The North Carolina Department of Agriculture likes to remind its employees of the agency’s real cash crop: not cotton, not tobacco, not soybeans, not sorghum. When the weather is right come mid-October, it’s the million people each year who attend the North Carolina State Fair.

The department’s headquarters sits across the street from the State Capitol in downtown Raleigh. In spite of its imposing limestone facade and hulking Ionic columns, the building’s entrance serves as a quaint reminder of the state’s rural heritage. A stained-glass cornucopia of fruits and vegetables sparkles above the front door. Inside, framed feed and fertilizer bags, quilts and farm tools line tall beige walls. A long trophy case holds Mason jars full of dried seeds alongside State Fair ribbons and programs, cotton blossoms and tawny photographs. A toy train circles overhead.

But that’s the past: Beneath one wall of a fake barn, which is decorated with mule harnesses and axes, an International Harvester tractor the color of a candy apple holds the key to the modern budget. “N.C. State Fair Attendance” reads a colorful, corrugated placard. The sign, situated between two massive tires like a masterpiece resting on an artist’s easel, lists the daily attendance numbers for the last five years. Record-breaking figuresin 2010, eight days delivered all-time highsare printed in bold red, the rest in humble blue. Such a sign, says one longtime employee, has been in the lobby for at least 19 years.

It’s almost impossible to enter the building without getting the memo: Bring more than a million people to the fair.

“The 11-day State Fair is the moneymaker, overall, and gate admission is our biggest source of revenue,” says Brian Long, the department’s public affairs director since 2003. “As we boost our attendance, we boost our profit.”

But over the last four years, the N.C. State Fair has lagged in one critical category: ticket sales for nightly headlining concerts inside Dorton Arena, the fairground’s iconic architectural anomaly. In fact, those figures have flagged to the point that, of the 44 shows booked at Dorton since 2011, 34 have lost money. Only six have sold out.

A part-time State Fair employee with no previous booking experience generously compensates the artists, however, under the assumption that the concerts will sell out, or at least come close.

That’s an expensive wager. In four years, these concerts have collectively created losses of nearly $900,000; nine concerts cost the state more than $25,000 in a single night. Even Agriculture Commissioner Steve Troxler has begun to worry. Despite four weeks of requests from the INDY, Troxler could not fit an interview about the subject into his schedule. Long conveyed his concerns.

“If you’re going to go through the trouble of putting on these shows, you want people to come. When you see Brandy Clark drawing 500 people, or a tenth of the room, that’s a problem,” Long says.

“The commissioner has said he doesn’t want to see that. He’s a businessman, a farmer in business for a long time,” Long continues. “He understands a balance sheet and that you want a balance sheet to be as healthy as possible. While Dorton Arena is a source of revenue, it is also a source of expenses. There has to be balance.”

Dorton Arena is the exception for a venture that’s historically profitable. The State Fair is an “enterprise fund” of the Department of Agriculture, meaning it operates largely as its own business. The fair doesn’t pay federal or state taxes and receives little taxpayer support. It doesn’t need to: Between fiscal years 2010 and 2014, the fair generated more than $24 million in net profit. Those funds cover the salaries of year-round fairground employees, the maintenance and upgrades of state facilities on the 344-acre fairgrounds, and the operations of the horse complex.

By and large, the Department of Agriculture collects that money when people come to the fair. Not only does the agency receive every person’s gate admission but also a per-person fee from the company responsible for building and operating the carnival’s midway. If you went to the State Fair in October and purchased a $9 ticket at the gate, you contributed nearly $15 to the cause, even if you never rode the Ferris wheel.

But that money is subsidizing a process that is broken to the point that it costs the State Fair a few hundred thousand dollars in potential profits each year. State officials say that these failures could lead to the elimination of future concerts altogether, though they have been a tradition for more than 30 years.

“Do we need concert entertainment in Dorton Arena period? Can we have a circus in there instead, as an example?” says Wesley Wyatt, the State Fair’s manager since 1997. “We’re reviewing all aspects of the fairprocedures, policies, entertainment, the whole ball of wax. What is the best use of our money?”

Major stars have played Dorton Arena: Jimi Hendrix in 1969 and KISS in 1976, Ray Charles in 1987 and Garth Brooks in 1990, Tammy Wynette in 1992 and Willie Nelson in 2000.

But staging those shows has never been easy. A National Historic Monument, Dorton Arena is, geometrically speaking, known for its hyperbolic paraboloid roof. It looks like a combination of a horse saddle and a flying saucer. Inside, it’s a warped mess of thick concrete, heavy metal and tall glass. Sound bounces around like a pinball.

“In order to avoid the echo within the arena, which Jimi Hendrix encountered recently, the performers had to present their music at their maximum volume,” the News & Observer‘s Gerry Ligon wrote in a review of Led Zeppelin’s 1970 appearance there. “Because of this, the audience had to adjust to the powerful beat of sound.”

Dorton’s acoustics are one of many problems the N.C. State Fair has faced. For concerts, the arena holds only 5,100 people. That means organizers can spend only a limited amount on popular, established acts because there are comparatively so few seats.

