also of his contrariness: here, after all, was someone who lent his support to anti-fascism and to Catalonia as well. But then bullfighting was not used as a symbol of political difference in those days, albeit that Hemingway's point of reference for bullfighting was what he observed in Castile.

In a "New York Times" article of September 1932, which was a review of Hemingway's "Death In The Afternoon", a book devoted to bullfighting, the author was quoted thus: "The only place where you could see life and death, i.e. violent death now that the wars were over, was in the bullring and I wanted very much to go to Spain where I could study it. I was trying to learn to write, commencing with the simplest things, and of the simplest things of all and the most fundamental is violent death".

Of course, Hemingway was to be proven wrong when it came to wars, but what he observed was what he felt was a human and societal condition in Spain. "If a country is to love bullfights," the article continued "the people must have an interest in death" and they did so, he argued, in Castile. Strip away the trappings of the spectacular, the notions of honour and of sport, and what was left was death - that of the bull, of the horse, of the matador.

Hemingway was seduced by a certain romanticism and by his desire to discover an alien culture. But this was the 1930s. The romanticism has long ceased to be, Spain is no longer alien. Yet, does something linger? Is Hemingway's thesis regarding an "interest in death" still current? Is it this from which bullfighting derives its support?

Hemingway's Spain was the "old" Spain, one whose societal attitudes certain politicians, notably Felipe González and José Luis Zapatero, have understood and have sought to alter. The attitudes of "new" Spain are reflected in a variety of ways that, for example, reject the conservatism of the church or the death in the afternoon. Yet, the "old" Spain is clung to. It is a comfort of tradition, the greatest fair in the world, the interest in death.

Wednesday, January 14, 2015

Out Of Sight ... The Balearics

Luis de Guindos, Spain's minister for the economy and competitiveness, was in Palma on Monday. The five-star Hotel Valparaiso was the setting for a conference to which he had been invited as a speaker. Its theme was "the keys to economic recovery in Spain". Perhaps Sr. de Guindos would have marvelled at one key to this recovery. He was standing inside it. The Valparaiso has been bought by Chinese investors.

The minister was able to explain how Spain was now on the cusp of economic recovery, the keys having already been partially turned, and the attendees were able to hang on his every word. And my, what attendees they were. Abel Matutes, one-time minister for foreign affairs and owner of the Ibiza-based Palladium Hotel Group; two from the family Fluxá - Lorenzo of Camper and Juan Antonio from Lottusse; the director-general for Santander Bank in Spain; members of the regional government; the director-general of Endesa in the Balearics; bosses of Alcampo and El Corte Inglés; representatives of business associations, such as the Chamber of Commerce. The great and good came to hear what Sr. de Guindos had to say and, for the most part, they were happy with his words.

But they weren't totally happy. Abel Matutes noted that de Guindos could have offered greater recognition of the Balearics. The president of the Balearics Business Confederation said much the same, as did the vice-president of Harinas de Mallorca, the flour makers. In a way, their remarks reflected the tensions which are apparent at governmental level. The regional government has its issues with Madrid over financing, as it does over oil prospecting. These are issues which further reflect a longstanding grievance in Mallorca and the Balearics; that the islands contribute much to the overall Spanish economy but are too easily disregarded or ignored. And such ignorance can lead to the occasional gaffe. Let us not forget Mariano Rajoy having referred to the "island of Palma".

This grievance may be purely one of perception, but might there be more to it? The Balearics have deputies in the national parliament. The islands have the odd representative within the upper echelons of governmental administration, such as the tourism secretary-of-state Isabel Borrego, but she isn't a cabinet minister, and when one looks at the background of the current cabinet, one begins to understand why there might indeed be more to the grievance than simply a perception of neglect.

