EXECUTIVE DIRECTOR'S REPORT

www.uschess.org is the Official Website of the United States Chess Federation

"The USCF would be in much better shape financially if we set our prices like a business rather than like a political body..."

Most of this reduction in the deficit has been achieved by cost-cutting. Some USCF members seem to believe there is a huge amount of waste at the New Windsor office and, therefore, cutting costs should be easy. This view is just not justified by the facts. The staff in New Windsor works constantly, fielding the huge number of phone calls and vast amounts of paper that flood the office every day. I've found a few things that were obvious to change, but not very many. The biggest area for potential savings is that of legal and other professional fees. These cost $66,000 in fiscal 1995, $131,000 in fiscal 1996, and were increasing at an even faster rate during the first half of fiscal 1997, totaling $69,000 through December. I expect to reverse this trend. I have budgeted only $70,000 for this category in fiscal 1998 and expect to squeeze this figure further in fiscal 1999.

One area of savings that was initiated by my predecessors and continued by me is the reduction of personnel costs by attrition. This is not a savings that can continue indefinitely. The USCF staff peaked at 45 and it seemed we had outgrown our building. We are now down to 38 employees with many of us doing the work of two and with some important jobs not getting done. One unfilled responsibility is that of Club Development. The federation suffers from not having someone to handle this important function which impacts on membership levels. But who should I hire back first: a Director of Operations, a Club Development Director, a graphic artist, a sales/membership representative, a warehouse worker, or someone else? And on what timetable should they be hired back? My tendency is to go slow – to have the improving financial results give me the ammunition to gradually add staff, most of whom, like a Club Development person, will create additional revenue by fulfilling their functions.

An area where expenditures will be necessary is equipment. We miss many sales and membership renewals due to our inadequate phone system. To not spend money on items like that will create larger, not smaller, deficits as the pay-back from a new phone system will be large and steady. Similarly cost-effective or necessary purchases include in-house color proof printing for Chess Life and up-to-date software for sales/membership and accounting.

WE PAY A PRICE FOR POLITICALLY DETERMINED PRICING

The USCF would be in much better shape financially if we set our prices like a business rather than like a political body with large and powerful factions. When I was what was called a Junior member back in the 60's, Junior dues were exactly half of Regular dues. Using that ratio would place Youth dues at $20 rather than the $15 they are today. The federation has also been subsidizing Scholastic dues at $10. We could afford to subsidize Scholastic memberships when they were a small percentage of membership, but not with them becoming such a large amount. $10 per year is an incredible bargain for a year's membership with tournament play, a year's subscription to a magazine, and the services of a full-time Scholastic Coordinator. This is less than what I pay to take my kids to McDonalds once, or bowling, or to the movies. It's hugely less than youth soccer league or one pair of basketball sneakers.
Therefore, I have proposed raising Youth and Scholastic dues by a modest $2 each, putting Scholastic at $12 and Youth at $17 per year. This will allow room to have modest multi-year discounts in these categories instead of the straight line increases that now exist, thus encouraging retention. I have also proposed limiting Scholastic memberships to children 15-years-old and under. I believe that this will aid in membership retention because School Mates is not an appropriate magazine for high school and college students. No magazine can effectively serve a readership as broad as 6 to 19 in age.

Another place in which politically determined pricing hurts us is in the area of TLA's and ratings. The editor of Chess Life, Glenn Petersen, tells me that TLA's are becoming too large a part of the magazine given the cost of printing and mailing and the low price we charge for TLA's. Glenn has done as much as can be done to hold back this expansion by stop-gap measures like changing font size. Decoupling the pricing of TLA's from ratings and raising the price of TLA's would encourage organizers to limit their TLA's to providing necessary information or else pay a price commensurate with the cost of the additional space.

