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HomeMy WebLinkAboutFashion Week El Paseo CITY OF PALM DESERT STAFF REPORT REQUEST: AUTHORIZE THE EXPENDITURE OF $50,000 AS ADDITIONAL FUNDING FOR FASHION WEEK EL PASEO 2009 SUBMITTED BY: JUSTIN MCCARTHY, ACTING CITY MANAGER DATE: FEBRUARY 12, 2009 Recommendation: By Minute Motion, authorize the expenditure of$50,000 as additional funding for Fashion Week EI Paseo from Account No.110-4416-414-3061. Executive Summarv: At the January 22, 2009 meeting, City Council approved funding for Fashion Week in the amount of $100,000 as the Presenting Sponsor for the event. Monies are included in the 2008/2009 Special Events budget. Additional funding, also available, has been requested to support the event. As such, staff is requesting the City Council consider funding an additional $50,000 to facilitate the event. Discussion: Fashion Week EI Paseo is a week-long event featuring women's, men's, and children's apparel, couture designer lines, beauty products, and fashions for the home. Palm Springs Life (PS Life) is the promoter of the event. This year the show is expanding from nine events to potentially ten events. One event is still pending confirmation. The primary difference this year is qualitative. The balance of events will be more professional, elaborate, and expensive than the prior year's events. Projected expenditures for actual production of the events are increasing by$35,000 over 2008. Examples of the differences between this year's and last year's events are as follows: • Two couture designers this year for Friday and Saturday night, rather than just one finale on Saturday. • ASID Project Runway (American Society of Interior Designers) — A fashion and merchandise design competition with celebrity judges, including Cheryl Tiegs on Tuesday, as opposed to simply a fashion lecture last year. • "Debut 2009" by the Fashion Institute of Design and Merchandise (FIDM) on Thursday night— FIDM is a nationally recognized school of design in Los Angeles. Each year the school debuts their top students who each design a clothing line to be shown to G:\rda\Justin McCarthy\staffrpts\fashion week 2-12-09B.docx Staff Report Fashion Week Page 2 of 4 February 12, 2009 representatives in the fashion industry. The show has never before been taken out of Los Angeles to be featured to the public. Last year, this was a Tommy Bahama's fashion show. • Sunday Brunch in the Tent with the Kids — This is the first year for a fashion show featuring children's apparel with students from Marywood/Palm Valley and Sacred Heart Schools. Last year, this event was a brunch and accessories boutique. Fashion Week is also anticipating greater attendance this year than last year, 3,500 versus 2,800. They are increasing seating from 400 to 500 in the main tent, and adding another tent to accommodate the "Fashion Bar" for pre-event gatherings and sponsorship displays. This appears to account for$4,900 in increased facilities costs. Given the higher caliber of this year's Fashion Week and show participants, a greater effort and expense is being incurred to promote the event. This accounts for a $3,900 increase in promotional expenses over 2008. This difference is primarily devoted to printed material and a higher quality promotional website versus general promotional and direct mail costs in 2008. PS Life has identified additional projected costs in the form of greater staffing costs that it incurs to both promote and manage a higher quality event. These represent approximately $8,500. Overhead allocation remained the same. These increased costs are anticipated to be approximately $52,300 and could correlate to the additional $50,000 over last year requested from the City. It should be noted that PS Life was successful at securing an additional net $45,000 after commissions in sponsorships over last year. However, other revenues are projected to be down due to declines in ad revenue attributable to the economy. Fashion Week's deficit, without the additional $50,000 from the City, would be approximately $96,000 which would be greater than the prior two years. With the requested $50,000, the projected deficit is still $46,000. Staff requested evidence of expenditure commitments made by PS Life on behalf of Fashion Week. To date, these commitments are approximately $233,748 with $142,517 in the form of contracts, approved bids or proposals. In most cases, money is not due until March 1 St Also, participants and third parties have made scheduling and other commitments to participate in the event. These include twenty-five local designers who are creating their own designs, which are in process, at an estimated cost of $2,500 each to produce their entry into the ASID show: Consistent with other promotional events the City has sponsored, an audit has not been required. However, PS Life has provided staff with its accounting and back-up bills and receipts from last year's Fashion Week. These are reasonably consistent with those represented by PS Life in its event pro-forma. Benefits: The benefits to Palm Desert are varied. These include the promotional value of the event estimated at $1 million in public relations media exposure at the local, regional, and national G:\rda\Justin McCarthy\staffrpts\fashion