An analysis of special events at racing venues


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An analysis of special events at racing venues

  1. 1. An Analysis of Special Events at Racing Venues By: Scott Shinbaum Submitted in Partial Fulfillment Of the Requirements for Graduation with Distinction in Sport and Entertainment M anagement M ay 2012 Approved: ________________________________ Todd Koesters Thesis Director ________________________________ John Grady Second Reader
  2. 2. Scott Shinbaum TABLE OF CONTENTS List of Figures .........................................................................................................iii Abstract ..................................................................................................................iv CHAPTER ONE: INTRODUCTION TO THE STUDY Research Need..............................................................................................1 Significance...................................................................................................1 Purpose........................................................................................................2 Research Questions......................................................................................3 Definition of Terms .....................................................................................3 CHAPTER TWO: REVIEW OF LITERATURE Overview of Halftime and Pre-Event Shows ...................................4 Overview of Fan Festivals and Concerts .........................................6 Overview of the Economic Climate ...............................................11 CHAPTER THREE: M ETHODOLOGY Research Question .....................................................................................14 Research Design .........................................................................................14 Research Sample ........................................................................................15 Data Collection ..........................................................................................15 Data Analysis ............................................................................................16 CHAPTER FOUR: FINDINGS Analysis of Research Question..................................................................17 NASCAR Events: Daytona 500 and Hollywood Casino 400 .......18 Churchill Downs – HullabaLOU M usic Festival ..........................21 Kansas Speedway – Kanrocksas Festival......................................24 CHAPTER FIVE: DISCUSSION Ancillary Events ........................................................................................28 Festivals .....................................................................................................29 Conclusions................................................................................................31 Recommendations for Future Research .....................................................32 REFERENCES.......................................................................................................34 ii
  3. 3. Scott Shinbaum List of Figures Figure 2.1 Gillette Free Shave Daytona 500 M idway sampling Figure 2.2 TUM S Fight Back Fast Daytona 500 M idway game Figure 2.3 Budweiser Clydesdales Daytona 500 M idway exhibit Figure 2.4 GT Vodka Stage Exposure during Dierks Bently concert prior to 2011 Daytona 500 Figure 4.1 Fans get close to the stage with a special ticket package Figure 4.2 Fans go onto the track for the pre-race show, enhancing the overall fan experience Figure 4.3 Additional concert crowd outside Kansas Lottery 98.9 ticket windows at green flag Figure 4.4 HullabaLOU event map (Bullard, 2010) Figure 4.5 Kanrocksas M usic Festival M ap (Festival infield layout, 2011) Figure 4.6 Kanrocksas billboard during June 2011 STP 400 at Kansas Speedway iii
  4. 4. Scott Shinbaum ABS TRACT The purpose of this study was to understand how special events surrounding megaevents and at purpose-built venues are used to increase venue attendance and repatronage, and to create and maximize revenue as well as sponsorship value and activation opportunities. An exploratory case study methodology was used in order to develop an understanding of the types of events organizers use to increase revenue, patron experience, and sponsorship activation opportunities. Through the use of in-depth interviews with three event organizers, post-event print articles, and observations at events, an understanding of the successes and failures of various types of special events emerged. The findings from the study suggest that ancillary entertainment events used to complement a mega-event provide a noticeable positive effect on ticket sales, patron experience, and sponsorship opportunities. Furthermore, fan festivals related to these mega-events provide a successful avenue for direct marketing activation initiatives for sponsors. The findings also indicate that stand-alone festival facility rentals are a successful revenue stream for the venue, while festival events at racing venues pose a financial risk to the venue when self-promoted. iv
  5. 5. Scott Shinbaum CHAPTER ONE INTRODUCTION TO THE S TUDY The purpose of this study was to better understand how racing venues use special events at venues hosting mega-events in order to increase revenue, repatronage, and marketing value for sponsors. Determining how special events have evolved since 1990 when the NFL began using big-name headliners for the Super Bowl halftime show, analyzing the relationship and benefits of the mega-event and the special events to each other, and understanding how special events can be used to increase revenues were all focal points of this study. Research Need There has been research on special events surrounding the Super Bowl and other megaevents. However, there is a lack of research on the use of special events at purpose-built racing venues, built specifically for horse and automobile racing. S ignificance This study was important because mega-events at a venue typically only happen once or twice per year. For a racing venue, this constitutes only one or two weeks out of the year that a venue is used to it’s maximum capabilities, and efforts must be made to exploit all possible revenue sources for these events. In the case of the Super Bowl, it is the only event in a stadium and its surrounding areas hosted by a league and not a team. This means that the NFL must find 1
