Festival Contract Next For CAA Event

December 10, 2007
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GRAND RAPIDS — Convention and Arena Authority Executive Director Rich MacKeigan got a green light from board members last week to create an agreement with Showspan Inc. to make the local firm the producer of the authority’s first-ever wine and food festival.

The festival would be a three-day event held in DeVos Place next November and would be the first of three the CAA and Showspan will own together.

“What we don’t have is an expertise in putting on a show, but Showspan does,’ said MacKeigan, also SMG regional general manager for the convention center and Van Andel Arena.

“Basically, the event would be co-owned by the CAA and Showspan.”

Showspan is headed by President John Loeks Jr., also of Celebration Cinema fame, and his firm specializes in staging consumer shows in large venues. Showspan already produces most of the consumer shows held at DeVos Place, such as the Michigan International Auto Show and the West Michigan Home and Garden Show.

“The real nuts and bolts of this is, it is a consumer show,” said CAA member Lew Chamberlin of the festival. “I think they’re going to put everything into it.”

Under the proposed agreement, Showspan will manage the festival and receive 20 percent of event revenues as a management fee — excluding the income that comes from the sale of tickets for wine and food samples. Showspan will also get half of the festival profits, minus the margin from those sampling ticket sales.

The CAA will get all rent and expense income and the net revenues from the sales of sampling tickets, a take that is expected to be 20 percent of the gross. The wineries and food vendors will receive 80 percent of the gross revenue from sampling-ticket sales —  a figure MacKeigan said was higher than most similar events offer.

The CAA also will be reimbursed up to $20,000 for expenses incurred to develop the festival, including a trip to the Canadian capital of Ottawa last year to observe that city’s renowned festival.

While Showspan will share in the event’s profits, MacKeigan said the company would also share in any losses if the festival loses money.

“We have to make sure we have a partner that is committed to our success. If they succeed, we’ll succeed,” he said.

MacKeigan showed board members what he called a “rough pro forma” that has two outcomes. One has the show losing $22,850 based on a three-day attendance of 5,000 at $15 per person, 75 booths selling for $700 each, and $10,000 in sponsorship revenue. The other gives the festival a profit of $74,900 based on a total attendance of 10,000 and 150 booths with $40,000 in sponsor fees.

In both cases, though, the CAA turns a profit when rent income, the sampling-ticket revenue and the reimbursement figure are included. The margin is $18,575 for the loss scenario and $79,450 for the profitable one.

“We are looking for additional revenue that could be set aside for capital improvements,” said Chamberlin.

MacKeigan said the festival would likely need at least 50,000 square feet of space and would likely be held in the south end of DeVos Place near the Steelcase Ballroom.

“This is a true consumer show and not a two-hour wine tasting event,” he said.

Showspan Vice President Henri Boucher said the festival will be a smaller event than most of the shows the company produces, but would include samples of food prepared by local gourmet chefs and items like wine cabinets and cooking accessories that consumers will be able to purchase.

“In the very first year, we should make this the finest wine event in Michigan. I’m confident of that,” he said.

Boucher said Showspan will hire an experienced festival manager to direct the event and will encourage local restaurants, distributors and grocery stores to become involved in the planning.

“Prospecting for the wine distributors is something we’re going to have to do early on,” he said. “There is going to be a lot of work in finding the wineries. We want the wineries to be our exhibitors.”

MacKeigan said hosting a festival in November is a good time for the wineries and the focus of the event will be on the state’s wine business.

The idea for the wine and food festival came from a recommendation CAA member Gary McInerney made as a way for the board to raise some money for capital projects at the arena and the convention center, the buildings the CAA operate.

“I think it makes sense to try it at least once,” he said.

Convention and Visitors Bureau President Steve Wilson told board members he would make an announcement this week about an “event within your event” that the bureau and the Kent County Lodging Association will co-sponsor.

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