Including prime minister Mariano Rajoy, the cabinet comprises fourteen ministers. Of this fourteen, four of the current incumbents are from Madrid: José Manuel García-Margallo, foreign affairs: Rafael Catalá, justice; José Ignacio Wert, education; and de Guindos. Three more - the vice-president Soraya Sáenz de Santamaría, the interior minister Jorge Fernández and the minister for agriculture and the environment Isabel García - are all originally from the historic city of Valladolid in Castile and Leon, some 180 kilometres to the north-west of Madrid. Ana Pastor, the minister for development, is from Zamora, west of Valladolid.

But not hailing from Madrid itself has not stopped Sáenz de Santamaría having been a deputy for Madrid or Cristobal Montoro, the finance minister (from Jaén in Andalusia), having represented Madrid in Congress. Then there are the three ministers who have left the cabinet over the course of this administration: all from Madrid.

To these one has to take into account Rajoy from Galicia, where Ana Pastor was once the regional minister of health and José Wert was a deputy for La Coruña, and the two Basques - the ministers for defence and health, Pedro de Morenes and Alfonso Alonso Aranegui.

There are, therefore, only two ministers who are not part of a Madrid, Castile, Galicia and Basque elite of interconnection that resonates with the history of power in Spain. Madrid itself; the region of Castile which in essence was to create Spain and where, in the city of Valladolid, Isabel of Castile married Ferdinand of Aragon; Galicia, the region of Franco's birth and of Santiago de Compostela, the Saint James centre of Spain's religiosity; the Basque Country, historically one of the principal regions for banking and industry.

One of the two "outsiders" is José Manuel Soria, the minister for tourism, industry and energy, and thus Isabel Borrego's boss. He is from Las Palmas in Gran Canaria, as far from Madrid as it is possible to get. He is from the "other" islands, but he is not welcome in the Balearic Islands because of the oil issue. It might be said that he has gone Madrid native in disregarding Balearic sensitivities over oil.

When one considers the cabinet make-up, one can see why there might be more than just perception at work. This might equally apply to other regions of Spain, but those regions are closer to home; home being Madrid. Too little recognition of the Balearics? It might not be all that surprising.

Friday, September 12, 2014

Holiday Lets Confusion And Challenges

When Balearics' tourism minister Jaime Martínez said that there was consensus regarding holiday let legislation envisaged in the new tourism decree, we knew that he was talking nonsense. Confirmation of this has come from the non-hotel complementary offer of tourist attractions, restaurants, clubs and retailers which met at the Chamber of Commerce on Tuesday and which today will present its challenges to the decree. These will include a demand that owners of private apartments be allowed to commercialise these apartments as tourist accommodation and advertise them as such through promotional channels such as websites.

The complementary offer also wants movement in two other areas - all-inclusive and hotels' secondary activities. On the first it is calling for minimum quality standards and a minimum period during which all-inclusive can be offered. This latter provision would tackle what does happen in some hotels whereby daily all-inclusive can be obtained. As far as minimum standards are concerned, Martínez has alluded to their introduction without as yet specifying what they might be. On secondary activities, such as having a club or restaurant that is open to the general public, the complementary offer wants a ban placed on keeping these activities going when hotels are otherwise closed, and so is insisting that there be a specific licence which allows them to keep going.

There has been a good deal of other news about the holiday-let situation over the past few days. A detailed study of the situation across Spain by Barcelona-based lawyers Iuristax suggested that the differences in regulation in the various regions of the country could be harmful to the Spanish economy. Their reasoning is quite simple: the different regulations lead to a lack of clarity and to a rise in confusion. Without a harmonised approach there are bound to be discrepancies in control and quality, and these could do a great deal of harm, leading to tourists choosing to opt for alternative destinations having had less than satisfactory experiences.

This lack of harmony was going to be evident from the moment that the national government handed responsibility for regulation to regional governments. It was a strange thing to have done, given, as I have pointed out previously, that residential tourism was identified as a strength of Spanish tourism in the national tourism plan drawn up by the current Spanish Government. The consequence of this is the chaos of different regulatory systems.

