Oganizers and Profit

One of the things that I have seen in some of the threads here (typically those about Millionaire Chess) and also heard from chess players in conversations is that organizers are greedy and just want to make a profit.

 

Setting aside the greed topic for now, my question is why is an organizer wanting to get paid for their time such a bad thing?

 

Organizers take financial risks while spending a ton of their time creating events for players to play in.

 

I was at a tournament one time that had a prize fund that was based on 60 players participating.  For those who don't know how that works, it means that if 60 players enter then the prize fund is fully guaranteed, while if less than 60 enter then it's 50% guaranteed.

 

The event wound up getting around 75 players and I overheard conversations from a handful of people that the organizer was ripping them off since the prize fund wasn't being increased.  Are you kidding me?

 

This kind of thing is insane to me, and the reason why so few people want to be organizers.

 

Think of it this way...I am moving in to a new house soon.  It has a huge finished basement of 900 square feet, which has a bathroom, fridge, sink, etc.

 

I have thought about running one or two blitz events each month from there (assuming I can convince my wife, lol) and it breaks down like this:

 

Assume a $10 entry fee with a format of a five round double Swiss.  Meaning that there will be five rounds of two games each so that each player is able to play two games against each opponent, one with White and one with Black.  Now assume that I'm able to get 20 players (not a given) which means that I'm able to take in $200 per event.  Let's say that I offer a prize fund of $75 for first, and $50 for second, with a U1800 of $25.

 

Do the math and you're thinking "He's making $50 - not bad for a couple of hours work."  Except now we get into the rating fee for USCF, which is $0.25 per game.  20 players playing 10 games each means that there are 100 games to be rated (since each game has two players in it).  So now I have to pay the USCF $25.  OK, so now we're down to $25 for a few hours work. 

 

So after 12 tournaments like that in a year I have made...$300!!! Woah, I'm rich!  Wait, wait...no...I have to pay the USCF an affiliate fee of (I believe) $49 per year in order to be able to hold and rate events.  So now for 12 months work I have $251 to show for it.  In return for that I got to spend two to three hours running each event, with an hour to set up and tear down each time (those tables and boards and sets didn't just set themselves up) while also having to clean up after the players (if you've ever TD'd you know exactly what I am saying.) So in exchange for what is probably 60 hours work I made $251.  Wow!  That's $4.18 per hour!

 

Except I also had to buy boards and sets, which means I probably spent $100 up front and another $20-30 per year replacing broken/damaged equipment.  So now we're down to let's call it $226 per 60 hours work, or $3.77 per hour.

 

Oh, and when good old what's his name broke one of my chairs I had to replace it.  And when the toilet was clogged guess who got to deal with that? etc.

 

So now I'm probably losing money or at best breaking even.

 

Oh, but remember those two tournament that only drew ten players?  Yeah, I took a loss on those since I still had to pay out the prizes.  With ten players I took in $100, paid out $150, and spend $12.50 rating it.

 

So let's change it up and say that I'm only going to pay out $50 for first, $25 for second, and return the EF of the top U1800 player.  Now I'm lumped into the "greedy organizer just trying to make a profit" category.  But am I making a huge profit?

 

Well, each event drawing 20 (again not a given) now takes in $200, pays out $85, and still costs $25 to rate.  So now 12 events would net me a grand total of $1080 for the year.  Back out the $49 affiliate fee and we're still at $1031 for the year.  A much more reasonable hourly wage of $17.18 now exists.

 

Factor in the equipment, the clogged toilet, the broken chair and all of the other things that inevitably go wrong and I'm maybe around $800 for the year.  So all the set up and tear down and everything else means that in a perfect year where every event is fully attended I am making a profit of around $66 bucks per event for around five hours work per event.  $13.20 per hour.  Wow.  What a greedy jerk I am.

 

By the way, if I had to pay for the space I was using then I'd be looking at $50-$100 minimum.  So I'd increase the EF to $15 and now the "greed" cries would really take off.

 

So next time you think you're getting ripped off by an organizer, try walking a mile in their shoes.

 

Thus endeth the rant.

Just to clarify a point made, based on prizes require proportional payouts if the number of entrants aren't met. So, if you base the prizes on 60 players and only 40 show up, you pay out 66% of the advertised prizes. If you have a prize fund of over $500 (I think, would have to verify) you are required to pay out at least 50%, regardless of turnout.

 

Also, the affiliate fee is $40 a year and each game in the event costs 25 cents to rate.  Add to that, advertisements and/or TLAs in Chess Life, and you have another expense. Run a website for your club/affiliate? There is some more money.

 

I've made a little money in some of the events I've ran. For the most part, all that goes back into running future events, mostly to insulate against future losses.

 

I certainly don't begrudge someone making some money running events. If events do well enough to turn a slight profit and pay the TD a decent amount of money, then maybe more events would be held and more people would be interested in running them.

Of course the prize fund should be increased if more people participate.  Why shouldn't it? They would reduce the prize fund if only 50 people showed.

 

Well, depending on how events normally turn out, the ability to bank some funds for future events is a good idea.

I've never been in the situation where I have had enough extra people attend to entertain paying more of a prize fund but since I'm OK with the TD/organizer making a profit, I am also fine with prizes not being increased in an event with a higher than expected turnout.

When you go to an event, you know what the prizes are. If they get increased, great, if not, no big deal.

Also, no one thinks you're making it rain based on a couple of basement chess tournaments.  It sounds like you want to complain about how terrible it is to run a chess tournament; so don't run one.

