ConStellation Bankruptcy

Constellation the 1983 Worldcon in Baltimore was an artistic success -- it was one of the larger Worldcons ever held with an interesting and varied program in an attractive venue. Unfortunately, once the convention was over the committee realized that its budget was something like $150,000 in the red. This was a problem.

Part of the shortfall was dealt with by not providing membership reimbursements for staff and program participants. (At modern Worldcons, other than the GoH, everyone right up to the chairman pays for their memberships. If cash remaining after the con permits, there are membership reimbursements for staff and program participants. This is a large chunk of money and is a Worldcon's largest financial cushion. While reimbursements are not a legal debt, they are a moral debt and Worldcons budget to be able to pay them.) This still left an unpayable legal debt in the neighborhood of $75,000. Constellation was effectively bankrupt.

The problem came from a lack of controls on spending. There was effectively no budget (i.e., there was a budget, but it did not actually affect where or how much money was spent). Major expenses (such as the $40,000 rental of Diamondvision, a super-large-screen television system to provide in-the-hall closeups of the Masquerade) were not even in the budget. In other cases, more than one department spent the same budget.

Fandom's reaction was predictable, with much finger-shaking, alarm and despondency, and expressions of dismay. The Connie bankruptcy was the talk of fandom. The second-guessing got to the point where the following year at LAcon II there was a very funny masquerade entry skit of smofs (identified by their t-shirts which read "Blah, blah, blah, fiscal responsibility. Blah, blah, blah, Diamondvision.") going on about it.

The reaction was sufficient that the 1984 Worldcon, L.A.con II became fiscally ultra-cautious and consequently ran the largest surplus in Worldcon history right up through 2010.

As is the norm, Constellation was run by a separate corporation from any other Worldcon, so other Worldcons were unlikely to suffer any legal impact, but there was widespread concern that other Worldcons would be tarred with the same brush and would be unable to get credit from their hotels and other vendors. A Connie Bailout was needed.

The convention committee, particularly senior members, contributed by not collecting the reimbursements due for convention expenses that they had paid for out of their own pockets, but this was not nearly enough. In addition, to foregoing reimbursements, the committee and local clubs ran fundraisers (including resurrecting Backrubs for Baltimore) and paid off a significant amount of additional debt. Finally, MCFI, the group which had run Noreascon Two in 1980 set up a Connie Bailout Committee chaired by Mark Olson. In the end, the Connie Bailout Committee raised around $30,000 and was able to use the cash to purchase the entire remaining unpaid debt owed outside of fandom at about sixty cents on the dollar.

Long-term, the Connie bankruptcy raised awareness in fandom that Worldcons had gotten to the point where their budgets were large and where mismanagement could produce problems beyond an individual committee's ability to remedy. Worldcons were not really islands any more. The Constellation bankruptcy was one of the factors which motivated the creation of Pass-Along Funds a few years later.

(Note, by the way, that while it is called the "Constellation bankruptcy", Constellation never actually underwent bankruptcy. Technically, it paid all of its assets to its creditors and the Connie Bailout Committee then used the funds it raised to purchase the remaining debt at about 60 cents on the dollar, leaving MCFI (the formal sponsor of the Connie Bailout Committee) technically the sole creditor. MCFI then wrote off the debt and allowed the Constellation corporation to close.)

On a lighter note, years later when the trauma was history and people were breathing again, Connie chairman Mike Walsh noted that Connie was the only Worldcon that had given fans more than their money's worth...

For contemporary reactions, see: File 770 44, p. 21 File 770 45, p. 3 File 770 46, p. 3 File 770 47, p. 3 File 770 48, p. 6 File 770 52, p. 7 (Chicon IV's contribution and Constellation Open Letter)

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Fanhistory

1983

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