The 300,000-square meter acquisition has proved to be the start of an adventure full of ups and downs, with a steep learning curve. Break-even is anticipated for three years from now.
This post was excerpted from the WAN-IFRA Report “Alternative Revenue Streams for Publishers.”
In 2009-2010, at a financial low point for media groups around the world, Grupo Nación started reviewing its options. The group already had experience in events organization, and it seemed a good idea to investigate possible expansion in that area.
The decision to invest in a 300,000-square meter venue is certainly a radical conclusion to that exploration. But Pedro Abreu, General Manager of Grupo Nación Medios, believes that for this type of investment, the risks are under control. At the same time, he realizes that running the operation is the real adventure.
When listening to Abreu’s explanation of the group’s strategy regarding a “physical” investment to grow its presence in events, one can’t help thinking about what U.K. newspaper group The Guardian wanted to achieve with the Guardian Space, the 30,000-square meter property it acquired in central London.
Both projects involve huge real estate investments and offer good synergies with the groups’ respective media brands.
There is one big difference, though. Parque Viva is an investment that the shareholders are making to protect their long-term profits. The media group and the new events division support one another, but in the end, from a shareholder perspective, each will have to be financially sustainable.
Being owned by a trust, The Guardian’s position differs, of course, and the new London venue was considered a possible way for the newspaper to directly support reader and advertising revenues. (In March 2016 the paper canceled the plan as part of an attempt to rein in skyrocketing operating losses.) In Costa Rica, Parque Viva has been operational since April 2015.
WAN-IFRA: Parque Viva is an ambitious project. Was a US$ 44-million investment necessary to achieve your goals in events organization?
Pedro Abreu: When we started investigating our developments in events, we realized there was no good venue for the kind of activities we wanted to organize. So in parallel, we looked for a location close to San José where we could build the ideal venue. We investigated how much it would cost, whether we should work with a business partner, with investors, and so on.
As the project progressed, the shareholders became really enthusiastic about this new venture and we decided to do it ourselves. We bought a 28-hectare property, 10 minutes from the capital. It used to be a place for auto racing; we kept the racing track and built on the property an exhibition and convention centre and a large amphitheatre for concerts.
Construction started in May 2014 and the official opening was in April 2015.
This is not your traditional business model, so how do you see the revenue sources in this case?
Short-term, the largest source of income is anticipated from renting the facility. This is where we have to be good.
Other revenue, derived from events, comes from food and beverages sold on site. That’s important too, if you manage it well. We have created a separate business unit, Bliss Entertainment, which focuses on running and developing this new venue. If we as a media company organize an event there, we will rent the facility from them.
The profit margin would be larger if you were also organizing the events…
We have to be careful not to be in competition with third-party organizers and business partners. For example, we won’t be organizing concerts. We are using the venue for ourselves. This year, the racetrack will reopen and host six races. In addition to that, Bliss will help us organize 12 other events.
We had two big events, one called “Expocasa y Decoración” and another one about food and beverages, linked to Sabores, our food magazine, and we’re considering holding them at Parque Viva. We also have events that we organize in hotel venues for our newspapers, and we are considering taking them to our new place. Some are quite small, conferences mostly, but we have a project where the conference could be combined with an exhibition.
Besides GN Medios renting the venue, what sort of other synergies have you created with your media properties?
All the events at Parque Viva get some type of promotional marketing in our media. It’s part of the agreement with the event organizers; they know they will get a certain amount of advertising in our media properties. It’s a differentiation and it gives us an advantage over our competitors. We also negotiate exclusive interviews and coverage, which is the case for auto races and for the big concerts, like when Katy Perry was here last year.
We are also building a brand around Viva. It worked really well with Sabores, our food magazine. We have Sabores cooking schools, a cafeteria, an e-commerce site, and an annual event. Viva is the name of the entertainment supplement in our printed newspaper. We recently launched a radio station called Viva. It’s a niche broadcaster, targeting a female audience, 30 to 40 years old, so it cannot be the only channel to promote Parque Viva.
The Guardian’s venue was orginally intended to help the paper with its paid-for membership scheme. Last year, you started charging for the online content of your daily, La Nación, and your weekly, El Financiero. Are you using the venue to market subscriptions?
Our readers also become members of a special club when they subscribe or register with us, and they get early-bird ticket offers and other advantages.
The membership card will be linked to a bank and people will be able to use it for payment. The card will earn them points that can be used toward discounted and free tickets for Parque Viva. It’s just a start. The launch of the digital paid-content offers and the opening of the venue are so new.
What have you learned, less than a year after the opening of Parque Viva?
It’s a very different business than what we’ve done before. Honestly, we had our ups and downs, and we have had various degrees of success for the events we have organized. Still, we’re happy with how it’s going so far and we are full of hope for next year. Almost every weekend is already booked now. We still have a lot to learn about the administration of a venue of this size. The hospitality business isn’t culturally ingrained in our company. Dealing with the local authorities in order to get all the permits needed for the events is a true nightmare.
Since there aren’t many venues like ours in Costa Rica, it’s difficult to find experienced people to run this business. We have learned we should focus our internal resources on the commercial aspect and event organization. For the rest, we try to outsource everything we can.
Our media company is still profitable, pays the loans and subsidizes the venue. In three years, we are hoping Parque Viva will pay for itself and of course generate money for the shareholders.