FINANCE AND ADMINISTRATIVE COMMITTEE

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

Stuart Taylor, Director, Strategic Services

 

 

 

 

PREPARED BY:

Emma Uffren, Publications Coordinator

 

 

 

 

DATE OF MEETING:

Oct-18-2004

 

 

 

 

SUBJECT:

Rink Board and Back Lit Advertising Rates

 

 

 

 

 

RECOMMENDATION:

THAT the rink board and back lit sign advertising rates attached in Appendix A be implemented and included within the Municipal Fee By-law;

 

AND that Schedule A of By-law 2002-276, A By-law to Impose Fees or Charges for Services or Activities Provided or Done by the Town of Markham, be amended accordingly.

 

 

PURPOSE:

The purpose of this report is to propose price points for the sale of rink board advertising and backlit signs at Town facilities.

 

 

BACKGROUND:

Rink board advertising has been sold in Town of Markham arenas for over a decade.  The existing rink board contract with Boardview expired at the end of August 2004.  Boardview completed the sales and the Town received $22,500 for rink board signs.  In addition, the Town will receive $10,000 for backlit signs in 2004.

 

Opportunity to Increase Revenue Generation

Staff have reviewed the current situation related to rink board advertising and backlit signs.  The research includes reviewing Canadian Advertising Rates and Data (CARD) for price points on rink board sales.  In addition, cost estimates for expenses related to installing rink board and back lit signs were developed.  With this information a three-year net revenue model was developed.  The model projects gross revenues from rink board signs across the Town and selling a limited number (12 over 3 years) of backlit signs at Angus Glen Community Centre (4 in year 1).  The model outlines the variable costs of artwork and installation as well as the fixed costs of installing rink board and back lit sign hardware and wiring.  At this time the model discounts the cost of hydro consumption for back lit signs. The gross revenue, variable costs, fixed costs and the net revenue information is contained in Appendix B. 

 

The existing CARD (April 2004) for Boardview, the proposed Town rates and the net revenue per board are outlined below in TABLE 1.

 

TABLE 1

 

Boardview Rates

Town Proposed

 

 

$1,300 annual

 

*Additional discounts available on multi year, multi sign purchases

 

$900 - $1,200 annual

 

* Rates vary on traffic volume

* Multi-year discounts available

 

Net Revenue

 

$450 @ sign

 

Based on agreement with 3rd party.

 

$615 @ sign new installation

$845 @ sign existing location

 

Based on average purchase price of $1,050

New installation includes a fixed cost of $230

Existing location include variable cost for sign and installation of $205

 

 

The Town received $450.00 per rink board sold under the recently expired agreement.  Staff believe that over a three period of time revenue generation can increase from $32,500 (2004) for rink board and back lits to approximately $97,000 by 2007/ 2008, triple the revenue.  The growth in the revenue stream is a result of the Town assuming direct responsibility for sales and capturing a greater percentage of the net revenues generated from sales.

 

 

Advertising Information and Rate Package

Strategic Services staff have developed a prototype of the Rink Board and Back lit sign advertising package.  The advertising rates proposed are aligned to CARD data and reflect fair value for the number of exposures. Advertising sales will come from three main sources:

 

·        The existing customer base - Strategic Services group currently oversees an advertising revenue stream of approximately $150,000 related to the Recreation and Culture Guide.  In addition, this work group is in the process of building partnerships and networks across many organizations in the Town.  This provides an existing customer base that will hopefully buy more, or find the back lit/ rink board advertising better suited to their needs and move over. 

 

·        New target markets - this will be a proactive effort that segments the local market and targets specific organizations.  This approach will enhance the opportunity for success as it will match the advertiser needs to the market exposure we can deliver.

 

·        Working with sales agents who bring multiple purchases on behalf of their client(s).  This occurs on behalf of large national companies who hire advertising firms to make media buys for them.

 

Sales of Rink Boards and Back Lit Signs may be combined with the sale of other items, including but not limited to Partnerships, Recreation Guide Advertising Sales and/or bundling. In such instances, staff reserves the right to package the sale of rink boards and back lit signs in such a way as to be mutually beneficial to both the Town of Markham and the potential client. This is consistent with the approach to partnerships that Council approved in June 2004.

 

 

Responsibility and Tracking

The Strategic Services group in the Community and Fire Services Commission will assume responsibility for making this transition.  It is recommended that the 2004 gross revenue of $32,500 be established as the base year for revenue generation and that performance goals for net revenues be established in the 2005 operating budget and tracked on an annual basis. 

 

 

Community Sensitivity

Staff are aware of the need to balance good taste against the desire to enhance an existing revenue stream.  Public perception of the use of the advertising space and the message is just as important to us as creating the revenue stream.  This effort has three key objectives;

 

·        To enhance an existing revenue stream to help maximize efficiency

·        To create value for our advertising partners

·        To deliver the advertising message in a manner that is acceptable to the vast majority of the community

 

Our commitment is to achieve all three objectives.

 

 

FINANCIAL CONSIDERATIONS:

The gross revenue and expenditures created by these efforts will flow into the appropriate Strategic Services operating budgets as they are generated.  It is recommended that Strategic Services staff maintain a spreadsheet to track annual sales and costs that is reviewed on a quarterly basis with financial services staff.  The growth in the net revenue will be credited against the Revenue Strategy financial targets.   At year-end, Strategic Services will allocate the appropriate funds to Recreation Services Cost Centre Budgets.  As the transfer will be net revenue the operating budgets for these accounts will be reduced.

 

 

ENGAGE 21ST CONSIDERATIONS:

This effort is aligned to our key corporate objectives of fiscal stewardship, infrastructure management, organizational excellence and creating a quality community.

 

 

BUSINESS UNITS CONSULTED AND AFFECTED:

Recreation Services

 

 

ATTACHMENTS:

Proposed Advertising Rates

Costing Model

 

 

 

 

 

 

 

 

 

 

 

 

Stuart Taylor, Director, Strategic Services

 

Jim Sales, Commissioner, Community & Fire Services

 

 

Q:\Strategic Services\Shared Data\Reports\Rink Board Fees Oct 18 04 - Final.doc