Agenda - Board of Directors Meeting, July 5th 2009

[fdad]

I thought someone said there was a system that was used this past year(for all except nationals)....or did they lie?

Also for those who think this was 'leaked' pay closer attention to what is posted, you might realize it wasn't.

There WAS a system used for some NACs last year, but the system didn't care where you slept. Seems like adding registration for NAC A to that system would be trivial. Almost no reason not to do it, unless they didn't want people registering yet.

[flechewounds]

I'm just wondering why most of the major problem-solving initiatives we've seen from our new Executive Director just happen to be back-scratch jobs for other companies outside of fencing that nobody likes (Hang-a-Star, THS).

Also I find it troubling that details of the Stay and Play program have not been released because they are not "finalized"--does "finalized" mean a done deal? If that's the case, isn't this decision simply being made by fiat without any consultation of the membership? Isn't that exactly what everyone wanted to avoid?

Dev -

Because it is far easier to get others to solve our problems than it is for us to do it our selves. Fencers just aren't that smart...

As for Stay & Pay, all I can see is a recipe for all of us to get screwed. As I've said on the other thread (see here), the real answer is for the USFA/THS to offer a better value to its customers... but if they did that, they'd have higher bookings, no?

Gary Zeiss.

[flechewounds]

I don't instinctually see this as a bad concept for the USFA to pursue.

I DO feel that the USFA, if they wish to pursue this, should contractually obligate THS to step up to the plate on their performance. This would mean contractual guarantees on room rates, room availablity, and penalties for non-performance or poor customer satisfaction. Do we, as an organization, have the will to drive such a contract?

My fear is that the USFA will not negotiate this strongly with THS, and that we will end up with a deal that will, again, have me in a strange city at 11 o'clock at night with no hotel room and no recourse because THS inadvertantly cancelled my reservation, and can't do anything about it or assit me in any way.

Oiuyt: no offense, but the bullet point in Kurts report is so vague as to be useless. It certianly doesn't begin to hint at the depth and extent of the bare bones of "Stay and Play".

Allen -

The problem here is that the families bear the cost of poor performance - we won't get a refund if THS fails to meet its service levels. I don't trust the USFA to police Stay & Pay if they get revenue from it.

Gary Zeiss

[edew]

Dev -

Because it is far easier to get others to solve our problems than it is for us to do it our selves. Fencers just aren't that smart...

As for Stay & Pay, all I can see is a recipe for all of us to get screwed. As I've said on the other thread (see here), the real answer is for the USFA/THS to offer a better value to its customers... but if they did that, they'd have higher bookings, no?

Gary Zeiss.

Gary,

That really is the bottom line, right? If THS had a decent website that doesn't look like an 8th grade project in 1996, real savings in the hotel rates and USFA doesn't go all ballastic in their entry fee raises (holy-heck, $50 reg fee, $70/event fee... was Kurt a former university chancellor or something?), then people would just use THS because it's a better mouse trap. Instead, it's a crappy mouse trap that whacks you on your finger, lets mice take the bait, and have a 30 page instruction manual and costs $90 (per use), and they want to write a contract to lock in users. Sounds like Windows Vista or something.

The easiest -- and correct -- way to get people to use THS is to have a great product. Look, I don't enjoy going through Priceline, then Orbitz, then Hotels.com then back to Priceline, then to Motel6.com, then back to Orbitz before finding a decent priced hotel. It really is a time-consuming activity. But if it saves me $50/night at a pretty-good hotel for 4 nights, it makes up for the extra work.

At the Louisville NAC this past January, I stayed at the host hotel for $40/night cheaper because I went through hotels.com. And hotels.com was way easier to navigate as a website than THS's. I've mentioned in other posts that I don't and have never used THS mainly because its website is so ornery and un-navigable. Couple that with a higher price, where's the incentive?

So basically, if THS can offer a navigable website with competitive prices, we'd use it. There's no stay and pay needed.

[flechewounds]

Gary,

That really is the bottom line, right? If THS had a decent website that doesn't look like an 8th grade project in 1996, real savings in the hotel rates and USFA doesn't go all ballastic in their entry fee raises (holy-heck, $50 reg fee, $70/event fee... was Kurt a former university chancellor or something?), then people would just use THS because it's a better mouse trap. Instead, it's a crappy mouse trap that whacks you on your finger, lets mice take the bait, and have a 30 page instruction manual and costs $90 (per use), and they want to write a contract to lock in users. Sounds like Windows Vista or something.

