There’s a convention center arms race in America. Can Baltimore afford to compete?

Architects recently sketched plans for a nearly $400 million expansion of the convention center in Raleigh, North Carolina. The Las Vegas tourism authority dropped $600 million modernizing its convention center campus. Houston is in the early stages of a $2 billion mega project that will create the biggest ballroom in Texas.

Hello, Baltimore, and welcome to the great American convention center arms race. The price of admission? About $1 billion.

That rough estimate came from a 22-person task force of state and local leaders that wants to modernize the Baltimore Convention Center. It has been three decades since the facility has undergone anything more than a face-lift, and civic leaders want a generational investment. The Greater Baltimore Committee called the convention center a “critical economic engine for Downtown Baltimore and the broader region.”

The task force warned that Baltimore has fallen far behind other cities and said the $1 billion price tag would be justified by newly generated economic activity. But, when The Banner asked economists to review the task force’s most recent report, they questioned its conclusions and raised concerns about unintended consequences for Baltimore’s economy.

The leading recommendation to finance the project is a 3% tax on restaurants, prepared foods and beverages in the city — with other taxes for surrounding counties in play, too. A new governmental authority would oversee the money and absorb the city’s tourism arm. State lawmakers punted on a decision during this year’s legislative session.

But the convention center’s executive director, Mac Campbell, hinted last month at the State of Downtown Baltimore Breakfast that the politicking for next year’s session has already begun.

Speaking before hundreds of civic leaders, city officials and politicians gathered at the convention center, Campbell asked if they wanted to let Cleveland, Detroit and Pittsburgh keep “stealing business from us.”

“I know the leaders in this room won’t have any of that, right?” Campbell said to applause. “When the time comes — and that time will be soon — we will need all of your support to make sure the city and state has the best place for conventions on the East Coast right here in Baltimore.”

At the breakfast, Senate President Bill Ferguson, a Baltimore Democrat, echoed Campbell, saying the next 18 months will be crucial for downtown and its convention center. Beware the naysayers and doubters, he said, because “the opportunity is limitless if we make the hard choices.”

“We need to look at those folks who say it can’t be done, who say it’s too big, it’s too hard, and say, ‘Not right now. This is Baltimore, and this is where we get it done,’” he said.

Baltimore’s original convention center — known today as CFG Bank Arena — opened in 1962. As the industry evolved, Baltimore built a new one along Pratt Street, opening in 1979. By the 1990s, city and state leaders said bigger convention centers in other cities were stealing business from Charm City. So they expanded Baltimore’s, building a wing across Sharp Street.

When that didn’t have the intended effect, Baltimore tried a different idea. In the mid-2000s, the city financed the construction of the Hilton Baltimore Inner Harbor, a 757-room hotel, to bolster business at the convention center. The city-owned hotel opened in 2008 and has been bleeding money ever since.

The Baltimore Convention Center also loses millions of dollars every year, but that’s not unusual. Most U.S. convention centers lose money. The idea is that they generate economic activity nearby that offsets the losses. Think hotels, restaurants, bars, taxis and other businesses.

Convention centers can also transcend simple economics, supporters say, helping to define a region’s identity. Think the Auto Show in Detroit and South by Southwest in Austin, Texas. And, like a sports team, most cities insist they need one.

Since the end of the coronavirus pandemic, there’s been a new wave of spending on convention centers, according to Miguel Neves, editor-in-chief of the trade publication Skift.

“I’m OK with the term arms race because ultimately it’s a zero-sum game,” Neves said.

That’s because there is a finite number of conventions and trade shows each year. Neves said cities are generally competing for the same customers.

“Size does matter, but it’s not about having bigger events,” he said. “It’s about having two events at the same time.”

Neves said convention organizers increasingly want modular spaces, a mix of room sizes and modern amenities.

That’s more or less the same vision Campbell has for the Baltimore Convention Center, which hosts groups as diverse as tow truck drivers, tattoo artists and fish endocrinologists. Visitors add vibrancy to the streets downtown, he said, and the convention center could host more of them.

“We don’t need to get bigger,” Campbell said. “We need to be best in class.”

Replacing decades-old systems such as wiring and plumbing means stripping the building to its bones, Campbell said, so why not use that opportunity to build a more modern and adaptable convention center?

Campbell said that would mean adding about a 100,000-square-foot “flex hall” to the 1.2 million-square-foot complex, without expanding its footprint.

