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HomeMy WebLinkAboutSponsorship Samsung World Championship LPGA Golf Tournament Oct. 10-16, 2005CITY OF PALM DESERT COMMUNITY SERVICES STAFF REPORT REQUEST: Consideration of a $200,000 request for sponsorship of the Samsung World Championship LPGA golf tournament from Bighorn Golf Club. DATE: June 23, 2005 CONTENT: 2004 Samsung Budget Recommendation: By Minute Motion, concur with the Marketing Committee's recommendation to sponsor Bighorn Golf Club's Samsung World Championship LPGA golf tournament in the amount of $137, 500. Executive Summary: Bighorn Golf Club has sponsored major golfing events for several years. The City of Palm Desert benefits from these nationally televised tournaments and therefore has contributed financially to the events. This year Bighorn submitted a request for City funding in the amount of $200,000 for the BIGHORN Golf Club's Samsung World Championships LPGA's tournament to be held October 10 — 16, 2005. The tournament features an elite 20-player field of women golfers. Last year the City of Palm Desert contributed $125,000 towards the event, which was deemed a great success. It was televised for four days, including during prime time, and generated countless national and international stories, as well as generated a significant amount of business in the City. General Manager Warren Smith and Director of Marketing Theresa Maggio presented their request to the Marketing Committee. Mr. Smith noted that last year the tournament expenses exceeded $727,000 (after the City's $125,000 donation), which was much more than Bighorn anticipated. Therefore, this year they were asking the City to increase their support. (Please see attached budget.) Mr. Smith also mentioned that new this year, many of the players and tournament officials would have accommodations at the Desert Springs JW Marriott Resort. They are attempting to secure up to 200 rooms for the duration of the tournament. In addition to the exposure Palm Desert would receive, Bighorn added value to the sponsorship to include three - 30 second vignettes, 500 tickets, and a display area in the sponsor tent to distribute collateral materials such as dining guides. Last year we received two vignettes and distributed materials in the players lounge. After much discussion, the Marketing Committee agreed that the Samsung event is important to the City and its timing is perfect, being held in the shoulder season. They recognized the value the City receives and as with all things, also recognized that costs increase. Therefore, the Marketing Committee recommended an increase of ten percent above last year's $125,000 contribution; therefore suggesting the City budget $137,500 for support of the tournament. As a shoulder season event, the Samsung offers the City a unique opportunity for promotion and advertising in that it establishes Palm Desert as a year-round, upscale destination resort in a forum not otherwise affordable. Staff feels it is difficult to qualify and quantify support of the $200,000 amount requested. However, Palm Desert does benefit greatly from the television exposure, the increase in visitors, plus the newly added value: • Up to 200 players and officials staying at the Marriott Desert Springs • An extra vignette for a total of three — 30 seconds each • 500 tickets to the event. Therefore, staff concurs with the Marketing Committee's recommendation to allocate $137,500 for support of the Samsung World Cham . sh' . Submitted By: Kristy Knei ing Sheila R. illig Marketing Manager Assistant City Manage Approval: Carlos L. Ort� City Manager Paul Gibson Director of Finance APPROVED MINUTES PALM DESERT MARKETING COMMITTEE MARCH 15, 2005 V. NEW BUSINESS A. REQUEST BY BIGHORN GOLF CLUB FOR FUNDING/ SPONSORSHIP OF THE SAMSUNG WORLD CHAMPIONSHIP GOLF TOURNAMENT WARREN SMITH, General Manager of BIGHORN, introduced himself and Teresa Maggio, Director of Marketing of BIGHORN, to the Committee. Mr. Smith's presentation included a synopsis of last year's Samsung World Championship Golf Tournament and how it benefited the City. He believed that early in the process of developing BIGHORN, publicity was essential for exposure; however, with BIGHORN at the end of its development with only 40 lots left to sell, exposure was not as critical as it once was. Having said that, he felt that the Samsung World Championship Golf Tournament was a win -win situation for both the City and BIGHORN. The following was a list of the benefits associated with the tournament this year as proposed by Mr. Smith: • The tournament would take place the week of October 10, 2005, which is the shoulder season for the Valley. • Michelle Wie had committed to her participation in the tournament this year. • The Marriott Desert Springs would be the host hotel this year and would be booking 260 room nights. The sponsor's corporate guests would be staying where the players stay, which could add to a booking of 600 to 700 room nights. • There would be national television coverage for four days as well as three 30-second vignettes that would run six times during the four -day coverage between the Golf Channel and NBC. • Samsung brings its biggest clients to the tournament, i.e., Circuit City, Best Buy, Good Guys, etc. Mr. Smith mentioned that BIGHORN had one more year on its contract with IMG to host the event. He said Mr. Hubbard would like to have the event for an additional four years; however, the event had proven to be more expensive then was anticipated. Mr. Smith said they were limited by what they could do within the confines of their contract with IMG. BIGHORN cannot sell sponsorships and does not receive revenue from ticket sales. He said the City's support of $125,000 last year was appreciated; however, the total cost of the 2004 tournament was $850,000, an amount that BIGHORN could not afford to pay after this year 2 APPROVED MINUTES PALM DESERT MARKETING COMMITTEE MARCH 15, 2005 without additional support. He hoped the City would strongly consider BIGHORN's request for $200,000. Ms. Kneiding said the Marketing Committee was reviewing this item. The Committee's recommendation to be included as a line item in the budget would be forwarded to City Council for approval. She added that the money would not come out of the Marketing budget but would be an appropriation from Council. Upon question by