The Wisconsin State Fair, the marquee event held at the Wisconsin State Fair Park, needs to raise more revenue to overcome a burdensome debt incurred largely by some of the other properties within the park. The fair’s executive director has elected to hire an agency to sell naming rights to various fair buildings and roads in hopes of raising an additional $1.5 million per year.

Can this strategy get the fair out of debt? Are there other options that are more feasible, or which should be explored in tandem with the venue-naming plan?

IEG SR solicited the opinions of experienced properties and an agency to provide suggestions to the fair–and other properties in a similar boat–on strategies and tactics for raising revenues. Also, IEG Consulting weighed in with its recommendations. Following is the brief of the case and our experts’ responses:

Wisconsin State Fair Background
Although the 11-day August event has 90 sponsors that contribute a total of about $1.5 million annually, the property has been running in the red for several years.

On its own, the fair would be profitable. But it is part of the larger Wisconsin State Fair Park, a 200-acre fairgrounds that contains the Milwaukee Mile racetrack; the Pettit National Ice Center–which is both a public venue and a U.S. Olympic training facility–a youth center; an Exposition Center–which, at 200,000 square feet, is the largest in Wisconsin–and numerous other buildings and pavilions.

Under the direction of the state legislature, the fair park has made numerous capital improvements over the years, including a recent $20 million project to upgrade the Milwaukee Mile’s grandstands. After paying the debt service on its capital projects, the fair park lost $1.9 million last fiscal year, bringing its total deficit to $8 million over the last three years.

Randy Prasse, the recently hired executive director of the Wisconsin State Fair, has been charged by the state with creating more revenue to help make the entire fair park complex profitable. However, the state has declined to give Prasse control over the inventory of the ice center, the race track, or the exposition center, each of which has its own manager and individual sponsorship program. Although he is free to work with the other managers on joint selling opportunities, their inventory is not his to sell.

Prasse has two full-time staff who actively solicit sponsorship, although he feels strongly that more staff is needed to better attract and service sponsors. Benefits are available in packages– such as the “Day at the Fair” package, which costs $20,000–or sold à la carte. An extensive price list is publicly accessible on the fair’s Web site. Benefit prices range from $85,000 title sponsorship of the main stage to $2,500 title of one of the daily food-eating contests. Prasse also is considering selling title or presenting status of the fair.

Some of the fair’s largest sponsors are The Coca-Cola Co., the official soft drink and bottled water, and Miller Brewing Co. Other major sponsors include dairy cooperative Foremost Farms USA and We Energies, the local power utility. The fair has several media sponsorships, all of which are in-kind deals for ad space. Most non-media deals are in the $50,000 to $75,000 range. No single sponsor spends in the six figures.

Unlike many state fairs, attendance at the fair has been on the rise. In ’04, the event broke the previous year’s first-day attendance record by attracting more than 70,000 visitors. The state fair park hosts more than 200 events and more than 2.5 million visitors a year.

The fair conducts yearly demographic surveys and a three- question sponsor affinity survey. Nearly 90 percent of fairgoers are from Wisconsin, with a majority from the greater Milwaukee area. About 60 percent are women and the average HHI is $65,000. In the ’04 affinity survey, 79 percent of attendees said they would “try to support the sponsors” of the fair and 75 percent said all things being equal, they “would purchase the product of a state fair sponsor over that of a non-sponsor.”

After evaluating his options for raising revenue, Prasse decided on the strategy of selling naming rights to about a dozen buildings, entrance gates and roads on the fairgrounds. This includes naming rights to the expo center–the sales rights to which he obtained from the manager there. He hopes the expo center naming will bring in $300,000 to $400,000 per year.

The approach builds on two naming deals signed last year in which separate sponsors each agreed to pay $325,000 over five years to name two smaller buildings. Prasse has hired a two-person, Milwaukee-based agency, which works on fee plus commission, to help sell the naming rights. He believes the sum of the remaining naming rights on site could be worth more than $1.5 million annually.

Agency: Sales Should Be Consolidated As Much As Possible
Marty More, president, SponsorSource
SponsorSource represents properties–including the state fairs of Virginia and Maryland–as well as sponsors

It appears that five distinct entities–the Milwaukee Mile, Pettit ice center, the expo center, the fair and the naming rights initiative– are potentially vying for the same customers. Not only is this self-defeating in terms of maximizing revenue, but confusing to potential sponsors as well.

The fair has brought in an outside organization to sell naming rights and it also has internal people selling sponsorship. The two may sell against each other by calling on similar people.

I would try to form one sales force to speak for and sell the entire project. If that is not possible, I would, at minimum, combine the fair and naming rights sales. Since the naming rights packages should include additional fair benefits to be truly valuable, it makes sense to have these sales components combined. The fair staff has established relationships with many corporations and most likely has the direct ear of sponsorship-buying decision-makers. To not have the fair’s sales people in the loop for selling naming rights would be a major mistake.

