Is U.S. Chess Bankrupt??

I found this story from the New York Times columnist Dylan McClain. This was a report released by Bill Goichberg, the U.S.C.F. President. He is best known for running the World Open, America’s largest and most lucrative international tournament. The report is not rosy. There are mentions of short falls in revenue particularly in terms of membership. Restructuring is being planned on publications and membership.

The U.S.C.F. avoided insolvency a couple of years ago but has been wracked by scandal and political infighting. The organization is competing against the online chess platform and is struggling to provide value-added services. Many will agree that the magazine has seen substantial improvements, but it (alone) does not justify the US$49/year adult membership. While budget cuts are necessary, I’m not sure what the plan is to invigorate membership. I would say that the board had better develop a strong marketing plan and solicit donations from big corporations.


As you know, after seven months we are running $42,341 behind budget. The membership trend has been poor in the past few months, and legal expenses for the rest of the year will be high, so I fear a loss for the year of at least $100,000. We probably can’t avoid a loss without unacceptable harm to services, but here are some ways to reduce the loss:

Staff cuts. Bill Hall has already let one employee go saving about $25,000 on an annual basis, but including severance, probably only about $7000 in this fiscal year. Of course we are concerned with the following fiscal year as well as this one, and I believe we should tell Bill to make another cut, but he feels this would be impossible without severe damage to service. My experience has been that such cuts don’t work out as badly in practice as feared, so I disagree with Bill here.

It should be noted that personnel costs are already $48,000 below budget, and overall expenses $51,000 below budget even with high legal fees, so our problem is not that the office has been overspending- the worst thing that has happened is that membership revenue is $97,000 below budget.

Magazine pages. I think all at our meeting agreed that we must cut pages for the remainder of this fiscal year. Dan Lucas reported that an 8 page Chess Life cut would save about $2400 per issue, a 16 page cut about $4800 per issue. The March issue is pretty well prepared, features Fischer and has recent material that shouldn’t be postponed; I suggest an 8 page cut from March and 16 pages from April, May and June (June issue expense is largely during this fiscal year), then starting in July we return to the 8 page cut. We may also be able to cut Chess Life for Kids. Overall, there may be a savings in the area of $17,000.

Stop the online distribution of free content from recent issues of Chess Life. Bill Hall says that action to do this will occur next week. As Mike Nolan has pointed out, why should people pay for this content if they can get it free? I think this change has to help membership, though Bill Hall is skeptical that it will have much effect. Unless proven otherwise, I think we should assume that the freebies may be a major factor contributing to our recent poor membership numbers. Some at our meeting suggested the economy was hurting, but poor economic conditions have not seemed to hurt USCF in the past (some people switch from more expensive pursuits to chess). USCF didn’t exist during the great depression of the 1930s, but it is believed that chess boomed then.

Make emailings available to affiliates for a fee, probably the same 5 cents per member that we charge for mailing labels. There have been issues in the past with such emails being considered spam, especially by AOL, but we can probably avoid this problem by using an emailing service and/or not sending them all at once. We may be able to make 3-4 cents profit on each email we send. If we can get this project going soon, I believe we can make at least $10,000 from it in this fiscal year and would be willing to use the service extensively for my own tournaments. It would also be a great help to affiliates, as that 5 cent cost per player is the whole cost while for postal mailings, with printing and postage the per player cost is more in the area of 30-50 cents per player.

For TLAs that are online only, initiate a small charge, maybe $5. I don’t know what this would bring in but every little bit helps.

For the long run (2008-9 fiscal year and after), we need to consider some fundamental changes. One option that was suggested was ending the dues sale at year end and charging $49. We tried charging $49 in 2003 and it was an utter disaster, losing over 3000 adult members in 14 months. We would probably have lost another 3000 in 2004 were it not for the $38 promotional membership started March of that year for new and long expired members. I don’t think the $49 rate would go over any better now. Indeed, when we offered the $39 dues sale we said it was important for the rate to start with a “3,” yet we then ignored that idea when the dues sale rate was changed to $41. I think we were better off at $39 and that the change to $41 has hurt membership more than expected. All major classes of membership but Senior and Family are off since then, but adult is down the most.

Instead of charging more and hoping this won’t severely hurt membership when our recent experience shows otherwise, we should consider lowering dues and expenses for our junior membership classes, where interest in a magazine is the lowest. Even with our new $7 junior tournament membership, the number of USCF rated scholastic tournaments appears to be decreasing, with some organizers using other rating systems. Entries in the national scholastics have also declined somewhat in recent years. Lower dues will be attractive to scholastic organizers and can turn this situation around, and we can afford to lower dues for kids if they receive an online publication.

