Forum - View topicAnswerman - Why Are Anime Conventions So Expensive?
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leafy sea dragon
 Posts: 7163 Location: Another Kingdom |
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That was actually a really neat insight into the types of costs a fan convention has to pay, and really detailed too. I'd guess the prices go up exponentially with the size of the convention, and that is a big factor into why bigger ones tend to cost more.
I'd guess there's also something else to consider that isn't immediately apparent and people don't really think about: Fees from the government. Even if it's non-profit, a convention might still need to pay fees and/or penalties simply because there are so many people present or because the topic the convention is on is beyond normal standards of something. I'd like to again bring up Arcade Expo as an example: The event has 600+ arcade machines, which means it takes up an absurd amount of electricity. Not only does this mean the electricity bill for the place goes through the roof any time the place holds Arcade Expo, but the people who run it need to pay special fees to get permission from the government to have and operate that many machines, as well as at least several maintenance people on the premises at all times in case something goes down (and last time I went there, about 25% of the machines were down or had malfunctions at any given moment, and I saw these guys constantly run from place to place; it was a bummer any time those really old WWII-era arcade games were down, especially that spinning rocketship one). I remember listening to an interview with John Weeks, the founder of Arcade Expo, and he says that those electricity-based fees cost him about $5,000 per day. At about 1,500 attendees, it is a pretty small con, smaller than small anime cons. (Unique to arcade machines, by the way, is that the staff must never let an attendee put coins into any of the machines. Otherwise, they will lose their non-profit status.) |
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Shiflan
 Posts: 418 |
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No, we weren't restricted to any specific part of the facility, and I did have a car available. I technically could have driven out but it just wasn't worth the effort. 30+ minutes of driving (two ways), plus the hassle of driving in an unfamiliar area (this was before the days of GPS-enabled smartphones), the fuel expense, and so on made it not worth it. Yes, the $10 hamburger was a ripoff, but driving 30 min to and from McDonald's would have been just as expensive when you add everything up. Thankfully that sort of thing is rare though, Most cons I have attended--be it for anime or for business--have plenty of options nearby. |
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HeeroTX
Posts: 2046 Location: Austin, TX |
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Thanks for raising this topic at the start of my week's vacation.
This is actually generally false. The standard cost curve rises and falls with size (with some variance for regional costs and venue availability) "Tiny" cons (currently defined as under 1000) are easy to find space, but difficult to defray costs due to smaller attendance. That affects both convention income and facility interest in the event. "Small" cons (1000-5000) are comparatively "easy" to profit from. MOST cities will have several options for space which means you can negotiate and compare and the attendance numbers mean you can get breaks from hotels based on pickup. "Medium" cons (5000-10000) are back to "questionable" this can be a tough hurdle to clear because you're transitioning from hotel space to "convention center" space which is less beneficial for more people but your attendance numbers may not yet account for the change. But again, it depends on competition. (At this point, I should note that larger cities have the benefit of more spaces, but the negative of more events. A conference center in a small town might be really enthusiastic about trying to fill their calendar and thus give price breaks for a "dead" time, but a big city center has no issue filling the space and instead makes the CONVENTION compete with other events) "Large" cons (10,000+) you CAN do whatever you're doing, any cost problems are entirely self-inflicted. (the size breaks are also somewhat "malleable", for example 10k people is not a "large" con in New York or LA) To anybody who wants to claim that a large con can't afford what they're doing I'll say this, if you're involved with that con, are you a millionaire? If not, would you "donate" 5+ figure $$$ to an anime convention to keep it running? Because, if not, then how DOES it keep going? When conventions have 6+ figure budgets, they don't keep going on the good will and charity of the Orgs. And at just 10k attendance being charged $50/head, that's $500k just on attendees, not counting vendors, artists etc. (For the record, I have been involved with various anime conventions at ALL levels, for MANY conventions (not all) it is looked at as a business, period. I personally hate that fact, but it IS a fact) EDIT: One Addendum, I don't think cons are more EXPENSIVE, but I do think people may be more inclined to NOTICE the costs more, because (as noted above) anime conventions have become more of a BUSINESS. |