  6. 6. Scott Shinbaum ways to increase revenue around an event that could easily attract more than just those with tickets to the actual Super Bowl. For the Daytona 500 and Kentucky Derby, these are the only events that maximize the capabilities of purpose-built racing venues. These venues bring opportunities to use the brand of a mega-event to market and support hosting other events at a facility. These venues also experience long off-seasons without hosting a ticketed event. This relative “dark” time means there is a period of potentially lost revenues due to an inability to maximize capabilities. These venues need to find ways to increase revenue and attract spectators to the facility. This study should help provide ways for these and similar venues to increase revenues and activity. Additionally, due to current economic conditions, event organizers must find ways to give spectators more value for their ticket dollars. Spectators now expect more value than just the sporting event, and they also expect more entertainment value to justify the expense of traveling to a mega-event (Caldwell, 2008). Sponsors also demand more to justify their investment in a facility or event, either through better activation opportunities or more special events, thus creating greater value for their sponsorship dollars. As both spectators and sponsors demand more value for their participation at an event, there is a need to better understand how event organizers can utilize special events to meet or exceed these expectations. Purpose The purpose of this study was to understand how racing venues use special events to increase attendance and maximize sponsorship value and activation. 2
  7. 7. Scott Shinbaum Research Questions The following research question guided this study: 1.) How do event organizers use special events and related mega-events to increase revenues, attendance and repatronage, and sponsorship opportunities? Definition of Terms M ega-event – An event that is awarded or bid to a venue, typically all-star games and championships. An event with high public, broadcast, and sponsor interest (“SportBusiness Debate,” 2011). Special event – Ancillary events to another ticketed event in order to create value, or an event that does not fit the intended purpose of a venue. Incremental Passes/Tickets – Additional tickets sold as a result of a particular event. 3
  8. 8. Scott Shinbaum CHAPTER TWO REVIEW OF LITERATURE In order to understand where special events can take us, first there needs to be a clear understanding of how special events have evolved to the present situation. Over time, how have sport event organizers used their mega-event brand name to create ancillary events, and how do these events affect sponsors and spectators, as well as revenue? Sport and entertainment have always shared a common bond. Sport at its core is a form of entertainment, and likewise competes with other forms of entertainment for consumers’ disposable income. This theory originates with former Chicago White Sox owner Bill Veeck, who determined that fans required many reasons to attend an event beyond the game itself (Brewster, 2004). Veeck made attending games more of a family affair. He put names on the backs of jerseys so people unfamiliar with the players could identify them, began a fan-appreciation night, and introduced the electronic exploding scoreboard (Brewster, 2004). Overview of Halftime and Pre-event S hows Following Veeck’s theory, event organizers often infuse some form of non-athletic entertainment into their sporting events. Colleges often use marching bands for pre-game and halftime shows, and until 1990, the Super Bowl utilized this same plan. Beginning in 1990, Super Bowl Halftime producers began using bigger name headliners in their pre-game and halftime shows as television viewership began to rise. In 1992, the Super Bowl halftime show was produced by Radio City M usic Hall Productions, and featured Gloria Estefan, Brian Boitano, and 4
  9. 9. Scott Shinbaum Dorothy Hamil (Altman, 2009). The halftime show was also televised by CBS and earned an estimated 71 million viewers (M andese, 1992). As television ratings have increased, production of the Super Bowl halftime show has grown to include other names such as The Rolling Stones, Paul M cCartney, Prince, and The Who. The show has also become a made-for-TV event, earning an estimated 99 million viewers in 2004 (Apostolopoulou, 2006). The goal of the halftime show is to attract the low and moderate sports fan to the Super Bowl. According to a survey conducted by Apostolopoulou, Clark, and Gladden, the halftime show rates among self-proclaimed low and moderate sports fans as carrying more importance than teams entering the field, the M VP award presentation, and the pre and post-game shows. These fans also appeared more likely to watch the halftime show than avid sports fans, and the halftime show carried more importance to the low and moderate fans than to the avid fans. This leads to the idea of “social fans” or “theatregoers” who are more likely to consume the sport event based on the entertainment value presented (2006, p. 229-230). This style of entertainment has expanded into other mega-events as well. The Daytona 500 held annually at Daytona International Speedway in Daytona Beach, Florida, is widely recognized as the largest event in stock car racing, and brings in crowds of up to 250,000 spectators. Prior to 2001, the prerace show consisted of an act produced on a small stage that was plugged into the track’s public address system. This show’s production was outsourced to another company. In 2001, the first Daytona 500 televised by FOX, FOX brought in their own production company for a made for TV show, similar to the Super Bowl halftime show. These shows allow the potential for extra revenue, as the track is able to sell VIP tickets for prime 5
  10. 10. Scott Shinbaum viewing areas on the track for the show (M . Lewis, personal communication, September 28, 2011). Overview of Fan-Festivals and Concerts In 1991, the NFL wanted to develop new hands-on marketing initiatives that could also allow more people to experience the Super Bowl, even if they did not have a ticket. NFL Properties hired David Newman to develop these initiatives (Fitzgerald, 1999). They created the NFL Experience, a temporary, sponsor driven theme park in the vicinity of the Super Bowl venue. The NFL Experience served as an activation avenue for sponsors and is ideal for product sampling, brand exposure opportunities, and promotions. An example of sponsor activation at the NFL Experience is Gatorade, who in 1995 sponsored a Punt, Pass & Kick attraction to give complimentary cups of Gatorade to participants upon completion of the activity (Jensen, 1995). M otorola used the NFL Experience in 2000 to showcase its new technology of the cordless headsets used by NFL coaches (Fitzgerald, 1999). In 1995, the NFL started a new Super Bowl Concert Series to run alongside the NFL Experience. The reason for starting the new series was to prevent ambush marketing by outside promoters by taking advantage of the Super Bowl without being officially associated with the event. According to Don Garber, Vice President of business development for NFL Properties at the time, “For many years, within the venues that existed in the Super Bowl city, promoters were promoting events that competed with us. They were capitalizing on the appeal of the game without any real association” (Newman, 1995, p. 13). The primary purpose for these concerts 6