From the national confederation for hotels and tourist accommodation (CEHAT) has come a finding that demand for holiday lets is greater among Spanish tourists than foreign visitors. While hoteliers might view this finding with concern, it should also be taken as an indication that the domestic tourist market, which has been in the doldrums for a few years, is genuinely recovering. It was up by around 10% in August.

And coming back to the chaos of different systems, in the Community of Madrid, the association of tourist apartment businesses is taking the regional government to court over its regulations. Moreover, the national competition commission has now got involved. It is studying the text of the Madrid regulations and is seeking detailed explanations from the government. This in itself could be an interesting move. The competition commission has, thus far, stayed out of the holiday-lets arguments. If it becomes more closely involved, it might just make certain regions act rather differently.

Monday, January 20, 2014

Extreme Tourism Promotion: Extremadura

Extremadura is the fifth largest region of Spain. It is also one of the poorest regions and has been hit particularly hard by the depression in the construction industry. Its unemployment rate is said to be 33%, higher therefore than the official national average (one says official, because there is always a caveat when it comes to unofficial employment, namely the black economy). This caveat notwithstanding, things in Extremadura are definitely tougher than most of the rest of Spain, and they might just get tougher if its public sector were to be trimmed back; it accounts for a third of what employment there is in the region.

The reliance on the public sector and on construction makes Extremadura a case example of what is inherently wrong with Spain's economy as a whole but it also emphasises, where the public sector is concerned, a Catch-22: cut public-sector employment significantly, unemployment goes up and there is little by way of an alternative. Unless, that is, there is some form of attitudinal and cultural change; the question being, though, to what.

For other parts of Spain there is always the get-out clause which is tourism. But Extremadura does not have a vast tourism industry. Landlocked, in 2012 it attracted slightly more than 200,000 foreign tourists in 2012. It's not even peanuts. As a region, though, it does have some things going for it. There are World Heritage sites, such as the monastery of Santa María de Guadalupe, and it is a region famed for the gastronomy of "jamón ibérico".

The tourism numbers in Extremadura are swelled by Spanish visitors to nearly 1.5 million, but it is foreign tourism that the region needs badly. What it gets at present is skewed in favour of Portuguese visitors, the largest tourism market, with the French, the British and the Germans trailing these. Consequently, a strategic effort to attract more foreign tourism has been put in place, with nature, gastronomy and culture very much part of this strategy (as you might expect). The region is strengthening its efforts to bring in French tourism and is eyeing up the American and Scandinavian markets; unlike the Balearics, the number of Scandinavians visiting Extremadura is negligible.

A comparison with the Balearics is impossible to make, except in one possible way: the amount of money that is being spent on tourism promotion. The Balearics budget for 2014 is less than three million euros. Extremadura's is, get this, just under 25 million euros.

If Extremadura might be a region of Spain which is not that well-known, Madrid would not be. This is the Community of Madrid and so not just the city. It suffered a major fall in its tourism last summer. In August it was down by more than 20%, and this was foreign tourism. Madrid, clearly, suffers from the same disadvantage as Extremadura in being landlocked, but it has very much stronger advantages in terms of international awareness and a diversity in the tourism offer. Despite this, it experienced its fall in tourism numbers, one that came as a genuine shock.

In an attempt to plough back this lost market, Madrid is increasing its tourism promotion budget. In 2014 it will be up by a whopping 68% to 12.4 million euros; only half of what Extremadura is planning on spending but still considerably greater than the Balearics. 

One looks at these figures for tourism promotion and wonders how it can be that the Balearics, with the enormous tourism industry it has, can spend so little. But though there is vast difference in the spend, there is also a vast difference in tourist awareness. No one has ever heard of Extremadura. Everyone has heard of the individual Balearic Islands.

This said, everyone has heard of Madrid and everyone has heard of Catalonia - its Costas and Barcelona certainly. And Catalonia doesn't have the disadvantage of being landlocked. It attracts more tourists than the Balearics and it will be spending more than Extremadura and Madrid put together in 2014, thanks in no small part to revenues from its tourist tax.

