"HMGS East financial meltdown" Topic

ORRR… another logical conclusion is that you've been doing it over and over again, making less and less money each time… Isn't it time to try something new before you actually DO start losing money?

Hard to argue with that logic.

Decision in favor of the flatulent wildebeest.

"making more money" is a false premise.
"Increasing attendance" is another false premise.

The true goal is to break even with the maximum attendance which still breaks even.

Why is making money a false premise? Of course, it begs the question, "So what are you going to do with that money?" But still, making money and increasing attendance are noble goals.

Non-profits are allowed to make money, and all the good ones do, or they go out of business (so to speak).

historygamer,

There are certainly some increased costs that can be traced back to the Host, but I doubt they represent more than a small portion of the increased costs. Without looking at the details my guess would be either, increased spending on "promotions", advertising and other perks. Also included would be increased staff costs.

As far as the justification for the "25 Anniversary" convention, the issue of the cake is a red herring, no matter how expensive the cake was. I suspect that cost pales in comparison to the cost of bringing in all the speakers and guests of honor, most of whom did very little to add to my convention experience. This expansion of the bread and circus elements of the convention are usually at the expense of the main reason for the convention, which is historical miniatures gaming.

As far as attendance, I don't have the numbers but my recollection is that attendance over this period has been essentially flat.

db

db:

As you know, promotions are a tricky thing to ascribe to any one line item in an expense report. Many of the convention directors have not controlled advertising for their conventions, including the flyers, but it may be charged against them anyway.

As far as speakers, my own take would be that they should be paid for out of the education budget, but it gets kind of murky when such speakers appear at a convention, and they could be charged either way I guess. It does fulfill the prime directive (sounds like Star Trek) of promoting history, but I grant you their worth is a subjective call.

Staff costs go directly to how many people work the cons, and what they are given for doing such work. Most of their hotel rooms are free to the organization, as I believe as it is part of the contract negotiations with the Host (or Ike, when that was finally fixed). Of course at the BCC that is another matter.

I understand the push to make Hcon better to hopefully attract more attendees, and I believe, prior to this past one, attendance has been up. CW, I have long suspected, of losing attendance, but would have to look to confirm that idea.

Again, without greater analysis, it is hard to say one way or the other as to why this is going on.

I think some of this is a lack of discipline that comes so often with greater resources. There are more speakers who appeal only to a small segment of attendees, but are a pet project of someone in an organizational capacity and the cost outweighs the benefit but it happens because "we can afford it."

It's a pretty natural occurance. Businesses are the same way. All of a sudden when they are successful they "need" so much that they didn't before. And most of this does not add enough to be really worth it.

I don't think the primary purpose of HMGS should be to turn a profit. Frankly, if they put on an event that is enjoyed by many members and hobbyists that it the purpose served, even if it just breaks even. This is the difference from a business. A business would not want a breakeven operation as it would serve no purpose. For HMGS it would serve a purpose in that having the event IS the purpose.

On the other hand, I do think the organization should try to maintain its financial strength so it should try to at least make a marginal profit from events if it could.

I understand that most people are reluctant to call out individuals but this financial crisis did not just happen. It is the result of an ongoing set of deliberate decisions made by a several individuals. As members we place responsibility with those individuals to manage the resources of the organization in a prudent manner. It is unproductive in a large sense to quibble with relatively minor financial decisions. Those who have the authority should make those decisions and then explain them to the membership.

I agree with you 100%. I was trying to stay away from the "ad hominem" attacks

PS – your figures show that the cost of keeping the cons in Lancaster has increased more than 100% for H-Con, and about 63% for C.Wars, over the past 5 years. At that rate of increase, you simply can't stay there much longer, can you?

If your numbers are right, then the cons have to move, period.

Before I could accept that statement, I'd like to see a breakdown of the expenses. I'd like to know exactly what drove the expenses up.

Granted, altough I have done a lot of work on such types of events, I have never negotiated with a food vendor. Although when I see them at such events with the $5 USD hotdog, I often think it would be far better to just sell cans of soda in tubs of ice, and find some local sub shop that wants to sell premade sandwiches.