Unlike adults, many of whom prefer hard copy Chess Life to online, kids are really into the internet, and I think most will be happy with an online magazine. In 2005 before Chess Life for Kids was created, this was considered by the Scholastic Council with some support expressed, but most were opposed. I hope the council will support such a change now, and think it will both expand scholastic chess and give USCF a huge financial boost.

For example, here is one possibility, which assumes we stop providing Chess Life free online and include a password required magazine with membership, and uses $1 per issue as magazine cost.

A) Scholastic dues are now $17 with a $2 commission. Most affiliates pass on the commission so most players pay $15. If magazine printing & mailing is $6 and processing cost $2, we retain $7.

We eliminate the cost of printing and mailing 6 issues of CL4K, saving probably about $6 per year. We end membership card mailings and make them available for players to print out on line, saving maybe another $1? (I know such mailings are sponsored now, but the online printouts can also be sponsored). We save some staff time because a separate TLA section will no longer be needed; CL4K can just link to the regular TLA section. We can spread the content out and make the magazine monthly without extra cost. Overall, if we save $7, the dues could become $10 with a $2 commission. $8 should be very attractive to scholastic organizers compared to $15! And maybe we could offer a junior tournament membership for $3 or $4. We retain the same average net on each member, but by having more rated scholastic events, get more members.

We now have 26,000 scholastic members. If lowering dues minus commission from $15 to $8 causes enough additional tournaments to be rated to bring this up to say 33,000, and we retain a $7 net, we are ahead by $49,000.

B) Youth dues are now $19, with a $2 commission, and they get 6 issues of Chess Life. We lower these dues to $17 with a $2 commission. They are paying $2 less and getting twice as many issues, and kids like things to be online, so most should be happy. Even if the $2 drop doesn’t cause many more JHS/middle school events to be USCF rated, if we lower our cost by about $7 per member, we are ahead about $5 per member.

With over 7000 Youth members, this could increase revenue by about $36,000.

C) Young Adult dues are now $25, with a $2 commission and 12 issues of Chess Life. We merge this category with Youth and offer it for $17 with a $2 commission. High school and college organizers will love the $8 drop in cost, and players will like it as well while most won’t mind the switch to online Chess Life.

A relatively small number of players will want to receive hard copy Chess Life. They (unlike adults) are unlikely to drop out as a result, and will become adult members, increasing revenue to USCF.

We would save $13 on each membership, and with the $8 drop in cost, come out $5 ahead of what we retain now. With 9000 Young Adult members, that’s a $45,000 gain. Also, the $8 drop should cause some nonrated high school tournaments to switch to rated, increasing membership. Guessing 1000 more members, that’s another $14,000 net. Also guessing that 400 Young Adults will pay $41 for regular membership to get hard copy Chess Life, that’s about $13 more net on each, or about $5000.

It’s all a guess, but the total is $49,000 + $36,000 + $45,000 + $14,000 + $5000, or $149,000. Even if I am too optimistic, we’re probably still well ahead. All the related discussion at our meeting was in favor of making Chess Life for Kids online only; the above numbers were not discussed, nor was the idea of removing hard copy Chess Life from Youth and Young Adult.

Bill Goichberg

Source: New York Times

19 Comments

  1. The USCF had better regroup fast! Top players like Gata Kamsky and Hikaru Nakamura are apparently experiencing frustration. Nakamura has made mention (on the Daily Dirt) that he would consider switching his federation and playing for Japan if the sponsorship situation (and overall chess climate) did not improve.

  2. Well… she has had to fight so many battles. There is a lot of mudslinging against the USCF… lawsuits and the whole nine. I honestly feel that Bill Goichberg’s focus on organizing tournaments would help lagging interest. He has not done many creative things with tournments. He has the World Open, but until the HB Global, he had no real innovations.

    Given these poisonous, I believe Polgar’s energy is better used developing innovative programs for the USCF. Why expend energy fighting these battles? Her husband Paul Truong has been accused of slandering Sam Sloan and writing false messages about him. Pure madness. The details are on the Daily Dirt blog, but you may also want to check Susan Polgar’s links below.

    Daily Dirt: https://www.chessninja.com/dailydirt/2007/10/slime_spillover.htm

    Susan Polgar Blog: https://susanpolgar.blogspot.com/search?q=sam%20sloan

    Susan Polgar’s Boards: https://chessdiscussion.com/phpBB3/viewtopic.php?f=4&t=716

  3. The state of affairs for Chess in the United States is a disgrace and has been for some time. Culturely & professionally it is almost nonexistant compared to other sports such as golf, basketball, etc. There is even televised Poker now. I say shut down the magazine and only deal with memberships for tournaments for now. Take any extra money and invest in brokering top-level matches to the corperations, with venus like Las Vegas. Try to get chess on television so that it will spread like wild fire.

