When George Strait demanded $1.1 million to play a single night at the Houston Livestock Show and Rodeo, leaders of the nonprofit organization paid the price.
They were worried about the transition from the Astrodome to Reliant Stadium and thought construction and a parking shortage might hold down crowds.
Strait may be the most popular act at the rodeo, but he isn't back this year. Nor is Bon Jovi, which commanded $950,000 when the band performed in 2003 -- more than double the average paid to other rodeo acts.
Those are strategic decisions from a Houston institution that, while it may be one of the most famous charities in town, is a very, very big business.
Today's rodeo hauls in $66 million in 20 days, not including the money collected by most food and retail vendors. Running Tuesday through March 20, it has 85 year-round employees, six-figure salaries for its top executives and has tapped a former management consultant with a Harvard MBA to take over as chief operating officer.
It is not your grandpa's fat stock show.
Instead, the rodeo has evolved into the second-largest fair in North America, with attendance of 1.9 million last year.
Its market research is so careful it can tell you that 70 percent of people who attended last year's rodeo the night Kenny Chesney performed went because of Chesney. But only 27 percent went to Wynonna Judd's concert because they were fans. Instead, 47 percent said they saw Judd because someone gave them free tickets.
Chesney is back. Judd is not.
"It's the Disney of livestock shows," said Errol McKoy, president of the State Fair of Texas in Dallas, the only fair that's larger.
The seven men who gathered in downtown Houston in 1931 could hardly have imagined how the event would change. They were only thinking of a way to promote the local cattle industry. They added a rodeo, "western" theme and parade to the livestock show in 1938 as a way to draw more people.
As the extravaganza has flourished, several of the original livestock events have quietly diminished in importance. Professionals no longer show poultry or swine, for instance, though students continue to exhibit them.
It hardly seems to matter. The whole package still is envied by other fairs and rodeos.
The millions of dollars given in scholarships each year, for instance, are seen as a brilliant marketing tool, McKoy said. Patrons perceive the show as supporting a good cause, which keeps them coming even if bull riding or country music aren't in vogue that year.
As for the livestock, shows were the best way to market animals for decades, said Larry Boleman, associate head of the animal science department at Texas A&M University. He likened them to store display windows. The best-looking animals got bred and made money for their owners.
Today, genetics and databases have taken a bite out of the average state fair. Ultrasound detects fat, muscle and marbling better than a judge.
"You can order a calf by specification on the Internet," he said.
That, combined with the expense of hauling and showing animals in a big city, fear of breeding stock catching a disease and industry consolidation have had an impact, Boleman said.
While swine, poultry and Angora goats are gone, certain cattle breeds remain robust. Major regional shows such as Houston have become the international showcases for breeds best supported by the local climate, Boleman said.
Denver has hairy breeds like Herefords, while Houston is renowned for breeds related to Brahmans, which tolerate heat, humidity and parasites. Cattle raisers come from all over Central and South America to see them, Boleman said.
"Like any kind of merchandise you order on the Internet, you still want to see it," he said.
Despite its continuing agricultural focus, surveys show that fewer than 1 percent of those attending the rodeo live in rural agricultural households. They were actually outnumbered by the 15,000 volunteers (there's a waiting list to join) who make the show happen.
Skip Wagner, the show's new chief operating officer, said the show now relies on what he defines as "charity" as its driving force: scholarships, youth exhibitor activities, support of county facilities and low ticket prices.
The average ticket price for the rodeo/concert this year is $24.90. The average for the top 100 touring concerts last year was $52, Wagner said.
The youth exhibitor program is "no different than Little League baseball," said Boleman, an assistant superintendent for youth shows. "We're keeping them busy. For some it's athletics, for some it's livestock."
Students from around the region raise the animals, gaining exposure to agricultural careers. This year's youth contest, with 1,850 steers, is the largest in the nation.
Wagner also sees the rodeo's relationship with Harris County as public-spirited. It built the original Astrohall and Astroarena itself and sells twice as many dates per year as the other major Reliant Stadium tenant, the Texans.
The rodeo pays a nominal rent of $1.5 million a year, and its $500,000 utility bill is paid by the county. But the county keeps all rodeo parking revenues, about $1.6 million last year, and in-stadium concession revenues that totaled $3.1 million.
The scholarships and prize money given to youth participants are the "bigger purpose" that separates the rodeo from most state fairs, said Lesa Ukman, president of IEG, a sponsorship marketing consultant in Chicago.
The rodeo relentlessly reminds patrons of its good works. It spent about $11.3 million, or 17 percent of its revenues last year, on youth and education programs, according to its audited financial statement, including 1,800 college scholarships.
Its goal is to spend 80 percent of the previous year's net profit on its charitable works and save the rest for a reserve fund in years when revenue dips, Wagner said.
That's a great draw for patrons and especially for corporate sponsors, Ukman said, because companies want to "capture the halo."