  11. 11. Scott Shinbaum was for property protection, and a portion of the revenues from this series went to the NFL Youth Education Town, and educational and recreation facility built in the Super Bowl host cities. In 2000, NFL Properties announced that the NFL Experience would be available as a traveling fan-fest, making as many as 20 stops before the Super Bowl. According to David Newman, Vice President of M arketing and Events at NFL Properties, “We’re the leading entertainment brand in sports now, but people have more choices every year in how they spend their entertainment time and dollars, and we want to stay in front by reaching new audiences” (Fitzgerald, 1999, p. 48). The goal of these events is to build awareness of new fans and families on weekends when teams do not have games. The NFL wants to build its brand in a variety of ways. Newman states, “local promotion is crucial to that effort” (Fitzgerald, 1999, p. 50). The fan-fest formula has been adopted among several different platforms. The NCAA has used this model to great success with its Bracket Town at its men’s basketball Final Four. Bracket Town at the 2011 Final Four in Houston featured 15 different companies on 385,000 square feet of festival space. These companies were able to showcase their products and entertain in excess of 55,000 patrons. Bracket Town also featured two concerts sponsored by Coca-Cola, which drew an estimated 50,000 spectators on the first day, and an estimated 65,000 for the Sunday headliner. Other companies, such as M cDonald’s, used in-store promotions to sell the $10 tickets to the fan-fest (Smith, 2011b). Bracket Town has been so successful that the NCAA has started looking at the College World Series in Omaha, Nebraska, and the NCAA lacrosse championships for their own fan-fests. Shea Guinn, senior vice president of IM G College, the 7
  12. 12. Scott Shinbaum company organizing the fan-fests, stated “the long-term goal is to expand and create value for corporate partners and enhance the fan experience” (Smith, 2011a). This fan-fest atmosphere is also prevalent at NASCAR events. With the explosion in NASCAR’s popularity, many tracks have built midway exposition areas dedicated to sponsorship activation, while some tracks have also built an additional “Fanzone” dedicated to additional entertainment (M . Lewis, personal communication, September 28, 2011). Similarly, sponsors are able to use these areas for brand exposure, product sampling, and one-on-one interaction and sales pitches to consumers. Gillette used a display at the 2011 Daytona 500 to demonstrate the closeness of its Fusion razor with a free shave demonstration, shown in Figure 2.1. Tums antacid activated its “Fight Back Fast” campaign by using a punching back game for its patrons, shown in Figure 2.2. Other companies simply desired to build on an existing brand. Budweiser used its established Clydesdales to increase exposure and provide a photo opportunity for fans, shown in Figure 2.3. Figure 2.1 Gillette Free Shave Daytona 500 M idway sampling 8
  13. 13. Scott Shinbaum Figure 2.2 TUM S Fight Back Fast Daytona 500 M idway game Figure 2.3 Budweiser Clydesdales Daytona 500 M idway exhibit Concerts have also become avenues for further sponsorship activation. At Daytona International Speedway for example, Budweiser produces a free concert following the annual Budweiser Shootout to activate its sponsorship. The Budweiser Shootout is the kickoff event to the annual Daytona 500 Speedweeks. Entertainment acts perform as part of the made-for-TV pre-race show, serve as the race grand-marshals, and then perform a concert for all spectators in the infield Sprint FANZONE. On the day of the 2011 Daytona 500, track sponsor Grand Touring Vodka leveraged its sponsorship with a similar concert by Dierks Bentley in the track’s infield. Sponsorship of the infield stage gave GT Vodka prominent exposure for fans prior to the 9
  14. 14. Scott Shinbaum race, shown in Figure 2.4. This also provides more entertainment value for fans, and the speedway can promote these concerts as an added value to persuade consumers to buy a ticket for a race they might not otherwise attend. Additionally, as the sponsor of the stage and bringing in the act, GT Vodka was able to also promote other entertainers whom it sponsors, thereby providing additional exposure for rising stars, much like other promoters use music festivals (H. Steinkuhler, personal communication, October 12, 2011). Figure 2.4 GT Vodka Stage Exposure during Dierks Bently concert prior to 2011 Daytona 500 In November 2010, NASCAR and Coca-Cola produced the Coca-Cola Fuels NASCAR Championship Drive. This was a free one-day festival on the beach in Homestead, Florida, promoting the upcoming NASCAR season finale at Homestead-M iami Speedway. The festival included an afternoon cook-off competition, driver appearances and autograph sessions, and other promotional displays, simulators, games, and sampling opportunities. The afternoon events attracted around 7,000 people. The evening featured a free concert by Zac Brown Band in front of approximately 18,000 spectators. The goal of the festival was to increase awareness and interest of the final race of the season, in which the NASCAR Sprint Cup Series championship would be decided. According to Steve Sweeney, NASCAR director of consumer marketing, “It’s 10
  15. 15. Scott Shinbaum a great opportunity for us to entertain fans, but get in front non-fans as well” (Spanberg, 2011, p. 16). These sponsored concerts also typically feature prominent signage for the sponsor. While there have been uses of special events around NASCAR events, this was the first time the sanctioning body took ownership of its own promotional special event for a race. Special events began to grow in earnest in 1990 with the beginning of the made-for-TV production of the Super Bowl halftime show, which then carried over into the Daytona 500. These shows focused on increasing entertainment value for spectators. The NFL Experience and subsequent growth in fan-fests were motivated by several factors. These festivals served to enhance fan experience, increase exposure, and increase sponsorship activation opportunities. In the case of the Super Bowl, the use of the Super Bowl Concert Series also has served as a form of brand protection, keeping others from taking advantage of the presence of the Super Bowl in a city and negating the effects of potential ambush marketing. M eanwhile, special events also provide substantial activation opportunities for sponsors either through sponsoring and promoting a concert, or through reaching out to fans via product samples, games, and other promotions. Overview of the Economic Climate Racing is a very sponsor-driven sport, particularly automobile racing in which the most expensive sponsorships for cars can be around $20 million annually, leading to many shared sponsorships among one car for an entire season (Smith, 2009). In an effort to capitalize on sponsorships in NASCAR, former Charlotte M otor Speedway track president Humpy Wheeler sold naming rights to Lowe’s in 1999, a 10-year $35 million deal that was the first of its kind for 11
