Mayor Folds Marketing Department Following Bungled Snapple Deal

Mayor Bloomberg is scrapping the city's marketing department less than three years after it was created, following criticism its first president bungled a high-profile deal with the beverage giant Snapple.

Mr. Bloomberg announced the merger of the marketing department with NYC & Company, the city's tourism arm, and NYC Big Events yesterday. A news release from his office said the new venture would create "the world's leading municipal, tourism, marketing, and events organization."

The move comes three months after the Marketing Development Corporation revealed its deal with Snapple - which gave the beverage company the exclusive rights to sell its ice teas and waters in municipal buildings - would rake in $93 million less in cash and promotions than predicted.

That news of the lower-than-expected revenue was an embarrassment to the Bloomberg administration, which had billed the arrangement as a novel way to generate revenue for the city's budget. And, the president of the marketing corporation, Joseph Perello, resigned shortly after Snapple deal had to be renegotiated.

The city's comptroller, William Thompson Jr., the leading critic of the Snapple deal since it was approved in 2003, released an audit in April that found the marketing corporation was not funneling its earnings to the city's treasury as it's supposed to.

Mr. Bloomberg touted the merger yesterday and said it would help the city meet its goal of attracting 50 million tourists to the city annually by 2015, up from the current 41 million visitors. He appointed marketing and advertising executive, George Fertitta, to head the new agency, which will have an annual budget of $22 million.

A spokesman for the mayor, Paul Elliott, disputed claims that the merger was an acknowledgement that the marketing was a flop. He said the department generated $32 million in revenue and $50 million in promotional exposure for the city without expense to the taxpayers. He cited deals with the History Channel and several other companies as a sign of its success.

City Hall said the new chief, Mr. Fertitta, would create a new "corporate identity and organization structure" by early fall. It will also use its resources, including $15 million Mr. Bloomberg earmarked in new city funds, to lure tourists and leverage "in-kind media" exposure internationally that it secure with a Spanish company Cemusa, which just won a $1 billion contract to provide new bus shelters, newsstands, and public toilets.