OPERATING
Calm before the storm?
Ali's quiet on the Detroit front. A
proposed anti-pinball ordinance in
that city seems at present to be
hanging in a state of limbo .
"It's still in the dormant stage,"
said Michael Spaniolo, executive
secretary of the Music Operators of
Michigan (MOM) of the proposed
ordinance . "The proposal is still on
the inactive part of the calendar."
would
ban
The
ordinance
amusement machines in the city
unless 51 percent of the residents
and the businesses within a 5OO-foot
radius approve (presently an arcade
can be set up in the city unless there
is 51 percent disapproval). The
proposed ordinance would also
redefine an arcade as a location with
two machines; presently, an arcade
is defined as a location with eight
machines. A third part of the
ordinance would ban all amusement
machines within 500 feet of any
school .
The Detroit Common Council 's
proposed ordinance follows trouble
at a location which happened to
have several pinball machines.
Detroit operators and MOM have
opposed the ordinance saying it
would virtually destroy the pinball
business in that city (August, PLAY
METER, page 14) .
At an October meeting where
MOM officials and Detroit operators
met with the Detroit Common
Council , MOM agreed to provide
the council with an economic
impact report of the ordinance .
Though MOM has provided the
Council with that report, the Detroit
council still has not commented on
it, nor has it commented on a
proposal by MOM which w ould
establish a self-regulating commit-
tee to oversee any location prob-
lems in lieu of the proposed
ordinance.
Spaniolo told PLAY METER that
MOM has decided to give up its
opposition to one part of the
proposed ordinance, the ban on
amusement machines within 500
feet of a school. However, he
continued, MOM will continue to
fight the other provisions of the
ordinance .
Spaniolo added that if the other
provisions are enacted by the
Detroit council, MOM will seek to
have the ordinance overturned in
the courts . ''I'm sure we'll entertain
some legal action against it because
we feel their legal position is very
weak, " said the MOM spokesman.
The memorandum to the Detroit
city council which outlines the
economic impact such an ordinance
would have points out for the
council members that " At no time in
the relationship between operator
and location does the operator have
control over how the location runs
his business . Herein lies the problem
associated with the proposed ordi-
nance to ban amusement devices in
the City of Detroit," the report
states. "The operator may be an
unwilling and innocent victim of an
ordinance to ban amusement de-
vices in the city."
The memorandum goes on to
state that "We understand there are
and have been locations in the City
of Detroit where young people
gather and cause trouble. Often
these trouble spots are associated
with the presence of an arcade,
sandwich shop, or other locations of
flipper games, pool tables, TV
games, air hockey, etc . But the
person responsible for the operation
of the location is the ovVner - not
the ope~ator of the games on the
premises," the report reiterated .
The economic impact report
pointed out that " there is not one of
our Detroit area members who will
not be compelled to layoff
employees, reduce work hours, or
both . "
The MOM impact survey showed
that the proposed ordinance would
affect over 700 locations in the city,
that over 45 employees of operating
firms would lose their jobs and
another 35 would face a salary or
hours reduction , and that over $1
million in gross revenue would be
lost by operating companies.
"In addition to these losses the
MOM report went on to say.
"Amusement machines build traffic
for many business establishments,
and the commissions from machine
income help these establishments
meet overhead expenses such as
rent and taxes."
MOM 's proposed self-regulating
committee would include two De-
troit operators, one member of the
Detroit city councilor the council 's
designee, the executive director of
MOM or his designee, a manufac-
turer or distributor representative,
and a private citizen .
Operating strategy for 1978
The impact of electronic pins has
been phenomenal. With the start of
production on Gottlieb's electronic
Cleopatra this month , the end of
electro-mechanical production ap-
pears to be just a matter of
time - perhaps by spring , or by
summer at the latest. It is a whole
new world of operation, techniques,
service, etc. We are still learning,
and we will continue to teach you ,
the operator, as we go along. We
will improve, and you will too .
The increased costs of the
equipment make it necessary for the
distributor to be selective in his
selling efforts. The poor or even
marginal paying operator is going to
find it increasingly difficult to get
14
equipment. The distributor can no
longer afford to take chances . The
days of easy credit and easy terms
are over. Payment terms to the
factories have become increasingly
stringent, and this inevitably must
result in more restrictive terms to
the operator.
In the same vein , the operator has
been changing , and must continue
to change, his methods of doing
business. The sub-marginal location
requires constant monitoring with
every effort being made to improve
income and efficiency.
Even the top echelon of locations
must be given continuous attention
to maximize income and profitabili-
ty.
And , in every case, the objectives
are the same:
1. How to increase the proportion
of total revenues for the operator.
2 . How to maximize income return
on capital investment in the loca-
tion . (For example, what is the
proper number of machines to have
in each location .)
3. How to improve efficiency in
service, shop costs, parts costs,
collection procedures, etc .
4 . An improved program in pur-
chasing and / or leasing with a
thorough analysis by management
and accountants as to the choice or
mix. This also includes budgeting
for purchases or leasing, forecasts
and depreciation , application of tax
PLAY METER, January , 1978