CFC Member Inactivity/Lack of Interest in CFC Program

[Bob Armstrong]

1st quarter 2011 Financial Statement

From 2010-11 GL ! - 2010 AGM Minutes - Financials

STATEMENT OF REVENUE AND EXPENDITURE

FOR THE 3 MONTHS ENDED JULY 31, 2010
UNAUDITED

.......................................................3 months 12 months
..........................................................2011....... 2010
REVENUE

Sales of books, equipment and software $ 4,291 $ 22,070
Memberships....................................... 14,400 46,767
Contribution from Foundation.................... 1,816 3,624
Rating fees.......................................... 7,288 28,582
Donations............................................ 2,455 11,640
Other programs................................... 12,700 58,701
Other revenue......................................... ..95... 532
........................................................43,045 171,916

EXPENDITURE

Cost of sales......................................... 2,752 17,730

General and administrative

Administration services.......................... 10,383 42,939
Office................................................... 3,058 9,963
Travel & Misc........................................... 778 1,801
.........................................................14,219 54,703

Programs

Publication; e-Newsletter............................ 4,450 7,550
International............................................. 2,469 8,045
Contributions to clubs and affiliates............. 3,800 10,948
Contributions to Chess Foundation.............. 1,170 2,106
Other programs...................................... 12,700 5 8,701
...........................................................24,589 87,350
............................................................______________
.............................................................41,560 159,783

NET REVENUE (EXPENDITURE) FOR THE YEAR $ 1,485 $ 12,133

[Roger Patterson]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

Financial statements are all online for those who want to know what the revenue is spent on. Go to the Governors Letter section on the website.

Neither you nor Bob (Armstrong) are addressing the issue. Sure, the financial statments show big line items for Office and Administration but they don't explain what is being done with that resource. If it is the case that the rating fee revenue of $28,552 covers the costs of doing the ratings (and then some), then why does it need memberships to do almost nothing else of chess value? (no contributions to the Olympiad, Closed(s) etc. - although the CFC did forgive the ratings dues for the Can. Open last year - doesn't seem to appear in the financials).

Strip out of the revenues in the financial statement: a) 'Other programs' (used to be charitable donations for various things and is matched by an equal 'Other programs' in the expenditures b) cost of sales out of revenue to get net book revenue c) contributions to affiliates and to the foundation (to get net CFC membership [the affiliate expenditure is provincial dues I guess]) d) presumed cost of ratings equal to rating revenue ($ 28,552)and e) surplus and you find that the CFC is using revenue of $41,716 to fund actual chess programs of $15,595 (about 50-50 for the emag and FIDE). That's a terrible ratio for adminstrative overhead.


Perhaps somebody will want to argue that the true cost of doing ratings is higher - in which case a) compared to Tom's estimated cost and also commercially available rating systems, the rating cost is grossly inefficient and b) the CFC is losing it's shirt on rating juniors for $0.50.

[Gary Ruben]

Re: 1st quarter 2011 Financial Statement

NET REVENUE (EXPENDITURE) FOR THE YEAR $ 1,485 $ 12,133

What happens to this net revenue? Where does it go?

Also, why are the contributions to the Chess Foundation close in amount of the "Contributions from Foundation"? It almost looks like the net is close to Zero.

[Fred McKim]

Re: 1st quarter 2011 Financial Statement

What happens to this net revenue? Where does it go?

Also, why are the contributions to the Chess Foundation close in amount of the "Contributions from Foundation"? It almost looks like the net is close to Zero.

The budget for 2010/11 is pretty well break even. We saved money on our estimated Olympic expense. This will hopefully be carried over to help with the Canadian Closed funding (2011/12 fiscal year).

The Chess Foundation sends the interest on their investments to the CFC.

The CFC sends life memberships collected to the Chess Foundation. They could simply be netted off the total membership in revenues.

[David Ottosen]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

A fully loaded cost would include over and above Tom's labour input the costs of uploading the data, data checking, amortized software cost, costs of collecting the money (usually involves a bunch of emails back and forth with the organizer), dealing with data that is badly formatted, website costs, costs of creating a data record for new players, etc.. I'm willing to believe that it is significantly more than the effort of just typing in the data.

There's only one way to find out. Put the rating processor job up for bid. Explain that the job requires:
1) Uploading data
2) Data checking
3) Updating and maintaining software/DB
4) Collecting the funds
5) Posting the ratings on a web site
6) Creating new records etc etc

Explain that the ratings processor must pay the CFC $1 per tournament per player, and then see what people will bid in terms of how much to charge on top. You think it will be $4.70? I suspect less.

[David Ottosen]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

Thank you David. You plan seems a lot more feasible than Jean's plan of free memberships for all. :)

I spend a lot of time doing customer retention and acquisition in my current role so I think about things like this a lot. In my opinion, the CFC needs to re-think their mission and re-evaluate what they are; there is plenty of value available to the CFC if they approach things right.