On a tour of the center this year, Campbell pointed out all the ways conventions boost Baltimore’s economy. It’s not just the tourists in lanyards walking around downtown, he said. It’s the small army of cooks preparing meals in the kitchen, the custodians vacuuming rugs and the contractors setting up and tearing down exhibits.

Who wouldn’t want more of that? Campbell asked.

When the Baltimore Convention and Tourism Redevelopment and Operating Authority Task Force published its latest report in December, it called a newly modernized convention center the “spark that lights the fuse for a boom in overnight tourism in Central Maryland.”

It’s a familiar line to Heywood Sanders, a professor of public administration at the University of Texas at San Antonio, who has devoted much of his career to debunking and interrogating claims made by the convention center industry. (Campbell called Sanders a “unicorn.”)

In the mid-1990s, Sanders warned that Baltimore’s big bet on a convention center expansion was unlikely to pay off.

At the time, about two dozen other American cities were in the midst of a convention center spending spree, with more projects on the horizon, The Baltimore Sun reported in 1996.

“They look at other cities and say, `Hey, I can play this game too,’” Sanders said at the time.

Baltimore went ahead with the expansion. Five years after the convention center reopened, The Sun published an investigation titled “Baltimore built it — they didn’t come.” The story eviscerated the “pie-in-the-sky promises and fudged figures” underpinning the expansion.

The renovated convention center was projected to have 330,000 annual attendees to trade shows and conventions by 2000. It has never hit that mark.

The 1996 expansion cost $151 million, most of which came from state funds. Adjusted for inflation, that’s roughly $320 million today.

Sanders called the task force’s current $1 billion idea the “product of a serial failure of policy analysis and public decision-making.”

The success of a convention center is largely measured by how many out-of-state visitors it attracts. A convention attendee might book a hotel room, visit the National Aquarium, dine at the Rusty Scupper and buy a commemorative tin of Old Bay, pumping new economic activity — and tax dollars — into the state.

The task force report said a newly renovated convention center would attract 200,000 to 300,000 more “convention attendees” annually.

This seemed high to Sanders, so he flipped through a consultant’s report cited by the task force.

Crossroads Consulting, a Florida firm hired by the state, predicted, if Baltimore did nothing to improve its convention center, yearly convention attendance would fall to 98,000. Modernizing would drive up that number to 236,500.

That’s an increase of 138,500 convention attendees annually. Although that’s a significant uptick, it’s about half what the task force claimed.

That’s because the task force defines “convention attendees” as anyone who attends an event at a convention center, even if it’s a local who doesn’t need a hotel and zips in and out of the city.

Commingling convention attendance with total attendance is a “jaw-droppingly bad” practice, Sanders said.

Another economist who reviewed the report, Dennis Coates, stressed the importance of opportunity costs. The money to renovate the convention center has to come from somewhere, said Coates, a professor at the University of Maryland, Baltimore County.

“We’ve got an affordability crisis, and what they’re proposing is to make food more expensive,” he said of the proposed tax on restaurants and prepared foods.

Even if residents swallow that tax, Coates questioned whether spending $1 billion on a convention center makes more sense than fixing potholes, repaving streets or improving public transit.

“There’s so many things that they could spend the money on that would have much more direct impact on the lives of the residents of the city, of the region, but they don’t consider those,” Coates said.

Christina DePasquale, economics professor at the Johns Hopkins Carey Business School, said, if taxpayers are being asked to spend $1 billion to modernize the convention center, every option should be considered — including doing nothing.

Yes, the convention center could continue losing events, she said, but does that mean they automatically leave Maryland?

Although trade shows and some conferences have space requirements that only cavernous convention centers boast, DePasquale said, other businesses host conferences, too. She pointed to the Baltimore Marriott Waterfront in Harbor East, which has 51,000 square feet and 42 rooms devoted to event space.

Still, DePasquale said, she is sympathetic to the idea a thriving convention center could help keep downtown from becoming a “ghost town.”

Economists always focus on the numbers when it comes to big public investments. And they should, DePasquale said, but there’s a rational psychological reason to invest in a convention center, too.

She compared it to a family-owned restaurant that’s been passed from one generation to the next. Although the restaurant might lose money at times, it can feed a sense of pride, connectedness and community.

But, as the bills pile up, every family has its breaking point, she said, and Baltimore might soon face tough questions about its convention center.