Time to Sell DCI

[mobrien]

I see some value in Daniel's thinking, but I don't think there's enough upside there to make anyone put down the money necessary. The only way investors would want to own DCI would be if they had a lot more control of the day-to-day operations of the corps themselves - and there are any number of corps who'd likely be shut down at the worst, or be required to hire different corps directors, at the minimum, which would be a house cleaning of fairly epic scale.

However, there might be a split-the-difference approach: a Board made up of 7 to 9 outsiders with prior business experience (preferably in the fields of events or sports production and marketing), all of them compensated for their Board time and effort, said compensation being determined by DCI's relative profitability. In this situation, the Board members would still have a financial interest in what happens with DCI, but it would be through profitability of the WHOLE operation that they would see cash, not through just "their part" doing well.

The corps themselves would have to be willing to submit to an all-outside Board, and live with whatever decisions they make. I could all but guarantee you that if DCI went this way, the new Board would likely want to change many of the things traditionalists prize about drum corps. Traditional uniform styles would be sacrificed in favor of costumes (which uniforms are, in a way, anyway), any number of smaller or less-competitive corps in the lower tiers of performance would be told to figure it out or find themselves off the tour, and the use of lights, electronics, and other non-traditional elements would likely increase, rather than subside. Being competitive would become more expensive, not less expensive, but there's every possibility that ramping up the entertainment elements of the activity could also increase the overall revenues such that those who were able to make the cut at a Top 16 corps could march without fees, and Finals could actually be a big enough draw (on the road, since I don't think Indy will ever have the excitement factor) that you could get 30,000 people to show up, since the Finals event was enough of a "Super Bowl" type extravaganza that it was fun to go to even if you were in the end zones.

The activity would probably find itself looking a lot different to the traditionalists, and the likelihood is that the top corps will STILL be the top corps, since they're the ones who've shown themselves the most adaptable over the years. But it also might provide enough revenue to the lower-ranked corps that they could put more of their focus on creating better products, via hiring more experienced or more innovative arrangers, instructors, and designers, rather than spending inordinate amounts of time trying to figure out how to stretch $100k into $120k worth of goods and services.

Edited February 4, 2013 by mobrien

[Michael Boo]

I had waffles for breakfast this morning. At waffle house. :blow:/>

Please take me with you the next time...and make it quick.

[cixelsyd]

Some time ago, I brought up the topic concept of selling DCI to a group of private investors. Given that DCI continues to struggle to keep things together, driven primarily by financial pressures, this option seems more and more like the best path to continued sustainability, and likely the only viable option left for retaining the continuity and integrity of the DCI brand.

I changed my mind - I will respond to this anyway.

We have learned a lot from that 990s thread. One of the first things we learned was that if there is a financial problem in the activity, it does not reside with DCI.

From what I hear, saying that "DCI continues to struggle to keep things together" is an apt description. But it is political pressures, not financial pressures, that cause the struggle.

It is simply time for acceptance of the fact that DCI has pretty much reached the limit of its potential within the current structure and experience cap of management team. If management team has no experience building up a company with more than $20M+ in annual revenue... and growth has remained relatively flat... seems not going to ever get there.

Growth is not flat - but flatter than it could be, given that a faction of 7 corps lobbies for a smaller DCI and distracts from a business plan for growth that most of them voted for back in 2009.

There must be a change in management. There must be a change in attitude. There must be a change in structure.

My reactions, in order: No. Yes. Already happened last weekend.

In this scenario, DCI intellectual property, commitments, etc., would effectively be purchased from the non-profit organization by a new investor-owned for-profit entity (seems cleaner than converting existing non-profit entity).

This is not realistic. DCI is not for sale, and never will be. DCI will never allow loss of control over the audio and video recordings that DCI has created and copyrighted (and which currently serve as part of what little glue holds DCI together).