  4. Chess is in bad shape. I think that the best way it’s going to move up here is for corporate dollars to get into the game. An ailing economy hurts also hurts. Some people are tightening their belts until things pick up again. And as you mentioned, the infighting isn’t doing any justice to the USCF and it’s members. I think it’s going to get worst, but it remains to be seen………………………………….

  5. davilarl,

    There is a lot of discussion about the worth of a USCF membership. I play in tournaments and read the much-improved magazine, but there is not much else. I believe we are in a new era and chess is suffering as a result of competition from Internet-based sites and gaming. They have to adjust by leveraging this new platform or figure new ways of drawing members.

    I’m not sure what format could be used for chess on TV because the public has been misinformed about chess and believe it is “geeky” and hard to learn. The mass media has damaged chess by pushing this misperception. I remember when Maurice Ashley did commentary (and of course Daniel King), at least they kept us excited. (see video below)

    The lure of poker is that you see people winning a lot of money even though you may not understand the strategy. The other thing is… everyone plays some type of cards, so they can at least relate. Chess is going to be a tough sell to advertisers and other interests. The USCF has to do a better job of marketing.

  6. This discussion is very interesting, and I just wanted to add a few tidbits of my own! For one thing, we must always remember that for the most part corporations are all about turning a profit! To really get corporate entities to support (sponsor) chess, we must somehow show them how supporting chess can help them make money! This may be a really tough sell! Another source of support that seems at least something that the USCF, et al, should leverage is available US Department of Education monies that would drive the further use of chess in public education to act as a vehicle and or catalyst to improved learning! Convincing the government that the connection between chess and improved academic performance for American children should prime the pumps for more funds to flow into the USCF for developing chess in public education! Susan Polgar, and others, are already at the forefront of this sort of thing. So, just to reiterate my 2 points: 1. More work needs to be done in showing corporations how sponsoring chess would benefit them. And 2. More government funds could be made available for supporting a nationwide push to make chess an integral part of public education! Again, it’s all about selling the advantages of chess in education to the holders of the purse strings! Let’s hear more from other bloggers…? 😆

  7. BTW, there is another lawsuit being filed against the USCF by a Mr. Gordon Roy Parker. He charges several member of the USCF which conspiring to destroy the organization and to “profit from its demise.” He states that Paul Truong has engaged in a smear campaign against Sam Sloan, but has used his name.

    In some of his documents there are very crude, sexist, sexual and even racist remarks made including an e-mail purported to be from Ray Gordon with the subject, “No black man is good enough to be a USCF DELEGATE AT LARGE.” From reading the documents, it’s hard to believe the persons writing these documents are even remotely associated with chess.

    https://www.cybersheet.com/chess/parker-v-sloan.html

  8. Wow! Sound really ridiculous, and if true, very shameful on the part of the USCF leadership! Of course, I’d have to see what was written or said for myself before getting too bent out of shape over it! For now I’m only going to write this short comment. To me, any organization that has money as it’s central focus is destined to be corrupt and will inevitably fail to accomplish anything worthwhile! I suspect that many of the people who want to run chess via the USCF or other governing body once had a genuine passion for chess. Then, finding that to become really awesome at the game required more than they had within them, and or were willing to muster, became disillusioned and lost their passion! I call this a chess death! Failing to play at the lofty heights that they may have once envisioned, they got into the politics of chess. Now, of course this is all IMHO, but seems plausible to me. What we need is people of passion, and people of integrity… probably true in all worthwhile endeavors of life I’d say!

  9. Links are above.

    Well… I don’t believe the USCF has money as its central focus. They can’t be… they almost went bankrupt two years ago. That may be part of the problem… not enough focus on fundraising.

    Now…

    LA Lakers

    It appears that there are people of integrity, but the thing in “organization behavior” is how they work together. Pardon the NBA example, but I remember the Los Angeles Lakers having four future Hall-of-Famers and getting swept by a well-oiled Detroit Piston team a few years ago. In fact I made that exact prediction and people thought I was crazy. However, I saw that the Lakers had no chemistry. The Lakers had four outstanding players with integrity and work ethic (as basketball players), but it didn’t result in a championship. To get swept 4-0 was very revealing.

