Often I see the headlines “City Loses on Sponsorship” or “Organization Got Left Paying the Tab.” When the City of Edmonton went back to secure the Honda Indy last year, people said they would “lose another $12 million.” Prime Minister Stephen Harper claimed EXPO 2015 would cost too much to make a bid on, especially if it was secured. I watch as organizations run events and “lose money” on them, but gain new members, build their brands and so forth.
Is this really “losing” or is it an investment? I know that, if I had $12 million dollars, gave it to my stockbroker and asked him to turn it into $500 million—and he did, I would be pretty happy. But for some reason, we want to say it will cost the City of Edmonton $12 million to host the Indy, $200 million for the City of Toronto to host the Pan American Games, or whatever. I look at it as a $12 million investment to deliver an economic effect of $250 million or $500 million to the municipality that would not happen without the Indy (EXPO, Pan American Games, Olympics, World Seniors Games, Expo, Rotary International Convention, etc.) being hosted there. You must spend money to make money. You must invest to reap the rewards.
You may say, “That’s easy for you to say, Brent. It’s not your money.” Well, I’ve done the same thing on a smaller scale for years. Each year, we underwrite the shortfall of the Western Sponsorship Congress™. We are the presenting sponsor but what we pay is way more than just cash as a sponsor. If the event “loses money,” our “investment” increases. For the first six years, we “lost money.” On average, it “cost us” or, as others say, “we lost” $20,000 per year. Some people would say, “Why do you continue to lose money? How can you pump $120,000 into an event that can’t even break even?” I look at it differently. Over the past six years, we have invested $20,000 a year in the event. Each year, we generate new clients, new business, and build our brand. We track who comes to the Congress and who our clients are (yes, we have ROI metrics in place). We know that, over the past six years, 85% of our business, the services we supply to clients, came through, or were touched by, the Western Sponsorship Congress™. If we have done $500,000 a year in gross sales for the past six years and 85% of that was directly or indirectly a result of the Congress, then the $120,000 against 85% of $3 million in revenue amounts to an investment of less than 5% of revenue. If we are investing less than 5% in marketing our business (or you are for yours), eventually we (and you) will be in trouble.
I don’t lose $20,000 a year on the Western Sponsorship Congress™. I invest $20,000 a year in it and the industry. This is no different than a municipality investing in a major event. It is the same for a member association that hosts a conference for its members and builds equity with them. It is the same as any other investment. The measurement is on the outcome, not the input.
These are just one person’s thoughts. What do you think – cost or investment?