You can tell the Vivid MBA guy put Vivid Cabaret deal together
Vivid has almost all of the major benefits:
- Likely it's a licensing fee arrangement where Vivid receives percentage of club's gross revenue "off the top." So even if club does't turn a profit, Vivid still gets paid.
- If club goes broke, Vivid does not have a loss.
- Vivid gets to use club to market its movies and promote its stars.
- Vivid can use clubs to build its relationship with its customers.
- Vivid can use clubs to promote its other products, especially Vivid Vodka.
- Vivid is still free to license with other clubs, which they are already doing.
- Vivid has opportunity to solidify its claim to the "Vivid" tradename across the country and with all types of products; e.g., Vivid sued HTC for marketing phone named "Vivid."
- If Vivid Cabaret works, RICK will feel compelled to make many more clubs Vivid Clubs.
- If Vivid Clubs succeed, Vivid gets the credit - since club uses their name; but if Vivid Clubs turn out to be duds, it's easy for Vivid to shift blame to RICK.
I caught that. That's a crock. I think the terms aren't very favorable for shareholders and Eric is hoping they do well before he announces the cost. Again, this is a public company and he runs it like it's his own private company. I think institutions are dumping shares because of this. Big shareholders want a say and to be treated with respect. All the planned investor conventions are a waste of time without management change.
If Vivid Cabaret works, RICK will feel compelled to make many more clubs Vivid Clubs. Sounds good to me. How about this. Maybe just maybe the idea works. Porn stars show up for cost and bring in thousand of customers at a premium at the door. I think YOU may have the problem. I just see differentiation and value.
Who knows how the deal works because they don't tell you? But it's fair to say that RICK probably leaves about 20%-30% of the profit on the table for Vivid because Vivid likely is paid off the gross rev. ... and Vivid has none of the loss. All the clubs might eventually become Vivid clubs ... then it's a huge drain on Rick's profits. Nothing like they could make with Rick branded clubs.