The easiest -- and correct -- way to get people to use THS is to have a great product. Look, I don't enjoy going through Priceline, then Orbitz, then Hotels.com then back to Priceline, then to Motel6.com, then back to Orbitz before finding a decent priced hotel. It really is a time-consuming activity. But if it saves me $50/night at a pretty-good hotel for 4 nights, it makes up for the extra work.

At the Louisville NAC this past January, I stayed at the host hotel for $40/night cheaper because I went through hotels.com. And hotels.com was way easier to navigate as a website than THS's. I've mentioned in other posts that I don't and have never used THS mainly because its website is so ornery and un-navigable. Couple that with a higher price, where's the incentive?

So basically, if THS can offer a navigable website with competitive prices, we'd use it. There's no stay and pay needed.

Precisely...

[oiuyt]

(holy-heck, $50 reg fee, $70/event fee... was Kurt a former university chancellor or something?)

I'm not sure it's reasonable to blame Kurt for a pricing structure that pre-dates him.

-B

[edew]

Ok, cheap (or rather, expensive) shot.

[jjefferies]

The program is called "Stay & Play". It's been used successfully by USA Volleyball for the past year or two.
:
-B

A few months ago I had a conversation with the mom of a girl high school volleyballeller and she mentioned the "Stay & Play" system in the most negative terms. In their particular system families either have to book together at the designated hotels or be split up. And her experience with costs were that their expenses had risen by in excess of 25%.

Of concern to me is that there is no recourse if you don't like the hotel, or THS service.

[fencerX]

dekko's post made my jaw drop.

I asked Mrs Wallet (some time lawyer in our jurisdication, but not in the US) about this THS description:

In Australia it would be called third line forcing and is very not legal. Third line forcing is a form of exclusive dealing involving the supply of goods or services on the condition that the purchaser buys goods or services from a particular third party, or a refusal to supply because the purchaser will not agree to that condition (Wikipedia defn.)

The US term would be an "illegal tying arrangement" rather than "third line forcing". Tying arrangements can violate both US federal and state antitrust laws.

Illegal tying is one of the most common antitrust claims.[ ...] Tying is often referred to as per se, or automatically, illegal. Nevertheless, tying arrangements may sometimes be justified or subject to rule of reason analysis.

Simply put, a tying arrangement is an agreement by a party to sell one product but only on the condition that the buyer also purchases a different product (often known as a positive tie), or at least agrees that he will not purchase that product from any other supplier (often known as a negative tie). The product that the buyer is required to purchase in order to get the product the buyer actually wants is called the tied product. The product that the buyer wants to purchase is called the tying product. In the most basic sense, the seller has tied two products together, as if in a knot. The only way the buyer can get the one product is to also purchase another product that he or she may or may not want.


II. Standard of Analysis

Tying arrangements can violate a number of antitrust laws. The confusion surrounding tying arrangements has arisen not because such arrangement might violate a number of different antitrust laws, but because the courts use confusing language when analyzing tying arrangements.

The antitrust laws are designed to protect competition. In antitrust law, there are some arrangements or restrictions that have such a deleterious effect on competition that courts have ruled them per se or automatically illegal. What this means is that if the basic elements of the antitrust violation are established, the court will consider the arrangement illegal and will not examine any justifications or reasons as to why the arrangement might actually benefit competition in some manner. Tying arrangements are often considered per se illegal. The basic requirements that must be met for tying to be per se illegal are as follows:

1. There must be two separate products or services.

2. There must be a sale or an agreement to sell one product (or service) on the condition that the buyer purchase another product or service (or the buyer agrees not to purchase the product or service from another supplier).

3. The seller must have sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product.

4. The tying arrangement must affect a "not insubstantial" amount of commerce.

Courts are nearly unanimous in agreeing that these are the basic requirements of a tying claim. The problem is that even though the Supreme Court has called tying a per se violation, the Supreme Court -- and other courts -- have actually followed a standard of analysis known as the rule of reason. Under the rule of reason, courts will use a balancing test, or a "look at all the facts" approach. The courts will examine both the positive and negative effects of the arrangement to see if one outweighs the other. This type of analysis is not used for per se violations. The third requirement for an illegal tying arrangement, however, requires the courts to examine the degree of market power that the seller has in the various markets. This type of market analysis is used in the rule of reason. Thus, even though courts call tying arrangements per se violations, they typically look at the market and balance the procompetitive and anticompetitive effects of the arrangement before determining whether it violates the antitrust laws or not.