But I also know some venues require you to use thie food concessions, In which case I would tell the venue thanks but I'll find another place to hold my event (if they tried to strongarm me into garanteeing a minimum,

Yes, I know its a hard job to run a con, which is why so many SF ones went for profit (and I regret I did not get in on that bandwagon). But it does seem in this economy you would not have to look very far to find someone to cater a "ready to go food" area in a far more profitable or cheaper way for the attendees.

There is a "standard" formula used by charities -- something like they want to earn 10% a year in new money (investments & donations) so they can spend 5% on the operation and a couple on admin and the rest goes to increase their capital. They can spend down a certain amount of capital during bad times and still emerge with no less than some specified capital base.

I'm still having trouble following this: "It's no longer profitable, therefore we must stay!" line of argument….

As several of you have commented, seeing a breakdown on expenses for the con seems quite logical. The organizers may very well be justified on this, as I mentioned earlier and it may simply be a case of , "one nust break some eggs to make an omelet".

Previous years showed quite a surplus of revenue, so why not spend some bucks promoting, bringing in new speakers, etc., to see if the customer base will expand? If it does not work, go back to plan A. Even with recent years expense increase there is still a bunch of money in the kitty from the earlier years, or at least there should be.

Who knows? The only way I know to find out is to get some input from those "in the know".

:-)

I'm still having trouble following this: "It's no longer profitable, therefore we must stay!" line of argument….

The right question to ask is why is HCon no longer profitable? Have the expenses at The Host gone up that much? What expenses have gone up to account for this loss?
Without seeing a full breakdown of the expenses, you'll never know where the money is.

Is it possible the situation could be made worse by moving to the BCC?

[The right question to ask is why is HCon no longer profitable? Have the expenses at The Host gone up that much? What expenses have gone up to account for this loss? Without seeing a full breakdown of the expenses, you'll never know where the money is.]

That's true, but it also means that one can't make the argument – as the O.P. did – that the rising cost of staying in Lancaster is a reason *against* moving to Baltimore.

Not only does it not follow logically: "The cost is rising where we are, therefore we must stay!"

…but as you say, it can't be proven (A) why the costs are rising, or (B) whether or not they'd be worse somewhere else.

So his whole premise, I think, is flawed.

[Is it possible the situation could be made worse by moving to the BCC?]

Possible? Yes, of course. Anything's possible. But since the O.P. posted his data about the *current* location, and it shows an untenable situation, by his own admission, then that makes a very strong argument for moving *somewhere.*

Possible? Yes, of course. Anything's possible. But since the O.P. posted his data about the *current* location, and it shows an untenable situation, by his own admission, then that makes a very strong argument for moving *somewhere.*

What is causing the untenable situation? For example (NOTE: I'M NOT SAYING THIS IS HAPPENING)

Let's say there were an extra 50 rooms given away this year, along, with fully paid meals and expenses.

What if there was an unscrupulous individual helping him\herself to the money and burying it?

There are allot of reasons for rising costs. The proper way to make changes is to figure out where the problem is and correct it. So far, nobody has come forth with an official explanation, backed with facts, for the rising costs.

That's fine; some sort of audit is obviously in order. If, for instance, there were malfeasance, then that would need to be dealt with no matter where the conventions moved.

And it would have absolutely nothing to do with whether or not the conventions should be moved.

That's my problem with the O.P.'s argument. There are some people who are just so bitter and dead-set against the move to Baltimore that they will use any factoids, no matter how tenuous, to slap together an argument against moving.

If the HMGS receipts had shown brilliant and massive increases in profits, he'd have argued that it's crazy to move to Baltimore since the Con is doing so well in Lancaster. But the receipts showed a decrease in profits, so he argues that it's "too risky" to move at this time because the cons aren't doing well, etc. etc. etc.

I mean, he's a former HMGS Treasurer, so I damn sure hope that he knows better than to argue: "Profits are down at this venue, expenses are up at this venue, therefore We Must Not Leave This Venue!"

It helps to be clear on wording, which people here are not.

The cons are still making a profit, they are just not making as great a profit as they used to.