[Vlad Drkulec]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

Vlad,

You should know that were the CFC to stop providing all services other then rating, the total cost of the rating system would still be about $5.70 per player per tournament.

Why would the price of the service be so high? Your argument appears ridiculous on the face of it. Does it cost the CFC $17 to process a three player double round robin submitted in Swiss Sys (presumably some kind of text) format which is presumably read by the computer and used to update the database of ratings? If so why are they only charging $9 for that three player tournament? Chess and Math charges much less to do basically the same thing. I haven't heard Larry complain about all the money he is losing on doing ratings. In fact I seem to recall that he offered to do the CFC ratings for a fraction of what they now charge but they chose a different arrangement.

If this is correct then there is something seriously wrong with the rating system or the systems in place to calculate the ratings. FICS calculates my rating instantly after every game and doesn't charge me anything. The marginal cost to the CFC of calculating one more rating or one more tournament with lots of ratings should be near zero. The whole point of requiring people to submit tournaments in Swiss Sys format is to make the process automated and thus requiring less human intervention.

You should know that right now your playing is many tournaments a year is being subsidised by people who play few tournaments per year. A player who buys a membership and plays one event per year is paying around $10 per game to get those games rated, why is it fair for you to pay $1.50?

It is fair because one active member is much more valuable to the CFC than an inactive member is.

I played about 37 CFC tournaments last year. The CFC charged $3 per tournament to rate my games for a total of $111 in rating fees plus my regular membership which was $43 some of which went to the Ontario Chess Association for a total of $154 paid to the CFC/OCA as a result of my activities. If every adult CFC member matched my contribution and there are about 1000 adult members then the CFC/OCA would have revenues from rating fees and memberships of about $154,000 plus what the juniors contribute. It seems to me that in that case there would be lots of money for the Olympic program and for a decent Canadian Closed and for the various youth programs. There would also be a large increase in tournament prize funds.

I have had many potential new players walk out of Hart House Events when it is explained to them that they need to pay $43 for a CFC membership.
The idea behind such a shift would be to promote new membership.

So you want to discourage me from playing so much and remove the more than $1250 dollars in entry fees that my participation in the various tournaments added to the tournament organizers revenues in 2010 because you think that its unfair that I only pay $1.50 per game. I see.

If you had more of a business background you would understand the concepts of marginal costs and marginal revenues and lifetime value of a customer (CFC member) and you wouldn't be suggesting such offensive ideas designed to penalize and reduce participation in CFC events. Your idea will have a cascading effect of reduced participation by individual members, smaller tournaments because of the reduced participation, fewer tournaments because organizers will lose too much money, less money to the top players because fixed costs will eat into more of the tournament budget leading to another death spiral for the CFC.

Each of your players in windsor would save $36 at the start of the year...

Which savings might be made up in extra tournament fees in three months for the players that actually care to play in CFC events.

considering right now they pay a three dollar rating fee, the cost would not be greater then the current costs until you have played at least seven events.

Which would happen by the end of March for most of the top group unless we decided to forget the CFC rating of most of the events as was the case for many years before we got things kick-started again recently and started running CFC events again.

I suspect that there would still be one or two CFC tournaments per year in Windsor instead of the 20 or more that there are now or are planned under the current system.

Such a shift would be revenue neutral, as I said. The only difference is the costs of the organization would be divided up proportionally to how many tournaments you play.

No. It would be divided up proportionately to how many CFC tournaments I play in. I can assure you that it would not be revenue neutral in my case. I would be very annoyed and would express my annoyance by greatly curtailing my participation in CFC events in favour of unrated local events and USCF events where I get a nice glossy magazine and the chance to participate in games with a larger pool of players. It would also have a domino effect in that if I would no longer participate in local CFC events except once or twice a year then there are a number of others who would probably stop playing because there is a very small pool of strong players and most of them prefer to play other strong players. The youth tournaments that currently support the CFC could easily convert to CMA events.

My USCF membership is looking like more and more of a bargain.

[Vlad Drkulec]

Re: Where, Oh Where, Are the CFC Members??

All good points... thanks. I said $70 as a discussion point; the risk is (as you point out) pushing it too high and discouraging potential new members. It is not easy to do the analysis of all possible outcomes because there are so many unknowns.

I suspect that any increase in price of the membership will decrease the number of potential new members and reduce retention with a fairly regular demand curve that you see in any introductory economics or marketing courses.

I think the current rating fee income should be offset by an increase in membership fees - I don't know how the arithmetic works out. Members who play more rated games more or less benefit from the switchover.

