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Club Lucky Seeks To Expand Tournament Programs And Establish Direct Purchase Option

Posted On: 2/23/2007

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TAMPA, FL -- Club Lucky, a nationwide alliance of 17 respected operating companies, convened here on February 1 and 2 with executives of 10 top game and jukebox manufacturers, two equipment distributors, a prize merchandise supplier and a major financial services provider. The allied operators requested opportunities to be recognized by manufacturers and distributors as a national account with rights to buy product on a direct basis. Club Lucky also sought to enlist manufacturers' support and cooperation in national tournaments and promotions that are proprietary to Club Lucky.

Moss Distributing (Des Moines, IA) and Weiner Distributing (Baltimore, MD) agreed to act as preferred distributors that will sell to any Club Lucky member.

Club Lucky members offered recommendations to improve earnings for specific games, as well as to have more tournament-oriented game features. They also encouraged manufacturers to improve service and support at the distributor level.

Manufacturers that grant national-account status to Club Lucky are designated as "preferred providers." Operator Dale Lazar of H. Lazar & Son Inc. (Pittsburgh), a Club Lucky spokesman, said that of the manufacturers in attendance, "Some suppliers are prepared to become a preferred provider immediately; others wanted time to consider; and others felt now is not the right time."

Also as a result of the meeting, Club Lucky members will participate in initial deployment of online touchscreen video equipment from Bulldog Entertainment Network. Bulldog is rolling out a new Photo Play entertainment system, designed for American consumption, built by Austria's Funworld AG. Direct purchase agreements and partnership on national tournaments may eventually grow from this initial test, Lazar said.

Club Lucky does not necessarily plan to bypass distribution. Member operators simply desire to expand their purchasing options, Lazar said. Many Club Lucky members will continue buying from local distributors because of longstanding relationships, and appreciation for the expertise, financing and service that distributors provide, he noted.

Certain other Club members do not wish to support local distribution in cases where the dealer also operates. Lazar said that some Club Lucky members believe that buying from such distributors amounts to indirectly subsidizing their competition. Accordingly, these members are most likely to seek to purchase equipment from the Moss or Weiner distributorships.

Guests at the two-day meeting, staged in an executive conference room at the East Lake Woodlands Country Club, included Bay Tek Games eastern sales director Todd Louthain; Bulldog chief executive Doug Johnson; Ecast director of sales Steve Kellam and Incredible Technologies president Elaine Hodges and sales and marketing vice-president Don Pesceone. Also on hand were Jeff Martin, president of Harbour Group's entertainment division, which includes Merit Entertainment and Rowe/AMI; Mike Maas, the new president of Merit and Rowe; and Bob Mills, Merit's vice-president of North American sales.

Additional participants included ICE vice-president Joe Coppola and U.S. distribution director Greg Kania; JVL president Peter Gutteres; and LAI Games general manager Alan Freimuth and sales executive Debbie Gonzales. Sega officials included president Rick Rochetti, marketing director Ron Malinowski, technology director Ben Kadish and regional sales manager Tom Keil. TouchTunes president Art Matin, senior vice-president Dan McAllister and national accounts vice-president Steve Birrell rounded out the guest list.

Representatives of the distributors and financial services providers in attendance were Weiner Distributing's Chuck Weiner, Moss Distributing's Terry Moss and Firestone Financial Corp. president David. In addition, One Stop Shop Vending & Redemption's Michael Winton, Gigi Eakins and Shawn Sullies attended.

Lazar said all companies that were invited to participate in the Tampa meeting sent representatives. Other companies that heard about the affair through the industry grapevine requested the opportunity to attend, and were subsequently invited and also participated.

The operators' organization submitted questions in advance to its guests, and each company made a formal presentation to the operators, outlining its responses to the questions.

Club Lucky's 17 associate members operate more than 19,000 games in 2,500 locations from coast to coast, Lazar told VT. The organization's members estimate they collectively purchase more than $12 million of new equipment annually, notwithstanding significant kit purchases. Lazar stated that these numbers would grow as Club Lucky expands membership into new geographic areas.

The club's present roster includes numerous current, past and likely future board members of the Amusement and Music Operators Association, as well as graduates of AMOA's Notre Dame executive development program and most of the winners of IT's Operator of the Year Award.

Named after the restaurant where it was founded in early 2006, Club Lucky's eight founding members are Matt Pascal of JE&S Video (Louisville, CO); Larry Elbert of Camden Entertainment (Cedar Rapids, IA); Jeff and Kama Reed of B.J. Novelty (Covington, KY); Jason Rubin of A.J. Video (Baltimore, MD); Matt and Mark Verdura of Full Spectrum Vending (Macomb, MI); Tim Zahn of American Amusement Arcades (Minneapolis); Bill Lethert of Mendota Valley Amusement (Inver Grove Heights, MN); and Larry Lindelow of Vending Resources (Houston, TX).

Later in 2006, the club recruited several additional operator members on a "very selective" basis, Lazar said. They are Rod Kruse of Nebraska Technical Services (Omaha, NE); Sean McGree of Harvest Darts (Everett, WA); Phil Juckem of All Brands Vending (Tampa, FL); Phil McBride of T&G Music (Titusville, FL); Dale Lazar of H. Lazar & Son (Pittsburgh); Mike Zappa of Lorain Music & Vending (Crestline, OH); Doug Hutton of Heavenly Amusement (San Diego, CA); David Winfrey of Bullseye Amusement (Spokane, WA); and Eric Johnson of Desert Amusement (Las Vegas).

Club Lucky's original charter was to pool operators' expertise and promotional efforts to create proprietary tournaments on Incredible Technologies' Golden Tee LIVE and Silver Strike Bowlers Club. The success of Club Lucky's video game tournament promotions is beyond dispute. In two recent, concurrent, eight-week tournaments sponsored by the organization, Club Lucky generated a significant increase in plays on IT golf and bowling games. Club operators awarded a total of slightly less than $80,000 in prizes to players in the two tournaments.

Several websites owned by Club Lucky are now in development, and Lazar said they are expected to launch in the immediate future.

"We would welcome the opportunity to run comparable promotions with Merit and JVL games," Lazar said. He added that restrictive distributor agreements might constitute barriers to certain forms of imminent cooperation between Club Lucky and particular manufacturers.

IT officials have told VT that whenever Club Lucky holds a major tournament, nonmember operators in the trade areas of Club members experience strong demand for the promoted IT games from players and locations. This demand further results in sales spikes of IT products that are directly attributable to Club activity, said company executives.

Lazar said Club Lucky members are well aware of this effect -- and are not shy about claiming status as unofficial marketing agents for sales of the promoted games. During the Tampa meeting, the group's members openly traded on this market influence, as well as their tournament expertise, in discussions with participating manufacturers about operators' desire to attain the right to buy equipment direct.

"We believe that by becoming a Club Lucky preferred provider, the manufacturer would increase sales, expand market penetration and enhance its status of equipment offerings," Lazar underscored.

Lazar reports that Club Lucky members were pleased with the results of the two-day conference. He emphasized that the mission of the alliance is to increase profitability for all three levels of the trade, and that Club Lucky views itself as a supporter of the three-tiered market chain.

The advent of a close alliance of operating companies is a "natural evolution" resulting from technological developments, an increase in operating sophistication and other market changes, Lazar explained.

"I would think any operator who is progressive should be looking at enhancing their competitive advantage and economic position," he said. "I view the process of building cooperation between industry segments through an organization such as Club Lucky as evolutionary, not revolutionary. We are not interested in destroying the three-tiered market chain. We still see it as having value. Given the current operating landscape for operators, we are simply looking to do what is best for our business."