Tuesday, February 25, 2014

Cost of Hosting FNM - Part Two

To recap:
You have one minimum wage employee, 8 tables, 32 chairs, and fingers crossed for 32 Magic players willing to pay $6 each for a Standard format event with prizes that can total 77 booster packs without losing money.

Friday is here! 12 people show up and pay a total of $72 in entry fees. You forgot that that employee needed an hour to set up and an hour to clean up for a total of 5 hours, not 3, so $43.75 instead of $26.25. Hmm...that would only leave enough money for 13 packs as prizes. (Not figuring anything but your employee as a cost, which there are obviously more costs.) Well, you've kind of already promised at least a pack per person and only one additional pack for 1st place would suck! You decide to put 2 packs per person in the prize pool so you have 12 packs to split amongst the players who fared the best. So, now, the event that brought in $72 has cost you (at least) $94.15.

Week two is better you have 20 players who pay a total of $120. With 20 players though, you've found out that one employee is not enough if you end up with 32 or more players. Now that you've established how you pay out, 40 packs cost you $84 and the employee cost is still $43.75, for a total of $127.75. Still losing money. Oh, and you've lost two chairs to people who refuse to sit in chairs properly. There's gum under one of the tables and someone peed on the floor (in the bathroom, at least).

But, wait, single sales should be up, right? Yes and no. You wanted to be competitive so you priced everything using TCG low, now everything that everyone asks for is sold out and no one will trade any of it in because your trade-in value is too low. You ditch the idea of being the cheapest for singles and start pricing using TCG mid, so trade-in value is higher and some standard staples start trickling in.

It's weird, though, because it seems like most of the people spending money on singles don't even show up for your FNMs. And a lot of the people showing up for FNM don't seem to spend much on singles or packs.

Restocking one of your rare binders you find sleeves with prices ranging from $2 to $8 stuffed in the pouch in the back. It appears as though someone has stolen $40 worth of cards. Why would they leave the sleeves? Unfortunately, this person has decided that if they slip "overpriced" cards in a pack of commons, they're paying SOMETHING for the cards, so it's not really stealing. IT IS REALLY STEALING.

This post ends on a down note, just like Empire Strikes Back!

Stay tuned for part three.

*Disclaimer: The store depicted in this post is completely fictional. Any similarities to stores (living or dead) are completely coincidental. This post is not intended as a model to create a store, and is for educational purposes only.

Monday, February 10, 2014

Cost of Hosting FNM - Part One

Let's say you're a newly opened local game shop's owner. You grew up playing Magic: the Gathering and wanted to try your hand at making it into a business. For the sake of this post, we'll skip ahead to planning Friday Night Magic.

The only things required to run an FNM are: running it on Friday night, having 8 players for sanctioning, and handing out a promo card to first & second place and two other random players. Well, that's not a big draw to your store, so you look at your options of adding prize support.

Most places in your area charge $5 for standard constructed tournaments and have various methods of paying out prizes, one place does some weird thing where they charge $6.99 and pay $4 in store credit per win and doubles it to $32 in store credit, if you go undefeated in four rounds. You want to do something kind of in the middle.

There's no way to know how many people you'll have for your weekly event, so in that respect, you're guessing in the dark.

Let's say that you pick the exact middle: $6. So with a minimum of 8 players you will take in $48. Here are the things that $48 has to cover: One person to run the event for about 3 hours, the cost of product, and --if you figure it properly-- a portion of the overhead (rent, utilities, insurance, etc.). Okay, now for the much hated math.

Minimum wage in Illinois is $8.25 per hour. Employers have to match 2.5% of that employee's social security withholding and a bit for unemployment insurance. So, let's just call it $8.75. For that employee alone, your cost is $26.25.

You've tried to stay close enough to the "action" to draw people to your store, but in an under-served area, so let's say you've chosen a store roughly 1200 sq. ft. in size. You got a nice lease and are only paying $800 per month. Fudging here a bit, let's just call the rest of the fixed costs $550 per month; for a total of $1350 per month in fixed costs.

Okay. Two 6' tables will fit 8 players, and will cost you $90 & 8 steel folding chairs cost you $110. You're not going to worry about that cost too much because you're going to use the tables & chairs forever! Anyway, 36 sq. ft. of store space (that's about how much 8 players, 8 chairs, & two 6' tables will take up) costs $55.50 per month or a measly $0.75 per FNM, figuring that you're open for 56 hours a week.

So, now you have $21 left of your entry fees for prize support. Including shipping, booster packs will cost somewhere between $2.05 and $2.20 each. Let's just put them at $2.10. That means that if you pay out more than 10 packs TOTAL for your 8 player event, you're losing money. Hmm. Well, 4-2-1-1 payout would be okay, and leave a sliver of profit. Just okay, though, not any more of a draw than "no additional prizes", really. Hmm.

Wait a minute, though, FNM is a weekly thing to get players into your store regularly. They, in theory, should buy packs, supplies, and singles. You can afford to jazz up those prizes some, losing money on the tournament end, and make it up in increased sales, right? Cool!

Let's shoot for 16 players. (And hope for 32 --the "Holy Grail" WPN advanced level!) At 16 players, you'll get $96 in fees. But, you're shooting for 32, so you need get 6 more tables and 24 more chairs. Another $600. Those tables & chairs add up! Again, though, you'll use them forever.

Setting up 8 tables, you realize that, in order for the players to move around and actually sit at the tables, each table will really need 24 sq. ft. of its own. That's a total of 192 sq. ft. or $2.90 per FNM. *Whew*, still no big deal. And your labor cost stays the same! With 32 players, you'll have $162.85 to play with for prize support. That's 77 packs! Holy crap, you can do some sweet payout with that kind of room!

(to be continued)

*Disclaimer: The store depicted in this post is completely fictional. Any similarities to stores (living or dead) are completely coincidental. This post is not intended as a model to create a store, and is for educational purposes only.