The logical consequence of this is that the parent organization won't then have as much money to sock away, or spend on other things. The cons cover themselves. Is that a bad thing? What else should they be making money for?

Funny, but some of you have been arguing that the organization doesn't need to make a profit, or much of one. Okay, that is what you have, at least based on two of the cons. So then why are you upset? You can't have it both ways.

In regards to BCC. It is reasonable to assume that in the first year it will probably not make a profit, and may even take a loss. That is called a loss leader. The hope, by the organizaiton, is that by moving to a larger facility, it will attreact more of eveything. That idea may work, it may not. But since it hasn't happened yet, and we don't know what they are forecasting for, or charging, etc, then it is all speculation without facts. IN short, you can't apply the current situations to the future, since they are different venues with different costs. It is not compaing apples to apples.

This is not to say there is not reason to be concerned, but that is all it can be at this point.

"Possible? Yes, of course. Anything's possible. But since the O.P. posted his data about the *current* location, and it shows an untenable situation, by his own admission, then that makes a very strong argument for moving *somewhere.*"

This doesn't make much sense to me. Though I suspect that lax cost control has more to do with it than uncontrollable costs at the Host, if cost at the Host has become a problem I can't see how that in any way supports a move to a venue that cannot reasonably be expected to be on par with Lancaster for cost, much less a savings. And based on the dissension about the move I can't see how a reasonable expectation could be created for increased revenues, at least not on the foreseeable future.

If the cost increase is not due to lax oversight and waste it would seem that is all the more argument not to move to a more expensive venue.

I will never understand the argument that if a situation is not good then it makes sense to try ANY change.

In fairness, the move from Lancaster to BCC was never predicated on rising costs at the Host. It was (if I recall) sold on the premises of:
1. More Room
2. More Access (to travelers) from being in a bigger city
3. More Attractive to new attendees (the city would be a draw)

Later complaints from band-wagon-jumpers included
1. The host is getting old, so a new venue is better
2. Drinking a cocktail in Baltimore Harbor somehow makes a wargaming convention better

Rising costs at the Host were never, if I recall, brought up. But finances might become an issue, if the new venue is:
1. More expensive (which it seems to be the case)
2. Lower attendance (which is yet to be seen)

That (in my opinion) wraps up the finance situation, without name calling or finger pointing.

Chuck

ps- okay, maybe the cocktail comment was a little uncalled for, but I gotta have my fun, don't I? feel free to ignore it.

cturnitsa,
2. Drinking a cocktail in Baltimore Harbor somehow makes a wargaming convention better

ps- okay, maybe the cocktail comment was a little uncalled for, but I gotta have my fun, don't I? feel free to ignore it.

If you knew how much time Bob C spends in the bar during a con you would understand why the inner harbor cocktail is such a big deal to him. ;)

iPat

Thanks Chuck for getting the discussion back on track…

Another interesting observation that I have… Didn't the prices for dues and, I'm fuzzy here…, conventions increase to help pay for the known increase in costs the move to BCC would have?

From these figures, It doesn't look like those funds are being preserved for their original intent. I know the convention accounting is held separate from the rest of the "club" accounting.

The prices for dues jumped by $5 USD to cover an ill-defined education fund. $5 USD of each membership is roped off for such a fund. The rest of the dues jumped to cover the costs of membership (flyers, newsletters, etc). The prices at conventions went up to cover increasing costs at conventions, and to help build a bigger surplus on the advice of the then accountant. They were not raised to cover any future costs of a new convention site per se.

It is very hard sometimes to figure out what gets charged for what. For instance, you could have speakers, and charge their fees to education, and that would seem reasonable. Or, you could charge them directly to the convention, and that would seem reasonable too. There are lots of things that could be charged lots of ways, and it doesn't mean they would be wrong.

I would say that cturnista's assessment is generally accurate. The only thing I would perhaps qualify is #3, which I would say the idea is that since the BCC is in a major population area, that it is reasonable to hope to get more people to come to just see the thing since they live close, whereas you wouldn't expect them to drive to Lancaster for just a look. I'm not saying that will happen, I am only explaining some of the logic behind it.