The circumstances, though, are different. For Extremadura, a virtual economic basket case of a region, it is a case of needs must. It needs any economic activity it can lay its hands on, so the 25 million is probably a wise investment. For Madrid, there was the shock of the decline last summer. For Catalonia, there is the windfall that has come from the tax. So, is it fair to compare these budgets with that of the Balearics?

Mallorca and the other islands do, certainly in summer, pretty much sell themselves, but this shouldn't be an excuse for neglecting promotion. Even if promotion is designed to keep the islands at the "front of mind" of tourists who are very familiar with them anyway, then it is promotion worth doing and worth spending money on.

Sunday, December 15, 2013

Pride And Avarice: The collapse of Eurovegas

Avarice, also known as greed, is one of the Seven Deadly Sins. Its broad definition is well enough understood, but there is a bit more to it than just the pursuit of material possessions. Avarice can inspire, so theologians would argue, a manipulation of authority.

Though avarice is addressed in The Bible, gambling is not expressly discussed. Nevertheless, and again taking guidance from writers and thinkers in such matters, it can be interpreted as being contrary to The Tenth Commandment, the one that has to do with covetousness. Moreover, it can bring on sloth, a further Deadly Sin, because it destroys the work ethic. In broader, non-religious terms, but ones nonetheless raised by theologians, gambling can be seen as bad governmental policy. It undermines morals and invites corruption**.

The Spanish newspaper "La Razón" headlined its article about the Eurovegas project in Madrid being dropped thus: "La avaracia de Adelson trunca Eurovegas". Literally, this means Sheldon Adelson's avarice truncates Eurovegas. A better verb than truncate might be sink, but whether truncated or sunk, the consequence is the same: 30 billion dollars will now not be invested in Eurovegas and complementary "integrated" resort projects in the Spanish capital.

The reason why "La Rázon" (which means "reason") has spoken about avarice is that demands which the Las Vegas Sands Corporation had made on the Spanish Government in return for its 30 billion dollar largesse were unacceptable. In financial terms, they were the payment of lower gambling taxes and guarantees of financial compensation in the event that future governments alter legislation which proves disadvantageous to the company. Even had the government been willing to consider the latter, it would have run up against a problem with Brussels. The compensation clause was a non-starter.

The demands were apparently non-negotiable and had also been introduced late on in negotiations. It seems almost inconceivable that the company wouldn't have been aware of European competition law which would have made the compensation demand impossible. Maybe it was unaware, but a conclusion that might be drawn from this demand is that the company either got cold feet about the Madrid project or saw less restriction elsewhere. Las Vegas Sands is looking at Asia as somewhere to pursue its "integrated" gambling resorts, and in Asia there might also not be a similar problem to that in Spain regarding smoking. The company had wanted the smoking ban not to apply to Eurovegas, another demand that was always going to pose a potential problem.

Or had it been the case that Las Vegas Sands would have thought that Spain was that desperate for investment that the government would simply roll over and say yes? It's doubtful. The project would have meant huge money but even Spanish governments have to abide by some rules and to be seen to be at least partially even-handed; it couldn't start making a massive exception on smoking without raising an equally massive objection from all sorts of business sectors across the country.

But, and here one comes back to the Deadly Sin, there is what avarice can inspire, i.e. a manipulation of authority. Perhaps "La Rázon" had adopted a rather more philosophical attitude to its definition than just plain material gain. The demands, it could be argued, were an attempt at manipulation. Then there is the notion that gambling can invite corruption, and here the Eurovegas story gets that bit murkier. A judge, José Manuel Gómez Benitéz, said some time ago that Eurovegas would be a "source of corruption", and let's face it, the last thing that Spain and its government need right now is any further whiff of that.

There were rights and wrongs associated with the Eurovegas project, some of the latter expressed by the Church. It may not have gone down the Deadly Sins line or even invoked The Tenth Commandment, but it is not exactly well disposed to gambling. One does have to wonder if the Church, and the ruling Partido Popular has sought to shift Spain back to more traditional Catholicism, might have been bending some ears at government level.

