I think if you run a lot of conferences it can make sense to own a conference centre.
Let’s say it replaces 50 days of 30-person conferences a year, which normally cost $1000 a head in terms of the venue. That’s $1.5mn. (Staff and food costs are on top in both cases).
Does this place cost more than that in terms of mortgage payments and upkeep costs I dunno, seems comparable.. So it seems plausible that it’s a good spend. I’d guess 70% that if I knew more I’d probably think it was reasonable.
Additionally I would add that it is not a depreciative asset and can be sold again at a later date, returning the money spent. Of course you have to deduct the counterfactual returns of investing that money, but my intuition is generally that owning land is a fine investment if it saves you from paying rent.
Agreed. And from perspective of the EA portfolio, the investment has some diversification benefits. YTD Oxford property prices are up +8% , whereas the rest of the EA portfolio (Meta/Asana/crypto) has dropped >50%.
side point on a pet peeve. Raw house price increases don’t account for the cost of improvements and renovations and the effect they might have on the value of property. eg Some houses might have gained in value because the owners added a bedroom
In the case of individuals, owning land is commonly better than renting for tax reasons (because you aren’t taxed on the counterfactual rent). Since EVF is a charity, it is tax exempt, so the same logic wouldn’t apply.
It is true of course that this isn’t a flat cost of £15m, but you have to take into account the cost of converting the property (to the extent that the conversions aren’t valuable to a prospective purchaser), the transaction costs (although these are lower than you might think because EVF should benefit from an SLDT exemption) and the maintenance costs (which will be large for a property of that character), in addition to the counterfactual income forgone.
Considered as an investment it suffers from the usual problem of property investment, which is that it’s very lumpy. The exposure is specifically this particular manor house in Oxfordshire, which makes it riskier than a balanced commercial property portfolio.
I also think people likely significantly underestimate the costs of running conferences. From what I understand, $2000 per person is a pretty standard number even for a 3-day conference, if hosted in a standard hotel convention center. I’m not claiming that EA should host many conferences which are that expensive—just that buying a property to host them could relatively quickly become cost-effective.
Others have commented that you could get a much cheaper venue. I’m skeptical, though. For external-facing events you want a hotel-quality venue, and I don’t expect that getting one with 30 rooms anywhere near a major city is going to be much cheaper.
Most of the costs of running conferences don’t come from the cost of the (pure real estate) costs of the property. (You’d still incur lots of the $2,000 if you run an event at Wytham Abbey, the only bits that you aren’t paying for are the pure capital costs for the property, part of the profit margin and costs for times the venue is otherwise empty.)
I’m not sure how I even feel about the price tag mattering considering it is an investment we can sell later but very quick research shows that there is a 13,000 square foot hotel (12 rooms) in the heart of Chicago for 300,000 a room. So conservatively we could guess that a similar building in downtown chicago would go for about 9 mil. And that is in pretty much the most expensive area in the city—If we are willing to go within an hour of the city center I think you could get something of comparable quality for ~5 million or maybe even less.
Not saying Chicago would be the right place but I would call it a major city (totally biased though).
Adding to this, there is the substantial staff time of identifying and setting up each venue that can be saved by owning a single venue and using that single venue for storage (which also means likely savings on supplies that can more easily be reused).
There’s still, however, a larger question about the cost-effectiveness of EAs organizing conferences and retreats at scale.
Do people think it’s plausible that CEA (and affiliates) will run 100 x 30-person events per year in Oxford alone? Doing one every 3.5 days seems unlikely and I expect the real number to be much closer to 50 or less.
Edit: I actually realise it will have to be 50 x 30-person retreats, assuming each workshop/event/retreat lasts 2 days. So it would be 2 days per week for basically all 52 weeks, which I still think is on the high side.
Yeah, I think something around that number is pretty likely. As an example, we have a much smaller house that we rent near Berkeley that is useful for 10-15 person retreats, and we’ve had pretty close to 75% utilization with stuff that I think would have otherwise required renting an AirBnB (I think some fraction of those would have been fine with a smaller AirBnB, but would have required then setting up that space and dealing with a bunch of overhead).
