TV Can’t Save Drum Corps

[garfield]

Help me understand. Why would Indy lend us portion of its borrowing potential with all the risk and costs entailed? I love your creative thinking. I just can't wrap my mind around Indy's interest around what amounts to a three-day weekend conference for them - one of many. Similary, I'm having a hard time imagining who would choose our credit profile over one with municipal tax revenue to repay debt. Or maybe I'm just not familiar enough with the diversity of municipal debt?

HH

Indy wouldn't "lend" DCI borrowing potential, and would have no costs or risk. They would simply be the conduit through which the financing is obtained. Municipal revenue bonds, commonly used for "pass-through" financing don't commit the issuing municipality to any risk because cash flows to pay the bonds come exclusively from the entity (DCI, in this case) that generates the revenue. These bonds are not obligations of the issuing municipality. Think about a utility power plant, or a manufacturing firm that is lured to the area with muni revenue financing; those third-party entities guarantee the revenue, not the municipality which, again, is only the conduit.

Indy wouldn't have any costs because the cost to issue the bonds are built into the bond issue, effectively paid by DCI.

Indy's incentive to offer conduit financing is based on their Arts Council's need to attract and keep arts organizations. Indy is working very hard to please and promote DCI. This is just another accomodation, but one that costs Indy zero.

Quality-wise, the decision for an invesor is not a comparison between a revenue bond (like DCI's) vs. a General Obligation backed by the city of Indy. The decision is based on "debt-service revenue", or how much revenue DCI is generating versus their debt service each year. If corps payout are calculated "below the line" (a required change to DCI's current calculations) then "revenue available for debt service" is the equivalent to the sum of the money paid out to corps plus whatever "net profit" DCI above and beyond that.

In actual terms, DCI has more than $2.5million in revenue available for debt service that is now paid out to the corps. As an exercise, I calculated a 10 year bond scale for a $2.5million bond issue and came up with approximately $130,000 in first year debt payment requirement, with each subsequent year's costs declining from there. An investor will look at "debt service coverage" of $2.5mm versus $130,000 debt service requirement and see a 5.2% debt service requirement.

I would suggest that DCI could easily find sufficient investors to purchase $2.5mm in bonds. The purchase would not be a charitable contribution but, as muni's, the interest earned is free from federal income taxation and, possibly, state income taxation. Most bonds are sold in pieces of $5000, so a maximum of 500 investors is needed. But, obviously, some might invest 10 times that amount so the actual number of investors would be much smaller.

DCI's gross revenue has increased 10% in the last 5 years, and payouts to corps has increased 13% in the same time. That's a pretty good place to start an investment analysis. Add in that annual debt service for this bond is just 5.2% (in my example) of that revenue, and a good business plan, and a qualified BOD and management team, and the "quality" of the investment becomes more saleable.

Looked at from the corps' perspective, they would have to agree to give up 5.2% of their DCI payout (pro-rata) the first year (and declining in subsequent years) in order to get their hands on about $2.4million to grow the activity.

Any subsequent success with sponsors or investors can simply be deposited to a debt-service reserve account to pay off the debt, freeing more of the annual income to be then paid out to corps.

Edited April 25, 2013 by garfield

[Pete Freedman]

I think there's a false dichotomy between Fan Network and TV. You can do both, if both make sense. Clearly Fan Network makes sense. Finals live on TV would cost some money in the form of lost ticket sales (but how much?) but, according to some on older threads, wouldn't have a high production cost because DCI is making the production anyway. As I understand it, the reason the deal with PBS went south had more to do with PBS's requirement that the videos had to be PBS videos, and there were problems with that side of the deal. In other words, DCI liked putting on the broadcast, and attracted interest through it, but couldn't take the media products deal that went along with it. Is my memory right?

Also, two things sweeten the deal today for everyone involved; the much higher resolution makes the activity much more TV friendly than it was. And the high performing arts focus of DCI today make it a better fit for PBS and possibly other channels as well.

Neither of those things necessarily push it over the line, but I hope they routinely reconnect with PBS to see if maybe the pendulum has swung.

[Pete Freedman]

What about adding a commentary track to the video products (optional of course). The commentators would presumably be the show designer(s), possibly the director, maybe a drum major or other member. 2 or 3 people. We would hear things like "This part kept falling apart so we had to simplify it," or "The brass loved to play too loud here so we had to keep pulling them back." Would any drum corps fan not want to hear this? A few, but I think most would. And would it hurt any corps? (Give the director the right to block out certain comments of course). Significant value added for little cost.

The only trick is that you might have to record it at quarterfinals or semis because everybody leaves after finals.

[cixelsyd]

TV exposure, in this culture, matters. Any sport or type of event that claims to be of international importance but has no television presence is lying to itself.

And yes, paying to be on tv is dumb, as you'd see from the numerous times I've stated so. That's what 'sponsors' are for - to provide money that can be used to offset the production expenses. If you're not going to be able to have a tv presence without them, you need to go get them. If you don't have anyone around who knows how to recruit them, then you have to go hire that person.

If you sit in the corner and say "we can't afford to do that", then congratulations. You'll have the front row seat at the inexorable slide toward total irrelevance for DCI.

Well, then, if you think DCI is bad, WGI must have their heads even deeper in the sand. When was the last time they were on TV?

