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To Merge Or Not To Merge?

Posted On: 8/23/2009

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International Association for the Leisure and Entertainment Industry, IALEI, International Association of Amusement Parks and Attractions, IAAPA, trade associations, Fun Expo, AMOA, AAMA, mergers, amusement industry, amusement trade, family entertainment centers, arcade industry, arcade games, amusement parks, theme parks, coin-op, coin-op games, coin-op news
This month the members of the International Association for the Leisure and Entertainment Industry will be considering the issue of whether to keep their association going as a small, independent organization, or to merge it with the much larger International Association of Amusement Parks and Attractions. Ironically, proponents and opponents of the merger point to a single overriding factor: IAAPA's enormous size.

Supporters say IAAPA has the deep pockets to really do some good for FEC owners: lobbying clout, educational programs, lavish member benefits and one of the world's most successful trade shows. Opponents say FECs could get lost in this vast organization that is, after all, primarily focused on theme parks.

Pro-merger forces argue that FEC owners now comprise the largest constituency within IAAPA. They also promise that the "parks association" is expected soon to have its first-ever president who is an FEC owner; the second vice-chairman of IAAPA is Bob Rippy of Jungle Rapids (Wilmington, NC).

Opponents counter that while small FECs may have a plurality of members among IAAPA's rank and file, it is still the big theme parks that dominate the organization. Theme parks, say merger opponents, have the heavy visitor traffic, multimillion-dollar budgets, traditional momentum and political clout that will always dominate the association's agenda -- no matter how many tiny FECs cluster at the feet of these relatively few giants.

While there are plenty of voices discussing the pros and cons of a merger in terms of what it might mean for IALEI members, there has been much less public discussion about what a merger could mean for the industry as a whole. In recent years, IAAPA has increasingly resembled a giant black hole, consuming everything in its orbit, or at least trying to -- exhibitors, buyers and money. And now, other associations and trade shows.

We state this observation not as praise or blame, but simply as a fact. The tendency toward monopolies or near-monopolies is hardly unique to the amusement industry. It has been a defining feature of capitalism ever since the railroad trusts and big petroleum combinations of the 1800s. (That doesn't mean AMOA and AAMA have to like it, of course. Nobody loved Standard Oil, either.)

If IALEI members approve the merger, then IAAPA will in all likelihood become the owner of IALEI's 50% share of the Fun Expo. What IAAPA might do with that share is anybody's guess. Sell it to AMOA and AAMA? Attempt to buy out the half of the show owned jointly by AMOA and AAMA? It might take another route entirely, considering that next year is the last for the 10-year agreement between IALEI, AAMA and AMOA to run Fun Expo jointly through Leisure Entertainment Trade Shows.

Some observers suggest that IAAPA may have plans, or at least the strong desire, to run a spring edition of its own "parks" show. If so, that could obviously mean competing for exhibitors, money and visitors against AAMA's Amusement Showcase International ... just as IAAPA's existing fall show already competes to an ever-increasing degree with AMOA's International Expo. As the economy gets tougher and exhibitors weigh the best use of their promotional dollars, the booths at the AMOA show are getting steadily smaller, and the large exhibits at the IAAPA show, with its vast international attendance, are holding steady.

The black hole of IAAPA just keeps getting bigger and its gravitational field just keeps getting stronger. Again, this is the dynamic of capitalism: The big get bigger and the small get squeezed.

Regardless of the accuracy or inaccuracy of any of these speculations, the sheer existence of this line of thought reinforces one key fact. IALEI's decision "to merge or not to merge" is a momentous one for the amusement machine industry. It's a decision that will have repercussions that go far beyond FEC owners, repercussions that last for many years -- perhaps decades -- to come.

It may not be too stark a characterization to say that what IALEI's members are really being asked to decide, then, is not just the fate of IALEI itself. They are being asked to decide: "Who do we want to stand with as our closest allies -- the street operators or the theme parks?" If IALEI votes to continue as a standalone association, it will in effect be voting to continue its 10-year alliance with street operators, with AMOA and AAMA. If IALEI votes for the merger, it will in effect be voting to shift its allegiance to a former competitor -- the theme park sector -- even though that shift may increase the financial, political and organizational pressure on IALEI's old allies.

VT urges all members of IALEI to participate in this important decision. Use the proxy vote that the IALEI board has made available. And when you do, make sure you register a fully informed vote. Read the details of the merger proposal. Hear out the defenses and the critiques. Weigh the arguments. Ask questions. Then think long and hard before casting your ballot. A lot is riding on the outcome.