STURGIS | The hard work and hassle of running one of the nation's largest motorcycle rallies is paying off big time for the city of Sturgis, where officials say the 2012 event saw increased attendance and a doubling of profits for the city compared to last year.
Vendors at the rally also saw a spike in income, as did the state of South Dakota, which collected more in taxes this year as a result.
In all, the city of Sturgis spent about $960,000 to host the six-day rally in August, which attracts hundreds of thousands of motorcycle enthusiasts to the city and surrounding Black Hills. But this year — through improved planning, doing more preparation earlier and dramatically cutting overtime costs — the city generated nearly $1.4 million in revenues.
That led to a net profit for the city of $399,642 this year, more than doubling the $197,107 profit the city made last year, Sturgis City Manager Daniel Ainslie told the city council at a recent meeting.
Ainslie attributed the jump to improved management of staff hours, particularly in the public works department, which is responsible for much of the ground work that goes in to preparing for the rally.
“Our overtime dropped 300 hours,” Ainslie said. “We saved a lot of money by putting up banners and doing other jobs ahead of time.”
Rally officials estimate that attendance this year was up 7 percent for the 10-day period that included the official rally dates of Aug. 6 - 11. Attendance was estimated at about 450,000 this year.
Rally officials also say vendor revenues were up this year, as were the tax collections resulting from those sales. According to the official rally website, 1,012 vendors registered for this year's rally, compared to 976 in 2011. Gross sales by vendors were $13.1 million this year compared to $12.6 million in 2011, an increase of about $580,000, according to the website.
As of late August, rally officials said the 2012 event generated overall sales and tourism tax revenues of roughly $1.18 million compared to $1.13 million last year.
Ainslie said that this year, employee related time, which included temporary rally workers, overtime and added staff in the rally department, totaled $352,019.
The city pays a hefty amount to Motoring USA, the consultant that essentially coordinates the rally for the city. They line up sponsors, vendors and publish the official rally magazine and guide which comes out months before the rally.
This year, the city paid Motoring USA $163,056 in commissions and fees, and $145,485 to publish the official guide.
Additional rally-related supplies cost the city $70,439, merchandise for resale, $28,730, special events, such as the stunt riders, cost $26,322, and $122,583 under a category dubbed “other rally related expenses.”
A large expense for the city this year was the amount of garbage generated by rallygoers. Ainslie said the amount of garbage hauled this year by city crews was 580.71 tons, up 12 percent from 2011.
The city also must pay for the use of the Sturgis name. Ainslie said the city paid Sturgis Motorcycle Rally Inc. $26,944 this year in licensing fees so that the city could solicit rally sponsorships.
The number of vendor licenses issued by the city dropped by 52 from 727 in 2011 to 675 this year. Ainslie said staff has noticed that although there are fewer vendor licenses issued, the average square footage of each vendor has increased over the years.
In 2012 the city collected $259,869 in vendor fees plus an additional $3,006 in vendor related fines for a total of $262,875
Sponsorship revenues this year were up 22 percent to $289,127. Sponsors range from familiar national companies such as Harley-Davidson, Dodge, Jack Daniels and Geico to more regional sponsors such as the South Dakota Pork Producers, South Dakota Tourism, Tom’s T’s and Black Hills Power.
“Corporate America sees the tremendous market there is out here,” Ainslie said.
The city also makes charitable donations from the rally proceeds. This year, $13,472 went to the Sturgis Rally Charities Foundation, $13,000 to the Sturgis Volunteer Fire Department, $4,000 to the Sturgis Police Reserves and $250 to the National Fallen Firefighters association for a total in giving of $30,722. The city's overall profit of about $400,000 takes into account those charitable donations.
Not counted in the revenue calculations by the city was the South Dakota Tourism Tax collected within Sturgis of $161,404 and the South Dakota sales tax of $433,595 during this year's rally.