TOC/G7 Related Discussion

[Slingerland]

3. I find quite curious the argument that DCI should become a for-profit entity; I'm not quite sure how that would work, given that all it's members (corps) are individual non-profit entities, each involved in their own fundraising and unique NFP issues. Could someone explain how that would work, beyond just saying that it should happen?

There are several models out there, one being the "association" model (which is what the corporations known as the National Football League, the National Hockey League, etc are), where it's a collection of privately-owned or operated businesses who use a central organization to manage competitions, negotiate media deals, and share revenues that are created by the combined efforts of all the partners. Individual profitability via the route of maximized group effort is the rule of the day. They make money as a group with an eye toward distributing that money back to the individual partner organizations

But there's another model of the for-profit 'league', and that would be NASCAR and the WWF (or whatever McMahon's wrestling league is called). In those cases, the league really is the product and the players/teams benefit from their work, but not (arguably) as much as the league owner does.

I'm not sure that the latter model would be feasible with DCI, as it moves to far away from the original intent of the organization, which naturally aligns more with the NFL model.

4. DCI is obviously in trouble and, in my opinion, it needs to look very carefully at the audiences it serves (corps, communities and individuals) and determine what internal changes are required to meet those needs successfully. It should eliminate the obvious conflicts of interest at the board level and build a board of successful/interested representatives from related industries and communities. It should then work to create a compelling strategic (long-range) plan and the more immediate annual business plans (goals) and related budgets that are required to operate a viable business in the NFP world.

I don't think you'll find that much disagreement even among the two primary viewpoints in this thread that DCI would do best with a stronger executive/less-interested Board model. There's a process that would have to lead to that, however, and step one would be committing to bringing in a team at the top who had the contacts and experience to grow the league's revenues several steps past where they are now.

The present Board members (some of whom are no doubt reading this thread) will have to acknowledge that none of them have the ability to be that guy (if they did, they'd be CEOs at $30m organizations, and not running $1m drum corps), and commit the organization to professionalizing at the top in a way that hasn't been done yet. And the member corps will have to be willing to accept that if they brought in an outside eye from the world of sports or event marketing, that she or he would likely want to make some changes in product that would take some elements of the product control out of the hands of the corps directors and their staffs.

There's room for growth here, but it's going to require the current leadership of the corps and of DCI themselves to realize that they're going to need to commit resources to getting the type of league management who's not going to be afraid to push the corps to be more marketable than they are now.

Edited March 21, 2013 by Slingerland

[BRASSO]

The present Board members (some of whom are no doubt reading this thread) will have to acknowledge that none of them have the ability to be that guy (if they did, they'd be CEOs at $30m organizations, and not running $1m drum corps), and commit the organization to professionalizing at the top in a way that hasn't been done yet. And the

If you find " CEO of a 30 million dollar organization ", presumably unfamiliar with Drum Corps, to give up that position ( and its ancillary annual million dollar salary, big time perks, etc )to come in and run DCI let me know. People that work in the Commercial arena are there for a reason. Typically, they don't drop that arena to then go and work full time for 501 C Corporations, and for Non Profit Youth Organizations. Furthermore, just who is going to pay this professional CEO from the outside, and just what exactly do you envision his or her salary to be that will be commensurate with their current salary running these successful million dollar commercial ventures ? Who is going to take a large pay cut to go into a venture that they have virtually little to no prior experience with ? I think we need to get real here frankly as to what is both practical as well as financially doable within the youth Drum Corps idiom.

Edited March 21, 2013 by BRASSO

[Slingerland]

If you find " CEO of a 30 million dollar organization ", presumably unfamiliar with Drum Corps, to give up that position ( and its ancillary annual million dollar salary, big time perks, etc )to come in and run DCI let me know. People that work in the Commercial arena are there for a reason.

You won't hire those guys for what DCI is paying now, no.

But there are plenty of non-profit organizations in the $18-30m range that have sports and arts events in their portfolios of activities. The CEOs at those organizations are typically in the $300k plus benefits and performance bonus range, not in the $1m range. The best can be close to $700k, but then again, those are the ones who are running $30m organizations; I'm pretty sure the member corps would be cool with paying someone that much if the person was able to triple the size of DCI from where it is now.

