Buying Power

"On a recent drive, the radio station I often listen to in Phoenix plugged their newest promotion, called “13K a day”.  The promo involved the station giving out $1,000 at 13 different times during the day.  The money was given to the 13th caller once a certain song or jingle played.  Basically, the station was trying to “buy” listeners to stay tuned in and not channel surf when commercials come on.  This got me to thinking….. 
 
Isn’t this the same thing CVBs and sports commission do with incentive money and bid fees?
 
Destinations seeking to land more sporting events have been “buying” business for decades, and while the bid free trend has changed over the years, incentive money in the form of “grants” to sports organizers is still prevalent.  Going back to the radio station promotion, do you think there are better ways to be relevant and keep your listeners tuned in?  Same question for sports organizations.  Can we take our grant or incentive funds and be more strategic?  Can we put those funds to work in a way that would give our communities greater economic return?  Can we leverage our community leaders to make our dollars go farther and land even more events? 
 
Of course, the answers to all of these questions is yes.  Here are two examples how…..
 
During our time in Denver, we partnered with the University of Colorado and the Denver Broncos to submit a bid for the Big XII Football Championship.  As a small stand-alone sports commission at the time (we didn’t have the luxury of bed tax dollars to sustain ourselves), the price tag on this event was quite high.  The event had sold out in prior years, and the conference office had crafted the RFP to include a guarantee of (you guessed it) a stadium sell out.  As the hosting entity, we had to guarantee the Big XII that every ticket would be sold, or cover the funds for each vacant seat.  In this particular year, that was a $4.9 million guarantee – way out of the sports commission’s league.
 
This event was important to our local partners and the community at large, so we had to figure out a way to get in the game.  Our solution was to go to area business leaders and ask them to backstop the ticket revenues for the game.  We had seven partners each agree to take on 1/7th of the risk with us.  That is, each partner committed to take on up to $700,000 worth of risk.  In all reality the risk was much smaller, but the possibility of a cash call for a one-seventh share of any unsold tickets was real.  We would work to get all the tickets sold, but a bad match-up or inclement weather could impact our ability to achieve a sell-out.  What was in it for the partners to take on this risk?  A “free" sponsorship. 
 
Our pitch was that this event was good for Colorado and the Denver community, and if we sold out, we would only bill the partners for the tickets and suite inventory they wanted.  If we fell short of a sell-out, they would indeed get a cash call for their share, but if we did sell every ticket, they got a free ride as a local partner for the game.  The Big XII signed off on this unique arrangement, and we submitted our bid.  In the end, we were not selected to host that year, which would have played out well had we hosted (the University of Colorado won the Big XII North and would have played in our game).  Even though we didn’t have to execute on this plan, the model gave us a structure to work with in the future, and also delivered some connectivity with new partners we had not worked with in the past.
 
Here is one more example of creative finance in sports…..
 
In 2001 a group of people in Tulsa started exploring a bid for what was then called the Women’s International Bowling Congress (WIBC).  Our LOC had the right make up of people to win the bid and execute the event, a nearly 6-month long bowling festival.  The biggest challenge was to come up with the bid fee, which was north of $375,000 at the time.  A big amount for a big event.
 
Our local bowling proprietors would benefit the most from hosting the event, as their centers would be filled with competition and practice time for nearly half a year.  Since they had the most to gain, we asked them to participate in the financial piece of the bid (rather than simply asking the city, CVB, or our sports commission to write a check – none of which would do so alone).  If we were to win the bid, we would have four years before we actually had to host the event and pay the full bid fee.  We did the math on how many “lines” (or games) would be bowled in our area’s centers between the awarding of the bid and when the payments were due to the WIBC.  We determined that if the bowling centers would add a nickel to each line, we would have the funds needed to cover the bid fee.  A simple nickel.
 
The proprietors agreed, and once we won the bid to host, they started collecting the extra nickel.  Every quarter they remitted the sum of the nickel increase to the sports commission.  We put it in the bank to use each time a payment deadline came (the payments were spread over four years).  The event was a huge success, but it took some creative thinking, and a unique funding model to get it done (we believe we were the only city to ever have the bowling proprietors pay the bid fee for this event).
 
There is always a unique way to get something done, beyond just writing a check.  Sit down with your main stakeholders and think outside the box.  Figuring out what’s in it for everyone around the table may help you determine a different model for success.