State Fair of Virginia

In November 2011, the State Fair of Virginia, Inc. (SFVA), which had been operating since 1854, was facing a dire financial situation. SFVA was a privately held, not-for-profit organization that operated the state fair independent of the state government, and received no operating support from state or local governments. In 2003, the organization had borrowed $83 million against a $47 million investment portfolio in order to develop its new fairgrounds, which opened in 2009. The new site had been attractive because it included The Meadow Farm, a horse farm famous for being the birthplace of the Secretariat, winner of the 1973 Triple Crown. The unprecedented collapse of the financial markets in the United States in 2008, combined with a poor economy and terrible weather for the fair’s first two years, resulted in a situation where in late 2011 the organization did not bring in enough income and donations to cover the loan payments. Creditors were demanding an immediate solution. The board of directors of SFVA realized that it had no choice but to consider strategic options including applying for Chapter 11 bankruptcy, which would give it time to try to restructure its debt, or shutting down immediately.

The purpose of this case is to help students develop an understanding of the challenges inherent in operating a not-for-profit organization. These dilemmas include operational and strategic decisions. Students will gain an understanding of the issues related to strategy formulation, risk analysis, and strategy execution. They will learn to evaluate the choices before a board of directors that is attempting to deal with prior decisions that are not working as anticipated. In particular, having chosen this strategic direction, should and can the organization continue on this path? Or, in recognition of the dire financial situation, should SFVA file for Chapter 7 bankruptcy, in essence liquidating the organization and ending the fair after 154 years of operation? Or should it file for Chapter 11 bankruptcy first and then, if that is not successful in allowing it to restructure its financial position, file for Chapter 7?<br><br><br><br>Through the case discussion, students recognize that strategic business decisions are path-dependent and can have extremely significant consequences for not-for-profit organizations that often lack the financial resources available to them to recover from incorrect choices.

• Bankruptcy
• Non-profit Organizations
• Operations
• Strategy Formulation
• Risk Analysis
• Strategy Execution
• United States