week 2-12-09B.docx Staff Report Fashion Week Page 3 of 4 February 12, 2009 levels. In fact, the editors for Women's World Daily and California Apparel News are covering this year's event. Women's World Daily is a premier national magazine for the fashion industry. The primary attendees for Fashion Week represent a premium demographic, and are typically female and Palm Springs Life Magazine subscribers with an annual income of$384,000 and an average net worth of $2.7 million. Building an iconic event such as Fashion Week on EI Paseo, which is evolving into a fashion district, is consistent with the City's economic development objective of promoting retail and attracting hotels to the EI Paseo district. Benefits for various charities are also derived by events to be held in the tent. The charity pays a nominal rental fee ($3,000-$5,000) for use of the tent and equipment. The following events/charities are listed below: • The Great Cut Off—sponsored by J Russell Salon and other local stylists. Customers receive haircuts for $25.00 with all proceeds going to Fashion Group International who sponsors scholarships to design schools. • Fashion Group International's Tuesday Luncheon — This is the group's largest fundraiser for the year. The local division of Fashion Group International has given $150,000 in scholarships to 50 students from the Coachella Valley over the last 14 years. • ASID's local chapter is giving a $2,000 scholarship from the proceeds of their event. � Friday evening's event is PS Life's fundraising effort for the community, and 30% of ticket sales go to Desert Aids Foundation. • Sunday Brunch event — attendees bring gently used clothing to donate to Barbara Sinatra Children's Center, Jackie Lee's Thrift Shop, and The Stroke Recovery Center. Proceeds to benefit scholarship funds for participating schools. • Monday evening event — The tent will be left standing this year for Desert Cities Charity Bachelor Auction with proceeds going to Shelter from the Storm. This is a first-time event, but they hope to raise over$30,000. PS Life indicates that Fashion Week EI Paseo is on the cusp of developing into a larger nationally and internationally recognized event by the fashion industry. With the closing of LA Fashion Week, due to failed management and the loss of their major sponsor, the west coast designers are looking for a place to showcase their designs. Rather than just a consumer show, Fashion Week EI Paseo has the possibility of evolving into a consumer and industry show. This could lead to afternoon shows exclusively for industry professionals that would bring an entire new level of customer to the street and our local hotels. This is currently being investigated. To put this into perspective, the largest fashion industry week in the United States, located in New York, attracts 233,000 attendees with an average expenditure of $2,000 during their visit. G:\rda\Juslin McCarthy\staffrpts\fashion week 2-12-09B.docx Staff Report Fashion Week Page 4 of 4 February 12, 2009 Given the target demographic, the high value fashion retail nature of the event and its synergy with EI Paseo, staff considers Fashion Week provides both promotional and economic development benefits to Palm Desert, and merits cultivation and support. Analvsis: The question has been posed regarding why Palm Springs Life is willing to incur deficits to promote the Fashion Week. A possibility exists that there may be future value to the event in terms of capitalization of future positive cash flows, sale of naming rights, promotional interests or other intellectual property, or the outright sale of the event itself. While staff does not consider the event to have reached that stature, it is not unreasonable for the City to take such a possibility into consideration, as it evaluates its role in sponsoring the event. It should be noted that Palm Springs Life is providing significant entrepreneurial value and has expended significant resources over the last few years in promoting the event. And, it should benefit in the event Fashion Week evolves into a profitable enterprise. Recommendation: Given the time constraints that the event is currently under, its potential promotional and economic value to Palm Desert, and its charitable value to the local community, staff recommends approval of the $50,000 and remittance of the previously authorized $100,000 subject to a mutually acceptable agreement in a form acceptable to the City Manager and City Attorney that provides for review of all invoices and receipts, and reimbursement of sponsorship moneys advanced by the City for 2009 in the event of a future capital event such as positive net operating income, sale of any rights or interests in the event, or its relocation outside of the City. Should the event be considered in the future, staff would recommend that it be subject to a negotiated agreement where all equities are taken into consideration including an agreed upon budget. Submitted by: � stin cCarthy, Acting City M nager Paul S. Gibson, Finance Director Acting ity Manager CTfYCOUNCILAC.�ION APPROVED '�'� D�� RECEIVED QTHER MEETIlY DAT� AYESs � C'� � � - NOES: � ABSENI't AB5TAINs G:\rda\Justin McCarthy\staffrpts\fashion week 2-12-096.docx �RIFIED BYi Original on File wit�City k's O�ce