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					                                             Confidential
                CITY OF RICHMOND
    PARTNERING COUNTIES CORPORATE SPONSORS
                   ARENA MARKET VALIDATION AND
                      FINANCIAL FEASIBILITY STUDY

                                                         VOLUME I OF III
                                                    EXECUTIVE SUMMARY



                                                           PRESENTED BY:
                                               BARRETT SPORTS GROUP, LLC
                                             POPULOUS SPORTS ARCHITECTS
                                          WESTON SPORTS & ENTERTAINMENT
                                                                  y ,
                                                            January 27, 2011

               PRELIMINARY REPORT – SUBJECT TO REVISION
Preliminary Draft – Subject to Revision                                 Page 0
                                          Confidential




Preliminary Draft – Subject to Revision        Page 1
Table of Contents
 I.     Introduction

 II.    Market Analysis

 III.   Market Surveys
                    y
        A. General Public Survey
        B. Corporate Base Survey

 IV. Preliminary Facility Characteristics
               y        y

 V.     Potential Arena Sites

 VI. Construction Cost Estimates

 VII. Financial Analysis

 VIII. Economic Impact Analysis
                  p        y

 IX. Major Development Considerations

 X.     Next Steps
                p

        Limiting Conditions and Assumptions

Preliminary Draft – Subject to Revision       Page 2
                                                            Confidential




                                          I. INTRODUCTION




Preliminary Draft – Subject to Revision                          Page 3
I.          Introduction
                       g                                      y       g
           The Consulting Team is Pleased to Present Preliminary Findings in Connection with the Arena
           Market Validation and Financial Feasibility Study

          Major Goals and Objectives
            Evaluate Local and Regional Market Demand
                                    g
            Site Analysis
            Prepare Preliminary Construction Cost Estimates
            Evaluate Financial Feasibility
            Evaluate Financing Alternatives (Case Studies Included /To be Completed – Next Phase)
            Evaluate Economic and Fiscal Impacts

          Richmond Coliseum Opened in 1971
            Seating Capacity                                               13,410 (Announced)
                – Hockey Configuration                                                  10,454
                – Basketball Configuration                                              11,038
                – 360 D       Configuration
                       Degree C fi      ti                                              12,217
                                                                                        12 217
                – 270 Degree Configuration (End Stage)                                  10,385
            “Luxury” Suites                                                                12
            “Club” Seats
                Club                                                                       668
            Lacks Modern Amenities/Quality Finishes
            Requires Significant Infrastructure Improvements
Preliminary Draft – Subject to Revision                                                           Page 4
                                                                Confidential




                                          II. Market Analysis




Preliminary Draft – Subject to Revision                              Page 5
II.         Market Analysis
       Comprehensive Review of Demographic Characteristics of Comparable Markets

           1. Median Market Area Comparison

                A. CBSA Designation
                   i. Arena/Stadium Seat Inventory

                B. Geographic Ring Comparison
                   i. 10 Mile Ring Statistics
                   ii. 20 Mile Ring Statistics
                   iii. 30 Mile Ring Statistics

                C. Drive Time Comparison
                   i.
                   i 20 Mi       Statistics
                          Minute S i i
                   ii. 30 Minute Statistics

       High Level Minor League Hockey (e g AHL/ECHL) Demographic Characteristics were
                                              (e.g.,
        Evaluated but Not Included in this Report


Preliminary Draft – Subject to Revision                                             Page 6
II.         Market Analysis
General Observations

       Median Market Summary Comparison

            Population
               p
             – Richmond Market is Generally Comparable to Other Markets
             – Below Market Average Based on 30 Mile Ring
             – Estimated Growth Rate is Comparable to Other Markets

            Households
             – Richmond Market is Comparable to Other Markets
             – Estimated Growth Rate is Comparable to Other Markets

            Income
              – Richmond Market is Above Other Markets
              – Number of High Income Households is Generally Comparable to Other Markets

