Gary Brewer of Brewer Amusement Co. (McMinnville, TN) will become president of the Amusement and Music Operators Association on Sept. 26 at the close of the association's 2009 International Expo in Las Vegas. He is a second-generation operator who has led his family business since 1979.
This interview was conducted in mid-July. For a profile of Gary Brewer as an operator, and a brief history of Brewer Amusement, see the August 2009 issue of VENDING TIMES.
VENDING TIMES: Congratulations on being elected to serve as next year's AMOA president. What have been the most important events, accomplishments and initiatives of the past year for AMOA?
GARY BREWER: As we moved beyond our 2008 fall show and looked ahead to 2009, we expected a challenging year for our industry and for the association due to the overall barometer of the economy. A similar uncertainty of outlook was experienced after 9/11; this is what always happens after any big challenge comes along. When something changes as much as the economics of the whole U.S. changed late last year, you don't know what impact it will have on the amusements industry. So we didn't know what to expect when we started out this year.
Our first activity of the year was our annual Council of Affiliated States. We began 2009 with a solidly sponsored, well-attended meeting in February; that served as a springboard of confidence throughout AMOA. Everyone thoroughly enjoyed the program. Since that came during sluggish economic times, we were really happy with the outcome.
That confidence has carried through the whole year. Fundraising and contributions to our political action committee program and the AMOA Wayne E. Hesch Educational Foundation are doing fine -- especially considered in light of what kind of year this is.
In general, I would say that trade associations are always very important, but especially so during lean economic times. There is great value to be found in AMOA and all its supporting programs, and operators are rediscovering that value today.
VT: Do you have any specific major goals or policies that you will pursue during your term?
GB: I plan to focus on our 1,300-plus members as they represent the majority of the buying force in the U.S. market today. At this time, I think the official figure is 1,318; that is a solid number in today's climate. We had just a little over 1,400 members last year, so our Membership Committee is very happy with their accomplishments. We'll close that gap even more, because we always pick up a few members just before our annual trade show.
It's always important to add to the member benefits package. We've got a committee that is working very hard on a variety of things. This is truly a year-round effort. It never slows down. It's a challenge to find things that will benefit the majority; but you always strive to do that. As I travel around the country during the next year, visiting state associations and operators, I want to learn more about our individual members and their businesses and see how our association can focus on meeting their needs, in their relationships with our distributors and manufacturers.
Today, a strong videogame title on average may sell 2,500 or 3,000 pieces of equipment. If we have 1,300 members, we feel that's the core of U.S. operators, so we feel our membership is doing the majority of that buying. We want to find out what their needs are and "work backwards" up the supply chain -- through distribution to the manufacturers -- to make sure we communicate operators' needs fully and clearly. Operators are out in the street and they hear the good, the bad and the ugly about the market. Operators know what players and locations like and want. So we are looking at ways that AMOA members can more effectively focus their collective buying presence in the market.
I also believe distributors have a crucial role to play and have a unique perspective on industry conditions. Distributors continue to play an active part in the amusements industry and as members of their communities. They belong to the local chambers of commerce; they often get leads on new locations coming into town; and they have specialized knowledge. Although the distributor sector has seen its challenges in the last few years and the industry's business model is changing, at their best, distributors are still an important part of what makes the industry healthy.
VT: Incoming AMOA leaders typically say they want to "continue the work that has been going on." What are the major ongoing projects and current top priorities for AMOA as of now?
GB: Among many other issues, recently we have been focused on the future of IALEI, the International Association for the Leisure and Entertainment Industry. AMOA has been trying to understand what IALEI's possible merger with IAAPA (the International Association of Amusement Parks and Attractions) means for Fun Expo and, if the merger takes place, what could be the impact on the overall industry.
VT: AMOA and AAMA are members of LETS, Leisure Entertainment Trade Shows, the umbrella organization that owns Fun Expo. Why did LETS approve IAAPA's possible purchase of IALEI's interest in Fun Expo?
GB: Whenever this kind of change is on the horizon, it's hard to know what the effects will be. As I mentioned, we've had a big discussion about it within AMOA. What it came down to is that AMOA felt the upside of having IAAPA as a potent partner in LETS and Fun Expo outweighed any negatives, and since AAMA ultimately approved the scenario -- and the leadership of our other partner, IALEI, obviously was in favor of it -- AMOA supported it, too.