  16. 16. Scott Shinbaum a track (Smith, 2009). Infineon Technologies purchased naming rights for a track in Sonoma, California in 2002 for $34.6 million over ten years, and the Automobile Club of Southern California purchased naming rights for the California Speedway in Fontana, California for $40 million over ten years in 2008 (Smith, 2009). The trend of naming rights for tracks was limited, and in 2009, Lowe’s allowed its sponsorship of Charlotte M otor Speedway to expire. Instrumental in that decision was the recession in which Lowe’s earnings fell 22 percent in 2008 and stock prices dropped from $28.49 to as low as $13 (Smith, 2009). Demand for tickets at sporting events has also decreased, and many racetracks have decreased their capacity recently to keep supply at equilibrium with demand. From 2009 to 2010, Daytona International Speedway decreased its capacity by 12,000 seats, Charlotte M otor Speedway by 25,000 seats, Texas M otor Speedway by 19,000 seats, Phoenix International Raceway by 20,000 seats, M ichigan International Speedway by 12,500 seats, and Richmond International Raceway by 12,000 seats. All of these tracks still have a capacity over 50,000 seats, and many over 100,000 seats (Newton, 2010). According to former Daytona International Speedway president Robin Braig, “It’s no secret that due to the challenges in the economy, attendance has softened throughout the sporting industry… we are at a point where we must take a broad look at our events and facilities and see if there is some right-sizing required … a move already seen across all major sports in the country” (Newton, 2010). This contraction in capacity is also in line with recent trends in other sports. According to Texas M otor Speedway president Eddie Gossage, “There was a period of time when you didn’t build a M ajor League Baseball stadium unless they had 65,000 or 75,000 seats. If you look today, it’s about 45,000. It’s reflecting the market place that is constantly changing” (Newton, 2010). Part of this 12
  17. 17. Scott Shinbaum reduction in capacity was to upgrade old seating areas. According to Phoenix International Raceway president Bryan Sperber, “We think guests are going to appreciate the extra room. We’ve always felt the customer is important, but it’s become more important in today’s economic climate” (Newton, 2010). Racing venues are not the only venues decreasing capacity. Stanford University reduced its football stadium capacity from 85,000 to 50,000 in 2006 to create more ticket demand, and the University of Tennessee reduced it’s football stadium’s capacity by 4,000 seats with recent renovations (Newton, 2010). Carolina Panthers owner Jerry Richardson has also stated that he should have built 73,778-seat Bank of America Stadium to be 10,000 seats smaller when it opened in 1996 (Newton, 2010). Despite capacity reductions at racing venues, NASCAR events are still among the largest in the country. Compared to the Dallas Cowboys, who draw around 730,000 fans for eight home games, Texas M otor Speedway is very successful, drawing around 1.2 million spectators for its 12 events, the seven largest of which are held over three weekends during the year (Newton, 2010). Track president Eddie Gossage is proud of this number in this economy, saying, “Everybody wants to compare, it’s easy enough to compare. We still do better in tickets to our eight biggest events compared to their eight biggest. When you sell 170,000 tickets [for a race], it’s still 100,000 more than the Super Bowl. The sky is a long, long, long ways from falling. I’m even looking at the sky” (Newton, 2010). 13
  18. 18. Scott Shinbaum CHAPTER THREE METHODOLOGY Research Question The study examined the following research question: How do event organizers use special events and related mega-events to increase revenues, attendance and repatronage, and sponsorship activation opportunities? Research Design The study followed an exploratory qualitative case study method. According to Breslin and Buchanan (2008), “As a research method, the case study is a recognized tool of the social scientist in gathering qualitative information” (p. 38). One form of a case study is an exploratory study. “In a sense, case studies are exploratory and descriptive by nature, identifying a phenomenon and placing it in the literature for further pursuit by other methods of research” (p. 38). Yin (2003) states, “A case study is an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident.” VanWynesberghe (2007) noted that this “invites the researcher to engage in any necessary ethnographic work that will delineate the event or concept of interest from the backdrop” (p. 2). According to Creswell (2002, p. 61), “A case study is a problem to be studied, which will reveal an in-depth understanding of a ‘case’ or bounded system, which involves understanding an event.” VanWynesberghe (2007) states that this calls for the researcher “to start with a quandary, 14
  19. 19. Scott Shinbaum that will invoke layers of understanding about the system in which the problem resides. The system becomes the case, and the researcher chooses an event, activity, or process within the system to illuminate it” (p. 2). Research S ample To conduct this study, convenience sampling was used due to the researcher’s past experience and interview contacts with the events used. The population was narrowed from all racecourse venues to events hosted at three particular venues: Daytona International S peedway Daytona Beach, Florida Kansas S peedway Kansas City, Kansas Churchill Downs Louisville, Kentucky These venues provided two different types of special events: ancillary non-ticketed events, and individual ticketed events. The non-ticketed events took place during Daytona 500 Speedweeks at Daytona International Speedway each February from 2006 to 2011 and the Hollywood Casino 400 weekend at Kansas Speedway in October 2011. The ticketed events include the HullabaLOU M usic Festival at Churchill Downs in July 2010 and the Kanrocksas Festival at Kansas Speedway in August 2011. Data Collection Data for this study included primary research data from site visits and personal interviews, as well as secondary data from media reports and articles before and after events were completed. This information was gathered from newspapers, journals, magazines, internet 15
  20. 20. Scott Shinbaum sources, and press coverage. Information collected provided goals and objectives of the special events, as well as post event data regarding the perceived success of the events, and current information about the expected renewal of the events. Data Analysis This qualitative research study was completed to analyze the potential value of hosting special events at racecourse facilities in order to complement a mega-event or to create additional revenue streams at a facility built to host a mega-event. The information gathered from the selected events was coded by the researcher. “Coding is a progressive process of sorting and defining and defining and sorting those scraps of collected data that are applicable to your research purpose” (Glesne, 2006). Each major code identifies a concept or central idea (Glesne, 2006). Once all of the data had been coded, all of the major codes were grouped together and all sub codes were grouped to provide more specific clarity to the information. Any data that contradicted the themes was analyzed to determine if major codes or sub codes should be developed to include the information in the research or whether the information should be considered exceptional data and not relative to the research (M erriam, 1998). Events were examined to determine the success and feasibility of similar events at similar venues. 16
