Some Positive Trade Show News; Emerald Exhibitions to Acquire the SIA Show

Finally, some positive movement in the trade show space.  I’ve hung back on writing about this for a few days but SIA President Nick Sargent sent out an email to all SIA members announcing and describing the deal, which is subject to approval by SIA’s premium members.

The email from Nick was labeled “CONFIDENTIAL: DO NOT SHARE OR FORWARD,” so naturally everybody in the industry who’s not in a coma now knows about it and has a copy.

Transworld, SAM and Shop, Eat, Surf have already published articles detailing the terms of the proposed deal, so I’m not going to spend a lot of time on that.  The thing I’m curious about is how they got to a price of exactly $16,678,973.  Just to mess with our minds, they should have made it $16,678,973.42.

I have no idea what trade shows are worth or how they are valued.  But SIA retained Corporate Solutions as an intermediary to help do the deal.  Apparently, that organization does know.  Who even knew there was somebody out there who specialized in valuing, buying, and selling trade shows?  No idea what their fee was, but I imagine it was money well spent.

My guess is that the deal will easily be approved.  I hope so because, for the reasons I’ll discuss below, I think it’s the right thing to do.  SIA has made various significant changes over the years, and I’ve been watching them since 1991.  Nobody ever loves change, and my perception is that every significant one SIA has implemented has been met with wailing and gnashing of teeth by maybe 30 percent of the membership.

I suppose this one, since it’s a pretty big one, will be the same.  Yet I’d like to see the industry come together on this for the reasons I’m about to discuss.  If right now you’re a “no” vote, I’d like to change your mind.

One thing we do all (mostly) agree on is that the trade show space has become messy; too many shows costing too much money and competing for a declining market.  I think (you probably think the same) that there will continue to be a role for shows and other forms of industry gatherings, but none of us are quite sure how that will evolve.  I’m not even a little sure.

This deal doesn’t solve the larger problem of the role of trade shows, but for those of you who attended both shows, you are now going to save some time and money.  And if you only attended only one of them, but needed to see certain products or customers that weren’t at that show, you are going to save some time and money too.

I do love financial efficiency.

Obviously, just putting a couple of miscellaneous shows together wouldn’t work.  A certain overlap in products and customers is required.  We’ve got that in spades with this deal.

Back in January at SIA’s Intelligence Day, we heard how big a chunk of SIA member revenues came from non-snow sliders.  I recall SIA Director of Research Kelly Davis saying it was something like 70%.  That should have gotten your attention.

As an industry, we’re now in active outdoor- not just snow sliding.  Yes, that’s a whopper of a generalization, and of course there are companies focused largely on snow sliding.  But every statistic we’ve seen suggests that future growth opportunities are in the much larger active outdoor space.

Before the show sale was announced Kelly Davis, SIA’s Director of Research, in the SIA Snow Source Weekly that I received May 16, wrote an article called, “Alarming EPA Climate Study on Snow Sports Economy Released.”  The EPA study says there will be a pretty dramatic decline in the length of the snow sliding season in the next couple of decades.  Unless something unexpected happens, our industry’s long term trend will be to decline.  Read the article at the link above and click through to the full report if you want.

That sounds to me like an invitation to do some dramatically different, possibly uncomfortable things.  Like sell the SIA show and merge it with OR to facilitate reaching that much larger customer group.  Which apparently, we are going to need.  The merger smoothly and seamlessly positions us in that space.

Kelly works for SIA, so it wasn’t really in her wheel house to say, “Well, looks like we might have to look to the active outdoor industry for our growth.  But as I watch winter resorts focus more and more on year around revenue sources, that’s exactly what I see happening.  The National Ski Areas Association (NSAA) is going to have to change its name to The National Year Around Mountain Resort Association.

I can imagine a separate hard goods show being attempted, but it won’t be by SIA.  The proposed contract won’t allow it.  I’m told that SIA’s finances were already pretty solid before this deal.  With another $17 million in the bank, the organization will have a lot of flexibility.

Flexibility to do what?

Well, for one thing they won’t have to worry so much about their primary income source being a trade show that was, from what I can see, shrinking and in danger of becoming too much of a niche player.  The SIA email promises a new strategy to be presented to SIA’s board of director in July of this year, assuming the deal is approved and closed.  Apparently they expect the deal to close quickly after approval.  It’s not long until July, and if they can put a plan together that quickly, I’m guessing some thought has already gone into it.  It’s not like the issues the deal addresses are new after all.

The email describing the deal says, “Moving forward, SIA will continue to focus on its three strategic pillars: Lead the industry, Support member business and Promote participation. Through research, education, consumer outreach, retail support and community building, SIA intends to bring greater value to its members and will focus its efforts on driving industry growth.”

Well, sure.  But the description of why the deal makes sense along with Kelly Davis’s article sighted above makes it pretty clear that SIA is fully aware of market evolution trends.  With the sale of the show, and positioning the industry as part of active outdoor, SIA has some new-found flexibility to rethink its members’ goals and its role in helping achieve them.  Maybe NSAA isn’t the only one that needs to consider a name change.

I see this as a win-win.  SIA, I trust, got a good price for the show and has solved its dependence on an at best slow growth show in an isolated and potentially shrinking niche industry.  They’ve gained the flexibility to think and act in some new ways, perhaps challenging some of its members’ preconceptions and reluctance to evolve (kicking and screaming in some cases I’m sure) when they really don’t have a choice.

To be blunt, if the deal happens, it is an acknowledgment that SIA, its board of directors, and the voting premium members acknowledge the market conditions I’ve described above.

Emerald Exhibitions, as you probably know, has just gone public.  Which is good, because now they have the money to pay SIA for the show!  They’ve also followed through on the acquisition strategy their public offering prospectus described.  They’ve helped simplify the trade show cycle and made it easier for their customers to manage.  And they’ve got some new customers.

The deal, as proposed, has certain protections for SIA’s exhibiting members built in.  The key one is about booth cost and lasts for three years.  However, the SIA show was owned by and run for its members.  Emerald Exhibitions is a public company that will have to be responsive to Wall Street.  SIA’s budget goals for the show were tempered by its exhibiting ownership.  Ultimately, Emerald’s will not be.

That’s not enough to make me any less enthusiastic about the deal.  The trade show environment was going to change.  It is changing.  It has to change.  SIA has given itself, and the industry it serves, a chance to be a beneficiary of that change rather than a victim.  I don’t often see organizations with potentially existential issues get out in front of them.  I think maybe SIA has.