If TLA's are priced apart from ratings, then we could lower ratings fees for regular tournament games, both on paper and on disk. On the other hand, scholastic ratings fees on disk should rise from being free to costing 10 cents per game. Scholastic games are actually more expensive than regular games to rate because of the larger number of unrated players and because of the hours employees spend with some of the parents who want to check their children's rating changes game-by-game over the phone. When the delegates mandate free services like free scholastic ratings on disk and six free TLA's, they are contributors to the federation's financial distress. It is time to end this practice of politically determining prices without adequate regard to financial reality.

THE BOOK AND EQUIPMENT BUSINESS

The book and equipment business earns a good profit every year depending on the assumptions one makes on allocation of salaries and overhead. This profit then supports membership activities like the prize funds of our closed championships. So, the health of this business is very important to the well-being of the federation. Former Executive Director Al Lawrence did a very good job building up this mail-order business, aided in some years by a boom in computer chess machines and programs, and in all years by his marketing savvy. Sales in fiscal 1997 have been anemic. So, one of my major goals during fiscal 1998 will be to re-examine our practices and come up with some innovations in this aspect of the USCF.

One change I am sure to implement is to revive the Scholastic Catalog. This was tried a few years ago and was abandoned after one attempt. We now have a much larger Scholastic membership to mail to, many of whom are avid players. We could also approach them with a larger catalog and a more varied product selection. A possibility I am less sure of is to come out with a larger book catalog or book section of a catalog with more professional, and less 'rah rah!' descriptions of the offerings.

THE APRIL-MAY CHESS BONANZA

During April and May, the USCF staff was hurled from one event to the next with barely a chance to catch our breath. April saw the Super Nationals in Knoxville, Tennessee, the largest chess tournament in the history of the United States with over 4,300 players. There were both large pluses and large minuses to combining the Elementary, Junior High, and High School tournaments into one jumbo event. Plusses included saving money for parents who have competing children in different levels of school and the extra publicity generated by holding a mega-event (photo on page one of The New York Times). The minuses were mostly more particular to the Knoxville event than to the concept in general and included inadequate skittles space, inadequate trophies, and overly-distant, excessively-priced hotels. Besides the Super Nationals, April contained another highly successful National Open.

In May, New York City hosted the biggest chess event, in public relations terms, since the first Fischer-Spassky match in 1972. Kasparov versus Deep Blue gained chess phenomenal publicity all over the world. This publicity will pay dividends to the USCF for years to come, even when we weren't directly mentioned, because of the heightened awareness of chess. However, the USCF was directly cited in many places. I recorded commentaries for NBC morning radio after every game and this was broadcast in hundreds of markets across the country. I was also interviewed on everything from Detroit Sports Radio to the Voice of America and by newspaper reporters from Dallas to Boston, making sure to mention the federation each time. Other USCF staff also made media contacts. For example, Scholastic Coordinator Beatriz Marinello was interviewed on a top Spanish language TV program and Assistant Director Eric Johnson was interviewed on the BBC.

No sooner had Kasparov-Deep Blue ended then we held a new event -- Chess JAM (Juniors Against Masters) '97. This event took four Super Nationals Championship teams and captained them with top U.S. grandmasters. Each grandmaster played one hour clock simuls against the three opposing scholastic teams. The level of the competing grandmasters was extremely high, all perennial U.S. Championship contenders: Gulko, Yermolinsky, Kaidanov, and DeFirmian. Playing such competitors was a fabulous and educational experience for the young scholastic stars. With the honor of the team at stake and the ticking clock stimulating the adrenaline, no charity draws were given out by the famous veterans, yet the young lions did nick their elders for two half-points. The event was held at the UMBC campus in Baltimore, Maryland in conjunction with an eight board clock simul by Garry Kasparov, his last appearance in the U.S. following the Deep Blue match.

THE WEBSITE

Our website featured a well-received simulcast of the Kasparov – Deep Blue match. Our sponsor, Engage (a spin-off of Interplay), developed the necessary simulcast software just in time and the commentary by GM's Patrick Wolff and Arthur Bisguier was much appreciated. On the other hand, on-line shopping was not available in time for the match, which cost us sales. The website has greatly increased in size and scope over the last few months. On the other hand, the extremely important ratings and TLA sections were updated too slowly and were frequently out-of-date. I recently acted to improve the site by hiring Jade River Designs (Duif Calvin) to provide Engage with our website material, so, hopefully, by the time you read this the web situation will have greatly improved.

