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5. LANSDOWNE PARK
- SUPEREX CONCERT PROMOTIONS PARC LANSDOWNE -
PROMOTIONS DE CONCERT DE SUPEREX |
Committee Recommendation
That Council receive this report for information.
Recommandation du comité
Que le Conseil municipal prenne connaissance du présent rapport.
Documentation
1. Executive Director's report (Business
Transformation Services) dated 2 October 2007 (ACS2007-BTS-RPM-0038).
2. Extract of Draft Minute, 2 October
2007.
Report
to/Rapport au :
Corporate Services and Economic Development Committee
Comité des services organisationnels et du
développement économique
and Council / et au Conseil
2 October 2007/ le 2 octobre 2007
Submitted by/Soumis par:
Stephen Finnamore, Executive Director, Business
Transformation Services / Directeur exécutif, Services de transformation des
activités
Contact Person/Personne ressource:
Doug Moore, Manager Venture Properties Division
Real Property Asset Management/Gestion des
actifs des biens immobiliers
(613) 580-2424 x 41301, Doug.Moore@ottawa.ca
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REPORT RECOMMENDATION
That the
Corporate Services and Economic Development Committee recommend Council receive this report for
information.
RECOMMANDATION DU
RAPPORT
Que le Comité des
services organisationnels et du dévéloppement économique recommande que le
Conseil municipal prenne connaissance du présent rapport.
BACKGROUND
At the 4 September 2007 meeting of the Corporate Services and Economic Development Committee, staff were directed to provide a report to Committee and Council outlining the factors contributing to the financial loss incurred by Lansdowne Park arising from the concert series presented during the 2007 SuperEx.
Lansdowne Park is owned by the City of Ottawa and is managed as part of the Real Property Asset Management (RPAM) Branch’s Venture Properties portfolio. At the time of amalgamation, a June 2000 Region of Ottawa-Carleton report (number 05-00-0045) directed staff to follow a mandate of managing Lansdowne “in a business like manner designed to maximize the long-term physical and financial viability of the Park.” Its mission is to be operated as a multi-purpose sports and entertainment facility catering to the needs of both local citizens and visitors. Lansdowne Park routinely works with the entertainment sector in one of three ways:
1)
Lessor
(Landlord): Lansdowne is risk-free as an outside promoter rents the facilities,
pays the associated costs for talent and production, and receives the revenue
and associated profit or loss from the event.
2)
Co-promoter: Lansdowne shares the risk with an outside
promoter. If the show makes a profit, Lansdowne receives a proportional
increase from the profits of the show, but is also at risk if a loss is
incurred.
3)
Sole
promoter: Lansdowne assumes the risk
and receives all of the profit from a show, but is also responsible if a loss
is incurred.
The Central Canada Exhibition Association (CCEA) is a tenant of Lansdowne Park. It pays annual rent for the use of Lansdowne and, as is the case with any event promoter, the CCEA is responsible for its own revenues and expenses along with the resulting profits or losses.
In early 2007, the management of the CCEA approached
the management of Lansdowne Park about the possibility of working more closely
together to create new or expanded revenues for both parties. The goal was to
create new partnerships that would benefit both in the short term and
ultimately assist the CCEA in increasing funds for its eventual relocation to
its new site on Albion Road.
One of the options that was discussed was to
co-promote paid entertainment events in the Civic Centre Arena during the fair.
Lansdowne Park agreed to take the lead in procuring the shows and the CCEA
agreed to provide value-added support (marketing, grounds admission, etc.). The
parties would share equally in the profits. This type of partnership would typically have the potential to generate
double the profit for each of the partners compared to what either one could
generate individually from a regular rental agreement.
The outcome of this effort was dramatically different from those mutual expectations. The debriefing by staff of both Lansdowne Park and the CCEA is expected to address the following points of concern, all of which may have contributed to the financial loss. These include:
·
Late start-up: The search for talent for the
2007 SuperEx began in early February 2007 following discussions with the
CCEA about working more closely together to increase revenue. Typically, the
search for touring talent
for the summer season begins in early December of the previous year at an
annual Entertainment Buyers’ Conference. This would have provided a deeper
talent pool from which to choose, better routing options, and potentially
better pricing for artists.
·
Talent selection: Artist selection was made on the
basis of availability, genre, cost and media response to marketability. There
was also a deliberate effort made to avoid competition with the free outdoor
concerts. The gradual roll-out of the marketing beginning in July, resulted in
the relative strength or weakness of sales not being apparent until early
August.
·
Competition: Other summer events in the
eastern Ontario market made it more difficult to bring attention to the SuperEx
concerts. Bluesfest (July 4th to 15th) set a record
attendance with a broad range of musical talent. The Havelock Jamboree in July
and the Riverside Jam in August, together, catered to all country music fans.
·
Resource challenges: Lansdowne Park and the CCEA may
have benefited from the assignment of dedicated staff resources to manage the
artists' requirements, as well as production and marketing for the
entertainment line-up.