My second concern is how the fair arrived at the values and prices for the naming rights. Many times a property establishes a price for this type of project based primarily on its needs, such as the costs and expenses of a particular facility. Unfortunately, sponsors don’t care what the building costs to run. They want to know what’s in it for them. Thus, the realistic price needs to be directly tied to measurable benefits.

In terms of additional tactics that could be used, I would focus on leveraging those categories where sponsors are in a position to take revenue out of the facility. Beverages, banks, food products, automotive and the like would be good places to start and might be most inclined to step up participation. Wherever possible, the fair should try to provide facility “ownership” and maximize revenue based on its ability to make a big fish out of each naming rights partner.

Property: Adding Value And Staff Can Help Raise Revenue In Addition To Naming Rights
James Holt, executive director, Memphis in May Int’l Festival

The fair should work to push its sponsorship rights fees up. I was surprised that the typical sponsor range was $50,000 to $75,000, as opposed to $75,000 to $100,000.

Given the size of the Milwaukee market, the success of the event, and its impressive demographic profile, the fair could make a case for escalating rights fees 10 to 20 percent to make up a small portion of its shortfall. Of course, if it does raise fees, it should also consider adding additional benefits to soften and help justify the increases.

Hiring more staff would seem to be a smart move. The fair is successful and growing. Prasse should capitalize on this with an expanded sales force. Sponsorship is a numbers game and the more lines you have in the water the more fish you catch.

The strategy for selling naming rights is very sound and is probably the fair’s only outlet for significant revenue growth, given the individual management structure for the other venues. Prasse definitely should explore joint sponsorship pitches with the other facility managers. Otherwise, differing goals and objectives are likely to develop into competing agendas and the potential for sponsor conflict increases.

He should especially look at working with the management of the Milwaukee Mile to sell naming rights. The track appears to be the biggest asset that the fair park has to sell. The track no doubt will want to protect any current sponsors, but hopefully the management can be convinced to give Prasse the room he needs to maneuver in selling a title sponsor.

IEG: Sell Fewer, More Integrated And Higher-priced Packages
Rebecca Joslin, vice president, IEG Consulting

With 90 sponsors and $1.5 million in revenue, the fair has not had trouble selling sponsorship. It has had trouble selling high-value sponsorship packages. Our first recommendation is to eliminate smaller sponsors in favor of larger, more integrated deals.

A la carte pricing of benefits should be eliminated, starting with the “shopping list” with prices posted on the Web site. No sponsor is going to spend six figures when they see they can pick and choose five or six benefits for half the price. By encouraging piecemeal buying, the fair is creating clutter and eroding the value of its larger packages.

Instead, the fair should create packages that incent sponsors to buy at a higher level. These packages should include visibility (signage and other sponsor identification), extended reach (exposure through media), attendee access (sampling/display, database, VIP benefits) and promotional rights (use of logos, activation credits, etc.).

Prasse clearly should work with the other fair park venues to create a year-round “global” packaging strategy. The revenue they can earn together far exceeds their value as pieces and parts. For example, the Oklahoma State Fair just sold a low-six-figure official vehicle deal to Toyota that includes year-round benefits. A mass market company will find more value in reaching 2.5 million people than 700,000.

Like the packages mentioned above, these year-round partnerships also should include exposure and sampling or display opportunities.

Even with a “fewer, larger” approach to sponsorship sales, the fair may still fall short of its goals. That makes the naming rights strategy worth pursuing, but in a slightly different way than has been proposed.

While naming rights are a good idea in terms of better mining the assets of the fair, it is crucial that the opportunities be part of a larger integrated deal. The days when companies paid six figures to name a building without receiving media or business-to-business or other benefits are over.

The value of a fair sponsorship is not in a barn or a milking parlor; it is in the ability to reach the audience that visits there and cares about the fair. Companies will not get that value if all they receive is the right to put their name on a building.

Additionally, one of the benefits of naming rights deals is their ability to generate publicity and awareness beyond the event site. But that will be difficult with some of the elements that the fair is attempting to sell. How often does an entrance gate or an access road get mentioned in the newspaper or on TV?

With that in mind, the fair might want to consider selling a dedicated live remote space to one of their broadcast media partners, which the station could then sell through (along with some other fair-related benefits) to one of its big advertisers. For example, a TV station receives a space at the fair where its reporters do all their reports, and they say, "Coming to you live from the We Energies Studio at the Wisconsin State Fair.”

The Fair also could offer each media outlet some unique content or access that could be featured during those live segments to make the opportunity more salable to the advertiser.

We believe the fair should invest in hiring sales staff. This is a better use of resources than farming out sponsorship sales to an agency. Not only is it a good long-term investment, but chances are, even if the fair pays bonuses or commissions to staff, it will ultimately keep a greater percentage of new sponsorship money.

Finally, if the fair does decide to explore selling title or presenting sponsorship to the overall event, it should conduct audience research to determine the potential risk for backlash. While many state and local fairs have sold title successfully, every event is unique in terms of audience perception.