WHICH MACHINES DO I BUY WITH A LIMITED BUDGET?
When you have a small club or regional hotel the choice of which machines to buy seems complicated.
As a gaming specialist, I am often asked by venues which machines are the best to buy when you don’t have a large budget. There is a good answer to this question, but it doesn’t start with “What do I buy?”.
“Where am I at, and what do I buy” is a more important starting point.
Lets’ start at the beginning…
How many should I buy?
There is a benchmark in the industry about the number of game changes that are required to be updated in any size venue. No matter what the size of the club or hotel the benchmark of 20% to 25% of your floor numbers is generally what’s required to change over each year to keep your product fresh. It’s not a hard and fast rule but does give you flexibility if you maintain it each year.
Maintain an annual purchase plan
If you are only a small 30 machine venue, then changing a combination of six new machines or game conversions each year is all that’s needed. I would look the purchase of two to three new machines, in two purchase lots 6 months apart, and then make up the rest by negotiating game conversions when you buy.
The catch is if you haven’t purchased machines for many years, you won’t have any machines that will be capable of handling new game conversions, so making up that number of game changes required each year becomes too expensive.
If you’re in this situation, where you haven’t purchased for several years, just start where you can, and with what you can afford.
Which Machines?
The best option for every club includes having the latest model from each of the main manufacturers on your gaming floor to ensure you have the widest variety of games available for players. However, for smaller venues you may only need two or three of these main manufacturers in order to offer that variety.
Just like a game of bridge, you always “lead with your longest and strongest suit”. So, whichever manufacturer earns you the highest turnover average, is the manufacturer that you need to prioritise for machine purchases. You should be tracking this game performance each month across your floor and be aware of which two or three manufacturers are the most popular among your players. For any purchase look at your turnover not your net profit, because this is your player’s direct vote on the machines you already have in the venue.
Once you have started the purchase plan and purchased a couple of machines, on the next round of purchases you’ll be able to do some game conversions on those initial games if required. This makes it easier to hit those game change percentage benchmarks. It also means if you start by buying, for example, two Aristocrat machines, and then six months later purchase one or two machines from another manufacturer, you can update those original Aristocrat games with conversions at the same time. Players will see these games changes as a marker that your venue is “up to date” even if you are small.
When do I buy?
The two major trading trade shows each year are the AHG Expo (Brisbane) in March and AGE Expo (Sydney) in August. Most of the manufacturers release their new games and new machines at this time of the year so you have a wider range of games to choose from at these trade shows. Throughout the year they also regularly release new games, but if you purchase around these March and August periods, you’re able to convert over to a brand new game that’s just been released using your six-month warranty if your initial purchase hasn’t worked as effectively as you’d hoped.
SAP or Link?
In a small or medium venue having one or two links is a positive on the gaming floor. It adds interest for players particularly when the jackpot lifts. In a venue of 30 machines or less I would only have one small link (4-6 machines). In a venue of up to 50 machines you could gain 2-3 links on your gaming floor, with larger venues needing more than that to give players lots of choice.
The biggest consideration with links is that you need to have enough turnover to drive that jackpot and have it hitting regularly enough so that the players don’t feel like they’re putting money in for nothing. Ideally the top jackpot should go off every 4 to 8 weeks. So, you have to have enough turnover to drive the link, and enough profit to pay for it when that jackpot hits. For some venues this is a fine line to walk so choose an appropriate jackpot level. Your reps all have tools that can help you with this calculation.
In a smaller venue SAPs still have $5,000 to $10,000 jackpots. Having SAPs instead of Links means that you can move them around the floor, giving you a great deal of flexibility for conversions and machine moves throughout the year.
Should I pay outright or pay off the machines monthly?
All manufacturers these days have a payment plan that clubs can use to pay off any machine purchases. Some managers still prefer to pay the machines outright using capex, but for a smaller venue it can be easier to pay for the machines out of your cash flow by paying monthly.
The advantage to the monthly payment plan is that the price isn’t increased, and you’re not paying extra to pay it off over 12 months. It just allows you to break up that payment for smaller venues or for larger purchases.
Summary
Remember, there’s nothing that you can’t change when you buy a machine. Game conversions are available, and there’s warranties on machines, so the biggest mistake you can make is just not buying. Your gaming floor will never improve if you don’t have new games for your players on the floor. Game types go through trends just like any other fashion and if you don’t keep up with the trends your results will keep sliding south.
In gaming, you can be small but mighty!
Written by: Justine Channing (Gaming Specialist)
Justine is an experienced gaming specialist working with many clubs and pubs across NSW/QLD. At reasonable prices she assists venues to plan their gaming strategy by interrogating and analysing gaming and membership data, mentoring young gaming managers, and planning machine purchase strategies to improve gaming results.
