Money Troubles in Carnival Land

During the days of Carnival, liquor flows freely as do the euros when millions are joining in the parades and street parties of Germany's largest public event. Countless bars and restaurants are full and of visitors flock to the Rhineland for the six days of festivities.

The star attraction is always the Carnival associations, with their elaborately decorated floats and extravagant costumes. They include everything from neighborhood groups to social groups, including gays and lesbians. Most dress as 18th century French soldiers (photo) -- a mocking gesture to the region's former occupier.

For a long time now, Carnival has been an important part of the economy in the cities and towns in the Rhineland and along the Main River. But with a flagging economy in Germany and diminished purchasing power, people are more reluctant to shell out money for costumes, beer and the expensive parties hosted by carnival associations. That's created a crisis for the groups.

Fewer sales, fewer subsidies

"In Cologne, where the biggest Carnival celebrations are held, some groups are really having trouble this year," said Franz Wolf, president of the German Carnival Association. "At some of the events only 80 percent of the tickets were sold and empty tables could be found. Those are the first indications that something is wrong."

Wolf doesn't believe the economy has anything to do with it.

"In my opinion, what the hospitality industry did after the change from the Deutsch mark to the euro was impossible," he said. "In many cases, they just kept the deutsche mark price and put a euro sign in front of it making things twice as expensive. Nobody can pay the new prices."

In some places there are empty halls, empty bars, and even empty cash registers. With lower tax revenues pouring in, many cities have also reduced the amount of subsidies they give to the different Carnival associations.

Donations to the groups have also dropped and they're having trouble making ends meet. The average Carnival association spends about €400,000 ($506,000) each year for everything from candy that's tossed to crowds during parades to portable restrooms.

An industry worth billions

In order to plug the holes in their budgets, the associations have started doing what sporting event organizers have long been doing: They're charging TV stations for the rights to broadcast their annual parties, which are often filled with celebrities and politicians.

Public broadcaster WDR in North-Rhine-Westphalia recently purchased the exclusive rights to broadcast massive Rose Monday parade in Cologne. Other broadcasters are limited to covering the event in news reports.

WDR is rumored to have paid in the seven figures for those rights. But WDR isn't telling.

Tough times or not, Carnival is an event that brings in big money that reaches virtually every business in the region.

"It starts out when the women go to the hairdresser," Wolf said. "They then attend a Carnival event and they take a taxi or public transportation to get there. They also buy costumes, drinks, meals."

It's even been the subject of McKinsey study. The consulting company found that Germany's Carnival is a €4 billion industry.