By contrast, the grandstand at the Minnesota State Fair accommodates crowds of 17,000. This year, Linkin Park, Aretha Franklin, Tim McGraw, Kid Rock and Journey took headlining honors there. In Arizona, bands play a coliseum that fits 15,000 fans; in October, the talent included Weezer, Wiz Khalifa and Queens of the Stone Age. These fairs have found ways to update their traditions. But in Raleigh, programming is limited to stars that are either rising or falling, typically sourced from country or Christian charts.

In the ’90s, State Fair organizers didn’t have to worry about how many tickets they could sell. For decades, all of the shows were free. But fair managers noticed that the Dorton Arena concerts actually hindered the success of the rest of the event. Hours ahead of showtime, spectators would begin forming a line outside the entrance. They weren’t spending money on rides or concessions or seeing the other exhibits in which the state had invested. Not only was the fair losing potential revenue from those people stuck in a queue, it wasn’t recouping any of the artist costs through ticket sales, either.

In 2002, when the fair’s longtime booking agent quit, assistant manager Mike Pleasant convinced the rest of the staff to let him rewire the system. Instead of free shows, the fair would sell reserved seats at a relatively low cost, thereby curbing the need for a line and offsetting some of the entertainment expenses. The fair had been spending $250,000 per year on talent, Pleasant estimates in retrospect; he hoped to sell enough tickets so that they lost only $80,000.

“I could save the State Fair $170,000 on entertainment,” he remembers of his realization, “and if we booked good entertainment, it would draw people to the fair who didn’t come on a regular basis.”

It worked, too. At one point, Pleasant managed to book six sell-out shows in a 10-concert season. Budgets increased and losses decreased. In 2009, which is as far back as the Department of Agriculture’s invoice archives stretch, five of Pleasant’s shows sold out or came close. His 11 concerts lost only $16,000a fifth of his $80,000 original goal.

“We experimented,” he says. “After two or three years, we found out what we wanted to do.”

Though Pleasant solved a longtime Dorton Arena challenge, his retirement in 2010 created a new hurdle. The fair had no one ready to replace him. Four years later, his position remains vacant, his former duties divvied among employees and contract workers. One such contractor is Sandra Brannen, the sister of Department of Agriculture marketing specialist Myrtle Earley.

In 2003, Brannen was searching for part-time work. Pleasant had recently expanded the fair's musical bookings to include two free outdoor stages, de facto apologies for the now-ticketed Dorton concerts. He needed someone to check in on those bands while he worked the larger shows inside. She took the menial task and, in 2005, became Pleasant's runner and on-site assistant. She shuttled bands between hotels, coordinated with caterers and learned how Pleasant managed talent and crews on site.

"I knew that one day, I would be leaving. I wanted to give her a good foundation so that if she wanted the job, she could take it," he says. "The last year I was there, I gave her more responsibility so the change wouldn't be so hard. And the year after I retired, I came back and worked as her assistant."

When Pleasant left in 2010, Brannen accepted the job as "Entertainment Director," a part-time position whose annual salary has increased from about $13,000 to more than $16,000 during her four-year tenure. Because it was a contract position, there was no competitive interview process or request for proposals typical of state hires. Instead, Pleasant appointed an under-qualified assistant to handle more than a quarter-million dollar budget for a job she'd never actually done.

"She was here. She was familiar with the fair. She had been assisting in that role for a number of years. There was a certain confidence level based on her years of having worked with Mike," Long says. When asked repeatedly if Brannen's numbers had underperformed, he pauses, sighs and, after some time, reiterates, "I can see why that's a valid question.

"The [fair managers] felt it was a move that could be effective," he says.

Like Pleasant, Brannen had no experience booking bands prior to taking the job. But there were no expectations when he started. Whereas Pleasant began with a budget of $250,000, it had exceeded $350,000 by the time Brannen began booking entertainment for the 2011 State Fair. Her choice of talent hasn't veered from Pleasant's, but the ambition of her payouts compared to what the artists sell has.

During Brannen's second year, the total talent budget skyrocketed to $663,000 because of Scotty McCreery, the Garner native who had won the American Idol contest. Although McCreery sold out both his shows, the remainder of the fair's 11 concerts lost nearly $180,000 in ticket sales. When production, catering and Brannen's salary are added, the total reaches $277,000.

(Brannen initially agreed to an interview until she realized the nature of the questions; the INDY has published statistics about her concerts since 2012. "I really would like to decline comment. I don't feel comfortable talking about this," she said. She did not respond to further inquiries.)

Brannen's figures improved in 2013; she lost only $122,000 on bands. Yet her decision to book McCreery for two more shows highlights her lack of expertise and experience promoting shows without the backup of a government organization. The state again paid the former American Idol a quarter-million dollars for two performances. But another year removed from his star turn on television, those shows fell far short of selling out. The State Fair lost more than $45,000 on McCreery alone.

"If you're Live Nation or a bigger promoter, you're doing other shows with Scotty McCreery, and maybe you know that his draw is going down. You have more data to work with," says Glenn Boothe, who owned the Chapel Hill club Local 506 for a decade before going to work for the Cat's Cradle earlier this year.

