I had an uncle who was a gambler. Once, he secretly went to Las Vegas and then had to call home with instructions to sell his car and send him money to get back. When he returned, he claimed that he'd "broke even." One good thing about my uncle, though, he only gambled with his own money.
That's not the case with the City of Hollister. They gambled, inappropriately, with taxpayers' money and lost - and now they are scrambling to reduce the damage.
The city lost more than $96,000 in public funds - and passed up the chance at making more - by going into the motorcycle rally T-shirt and merchandise business. They're now trying to liquidate the balance of the unsold stock. I wish them luck, but they should never have put themselves in that position.
It will take almost $10 million in Measure T sales to generate enough taxes to replace that loss. It's especially galling to have this happen in only the second year of the reorganized rally. The logic behind privatizing the event was to reduce the risk to the taxpayers, but that philosophy was ignored.
Considering the city's financial condition and the 1 percent emergency sales tax, the decision to roll the dice with public money shows a level of hubris that is hard to comprehend. Had they gotten lucky and made money the city council and administration would be crowing, but it would still have been reckless decision.
You do not bet the rent money on something you know nothing about.
Bad gamblers and bad managers never admit they have a problem. They pretend everything is dandy or claim they know how to win next time. The city is a classic case. They're already presenting nonsensical scenarios for the future.
One was to order and sell exactly the right amount of T-shirts. They never heard the old New York joke: "Of course you need a size 46-extra-long yellow suit, because that's all I have left in stock."
Accepting that the loss was only $96,300 requires a leap of faith. What about the additional loss of licensing fees for the official merchandise? It may have been worth another $50,000, but who knows for sure - the city has carefully refrained from divulging the actual number.
If our official brand had any value, they should have been able to sell an exclusive license upfront with little effort and zero risk. If no one was willing to pay licensing fees, it indicates no value.
I've been a strong supporter of the motorcycle rally, but this is a prescription for failure. The right way to make more money from the rally was to ensure a good experience so the customers will continue to come back, reduce the overhead and pass all the costs to the commercial entities. The energy used for T-shirt sales should have gone into those three objectives and into fixing the complaints from last year's customers.
Reducing overhead, especially the huge security costs, brings every dollar saved right to the bottom line. If security is going to cost a fortune, then that cost must be passed on to the beneficiaries through appropriately priced fees and temporary licenses.
Many attendees have said that the rally has lost its focus and reason for being - the lure, history, power, beauty and freedom mystique of the motorcycle. The bikers come to see and be seen. Instead, the bikes are being shuttled off into expensive parking areas where they sit in isolation. It's supposed to be Easy Rider, not "shop 'til you drop." That is not a motorcycle rally - it's a flea market.
This year's attendees also lamented the move from the traditional Fourth of July holiday. Like it or not, for many motorcyclists personal freedom is intimately connected with freedom of the road. The city should use its resources and talents to manage and sell the Hollister Motorcycle Rally, not the T-shirts.
When the rally is great, the T-shirt concession will be worth a fortune.
Excerpt from Marty's Feb. 12 column:
If a private vendor paid the fees and netted that $69,000, they would get a nice 12.8 percent return in less than six months with an opportunity to make $497,000, a return of more than 85 percent. That is the red flag. The vendors should be rushing to buy into this wonderful opportunity, but they are not. If it sounds too good to be true ... You know the rest.
Hollister is not in a position to take this much financial risk now, and the staff does not have the information, resources or time to do it right. The city should concentrate its limited resources on making the rally a great experience that generates repeat business; only then should we consider getting into the T-shirt business. We could get lucky and this might work out, but it's not a gamble worth taking when we are almost broke.
Marty Richman Got a question or a comment? Send us an email.
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