  21. 21. Scott Shinbaum CHAPTER FOUR FINDINGS Analysis of Research Question In today’s struggling economy, researchers must examine how other facilities are working to maximize their capabilities for sponsors, fans, and revenue. Event organizers must leverage special events to attract more fans and provide more sponsorship opportunities, thereby increasing revenue. For the average sporting event, fans arrive on the day of the game, and then leave after the game is over. There might be some tailgating before the game, but these are usually one-day affairs. Unlike the average sporting event, NASCAR Sprint Cup Series weekends typically involve camping for multiple days, and therefore provide a greater atmosphere beyond the more than 100,000 spectators in attendance for the average race, and up to 250,000 in the grandstands and infield for the Daytona 500 each February. M any fans also travel long distances for the average NASCAR race, some as far as 300 miles (Caldwell, 2008). Additionally, these weekends, as well as the weekend of the Kentucky Derby at Churchill Downs in Louisville, Kentucky, feature multiple supporting events in the days prior to the main event. The Kentucky Derby weekend also features the Kentucky Oaks horse race on the Friday before the race and several support races each day, while Daytona 500 Speedweeks features up to seven additional supporting events, and the average NASCAR weekend hosts up to three additional events. With this much time devoted at the track, there are more opportunities to increase revenue, sponsorship opportunities, and the overall fan experience. 17
  22. 22. Scott Shinbaum NAS CAR Events: Daytona 500 and Hollywood Casino 400 By itself, the Daytona 500 is a mega-event, and therefore is treated similarly to a Super Bowl. The race features a pre-race show televised by FOX and includes a short performance by a music star. The show produced in this fashion began when FOX became a NASCAR broadcast partner in 2001. It was originally a “Tribute to America” musical tribute used to emulate the Super Bowl and to elevate the Daytona 500’s status as “The Great American Race.” In 2006, with Sprint’s involvement in NASCAR, Sprint leveraged a partnership with rock musician Bon Jovi to perform the Daytona 500 pre-race show, and NASCAR LA used a partnership with Kelly Clarkson in 2007. In 2008, there was a “Through the Decades” show in honor of the 50th running of the Daytona 500. Starting with the Lady Antebellum’s pre-race performance at the 2008 Coke Zero 400, held at Daytona International Speedway each Independence Day, the Speedway has been able to carry this momentum forward, despite lessened sponsor involvement after the recent economic struggles began. The speedway was able to secure Keith Urban for the 2009 Daytona 500 from the same promoter as Lady Antebellum, and Tim M cGraw followed in 2010 with Brad Paisley in 2011 after seeing the success of past performers. Daytona is able to secure these acts with limited expense. The acts are leveraged as promotional opportunities for new albums, and therefore the artist is not paid an appearance fee, although the speedway does cover travel expenses (B. Crichton, personal communication, October 25, 2011). Daytona is also able to leverage these performances to increase ticket sales. The speedway offers special ticket packages involving the act. These packages typically include a ticket to lower demand seats and pre-race access closer to the stage, shown in Figure 4.1. This 18
  23. 23. Scott Shinbaum increases the spectator value for seats that the speedway may struggle to sell. Daytona also feels that these shows sell incremental passes to their infield Sprint FANZONE, an area that allows for pre-race on-track access, although it provides limited track viewing opportunities. Depending on the band, the track can also sell VIP packages. Additionally, these performances provide additional selling and messaging points for spectators, even without the special ticket packages. (B. Crichton, personal communication, October 25, 2011). M any fans will be more likely to buy a ticket in a prime area of the track that provides a good view of both the event and the concert. Daytona International Speedway also allows all fans onto some areas of the track in order to maximize the average fan experience, shown in Figure 4.2. Figure 4.1 Fans get close to the stage with a special ticket package Figure 4.2 Fans go onto the track for the pre-race show, enhancing the overall fan experience 19
  24. 24. Scott Shinbaum Daytona International Speedway’s annual Speedweeks begins the weekend before the Daytona 500 with the Budweiser Shootout. The speedway utilizes Budweiser’s existing relationship with a band to provide a pre-race show. This show also provides leverage for both the speedway and Budweiser to increase their television time on FOX for the race. The band also performs a free concert after the race is over. This concert serves many important purposes. First, it extends the event. The Budweiser Shootout is a sprint race (75 laps, 187.5 miles), and therefore only takes about one-third the time of a normal NASCAR event. Therefore, a concert provides more value for the fans in attendance, and justifies them spending $39 for a general admission ticket, or $70-$99 for reserved seats to the race. By extending the duration of an event, more spectators stay longer after the race, and therefore helps to also ease traffic flow away from the track, allowing for a better customer experience at the Speedway. Second, the concert also provides the speedway with additional selling points and better messaging points for sponsors and marketing initiatives. Daytona International Speedway does not release actual attendance data, but they have experienced a noticeable spike in sales surrounding the announcement of an entertainment act for the race (B. Crichton, personal communication, October 25, 2011). Kansas Speedway in Kansas City, Kansas, used a similar technique for its Friday night ARCA Series race, the opening event to the October 2011 Hollywood Casino 400 weekend. The Kansas Lottery 98.9 was jointly sponsored by the Kansas Lottery and local radio station KQRC 98.9 The Rock. KQRC produced a concert performed by JACKYL outside the track that was only open to race ticket holders, and as part of the promotion, tickets for the ARCA Series race were $9.89 compared to the typical $10 general admission ticket that would have been otherwise available. The race was also adjusted from its past 100 laps to 99 laps as part of the promotion. 20
