Las Vegas Review-Journal (Sunday)
Cost of business lavish for agency
Authority: Purchases key part of marketing
The Las Vegas Convention and Visitors Authority spends millions of taxpayer dollars on high-end entertainment, including topshelf liquor and $300 steaks, as well as gifts for employees and first-class trips for board members. The agency’s lavish purchases at times have little or no business purpose and routinely violate its own vague expense policies, a Las Vegas Review-Journal investigation found. Over the past three years, the authority paid at least $697,000 for alcohol, $85,000 to hire showgirls and hundreds of thousands more for concert tickets, skyboxes, banquets, exotic car rides and jewelry for employees. The payments for board members raise questions about the independence of their oversight at the nation’s largest tourism agency. Board Chairman Lawrence Weekly, for example, requested $1,000 in concert tickets that he conceded had no business purpose.
“It leaves the appearance that there’s a cozy relationship,” said Clark County Commission Chairman Steve Sisolak, who added that the authority should spend public money efficiently.
“I would like to know the cost-benefit ratio — how much they spend versus what they get for the money,” he said.
Famous for the slogan “What Happens Here, Stays Here,” the authority has a $251 million operating budget, funded mostly by hotel room taxes, to market Las Vegas as a destination. The agency touts the city’s high hotel occupancy rate and consistent ranking as North America’s top trade show destination as proof of its effectiveness. The Las Vegas area drew 42.9 million visitors last year.
“We’re No. 1, and we continue to be No. 1 because we continue to do it bigger and better than anyone else, and we have a great destination,” said Rossi Ralenkotter, the authority’s president and CEO, who made $768,000 in salary, bonus and benefits last year.
The authority says visitors to Southern Nevada contribute more than $59.6 billion to the local economy. The agency takes credit for bringing in $12 for every $1 it spends.
Ralenkotter maintains that expenses
such as a $21,000 NASCAR suite that included a Las Vegas police detective and a city building inspector on the guest list are critical to its primary function of “relationship building.”
“You don’t just walk into a room and say ‘I want you to come to my city next year’ and the deal is done,” Ralenkotter said. “You have to establish a relationship. This is a people-to-people business.”
Ralenkotter said, “No destination sells itself.” But not everyone agrees. “Las Vegas can advertise itself,” said Clark County Commissioner Chris Giunchigliani, a former state legislator who sat on the Assembly Ways and Means Committee. “You always need to have the messaging out there, but you should be sensitive to wining and dining. Just because you can, doesn’t mean that you should.”
The authority is not alone in marketing Las Vegas.
Casinos on the Strip spent $142 million last year on advertising and promotion, figures from the Nevada Gaming Control Board show.
Ralenkotter said the authority spends only about $4.5 million, or 1.8 percent, of its budget annually on entertainment. The agency employs 500 people and manages convention space.
Michael Green, an associate history professor at the University of Nevada, Las Vegas who has studied local government, said the public should be concerned about the way the authority conducts business.
“On the one hand, they are trying to make a good impression on people who could benefit Las Vegas,” he said. “But it’s public money and all of us who are paid by a government entity should be accountable for what we’re spending.”
Board seats are coveted
Serving on the authority board has long been regarded as a plum assignment for elected officials because of its prestige, perks and access to gaming executives who also serve on the board.
“This puts them into the same room with some of the most important business leaders in our state,” said Dan Hart, a longtime political consultant. “It grants you a certain stature as a politician. You get to talk about the lifeblood of our community, the tourism industry.”
Over three years, the authority spent about $60,000 on trips for elected officials serving on the board. It purchased firstclass plane tickets, chauffeured rides and expensive hotel accommodations for them.
Board members also reported receiving $8,000 in gifts from the authority. But the staff said the gifts were not purchased with taxpayer money and were provided by business partners such as the National Finals Rodeo and the Las Vegas Bowl.
Pete Sepp, president of the National Taxpayers Union, said it is a conflict for elected officials to accept gifts and travel from an agency they oversee.
“It’s difficult to see how the oversight function can work effectively with virtually no daylight between the authority board and those who spend it,” he said. “The last thing you want to do is undermine your authority to blow the whistle on others when they’re doing this kind of spending.”
Board policy actually requires that its members attend either an authority-sponsored trip or a local event each year. Agency staffers said those trips make it easier for them to get board approval for big-ticket spending.
