Newport vs. Cincinnati – Round II
The proposed Banks music venue reminds me of 2001 when the Newport IMAX opened as a direct competitor to the Omni/IMAX theater we had at Museum Center (CMC). (IMAX is a flat screen; Omnimax is curved, but they show the same films.) This new theater was competition and not a collaborative situation. One of these theaters would win, and one would lose.
Nonprofit and government cultures are naturally set up for win-win situations where many times compromise is a virtue. However, when put into an exclusive consumer market where the competition is for the consumer’s pocketbook, non-profits have a hard time changing their culture to compete to win. Consumers support the best experience, they don’t differentiate the provider’s legal tax structure; they buy the experience which interests them.
When the Newport IMAX opened, I didn’t go to the community grand opening, I declined to participate in cross promotions, and never stepped foot in the theater (until years later), and we locked up every water/wildlife film with exclusive territorial agreements for years in the future. The film distributors knew CMC had a track record of success and would buy their other films, so they gave us exclusives on the water/marine life based films, which were the best films for the Newport IMAX with an aquarium next door.
We also reached out and made friends with the aquarium leadership team and when we had water/marine life films like Dolphins, we did cross promotions with the aquarium encouraging their customers to come to CMC rather than the IMAX next door and we promoted the aquarium to those who came to our films.
Non-profits are the best part of our culture and make our world better. However, we need to be very careful when we compete with for-profit businesses, that we win and don’t weaken our core organization.
During this period, I met with Greg Kenny who was CEO of General Cable about joining the CMC board at that time, he asked me what my strategy was for the Newport IMAX. I said, “shutters on their windows.” He was very surprised at my response and laughs about this atypical nonprofit CEO response to this day! It was our plan as we had an existing investment we had to protect in a time when CMC’s own finances were precarious.
Our strategies were pure business; we responded differently than most non-profits but we saw the Newport IMAX for the threat is really was. It wasn’t personal between the museum and Newport IMAX owners; they were good people; it was just business. The Newport Imax opened in September 2001 but closed abruptly in June 2003 after racking up roughly $8 million in debt and posting more than $600,000 in operating losses, according to bankruptcy filings. Our business objective was accomplished; they had “shutters on their windows.”
This has some interesting analogies to competing popular music venues under consideration on the Cincinnati and Newport banks of the Ohio River. One by the Cincinnati Symphony Orchestra and the other for a for-profit behemoth of an entertainment company AEG Worldwide which operates world-class arenas, convention centers and stadiums spanning five continents, including over 20 of the top 100 venues and presents more than 22,000 events annually.
CSO is a great organization and very well run; everyone is sympathetic to their
mission in contrast to AEG’s bottom-line. We all want them to win! The same was
true with CMC and the IMAX but we knew the public was going to go where they
found the best product and knew we had a competitive advantage to control the
product. We, at the same time, needed to be ruthless in leveraging the
advantage of controlling the best IMAX films.
This case is very different than CMC’s, AEG Worldwide controls many of the best acts and they may have their venue in place first. They certainly will have the leverage to book all the best acts into their venue ahead of the CSO’s. AEG is in CMC’s shoes and they will be even more ruthless in competing for the public’s pocketbook.
I hope the very best in this situation for CSO in their wonderful new Music Hall venue. I however pray their Banks project doesn’t become the progeny of the Newport IMAX. Cincinnati won that one, putting shutters on the Newport IMAX’s windows but in this fight, AEG has the advantages and are much tougher competition. This will be a fight to the death, not a win-win and AEG Worldwide is coming to the fight with a cannon and Cincinnati is coming with hopes, dreams and the best intentions.