County Fair and Rodeo Alcohol Sales: Net profits higher but return lower
Published March 10, 2025
According to management, alcohol sales have the highest profit margin of any product offered at the County Fair and Rodeo. A change in the model for selling alcohol from in-house to partnering with a Contractor prompted a review of how the new and prior sales models compared. The audit objective was to determine whether alcohol sales at the County Fair were cost effective. Sub-objectives included determining how the partnership arrangement compared to the prior in-house model and whether cash and inventory were adequately controlled.
What was found:
Performance of the partnership arrangement remained unclear. We found that management couldn’t demonstrate the success of the partnership program. A high-level review of expenses and revenue revealed mixed results with the County netting more revenue with the partnership model but with a lower return on investment.
Net Profit increased from $128K to $164K but Return on Investment Decreased from 52% to 38%
Though the contract between Fair and Expo and the Contractor managed risk in some areas, others contained unclear language and opened the County to financial risks. On the positive side, the contract required the Contractor to purchase liquor liability insurance. However, the fair alcohol sales program was a patchwork of in-house and concessionaire programs where roles and responsibilities were not clear and introduced risk, leaving the County vulnerable to cash and inventory losses.
We recommended that Fair and Expo management:
- Periodically evaluate fair alcohol sales against prior models or other contractors.
- Design a program that limits County risk.
- Clarify contract language regarding roles and responsibilities.
Audit Report
County Fair and Rodeo Alcohol Sales: Net profits higher but returns lower
Follow-Up Reports
Scheduled for 2025.
Recommendation Status
Of the three recommendations
RESOLVED: 0
Recommendations have been fully implemented. Auditor will no longer monitor.
IN PROCESS: 3
Recommendations are in progress. Auditor will continue to monitor.
ACCEPT RISK: 0
Management accepted the risk of not implementing the recommendation.
