Arts & Entertainment, etc. and 500 Festival and Festivals and Events

500 Festival retools after growth spurt

April 28, 2008

May is show time for 500 Festival Inc., and the local not-for-profit should have more than enough gas in its tank to cross the 2008 finish line. In the past five years, it has doubled its budget, improved attendance--and quality--at its signature parade, and continued to grow the nation's largest half-marathon.

But once the checkered flag flies, leaders of the 51-year-old organization will be sitting down to consider whether they can maintain that pace without losing focus.

"Now that we've gotten our core events in good shape, we have to look at what we can manage to add and not topple over," said festival CEO Kirk Hendrix.

500 Festival keeps a relatively low profile, despite its goal of helping to build civic pride by marketing and promoting the Indianapolis 500 through related events--nearly 50 of them at last count, running the gamut from the $275-per-ticket Snakepit Ball to freebies like Kids' Day on the Circle.

Hired in 2003 after a nationwide search, Hendrix, 48, has been at the wheel as the organization picked up speed. He has almost three decades of experience--including stints at the Horizon League, Fiesta Bowl and Pac-10 Conference--and is known nationally as a leader in the field.

"He's a very well-established figure in our industry," said Steve Schmader, CEO of the Idaho-based International Festival and Event Association. "If there's a vision, he's the guy who could go get it done."

Indeed, since Hendrix worked with the 35-member board to implement a five-year plan for the organization, revenue has more than doubled from $3.2 million to a projected $6.6 million this year. Hendrix said corporate sponsorships in particular have kicked into high gear, but he would not provide additional details.

"We have been on a speed train," he said.

His salary also has increased along the way. Hendrix was paid $203,125 in the fiscal year ended June 30, 2006--the most recent year for which data is available--up 63 percent from three years earlier. That's a generous wage compared with some local charities, but in line with other national festivals.

Though it has not-for-profit status, 500 Festival falls into a different charitable category than many more well-known institutions like Habitat for Humanity or United Way. The festival's revenue is tax-exempt, but donations to it are not.

Marketing and promotional groups often have a harder time demonstrating their effectiveness than more traditional charities, said Kirsten A. Gronbjerg, Efroymson professor of philanthropic studies at Indiana University's Center on Philanthropy. Unlike human service organizations, marketing not-for-profits can't count how many clients they serve.

"It's difficult because we don't have the bottom lines, market share or profit ratios that you have in the for-profit world," she said.

While researchers can measure how well-known the race is or how many tourists it lures, that still leaves questions.

"It's hard to say how much credit the [festival] organization can take compared with the sporting event itself," she said.

Doing more

Still, signs appear good for the festival's core products.

The parade, for example, drew an estimated 300,000 spectators last year, up from 250,000 five years ago. And in 2007, the 25,000 bleacher tickets sold out for the first time in 20 years.

Hendrix said his first focus in the job was spending more to make sure the floats and balloons are top-notch and that the festival could attract A-list celebrities like last year's draws--Colts quarterback Peyton Manning and actor Patrick Dempsey.

Securing television coverage was another priority. WISH-TV Channel 8 pays a fee to televise the parade locally, and it is carried nationally on ESPN2. Some parades buy national television time to get on air, so getting an unpaid spot is a coup, he said. The 500 Festival Parade is part of the television contract negotiated by the Indy Racing League.

"The parade is a huge vehicle to promote Indianapolis," Hendrix said.

The festival also has continued to grow its Mini-Marathon, adding 5,000 registration spots two years ago to a maximum 35,000, but still selling out earlier every year. It's the nation's second-largest foot race, topped only by the 40,000 athletes who compete in the New York City Marathon.

And the group's main free offering--Kids' Day on the Circle the week before the 500-mile race--draws about 40,000 people.

Building those events has meant additional money to provide more obvious charitable programming. About $2.2 million of the festival's $6.3 million budget pays for the Mini and parade; the rest funds other events. Hendrix would not provide a detailed breakdown.

In 2004, the festival rolled out an education program that provides a free curriculum packet to any fourth-grade classroom in the state. The goal is to teach kids about the history of the Indianapolis 500 while they're learning about Indiana history.

The program started with 5,400 students and grew to 25,000 in 2007. Participating classrooms get a free field trip to the track, with the festival covering transportation and food costs--a perk about half the enrolled students used.

"Some of these students will naturally grow into [the race] being part of their life now," said 500 Festival Board Chairman Charlie Morgan, also president of Indianapolis Motor Speedway Productions. "There's huge potential for continuing this legacy, but we couldn't do that if we didn't have strength in our more well-known events."

The Hendrix-led organization also has reactivated a mostly dormant sister foundation, building its coffers up to $500,000 through golf tournaments and other events.

About $350,000 of 500 Festival Foundation's savings will be used to pay for and install a public art project commissioned in honor of the festival's 50th anniversary. Sculptor Donald Lipski will create a piece for downtown Indianapolis. The design will be released this fall.

Keeping pace

But the organization soon may be under a yellow flag because the core events don't have much more room to grow.

"We've maxed out some of the revenue areas," Hendrix said. "We won't have that pace of growth in the next five years."

The half-marathon could add another 5,000 registration spots, he said, but not much more. So the festival will be working to grow spin-off events like the shorter "training" events leading up to the Mini.

Another possible caution is the renegotiation of the IRL's television deal, which could affect the parade's television placement. The current contract runs through 2009, but the fate of the parade beyond that remains to be seen.

"We've at least positioned ourselves programmatically to stay on national TV," Hendrix said. "But in 2010, the landscape could look very different. We don't know what that will bring."

The parade is fairly well-known in the industry and is considered in the Top 10 nationally, said the festival trade group's Schmader.

Still, some parades have folded as more entertainment options compete for attention. Atlanta's 47-year-old July 4 parade has been canceled this year and the fate of Hollywood's Christmas Parade remains uncertain after the longtime sponsor dropped out last year.

"The real way to gauge the success of a parade or event is to look at how much ownership the community feels towards it," Schmader said.

Hendrix also hopes to do more off-season fund-raising events, including an alumni program for past board members.

Past and present, the festival's board reads like a who's-who of Indianapolis power players, like State Rep. Carolene Mays and Kite Realty Group executive Tom McGowan. Board members get official pace cars to drive from mid-April to the end of May to promote the race. Chevrolet donates the cars, including this year's Corvette convertibles, through a deal it has with the Indianapolis Motor Speedway.

But while the festival is adding some events, Hendrix is hesitant to try to extend the three weeks of race-related festivities or come up with higher-profile off-season celebrations.

That's a common challenge festivals face, Schmader said.

"If an event gets too long, it can kind of lose its luster," he said. "Some stretch related events out four, then six, then eight weeks. Pretty soon, it's just a logo attached to a whole bunch of stuff as opposed to an event that people can plan their vacation around."

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