Opportunities for the Mississippi Fair Commission: A Blueprint for the Future
Executive Summary
Introduction
MISS. CODE ANN. § 69-5-1 (1972) created the Mississippi Fair Commission “in order to promote agricultural and industrial development in Mississippi and to encourage the farmers to grow better livestock and agricultural products.” MISS. CODE ANN. § 69-5-3 (1972) enumerates the powers and duties of the Mississippi Fair Commission, specifically the power to hold an agricultural and industrial exposition—i. e., State Fair—annually and other events from time to time for the promotion of Mississippi agriculture and industry.
Problem Statement
Dr. Lester Spell, Commissioner of Agriculture and Commerce, acting in his capacity as chair of the Mississippi Fair Commission, requested that the PEER Committee review the commission’s management of state-owned facilities and offer a strategy for strengthening those facilities’ revenue-producing capabilities.
In making his request to the PEER Committee, Commissioner Spell noted that the Fair Commission is a 100% special fund agency—i. e., it generates its own funding and receives no general funds from the Legislature for day-to-day operations. Over the years, the majority of the commission’s funding has been generated by revenues from the Mississippi State Fair and, to a lesser extent, the Dixie National Livestock Show and Rodeo. Commissioner Spell explained that in carrying out its primary statutory mission—promotion of agricultural and industrial development—the commission sponsors mission-related events, such as youth 4-H activities and animal shows, that produce limited or no revenues for the commission’s operations. Therefore, the commission has historically rented its facilities to promoters and sponsors for events that are not directly within the commission’s statutory mission, but produce much-needed revenues for commission operations. A goal of the commission has been to schedule events that produce revenues in excess of direct expenses in order to subsidize the commission’s less profitable events.
Commissioner Spell also stated that the environment in which the Fair Commission attempts to attract events has become more competitive within the last decade. Similar types of facilities that are newer and equipped with more advanced technology now exist in Jackson (e. g., the Jackson Convention Center that opened in 2009) and in other parts of the state (e. g., facilities on the Gulf Coast, in Tunica, in Tupelo, and in Philadelphia). The commission’s Coliseum and Trade Mart facilities, which are forty-seven and thirty-five years old, respectively, may now be less attractive to promoters and event sponsors. Given the age of these facilities and increased competition, Commissioner Spell sought the PEER Committee’s assistance in determining how the Fair Commission could maximize its resources to remain financially viable and continue to carry out its statutory mission.
Scope and Purpose
In considering Commissioner Spell’s concerns, PEER sought to answer the following questions:
Conclusions
What assets does the Mississippi Fair Commission control and what are their revenue-producing capabilities?
The Fair Commission’s assets include five major revenue-producing facilities that generate revenue primarily through rental fees and concession sales. The remaining facilities are support facilities necessary to produce events at the major facilities as well as support the State Fair and Dixie National Rodeo.
The Mississippi Fair Commission has twenty-seven permanent facilities located on the Mississippi State Fairgrounds Complex. Of the facilities located on the Mississippi State Fairgrounds Complex, five produce revenue to help support operations of the Mississippi Fair Commission: the Mississippi Coliseum, the Trade Mart, the Kirk Fordice Equine Center, the Agriculture Building, and the Industrial Building. The Fair Commission also utilizes the asphalt parking lot of the fairgrounds complex to generate revenue from events, primarily the midway for the annual State Fair and in recent years a crawfish boil and concert.
Although fees from promoters or organizations generate a portion of the Fair Commission’s operational revenues, the other twenty-two facilities located on the Mississippi State Fairgrounds Complex have limited revenue-producing capability.
How does the Mississippi Fair Commission currently utilize, market, and manage its assets to support its statutory mission?
While the Mississippi Fair Commission routinely hosts events that support its statutory mission, the majority of the revenue-producing events held on the fairgrounds complex do not directly support its statutory mission. The commission primarily relies on repeat business from promoters and its controls over contractual employees are insufficient to safeguard its revenues.
The four major events hosted by the Fair Commission (State Fair, Dixie National Rodeo, National Barrel Horse Association Youth World, and Appaloosa Horse Club National and Youth World Championship Show) advance its statutory mission. In FY 2009, these four events generated approximately sixty-six percent of the commission’s total annual revenues. The majority of events held on the fairgrounds complex during FY 2009 were revenue-producing events that did not directly support the Fair Commission’s statutory mission, but provided revenues for the commission’s operations.
The Mississippi Fair Commission’s current marketing strategy primarily relies on repeat business from promoters and sponsors. The commission’s basic approach to marketing is that the “fairgrounds sells itself,” meaning that the commission relies heavily on promoters and sponsors to book events instead of the commission aggressively targeting events and promoters that will be financially beneficial or mission-related.
Regarding the safeguarding of its revenues, PEER found that although the commission’s internal controls are designed to ensure proper segregation of duties and define roles and responsibilities of the commission’s staff, PEER has concerns regarding controls for the oversight of contractual employees who collect revenue from commission events.
Are the Mississippi Fair Commission’s assets being underutilized?
For fiscal years 2007 through 2009, the Fair Commission had event-days on which the commission’s facilities were not in use—i. e., residual capacity—and additional events could have been scheduled. When filling its residual capacity, the Fair Commission should endeavor to schedule events with the highest profitability potential.
Because the Fair Commission’s major revenue-producing facilities were booked for approximately half of the available event-days during fiscal years 2007 through 2009, the commission had the capacity to schedule additional events and produce revenues.
While PEER knows of no specific criteria regarding facility utilization (because venues have different markets and product mixes), experts in facility management state that 90% or higher utilization of facilities in municipalities, particularly rural areas, would be considered a high rate of use. Other facility management experts suggest that a facility utilization rate of approximately 200 annual event-days would be reasonable goal for facility managers to achieve.
What actions could the Mississippi Fair Commission take to increase utilization and maximization of its assets?
To increase utilization and maximization of its assets, the Fair Commission could develop a comprehensive strategic plan, develop a marketing plan and designate a marketing director, improve the quality of its financial information, and consider additional revenue-producing opportunities.
The following gives more information on these proposed actions.