I'm no longer a member so I never saw actual verbiage from HMGS-East about what the increases were for, but it was mentioned on here that the desire to create the buffer was to help with the move to BCC.

You still reinforced my point that the extra revenue doesn't appear to be creating the desired buffer.

"The logical consequence of this is that the parent organization won't then have as much money to sock away, or spend on other things. The cons cover themselves. Is that a bad thing? What else should they be making money for?"

From a big picture standpoint the conventions provide the funding for all the other "stuff" that east does, should be doing or wants to do. At a minimum the conventions should show a surplus when necessary to maintain an adequate balance against the unanticipated loss due to weather or some other event. If, as we now know, East is now about $60,000 over budget for this year they have reduced that reserve fund. I have heard but been unable to confirm that the "education day" cost the organization $10,000…more money down the rat hole.

"Funny, but some of you have been arguing that the organization doesn't need to make a profit, or much of one. Okay, that is what you have, at least based on two of the cons. So then why are you upset? You can't have it both ways."

You're correct you can't have it both ways and if I have to choose I'd feel much more comfortable with the historical pattern…Historicon and Cold Wars make a healthy surplus, Fall In is break even and the organization has the flexibility to fund other efforts related to the goals of the organization, primarily to promote military history and historical miniatures wargaming. As has been suggested on these pages over the past several years there are any number of programs that could be tried but they may require resources.

db

Its been stated that the BCC provided space for the GED for free, so how could there be thousands in expenses?

I have been able to put together the following information from the files that are available to all HMGS members via the Yahoo group. I have only put together the Facility Infrastructure Costs; this is the "basic" rent for the facility ONLY. I think this shows pretty well that the costs in Lancaster have not been skyrocketing, making a stay there untenable, as a couple have suggested on this string of posts.

Historicon Facilities Costs:
2004: 8,165.00
2005: 8,162.00
2006: 11,061.00
2007: 6,874.00
2008: 10,982.00
2009: 11,009.00
2010: 45,000.00 (36,000.00)

I am not sure why 2007 was so cheap. No explanation in the financials. Maybe something was mis-posted?

I did not do a full analysis to see where all of the spending increases occurred, but it would be easy enough to do by someone with 2 free hours of time, which I don't have right now. I would say from the above information though that Lancaster is not the problem. Any increases in costs would be in other areas, such as more staff needing support, or speakers, or table rental, or whatever else. Of course, all of those will continue to be issues in Baltimore as well. Staff rooms will likely run more, but I don't know that for sure. I would imagine that the size of the staff will also need to increase, as they are talking about having volunteers to lug your stuff in and out of the con for you from the front loading area.

The 45,000.00 for BCC in 2010 can receive as much as a 9,000.00 discount, dependant on whether or not we sell enough hotel rooms, so that is why the 36,000.00 is in parenthesis.

I am trying to keep my personal feelings out of this argument one way or the other, but I can't stand seeing people make posts when there are no facts backing them up, so felt I should post this. It is all information that anyone can get if they look hard enough. I say let people make up their own minds, but let them do so with the correct facts.

"2010: 45,000.00 (36,000.00)"
I do hope you get alot of walk ins willing to pay whatever the cost will be for a day or days because to me that seems abit high and if you don't cover it that will be alot of money lost.

Historicon Facilities Costs:
2004: 8,165.00
2005: 8,162.00
2006: 11,061.00
2007: 6,874.00
2008: 10,982.00
2009: 11,009.00
2010: 45,000.00 (36,000.00)

According the the meeting I was at, we're going to get allot of people coming from overseas – that should help make up the difference. Plus we're going to get allot more walk in traffic AND grow the hobby at the same time!!

Seriously…

This should be of concern. At 35.00 a head, you'd have to pick up 750 more people to make up the differences. Maybe they're going to make some of it up with the dealers but how much?

Can I ask where you got these numbers? I'd like to verify them and talk to some of the BoD members about this.