There are several important factors that members should keep in mind when thinking about the Website. Most important is that Interplay and Engage have large resources that many other chess Internet participants lack. These resources are being thrown into developing on-line chess playing and a new shelf product, USCF Chess, on which we will gain royalties. Interplay is also our best sponsor and is the title sponsor for the U.S. Championship, the U.S. Women's Championship, and the U.S. Junior Championship. The people at Interplay and Engage are highly talented professionals who are also nice people.

Berating them on the Internet is not a good way to attract additional sponsors to chess or to keep those we have. Informed criticism is fine, but it gets more respectful attention when it is expressed cogently and not abusively.

WHICH BRINGS UP SPONSORSHIP IN GENERAL

The USCF now has a great new sponsor. Wizards of the Coast is a Seattle based company which produces the hit card game Magic: The Gathering™ . They helped sponsor this year's CHESSathon and they are considering the rest of our sponsorship proposals. They are also involved in setting up a gaming center in Seattle and are looking forward to organizing USCF tournaments, which could bring in many new members from the fantasy gaming world. The Wizards of the Coast people think very creatively and we are already exploring many new possibilities with them, including joint advertising efforts.

We continue to work with other potential sponsors, old and new. Saitek recently sponsored a computer give-away in Chess Life for limerick composers. We are now flooded with chess limericks. Incidentally, Saitek will also be sponsoring a new chess television program developed by wunderkind GM Gabriel Schwartzman for educational television. Look for it in the Spring!

Not all potential partners are corporate in nature. Policy Board member Rachel Lieberman made a terrific contact with the Center For Disease Control (CDC), a branch of the federal government. The tie-in is that the CDC is interested in preventing sexually transmitted diseases and teen pregnancies and that one way to do this is by providing positive alternatives to youths, like chess. Chess helps people to think ahead, weigh and test the consequences of their actions, and to delay gratification, all of which is helpful in this area. A CDC manager and five community representatives from Texas, Oklahoma, and Illinois contacted by the CDC joined the Liebermans, PB member Fan Adams, Scholastic Coordinator Beatriz Marinello and me in visiting New York City chess instructional classes in the public schools as well as the CHESSathon. As a result of this visit, we will likely see chess introduced into the curriculum in San Antonio, Texas, as well as possible federal funding for research projects investigating the educational benefits of chess. My appeal to the general membership in Chess Life and to the Life Members by direct mail has also been successful, bringing in over $20,000 so far.

IN CONCLUSION

We are not out of the hole yet, but we're getting there fast. I'm projecting a surplus of over $100,000 in fiscal 1998 to offset the deficit in fiscal 1997. The initial June - October period may well see a deficit again because it is the federation's normal, seasonally weak period, but we should be in surplus after the Christmas season and for the rest of the fiscal year. If the federation is to avoid financial chaos, we need to eschew politically determined pricing to the maximum extent possible. The book and equipment business makes a positive contribution to the federation and needs new ideas, like a scholastic catalog, to give it a boost. We need to broaden our sources of support to new benefactors in the corporate, government, and foundation worlds. Finally, I'm happy to report that, even in this year which began with a large deficit cramping the federation's position, we were still able to hold many successful chess events and even to create a new one. As chess stalwart GM Edmar Mednis remarked to me while he was volunteering at the CHESSathon: "If you get any extra money next year, spend it on chess, not this other stuff." Amen, Edmar.

Michael Cavallo
U. S. Chess Federation
Executive Director

We welcome your feedback about our site! Please write to: [email protected]

This page was last updated June 26, 1997

� 1996, 1997 the United States Chess Federation - All Rights Reserved
*Hosted by Internet Chess Club*