He says these mistakes show that Brannen probably doesn't consult significant market research. Instead, she parachutes into the entertainment industry to book 11 shows each year, so she never has a chance to detect new trends or alternate ideas. When Boothe ran Local 506, he presented as many shows as he could each week. Whether a success or failure, every gig told him something new about his potential audience.

"If your only data is your past year's fair, you don't have a lot of research," he says. "You want some expertise. If she only has knowledge of how these 11 shows a year are doing, that's not a lot, considering how many booking agents are out there. That's why a place like Walnut Creek Amphitheatre hires a company like Live Nation."

Talent buyers tend to consider all concerts gambles, as each show includes a necessary risk and potential reward. In most cases, they don't know on which side the balance sheet will land until the show is over.

"Mitigating risk is the name of the game," says Adam Lindstaedt, who owns The Pour House in downtown Raleigh. "If I make two or three mistakes where I book bands and lose a ton of money, like the State Fair, that's the difference between being in business and out of business."

One way to reduce the risk, though, is through information, as Boothe suggests. Another way is to be careful in the deal-making. Rather than promise an act an exact, often large, amount of money, promoters typically bargain with a "percentage deal" or "versus deal." In a percentage deal, a band agrees to a reduced fee up front. After that is paid, the venue covers its own expensesincluding production, promotion and cateringfrom ticket sales. If those expenses are met, the band has reached the "split point," and then receives a high percentage of all subsequent ticket sales.

In a "versus deal," bands are guaranteed a slightly reduced sum or a greater percentage of ticket sales; at gig's end, the band receives the larger amount.

But the State Fair has used only one system: Promise the artist a large lump sum up front, cut the check as early as a month before the show and fork it over at night's end, whether 50 or 5,000 people arrive. The fair has never toyed with the idea of a percentage or versus deal, Wyatt and Long say, though four booking agents interviewed by the INDY agreed that's likely the best way to limit losses.

"That's not a good philosophy," says Lindstaedt. "It's not a good idea to guarantee an artist more than two-thirds of what your capacity is, and even that's being generous. I try to do less."

Long worries that a state statute might prevent the Department of Agriculture from using such a complicated system. It wouldn't, according to fair manager Wesley Wyatt. Pleasant says that an alternate model seemed like too much work, where "you get into a lot of red tape, where it's not really worth it." From mid-sized rock clubs to major arenas and amphitheaters, many venues survive by using a percentage or versus deal and not relying on costly, risky guarantees. Those are independent businesses, though, without state support.

Brannen continues to gamble with high risks and low rewards. If all 11 of this year's shows had sold out, the state would have collected only $135,900less than a quarter of gross salesbefore expenses. Unlike a rock club, which can pad its bottom line through liquor sales, the state doesn't keep concessionsor sell alcohol. For the last four years, there has been no sponsorship inside Dorton Arena, either, eliminating another source of potential revenue.

In the end, only one show in 2014 sold out, the veteran Christian rock band the Newsboys. The State Fair lost nearly $100,000 combined on its 11 shows. Add expenses, and the losses total $195,000.

The Department of Agriculture insists that these numbers aren't that grim, and theoretically, that's right. The money that the State Fair generates from entrance fees and from carnival payoutsremember, that sum is as much as $14.20 per personis enough to put the State Fair firmly in the black every year. Concert ticket sales can be seen as bonuses. Despite Wyatt's insistence that the Department of Agriculture is evaluating its use of Dorton Arena for concerts, he maintains that those other revenues make Brannen's concert losses acceptable.

"We would rather the losses not be that way. While a concert may or may not completely cover all the costs involved, when you add those other revenue sources generated by the concert attendee, we do all right in Dorton," Wyatt says. "We might even make a little money."

And according to Marla Calico, the chief operating officer of The International Association of Fairs and Exhibitions, such entertainment options not only generate new income for fairs but also foster promotion.

"The tie-in with presenting media partners is a critical piece of the puzzle," she says. "A radio partner promoting a concert with on-air ticket giveaways is talking about the fair. There is considerable marketing value."

And taken as a whole, the State Fair seems a model of financial health. But no one, Wyatt included, can say how many people who attend the State Fair go only for the concerts. The fair has never quantified the ability of its shows to attract new people. Wyatt thinks the number is high, but during each of the last five years, less than 4 percent of all State Fair attendees have paid to get into Dorton Arena; in 2011, that number cratered to 2.1 percent. Long estimates that the pull of Dorton shows is low, at least in compelling people to come to the fair. It mostly helps people pick which night they'll attend, he reckons, not if they'll attend at all.

In either scenario, the concerts at Dorton Arena remain a loss leader. Attendance figures since Brannen took over in 2011 suggest they're a dismal one at best.

"How much do you want to pay to actually see a show in Dorton Arena? This is tough. It's not an easy task," Long says. "Are there answers? What can we do? What else can we do with Dorton Arena? Do we need 11 nights of music? We don't have any answers about what that's going to look like, but it is certainly going to be a topic of discussion."

Graphics by JP Trostle; Head photos courtesy of artists, respective labels and publicists.

This article appeared in print with the headline "State Fair shakedown"