            Unemployment
             – Unemployment Rate is Comparable to Other Markets




Preliminary Draft – Subject to Revision                                                     Page 7
II.         Market Analysis
General Observations

       Median Market Summary Comparison

            C         Base
             Corporate B
             – Comparable to Market Average Based on Number of Companies with $50.0 Million or
                More in Sales
                     p                    g                         p
             – Comparable to Market Average Based on Number of Companies with 500 or More
                Employees

            Media Market
                Below Market Average B d on TV H
             – B l M k A             Based      Homes
             – Below Market Average Based on Radio Population

            Seat Inventory
             – Below Market Average in Terms of Existing Inventory of Stadium /Arena Seats
                  » Low Inventory of Existing Seats, Luxury Suites and Club Seats
             – Ratio of Population and High Income Households per Seat Above Average
             – Ratio of Population and High Income Households per Suite / Club Seat Above Average
             – Ratio of Large Companies to Number of Suites / Club Seats Above Average
Preliminary Draft – Subject to Revision                                                       Page 8
II.         Market Analysis
Competitive Facilities

            Competitive Facilities in Immediate Market Vicinity Provide Limited Direct Competition to
             Proposed Arena
                 Events/Tenants
             – E t /T         t
             – Premium Seating Leasing
             – Advertising/Sponsorship
             – Other

            Facilities Located in Neighboring Communities (e.g, Charlottesville/Hampton/Norfolk)
             Provide Direct Competition (Significant Issue)
             – Events/Tenants
             – Advertising/Sponsorship
             – Other

            John Paul Jones Arena Provides Most Significant Source of Competition
             – State-of-the-Art Facility
             – Large Capacity
             – Events/Tenants
             – Premium Seating Leasing (Limited)
             – Advertising/Sponsorship

Preliminary Draft – Subject to Revision                                                           Page 9
II.         Market Analysis
Promoter/User Interviews

       Richmond Coliseum Lacks Amenities of Newer Facilities and is a Challenging Venue for Events
           Loading Dock
           Rigging
           Backstage Areas/Star Areas

       Promoters Would Prefer More Seats in the Lower Bowl as Compared to Current Configuration
                                                                  p                     g

       Richmond Market Loses Events to John Paul Jones Arena Due to Size/Condition of the Richmond
        Coliseum

       Promoters Would Prefer Richmond Market Over Charlottesville

       Promoters Acknowledged there are Few Shows that Currently Need Capacity of a Large Arena
                           g                                    y        p y            g
        (16,000+)

       Ticket Tax/Facility Fees are Potential Deterrents for Promoters/Acts – Current Rate 7.0%

       New/Renovated Arena Should Attempt to Maximize 270 and 180 Degree Configurations

Preliminary Draft – Subject to Revision                                                            Page 10
II.         Market Analysis
Promoter/User Interviews

       CAA Representatives Indicated Capacity Over 16,000+ Would Not be Desirable
         Prefer a Downtown Site
         Premi m Seating is Not a Significant Iss e
          Premium                              Issue
         CAA would Consider Long-Term Agreement – Desire Office Space (At Arena or Other Site)
         Agreement Recently Extended through 2014

       NCAA Representatives Indicated Minimum Capacity of 12,000 for Tournament Early Rounds
         Richmond Would Potentially be a Considered Market
         Significant Competition on the East Coast to Host Tournament

       ACC Representatives Indicated Capacity Between 18,000 to 20,000+ Would Likely be Required
         Richmond Would be an Attractive Market (Nine Universities within Driving Distance)
         ACC F      i
               Focusing on N Newer A         Amenities/Seating Ch
                                    Arenas – A                       t i ti
                                                  iti /S ti Characteristics
         Greensboro will Host Four of Five Next Tournaments (ACC Based in Greensboro)

       Two Minor League Hockey Ownership Groups Expressed Significant Interest in New/Renovated
        Arena (AHL/ECHL Options)


Preliminary Draft – Subject to Revision                                                       Page 11
II.         Market Analysis
Promoter/User Interviews