Mr. Mandelbaum, Ms. Kneiding responded that the Committee was not being asked to reconsider the $125,000 recommendation by staff. She said that the City met with Mr. Smith and Ms. Maggio to discuss what could be done to expand sponsorship; although nothing was set forth at that meeting, she was pleased that BIGHORN was now utilizing the Marriott Desert Springs for its host hotel. She added that, while the Samsung World Championship was an important event for Palm Desert, there were many events that the City would like to support, and staff wanted the Committee to give its recommendation on what it felt the value of this tournament was to the City. Upon question by Mr. Rodriguez regarding comments made earlier in the meeting about hosting the tournament in the future, Mr. Smith replied that BIGHORN was presented with the opportunity to host the Samsung tournament with a site fee of $400,000 to $450,000. He said they thought it was a good opportunity for the following reasons: 1) four days of national television coverage; 2) ladies golf on the incline; and 3) Annika Sorenstam is a member at BIGHORN. However, the cost was so much more then they thought it would be due to expenses they didn't anticipate; i.e., transportation and security. He said the contract with IMG was for two years with a one-year option. He was certain that they would not be exercising that option if they end up spending that kind of money each year. He said the event was fun, the participants enjoyed it, the players were great, but they would not be able to continue unless the losses were reduced. Mr. Mandelbaum asked why there was no revenue for the ProAm. Mr. Smith responded that the ProAm was a sponsor's event and that BIGHORN received one foursome spot out of 20 groups. He noted that BIGHORN was responsible for the awards party, which was an additional expense. Mr. Rodriguez asked Mr. Smith if they might be looking for another one - day special event type of opportunity. Mr. Smith responded that he could not answer that question. 3 APPROVED MINUTES PALM DESERT MARKETING COMMITTEE MARCH 15, 2005 Ms. Bowen asked whether BIGHORN was looking to recoup the entire cost of the tournament, less the City's contribution of $125,000, or if they were prepared to be responsible for $400,000 each year and recoup the remaining balance, less the City's contribution. Mr. Smith said they knew it was going to cost them something, but it cost more then they really thought it would. Mr. Shimer asked Mr. Smith if BIGHORN would want to continue the tournament next year if the 40 lots were sold. Mr. Smith replied that Mr. Hubbard would definitely like to continue hosting the tournament if it made economic sense. Mr. Shimer asked if he considered going to other cities for support. Mr. Smith said he had not been met with open arms or enthusiasm from other city's council members. Mr. Shimer felt the fact that the tournament was held during the shoulder season was positive for El Paseo. He commented that the donation of The Gardens parking lot and the shuttle service was a big success. He said there could have been more traffic in the restaurants and stores, but everyone on the street noticed the additional bodies. He thought it was a great event. Mr. Mandelbaum made a couple of suggestions: 1) distribute packets from the Visitor Information Center to the participants; and 2) put together an event to benefit Junior Golf or something similar for the children of the community. Mr. Rodriguez felt that national television coverage was desirable for the City. He also felt that any investment the City makes should ultimately be an ongoing investment, which is why he was curious about the future of the tournament. He said he would want to know if BIGHORN would be moving forward with this event or if this was the last year. He did not believe Mr. Smith could answer that question. Ms. Kneiding commented that the City was not looking to add more work for BIGHORN or themselves with regard to the tournament. She said the City would like the Committee to evaluate the tournament as it stands now and determine what benefits the tournament would bring to the City from a marketing perspective. She said staff is recommending $125,000 for sponsorship, and BIGHORN is asking the City for $200,000. She said whether the tournament ever happened again was BIGHORN's decision. What the Committee needed to look at was what would be a fair contribution to support an event that gets international publicity for the City. 4 APPROVED MINUTES PALM DESERT MARKETING COMMITTEE MARCH 15, 2005 Mr. Rodriguez said, from his perspective, it clearly mattered what would happen to the tournament in the future. He would like to go beyond staffs recommendation and increase the amount of participation, perhaps not at the level requested, but if nothing else a token increase. He added that prices had increased significantly over the past year, and it would be his recommendation that the Committee consider some form of increase to show its support of the tournament. Mr. Shimer asked Ms. Close if she could attach a dollar amount to the three vignettes. Ms. Close responded that she could not. Mr. Rodriguez moved to approve staffs recommendation for sponsorship of the Samsung World Championship Golf Tournament at BIGHORN in the amount of $125,000 plus 10%. Motion was seconded by Mr. Mandelbaum and carried by unanimous vote. B. REVIEW PROPOSED BUDGET Ms. Kneiding gave a brief overview of the proposed budget. She said the media buys are still very preliminary in order to meet budget deadlines, but the dollar amount probably would not change. Mr. Mandelbaum asked how the budget compared to last year's. Ms. Kneiding said the total budget is higher because advertising is up about $75,000, but $50,000 of that is earmarked for the Visitor Information Center grand opening. Further discussion ensued regarding the budget. Ms. Kneiding said they were looking at about a 7% increase in ad rates. Mr. Mandelbaum moved to approve the proposed budget as presented. Motion was seconded by Ms. Bird and carried by unanimous vote. VI. OLD BUSINESS None VII. REPORT ON CITY COUNCIL ACTION (S) None VIII. REPORTS AND REMARKS A. Chair Ms. Bowen reminded Committee members to turn in their Conflict of Interest Form 700 to Rachelle Klassen, City Clerk, if they have not done so. She said forms must be received by April 1, 2005. li