I can live with the current fee structure. Slight increases in the annual fee or rating fee wouldn't significantly affect my chess play. Significantly increasing the rating fee which is somewhat hidden from members would bother me. I really think that the CFC can't reform itself until it allows the members to vote for the board and do away with the whole governor structure as they do in the USCF. We've had a series of good presidents and executive directors with a very few, well one, less than stellar president and we keep having the same problems.

Increasing the rating fee to $8 as has been suggested would have meant that I would have had to pay $296 in rating fees last year. In exchange for this I would have gotten what? A dollar's worth of computing effort, maybe?

The attitude this betrays is, "Stick it to the CFC membership. They will take it because they are stupid and we the wise rulers know what is good for them."

As the member who played the most last year I have come to some realizations about chess and what is important and what isn't. Ratings don't really matter that much. They will go up and down over time. If ratings don't really matter then the CFC does not have the monopoly that some of the governors seem to think that they have.

Playing games against players who challenge you and then learning from your mistakes is the best way to improve. Those games don't necessarily have to be CFC rated to be useful, effective and enjoyable.

Teaching kids what you know about chess and watching them improve and grow in ability while applying what you show them is extremely satisfying. Feedback from the kids, their parents and grandparents and other strong players about their positive results in competition is also very edifying.

Its got to be fun for the kids so mix things up a bit. Even the grandmasters that develop among them won't be treated like rock stars so lighten up.

Good organizers and tournament directors are gold. Show them some appreciation.

The CFC is not structured to succeed. It shouldn't be a surprise that they don't succeed.

Unfortunately, the rating and membership fees are only one aspect - there is the bigger question of value for membership and what percentage of the membership fees go to: ratings and membership, the Closed, the Olympiad, the Office, FIDE-mandated stuff, publicity programs, website operation (a large enough expense to justify a separate citation), the e-magazine, the CYCC, the WYCC, the Cdn Junior Championship. There are a lot of mouths to feed on $43/month.

There are a lot of mouths to feed and don't kill the goose that lays the golden eggs (the CFC members) that provide that $43/year.

Another idea is to get rid of Provincial organizations altogether (another contentious point I am sure).

From what I can see its the same people so I don't see that getting rid of provincial organizations would help. Some of them are effective in promoting chess (Quebec, Alberta, BC come to mind) and others are less effective but the people involved seem to do a good job as individuals its just that when you combine them with others involved in provincial chess politics you get some vast black hole that sucks the abilities out of them.

[Egidijus Zeromskis]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

There's only one way to find out. Put the rating processor job up for bid. Explain that the job requires:
1) Uploading data
2) Data checking
3) Updating and maintaining software/DB
4) Collecting the funds
5) Posting the ratings on a web site
6) Creating new records etc etc

It looks like a project to create an automatic software (aka 3,5,6):
The TD uploads event's results (aka 1.upload data, 2.checking - in most cases done during the tournament.)
TD pays using some kind of online banking (aka 4.)
+ savings on the Ex.Director's time (aka money)

[Egidijus Zeromskis]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

In my opinion, the CFC needs to re-think their mission and re-evaluate what they are

My kid's schools use(d) a term "strategic planning" for this kind of process.

[Alan Baljeu]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

We don't need the CFC.

Read Wikinomics, and you'll see that self-organizing individuals and small companies can outperform Top multinational companies in getting new stuff happening. So chess organizers, sharing ideas over the web, can do much better than going through a stodgy institution like the CFC.

The CFC itself will be better served by offloading its services. This may not make the CFC stronger, but it will make the chess community stronger.

Forget the whole bidding process. Get individuals who want a great Closed to discuss and come up with ideas. Put proposals for the Closed on the web. Let the players who will attend comment. Let organizers share ideas to Improve the proposals. Plan a great event, and kill the hefty rules that keep people from even thinking about organizing.

Same for the Open: public proposals, public discussion, public improvement of proposals, and public vote for the best event.

Ignore the governorship and let people who know sponsorship seek out sponsors. Let the CFC be the steward of these funds, but merely direct them to the organizers to run the tourney.

Those who want to support Juniors internationally, run fundraising tourneys. Support the local qualifier, or run a junior tournament which directly funds the winners' travels.

Let ALL programs become in/out on the CFC budget, and have the CFC be just the medium and hub for people who do the work. They can designate the official source of ratings.

Get automated software for ratings. Let TDs login, post results, login to make corrections, and the only job required is a very part time DB admin.

[Kevin Pacey]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

We don't need the CFC.

A strange way to begin, since later in your post you do find uses for the CFC. :)

Read Wikinomics, and you'll see that self-organizing individuals and small companies can outperform Top multinational companies in getting new stuff happening. So chess organizers, sharing ideas over the web, can do much better than going through a stodgy institution like the CFC.