  25. 25. Scott Shinbaum Like its sister track, Daytona International Speedway, Kansas Speedway does not release official attendance numbers; however, the crowd for Friday night was estimated to be over 20,000, significantly higher than past ARCA races at the facility. M uch of this increase in attendance was attributed to the concert based on the lines at the ticket windows as the race started, shown in Figure 4.3, compared to the typical motorsports crowd that is usually in the track well before the drop of the green flag. Not only did this concert attract more fans to the Friday night event, but also it exposed many people to motorsports and Kansas Speedway, and therefore increased awareness of NASCAR and the speedway (H. Steinkuhler, personal communication, October 12, 2011). Figure 4.3 Additional concert crowd outside Kansas Lottery 98.9 ticket windows at green flag Churchill Downs: HullabaLOU Music Festival Churchill Downs expanded on these special events to create an entire music festival. In 2009, Churchill Downs formed Churchill Downs Entertainment Group (CDE) in order to grow revenue for the company with new events that fully utilize the property (Waddell, 2010). Churchill Downs has a normal racing season that runs from early M ay through July 4th, and then from late September through November. This leaves a void during the prime months during the 21
  26. 26. Scott Shinbaum summer when people are able to travel longer distances to events. In order to fill this void, CDE created the HullabaLOU M usic Festival in late July 2010. HullabaLOU was created with the goal of finding new revenue sources for Churchill Downs Incorporated (CDI) and diversifying revenue streams. This was a long-term goal as CDE was expecting that the festival would lose money during the first year, break even in the second, and then begin making a profit in 2012 (Sloan, 2010). CDE knew they could leverage their capabilities and experience of managing large-scale audiences easily and safely, as well as having the infrastructure already in place for a large event. In this respect, Churchill Downs had an advantage over other music festivals in that it would not require high building costs because the facilities were already in place. Organizers were able to utilize the existing grandstands to create reserved seating, while also combining the infield and paddock areas for four additional festival stages. Figure 4.4 provides the event map of the festival. HullabaLOU was also intended to bring new people to the Churchill Downs property. 22
  27. 27. Scott Shinbaum Figure 4.4 HullabaLOU event map (Bullard, 2010) HullabaLOU was a great success by attracting new people to Churchill Downs and successfully leveraging the facility’s capabilities of providing an exceptional fan experience. HullabaLOU attracted about 78,000 fans from 47 states. 65% of those fans came from outside of the Louisville, Kentucky market. In a survey, the festival also drew 60% regional awareness in just its first year. Additionally, fans satisfaction of the event was so high that 70-80% of patrons surveyed said they would come back again, and 99% said they would recommend HullabaLOU to others (“Look for HullabaLOU M usic Fest,” 2010). The festival also established a database of buyers for both future HullabaLOUs as well as potential buyers for events during the racing season. HullabaLOU was also successful in bringing new people to the racecourse that would ordinarily never have attended an event at Churchill Downs. 23
  28. 28. Scott Shinbaum However, HullabaLOU experienced many struggles. First, the festival coincided with one of the worst concert seasons in 2010. According to Clark Case, owner of Buster’s Billiards and Backroom in Lexington, Kentucky, even established music festivals struggled in 2010. Case also suggested that prices for HullabaLOU might have been too high at $200 for a three-day pass compared to $150 for Voodoo Fest in New Orleans (Sloan, 2010). 2010 also was the hottest year on record in Louisville. Temperatures in July 2010 were in the high 90s, compared to the average July high temperature in the 80s. This tarnished the potential for a large local walk-up crowd, which music festivals are dependent on to boost sales. Additionally, in order to combat the record heat and maximize customer experience, Churchill Downs provided free water refills, which cut into a significant portion of potential concessions sales. This was a conscious effort by organizers to sacrifice revenue in an effort to create a safe and enjoyable experience for the patrons. However, the combination of these factors led to a net loss of $5 million in 2010. This greater than expected loss eventually led to the dissolution of CDE and the cancellation of HullabaLOU in 2011. According to CDI CEO Bob Evans, “It has become clear that launching new, upscale, entertainment events in the current economy, particularly with the persistently high levels of unemployment is extremely difficult” (Sloan, 2010). Despite the cancellation of the 2011 festival, CDI remains hopeful that HullabaLOU may return when the economy recovers (Sloan, 2010). Kansas S peedway: Kanrocksas Festival Kansas Speedway hosted the similar Kanrocksas M usic Festival in August 2011. Unlike Churchill Downs, which took on risk of HullabaLOU by paying for their own acts, Kanrocksas functioned as a track rental, much like a basketball arena or football stadium, with an independent 24
  29. 29. Scott Shinbaum promoter, Brandmeyer Fritz Festivals (BFF), a joint venture by Bill Brandmeyer and Chris Fritz of New West Presentations. BFF’s goals were to deliver a unique musical experience and a vision for a national, significant music festival to put Kansas City on the music festival map (About the organizers, 2011). BFF approached Kansas Speedway for the festival because the track had ample space for stages and camping. They were able to attract acts around Lollapalooza in Illinois, which was taking place on the same weekend. This allowed the promoters to save substantial money because the artists were already traveling either to or from Lollapalooza. Kanrocksas used a similar set-up (shown in Figure 4.5) to HullabaLOU, but only featured 4 stages compared to 5 at Churchill Downs. Figure 4.5 Kanrocksas M usic Festival M ap (Festival infield layout, 2011) Kansas Speedway used Kanrocksas as an opportunity for name generation, as well as to promote its upcoming Hollywood Casino 400 weekend in October 2011. According to Kansas 25