And competitive marching band is doomed. They have never had a TV presence. Must be totally irrelevant.

[KeithHall]

TV is NOT the answer for DCI, DCA and Marching Bands!

Probably all of us have been to a live competition (duh) and we all know that the sound and visuals are so different than the TV. Being at the show, sitting in the stands, hearing the great sounds and seeing EVERYTHING is great. TV has 8 (my guess) camera angles. We see what the producer wants us to see. The sound is not the same on TV. Watch "American Idol," I always thought that the band vs. vocal mics were terrible! My friend who is an LA studio trumpet player and has played on the show (when they had real horns playing), told me that the sound is incredible and so much better live.

TV was great if you can't be there live but as far as I can see....All those years on PBS, a couple on ESPN....and here we are. The same people who marched that are still alive and care about corps are the only ones who watch it. Unless you get it on ABC, NBC or CBS and promote the heck out of it, TV won't save drum corps.

I think DCA and DCI need to brainstorm ideas together to find a way to sell drum and bugle corps to the public. Have they done this together? They need to to save what little is left.

[Slingerland]

Well, then, if you think DCI is bad, WGI must have their heads even deeper in the sand. When was the last time they were on TV?

And competitive marching band is doomed. They have never had a TV presence. Must be totally irrelevant.

WGI sold how many tickets to their events last week? Sold out, yes, but 25,000 at any one event? Nope. So the amount of revenue generated by their championships and given to their competing units was how much? Pride of Cincy's 990 shows that they made $2,800 in appearance fees in 2011. If you want an activity in which the amount of funding available to return to the competing units is a couple thou a year, then absolutely, hold that up as the gold standard of what DCI should aspire to achieve, financially.

Then say goodbye to everyone in drum corps who's running a top 18 or 20 corps, because they can't afford to keep walking away at the end of every season having given away their product for a fraction of what it costs them to produce it.

TV can't 'save' drum corps, but failing to find a way to increase the overall revenues available to the corps themselves via their performance work will sure as hell kill it.

Edited April 26, 2013 by Slingerland

[garfield]

TV is NOT the answer for DCI, DCA and Marching Bands!

Probably all of us have been to a live competition (duh) and we all know that the sound and visuals are so different than the TV. Being at the show, sitting in the stands, hearing the great sounds and seeing EVERYTHING is great. TV has 8 (my guess) camera angles. We see what the producer wants us to see. The sound is not the same on TV. Watch "American Idol," I always thought that the band vs. vocal mics were terrible! My friend who is an LA studio trumpet player and has played on the show (when they had real horns playing), told me that the sound is incredible and so much better live.

TV was great if you can't be there live but as far as I can see....All those years on PBS, a couple on ESPN....and here we are. The same people who marched that are still alive and care about corps are the only ones who watch it. Unless you get it on ABC, NBC or CBS and promote the heck out of it, TV won't save drum corps.

I think DCA and DCI need to brainstorm ideas together to find a way to sell drum and bugle corps to the public. Have they done this together? They need to to save what little is left.

I hesitate to be emphatic about what will, or will not, happen in the future (else I'd be the richest man in the world), instead choosing "maybe" or "probably" or "likely".

That said, if part of DCI's growth plan is to attract un-affiliated BITS, how is it best to expose the activity to those uninitiated out there who have no direct connection to drum corps?

If the growth plan is focused solely on the parents/friends of participants, then I can see that TV would offer little additional exposure to the school outreach programs that DCI has/will have in place.

Are you saying that any mass-marketing for exposure purposes is not usefull and that DCI should simply focus on increasing paying fans by increasing participation?

Edited April 26, 2013 by garfield

[KeithHall]

Has PBS/ESPN telecasts brought a substantial increase of fans (non-corps) to the activity?

[barigirl78]

When ESPN decides to air a sport--many of which they pay for the rights to air--they do so because they know people want to watch that sport. It's for the ratings.

The fact that drum corps can't get on TV unless drum corps pays is a reflection of how the programming directors perceive the activity. It's an insular activity with now enough "mass" to justify.

When PBS did live telecasts in the 70's, the activity was more populist. It was still associated with organizations like the VFW and American Legion who had millions of members. More laypeople had actually heard of drum corps because it wasn't unusual to see the local corps march in the local Memorial Day parade.

If you have to pay the networks--and not the other way around--to get on national TV, then the question we should be asking isn't "would TV help drum corps more popular", but "why isn't drum corps popular enough to have program directors WANTING to air it?"

[Pete Freedman]

Well, then, if you think DCI is bad, WGI must have their heads even deeper in the sand. When was the last time they were on TV?

And competitive marching band is doomed. They have never had a TV presence. Must be totally irrelevant.

Marching bands are supported by schools, as are many color guards. And color guards have lower costs due to smaller numbers and less expensive equipment (less heavy too). Drum corps must pay their own way, and are much more expensive.

Also, while I completely approve of the modernization that drum corps has experienced, color guards seem to have gone too far. The shaky web videos I've seen of top guards seem to indicate a complete rejection of visual pattern for almost all of the show. That used to be the most impressive part of the activity. By contrast, drum corps are in some kind of formation for the great majority of the show at least.

My point is I think WGI may be making its own huge mistakes.

Oh, WCNY used to show the regional or state marching band finals from the Carrier Dome in Syracuse, in conjunction with DCI as I recall.