Not sure how you got that from the OP.  It is pretty obviously a reply to people that think organizers are making tons of money.

I've entertained writing a blog post with a similar topic, for similar reasons, but I'm lazy

Half of his post was complaining about things like clogged toilets and broken chairs.

Which is an explanation of some of the work involved in being a TD and how that directly relates to any actual or perceived profits made in the event.

 

Yeah, and?

And, if your reading comprehension is good enough, my point is fairly clear

 

 

Martin_Stahl is right on point.

For whatever reason the perception is that organizers are beholden to the players.

One point I didn't bother going in to because my post was long enough is that if an organizer makes a bit of money on one event really that just insures against losses in future events.

Many organizers are one bad event from losing enough that they won't do it again.

I used the basement as an example because it keeps expenses way down compared to having to rent hotel space.

And to SilentKnighte5's point about why shouldn't the prize fund be increased...that's exactly the point.

Most organizers run on what tends to boil down to a break even margin. Finally you get one good event that will let you insure against a bad event in the future and you always get the "you owe it to us" crowd.

I understand the predicament organizers face regarding participation/financial risk/financial reward. If you charge to much, many won't come play and you face possible significant financial loss (millionaire tournament). If you charge to little, you either a) risk a significant financial loss if you don't get a lot of participation or b) you get a lot of participation but don't make much per participant so ultimately you make little profit. It seems many go on the seesaw trying to find that balanced point of participation to charged amount where it's profitable and a success.

I guess at the end of the day those trying to make money as chess organizers face a dilemma every event and especially starting up it can be very risky and daunting. There is a reason for example why most tournament organizers don't provide the chess equipment in the United States- to costly. Venue's are actually costly too- well, decent venue's. Which ultimately is what most chess organizers have to financially handle, the venue cost and the prize fund, and whatever staff they decide to hire. And the bigger the event the greater the financial burden to undertake and bigger losses. Would you want to risk say $35,000 on a chess event hoping to at least recoup that if not get a profit? If I did that I'd be stressed out for weeks before the event, checking every hour at the sign up list to see how many more players have signed up to play and calculating how many I needed to reach to break even.

So I don't complain about chess organizers greed and I think if you truly believe you are being ripped off by an organizer then simply don't participate in their future events. I think organizers should be encouraged and supported, not called out as being greedy.

Ha, I just noticed my typo in the subject line.

A real life update to this topic...

 

I was recently looked at putting together a tournament which would have an EF of $50.  20 players was the expected turnout.  $50x20=$1000  Since it would be limited to players rated 2000+ there was no practical way to draw more players, and the chance of drawing fewer was very real.

 

The space cost along with everything else (rating fees, FIDE rating fees, flyers, equipment, etc.) would be about $350

 

That leaves $650.  The idea was to use $550 as a prize fund, leaving $100 for the organizers.  As was explained to me by some people in the community, the kind of greed in which less than 70% of the entry fees were returned to the players as prizes simply would not be tolerated.

 

I stopped working on the idea.

 

So think of this...the idea as put forth by some players was that as long as I was willing to lost a minimum of $50 out of my own pocket in exchange for 50-60 hours of work between organizing, setting up, and then directing during the event itself then it was OK.  Not great, just OK.  And it we drew say 16 players instead of 20 then I'd lose an additional almost $50 per player (I'd save the rating fees...big whoop) for a total loss of $250.

 

But the instant I said "My time and the fact that I am taking all of the financial risk is worth $100" it was "Greed!" and "Boycott him" etc. 

 

You wonder why quality events are so scarce?  It's because so few people find it worth the time to work so hard for less than nothing.

Wow, that is a great rate for the site though. I was pricing a hotel to hold a two-day event at in a nearby town and it was $500 a day. WIth a $40 entry I would have to pull 40 people to have an okay prize fund. Probably would only pull 25 or less.

 

Luckily a club at the local university was able to secure a room for free and I am dropping the entry way down and keeping a similar prize fund.

 

If I was trying to pay for my time, I wouldn't have any chances.

In our area a guy holds tournaments at a local library for free. The costs associated are literally the fees to rate the tournament by the USCF, which is basically lunch money which is funded by a chess class he runs which multiple participants of these tournaments attend. Nobody makes money, nobody loses it. Works for us, and we had 20 participants last weekend. He tries to do one at least once every 2-3 months but I've been encouraging him to try for monthly. I've covered the rating fees several times in the past as a thank you and earlier this year bought plastic table number cards for board pairings since kids were having trouble going to the right board sometimes and it looks more organized.

 

I'm not criticizing those who charge, everyone deserves to make a buck for their time if they want and it should be expected. However we found a way for everyone to have fun playing tournament chess and for parents not having entry fees is very appreciated and adults come play too since it's free. We're hoping to grow the number of participants over time. It's fun!

Pretty sure it's common knowledge organizers/TDs don't make money, and are being very generous with their time.

Yeah, there's a local hotel here with dirt cheap space that actually works well.

Honestly I'd prefer low entry and little prize fund. But that doesn't appear to be what the masses prefer.

Chris, you can make additional funds in other ways as well. If its at your house. You can sale concessions. Bottled teas, and snacks, etc. You could find out before hand if they even wanted something like that. Maybe even have supplies, like sets, etc. You could also record the event live, and broadcast it for additional funds.

I always wanted chess televised. Look how well poker did, billiards also. Host a women's tournament. It might generate a following, and turn big, especially in America. I don't buy that chess isn't popular enough.

If you do this, good luck, and best wishes with it.