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HomeMy WebLinkAboutSponsorship of Palm Desert Style Magazine July 14, 2011Contract No. C29960 CITY OF PALM DESERT STAFF REPORT REQUEST: PROVIDE DIRECTION TO STAFF REGARDING THE CITY'S SPONSORSHIP OF PD STYLE MAGAZINE AND RENEWAL OF THE RELATED CONTRACT WITH THE DESERT SUN SUBMITTED BY: David Hermann, Management Analyst DATE: July 14, 2011 Recommendation By Minute Motion: Provide direction to staff regarding the continuation of the City's $110,000 sponsorship of PD Style magazine and renewal of the related contract with The Desert Sun. If Council wishes to maintain the past subsidy, additional funds must be appropriated. Executive Summary In September 2010, the City entered into a contract with The Desert Sun for a one-year, $110,000 sponsorship of PD Style magazine. Under the contract's terms, the City would assist in the start-up of the magazine and use the publication as a marketing and economic development tool with the intent that it should become financially self- sustaining over time. The contract, which expired on June 30, 2011, included a renewal option for a second year of PD Style, under the same terms as the first year, upon mutual written agreement of the City and The Desert Sun. The Desert Sun has expressed a willingness to renew the contract under the original terms, despite the contract's expiration. In March, Palm Desert's Marketing Committee, as part of its review of the City's proposed Marketing Budget for fiscal years 2011 /2012, suggested that the City's $110,000 per year commitment to PD Style should be redirected toward marketing activities that specifically target potential visitors from outside the region. Mindful of the contract language stating that the magazine should become financially self-sustaining over time, City staff subsequently approached The Desert Sun about reducing the City's subsidy of PD Style. Desert Sun representatives indicated that the magazine could not be produced as currently constituted without the $110,000 provided by the City. The Desert Sun proposed three options to reduce costs. Staff Report Provide Direction Regarding Continued Sponsorship of PD Style Magazine July 14, 2011 Page 2 of 3 These were: 1. Decrease the quality of PD Style's paper stock for a projected savings of $16,000 per year. This would reduce the City's subsidy to $94,000. 2. Produce three issues of PD Style per year instead of four for a projected cost savings of $39,500, thereby reducing the City's subsidy to $70,500. 3. Change the magazine's distribution so that residents who do not subscribe to The Desert Sun would no longer receive the magazine via U.S. mail. These residents would receive the magazine as an insert with a copy of The Desert Sun newspaper for a cost savings of approximately $2,000 per issue. This option would reduce the City's subsidy to $102,000, assuming the production of four editions per year. Funds totaling $60,000 are included in the proposed PD Style sponsorship. Staff does not recommend Style's quality as any such a change would servo purpose. 2011/2012 fiscal year budget for ny option that would reduce PD to undermine the publication's On June 9, the City Council directed staff to ask the Marketing Committee to reevaluate PD Style within the context of the City's new Marketing Plan. As part of its review of the Marketing Plan at its meeting on June 21, 2011, the Marketing Committee reiterated the position that the marketing dollars devoted to PD Style would be better spent on marketing efforts that would "put heads in beds." The Marketing Committee's vote was unanimous with one abstention. Committee members noted that using the money to market Palm Desert to potential visitors and residents rather than to those who were already here was consistent with the Marketing Plan's fundamental goals: to increase the number of visitors to Palm Desert; to increase Transient Occupancy Tax revenues; and to increase sales tax revenues. Background In 2010, The Desert Sun proposed a re -launch of the magazine formerly known as 92260. The proposal included a request for City funding in the amount of $110,000 for four issues of the magazine to be produced over a one-year period. Desert Sun staff would be responsible for the editorial content, photography, and layout of the 52-page publication. City staff would generate eight pages of content. The Desert Sun would set rates, sell advertising, and keep proceeds while covering all sales and production expenses beyond the City's commitment. The magazine would be distributed in home -delivered copies of The Desert Sun, through mail delivery for non -subscribers, and to selected local attractions and hotels. g:\rda\david hermann\word files\marketing\pd style\pd style renewal staff report 07-14-11.doc Staff Report Provide Direction Regarding Continued Sponsorship of PD Style Magazine July 14, 2011 Page 3 of 3 The Marketing Committee endorsed the idea of the magazine and the City Council authorized staff to move forward. At that time, Desert Sun representatives indicated that the City's contribution could be reduced over time, subject to the venture's success. On June 24, 2010, the City Council approved an agreement with The Desert Sun for sponsorship of the magazine, ultimately titled PD Style. A publishing contract between the City and The Desert Sun was signed on September 3, 2010. The Desert Sun honored the contract and produced four editions of PD Style magazine. In addition to a variety of features on local businesses and neighborhoods, each 52- page magazine included eight pages of City -generated content promoting City - sponsored programs, attractions, and events. v The Desert Sun has provided gross revenue figures for the magazine. Those figures 4 showed that ad revenues slightly exceeded the City's $27,500 per issue subsidy for the o a inaugural fall edition of PD Style, but remained below that figure going forward. a 'N Fiscal Analysis o 0 •� eo b The timing of negotiations and approval of the PD Style agreement in summer 2010 -W prevented the initial $110,000 sponsorship from being included in the City's marketing 0 a budget for fiscal year 2010/2011. A number of expenditures for advertising buys and " a other marketing purposes were subsequently placed on hold during a review of the 4 o City's marketing programs. Staff used funds from these accounts and other sources to ,a pay PD Style's sponsorship. As the City resumes its marketing efforts in the current W y fiscal year, some of the monies that helped pay for PD Style are no longer available. y as Staff included $60,000, Account No. 110-4417-414-3027, to sponsor PD Style in the P y 2011/2012 budget that was approved by the City Council on June 23. If Council wishes c to continue the current subsidy, additional funds must be appropriated. U p Submitted By: Department Head: G David Hermaryf , Management Analyst Jyrstir McCarthy, ACM ,�01 4�\ CICTY�VE CM1 rMMirMMMMM,.rM.INw.. Paul S. Gib n, Dyr for of Finance gECEIM Approval: MEETWG DA' AYESt 0 NOESt ABSEN43 Jo M. Wohlmuth, City Manager ABSSDTiiAINt g:\rda\ avid hermann\word files\marketing\pd style\pd style renewal staff report ARIDED BYt Original on File wtit6 City " 0 d - o lopment Office -X ��