       AHL Representatives Indicated Potential Interest in the Richmond Market
         Richmond is a Good Fit Geographically for the League
         Arena Size is Important – Curtain System to 7,000 Seats

       ECHL Representatives Indicated Potential Interest in the Richmond Market
         Richmond is a Good Fit Geographically for the League
         Arena Size is Important – 13,000 Seats is Big
         Deal Structure (Rent/Revenue Sharing) is Critically Important
         Generally Prefer Downtown Arenas

       WNBA Representatives Indicated Potential Interest in the Richmond Market (League has Not
        C d t d D t il R        h)
        Conducted Detail Research)
         Richmond is a Top 10 TV Market for the League
         Corporate Support is Important
         Prefer Arenas with Less than 18,000 Seats – Curtain System is Important

       NBA D League Representatives Indicated Potential Interest in the Richmond Market (League has
        Not Conducted Detail Research)
         Condition of the Coliseum is Issue with Market
         Prefer Arena with Approximately 6,000 Seats – Curtain System is Important
         Deal Structure (Rent/Revenue Sharing) is Critically Important

Preliminary Draft – Subject to Revision                                                      Page 12
                                                           Confidential




                                  III.    MARKET SURVEYS




Preliminary Draft – Subject to Revision                        Page 13
III.        Market Surveys
Market Surveys

        Market Surveys were Conducted to Further Assess Potential Demand

            W b B dS
             Web-Based Surveys
            Telephone Interviews

        Approximately 1,670 Web-Based Surveys Completed
                             Web Based

            General Public Surveys (1,516)
            Corporate Base (154)

        Summary Results Included Herein Reflect Expressions of Interest for Respondents Surveyed – Must
         Consider Expression of Interest vs Actual Buying Decision, and Sample Size vs Total Universe to
         Assess (Extrapolate) Demand

        Given the Nature of the Surveys, the Research Does Not Focus on Development of a Specific
         Probability Percentage or Margin of Error But Utilizes Results as a Guide and Comparative Tool

        Results Included Herein are Provided for Illustrative Purposes – Given Regional Nature of
         Responses for Certain Questions, Corporate Survey Results May Understate Total Demand

Preliminary Draft – Subject to Revision                                                          Page 14
III.        Market Surveys
Market Surveys – General Public

        Approximately 79% (1,201) of Respondents Live and/or Work in the Greater Richmond Area

           B l      f Survey R
            Balance of S            d
                              Respondents Vi i the G
                                          Visit h Greater Ri h
                                                          Richmond A at L       Time   Year
                                                                 d Area Least 1 Ti per Y

        Approximately 45% (680) of Respondents were Aware that a Renovation or New Arena
         Development was Being Studied
               p             g

        Approximately 86% (1,300) of Respondents Support the Ongoing Efforts to Renovate the Richmond
         Coliseum or Build a New Arena

        Only 18% (271) of Respondents Believe that the Existing Sports and Entertainment Facilities in the
         Greater Richmond Area Adequately Meet the Needs of Residents

            Approximately 63% (950) of Respondents Believe that the Existing Sports and Entertainment
             Facilities in the Greater Richmond Area Do Not Adequately Meet the Needs of Residents

        R     d t Generally S
         Respondents G               t d Renovated Ri h
                          ll Supported a R                    d Coliseum or C t ti of a N
                                                 t d Richmond C li          Construction f New
         Downtown Arena Over Building a New Arena Outside of Downtown or Doing Nothing

Preliminary Draft – Subject to Revision                                                             Page 15
III.        Market Surveys
Market Surveys – General Public

        Approximately 89% (1,346) of Respondents Believe that a Renovated Coliseum or New Arena
         Development Would be a Benefit to the Community

        Approximately 99% (1,503) of Respondents Would Potentially Attend an Event at a Renovated
         Coliseum or New Arena Development

        Approximately 68% (1,031) of Respondents Indicated that a Renovation of the Richmond Coliseum
         or the Development of a Downtown Arena Would Potentially Cause Them to Spend More Time at
         Downtown Restaurants, Bars, Retailers, etc. Before and After Events

        Approximately 82% (1,246) of Respondents Indicated that that a Renovation of the Richmond
         Coliseum or the Development of a Downtown Arena Would Potentially Contribute to the
         Development of New Downtown Restaurants, Bars, Retailers, Hotels, etc.