So you think something roughly like a 2-day workshop every week of the year? I think that’s possible yeah but still not very likely (like 20% likelihood). Also you’re saying conference but these events are max 30 people so seem much more like workshops / events / retreats than a conference?
Do you have a sense for how many of these happen in the UK right now? I still think this is <50 per year and closer to 30. I also think it wouldn’t be worth it for groups north of (approx.) Newcastle due to travel times etc.
Judging from similar estates in the area, the Abbey must’ve cost at least $10,000,000 [EDIT: from other comments it cost 15,000,000 pounds (~$21 million at time of purchase)]. A 30 person conference could easily be held in an office. Regardless, no way CEA hosts 100 of them near Oxford every year. I’m guessing the upkeep costs of the Abbey alone cost more than rent for a generous office.
Besides, if they did want to buy a venue, they could have found one for much cheaper.
This is a luxury purchase. It’s made to make visitors feel important and prestigious. It is rightly being criticized and mocked by those outside CEA. WTF were they thinking?
A 30 person office could not house the people attending, so you’d need to add costs of a hotel/AirBnB/renting nearby houses if going down that option. Even taking into account that commercial rest estate is usually more expensive than residential, I’d expect the attendee accommodation cost to be greater than the office rental simply because people need more living space than they do conference space.
Additionally in my experience retreats tend to go much better if everyone is on-site in one location: it encourages more spontaneous interaction outside of the scheduled time. There are also benefits to being outside a city center (too easy for people to get distracted and wander off otherwise).
Was Wytham a wise investment? I’m not sure, I’d love to see a calculation on it, and it probably comes down to things like the eventual utilization rate. But I think a fairer reference class would be “renting a conference center plus hotel” than “renting a 30-person office”.
I agree with Adam here about the fact that it’s better to host all attendees in one place during retreats.
However, I am not sure of the number of bedrooms that Wytham has. It could be that a lot of attendees have to rent bedrooms outside of Wytham anyways, which makes the deal worse.
I am really torn on this purchase, but just to add some info/one data point—OFTW ran its first conference in a while this year in Philadelphia and I was genuinely shocked at the costs. Hotel plus professional conference venue plus locking you in to caterers that charge a premium… It came out at $1000/head for 1.25 days (although this also included travel, which was average $500/head). And I really truly think we couldn’t have held that conference in a cleared out office space.
That said, it is possible that something equally functional was available for cheaper, and with better optics.
To add further, given construction prices in Oxford and London, CEA could have built a brand-new office/hotel/retreat center of the same size for less than half the price.
And given the top level answer, they looked at three properties. Most people look at way more than three properties when they are just renting an apartment, let alone buying a house or a 14th century estate. It seems CEA had the money, liked the place, and didn’t put much more thought into it on the optics or the economics. I’m really puzzled why people are so comfortable with the rationalizations CEA gives. CEA clearly cares little about due diligence and justifying its decision to the community, referring to that as just “looking good”.
To add further, given construction prices in Oxford and London, CEA could have built a brand-new office/hotel/retreat center of the same size for less than half the price.
The difficulty in building, aside from the fact that CEA is not a construction firm, is all in the planning permission, not the cost of materials and labour. I would be very surprised if CEA happened to have a comparative advantage at overcoming one of the main impediments to UK economic growth over the last 70 years.
For context, here’s Matt Yglesias on the state of UK housing policy:
The nature of the UK housing issue should be familiar to Americans, especially those who read Slow Boring. There is a lot of demand for living in Greater London (and also Oxford, which isn’t far away), and that demand is not met, which leads to high prices.
But the extent of the problem can be hard for an American to grasp.
For example, as best I can tell, the average size of a home in the United Kingdom is 1033 square feet versus 968 square feet in New York City, so it’s not that Greater London is experiencing a housing squeeze comparable to Greater New York City — the UK as a whole is experiencing a housing squeeze similar to that of NYC. London is worse, and not coincidentally, the UK doesn’t have an equivalent of Dallas or Phoenix or Atlanta — a big, cheap city that is growing fast.
