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Cities, Corporations Look To Cash In On Party Conventions

Topics:Democrats | Republicans | Politics & Government

By: Cadie Thompson, Special to CNBC.com | 22 Aug 2008 | 09:19 AM ET

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For the Twin Cities of Minneapolis-St. Paul, hosting the 2008 Republican National Convention is less about politics and more about, well, money.

Despite its Democratic background (every mayor of Minneapolis since 1979 has been a Democrat) the metro area is banking on a big payoff from hosting thousands of Republicans Sept. 1-4.

Worker prepares XCEL Center in Minneapolis for Republican Convention Sept. 1-4.

“Our business community very much understands the opportunity we have here,” says Jeremy Hanson, the press secretary for Minneapolis Mayor R.T. Rybak. “We’re receiving strong support from the local and state businesses.”

No wonder. A report by Minnesota’s Department of Employment and Economic Development estimates the convention will generate about $148 million in spending and create 2,800 jobs.

Denver, which hosts the Democratic National Convention Aug. 25-28, estimates that event will mean a minimum of $160 million for the local economy.

Balance Sheet Politics

So much for the payoff. Now the price of entry.

There's a minimum of sorts; both the GOP and Dems have a contractual agreement with the planning committees of the two political parties to raise a certain amount of money. A city must generally raise at least $40 million to host a convention, although the overall budget generally exceeds that.

Minneapolis-St. Paul, for example, was contracted to raise $39 million by July 15.

Denver alone is spending $19 million for renting and preparing the Pepsi Center and another $7 million on production costs for the festivities.

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A federal grant also gives each host committee an additional $50 million for security costs.

The Minneapolis-St. Paul host committee set out to raise $58 million to cover the convention’s overall budget, says Teresa McFarland, communications director for the committee. McFarland says about 60 percent of the money raised so far has come from local donors, including some of area's’ 19 Fortune 500 companies. Major sponsors also include Ford Motors [F Loading... () ], General Mills [GIS Loading... () ] and Xcel Energy [XEL Loading... () ], which are listed on the host committee's Website.

Pepsi Center
Ed Andrieski / AP
Denver's Pepsi Center will be the main site for the Democratic Convention August 25-28.

Denver's host committee says it is on target to reach its goal of $40.6 million, having raised about 70 percent through June, says Chris Lopez, the committee's communication director.

Most of that money has come from national fundraising, Some of the major donors include Anheuser-Busch [BUD Loading... () ], Google [GOOG Loading... () ] and Chesapeake Energy[CHK Loading... () ] -- again, all visible on the committee’s Web site.

National Stage, Local Prize

On average, each convention will attract 35,000 to 45,000 delegates, party officials, volunteers and members of the media -- in other words, a small city worth of shoppers, diners, taxi riders and hotel guests.

Downtown Denver restaurant owner, Greg Goldfogel, says he expects to see an immediate and much-need economic boost.

“We know it will be healthy for our business,” says Goldfogel. “Business is off right now, not just here but throughout all of downtown because of the economy.”

Goldfogel may have reason to be hopeful.

According to a report by Boston's Office of Budget Management, the city and its environs, which hosted the Democratic National Convention in 2004, felt an economic impact of over $160 million in direct and indirect spending.

Lopez sees an even longer-lasting impact.

“It sets up Denver as a convention city, as a destination city, as a tourism city and state,” he says. “It’s luring and attracting other corporations as they see again and again this a good place to do business.”

CNBC's Top States For Business

Jo Ann Davidson, the Republican National Convention Co-Chair of the Committee of Arrangements, agrees, saying a convention can do a lot for a city's image.

“It’s more than you can put a dollar and cents on,” Davidson said. “It just establishes the city in a different limelight.”

Fundraising Debate

Though cities are understandably grateful that big-name companies are stepping in to foot the bill, the role of such corporate sponsors has raised questions about campaign finance; corporations' hefty donations allow them a legitimate marketing platform but can also create unusual access to political leaders.

Political conventions are a breeding ground for companies to pour unregulated amounts of money into a political campaign via the cities host committees, says Stephen Weissmann, associate director for policy at the Campaign Finance Institute, a non-partisan, non-profit institute affiliated with the George Washington University.

“It’s absolutely a major loophole to support the biggest advertisement in a presidential campaign,” says Weismann. “Basically, these non-profit committees are strongly connected to the party.”

Minneapolis-St. Paul's McFarland, for one, says the committee serves a more honorable cause.

“Our goal is to attract more tourists, more businesses, another convention,” she says. “We’re showcasing our area as a great place to work, live, visit.”

Weissmann, however, argues the host committees leaders spearheading the fundraising are closely affiliated with political parties and are using their ties to lock in pledges from companies and wealthy donors by promising them access to political leaders.

According to a report released by the institute, Denver created a corporate sponsorship packet, which stated donors that gave $1 million and up were promised invitations to private events with leaders such as Colorado Governor Bill Ritter, U.S. Senator Ken Salazar and Denver Mayor John Wedgeworth.

The same report, the result of a Freedom of Information Act request, also highlights an element in Minnesota’s Gov. Pawlenty’s outline of talking points to potential corporate sponsors, which mentions “an opportunity for corporate partners to promote new products, connect with influential government officials (Cabinet, President, next President)”

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