  30. 30. Scott Shinbaum Speedway marketing manager Haley Steinkuhler (personal communication, October 12, 2011), there was very little initial crossover in the crowds attracted to the music festival to the races. Therefore, the speedway used a booth and show car in the festival’s vendor areas, as well as drawings for souvenirs and tickets for future races in order to promote track and event awareness. Even then, just the presence of the festival at the track created substantial awareness of Kansas Speedway. Kanrocksas also did some advertising during the June 2011 NASCAR weekend at the speedway through a billboard on the track, as displayed in Figure 4.6. Kanrocksas was deemed a success by event organizers from both BFF and Kansas Speedway, and both parties are hopeful that the festival will return; however, an immediate return in 2012 could be threatened because Kansas Speedway will be undergoing a complete track resurfacing during summer 2012, and therefore might not be capable of hosting the festival (H. Steinkuhler, personal communication, October 12, 2011). Figure 4.6 Kanrocksas billboard during June 2011 STP 400 at Kansas Speedway 26
  31. 31. Scott Shinbaum Kanrocksas attracted 70,000 spectators over the two-day event, most of whom were in the 18- to 34-year-old demographic according to Chris Schwartz, vice president of marketing and sales at Kansas Speedway. Schwartz adds that the name generation efforts directly led to hundreds of ticket sales for the Hollywood Casino 400 weekend in October. Additionally, Kansas Speedway believes, as recently as December 2011, that the festival will lead to landing Kanrocksas presenting sponsor Samsung as a facility partner or suite buyer for 2012 as well (M ickle, 2011). Festival-style concerts have been increasing at large racecourse facilities, whether to create extra value for a mega-event or supporting event, or to increase revenue and venue usage during traditionally dark seasons. They have also been used to varying degrees of success. Supporting NASCAR events have experienced booming successes by achieving multiple goals of increasing attendance for the supporting events, increasing partnership value, and providing an improved fan experience. M eanwhile, HullabaLOU had more tempered success. Organizers within CDE were pleased with the inaugural effort; however, the festival was cancelled after one year. Kanrocksas meanwhile was also a tremendous success, although it faces an uncertain future in 2012 due to facility maintenance. 27
  32. 32. Scott Shinbaum CHAPTER FIVE DIS CUS S ION As this study was completed, venue managers are continuing to search for new revenue streams to help raise overall revenue as well as fan and sponsorship value. The results of this study show that special events do provide positive growth through additional revenue from ticket sales and facility rentals, as well as growth through increased awareness from events that attract crowds atypical of a horse race or auto race. The results were somewhat tempered from the total financial loss of the HullabaLOU M usic Festival, raising questions about the effectiveness of self-producing a music festival versus using an outside promoter via a facility rental. However, there were several factors in this financial loss, including record-high temperatures and a poor 2010 summer concert season. Ancillary Events The findings from the Daytona 500 case study and the Hollywood Casino 400 weekend at Kansas Speedway case study supported a continuation of the literature review in which special events in the form of pre-race and post-race concerts help increase sponsorship activation opportunities as well as attendance. These claims were supported by the noticeable spike in ticket sales surrounding the announcement of an act at Daytona International Speedway, as well as the substantial lines outside the Kansas Speedway during the Kansas Lottery 98.9 ARCA Series race. Additionally, the sponsors that promote these events were able to gain additional exposure through the publicity and positive recognition gained from the events. Having special events gave the venues more selling points to increase sponsorship revenue, as well as more incentive to leverage sponsors through the additional exposure gained by more time spent at the 28
  33. 33. Scott Shinbaum facility with these events. Venues were also able to build new ticket packages with VIP add-ons. With the largest events, such as the Daytona 500, special events were also successfully leveraged to increase television time, and subsequently further increase exposure. Based on the research and the literature review, the following conclusion can be reached: 1.) Ancillary Special Events successfully increase revenues through incremental ticket sales and increased message points for sponsors and sponsorship activaton. These special events also were not a great financial burden on the facilities. In most instances, there was an outside promoter to pay for the event (i.e. Budweiser in the Budweiser Shootout and Rock 98.9 in the Kansas Lottery 98.9). However, Daytona International Speedway also began promoting its own pre-race show for the Daytona 500. They were able to reduce their burden by leveraging the promotional opportunities for new albums as their selling point to the act. The only burden carried by the Speedway was the travel costs. If the performer were to require an appearance fee, then the incremental number of tickets sold may not cover the appearance fee, and therefore the benefits of the special event may not cover the cost. Festivals Festivals were held at both Churchill Downs and Kansas Speedway to varying degrees of success. Both festivals held a common goal of increasing awareness and bringing new patrons to the facilities. Both festivals accomplished these goals to great success. However, HullabaLOU was a financial struggle, losing a net $5 million. While some loss was expected, the losses were exacerbated because Churchill Downs decided to pay for its own acts rather than function as a facility rental. This was a risk/reward scenario in which CDE took on the risk of paying for its 29
  34. 34. Scott Shinbaum own acts rather than earn the guaranteed marginal net gain from renting the venue to a promoter, while the use of an outside promoter also places the risk on the promoter instead of on the facility, and the facility instead operates through a traditional rental process. This provides a guaranteed revenue stream for the facility. The festival facility rental was a proven success for racecourse facilities. One of the most successful festivals was the Electric Daisy Festival hosted at Las Vegas M otor Speedway. This festival attracted an estimated 230,000 fans to the three-day summer event in 2011. LVM S collected rent and concessions revenue from the event totaling over $1 million in revenue. According to senior vice president of sales and marketing Kevin Camper, LVM S’ “goal was to take care of everything around the facility and how they interacted with the different services so that (attendees) walked away from here feeling good about the experience. Hopefully that drives NASCAR revenue next year, 10 years or 20 years from now.” Additionally, Auto Club Speedway in Southern California had similar success with a festival promoted by Cardenas, a local Latino grocery chain, over the past five years. President Gillian Zucker states, “I can’t tell you how many people have come up to me and said, ‘We came here for the Cardenas event,’ and they keep coming back. It’s how they’re introduced to the speedway” (M ickle, 2011). Based on the successes of the festivals examined, the following conclusions can be reached: 1.) Festival events serve to increase facility awareness, attendance, repatronage, and sponsorship activation opportunities. 2.) Festival events operated as facility rentals successfully increase net revenue for the hosting venue. 30
