Play Meter

Continued from page 14
"I would never buy a place thinking
I was so great that I could increase its revenue"
PLAY METER: You mentioned vacancies coming
open in malls from such things as bankruptcies.
Would it be wise for an operator to keep his eyes on
existing malls for this reason?
DAUGHERTY: Yes, when a large tenant goes
bankrupt, they can leave behind maybe ten or
twenty thousand square feet, and that can be
pretty hard to fill. Sometimes the landlord can
divide it up, and this is the perfect time for someone
to move in with an amusement center, if there isn't
one already in there. The good thing about an old
mall is that you can clock the traffic. A new
mall- let's say with one million square feet-has
everything going for it, but it's not always the
success it's supposed to be. Sometimes with the
new shopping malls you can't measure the success
as well as you can with an old shopping center
where you can actually clock the traffic. If you find
a good shopping center that doesn't have an arcade,
you might approach the landlord, even though all
his space is filled up. That way when a vacancy
pops up, you'll be right there. And, of course, you
can probably negotiate a better lease agreement.
PLAY METER: A lot of the planning of amusement
centers focuses on what the operator thinks he · can
make from his machines. Is there any guidelines as
to how the operator can project his earnings?
DAUGHERTY: In a mall, I would use anywhere
from $50 per machine up to $100 per machine per
week. So you ought to figure at about $75 per
machine per week, which for about 40 machines in a
2000-square-foot area would give you about
$150,000 a year. But .you have to look at the down
side of that. What if you . pull in only $50 per
machine per week, which would be only $100,000 a
year? Can you still pay your bills? And then there's
the chance you might do $100 a machine which is
$200,000 a year.
PLAY METER: Replacing or rotating games, you
said earlier·, is a problem even with the national
companies. What should the operator consider in
this area?
DAUGHERTY: I think you're lucky if a new game
goes for a year and a half in an arcade. My clients
have a difficult time here, because they are single
Mali
The Henry W. T. Mali & Co . Inc.
2fil Park Ave. South
Naw York. NY 10010
12121 475 49iO
Toll Free: IIDJI223 6468
78
operators. The bigger operators have the ad-
vantage of their growth and can do a little rotation .
But I think the days of rotation are just about over.
I think we're in t he days of upgrading only. The
thing is that today you have to sell the machine
before the depreciation gets too bad on it. Take Sea
Wolf, for example. Up until a few months ago, you
could get $900 for the game, and that game is about
three years old! and only cost $1500. So it only
depreciated about thirty percent in three years.
But now it's down to $600 or $700, and I guarantee
you that in another three months it'll be down to
$300 or $400. So there are two things to consider
when you are thinking about trading in your old
games to get new ones. You have to consider the
play appeal of the game and its resale value. But the
average guy will say the game is still earning a
hundred a week for him so why should he get rid of
it, but you also have to have a mind toward
replacing your equipment. If you hold onto it too
long, then you may have trouble getting rid of it
when the time comes.
PLAY METER: What are your feelings on
promotions?
DAUGHERTY: Sometimes people think they can
buy an arcade and can increase the revenue, but I
don't think you can. No matter how good a
promotion you have, no matter how good the
equipment, the whole gross revenue for the place
was established when you picked the spot. I
disagree with some of the national companies on
this point. They claim that promotions and market
studies are worthwhile . I don't think they make
that much difference. To use the two extremes as
an example, I think it's possible if you give me a
good location to make money there, even if you
have crummy games in there, you run the place
crummy, and don't do any promotion. On the other
hand, if you have a crummy location, even if you
have good equipment, you run the place well, and
you have all the promotions in the world, you still
won't do that good. In short, I would never buy a
place thinking I was so great that I could increase
its revenue. It's the location you've got to consider,
and the enclosed shopping malls are where the good
locations are t oday.
Billiard Cloth
tyle
~20- Pl ai n,
Style 920-Backed
Fabrics developed pecifically for
coi n-operated tables.
Available through your di tributor.
PLAY METER, April, 1979