MAGIC Acquires Fashion Competitors ...

By Heidi Genoist -- Tradeshow Week, 9/12/2005

Las Vegas—Advanstar Communications stole the limelight from its subsidiary MAGIC Intl. on the opening day of MAGIC Marketplace Aug. 29 when the business-to-business media company announced it had acquired two of its fastest-growing tradeshow competitors in contemporary fashion.

In separate deals that closed in mid-August, Advanstar acquired Project Global Trade Show group from Sam Ben-Avraham and POOL from Rhonda Walker. The parties did not disclose the terms of the deals, except to say that the combined purchase price amounted to five times the earnings of the purchased companies. An investment firm did not broker either of the deals.

Other tradeshow deals this year have fetched multiples of 10 to 12 times operating cash flow. Advanstar's $185 million sale of five of its divisions to Questex Media Group amounted to 9.3 times operating cash flow.

"They've made it very lucrative for me to stay on," said Walker, who, like Ben-Avraham, has a 3-year contract to continue overseeing her show.

The POOL and Project acquisitions captured the attention of participants not only in MAGIC, but the seven other fashion-industry tradeshows taking place around Las Vegas.

"We were all wondering when they were going to do that," said POOL exhibitor Jelessy's Loire Squillini.

In recent years, Advanstar has had to contend with up to a dozen niche events taking place alongside it in Las Vegas. Although many of the shows draw their own retailer audiences, some pull buyers from the Las Vegas Convention Center, where the bulk of MAGIC is staged.

Of these competitors, POOL and Project have generated the most buzz lately. The semiannual POOL, in its ninth staging overall and second year at Mandalay Bay Convention Center, is described by fashion-industry observers as catering to the advanced contemporary or boutique lifestyle market and having a West Coast feel. It focuses on budding designers in denim- and T-shirt-based fashions, but also features home furnishings, music and other lifestyle products.

The 2-year-old Project, on the other hand, is described as premium contemporary and hosts more established brands in its four total shows in New York and Las Vegas. While it also features jeans and other casual wear, it touts well-known brands like True Religion and le coq sportif.

Several designers, like J. Lindeberg, have moved from POOL to Project as they've gained popularity.

"There's a stronger vibe at Project than at POOL," said Danny Lieberman of le coq sportif.

To replicate this vibe, MAGIC in the last couple years has added components like the High 5 Campground in its streetwear section and Platform in its contemporary section. But, noted Squilliny and others, these add-ons failed to capture the essence of the original events.

MAGIC Vice President and General Manager Laura McConnell said the acquisitions "allow us to stop competing."

POOL and Project distinguished themselves from MAGIC as hipper, rawer gatherings through bare concrete floors instead of aisle carpet, garment racks and popup displays instead of hardwall booths, and full bars with DJs instead of buffets or cafeterias.

"I think the best thing about POOL is that Rhonda (Walker) took a really innovative concept, and made it work on a large scale," said designer Kendra Lynn of Lynn/Linh.

How large a scale is difficult to determine. Project's Web site listed more than 250 exhibiting companies that were to fill the Venetian Hotel Resort Casino's Exhibit Hall D, but Ben-Avraham could not be reached for a report on the show's actual performance.

Walker said she doesn't track exact net square feet or number of exhibiting companies, but estimated the showfloor included 500 exhibitors and spanned 150,000 net sq. ft. POOL attracted more than 10,000 attendees in its first two days, she added.

So, why sell?

"It's not a loss, but bringing everything together and making it easier for the buyers," said Walker. "We will all benefit from sharing badges and registration information."

Buyers like Merium Kumane from New York will appreciate that. "This needs to be more efficient," she said, after leaving the registration area to enter Project. "We've waited an hour each to register for four different shows. It's a waste of time — time I could be sourcing."

Others — specifically, POOL and Project exhibitors — are concerned that the acquisition will bring unwanted changes. "I hope this doesn't change anything," said Tichanda Daniels, a representative of Project exhibitor Jordache Vintage, whose parent, Jordache Enterprises exhibits in MAGIC. "Sam (Ben-Avraham) wants to keep the look and feel, and I hope this additional funding will help him add to the show without turning it into a big-booth corporate show like MAGIC."

McConnell said POOL and Platform will get some behind-the-scenes advantages by being part of MAGIC, but Advanstar has no plans to change the shows.

Apart from a possible move from Mandalay Bay to the LVCC, Walker said the show won't change. Because the show's layout is an important part of the show, she thinks POOL might take place in a tent outside the convention center or some other connected venue.

But, she added, POOL was "exploding. I needed some infrastructure to keep doing what I do, which is create things."

Project will stay at the Venetian at least through its 2-year commitment.

For its part, MAGIC will keep Platform and High 5, McConnell said. "We feel there's a need for both ... There's going to be some synergies between the shows."

As for other acquisitions, McConnell said "We're always looking to partner with different people."

Larry Hymes, co-founder of The Westcoast Exclusive, said the show hasn't been approached by Advanstar, but joked, "If they'll be reading this, say we'll entertain offers."

Held at Mandalay Bay, the 100,000 net sq. ft. show for high-end menswear will be one of MAGIC's biggest competitors now that POOL and Project are out of the way.

Collocated last year with both of the MAGIC-acquired shows, Westcoast appears to be the only fashion tradeshow left at Mandalay Bay. In an attempt to recreate the youthful energy lost when Project moved to the Venetian, Westcoast this year added a section called Synergies. But the bare floors and pumping music weren't enough, said exhibitor Elliott Feller of Thomas Elliott Milan.

"Will we come back next year? That's the question all the companies in this section are asking ourselves and each other," Feller said. "These show managers need to stop fighting and just get together and do what's right for their customers."

Still, longtime Westcoast exhibitors such as suit-maker Luigi Bianchi said their part of the show is exactly what they want: a quiet, upscale atmosphere for doing business with menswear retailers.

Retailers like Alan Au also appreciate that atmosphere. He comes to town looking for "people who can cut our sizes," and 90 percent of them are at Westcoast, which would be perfect, he said, if it had a fashion show — like MAGIC.