· Marketing strategy and coordination: Both partners did what was agreed upon, but the overall marketing approach lacked coordination. For example, the early strength of the SuperEx campaign highlighted all of the free attractions and entertainment (including some concerts). When advertising for the paid concerts rolled-out, there was some confusion from the mixed messaging. As a learning outcome, this will be addressed in the post mortem review.
· SuperEx as the backdrop: This concern relates to artist selection. A better understanding of the current target audience/demographic of SuperEx patrons and the type of entertainment that appeals to them is required. Items for consideration during the post mortem review include: using entertainment to attract a broader audience (with the midway and other attractions providing enhanced value); if there is already a limited audience and therefore, the entertainment merely provides added value to those who might already attend; and the compatibility of paid shows with free outdoor concerts.
The entertainment series resulted in a financial loss of $93,807 to Lansdowne Park’s operations. This amount represents Lansdowne’s share of the revenue less the total cost of operations. The net cost is demonstrated in the following summary:
Artists’ Fees $166,000
Production Costs $100,650
Marketing $49,000
Total Gross Expenses $315,650
Revenue $128,036
Total Net Cost ($187,614)
Lansdowne Park share: $93,807
Despite this loss, Lansdowne Park hosts hundreds of successful events annually. Last year, Lansdowne hosted 450 events (with an attendance of 1.5 million) representing revenue of $4.5 million. Prudent management, increased marketing and as a result, increased business has resulted in bookings that are often contracted a year in advance.
Over the past several years, Lansdowne has hosted a variety of major national and international events. This includes the 2007 FIFA U-20 World Cup Canada Soccer Championship, the 2006 Ontario Summer Games, the 2005 Rolling Stones Concert, the 2004 Grey Cup, and the Jeux de la Francophonie. Later this year, Lansdowne will host the World Ringette Championships and from December 2008 to January 2009, Lansdowne Park will again host the World Junior Hockey Championships. Collectively, these events generate significant exposure and economic benefits for the City of Ottawa and help to reinforce our City’s vibrant and dynamic image.
Lansdowne Park and CCEA staff will be conducting a detailed post mortem review over the next several weeks to better understand the factors contributing to this particular situation and to determine what can be done differently to improve joint ventures on a move forward basis.
CONSULTATION
Public consultation is not required.
FINANCIAL IMPLICATIONS
As a result of the
co-promotion of the entertainment events with the CCEA, Lansdowne Park
operations incurred losses of $93,807. The impact of the loss on annual
operations of Lansdowne Park will be reported in the 2007 Disposition Report
expected in the spring of 2008.
DISPOSITION
This report is forwarded for information pursuant to the Corporate Services and Economic Development meeting of 04 September 2007.
LANSDOWNE
PARK - SUPEREX CONCERT PROMOTIONS
PARC LANSDOWNE - PROMOTIONS DE CONCERT DE SUPEREX
ACS2007-BTS-RPM-0038 capital/capitale (17)
Councillor Bloess noted this
issue had been reported in the media as a negative story. However, he presumed that staff had entered
into the agreement in the hopes of generating revenues and he wondered how this
particular event fit into Lansdowne’s overall operations. Mr. D. Moore, Manager of Venture Properties
Property Management, acknowledged that in isolation, this particular event looked
bad. However, he reported that in terms
of this line of business, the Division had netted a profit of about $750,000
over the last three years. He further
reported that so far this year, they were in a break-even proposition with
three more concerts to go, which would put them in the black by year-end.
Responding to questions from
Councillor Desroches, Mr. Moore indicated the decision to enter into the
agreement with SuperEx would not have come to Committee and Council because it
had been delegated to staff and the decision was taken in the normal course of
business at Lansdowne Park. He
confirmed that there were lessons learned from this particular situation and
that in the future, staff would be looking to mitigate risks. However, he re-iterated that over-all, the
picture was quite good in terms of staff’s decisions at Lansdowne Park.
In response to questions
from Councillor Wilkinson, Mr. Moore confirmed that the profit generated by the
management of Lansdowne Park factored-in all operating expenses, including
staff costs.
Following-up on a previous
question and the issue of this line of business being profitable, Councillor
El-Chantiry inquired as to any lessons learned in terms of publicizing the
positive so that there would be less focus on the negative. Mr. Moore indicated there were a lot of
positive ventures that never got reported in the media. He submitted this was a marketing issue,
though he was unsure how to deal with it.
Mr. K. Kirkpatrick, City
Manager, noted Lansdowne Park was a venture property. He reminded members that, after amalgamation, Council gave
Lansdowne a specific mandate – to operate in the market on a competitive basis
in order to reduce taxpayers’ support for the operations of the facility while
having it continue to provide services to the community. He submitted that with any venture property,
there was some element of risk. In this
case, it had not worked out as staff had expected, resulting in a loss. However, he maintained that in many other
cases, things had worked out, resulting in revenues. He acknowledged that it might be in the City’s interest to better
communicate the good news stories.
However, he felt it came down to a question of how much money and how much
effort to expend in that regard.
That the Corporate Services and Economic Development
Committee recommend Council receive
this report for information.
RECEIVED