“What helps us with the elected officials is if they have some knowledge of what we do,” Cathy Tull, the authority’s senior vice president of marketing, said in an interview with the Review-Journal about board travel last year.
That way, when agency staff asks board members for funding, “They’re not like: ‘You’re spending what?” Tull said.
But she said staff doesn’t have to educate the corporate executives on the board about how the authority does business.
“The private-sector gaming guys completely understand it because they’ve been to the show and they get how that’s done,” she said.
No influence, Weekly says
Authority Chairman Lawrence Weekly took more perks than any other board member over the three years analyzed by the Review-Journal.
The county commissioner accepted about $33,000 worth of travel, meals and what he reported as gifts from the authority, including an $11,000 flight to South Africa, a trip to China, a Bluetooth speaker and a Fitbit. Over the past three years, authority staff members also have donated $3,500 in toys to Weekly’s annual holiday drive to collect gifts for foster children and disadvantaged youths.
Among the gifts Weekly accepted was $1,062 in tickets to the iHeartRadio Music Festival headlined by Justin Timberlake, Katy Perry and Elton John in September 2013. Ralenkotter purchased them with his agency American Express card. The justification for the expense was listed as “Board PR — Attend event representing LVCVA.”
When asked about it, Weekly said, “There was no business, there (were) no business reasons.” He said he gave the tickets to two constituents, who were named in authority billing records as Shanelle Andrews and Jye Green.
Weekly insisted gifts and trips do not affect his oversight of the authority.
“No sir, it doesn’t influence any of that,” he said.
Weekly added that he doesn’t believe the board should be in the business of micromanaging staff because Ralenkotter does a good job.
“We have a lot of confidence in the CEO,” said Weekly, who last year described Ralenkotter’s management style as “poetry in motion” after leading the board to approve a $166,000 bonus for him.
The second biggest beneficiary of board travel was Las Vegas City Councilman Ricki Barlow, who joined the authority in July 2015.
In the fall of that year, the authority paid nearly $13,000 for him to fly to England and Copenhagen, Denmark, for the launch of Norwegian flights to Las Vegas. Four months later, he traveled to Rio de Janeiro and Sao Paulo to attend the World Travel Market at a cost of about $5,000. A Barlow aide and the authority said he was unavailable for comment.
The authority credits Weekly and Barlow’s trips with helping to promote Las Vegas and secure direct flights from overseas. Ralenkotter declined to address whether gifts, travel and entertainment influences board members charged with overseeing him and his staff.
Expenses are questionable
The Review-Journal examined more than 32,000 pages of receipts over three fiscal years from many of the authority’s top executives, finding repeated instances of extravagant — and questionable — expenses. In particular, the receipts detail numerous meals at pricey restaurants that seem to violate the authority’s ambiguous policies of “sensible” menu items and banning “excessive” drinking.
In June 2014, for example, authority sales representatives spent more than $6,900 at a Toronto steakhouse, entertaining a party of 15 that included convention executives and members of the U.S. Consulate. The dinner featured two 16-ounce Okinawa ribeye steaks, which cost $328 a piece, as well as 11 bottles of wine and lobster on top of $138 prix-fixe meals for each guest.
The authority also spent extravagantly on its own employees. Over the three years examined, the agency paid nearly $30,000 for Tiffany bracelets and an additional $20,000 on employee service rings. Ralenkotter received a 40-year ring that cost $3,685. An agency spokeswoman said the bracelets were branded with the authority logo and given to female staffers so they can promote Las Vegas wherever they go.
Authority policy requires that all spending be business related, but several receipts described expenses where it was difficult to see the purpose. For instance, two authority staffers, two airline officials and their spouses went to a Jimmy Buffett concert, where the listed reason for attending was the Delta Airlines “Fall 2014 sales team meeting.” The tickets cost $960.
“You know better than that, that they’re not having a meeting at a rock concert,” said Weekly, the board chairman. “They met prior. One of the reps said they wouldn’t mind seeing that and we got something out of it like great direct flights that bring thousands of visitors.”
The newspaper also found that executives often violate the authority’s policy that a “typical” bottle of wine should be “targeted at under $100.” Over three years, the authority spent about $40,000 on bottles costing $100 or more.
The authority also paid top dollar for liquor. In April 2014, an executive spent $1,170 on a magnum bottle of Grey Goose with table service at Mandalay Bay’s Light Nightclub, where he was entertaining executives from Allegiant Airlines. Later that same year, the authority paid more