Those CEOs recruit Board members who use their business and personal connections to bring in hundreds of thousands of dollars (each) in outside support for their organizations. That's the model to look at, not the PTA bake sale.

If you think that the positive impact of what drum corps does and the potential appeal of the product is so insignificant that it deserves a bake sale mentality, then go for it. Oh wait, don't bother, you've already got it. Carry on.

But it would be a good idea for the current Board to sit down with the member corps and have an honest discussion as to what the investment would look like to build something more substantial. First order of business would be committing to the idea of substantial growth - set a target for what you want in hard numbers re: audience size and revenues. The actual plan for achieving those results would have to be in the hands of the executive team they hire to do the building.

And at that point, the corps themselves would have to agree to give over a lot of the power they now have in terms of product, tour schedule, etc, and trust that they've hired the right team to build the brand. If they do so, there's hope for moving forward. But if they continue to go with the relatively weak executive/strong Board philosophy, they're screwed.

Edited March 21, 2013 by Slingerland

[danielray]

If you find " CEO of a 30 million dollar organization ", presumably unfamiliar with Drum Corps, to give up that position ( and its ancillary annual million dollar salary, big time perks, etc )to come in and run DCI let me know. People that work in the Commercial arena are there for a reason.

This happens a lot, actually. It is not that difficult to find if you engage a professional headhunter.

One good example is one of our portfolio companies where a guy left a gig as president of a company turning over about $50M a year to go to a company that was doing around $2M.

The company he left was in the professional/pro-sumer camera business... and the company he went to was a technology services business.

He took the gig because the company he was moving to had a great foundation, but only one major client. He had relationships where he could immediately bring in other clients and for him, growing the company was much easier/less stressful than his last gig, but with much more personal upside potential.

Typically, they don't drop that arena to then go and work full time for 501 C Corporations, and for Non Profit Youth Organizations. Furthermore, just who is going to pay this professional CEO from the outside, and just what exactly do you envision his or her salary to be that will be commensurate with their current salary running these successful million dollar commercial ventures ? Who is going to take a large pay cut to go into a venture that they have virtually little to no prior experience with ? I think we need to get real here frankly as to what is both practical as well as financially doable within the youth Drum Corps idiom.

DCI has no future as a non-profit. It has reached the ceiling of this sort of structure.

Also understand that most great CEOs, especially those that are turn around artists... aren't there for the salary... but for the performance-based compensation. It is not unusual that many of these guys take zero salary (they don't need it anyway) and very little in the way of perks.

This type of individual could be attracted to run a revamped DCI (not the current non-profit), but it would definitely be a very different dynamic.

[danielray]

3. I find quite curious the argument that DCI should become a for-profit entity; I'm not quite sure how that would work, given that all it's members (corps) are individual non-profit entities, each involved in their own fundraising and unique NFP issues. Could someone explain how that would work, beyond just saying that it should happen?

How it would work...

All IP assets (brand, video archive, etc.) is transferred from the current DCI, Inc. to a new for profit entity that is wholly owned by DCI, Inc.

100% of shares of DCI, Inc. are sold to an investor for a nominal sum.

In return, investor agrees to a guaranteed minimim level of compensation paid to DCI, Inc. on a specific timescale (easing the cashflow problems).

Investor doesn't get into the mess of how that money is actually distributed, just writes the checks to DCI, Inc. which distributes it how they will.

The issue here is stabilization. Now individual organizations have predictable and guaranteed cashflow (consider that it wasn't revenues, but cashflow .... air in the hose... that caused difficulties for groups like Teal, Glassmen, etc.).

The investors then have a very strong incentive to grow the business. There is also vey strong incentive to reinvest increased earnings into improving the level of individual corps. Greater competition makes it more interesting and further increases the marketability, sponsorship potential, etc.

The future of drum corps is sponsorship driven... and is not lead by music brands, but consumer brands that have a strong interest in the youth market.

Also, the key here is an investor that can not only tolerate, but will expect losses for some time. It is not something that will turn around in only a couple of years. Will need reinvestment of increased revenues for a bit.