Can much larger conferences be held there, like EAG or EAGx? Use each individual room as a meeting room, and a few big halls for large gatherings, possibly adding to the building if necessary.
edited numbers
I think if you run a lot of conferences it can make sense to own a conference centre.
Let’s say it replaces 50 days of 30-person conferences a year, which normally cost $1000 a head in terms of the venue. That’s $1.5mn. (Staff and food costs are on top in both cases).
Does this place cost more than that in terms of mortgage payments and upkeep costs I dunno, seems comparable.. So it seems plausible that it’s a good spend. I’d guess 70% that if I knew more I’d probably think it was reasonable.
Additionally I would add that it is not a depreciative asset and can be sold again at a later date, returning the money spent. Of course you have to deduct the counterfactual returns of investing that money, but my intuition is generally that owning land is a fine investment if it saves you from paying rent.
Agreed. And from perspective of the EA portfolio, the investment has some diversification benefits. YTD Oxford property prices are up +8% , whereas the rest of the EA portfolio (Meta/Asana/crypto) has dropped >50%.
side point on a pet peeve. Raw house price increases don’t account for the cost of improvements and renovations and the effect they might have on the value of property. eg Some houses might have gained in value because the owners added a bedroom
Relevant.
Also I’m sure it’s said a million times in this thread but upkeep may be high for this property.
Hasn’t actually been said that much and is a really important point
In the case of individuals, owning land is commonly better than renting for tax reasons (because you aren’t taxed on the counterfactual rent). Since EVF is a charity, it is tax exempt, so the same logic wouldn’t apply.
It is true of course that this isn’t a flat cost of £15m, but you have to take into account the cost of converting the property (to the extent that the conversions aren’t valuable to a prospective purchaser), the transaction costs (although these are lower than you might think because EVF should benefit from an SLDT exemption) and the maintenance costs (which will be large for a property of that character), in addition to the counterfactual income forgone.
Considered as an investment it suffers from the usual problem of property investment, which is that it’s very lumpy. The exposure is specifically this particular manor house in Oxfordshire, which makes it riskier than a balanced commercial property portfolio.
I also think people likely significantly underestimate the costs of running conferences. From what I understand, $2000 per person is a pretty standard number even for a 3-day conference, if hosted in a standard hotel convention center. I’m not claiming that EA should host many conferences which are that expensive—just that buying a property to host them could relatively quickly become cost-effective.
Others have commented that you could get a much cheaper venue. I’m skeptical, though. For external-facing events you want a hotel-quality venue, and I don’t expect that getting one with 30 rooms anywhere near a major city is going to be much cheaper.
Most of the costs of running conferences don’t come from the cost of the (pure real estate) costs of the property. (You’d still incur lots of the $2,000 if you run an event at Wytham Abbey, the only bits that you aren’t paying for are the pure capital costs for the property, part of the profit margin and costs for times the venue is otherwise empty.)
I’m not sure how I even feel about the price tag mattering considering it is an investment we can sell later but very quick research shows that there is a 13,000 square foot hotel (12 rooms) in the heart of Chicago for 300,000 a room. So conservatively we could guess that a similar building in downtown chicago would go for about 9 mil. And that is in pretty much the most expensive area in the city—If we are willing to go within an hour of the city center I think you could get something of comparable quality for ~5 million or maybe even less.
Not saying Chicago would be the right place but I would call it a major city (totally biased though).
Reasonable criticism from Keith
I really like that you found a counter argument to your own post and posted it. Go you :-)
Adding to this, there is the substantial staff time of identifying and setting up each venue that can be saved by owning a single venue and using that single venue for storage (which also means likely savings on supplies that can more easily be reused).
There’s still, however, a larger question about the cost-effectiveness of EAs organizing conferences and retreats at scale.
Do people think it’s plausible that CEA (and affiliates) will run 100 x 30-person events per year in Oxford alone? Doing one every 3.5 days seems unlikely and I expect the real number to be much closer to 50 or less.