VT: Can you give us any update on the ongoing discussions about a possible merger of the AMOA show with the Amusement Showcase International, owned by the American Amusement Machine Association?
GB: All those involved in these discussions are bound by a nondisclosure agreement. But yes, it is a matter of public record that we have also spent time discussing the possibility of one show, combining AMOA International Expo with ASI.
At this time we have no results to report on the outcome of these talks, which have been going on for some time. I can only say this: Whatever happens or does not happen with all the shows and all the associations, AMOA members will do what they have always done. They will adjust to whatever conditions are out there. As operators, we will work with what we have and make the best of it.
VT: You have always said that AMOA's most important strengths include a deeply ingrained volunteer ethic, plus a solid organizational structure that efficiently channels all that energy.
GB: Yes, I greatly admire AMOA for both of these strengths. Our association's board of directors are forward-thinking volunteers who pay their own way to all AMOA meetings and events. But working with AMOA is a great way to give back to the industry. They are dedicated not only to improving our member benefits, but also to making contributions to the overall welfare of the industry.
As president of AMOA, I won't be flashy. My style is simple but it seems to work in our company, and I hope it can work with a larger organization. I do like AMOA's disciplined, regimented style.
VT: How would you describe the economic environment for today's operators?
GB: Per-game collections today are hardly what they once were. Our industry is funded by the public's discretionary dollars and in today's tough economy, people have fewer of those dollars to spend. In some states, including my native Tennessee, the unemployment rate is 13%. Highly qualified people come through our doors looking for jobs and three years ago I would have jumped at the opportunity to hire them. As things improve, we will have a good employee-pool from which to choose. I am confident that good times will return, and when they do, we will need more than we currently have on staff. You can't just hunker down when times get a little tough. There are opportunities out there. You need to be prepared to take calculated risks.
Companies that are diversified in their location bases are doing fine. Well-run street operations that service adult clienteles in bar and tavern locations, providing traditional amusements as well as impulse-buy equipment with merchandisers that appeal to all segments, are stable. Because I believe in diversity, I would urge my fellow street operators to never forget about the kid business. Certain segments of our industry may be down, but if you have diversified your location base, overall you can still do very well.
If you make a decision to get too trendy, over-investing in one machine or one type of market segment, you can get in trouble. Our own company provides an example.
For years, when anyone asked me what type of locations we operate in, we had a lower percentage of adult venues and more kid-type places and a lot of instant redemption machines because we had a large Wal-Mart route. We were very happy and healthy running that route, but when we sold that operation two years ago, we analyzed what we needed to create a long-range plan.
Today we are working on getting new locations and finding places that we had overlooked before. Some are taverns; some are c-store type locations. As a result, we have more jukeboxes and grownup videogames like golf games, and a better balance of adult and kid equipment. We enjoy offering a variety of coin-op for skate, bowling and inflatable locations.
My wife Donna works with me here at Brewer Amusement, and she often reminds me that every time we get comfortable, every time we get our business situated as we like it, something changes in the market that requires us to redefine our business in a major way. Operators who are going to be successful need to be ready to adjust to new conditions again and again. Those who are too rigid to change may need to think about getting into a different industry.
VT: What is your biggest worry or concern as you assess the state of the market today?
GB: Every industry needs a steady stream of new entrants who bring new thinking to the market in order to remain healthy. The amusements industry is no exception. I believe we'll have more new operators in the years to come. But at the moment, I am concerned that we're not getting new people in the industry at the pace that we need.
It doesn't seem that we are recognized as an industry that encourages people to get involved in our business. Many people don't seem to think of music and amusement operating as an investment opportunity or as a promising environment for entrepreneurs.
The good news is, there are some young people who have chosen to enter our industry and I'm always impressed with their new approaches and styles of operation. We simply need more of them.
VT: Is this something you'll focus on as AMOA president?
GB: I wish we could. As we all know, many operating companies are family-owned, and today many are led by the second and third generation. That is a strength. But much of the general public has an outdated view of our industry. Many members of the public have not realized that we are moving beyond cashboxes and old-fashioned mechanical technology. I also believe that as technology develops, we will attract new blood.