Even if it had, 30 billion dollars weren't to be sniffed at. Projects of such scale do not come along every day: 11 million tourists annually, most of them well-heeled you would think, 250,000 jobs. These are a lot to lose, though it had been argued that most of the jobs would have been low-paid. Maybe they would have been, but then jobs in the tourism industry tend to be low-paid; they are still jobs and they are still paid.

Las Vegas Sands may have sought to extract pounds of flesh, but one fancies there is more to the project truncation than this alone, and some of it will be on the government's side. The media will blame Sheldon Adelson and his alleged avarice, but has there been a different Deadly Sin at play? Pride perhaps.

** Kirby Anderson from https://bible.org/question/why-gambling-wrong

Photo sourced from "La Vanguardia".

Tuesday, October 15, 2013

The New Model Regional Financing System

A solution which is sometimes offered to Spain's economic woes is to do away with the system of regional government. The regions are a drain on national finances, they have spent money poorly, they have acquired vast debts. The arguments trotted out against the regions are familiar enough but they carry little force politically. There is no obvious will to reform the structure of regional government or to go so far as to eliminate it. Even were there such a will, there is one very major obstacle that would prevent it - the Spanish Constitution.

Instead, the focus has been on how to make the regions more financially efficient, and efficient financing is very much on the agenda at present, while the debate surrounding it may prompt a reconsideration of the nature rather than structure of regional government, making the regions more not less responsible for finance and creating what would be more a genuine financial and fiscal federal arrangement than the one which currently exists.

The Spanish Government has said that it will look at a reform of the present system of regional financing next summer. Certain regions, especially Madrid, want this brought forward; regional financing needs to be examined with greater urgency.

The financing of the regions is hardly a straightforward matter. The Aznar government tried to make it more straightforward in 2001 by introducing a reform which would have, it had hoped, stood for all time and taken away the regular, five-yearly rounds of negotiations which had only succeeded in generating political tensions. Almost from the moment the 2001 reform was introduced, it was apparent that it was unworkable. A weakness was to have assumed that one key factor in allocating national revenues to the regions - that of population increase - would be essentially evenly distributed. It was not, and the Balearics, by going through a boom in population, was a region which demonstrated just how uneven it could be.

The most recent reform was in 2009 by the Zapatero government. Under this reform the regions got more from the national tax revenue pot - 50% of income tax and IVA (VAT) for example. There were various funds set up, one of them called the Competitiveness Fund from which the Balearics has done quite well, and the system of equalisation between the regions was made more flexible and adjusted annually.

Though in theory all regions benefited to some extent from the 2009 reform, it was not without its critics. They focused on the political as much as the financial aspects of the reform, and politics have always played a part in how the regions' finances have been worked out. In 2009, the political criticism fell squarely on Catalonia. It had been pressing for a different financing arrangement and it got much of what it wanted, prompting attacks on the Zapatero administration for having in effect bought Catalonia's support.

The Catalonian dimension sours current opinion in several regions, especially those led by the Partido Popular and which make greater contributions to the overall revenue pot from which their finances are then redistributed. Madrid is one such region. The Balearics is another.

The starting-point for evaluating these finances is what the individual regions bring in from the tax-gathering function they perform for national government. In terms of tax capacity per head of population, Madrid stands in first position. Second is the Balearics; its tax raising per capita is three times greater than the region with the lowest capacity, the Canary Islands.

Based on 2010 figures, the Balearics had a tax capacity of 2,692 million euros. The final totting-up, which took into account different funds in addition to redistribution of income tax and IVA revenues, left the Balearics short by 300 million. Madrid was short by around 2,800 million. The issue of efficient financing centres, therefore, on what some regions believe to be unfair. They, in effect, subsidise other regions of Spain, and this has been an argument that Catalonia has long made as part of its claims for greater autonomy or even independence.

