BUDGET BRIEFING: NEW BUSINESS  3.

COMMITTEE MEMORANDUM

HISTORY:

The Marketing and Communications Department oversees the sales of advertising and sponsorship for various City programs, facilities, events and other items throughout the city.  Over the last 6 years the department has generated and managed over $5.6 Million. For the upcoming fiscal year, staff was asked to research additional ways to generate alternative revenue.  The chart below shows a 6-year snapshot as well as forecast for the upcoming fiscal year.

ANALYSIS:

As the City considers ways to secure additional alternative sources of revenue, the Marketing and Communications Department has researched various options for your consideration.  The attached document, labeled Attachment A, shows various possibilities pertaining to sponsorships and advertising. 

The recommended advertising items are highlighted in yellow and are as follows:

RECOMMENDED ADVERTISING OPPORTUNITIES TO CONSIDER

• Trolley Advertising – Exterior and Interior:

  • Based on previous advertising prices, potential revenue for exterior and interior advertising would be approximately $880,000 per year.  

• Exterior Parking Garage Ads:

  • Based on prices paid for signage in the city of Miami, estimated rates per sign could total $30,000 per month or a possible total of $3.2 Million per year.

• Exterior Advertising at Fleet Building: Large format signage that would be seen by all cruise ship passengers as well as boaters in the area that enter and exit the port at an average suggested rate of $20,000 per month could generate approximately $240,000 per year

In 2007 the City entered into an agreement with a third-party to inventory and generate sponsorships.  The document labeled Attachment B is the Inventory with suggested price ranges from this company.  During their time in contract with the City they secured the Coca-Cola agreement and pitched other opportunities to the Mayor and Commission.  The bottom spreadsheet in Attachment A shows some of their recommended sponsorships and possible revenues. 

The recommended sponsorship items are highlighted in yellow and are as follows. 

RECOMMENDED SPONSORSHIP OPPORTUNITIES TO CONSIDER

• Park Naming Rights:

  • In 2012 Carnival Cruise Lines verbally proposed an annual sponsorship fee of $200,000. The total value of the Carnival Cruise Lines sponsorship fee over the proposed twenty-year term is $4,000,000.

    • The Committee recommended The Superlative Group bring back a more detail report to the October meeting. During that time the interested party withdrew their naming rights offer and decided to move in another direction.

  • SoundScape Naming Rights were also presented and were valued at approximately $175,000 per year.

Considering the items highlighted in yellow only, the possible annual revenue totals approximately $4.7 Million.  The recommendation from staff would be to work with our procurement department to do a competitive bid for a third party to manage the sponsorship opportunities and one for the trolley advertising opportunities.   Based on the current agreement with the interior parking garage advertising, it is the understanding that this company would have the first right of refusal to manage the advertising on the exterior of the garages if this was a direction chosen. 

Miami Beach Convention Center Naming Rights

As is common in many large sports or convention facilities, there is opportunity to sell naming rights to the building as well as various opportunities inside the facility.  The following spreadsheet shows some City comparison rates that other venues have received on naming rights deals to show a range of what the City could receive for naming rights of the Miami Beach Convention Center:

Miami Beach Licensing Program Update

In 2014 the City of Miami Beach partnered with Destination Brands and launched MB Suncare – the exclusive sunscreen of the City of Miami Beach.  Through this partnership, the Miami Beach brand has been promoted via marketing and merchandising globally and is sold at major retailers such as Target, Navarro, Tom Thumb, Walgreens, Florida Turnpike Sundries and by our concessionaires in Miami Beach such as the Boucher Brothers.  Since the partnership began, reported net sales are over $1 million and the city has generated over $71,000 in royalty revenue.

With the success of the MB Suncare brand, the City hired Beanstalk in 2015 – an international licensing company ranked number 5 out of 35 global licensing agents according to the Licensing Industry Merchandising Association, to further expand on the Miami Beach brand and licensing and merchandising program. 

During Phase I of the consulting, Beanstalk worked with city staff to complete a thorough market analysis of the Miami Beach brand and feasibility of immersion into various possible categories.  After analysis and research, Blueprint delivered various scenarios and reports to the City, including a prospecting guidebook, program management guidebook, and specific category evaluations and recommendations. Some of the recommendations included in the analysis by Beanstalk (recommendations detailed in Attachment C) are:

Following the completion of Phase I with Beanstalk, Commission approved an item to continue the relationship and begin Phase II – brand development. Through the partnership, the program design has been completed and staff have begun the official prospecting in target categories in July.  The timeline moving forward as well as the overall strategy is as follows:

Timeline moving forward

• Finalizing all pitch materials and Style Guide – End of June
• Official prospecting in target categories will begin in July 2018
• Estimated time it takes to finalize a contract is 3 to 4 months
• Estimated time to market at least 12 to 18 months depending on product category.
• Potential 2019 revenue would come in the form of advances (EST:  $15K)
• Royalty revenue Could begin in 2020

Two-tiered Licensing Strategy

Based on recommendations from the research provided by the consultant, staff is approaching the licensing program in two ways simultaneously. 

1. Souvenir Category – This would include items such as t-Shirts, beach towels, mugs, tumblers, magnets, frames, plush, hats, bags, and novelty products.  These would be sold through a royalty agreement with a third party manufacturer/distributer and the City would receive royalties (similar to the suncare line).

2. Lifestyle Brand Category – This would include items such as apparel and accessories, home décor, textile, publishing, consumer electronic accessories, table top, glass ware, furniture and more. This would also be sold through a third-party, but would involve a higher level of involvement from the city through negotiations and approvals of design, etc. 

During research on this program, staff also consulted with representatives from New York City, as the industry leader in city souvenir merchandising.  During discussions with the representatives, they mentioned that the majority of their revenues don’t come through online sales but from the tourist in person at their brick-and-mortar shops. They recommended that in the future we consider opening a store to sell official licensed apparel and merchandise in Miami Beach.

CONCLUSION:

This information is presented to the Finance and Citywide Projects Committee for discussion and direction.