Coca-Cola and the Miller Brewing Co. consider their in-store rodeo promotions among their best marketing strategies, she said.
"Coke realizes people care more about the rodeo than Coke,"she said.
Ukman counts the rodeo as a client, and said it is progressive because the business people who comprise its board realize they control a valued asset. Among its branded offshoots are trail rides, a barbecue cook-off, horse show, carnival midway, Go Tejano Day, Black Heritage Day, a 10K run and the Rodeo Uncorked! wine event -- such a smash last year that it netted $600,000.
While the rodeo could spend a lot of time congratulating itself, a glance at the most successful fairs shows two main ingredients for success, McKoy said -- location in a major urban area and superior venues like Reliant Park.
It doesn't hurt to be run by influential businesspeople in the community instead of a government, he said, and to be so glamorous that committee membership conveys a social status.
"Your show is over the top," said Jerry Hammer, executive vice president of the Minnesota State Fair, who visited last year and saw the grand champion steer auctioned for a $250,000 charitable donation.
"It's worth two or three Super Bowls in terms of economic impact," McKoy said.
McKoy was an executive with Six Flags theme parks before joining the State Fair of Texas.
He said the master strategy of all such attractions is to keep people on the grounds as long as possible, spending money. The industry average for a fair is an extra $1.50 per person for every 30 minutes you stay, he said.
A major fair really has no competition, McKoy said. Other venues tend to go dark for its duration. The enemy is weather and the goal is discovering new hooks each year to keep people coming back on a short "recycle time."
The Houston rodeo's executive salaries are in range with other large private shows, from $200,000 to $400,000 per year, according to a survey of tax forms.
The forms also must disclose self-dealing, such as purchase of goods and services from committee members.
While the rodeo has several million dollars a year in such deals, Wagner said all contracts are bid periodically and vendors tend to join committees after they start selling to the rodeo, not the reverse.
"People are motivated to help the show, not take something from it," he said.
RODEO FUN FACTS:
--Number of animals to be shown this year: 26,170
--Money spent in Houston for 2003 rodeo: $179 million.
--Percent spent by out-of-towners: 47
--Percentage of patrons attending rodeo for first time: 16
--Percentage of attendees from the Houston metro area: 82
--Average number of hours spent per visit: 6
--Percentage of 2004 revenue distributed to charitable programs: 17
--Registered foreign visitors: 1,766
--Percentage of rodeo patrons who got a free ticket from a client, friend, etc.: 42
They were worried about the transition from the Astrodome to Reliant Stadium and thought construction and a parking shortage might hold down crowds.
Strait may be the most popular act at the rodeo, but he isn't back this year. Nor is Bon Jovi, which commanded $950,000 when the band performed in 2003 -- more than double the average paid to other rodeo acts.
Those are strategic decisions from a Houston institution that, while it may be one of the most famous charities in town, is a very, very big business.
Today's rodeo hauls in $66 million in 20 days, not including the money collected by most food and retail vendors. Running Tuesday through March 20, it has 85 year-round employees, six-figure salaries for its top executives and has tapped a former management consultant with a Harvard MBA to take over as chief operating officer.
It is not your grandpa's fat stock show.
Instead, the rodeo has evolved into the second-largest fair in North America, with attendance of 1.9 million last year.
Its market research is so careful it can tell you that 70 percent of people who attended last year's rodeo the night Kenny Chesney performed went because of Chesney. But only 27 percent went to Wynonna Judd's concert because they were fans. Instead, 47 percent said they saw Judd because someone gave them free tickets.
Chesney is back. Judd is not.
"It's the Disney of livestock shows," said Errol McKoy, president of the State Fair of Texas in Dallas, the only fair that's larger.
The seven men who gathered in downtown Houston in 1931 could hardly have imagined how the event would change. They were only thinking of a way to promote the local cattle industry. They added a rodeo, "western" theme and parade to the livestock show in 1938 as a way to draw more people.
As the extravaganza has flourished, several of the original livestock events have quietly diminished in importance. Professionals no longer show poultry or swine, for instance, though students continue to exhibit them.
It hardly seems to matter. The whole package still is envied by other fairs and rodeos.
The millions of dollars given in scholarships each year, for instance, are seen as a brilliant marketing tool, McKoy said. Patrons perceive the show as supporting a good cause, which keeps them coming even if bull riding or country music aren't in vogue that year.
As for the livestock, shows were the best way to market animals for decades, said Larry Boleman, associate head of the animal science department at Texas A&M University. He likened them to store display windows. The best-looking animals got bred and made money for their owners.
Today, genetics and databases have taken a bite out of the average state fair. Ultrasound detects fat, muscle and marbling better than a judge.
"You can order a calf by specification on the Internet," he said.