Regions like Madrid and the Balearics are politically very different to Catalonia and though they believed that they lost out to Catalonia under the 2009 reform (and still the system in operation), they have a similar gripe. It is because of this that the reform to be undertaken by the Spanish Government is seen as being potentially highly significant. Not only will it be political in addressing the vital issue of Catalonia's finances and so therefore the drive towards independence or not, it might just herald a move towards more of a fiscal federalist state, one in which, because it shouldn't be forgotten, there are two regions which operate in a totally different way to all the rest - Navarre and the Basque Country. They keep their tax revenues and hand over a percentage to national government. As such, they are not a part of the system of redistribution. Might they be the model for a new regional financing system?

Monday, September 10, 2012

Viva Eurovegas!

Sheldon Adelson is an extraordinarily wealthy man. Self-made, "Forbes" magazine ranked him as the sixteenth richest person in the world in 2011. Chairman and CEO of the Las Vegas Sands Corporation, Spain may finally be on the point of receiving some of his colossal wealth.

Adelson is the man behind Eurovegas. Originally intended to be located in Catalonia near to Barcelona, the location has shifted. Madrid is now likely to be the beneficiary of a project that would create a tourist and gambling resort in the style of Las Vegas. Barcelona has been ruled out because plans for enormous skyscrapers would have posed a safety risk, given that the site would have been close to El Prat airport. Madrid, it would seem, doesn't pose such a risk.

The figures for Eurovegas are impressive. It would comprise six casinos, twelve tourist complexes each with up to 3,000 hotel places, restaurants, museums, convention centres, attractions and no doubt other things. Its cost would be in the region of 17,000 million euros. It would create 260,000 jobs and would, when completely finished, attract 11 million tourists annually.

Adelson has yet to finally decide whether to go ahead, but Eurovegas is becoming more of a probability, its first phase to be completed by 2016 and the whole project to be finished by 2022. If the numbers stack up, you would think that politicians would be lining up to bite his hand off.

There are plenty of people of course who would argue with the figures. What they can't argue with is that Las Vegas Sands has been extremely successful in developing similar resorts in Las Vegas itself and also in Macao and Singapore. Opponents might argue that Mr. Adelson is inflating the figures, but the investment required would not seem to be a deterrent given investment elsewhere, while returns have been such that the Macao project realised a payback in its first year of operation. This is a serious businessman, whatever people might think of him.

It is what people think of him that might yet scupper Eurovegas. Adelson hasn't exactly escaped the attention of courts, including the Nevada Supreme Court, but he has fought allegations to the extent that the "Daily Mail" was forced to pay out four million pounds in damages for libel. Accusations that were levelled by "The Mail" have kind of been echoed in Spain. A judge, José Manuel Gómez Benítez, who is a senior figure with the General Council of the Judiciary, has said that Eurovegas would be a "source of corruption and mafia-style activities" and that it would be "difficult to control" (I quote from a report from the EFE news agency of 12 July this year.) Benítez's position was in contrast to that of the director of Catalonia's anti-fraud office who praised the Eurovegas project, not that this seems to have done much good as Barcelona has been given the boot.

Even without the controversies that have attached themselves to Mr. Adelson, Eurovegas has always been and will remain a highly controversial project. It is one, for example, that places the Partido Popular up against the church (and Madrid is run by the PP with former prime minister Aznar's wife in charge). The church charity Caritas has been one of the most outspoken critics of the probably doomed Gran Scala project near Zaragoza. Yet for all that the church might disagree with gambling, the Spanish are one of the most gambling obsessed people in Europe, largely, one presumes, because of the vast amounts that are spent on lotteries.

But Eurovegas would be less a project for Spanish visitors than it would be for tourists from overseas: from European countries, from Russia (which might just set some alarm bells going) as well possibly from the Middle East and even China given that Chinese tourism to Spain is expected to increase significantly. And tourism from the US couldn't presumably also be ruled out.

The project would clearly stand or fall on its ability to generate the number of visitors being spoken about, but who's to say that it wouldn't. One doesn't know how the annual eleven million is arrived at, but it would be stupid to believe that an operation as successful as Las Vegas Sands doesn't have a sound idea as to the numbers.