Moving forward, a refocused and privately-held DCI would be focused on LONG-TERM returns, not short-term sustainability. In the short term, the aim would be to not only distribute as much revenue possible to corps (at least in the near-term to get them stable and increase participation), but would also focus on improving the competitiveness of all corps top to bottom in order to make the league more engaging and to provide greater geographic consistency in terms of quality.

Sounds nice, but I have three questions. They all start with "how".

Part of increasing competitiveness would be efforts to lower cost of participation to ensure that talented individuals are not sitting out due to financial reasons. This would be done though a combination of increased operational efficiency, growth in current revenue opportunities and development of new and diverse revenue streams.

You cannot legislate the fees that 40 different drum corps charge their members. Corps will charge whatever the market will bear. And the market shows that every corps with the faintest chance at finals has an excess of talent auditioning, and kids (or their parents) in some cases willing to pay just for the experience of rehearsals even after auditions are done and the lines are set.

[cixelsyd]

Here's one question potential, profit seeking investors might ask of DCI.

Why do you hold your marquee events in stadia where the percentage of use vs. total capacity is so low?

If, for example, Lucas Oil Stadium has a capacity of say, 75,000, and finals draws 20,000, that's about 26% of capacity. Why would an investor or investment group put serious money in a venture that at best could draw 30-35% of the total number of seats where they hold a major contest?

Last year I went to Met Life to see the TOC show there. The week before, I ran into acquaintance who happens to be a supervisor of ushers there. When I mentioned the show, he smirked and said the number of people expected was so low he'd have to work as a regular usher.

DCI isn't football, I get that, but anyone serious about ROI would want to know why this happens at so many shows.

Of course, the solution would be to create shows that appeals to a wider expanse of seats, but that has only happened once that I remember.

Just asking.

As long as the judges are seated in a fixed position (the press box), the competitive performance will continue to be aimed to that location. If we intend to appeal to a wider expanse of seats, we need to put the judges in a wider expanse of positions.

[danielray]

I see some value in Daniel's thinking, but I don't think there's enough upside there to make anyone put down the money necessary. The only way investors would want to own DCI would be if they had a lot more control of the day-to-day operations of the corps themselves - and there are any number of corps who'd likely be shut down at the worst, or be required to hire different corps directors, at the minimum, which would be a house cleaning of fairly epic scale.

What if the value of it was not exactly in the money they could make from it independently, but the value it adds to their existing portfolio, which is complimentary, but had absolutely nothing to do with music?

Yes, corps would be required to hit specific performance milestones (and would be given support to do so) or would lose support. This would likely require management changes at many organizations to effectively reach and maintain these milestones.

[Fred Windish]

Good discussion!

Before selling the whole thing, I suggest a re-thinking of some prior decisions. Such as . . . .

Responding to smaller audience numbers by RAISING prices on those who do attend.

Deciding to eliminate some of the fan experience, like taking away Olympic-style closing ceremonies.

Putting out proven successful charts that have been RADICALLY re-worked into something far different.

Displaying performances that are overly subtle.

Running sponsors over with housing demands and, sometimes, prima dona arrogance.

Sharply raising member dues and other expenses to participate, in an activity that once had almost none of that.

Avoiding parades and other promotional appearances.

Look outward, yes. Inward, too.

[danielray]

DCI is not for sale, and never will be. DCI will never allow loss of control over the audio and video recordings that DCI has created and copyrighted (and which currently serve as part of what little glue holds DCI together).

Are you kidding? Of course it is for sale.

[skywhopper]

Would it be possible to somehow outsource DanielRay to some other message boards?

[danielray]

Would it be possible to somehow outsource DanielRay to some other message boards?

If I wasn't here... what fun would DCP be?

Seriously, DCP has lost a lot of diversity over the past few years... making it a bit stale... a bit too Jurassic Park.

[Fred Windish]

If I wasn't here... what fun would DCP be?

Seriously, DCP has lost a lot of diversity over the past few years... making it a bit stale... a bit too Jurassic Park.

By all means, danielray, keep it up! Makes for good reading and lots of traffic for DCP! Even though no one's opinion is more correct than my own, God made both the wheat and the chaff.