    The USCF has some really good people. You look at their resumes and they are eminently-qualified, but they are not working well together for some reason. It may be personality issues or old history. I will tell you this… there is regressive thinking in U.S. chess. You read those reports and it is hard to believe these people have any role (or any say) in leadership. The behavior is totally unacceptable and even infantile. The sexual innuendos sound like something from high school locker room. I believe that the USCF was doomed from the time the scandals occurred during the elections. You cannot run an organization when people are suing each other.

  10. Daaim, having money as a central focus does not mean that you’re going to be successful in generating wealth. What I mean is that the important attributes that attract financial supporters, like genuine enthusiasm for whatever it is one is trying to sell, be it chess, cars, or basketball, are lacking! Sure team chemistry is important, but not just for accomplishing things that need to get done, but for also influencing potential supporters who are observing the organization from the outside. Of course with the Lakers, we know that the chemistry wasn’t right, partially because of Kobe! Remember the Bulls of the 90’s? They were not as talented as the Lakers, but they had a leader in Michael Jordan, who could pull the team together into a highly successful championship team with great chemistry. And come to think of it, this was accomplished even with a distracting force like Dennis Rodman! I’m glad you mentioned basketball, because like chess, it’s another one of my passions even though I don’t play anymore!
    A last think I should mention is regarding integrity. Integrity is one of those things that speaks of what’s in a person’s heart. It’s not something that can easily, and certainly not always understood by observing a person from a distance. I mean, the Laker’s “future all of famers” may or may not have been men of integrity? I mean, how would you know unless they did some visibly outlandish things that became publicized? But if what has been written about the USCF leadership (at least some?) is true, this is certainly evidence enough that they are lacking in integrity! Keep in mind that crdentials (on paper) doesn’t mean that as a team, the USCF is able to be successful. I agree with you on the point regading the significance of team chemistry… good point!

  11. ETJ,

    Shaquille and Kobe had a strained relationship after they were swept, so I believe there were some person issues during the season too. Then the bombshell came when Kobe started talking about Shaq’s private life (as we are seeing people carry on in the USCF). It’s pathetic.

    As far as the USCF, I don’t know any of them particularly well. I’ve met most of them, but whatever the case, they had better clean house and start over or get the right pieces in place or else the USCF will sink. I’m not sure how the USCF can build the chemistry. One issue is that much of the staff is dispersed throughout the country. I doubt if most of the key members are living in Crossville, Tennessee. 😐

  12. Right…! I never understood why they made that move anyway? If anyone has the inside scoop on this, please let me know via this blog! I would think that a BIG chess Mecca like NYC or LA that has the
    easy access; the people density (especially chess players!); and probably close proximity to corporate and other supporter would have been good choices for the USCF HQ! I’m sure that there’s a lot to it that I don’t know… maybe somebody donated a free site and the like, but why Crossville, TN? I just read Morozevich’s comments about FIDE on the Chessbase Web site, and like the USCF, sounds like more of the same sort of discontent, but of course, on a much larger scale! Give us passionate, smart people with integrity… that’s what we need in chess and elsewhere!

  13. I think the decision was political, but they wanted to move to a low-rent district. You may remember the phase when a lot of companies moved from high-rent districts out to suburban areas. Well… the USCF went one better and moved it to Timbuktu! There was talk of moving it to Miami, Florida where the Hall of Fame museum is located.

    Be that as it may, it was a bad decision… both from a marketing standpoint and from a professional standpoint. How many people working full-time would want to transfer to Crossville, Tennessee? I honestly feel that the USCF headquarters should either be in New York or a centrally-located state like Illinois or Ohio.

    FIDE is another animal… so much conflict in the last 35 years. Chess needs to become more universal in its decision-making… it’s dominated by narrow interests in Europe.

  14. I do not believe Chess should be run by old pple ,i mean over 40 yrs old and especially people who have never been strong players themselves .What would be their interest to Chess???of coz just power n money plus a CV.Its time players did something themselves but most Chess players are a crazy selfish bunch.They would rather fight over the board for a small first prize than correct the whole picture and so its a dog eat dog affair .Tell me why Seirawan, Chriastiansen, Kamsky, Akobian, Dlugy, Browne, Onischuk, Nakamura ,Kaidanov, Polgar n co cant just come together and form a powerful group n run their own tournaments ??????I’m sure it wont be as bad as fighting for a first prize of $1000 or less at Marshall Chess Club ,but what do they do??they entrust people who have no clue how to set up chess pieces on starting positions to run such important aspects of their lifestyle ,its a joke.

  15. Darren,

    Power and money? People don’t make a lot of money running poor, non-profit organizations like the US Chess Federation. It’s a “labor of love.” How many “younger” (21-39 by your scale) people would take on non-profit employment? You could conceivably make less than US$20,000/year in some of those positions. The people most qualified to run these organizations would not make the financial sacrifices to do so.