Long Island Gamer,

They are available on the HMGS Yahoo group, just open up the financial files there. The numbers for 2010 are floating around out there. I have seen these numbers behind the scenes, so can verify them, although negotiations are apparently still underway. I would not have posted them here had I not seen non-officers speaking about them already; I have received 2 e-mails from members asking if the number was correct. Again, I would not have posted the number here if I thought I was the first person to put it out to the public…

They will need a nearly 20% increase in attendance at current rates to cover those costs. As I see it, they're looking at a 20% decrease in attendance. In fact, it was assumed that attendance would be down for 2+ years.

That is just the basic rent, expect all categories of cost to rise as well, probably not at the same 4x ratio, I hope not anyway, but still, I don't see anything being cheaper in the long run…

IIRC, the Host was under construction in '07, so perhaps they knocked some of the costs off as not all the rooms were available.

Clearly the break year for Hcon is '06, which again, IIRC, was perhaps the first year of the new contract with the facility. Thus if you discount '07 (venue charges were down due to limited access during construction), the costs for the facilities have been about $11K a year, or $3K more than previous years.

Again, if you discount last Hcon's higher spending due to the anniversary costs, and perhaps pumped up advertising and other activities to draw people in a down economic time, that might explain last July's higher costs as well. I seem to recall hearing that the final numbers were only down about 100 people from the previous year's all time high.

I am speculating and working from memory above on Hcon, but I have no explanations for CW.

07 May have been the year the air conditioner broke….we got a rebate from the HOST for that I believe.

OS

The next poll question: will the loss from Hcon 2010 be more than $50,000?

It's a dead certainty to lose 25k but I suspect 50k is not an unreachable "goal."

"They will need a nearly 20% increase in attendance at current rates to cover those costs. As I see it, they're looking at a 20% decrease in attendance. In fact, it was assumed that attendance would be down for 2+ years."

"Just" 20%? Based on the feelings of many people I suspect they are looking at a decrease. I think an increase in attendance is a pipe dream. A crack pipe.

Not to add, what has already been mentioned, other costs will rise as HMGS throws money at the problems. And what is the room minimum to get the 9k discount…if that was based on historical numbers plus all this massive new attendance (lol) I suspect they may not hit that either.

Yes, you are right, the AC clunked out. Thus the discounted rate. Thanks for the correction. :-)

I'd like to see the costs (and net profit/loss) on a "per ticketed day" basis. That would provide some info to see how sensitive breakeven is to attendance.

I would think that someone has already created a spreadsheet for inputing all the variables…

Seems to me that BCC will shift a lot of people from guests to day-trippers because its close enough to NoVa.

"I would think that someone has already created a spreadsheet for inputing all the variables…"

Not to be too flippant, but I highly doubt it. That would require way too much organization than has already been displayed in this matter.

Costs are going to go up in addition to the basic "rent" cost. Plus they've already said they weren't raising rates for dealers (i.e. no more revenue). Wasn't it also mentioned that maybe some other dealer costs might be subsidized? Staff costs are going to explode. Not only because the convention hotel is more expensive, but I agree that more people are going to be needed to staff this space and provide the promised "labor" to the GMs.

I'm wondering if the over-under should be set at $75,000…

I'd try to do a "convention guesstimate" if I had access to the records.

Guys,

I'm glad I'm out of it. What amuses is the persistency of the mean spirited belief that some are taking advantage by spending the "profits" on themselves or outright embezzling them. This was carried to the extreme last year when some miserable person reported his suspicions that HMGS was not meeting its requirements as a 501c3, to the IRS. Fortunately our treasurer, Dudly Garidel, is a CPA and had the financial records in A-1 condition. And, guess what? The IRS audit gave HMGS a clean bill of health. Does anyone know what it costs for a CPA to represent a small corporation at an IRS audit? Well Dudley did it for free. THANKS DUDLEY.

Having attended gaming conventions since Origins I and having attended the last Origins in the BCC, having managed 8 Historicons, moving it twice, and being familiar with the BCC it is not evident to me that the convention will need extra staff.

What is evident is at $130-135/night for rooms we are not going to pay any more for the staff rooms than at the Host. How can this be? Well as a 501c3 of the State of MD we will not pay taxes on the rooms, while in PA we did, raising the cost of rooms $25 USD or so. And neither will we pay entertainment taxes on the BCC.