The CFC is rather small (or at least medium sized), in terms of individuals governing, plus the ED and Newsletter Editor. FIDE still deals only with the CFC when it comes to Canada, such as submitting Canadian events to be FIDE rated. The CFC would love there to be more [active] organizers in Canada, which the CFC can then assist, besides regulating such things as TD standards or appeals.

The CFC itself will be better served by offloading its services. This may not make the CFC stronger, but it will make the chess community stronger.

Forget the whole bidding process. Get individuals who want a great Closed to discuss and come up with ideas. Put proposals for the Closed on the web. Let the players who will attend comment. Let organizers share ideas to Improve the proposals. Plan a great event, and kill the hefty rules that keep people from even thinking about organizing.

Same for the Open: public proposals, public discussion, public improvement of proposals, and public vote for the best event.

Ignore the governorship and let people who know sponsorship seek out sponsors. Let the CFC be the steward of these funds, but merely direct them to the organizers to run the tourney.

Those who want to support Juniors internationally, run fundraising tourneys. Support the local qualifier, or run a junior tournament which directly funds the winners' travels.

What you describe (except for ditching the bidding process) can all be part of the organizing process right now if organizers actually did it, without having to change the CFC or its role. Again, a big problem is the lack of [active] organizers. In the past at least this was partly caused by the policies or actions of the CFC.

They [the CFC] can designate the official source of ratings

I assume you mean after offloading the CFC's rating service?!

Get automated software for ratings. Let TDs login, post results, login to make corrections, and the only job required is a very part time DB admin.

The CFC getting automated software for ratings is contrary to offloading it, but would be a good idea if and when the CFC can afford it. I've heard that the CMA's automated rating software is very expensive (thousands of dollars?!).

[Vlad Drkulec]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

The CFC getting automated software for ratings is contrary to offloading it, but would be a good idea if and when the CFC can afford it. I've heard that the CMA's automated rating software is very expensive (thousands of dollars?!).

Actually it wouldn't be that expensive even if it did cost tens of thousands of dollars which it shouldn't. The current system costs about $13,000 to $20,000 per year in labour costs depending on how you divvy up the costs and overhead items according to the information posted by Fred McKim. If you went to something fully automated you could probably reduce that to $6500 to $10,000 or perhaps if you did it properly you might be able to reduce the need for human intervention to close to zero. The payback on an investment in the software would be less than a year. That would free up the Executive Director to do more productive things.

I imagine that you would need a robust database like Pervasive, MySQL, SQL Server, PostgreSQL or some such with a website front end. I would be surprised if the costs would exceed $5000 since full blown commercial websites with much more functionality can be had for less than that (in the Windsor/Detroit area at least).

[Fred McKim]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

Actually it wouldn't be that expensive even if it did cost tens of thousands of dollars which it shouldn't. The current system costs about $13,000 to $20,000 per year in labour costs depending on how you divvy up the costs and overhead items according to the information posted by Fred McKim. If you went to something fully automated you could probably reduce that to $6500 to $10,000 or perhaps if you did it properly you might be able to reduce the need for human intervention to close to zero. The payback on an investment in the software would be less than a year. That would free up the Executive Director to do more productive things.

I imagine that you would need a robust database like Pervasive, MySQL, SQL Server, PostgreSQL or some such with a website front end. I would be surprised if the costs would exceed $5000 since full blown commercial websites with much more functionality can be had for less than that (in the Windsor/Detroit area at least).

I would expect that our next "capital purchase" will be rewriting the rating software completely with an automated tournament submission system.

It would premature to give any expectation on when that would occur, but I suppose the relative success or failure of the new web site might play some role in that.

[Alan Baljeu]

Re: CFC Member Inactivity/Lack of Interest in CFC Program

A strange way to begin, since later in your post you do find uses for the CFC. :)

I was being provocative. The point is that a lot of the discussion and complaining can be solved by people just getting together and doing stuff.

The CFC is rather small (or at least medium sized), in terms of individuals governing, plus the ED and Newsletter Editor. FIDE still deals only with the CFC when it comes to Canada, such as submitting Canadian events to be FIDE rated. The CFC would love there to be more [active] organizers in Canada, which the CFC can then assist, besides regulating such things as TD standards or appeals.

CFC should be the afterthought , not the focus. We only need the CFC to hand out officialness, nothing else.

What you describe (except for ditching the bidding process) can all be part of the organizing process right now if organizers actually did it, without having to change the CFC or its role. Again, a big problem is the lack of [active] organizers. In the past at least this was partly caused by the policies or actions of the CFC.

So bypass the CFC and get stuff happening. Let's talk about putting on an elite Closed, get the best ideas out there and make one happen. Then the Governors can sanction it or not, but chess goes on.

Same with ratings. Discuss how to create a tournament reporting system. Get the best ideas going. People can build something as a hobby (it's not that hard). People try it, improve it, and when it works great, then replace the CFC system.