    I digress… many of the players currently running the USCF are strong players including Bill Goichberg (FM), Susan Polgar (GM), Paul Truong (FM) along with other Experts and Masters. Nevertheless, a strong player does not necessarily make a better manager/organizer. What you need is combination of people who understand business management and the market demographics for chess. I would agree that you also need some strong players as well.

    Darren… I believe that chess players merely want to play chess in an organized environment and not deal with the administrative and political issues. We pay dues and have elections so that people can perform those functions. Why don’t GMs run tournaments? They would not run their own tournanments because (1) a conflict of interest (2) travel schedules and obligations (3) they are players and not organizers (4) conflicting visions and (5) lack of profit motive. Ask Maurice Ashley how difficult being an organizer is. He did the HB Global Chess Challenge and it was a success from an organizational and chess standpoint, but the sponsor pulled the plug. The tournament lost money.

    Another case in point… FIDE is in a mess and it’s run by strong players. In fact, the strongest players in history put chess into a tailspin… Bobby Fischer and Garry Kasparov. These are strong personalities. You saw that Kasparov’s breakaway organization failed as did kasparovchess.com. When was the last time you heard from Association of Chess Professionals, the organization run by GMs?

  16. I personally don’t think you need any strong players at all to run an efficient and highly successful chess federation! I do think that the element that we’re seeing in the strong player that makes us think we need a strong player is “passion!” It seems that even with all of the other attributes needed to become a strong chess player, like above average memory, good power of concentration, ability to think fast and synthesis new ideas on the fly (i.e., flexible thinking), etc., without passion or strong desire, one still can’t make it to the ranks of master! Another thing to keep in mind is that when we say “strong player” we don’t necessarily mean grandmaster! What we need are people who have a passion for chess, and who also possess the other attributes needed to run a successful business, like people skills, business acumen (usually from experience and formal training), but also a good familiarity with the chess market space. And of course, as was mentioned in a previous blog, putting together a good organization (a team!) with the requisite team chemistry, plus a nice mix of complimentary skills would certainly move chess forward in the “right” direction! Here’s an observation that again comes from basketball, but easily be applied to a chess organization as well. When we look at the successful basketball teams, what do we see? We see a team with a mix of skills: one person may be tall and a good shot blocker, but only scores in the single digits; another player may have a killer outside shot and can score almost at will if she’s given a good look at the basket; still another might be good at assists, and so on…! The point being that the team needs players of different skills that can work well together for a common purpose! We still need passionate people who have high integrity, but it’s a team! To my way of looking at things, the USCF needs to understand how teams work and then take the best of that understanding and apply it to running our chess organization! I know it can be done, look at the Turkish Chess Federation…?

  17. Daaim

    Daaim the biggest organizer i respect is one WHO SOURCES SPONSORSHIP.Today you have a lot of people who think they should be appreciated for simply running Swiss 46 ,that is totally nonsense.You get these guys organizing events in the most squalid conditions and demanding extra ordinary entry fees and they think they deserve credit but WHERE IS THE SPONSORSHIP SOURCING??Zilch!!

    About the situation in US Chess ,I will take you back to the collapsed Prague agreement a little while ago.If you remember precisely Yasser Seirawan told players to get organised in a certain way and he was going to source money.Even Kasparov agreed to this .Where was the money coming from??Surely somebody knows.I am not anti semitic in any way but i believe the Jewish Boys and Girls like Polgar ,Yasser seem to know how and where to source money and these are only players (therez every pointer these guyz are millionaires in real life).I remember Yasser’s Chess Company on some stock exchange or so a few years ago.

    Until the players themselves wake up ,nothing will happen.If you think these so called organisers are gaining nothing from executive posts ,just ask them to leave and see if they agree.Its pure power hunger ,the guy is a patzer ,does not know how a player feels over the board ,old ,yet claims to be an organizer ,cant source any meaningful sponsorship ,man its a mess.

    You mention FIDE .Because players are not organised themselves FIDE will continue imposing atrocious rules.Topalov seems active in seekin money albeit only for his title defence and seems to have Bulgarian banks and maybe President behind him .Chessplayers are not speaking with one voice ,once another boycotts a tournament ,the other sees opportunity and plays ,so how can you solve anything???

  18. Darren,

    Your comments are valued, but be sure you’re respectful and sensitive to the audience here. With Yasser being born in Syria and father being Arab, he’d probably raise objection to your “Jewish” comment. Calling grown people (both respected GMs) “boy” and “girl” is definitely not cool.

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