After attending dozens of conventions in dozens of venues and working and managing almost a dozen conventions and having moved Historicon twice, I have complete confidence Bob Giglio understands the nature of the challenge he faces and will deal with the problems in an efficient manner. In my opinioin he is the hardest working and best convention director HMGS has had. He certainly knows more about how to make conventions successful than anyone I have seen posting on this site.

As for finances, we have about $300,000 in the treasury and even after sitting at the bar at the Host for long hours I am sober enough to understand that the two conventions cited earned over $210,000 in the last 5 years. In addition HMGS will be moving Fall In! to the Host which is less expensive, thus, positioning it to become a good profit center.

Regarding attendance, when an event changes venues, you can expect to initially lose some attendance and given the hysteria attendant to the move I have little doubt that Historicon will lose more than it should. The trick is to remain consistent and not move the convention. If the location is good and it is, if the convention is attractive and it is and if the management is competent and it is, over the years attendance will increase.

For those who enjoy the good things in life, see you at the Penthouse Bar in the Hyatt overlooking the harbor, after closing.

Bob Coggins

ratisbon: If the location is good and it is, if the convention is attractive and it is and if the management is competent and it is, over the years attendance will increase.

The management is good. For how long? Bob G has run 4 Historicons at the Host and will take on his fifth at BCC in 2010. That is a longer string than any CD in East's recent history. Who is going to be this competent management "over the years?"

iPat

it is not evident to me that the convention will need extra staff.

I believe the comments about extra staff are driven by the repeated assurances that there will be "staff" to help GM's unload and watch their stuff while they go park, and "staff" to keep traffic moving outside the loading docks, etc., in addition to the normal staff for the reg desk and other functions. Presumably all staff will be compensated equally, therefore resulting in more free room nights being given out.

IPC

Oh! I don't know. I stumbled through 8 cons. Bob's a smart young guy who works hard at the convention biz and I think he as 4 or more years in him.

So why don't you volunteer and learn the ropes?

jtk,

Were you experienced in conventions you would realize you don't treat staff all the same. Full time staff which provide so many hours are compensated differently than staff which only works a few hours.

Good gaming.

Bob Coggins

Were you experienced in conventions you would realize you don't treat staff all the same. Full time staff which provide so many hours are compensated differently than staff which only works a few hours.

While its true I've not been on staff at an EAST con (I have for a non-EAST con, and also as part of my job, non-hobby related), room nights and meals are the only thing I've ever heard mentioned as compensation when talking to friends who have been. Staff room nights, meals, and misc expenses are the only things listed in the financials. I would be interested to hear what other methods of compensation are used for EAST con volunteers, I didn't see anything it on the main EAST website, or the con websites.

They give a small per-diem to the top level managers, otherwise, it is the same room and food voucher deal for each volunteer, no matter who they are. Atleast that is how FALL-IN! has been done, I cant speak to Cold Wars or Historicon, but I assuem they are the same.

Thank you Andy.

jtk,

Your concern is dripping with the irony of an individual smart enough to know better. So what's it to you as long as the Society makes money?

I cannot answer for the current convention directors but there are lots of ways to reimburse for work.

When I ran Historicon mostly members volunteered – you know gave their time "freely" to a non profit corporation in order to benefit the goals of the organization.

That said other than rooms I gave free entrance for minor help as well as $10 USD or $20 USD dealer certificates, a program which was lamentably discontinued.

Alternatively, if you are concerned about the Society's finances and cannot volunteer why not donate a few hundred dollars to the Society to show your support. Its tax deductable.

Good gaming.

Bob Coggins

From all that I have seen and learned over the past several weeks, don't be too dismissive of what Dave Bonk (db) and SMPress are observing and reporting to us here. I know it's easy for this group to get sidetracked and boggled down in minutia but there is some very serious stuff going on in HMGS East land. If you have access to the last two financial reports from July and August start there and it's all there for anyone to see.

Wow Toby, you are so right! I just looked at the reports. Does not bode well for 2010.

Wow Toby, that is impressive. I looked at the reports for all of the year so far (August being the last one)(No dig intended at the treasurer here). Trend is disturbing. Will watch closely to see what Sept. looks like.