That, combined with the expense of hauling and showing animals in a big city, fear of breeding stock catching a disease and industry consolidation have had an impact, Boleman said.
While swine, poultry and Angora goats are gone, certain cattle breeds remain robust. Major regional shows such as Houston have become the international showcases for breeds best supported by the local climate, Boleman said.
Denver has hairy breeds like Herefords, while Houston is renowned for breeds related to Brahmans, which tolerate heat, humidity and parasites. Cattle raisers come from all over Central and South America to see them, Boleman said.
"Like any kind of merchandise you order on the Internet, you still want to see it," he said.
Despite its continuing agricultural focus, surveys show that fewer than 1 percent of those attending the rodeo live in rural agricultural households. They were actually outnumbered by the 15,000 volunteers (there's a waiting list to join) who make the show happen.
Skip Wagner, the show's new chief operating officer, said the show now relies on what he defines as "charity" as its driving force: scholarships, youth exhibitor activities, support of county facilities and low ticket prices.
The average ticket price for the rodeo/concert this year is $24.90. The average for the top 100 touring concerts last year was $52, Wagner said.
The youth exhibitor program is "no different than Little League baseball," said Boleman, an assistant superintendent for youth shows. "We're keeping them busy. For some it's athletics, for some it's livestock."
Students from around the region raise the animals, gaining exposure to agricultural careers. This year's youth contest, with 1,850 steers, is the largest in the nation.
Wagner also sees the rodeo's relationship with Harris County as public-spirited. It built the original Astrohall and Astroarena itself and sells twice as many dates per year as the other major Reliant Stadium tenant, the Texans.
The rodeo pays a nominal rent of $1.5 million a year, and its $500,000 utility bill is paid by the county. But the county keeps all rodeo parking revenues, about $1.6 million last year, and in-stadium concession revenues that totaled $3.1 million.
The scholarships and prize money given to youth participants are the "bigger purpose" that separates the rodeo from most state fairs, said Lesa Ukman, president of IEG, a sponsorship marketing consultant in Chicago.
The rodeo relentlessly reminds patrons of its good works. It spent about $11.3 million, or 17 percent of its revenues last year, on youth and education programs, according to its audited financial statement, including 1,800 college scholarships.
Its goal is to spend 80 percent of the previous year's net profit on its charitable works and save the rest for a reserve fund in years when revenue dips, Wagner said.
That's a great draw for patrons and especially for corporate sponsors, Ukman said, because companies want to "capture the halo."
Coca-Cola and the Miller Brewing Co. consider their in-store rodeo promotions among their best marketing strategies, she said.
"Coke realizes people care more about the rodeo than Coke,"she said.
Ukman counts the rodeo as a client, and said it is progressive because the business people who comprise its board realize they control a valued asset. Among its branded offshoots are trail rides, a barbecue cook-off, horse show, carnival midway, Go Tejano Day, Black Heritage Day, a 10K run and the Rodeo Uncorked! wine event -- such a smash last year that it netted $600,000.
While the rodeo could spend a lot of time congratulating itself, a glance at the most successful fairs shows two main ingredients for success, McKoy said -- location in a major urban area and superior venues like Reliant Park.
It doesn't hurt to be run by influential businesspeople in the community instead of a government, he said, and to be so glamorous that committee membership conveys a social status.
"Your show is over the top," said Jerry Hammer, executive vice president of the Minnesota State Fair, who visited last year and saw the grand champion steer auctioned for a $250,000 charitable donation.
"It's worth two or three Super Bowls in terms of economic impact," McKoy said.
McKoy was an executive with Six Flags theme parks before joining the State Fair of Texas.
He said the master strategy of all such attractions is to keep people on the grounds as long as possible, spending money. The industry average for a fair is an extra $1.50 per person for every 30 minutes you stay, he said.
A major fair really has no competition, McKoy said. Other venues tend to go dark for its duration. The enemy is weather and the goal is discovering new hooks each year to keep people coming back on a short "recycle time."
The Houston rodeo's executive salaries are in range with other large private shows, from $200,000 to $400,000 per year, according to a survey of tax forms.
The forms also must disclose self-dealing, such as purchase of goods and services from committee members.
While the rodeo has several million dollars a year in such deals, Wagner said all contracts are bid periodically and vendors tend to join committees after they start selling to the rodeo, not the reverse.
"People are motivated to help the show, not take something from it," he said.
RODEO FUN FACTS:
--Number of animals to be shown this year: 26,170
--Money spent in Houston for 2003 rodeo: $179 million.
--Percent spent by out-of-towners: 47
--Percentage of patrons attending rodeo for first time: 16
--Percentage of attendees from the Houston metro area: 82
--Average number of hours spent per visit: 6
--Percentage of 2004 revenue distributed to charitable programs: 17
--Registered foreign visitors: 1,766
--Percentage of rodeo patrons who got a free ticket from a client, friend, etc.: 42
