Saturday, April 9, 2011

Snooki's speaking fee is $25,000 per appearance...WOW, what a bargain!!!

Is Snooki worth the speaking fee she receives? Rutgers University paid $32,000 for her to come to speak to students. However, apparently she receives a usual fee of $25,000 to cavort with paying customers at clubs.  Does the business get is money worth?  By the estimate given in the article below (full article below the fold) the change in revenue (Marginal Revenue) for a Snooki appearance is approx. $260,000. Far in excess of the extra cost of hiring her (Marginal Cost) for $25,000.  Marginal Revenue is greater than Marginal Cost...In Microeconomics, we learn that to maximizes profits, they should hire her until the change in revenue equals her speaking fee (Marginal Revenue $25,000=Marginal Cost $25,000)...guessing that might happen after (during) the second appearance....

Snookinomics: Profits from a Tan



THIS week, media outlets everywhere mocked Rutgers for paying Nicole (Snooki) Polizzi $32,000 to talk about drinking and tanning on March 31. That was $2,000 more than what the Nobel laureate Toni Morrison will receive for the school’s commencement speech next month.


How could a pint-size, poufed party girl possibly be worth so much?

Turns out, that’s the going rate for Ms. Polizzi, though her house-raising presence is more typically sought by nightclubs and bars, rather than places of higher learning.

For her club appearances, Snooki can receive $25,000 for a couple of hours of drinking and dancing, according to her managers. Below is a back-of-the-envelope estimate showing how she may be worth more. Most figures are from Alex Cordova, a marketing executive for Angel Management Group, which runs the LAX in Las Vegas, which recently hired Snooki for a spring-break party.

TABLE SERVICE LAX has 60 tables. In exchange for table service, patrons must commit to a minimum bottle service.

On a typical Saturday night, that cost would be $1,000 to $5,000, depending on location and size of the table. On a celebrity night, the prices of tables double, with those closest to the star going for the highest amount. Mr. Cordova declined to specify exact prices.

Using a conservative estimate, let’s say that on a non-Snooki night, 58 of 60 tables sell for $1,000, and two tables for $5,000. So on Snooki’s night, the club gets, at minimum, an extra ($1,000 x 58) + ($5,000 x 2) = $68,000 in table service.

COVER CHARGES LAX can expect 1,600 to 1,800 patrons on a typical Saturday night in March. With a buzzworthy celebrity, attendance goes up to 1,900 to 2,200 customers, Mr. Cordova estimates.

Guests who purchase tables don’t pay a cover charge. With 60 tables with 10 people each, 600 people wouldn’t pay covers. That means the remaining guests, called G.A. for “general admission,” number about 1,100 on a noncelebrity night, and 1,450 on a celebrity night.

The entrance fee is $20 for women and $30 for men. Not everyone pays: bouncers let many in free. On a noncelebrity night, about 60 percent of G.A.’s pay the cover. On a celebrity night, when demand is higher, Mr. Cordova estimates that 80 percent pay.

For simplicity’s sake, let’s assume that an even share of men and women attend and are allowed in free. So for a noncelebrity night, the club gets $16,500 in cover charges (60 percent of 550 men paying $30, plus 60 percent of 550 women paying $20).

And on a celebrity night, the club gets $29,000 in cover charges (80 percent of 725 men paying $30, plus 80 percent of 725 women paying $20).

So the total in extra cover charges is $12,500.

BAR SERVICE G.A.’s buy drinks at the bar. Let’s assume that the average Las Vegas clubber buys four drinks, at about $12 each. That’s a bar tab of $48.

So on a noncelebrity night, with 1,100 guests who haven’t bought tables, that would total $52,800 (1,100 x $48).

On a celebrity night, with 2,050 non-table-buyers, bar service totals $98,400 (2,050 x $48).

So the additional, Snooki-derived bar revenues would be $45,600.

MEDIA EXPOSURE The previous figures are tallied the same night that Snooki slinks down LAX’s center staircase. But the real return comes later, when patrons upload photos with Snooki onto Facebook, or when a portrait of her partying at LAX runs in UsWeekly.

And to ensure maximum exposure for the clubs, stars like Snooki usually sign an agreement that prevents them from partying at any nearby clubs, said Lori Levine, founder of Flying Television, a celebrity booking firm.

According to Cision, a company that tracks media coverage, the Snooki appearance generated 95 mentions in the mainstream media, plus hundreds of mentions on blogs, Facebook and Twitter. The company estimated the publicity value at $133,306.

THE VERDICT By this rough accounting, Snooki’s $25,000 fee brought in an additional $259,406 in revenue for LAX.

Of course, a university like Rutgers doesn’t have the same profit motives as a nightclub.

Still, schools get other benefits from steep speaker fees. Rutgers officials say that celebrity appearances have boosted the university’s brand, as well as student morale.

Indeed, students were so excited about Snooki that the school had to add a second standing-room-only show. And the finger-wagging controversy generated headlines around the world, raising the school’s visibility.

“A large part of what brings students to a school is not just the academics, but what you can offer outside of the classroom,” said Ana Castillo, a senior and president of the Rutgers University Programming Association, the student group that arranged Snooki’s lecture.

“We have to show applicants what kinds of fun we have,” she added, “to show that students here aren’t dying from just reading books 24 hours a day.”
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