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leafy sea dragon
Posts: 7163 Location: Another Kingdom |
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That's also interesting. I always had the impression that the bigger your convention, the more additional costs you have to deal with and the more parties get involved. That is, I had the impression that bigger conventions would have certain expenses smaller companies wouldn't have. I'm going at this based on the size of businesses though. Some mom-and-pop store might have all the accounting done by the store owner using a four-function calculator, for instance, but if they get big enough, they'll eventually need to get accounting software, then their own dedicated accountant. If they get even bigger, they might need an entire accounting department. You'd also have departments like public relations, legal, brand management, and quality control that a small mom-and-pop business wouldn't have. Does this not apply to conventions? Or am I also getting the idea of an expanding business all wrong? |
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HeeroTX
Posts: 2046 Location: Austin, TX |
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This isn't necessarily true. It COULD happen that way, but just as example: When conventions hit "transition points" you often hear complaints about things. Like "lines", the reason is that the convention has gotten bigger, but all the processes made to handle (for example) registration are still the same, and often manpower has not increased appreciably. (and the vast majority of the time, it's volunteers, so the con is not "throwing money at the problem") Thus you have a system designed when you had hundreds or maybe a couple thousand people now trying to cope with 10 thousand+. The biggest "transition point" is anytime you shift facilities. Again, going back to the variation, a "tiny" convention could run in a small hotel, or maybe on a campus. A "small" convention needs a larger hotel, but it can also more easily offset costs. Many hotels will greatly reduce (if not "comp") function space if you pick up a lot of room nights. So at the low end, the space is more expensive because you don't have enough people, but as your people increases, your costs actually go DOWN because the hotel makes more money off of you and you can negotiate that as a savings to self. Once you need to make the jump to convention center, costs jump again because you now definitely need to pay for space again, but as you "spread out" the previous points come back into play. Plus, if you get large enough, the city gains from your presence and better appreciates the revenue, and thus the local CVB will more readily assist with negotiations and other things. (Also, when you FIRST move to a CC, let's say it costs $100k, if you have 5,000 people at $50/person, that's 40% of your budget, but if the space can accomodate 10k people, then if next year the convention has 8,000 people, the CC itself is only 25% of budget (sure, there ARE other expenses, but those are MOSTLY controllable and NOT of the same scale) And of course, the "economy of scale" is always a factor as well. It's all well and good to note the cost of things like Program Books (which are mostly a waste nowadays), but if you're buying Prog Books of 1,000 people, they actually cost MORE (per book) than if buying for 10,000. So, if you have 1k attendees, Prog Books may be $1 for every badge bought, but with 10k people it may be more like $0.25 per badge bought. For things like tshirts and other merchandise (which the con actually SELLS) the convention profit rises with more people, both in raw dollars, but also as a percentage. So a $20 tshirt may make the con $2 if there's only 500 people, but it may make $10 (or more) if there's thousands of people. While a convention like Anime Expo also has to deal with union people in the venue (which is a tremendous expense) they also get industry people paying (a premium) for space and often bringing in guests. You also get people that actually CARE about marketing at your event and thus will pay for the priviledge. A smaller convention might need to PAY reps from FUNimation to come to "podunk town USA", AX has the opposite. Depending on the combination of your regional expenses and options the convention expenses will rise and fall based on how well you can handle the current "tier". The closer you are to "maxing out" the current tier, the lower your expenses are. Then, once you move up to the next tier, your expenses JUMP because of the shift and the expectations (from suppliers) of what is "normal" for that tier. It's also why conventions will often have at LEAST 1 or 2 years of being "jam packed" at any given venue before moving somewhere else. At large level, you need to make deals years out, but at the lower levels, its more a function of maxing utilization to drop costs before moving up and raising expenses again. |
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Dessa
 Posts: 4438 |
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A lot of it depends on the event and how it's structured. There's also a difference depending on it it's for/not-for profit, and what it's tax categorization is.