[BRASSO]

But it would be a good idea for the current Board to sit down with the member corps and have an honest discussion as to what the investment would look like to build something more substantial. First order of business would be committing to the idea of substantial growth

If we are talking about " substantially " increasing the national audience size, then in my view the " first order of business " is to hire a research firm to conduct national viewer surveys to a) determine the current appeal of the DCI programming product and B) take both the positive and negative feedback from these national surveys and then C) begin to incorporate this info into future show programming.

" Give the Lady what she wants "

Marshall Field, Clothing Tycoon.

Edited March 21, 2013 by BRASSO

[danielray]

If we are talking about " substantially " increasing the national audience size, then in my view the " first order of business " is to hire a research firm to conduct national viewer surveys to a) determine the current appeal of the DCI programming product and B) take both the positive and negative feedback from these national surveys and then C) begin to incorporate this info into future show programming.

" Give the Lady what she wants "

Marshall Field, Clothing Tycoon.

DCI programming is not the issue..... the money in DCI is not increasing the number of adult members in the audience, but increase the connections with youth. The money is in youth sponsors.

For youth, the programming is not broken, just a bit behind the times in comparison to other marching music activities.

[sky]

DCI has no future as a non-profit. It has reached the ceiling of this sort of structure.

Also understand that most great CEOs, especially those that are turn around artists... aren't there for the salary... but for the performance-based compensation. It is not unusual that many of these guys take zero salary (they don't need it anyway) and very little in the way of perks.

This type of individual could be attracted to run a revamped DCI (not the current non-profit), but it would definitely be a very different dynamic.

Thanks to a few recent posters, there are several possible models to examine in creating a successful DCI non-profit structure.

I do not believe that turning DCI into a for-profit business would be a successful venture and cited a few reasons in my earlier post.

Please give some specific steps as to how you envision a successful transition, not just for DCI but for its member corps.

For example, who are some of the "great CEOs" that might consider such a turnaround venture and what organizational structures might they implement?

I just don't understand how DCI or its members could survive in the for-profit world. Help me "see the light."

Edited March 21, 2013 by sky

[Slingerland]

If we are talking about " substantially " increasing the national audience size, then in my view the " first order of business " is to hire a research firm to conduct national viewer surveys to a) determine the current appeal of the DCI programming product and B) take both the positive and negative feedback from these national surveys and then C) begin to incorporate this info into future show programming.

Outside consultants can be useful when you don't have the resources to do your own legwork or when you need an outside eye for perspective.

But spending money on finding someone to tell them that they need to change things would be a waste of funds. They need someone who can actually devise then implement a plan for growth, not just tell them that they're failing to connect with sponsors and potential participants and audiences.

Edited March 21, 2013 by Slingerland

[danielray]

Thanks to a few recent posters, there are several possible models to examine in creating a successful DCI non-profit structure.

I do not believe that turning DCI into a for-profit business would be a successful venture and cited a few reasons in my earlier post.

You will not attract the necessary leadership for this type of growth as a non-profit. They need very strong upside potential, which is not possible as a non-profit.

Also, it will need considerable amount of capital... which investors will write down as a loss for the near term. This is also not possible as a non-profit.

The structure of a non-profit is simply far too limiting to make it work for drum corps. Sure, it works for some other types of organizations due to the nature of what they actually do. But, it will not work for what drum corps does in the context of what the activity really needs right now from the cash and leadership perspective.

Please give some specific steps as to how you envision a successful transition, not just for DCI but for its member corps.

Corps get paid what they get paid now + a bit on top... except they get it 100% up front for the summer and timed during the offseason to cover non-performance related expenses.

For example, who are some of the "great CEOs" that might consider such a turnaround venture and what organizational structures might they implement?

There are a number of potential candidates. These are not guys that would apply for the position. These are guys that you would actively steal away from other positions. You don't want anyone that actually wants the job... but someone that needs to be sold the job.

I just don't understand how DCI or its members could survive in the for-profit world. Help me "see the light."

The members would still remain non-profit. That makes sense. Only DCI as an events company would become for profit.

This events company would actually be producing events YEAR ROUND that are not related to marching music... but simply corporate and mainstream stuff. It is absolutely pointless to have all that latent capability and capacity for simply a summer program.

....

Another option could be to simply sell DCI to a group that is already producing major events (not connected with marching music), that already has the management and already has the sponsor network. This is a very realistic option. It would retain the DCI brand... which would simply be just another "channel" in their portfolio.