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HomeMy WebLinkAboutC29960 Continued Sponsorship of Palm Desert Style MagazineContract No. C29960 CITY OF PALM DESE aFT""'` `'°T` STAFF REPORT 0 Prs SE5 TO 2ND READING * in conjuncgion with the Marketing Plan. REQUEST: PROVIDE DIRECTION TO STAFF REGARDING THE CITY'S CONTINUED SPONSORSHIP OF PD STYLE MAGAZINE AND EXTENSION OF THE RELATED CONTRACT WITH THE DESERT SUN SUBMITTED BY: David Hermann, Management Analyst DATE: June 9, 2011 Recommendation By Minute Motion: Provide direction to staff regarding the continuation of the City's $110,000 annual sponsorship of PD Style magazine and extension of the related contract with The Desert Sun. If Council wishes to maintain the current subsidy, additional funds should be appropriated as part of the 2011/2012 budget approval process. 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 includes 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 initial contract is scheduled to expire on June 30, 2011. The Desert Sun has honored the contract and produced four editions of PD Style magazine since September 2010. In addition to a variety of features on local businesses and neighborhoods, each 52-page magazine has included eight pages of City - generated content promoting City -sponsored programs, attractions, and events. As outlined in the contract, The Desert Sun provided the City with gross revenue figures for the magazine following publication of the magazine's spring edition. Those figures showed that ad revenues slightly exceeded the City's $27,500 per issue subsidy for the inaugural fall edition of PD Style, but remained below that figure going forward. Staff Report Provide Direction Regarding Continued Sponsorship of PD Style Magazine June 9, 2011 Page 2 of 3 In March, Palm Desert's Marketing Committee, as part of its review of the City's proposed Marketing Budget, 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. As part of the annual budgeting process and consistent with contract language stating that the magazine should become financially self-sustaining over time, City staff 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. 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. A fourth option would be for the City to discontinue its support of the magazine and, as suggested by the City's Marketing Committee, redirect the money that would be spent on PD Style toward marketing Palm Desert to potential visitors from outside the Coachella Valley. Funds totaling $60,000 are included in the proposed 2011/2012 fiscal year budget for PD Style sponsorship. Staff does not recommend any option that would reduce PD Style's quality as any such a change would serve to undermine the publication's purpose. 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. g:Vda\david hermann\word files\markefin&d style\pd style renewal staff report 06-09-11.doc Staff Report Provide Direction Regarding Continued Sponsorship of PD Style Magazine June 9, 2011 Page 3of3 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. The Marketing Committee endorsed the idea of the magazine and the City Council authorized staff to move forward with the concept shortly thereafter. At that time, Desert Sun representatives indicated that the City's contribution could potentially 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. Fiscal Analysis The timing of negotiations and approval of the PD Style agreement in summer 2010 prevented the initial $110,000 sponsorship from being included in the City's marketing budget for fiscal year 2010/2011. A number of expenditures for advertising buys and other marketing purposes were placed on hold later that year during a review of the City's marketing programs. Staff utilized funds from these accounts and other sources to pay the first year's sponsorship for PD Style. As the City resumes its marketing efforts in the coming fiscal year, some of the monies that helped pay for PD Style will no longer be available. Staff included $60,000 to sponsor PD Style in the proposed Financial Plan for 2011/2012; Account No. 110-4417-414-3027. If the Council wishes to continue the current subsidy, additional funds should be appropriated as part of the budget process. Submitted By: David Hermann, Management Analysi Paul S. Gibson, Director of Finance Approval: Wohlmuth, City Manager Department Head: garda\david hermann\word files\markefing\pd styiMpd style renewal staff report 06-09-11 Am