There's a long way to go yet for Eurovegas and it will be the subject of intense debate, but one thing it has going for it is that in Madrid it probably won't be faced with a xenophobic attitude to foreign investment. Imagine what would happen in Mallorca, where the garlic and crosses would be brandished at the very mention of such a project.


Any comments to andrew@thealcudiaguide.com please.

Sunday, October 04, 2009

I Will Travel To Rio

There were no parties in Madrid. The samba danced on till the wee smalls in Rio instead. The Olympics. Some years from now. There were presumably a few Brazilians in Mallorca who were dancing the night away as well. Or make that more than a few. The numbers of Brazilians on the island are strangely high given that the great world carve-up of the late fifteenth century denied Spain the largest of South America's countries.

The awarding to Rio of the 2016 games was the fairest result. To have continued to deny South America a piece of Olympic action would have seemed miserly. If South Africa can have the World Cup, then Brazil can have the Olympics, and indeed, given the national team's pre-eminence for so many competitions, it is curious that it has not been granted another World Cup since 1950 whereas an under-performer like Mexico can have had two, albeit that the second was a late change when Colombia fessed up to not being able to stump up the financ and also that Brazil will host the 2014 competition.

Disappointment there may be that Madrid has lost out - again - but it may have been for the best. Now, in all truth, is not the time to be taking on the sort of financial commitment that an Olympics demands. The games may be seven years down the line, but the work starts now, as does the handing around of the cap. The Spanish Government would have been insane to have started chucking money that it doesn't have at a Madrid Olympics. And it might only have fuelled more regional resentment. The Catalans have not exactly been supportive of any Madrid bid, which is a tad churlish as Madrid lent Barcelona its backing in 1992. It might be noted, though, that Juan Antonio Samaranch, who made the emotional plea in favour of Madrid, was born in Barcelona.

But of course, as we keep being told, the Olympics are about more than just a huge tax burden, they are about legacies, promotion of sport and healthy lifestyles and all the usual twaddle. They are also about politics (as in Beijing) and tourism (as in all of them). Though one felt pride at London being chosen for 2012, there must be many now, given the economic circumstances, who would have preferred not having put one over the French or indeed Madrid. Only one city in recent times has truly benefited from the games, and that was Barcelona - all that money that was lavished on bringing it up by the boot- and athletics shoe laces from the sand-pit it had been allowed to become during Franco's time and turning it, once again, into one of Europe's great cities. But there is the pride angle, always assuming the organisers don't completely cock-up and turn a host city into a laughing-stock (Atlanta was never that but it wasn't far short). London Pride, let's hope to God there will be grounds for it and indeed grounds fully developed.

The Olympics are the not the only vehicle for a bit of civic tourism promotion and legacy-building, whatever this latter is. There is the rather more down-scale city of culture malarkey. Palma is up for some of this, as it had been for riding the crest of the wave of the America's Cup before Valencia hoisted its victorious sail. At least no-one's suggested that Palma should have the Olympics - yet. A city of culture, though, seems fair enough. It would make all that cultural tourism stuff seem worthwhile, and who knows, were Palma to be the culture capital - in 2016 by coincidence - maybe all the new tourists that this would create (one hopes) might also contemplate visiting other parts of the island. The actual candidacy is in fact for Palma and the Balearics, which sounds like stretching the city angle a bit. More likely, the tourists who come to those other parts would be shuttled off on excursions to Palma in order to get a bit of cultural action. And action, moreover, that will probably include bands of Brazilians beating drums and dancing sambas, resplendent in yellow and green t-shirts with legends declaring Rio 2016.


QUIZ
Yesterday's title - "Morning Glory", Oasis, http://www.youtube.com/watch?v=gr7MSSPNH9o. Today's title - he was the one with the woolly hat.

(PLEASE REPLY TO andrew@thealcudiaguide.com AND NOT VIA THE COMMENTS THINGY HERE.)