Club Spending More to Attract New Players

What if Players International threw a party and only about 2,000 people came?

That’s what happened in December when the Calabasas company, which operates a discount travel club for frequent visitors to Las Vegas, Atlantic City and other gaming resorts, held a three-day festival in Las Vegas called “Gamefest,” promising an “entertainment and travel extravaganza” with slot machine and blackjack tournaments and a big party with food and drinks from Australia.

But after budgeting for 3,000 to 4,000 participants, Players only got about 2,000, making the event disappointing and unprofitable for the company.

“I know it has to do with the economy and the war,” said Players Vice Chairman David Fishman, who declined to provide cost figures for Gamefest.

Indeed, Fishman said the threat of war in the last three months of 1990 put the skids on all of the company’s business ventures, forcing the company to spend more to get new members for its Players Club and cutting revenues for its travel agency business.

The problems became obvious when Players said its earnings for the quarter that ended Dec. 31 dropped 43% to $179,000, from $313,000 a year earlier, even while revenue rose 47% to $6.03 million, from $4.10 million a year ago

During the nine months that ended Dec. 31, Players’ net income dropped 83%, to $610,000 from $3.61 million a year earlier. The plunge was due mainly to a $3.50-million onetime contract settlement the company received in 1989. Revenues during the nine-month period climbed 24% to $14.8 million, from $12.0 million.

The war in the Gulf has put a severe crimp on travel in the United States--travel from some countries to the United States has fallen 40% since the war began in January. That directly hurts Players’ travel agency business. And Roger Lipton, an analyst with Ladenburg, Thalmann in New York said it can hurt Players Club, the company’s main business, as well. “You don’t need to join a travel club if you’re not anticipating any travel,” he said.

But Fishman said there’s more to the company’s war-related problems. Players Club attracts new members with television ads starring actor Telly Savalas--most of them shown on late-night television--and through direct-mail solicitations and telemarketing. Fishman said consumers don’t respond as well to such appeals during wars.

Although the number of new members has fallen off and the cost to attract them is higher, Fishman said, renewals by existing members have been constant.

All Players can do in such tough times is cut costs by scaling back its marketing--buying fewer television spots and having outside contractors send fewer direct-mail solicitations, Fishman said. The company continues to do test-marketing in hopes that the tide will turn.

A possible bright spot for Players is its “Phone Jeopardy!” and “Phone Wheel of Fortune,” 900-number games that allow customers to play electronic versions of the popular television game shows by phone. In the quarter that ended Dec. 31, start-up costs for the games cut into profits, but Players said it has now recouped nearly all the costs and expects the games to contribute to profits in the present quarter.