2004: Fixing shows a crucible for new boss

By John Steinbreder

Six years ago, at the peak of their prestige and value, the U.S.-based PGA trade shows were acquired by Reed Exhibitions.

But for shelling out a reported $122 million for the two events, the major exposition company has watched its investment do little. Attendance, revenue and prominence all are trending downward.

Reed’s solution? Yank the show chief.

In a move akin to replacing a sports team’s coach, Reed announced the management change in June and recruited a former Top-Flite Golf Co. executive to restore vitality to its Fall Expo, and more importantly, its flagship PGA Merchandise Show held in January in Orlando, Fla.

But what remains unanswered is whether any amount of executive shuffling can restore the shows to their former luster – especially because their deterioration is more a reflection of the golf industry’s evolving nature than the quality of the expos themselves. Neither the installment of a new leader nor enhancements to the events are likely to solve the fundamental woes afflicting the PGA shows. Indeed, an argument can be made that large trade shows, in general, are struggling and need redefining. Case in point: The sporting goods industry’s Super Show hasn’t been super in years, and COMDEX, the information technology’s premier expo, recently announced the postponement of its 2004 gathering.

Such a fate doesn’t seem imminent for the Merchandise Show, but reversing its fortunes clearly has become a top priority.

Thus, Reed relieved show manager Christopher McCabe of his duties and transferred him to run its Book Expo America and consumer events port- folio. In came Ed Several, the former vice president of marketing services for Top-Flite.

Several is an enthusiastic, sales-oriented fellow with a passion for golf. And though he only has been involved with the game since 1999 – when he joined the now-defunct Spalding Sports golf division – he brings what Reed officials describe as a critical perspective.

“We wanted someone from inside the industry who was familiar with the shows and had also been an exhibitor,” says John Lewinski, the Reed senior vice president who oversees the Merchandise Show and the Fall Expo.

To succeed, Several – who previously held marketing and merchandising posts at Kraft Foods – will need to address the shows’ underlying problems and not just their symptoms.

Perhaps the most critical factor is the increasing consolidation of the manufacturing and retail sectors. Simply put, there are now fewer buyers and sellers doing business with each other. Many industry executives say such a scenario diminishes the need for a massive exhibition. Furthermore, major companies with extensive sales forces are writing fewer orders at the expos, making it difficult for them to justify their attendance. Add to the mix weak consumer demand in recent years (though this seems to be improving) and heavy discounting – both of which have forced exhibitors to cut their marketing budgets.

So what is Several going to do?

He only has been on the job for a couple of weeks and is not yet ready to talk specifics. But Several insists his shows “are on a roll,” speaks about “the wealth of opportunities” they provide for exhibitors and buyers, and describes his commitment “to building value and making sure the return on investment is strong for those who come.”

“We have plans we believe will have a positive impact,” Several says. “One, for instance, would allow exhibitors to drive sell-in of their products at retail and pull it through with programs linked and tied to the shows.”

Another possibility, advanced by PGA of America chief executive Jim Awtrey, is to bring affiliate industries, such as superintendents and country club operators, to Orlando to make the January event a broader, industry-wide event.

Regardless, Several has his work cut out for him.

“What Reed has recently done is certainly a sign that it is worried,” says Casey Alexander, a special situations analyst who closely follows the golf industry for Gilford Securities in New York. “After all, the Orlando show went from a packed hall to one in which you could fit a huge driving range. And the absence of major equipment makers like Titleist and Ping speaks volumes.”

Most disturbing for Reed is the impact these developments have had on the bottom line. Compounding the problem for Reed – the Connecticut-based company that runs roughly 500 trade events in nearly 50 industries – is that it egregiously overpaid for the golf properties, according to many observers.

The Fall Expo is probably break-even at best, and though the Orlando show is profitable, it is generating far less revenue than its owner initially had projected. The shortfall is particularly troubling because it has occurred despite significant increases in exhibition fees. Simple math reveals the problem: The 2004 Merchandise Show occupied slightly more than 500,000 net square feet of exhibition space, down nearly 200,000 square feet from a record total in 2002. At the current rate of $30 per square foot, the shrinkage resulted in a $6 million reduction in revenue.

To be fair, Reed deserves high marks for the many moves it has made to stanch the tide of troubles that have swamped the shows.

In recent years, it organized a well-received demo day in Orlando that attracted 4,000 PGA professionals and 45 equipment makers, and established an indoor equipment test center where attendees sampled wares from 30 club manufacturers. In addition, Reed worked with the PGA to add educational seminars to make the shows more compelling for PGA professionals. It also capped booth space to lower costs and created anchor tenant deals for the largest exhibitors.

But those steps failed to produce a satisfactory turnaround. And one industry veteran isn’t optimistic that a fix will be found any time soon: “The NASDAQ will hit 4,000 before the Merchandise Show goes back up to 700,000 square feet again.”

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