Since the rule of reason analysis here includes looking at market power ...

Market Power

Arguably the most analyzed requirement for a per se tying violation is the requirement of market power. In the tying context, the seller must have sufficient economic power in the tying market to leverage into the market for the tied product. That is, the seller has to have such power in the market for the tying product that it can force the buyer to purchase the tied product. The requirement of market power is crucial to a per se violation.

So before anyone believes the USFA's tying arrangement conduct might escape under a "rule of reason analysis", remember that as a NGB under the USOC, the USFA has (a congressionally approved) monopoly on US national fencing team selection events, etc under the Ted Steven's Amateur Sports Act. The USFA has absolute, total market power in the tying market.

So it sounds like Kurt is conspiring with THS to create a program that 1) could be an illegal tying arrangement, 2) has serious privacy violations and 3) possibly violates USOC bylaws and the ASA, but some Officers and BoD members feel it's not in their perview to review? Holy crap.

[edew]

Sounds like a PC with the Windows OS installed (or having IE installed). In the latter case with IE installed, we know that the courts have ruled against MS for tying IE as the default browser in PCs.

[flechewounds]

Folks -

As you've seen, I have a number of issues with Stay & Pay. While some have called for "calm" to see how this plays out, I actually feel strongly otherwise - this concept must not be allowed to see the light of day. It must be stopped dead in its tracks.

First, while I don't have a broad criticism of Kurt's job, yet, I do think that this particular "bright idea" fails to take into account that this idea helps the USFA at the expense of the USFA membership. What harms? Reduced choice, creeping costs over time (I'll bet money that the cost profile within 3 years will be different from day 1, citing "increased costs of business" or such other B.S.), and generally poor service (few have said anything good enough about THS to warrant awarding them this level of exclusivity). One of the failings that often occurs in management of membership organizations is that the management fails to realize that their job is to act in the best interest of the membership broadly, not the organizational management narrowly. "Stay & Pay" is clearly not in the benefit of the membership broadly.

Also, this will be impossible to get rid of once it is in place. Impossible. No amount of executive hand-wringing over this can convince me otherwise. Why? Because it is free money to the USFA - an organization that is desperate for revenue. Free heroin for the junkie. However, free money comes at a cost - a cost to the community at large - if I take jjeffries' post as accurate, a 25% increase in lodging costs overall.

Furthermore, no matter what "service levels" are put in on the deal, THS knows that it only needs to perform to the barest minimum of acceptability (this saves THS money). Why? Because the USFA won't cut the deal loose (and forego the revenue). What they will assume is that the fencing community will eventually tire of complaining about it, the USFA won't forego the revenue, and that they can put cosmetic fixes in place during renewal periods.

How do I know this? I'm in the business of negotiating long-term services contracts and I fight this battle every day. Services vendors always fight to avoid accountability and create bogus "win-win" incentives so that they can increase their revenue, lower the operating costs and reduce the deal risks. Inexperienced customers (and frankly, the USFA is an inexperienced customer) sign on because it looks good optically. Change is prevented because of high customer switching costs (no manager wants to admit that they entered a stupid deal; few companies will risk even a poor revenue share, particularly in tight times; and it is politically and economically costly to enter into another deal).

Stay & Pay is a bad idea. Furthermore, it is a bad idea that, if implemented, will be near-impossible to kill off. That is why it mustn't see the light of day.

Gary Zeiss.

[dekko]

oiuyt,

Bottom line this for everyone. Simple yes or no answer, if possible.

Is this something that will happen regardless of our opinions, concerns or potential legal ramifications?

[Inquartata]

Well...if US Volleyball has been using an identical arrangement for some time and it has not been adjudicated as an illegal tying arrangement, I am not sure that there is much chance that it will be so ruled in our case.

Of course, maybe no one with standing has challenged the USV arrangement yet.

Meanwhile, I ask again: Will Stay and Play also apply to registrations made by fax and mail, or will it only link online registrations to THS reservations? Or, is the USFA planning on doing away with fax and mail registration?