Online games, downloading music and the capability to track revenues remotely through computer networks are well in place now and we will definitely see continual improvements to all these technologies in the future. Our industry is much more in tune with current technology than its public image might suggest. There is still plenty of room for entrepreneurial spirit -- and as more business people beyond the industry come to realize this, we will attract new people.
VT: Beyond the strength of AMOA itself, what trends or factors do you view as most encouraging in the industry today?
GB: To help answer that question, let me point to the annual Vending Times Census of the Industry. This is an information resource that operators need to keep handy as they decide how to expand their equipment base. I have mine right here on my desk, and certain pages are marked with blue tags for especially important facts and figures.
According to the most recent VT Census, prize merchandisers are a segment that all operators should investigate; if they have never explored it, they are missing an important opportunity. The proof is right here in your statistics. Nationwide, prize merchandiser gross revenues as a class grew from $338 million in 1998 to over $1 billion today. Nothing else has come remotely close.
It's also encouraging that many segments have held their own. Pool has held steady, within a dollar of the same weekly gross, for four years. Videogames have come close to that as well. The proof of this industry's strength is documented in the information collected from the operators themselves.
VT: What kind of reading do you get from operators today? When operators talk turkey, are they confident, worried, happy, unhappy?
GB: As you would expect, the mood of operators today is a mixed bag. Some operators voice a sense of concern, of course. Some are impatient for better conditions and better earnings to return. But today's operators are also determined to succeed and, deep down, I think most operators are optimists at heart.
No matter how frustrated operators may be at times, those I talk to are never totally pessimistic about this industry. Operators are people whose fundamental makeup includes a deep layer of hope that is simply inexhaustible. That positive vision of the future is a defining characteristic of who they are as operators, and always will be.
VT: It looks like operators will be allowed to enter the video poker market in Illinois and in Pennsylvania if VLTs are legalized there. But operators may be shut out of new VLT markets in a couple of other states. On the national level, Rep. Barney Frank (D-MA) is pushing a federal bill to legalize online casino gambling. What do you see as the net effect of this on amusement operators ... and what should they do about it?
GB: All state governments today are desperate for revenue. Sales tax collections and property taxes, anything that funds public programs, are seeing lower revenues. The job of state officials is to find revenues and many states, perhaps most, now have constitutional amendments that require balanced budgets. As a result, many states are looking at some form of expanded gambling. Most already have some form of legal gambling to begin with.
As for the impact on amusement operators, I used to say that when operator-run gaming came into a state it would have a negative effect on other coin-op machines. I said that because experience shows that many operators choose to focus on gaming and put less emphasis on traditional music and amusements.
Today, I would say it has to be a personal decision, whether the operator in a state with a new market for legal gambling wants to continue in traditional amusements or include that in their portfolio. If we understand that more gaming is coming, we need to be proactive to make sure it's operator-run.
Amusements and gambling can definitely work side by side. Nevada has more gambling than any state, but they also have operators who do well by focusing mostly on amusement. South Carolina had legal video payoff video poker for some years, but during that time some operators made sure they were active in both gaming and amusements. When pokers were banned in South Carolina, those diversified operators were able to continue with viable businesses.
VT: Are there any updates on the status of AMOA's ongoing negotiations regarding blanket licensing for downloading music?
GB: Those talks have not been active for the last year, so there are no updates or changes on the music front.
VT: Is there any other message you would like to communicate to our readers?
GB: I am honored to be president of AMOA because I think so highly of its members and have such respect for the contributions that AMOA makes to this industry. Also, I would like to thank our 2008-2009 president, Russ Mawdsley Jr., for his hard work and leadership, and for his great support and assistance to me personally.
VT: Will Donna travel with you as you visit state associations during this coming year, or will she stay home and mind the store?
GB: Donna has had a pretty-near-perfect "attendance record" of traveling with me. The exception was a few years ago when many of our family wanted to attend AMOA Expo. She said, "One of the Brewers should stay home, so I'll be the one." But I look forward to having Donna at my side during most of my travels.
VT: Thank you, Gary, and we wish you and Donna the best of success in the coming year.