When the Hopscotch Music Festival made money for the first time, organizers went on a strategic spending spree.
In 2011, a mix of The Flaming Lips, sunshine and afterglow of press raves from the festival's 2010 debut produced a small profit for the new venture after an $80,000 loss in the first year. So, come 2012, Hopscotch spent more, a lot more, adding several venues to the mix, such as the massive Memorial Auditorium and a 19th-century sanctuary.
While the move allowed the festival to recruit more popular bands, it nearly crippled the operation. Festival founder, director and co-owner Greg Lowenhagen admits he underestimated the additional costs of acts big enough to fill Memorial Auditorium, as well as the number of festival passes needed to help fill that venue. In fact, in the three years since Hopscotch made money, it hasn't turned another profit—not yet, at least.
"Looking back, we still think that was the right move," says Lowenhagen of the early expansion. "We wanted to push the limit."
Despite the consistent lack of profits, that audacity remains a central feature of Hopscotch. This year, for instance, the festival wasn't able to use the 80-year-old Memorial Auditorium due to in-progress renovations. Instead of scaling back, Hopscotch booked its first-ever Thursday night concert in Raleigh City Plaza with hip-hop legends De La Soul. And in its first year, Hopscotch Design Fest expands the scope of the entire venture. Hopscotch seems to refuse the cautious approach.
"[Hopscotch] is not perceived as a top-tier national event like Coachella or Bonnaroo, but it certainly has more profile and credibility than the average local festival," says David T. Viecelli, president of prominent national booking agency The Billions Corporation. Its wide roster includes Hopscotch alums like Future Islands and Spiritualized, plus this year's main stage act St. Vincent. "It has done a credible job of getting the event off the ground with relatively limited means, showing responsible ambition and growth."
Indeed, there are signs that the ambition is finally paying off. In the second year since Lowenhagen bought the festival from the INDY's former parent corporation, Carolina Independent Publications, total ticket sales and ticket revenues are up compared to 2013, he says. Fewer people have bought $150 three-day passes, and the number of $205 VIP passes were limited because, without Memorial Auditorium, there are fewer available seats overall. But the festival has sold more single-day passes and individual tickets for City Plaza's three headlining shows. Friday's show with Spoon and St. Vincent at City Plaza has sold more $40 tickets than either of last year's Plaza shows.
A week before Hopscotch 2014 began, Lowenhagen seemed optimistic.
"[Sales] picked up later this year than in the past, but they've picked up as strong, if not stronger," he said. "The last week is really the key every year, and it'll be that way again in 2014."
Though Hopscotch lost its title sponsor this year, the Morrisville-based computer giant Lenovo, total sponsor dollars have increased by 10 percent.
"There's a chance we do get back to black here. I think we're going to be very, very close," Lowenhagen says. "I think it's the closest we'll be since 2011."
But the challenges remain immense. The company gave up its downtown Raleigh office space earlier this year to cut overhead; the organization is now based in Lowenhagen's home. And the company employs only two full-time staff—Lowenhagen and Jenny Hwa, a development director charged with recruiting new sponsors. The marketing budget relies heavily on trade-outs and cross-promotions. By Lowenhagen's estimate, the festival's entire talent budget is less than one Coachella headliner.
It's not necessarily getting easier with time. Other than the weather (September is hurricane season), Hopscotch has had little competition since it started. But as Raleigh has grown, so have events that compete for space and ticket buyers. In September alone, Hopscotch will go up against FarmAid, The Big Shindig and World of Bluegrass. This year's Lockn' Festival brings Tom Petty, Wilco, Willie Nelson and The String Cheese Incident to Arrington, Virginia, just three hours away, during the same weekend. For an operation with nearly $1 million in expenses and little record of profits, it's shaky ground.
"The future of the festival has always been in doubt, every year," Lowenhagen admits. "It's no different this year."
To make the future more certain, Lowenhagen has been courting investors since last year. That requires making a strong case for the festival's long-term prospects. As a for-profit organization, Hopscotch is not eligible for many city grants, but Lowenhagen has worked with the Greater Raleigh Convention and Visitors Bureau to position the festival for business development funds. The city awards those based on dollars spent by out-of-town visitors. So far, 65–70 percent of Hopscotch's ticket sales have come from Triangle residents, Lowenhagen says.
Still, the Convention and Visitors Bureau estimates the festival's 2013 economic impact at close to $1.5 million, up from $1.2 million in 2011. Loren Gold, the executive vice president of the Convention and Visitors Bureau, says that is "a very nice number for the size and the scale of the festival."
But events must be able to quantify their ability to draw tourists from beyond the immediate area: "The daytrippers and the overnight visitors are the ones who bring in the economic impact," Gold says. "Somebody who lives here, that's not new money."
Outside investors, city funds, sideline enterprises such as Hopscotch Design Festival: For Lowenhagen, these are all options for pushing the festival beyond its fifth anniversary.
"We have some strategic business planning to do, and that's after five years," he says. "It's a very typical time to be looking at it. People say five-, 10-, 15- year plan. Well, we got through five years, now what's next?"
This article appeared in print with the headline "More than a game"