[occasionalfencer]

Folks -

As you've seen, I have a number of issues with Stay & Pay. While some have called for "calm" to see how this plays out, I actually feel strongly otherwise - this concept must not be allowed to see the light of day. It must be stopped dead in its tracks.

First, while I don't have a broad criticism of Kurt's job, yet, I do think that this particular "bright idea" fails to take into account that this idea helps the USFA at the expense of the USFA membership. What harms? Reduced choice, creeping costs over time (I'll bet money that the cost profile within 3 years will be different from day 1, citing "increased costs of business" or such other B.S.), and generally poor service (few have said anything good enough about THS to warrant awarding them this level of exclusivity). One of the failings that often occurs in management of membership organizations is that the management fails to realize that their job is to act in the best interest of the membership broadly, not the organizational management narrowly. "Stay & Pay" is clearly not in the benefit of the membership broadly.

Also, this will be impossible to get rid of once it is in place. Impossible. No amount of executive hand-wringing over this can convince me otherwise. Why? Because it is free money to the USFA - an organization that is desperate for revenue. Free heroin for the junkie. However, free money comes at a cost - a cost to the community at large - if I take jjeffries' post as accurate, a 25% increase in lodging costs overall.

Furthermore, no matter what "service levels" are put in on the deal, THS knows that it only needs to perform to the barest minimum of acceptability (this saves THS money). Why? Because the USFA won't cut the deal loose (and forego the revenue). What they will assume is that the fencing community will eventually tire of complaining about it, the USFA won't forego the revenue, and that they can put cosmetic fixes in place during renewal periods.

How do I know this? I'm in the business of negotiating long-term services contracts and I fight this battle every day. Services vendors always fight to avoid accountability and create bogus "win-win" incentives so that they can increase their revenue, lower the operating costs and reduce the deal risks. Inexperienced customers (and frankly, the USFA is an inexperienced customer) sign on because it looks good optically. Change is prevented because of high customer switching costs (no manager wants to admit that they entered a stupid deal; few companies will risk even a poor revenue share, particularly in tight times; and it is politically and economically costly to enter into another deal).

Stay & Pay is a bad idea. Furthermore, it is a bad idea that, if implemented, will be near-impossible to kill off. That is why it mustn't see the light of day.

Gary Zeiss.

Thank you so much for saying all this. It is exactly what I fear, but you have the voice of authority based on experience. Here's my suggestion: since we have no official information, or official contact, talk to, phone or email every USFA member, and club and division that you can. Tell them what you said here. Ask them to call and (not or) email every USFA staff member, every USFA board member, every working referee, every national coach, and express these concerns. I truly think that this is a big issue in several different ways. If you know fencers who are less likely to attend a tournament under these conditions, make sure that they communicate that clearly. If you know fencers who have to go to NACs no matter what, make sure that they know in what ways they can express their displeasure, repeatedly and emphatically. Above all, make sure that everyone you know DEMANDS a waiver.

Please.

[hologramqueen]

I agree with Gary. being the fencing mom of 2 (pretty decent fencers) I want to be able to voice my opinion and not be forced into bed with THS. Something needs to be done, and we need to spread it via facebook, twitter fencing.net etc.. it has to go out to the masses to get those that will be financially smashed involved. If we don't take a stand now, we will be silenced.

[dekko]

When your voice is ignored, as in this case, your screams are silent.

[flechewounds]

When your voice is ignored, as in this case, your screams are silent.

We then need to keep screaming...

[flechewounds]

And one more thing - if THS believes the deal is underperforming because people aren't using them enough, might it be because a large part of the membership doesn't like THS's service? Has Kurt & Co. considered that?

[FreedomAtRisk]

If everyone hates this thing so much, the easy thing to do would be to simply boycott THS during NAC A and NAC B. I don't think that near-venue hotels are difficult to find in either Des Moines or Kansas City, and a boycott would send a clear signal that the membership doesn't want this.

[hello?]

If everyone hates this thing so much, the easy thing to do would be to simply boycott THS during NAC A and NAC B. I don't think that near-venue hotels are difficult to find in either Des Moines or Kansas City, and a boycott would send a clear signal that the membership doesn't want this.

The whole point is that you would not be allowed to fence if you did not use THS.