  35. 35. Scott Shinbaum M oving forward, even more tracks are trying to recruit promoters to rent their facilities for non-traditional entertainment opportunities. Other tracks are hosting their own events, particularly during the winter racing offseason. Inspired by a charity fundraiser hosted at Bristol M otor Speedway in Tennessee each winter, Charlotte M otor Speedway hosted a Christmas light show that attracted an estimated 200,000 visitors over 42 days at $20 per vehicle in 2010. This show was extended to cover Speedway M otorsports Inc. facilities in New Hampshire, Texas, Las Vegas, and Atlanta in 2011, lighting up these tracks when they would otherwise be dark (M ickle, 2011). Conclusions The purpose of this study was to understand how special events surrounding a megaevent and at purpose-built venues were used to increase venue attendance and repatronage, and to create and maximize revenue as well as sponsorship value and activation opportunities. This study followed an exploratory case study approach and was limited to examining special events surrounding the Daytona 500 at Daytona International Speedway, the Hollywood Casino 400 weekend and Kanrocksas Festival at Kansas Speedway, and the HullabaLOU M usic Festival at Churchill Downs. From the research in this study, literature examining the success of special events during mega-events was supported through the successes of special events during Daytona 500 Speedweeks and the Hollywood Casino 400 weekend. There was little literature found on the use of special events independent from a mega-event. Based on the success of these events, the following conclusions can be extrapolated from the events examined: 31
  36. 36. Scott Shinbaum 1.) Ancillary Special Events successfully increase revenues through incremental ticket sales and increased message points for sponsors and sponsorship activaton. 2.) Festival events serve to increase facility awareness, attendance, repatronage, and sponsorship activation opportunities. 3.) Festival events operated as facility rentals increase net revenue for the hosting venue. A final conclusion that festival events for which the facility pays for its own acts pose a severe financial risk for a venue cannot be supported because there was only one example available and was not supported by a second festival with a financial loss, in part because HullabaLOU was not given a second opportunity to improve on its budgeted financial loss from year one to year two. Additionally, other factors affected the financial loss of HullabaLOU, making it difficult to reach a solid conclusion. Recommendations for Future Research The purpose of this study was to understand how racing venues use special events to increase attendance and maximize sponsorship value and activation. As event organizers attempt to attract more guests to their facilities, organizers will continue build off of current special events to create new ways to attract patrons to their facilities. As purpose-built racing venues attempt to become more multi-purpose facilities, these venues may become viable competitors to stadiums and arenas, particularly in larger markets such as M iami, Phoenix, Dallas/Ft. Worth, Las Vegas, and Charlotte. Future researchers can examine how racing venues interact with traditional multi-purpose venues to become competitors. Additionally, because HullabaLOU was the only example used demonstrating a 32
  37. 37. Scott Shinbaum festival in which the venue carried substantial financial risk, future researchers can find additional examples to support or contest the conclusion that festival events for which the facility pays for its own acts pose a severe financial risk for a venue. Further research can also be done on the use of special events as ancillary events for other sports, including post-game concerts at baseball games. 33
  38. 38. Scott Shinbaum References About the organizers. (2011). Kanrocksas M usic Festival. Retrieved from Altman, A. (2009, February 2). A brief history of the Super Bowl halftime show. Time, 173 (4), 22. Apostolopoulou, A., Clark, J., & Gladden, J. (2006). From H-Town to M o-Town; the importance of Super Bowl entertainment. Sport Marketing Quarterly, 15 (4), 223-231. Breslin, M . & Buchanan, R. (2008). On the case study method of research and teaching in design. Design Issues, 24 (1), 36-40. Brewster, M . (2004, October 27). Bill Veeck: a baseball mastermind. BusinessWeek Online. Bullard, G. (2010, June 24). HullabaLOU organizers hoping for last-minute sales boost. WFPL News. Retrieved from Caldwell, D. (2008, July 3). For NASCAR fans, high price of gas is not only catalyst for cutting back travel. The New York Times. Retrieved from Creswell, J. (2002). Research design: Qualitative, quantitative and mixed method approaches. London: Sage. Festival Infield Layout. (2011). Kanrocksas M usic Festival. Retrieved from Fitzgerald, K. (1999, December 13). NFL’s movable fest. Advertising Age, 70 (51), 48-50. Glesne, C. (2006). Becoming qualitative researchers an introduction (3rd ed.). Boston: Pearson Education, Inc. Jensen, J. (1995, January 16). NFL amusement park is just the ticket. Advertising Age, 66 (3), 24. Look for HullabaLOU M usic Fest to return to Churchill Downs. (2010, July 26). Louisville Courier-Journal. Retrieved from M andese, J. (1992, September 14). Fox plans to zap NBC’s Super Bowl halftime with sports. Advertising Age, 63 (37), 4. M erriam, S. B. (1998). Qualitative research and case study application in education. New York: Jossey-Bass. 34
  39. 39. Scott Shinbaum M ickle, Tripp. (2011, December 19). Tracks push harder for events beyond racing. Sports Business Journal. Retrieved from http;// Newman, M . (1995, November 25). Super Bowl XXX scores with new concert series. Billboard, 107 (47), 13-14. Newton, D. (2010, January 22). Standing room only? Not these days. Retrieved from Sloan, S. (2010, October 7). Churchhill Scraps HullabaLOU M usic Fest, dissolves entertainment group. Lexington Herald-Leader. Retrieved from Smith, M . (2011a, April 18). CWS, lacrosse to get NCAA fan-fest treatment. Sports Business Journal. Retrieved from Smith, M . (2011b, April 11). Final Four scores big with sponsor activation. Sports Business Journal. Retrieved from Smith, M . (2009, August 3). Lowe’s tells speedway it won’t renew deal. Sports Business Journal. Retrieved from Spanberg, E. (2011, June 27). Coke, NASCAR get the party started. Sports Business Journal. Retrieved from The sportbusiness debate. (2011, July). SportBusiness International. VanWynsberghe, R. & Khan, S. (2007, June). Redefining Case Study. International Journal of Qualitative Methods, 6 (2), 1-10. Waddell, R. (2010, February 6). And they’re off. Billboard, 122 (5), 16. 35