Sakura-Con, for example, since I've been staffing for it, has had to go through a few restructures. When I started, there were 3 departments: Programming (everything to do at con), Operations (everything to make the con run smoothly), and Relations (guests, dealer's, and everything dealing with outside the con). Since then, Publicity has become it's own department (formerly part of Relations), Membership (primarily Registration) split off from Operations, and Sakura Attendee Services (we cannot legally call it 'security' because they are not trained/licensed) was moved from Operations to Publicity. Now, the restructure hasn't cost Sakura-Con anything, because everyone is volunteer (we're a 501(c)3). But an event that has paid staff? Well, you have 2 new executives, so that's gonna be a higher pay rate. And then there's all the man-hours in figuring out exactly how things will work with the new/changed departments. And that's just on a structural level. In general, the biggest cost for a convention is venue. Bigger venue = bigger cost. But bigger venue also means more [potential] attendees, which offsets that cost. So HeeroTX is definitely right in that aspect, because more attendees = more money to offset costs. But there's still a lot more than just that going into it overall. This is why I don't do anything with money (I'm in Programming, myself). |
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HeeroTX
Posts: 2046 Location: Austin, TX |
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Outside of maybe the 3-5 biggest cons (Expo, Otakon, etc) most conventions have maybe around 5 "paid" staff at any given point in time. If any con Org wants to chime in and quote a higher number, feel free. But most just funnel the money to a VERY small few. Usually, new depts just mean someone gets a new fancy title, rather than a sudden windfall. Also, it's not just "more people=more money". Conference centers change the math CONSIDERABLY, but for any convention using hotel function space the MORE people the better (for price). Just as example, look at any hotel website and look at their "Meeting Info". If you want space they will ALWAYS ask "how many room nights do you need". The function space is sold specifically to sell either rooms or catering (or both). Weddings often book rooms for out of town guests and a lot of catering. Conventions often try to avoid the catering, but will book a lot of rooms. So, a hotel might sell you their meeting rooms for $10k/day, but if you fill 200 rooms, they may drop that to $5k/day. If you fill 500 rooms, you may get the space for free! So increasing your turnout not only sells more badges, but also DRAMATICALLY cuts your costs. Again, this doesn't happen with a convention center (which has no rooms to sell) but you have other levers to pull. |
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Dessa
Posts: 4438 |
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Actually, the entire POINT of a convention center is to sell hotel rooms. Just not in the building itself. A con center exists to sell rooms in the nearby hotels. |
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Shiflan
Posts: 418 |
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Yes, but that's not relevant to this point. HeeroTX's point was that when you are using a hotel as your convention venue then you can negotiate a lower price for the use of the ballrooms (etc.) because you are giving the hotel other business (room rental). That doesn't happen in the case of a convention center because the hotels and the convention center are two separate businesses. The convention center isn't going to lower its price based on you filling rooms in a totally separate 3rd party hotel. |
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Dessa
Posts: 4438 |
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Actually, that's exactly what I'm saying. Convention centers exist to sell area hotel rooms. So the more hotel rooms you sell, the better position you're in to negotiate dates, rates, etc, with the convention center. It might not correlate directly to "more rooms = lower rates" like in a hotel, but it does affect the rates.
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leafy sea dragon
Posts: 7163 Location: Another Kingdom |
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Hmm, so does that mean that for most conventions and expos, there are no additional costs that only exist at higher levels besides a more expensive venue? I thought at the very least that they'd all eventually have to get a legal consultant once they reached a certain size. Jim Davis has an attorney as part of his team dedicated solely to Garfield-related things, for instance, and by Season 3 of The Simpsons, there was an attorney always on hand--while I don't think any convention really needs to have. I don't think any convention will need to pay for an attorney's entire income, but at the same time, they're not going to work for free. But maybe this also increases proportionally with the convention's size (and probably the number of attendees) without going out of scale with anything else.
Ah, that's an excellent point. I have been mistakenly comparing these events to for-profit businesses without considering if the conventions or expos are actually for-profit or not.
Maybe it's because I'm seeing it from the point of view of an attendee and not an organizer, but between some of the hotels outright banning people associated with certain events and them holding their own related mini-events (or some exhibitors going to the nearby hotels instead of the convention center), I think there's a significant degree of autonomy between a convention center and the nearby hotels. |
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HeeroTX
Posts: 2046 Location: Austin, TX |
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You're right of course, but with hotels it is a direct relationship, the function space is intended to sell rooms in ONE specific hotel, so if you look at the hotel capacity you can get an idea of what they want. Also, aside from F&B, there's very little "other" considerations, which may or may not be "in house" (ie. considered a big revenue driver). USUALLY a convention center is "allied" with multiple hotels but also has it's own other avenues of revenue (related services). That said, the allied hotels are one of the levers I noted. Also, (depending on the size) the local city/municipal district is also a lever. To put it in perspective, check the tax rates/codes of your town. MANY cities hike up the hotel taxes because "out of towners" are the people usually affected by them. So it is an easy tax to raise without bothering the local constituents. Also, sales & use taxes from a large event can be a BIG deal. Plus various other factors that come into play for negotiations. Point being, when you go from a "small hotel" to a big hotel" to a "convention center" the costs jump, but "more people" is USUALLY a net positive both in terms of revenue and negotiating position. (There are ALWAYS exception cases) |
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