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For many winter-weary Canadians, tulips are among the earliest harbingers of spring. Spearing greenly out of winter beds, the majestic flowers hold the promise of longer and warmer days to come. For the City of Ottawa, the annual floral explosion has also blossomed into an economic bouquet: The Canadian Tulip Festival.
Ottawa’s perennial spring celebration has roots dating back to 1945, when the late Queen Juliana of the Netherlands gave our nation’s capital 100,000 tulip bulbs as thanks for Canada’s support of the Dutch during World War II. The gesture marked the beginning of a stunning flower show that eventually grew into an important outdoor festival attracting some 600,000 visitors during its two-week run each May, generating as much as $60 million in economic activity.
Two years ago, however, the venerable event almost died. A hodgepodge of disparate attractions combined with a risky business model and extreme weather, left the non-profit with successive years of financial flops. Burdened by debt, in October 2006 the festival filed for bankruptcy protection. Now, 18 months later, the Canadian Tulip Festival is blooming again, but its story serves as an important reminder of how easy—and dangerous—it is for enterprises to stray from their roots in the name of growth.
The Ottawa Board of Trade formally launched the Canadian Tulip Festival in 1953, positioning the tulip as a symbol of international friendship and peace. Over the next 10 years, flower enthusiasts from around the world flocked to Ottawa to see a staggering display of more than two million flowers, plus other city attractions.
As the flower display grew (Queen Juliana sent Ottawa 20,000 bulbs every year), so, too, did the scope of related attractions. By 2004, the festival’s annual budget was $2 million—derived from local and federal government grants, corporate sponsorships, ticket sales and merchandising—in support of a parade, regatta, craft show, fireworks displays and concerts.
The musical events showcased big- name talent. Liberace opened the event in 1972. Tiny Tim tiptoed through the Tulip Festival in 1984. Great Big Sea took the stage in 2002, and The Guess Who in 2003. Marquee acts cost a lot of money but can also earn a lot of money, says Doug Little, the festival’s marketing and communications director for the past 10 years. Great Big Sea, for example, commanded $70,000 but attracted a sold-out crowd of 9,000, the biggest audience the festival had ever enjoyed.
Despite such success, says Little, the concerts carried an unacceptable degree of risk. The festival paid $186,000 for The Guess Who, but advance ticket sales were slow and bitter weather kept last-minute customers away. The show ended up losing $100,000. To their credit, says Little, the organizers tried to address the problem. The following year, they bypassed the big names for a more modestly priced act. The move backfired; the less celebrated band drew a smaller audience, and bad weather once again torpedoed the evening.
“In 2004, the weather was bad. In 2005, it was really bad. And in 2006, it was even worse,” says Little. Despite a bailout of $75,000 from the city, in 2006 the festival’s coffers held just $65,000 against debts of $750,000.
In hindsight, Little says, the festival had lost its focus. “The model had become too broad. We mounted a craft fair, held huge music concerts,” he says. “What did that have to do with tulips or the Dutch royal family? Those of us who were in the thick of things simply couldn’t see a way to stop the slide.” On October 26, 2006, the festival filed for bankruptcy protection.
When the trustee put out a call for a green thumb to bring the perennial event back to life, David Luxton answered. Luxton is no horticultural genius, by his own admission, but he seems to have a talent for cultivating successful businesses. Currently president & CEO of Allen-Vanguard, an Ottawa-based manufacturer of bomb-detection systems, Luxton’s previous management experience includes building Simunition Technologies Inc., a defence- and security-sector company, and The Business Media Network Inc., which produces a chain of city business magazines and trade shows, including the Ottawa Business Journal (OBJ). His relationship with the festival dates back to 1995, when OBJ was a festival sponsor.
“Running the festival wasn’t on my list of things to do, but clearly the event was in distress and needed help,” says Luxton. To satisfy creditors, Luxton initially injected $35,000, and then followed that with $215,000, buying the festival time to regroup and some much needed goodwill from disaffected former supporters.
While the festival formula was failing for a number of reasons, says Luxton, one of the most notable factors was the Ottawa climate. “Rain may be good for tulips, but not for festivals,” observes Luxton. “They were bringing in big names for outdoor performances in May, which, in this city, statistically, gets at least 17 days of rain. The odds were against them, and they weren’t getting any breaks.”
Along with government and business sponsors, the festival relied on ticket sales—$10 to $15 for the craft fair and a variable amount for the concerts—for a substantial part of its budget. “They had these big financial commitments to these [musical] groups,” says Luxton, “and if the weather was bad and the crowd didn’t show up, they would lose their shirt.”
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