The Crazy Economics of Comic Conventions
I talked to experts on how they make bank. I was surprised at what I learned.
Another hot August day in San Antonio.
One of our companies sponsored a local comic convention.
We stopped by to show support, fresh in our corporate logo polo shirts.
And immediately felt out of place in a sea of… nerds in costumes.
What I saw surprised me:
Money flying everywhere!
People dropping $50 for autographs from a random anime d-list celebrity.
Then spending $10 to get it “certified” for resale.
Vendors making $100s per minute selling (sometimes authentic) gear.
$15 “magic cups” with unlimited soda and popcorn refills.
Nerds in costume hanging around the bathrooms.
Hoping that someone would want to take a selfie with them
What in the name of Adam Smith's free market economics is going on here?
They may be comic nerds. But I’m a business nerd.
I decided to talk to some experts to learn more.
The Promoters
Conventions like San Diego’s Comic-Con or the smaller copies around the country date from the 1960s.
Small-time promoters organized comic books, sci-fi, or similar get-togethers. What started as a fan gathering of several hundred people now gets up to 165,000 attendees in many types of flavors.
These include comic conventions (centered on comics), sci-fi cons, celeb cons, and others.
Behind these are The Promoters.
Organized as either solo operations or large corporations, these groups take most of the risk of the event.
The promoters:
Conceive the concept and strategy
Sell spots to vendors, sponsors, and tickets
Secure venues, speakers, and stars to appear
And get “support” from cities wanting the tourist dollars (i.e., ask for public money)
The Promoters have the same economics as a music promoter or a sporting event:
Large, fixed costs that they must overcome to make a profit.
And a big upside once they clear it.
A good rule of thumb is a well-run convention should make $30 per attendee in profit.
But, do it wrong, and you can lose your butt (or, more specifically, millions of dollars).
Power Laws and Cons
A power law distribution looks like this:
A few “winning” cons are bigger than the entire long tail of smaller shows or events.
San Diego’s Comic-Con reportedly gets 130,000 attendees over a weekend.
Using the $30 / attendee profit measure, they’re generating ~$3.9mm in profit.
These big shows make most of the money, get most of the attention, and most of the attendees.
Well, why is that?
The Stars
Do you know the most famous male action star in Hollywood right now?
Tom Cruise is the easy answer.
Who’s the 5th most famous?
The short answer is: Nobody cares.
Given most people see only a few action movies a year, the studios will pay tons for stars 1-3 or so.
But, the 5th best star works as a waiter at Pizza Hut.
Well, why do I talk about this?
It affects the Cons as well.
If Tom Cruise is at your show, you’ll get 10,000s attendees.
If the #5 action star shows up, nobody cares.
So, the Cons line up to get the biggest stars.
And the “Power Law” outcome naturally forms.
The Stars
At the con I attended, here is the line to take a 15-second photo with “Obi-Wan Kenobi” Ewan MacGregor:
There were 3-tiers of celebrities:
· Tier 1: Ewan MacGregor, Blues Brothers ($200k-400k or more in appearance fees for 6-12 hours of work)
· Tier 2: The original Flash Gordon, etc. ($25k-100k in appearance fees)
· Tier 3: Random C-list or D-list celebs (pay their way or even pay to be in the show)
A few fans were there for Tier 3.
A few more for the Tier 2s.
But, the draw was the Tier 1. They eat up almost all the expense – because they and their agents know how this works.
You get Arnold or Obi-Wan. Your show is going to work.
You don’t? Good luck.
Oh, and the celeb might take a cut of each dollar of profit from you, the promoter, above a certain amount.
Rumors are that guys like William Shatner might take 70 or 80% of the split above his fixed fee.
Or, their agency might make you pay some c-listers they rep to get the a-list.
All about leverage – and Hollywood is the KING of knowing when they have it!
Come for the stars, there are many other people ready to take their cut.
Venues
The experts told me your show would live or die with the venue contract.
In San Antonio, our medium-sized convention center is $300k-$500k just to open the doors.
Then, these venues can eat you alive with sweetheart deals made with “exclusive” service providers – who then turn around and charge you a ton.
“Sorry, you must use one of these 3 electricians who all happen to know each other.”
“You want popcorn? This is the exclusive provider for that. Pay up.”
And the worst, according to the experts, are Union shops.
I heard horror stories of shows unable to continue because unions or vendors wouldn’t provide internet access or were too slow.
Brutal.
Merch Vendors
These guys come in all shapes and sizes.
You have mom-and-pops just promoting their books or the art they create.
Up to the big brands like Marvel or DC Comics, who may or may not be willing to come in.
And then there are the “gray market” guys like this one selling $70 prints of questionably licensed merchandise. Get these guys in your show, and the legit players won’t come.
But, these guys can make bank — rent a spot for $1k-$50k on the show floor. Do several thousand to $100ks of high gross margin sales in a weekend. Do it again next weekend.
And the Rest
· Sponsors: the companies and brands you get to pay the show for exposure. In the case of the con I attended, a local personal injury firm bankrolled the whole thing.
· Hotels: another source of revenue for the promoters. Send guests their way, and you can get kickbacks or free rooms.
· Cities/CVBs: San Diego Comic-con and many other conventions get to a size where they command subsidies from the government. You’ll see cons “handout hopping” between cities based on who gives them the best deal.
· Inspectors and Bureaucrats: These guys also want their pound of flesh. Health and safety inspections, fire marshals on site. It’s all real, and they get paid whatever you’re told to pay them.
· Cosplayers: These people dress up as their favorite characters and then pay to attend your show. Never have I seen a business where the entertainers are paying customers! Fun fact: some of these Cosplayers have become minor celebs as well.
· Community: most shows need the community to produce content like panels or interviews. The good news: they often do it for free.
Just nuts.
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Oil Wildcatters, But Geeks
These promoters and the people in the show circuit feel like old-school Oil Wildcatters.
High-risk entrepreneurs striking it rich or going broke in a hurry.
The experts said shows come and go quickly, with few standing the test of time.
The ones like San Diego Comic-Con or New York (the 2nd biggest) have seemingly big moats.
When you’re big, the money comes in, you can take bigger bets the next year and afford the biggest stars.
The vendors pay up, and you have leverage over the city and hotels.
Being small means scraping by some years and printing money in others.
But, like the Power Law economics in Oil Wells – it only takes one hit, and you can make a mint.
You, the promoter, just must survive long enough to hit it big.
Michael
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