HOW TO BUILD A CASINO ENTERTAINMENT BUDGET
In this blog post, we are going to talk about building a casino entertainment budget. We’ll cover all of the important elements of a standard entertainment budget and I’m also going to share some useful tips in hopes that they may be useful in your entertainment program. Additionally, I’m going to talk a little bit about some general marketing and entertainment concepts since the two are so deeply connected. Remember, building a casino entertainment budget is less about determining what or how much to spend, it’s more about figuring out why and when to spend. There are a million different ways to build a budget.
3 STEPS TO BUILDING A CASINO ENTERTAINMENT BUDGET:
- Identify strategy
- Set goals
- Set a cap for frequency & talent fee per show
WHY DO SO MANY TRIBAL CASINOS LOSE MONEY IN THEIR ENTERTAINMENT PROGRAMS?
In order to answer this question, I feel it’s important to understand the process and the people involved or selected to build the casino’s entertainment budget. Sometimes a casino talent buyer is involved in that process, most of the time they are not. The value of having a high-quality entertainment consultant in the room during the budgeting process cannot be understated, however. A budget is basically just a plan. And every plan starts off the same way, with intent or a final goal in mind. To increase the chances of reaching your goal, it might be a good idea to have anyone playing a major role in a casino entertainment program involved from the beginning, and that includes the planning or budgeting phase.
It’s natural to want to blame someone if you are experiencing a significant loss in your entertainment program. Instead of shifting the blame or accusing your talent buyer of foul play, it might be wiser to consider working with a variety of entertainment consultants until you find one that has the most measurable success. The right entertainment company really can help you massage the budgeting process since they will likely be able to offer real insight on celebrity pricing and other live event-related costs. With Seattle Entertainment Group we outline your core objectives first, then SEG starts to build a casino entertainment budget based on your desired outcome. What does this mean? It means we measure a budget by the projected results and historical data for your venue, not the size of your property. I couldn’t tell you what your budget should be. Not unless I reviewed all entertainment financials and relevant ticketing data for your venue. I would then also look at the gaming floor capacity, table max, betting limits, regional trends, and more before even considering making a budget recommendation. Notice I didn’t say anything about the size of the venue or how many seats you might have to sell. That is the easy part, and only a part of the secret sauce needed to maintain the success of any casino properties long term entertainment program. In short, the casino entertainment budget is more than what you want to spend on talent. There is an abundance of foundational information to gather and analyze before even thinking about what kind of artist you plan to hire for your casino concert goer or VIP event. Contact us for more details if you are unsure of what step to take next. We can save you time, money, and energy. A lot of it.
It is not normal for a concert venue to have a $1 million deficit at the end of the year but it was happening within tribal casinos everywhere in Indian Country pre-Covid.
UNDERSTANDING THE CASINO ENTERTAINMENT BUDGET:
Your entertainment program can prosper greatly, but your casino entertainment budget will only start to pencil if it is driven by 100% business objectives. NOT egos. In other words, it could be beneficial to stop trying to compete against the tribe down the road. And if you are completing an artist’s agent could certainly exploit the fact. Personally, I NEVER do the bidding war thing. As a business person, it never made sense to spend more than what you can make back on paper. Sadly, in some cases, you almost have no choice. There is an option, however. The option to walk away and be more creative in order to outshine and outperform the competition. You don’t have to outspend to be the most creative or the talk of the town. Trust me.
Research shows brand marketing is less effective in a competitive market because there are so many options. Brand marketing essentially means you cannot justify the expense fully or at all in most cases. Now, this is where I have to be very clear because I feel there is a misconception in tribal gaming. Some of the advertisement expenses for a concert can be considered part of the key brand marketing for your tribal casino. Therefore, the return is in a way, submissive. It might be a mistake however to apply the same logic toward the talent fee, agent fee, and any other concert-related costs though. The goal should be to make money like a normal concert venue, not to throw a tribe’s money into a money pit, and call it essential brand marketing. Another common mistake is overpaying for an act so a neighboring tribe/venue doesn’t get them first. This will actually hurt your bottom line in multiple ways. First, you lose money because your tickets won’t scale properly now that you have overpaid for the artist. Secondly, the small amount of brand equity gained from having the aforesaid performer at your venue versus the competitor probably isn’t enough to justify the extra money spent to get them there. And guess what, it’s probably not enough to spark a lifelong gambler at your casino property either. Most true gamblers pick their preferred gaming destination based on convenience, amenities, service, and overall value. This includes player rewards and comp/reinvestment programs. A true concert goer now, they will certainly become a lifelong patron of your venue if you have the exact type of bands they like to see perform. The two types of people do a crossover, but one (the gambler) is very unlikely to alter their long-term preferred buying habits based on the types of entertainment you have.
3 ELEMENTS OF A CASINO ENTERTAINMENT BUDGET:
- Expenses – The Cost
- Revenue – The Income
- Outcome – The Difference between number 1 and number 2
6 DIFFERENT TYPES OF CASINO ENTERTAINMENT EXPENSES:
- Talent Fee & Talent Buyer Fee
- Advertising – Internal/External Print, Digital, Radio, Television & Social
- Production – Sound, Lights, Staging, Backline, Video & Labor
- Ticketing Services & Ticket Comps
- Transportation + Runner
- Catering & Hotels
3 REASONS CASINOS NEED AN ENTERTAINMENT BUDGET:
- Adds another profit center
- Rewards & retains your current core demographic
- Leverage to acquire or appeal to new clients
Expenses can vary depending on the venue and the needs of each act or performer. Hopefully, this short list helps you understand some of the initial expenses.
WHAT ENDS UP HAPPENING
Many talented buyers decide to get into the music industry because of their passion for watching live entertainment. The downside is, most casino talent buying agents do not understand the financial side of the music business within tribal gaming. All they talk about is the talent fee, buyers fee, and the hopeful drop. This means it will be much more difficult for them to be successful long term and the casinos they work with along the way could suffer. Concerts and live events can be very lucrative for you as a booking agent/promoter, but you must have the same passion for the budgeting and financial aspect of the industry as you do for any other part. If your talent buyer doesn’t provide you with killer budgeting tools and solid financial recommendations based on data, run, and contact us now.