Edit: I actually realise it will have to be 50 x 30-person retreats, assuming each workshop/event/retreat lasts 2 days. So it would be 2 days per week for basically all 52 weeks, which I still think is on the high side.
Yeah, I think something around that number is pretty likely. As an example, we have a much smaller house that we rent near Berkeley that is useful for 10-15 person retreats, and we’ve had pretty close to 75% utilization with stuff that I think would have otherwise required renting an AirBnB (I think some fraction of those would have been fine with a smaller AirBnB, but would have required then setting up that space and dealing with a bunch of overhead).
100 days worth seems pretty plausible, yeah. After all, you would basically push any UK conference here, right?
So you think something roughly like a 2-day workshop every week of the year? I think that’s possible yeah but still not very likely (like 20% likelihood). Also you’re saying conference but these events are max 30 people so seem much more like workshops / events / retreats than a conference?
Do you have a sense for how many of these happen in the UK right now? I still think this is <50 per year and closer to 30. I also think it wouldn’t be worth it for groups north of (approx.) Newcastle due to travel times etc.
Judging from similar estates in the area, the Abbey must’ve cost at least $10,000,000 [EDIT: from other comments it cost 15,000,000 pounds (~$21 million at time of purchase)]. A 30 person conference could easily be held in an office. Regardless, no way CEA hosts 100 of them near Oxford every year. I’m guessing the upkeep costs of the Abbey alone cost more than rent for a generous office.
Besides, if they did want to buy a venue, they could have found one for much cheaper.
This is a luxury purchase. It’s made to make visitors feel important and prestigious. It is rightly being criticized and mocked by those outside CEA. WTF were they thinking?
A 30 person office could not house the people attending, so you’d need to add costs of a hotel/AirBnB/renting nearby houses if going down that option. Even taking into account that commercial rest estate is usually more expensive than residential, I’d expect the attendee accommodation cost to be greater than the office rental simply because people need more living space than they do conference space.
Additionally in my experience retreats tend to go much better if everyone is on-site in one location: it encourages more spontaneous interaction outside of the scheduled time. There are also benefits to being outside a city center (too easy for people to get distracted and wander off otherwise).
Was Wytham a wise investment? I’m not sure, I’d love to see a calculation on it, and it probably comes down to things like the eventual utilization rate. But I think a fairer reference class would be “renting a conference center plus hotel” than “renting a 30-person office”.
I agree with Adam here about the fact that it’s better to host all attendees in one place during retreats.
However, I am not sure of the number of bedrooms that Wytham has. It could be that a lot of attendees have to rent bedrooms outside of Wytham anyways, which makes the deal worse.
I am really torn on this purchase, but just to add some info/one data point—OFTW ran its first conference in a while this year in Philadelphia and I was genuinely shocked at the costs. Hotel plus professional conference venue plus locking you in to caterers that charge a premium… It came out at $1000/head for 1.25 days (although this also included travel, which was average $500/head). And I really truly think we couldn’t have held that conference in a cleared out office space.
That said, it is possible that something equally functional was available for cheaper, and with better optics.
To add further, given construction prices in Oxford and London, CEA could have built a brand-new office/hotel/retreat center of the same size for less than half the price.
And given the top level answer, they looked at three properties. Most people look at way more than three properties when they are just renting an apartment, let alone buying a house or a 14th century estate. It seems CEA had the money, liked the place, and didn’t put much more thought into it on the optics or the economics. I’m really puzzled why people are so comfortable with the rationalizations CEA gives. CEA clearly cares little about due diligence and justifying its decision to the community, referring to that as just “looking good”.
The difficulty in building, aside from the fact that CEA is not a construction firm, is all in the planning permission, not the cost of materials and labour. I would be very surprised if CEA happened to have a comparative advantage at overcoming one of the main impediments to UK economic growth over the last 70 years.
For context, here’s Matt Yglesias on the state of UK housing policy:
Can much larger conferences be held there, like EAG or EAGx? Use each individual room as a meeting room, and a few big halls for large gatherings, possibly adding to the building if necessary.
$1000 per person per day just for the place seems pretty expensive for a 30 person conference…