Preliminary Draft – Subject to Revision                                                        Page 16
III.        Market Surveys
            y       p
Market Surveys – Corporate Base

        Approximately 98% (154) of Respondents are Located or Conduct Business in the Greater
         Richmond Area

        Approximately 91% (140) of Respondents Support the Ongoing Efforts to Renovate the
         Richmond Coliseum or Build a New Arena

        Respondents Generally Supported Construction of a New Downtown Arena or Renovated
         Richmond Coliseum Over Building a New Arena Outside of Downtown or Doing Nothing

           Respondents Strongly Opposed Doing Nothing and Maintain Status Quo – Not Renovating
            Coliseum or Building a New Arena

        Respondents were Asked if they Would Potentially be Interested in Leasing Premium Seating at
         a Renovated Richmond Coliseum or New Arena

           Luxury Suites
           Loge Boxes
           Cl b Seats
            Club


Preliminary Draft – Subject to Revision                                                         Page 17
III.        Market Surveys
            y       p
Market Surveys – Corporate Base

        Relatively Low Demand for Luxury Suites

            Potential to Offer Suite-Sharing Opportunities to Increase Demand

        Moderate to Strong Demand for Loge Boxes

           Significant Price Sensitivity

        Moderate to Strong Demand for Club Seats

           Significant Price Sensitivity

        Relatively Low to Moderate Demand for Naming Rights

        Moderate Demand for Advertising




Preliminary Draft – Subject to Revision                                          Page 18
                                                                         Confidential




                      IV.         Preliminary Facility Characteristics




Preliminary Draft – Subject to Revision                                      Page 19
IV.         Preliminary Facility Characteristics
Preliminary Program Recommendations

       Arena Characteristics

              Capacity – 360 Degree                                 15,000
                                                                     15 000
              Capacity – 270 Degree (End Stage)                     14,000
              Luxury Suites                                         15 – 25
              Loge Boxes                                            15 – 20
              Club Seats                                          500 – 650
              Parking (Public Sector Spaces – Revenue to Arena)       1,000

       Event Mix

              Minor League Hockey (e.g., AHL/ECHL)
              NBA D League
              CAA Tournaments
              NCAA Tournaments
              Arena Football
              Concerts/Family Shows
              Conventions/Meetings
              Other



Preliminary Draft – Subject to Revision                                        Page 20
IV.         Preliminary Facility Characteristics

       Capacity Comparison – Richmond Coliseum and Proposed Arena

            Final Proposed Arena Design May Provide Opportunity to Increase Capacity Based on
             Configurations

                               Capacities - Based on 270 Degree Configuration (End Stage Concert)

                                                               Richmond         Proposed              Net
                                                               Coliseum            Arena         Increase
                              360 Degree - (1)                    12,217          15,000            2,783
                              270 Degree                          10,385          14,000            3,615
                              180 Degree                           8,315          12,000            3,685
                              Hockey                              10,454          13,000            2,546
                              Basketball                          11,038          13,500            2,462

                              Notes: Proposed capacities are estimates - detailed analysis to be completed.
                              Arena configuration and curtain system will be important factor on capacities
                              ( g,                p ,     )
                              (e.g., horseshoe shape, etc.)
                              (1) Coliseum management indicated largest set-up has been for 12,800 seats.
                              Capacity listed at 13,410.




Preliminary Draft – Subject to Revision                                                                       Page 21
IV.         Preliminary Facility Characteristics

       Capacity Comparison – John Paul Jones Arena and Proposed Arena

            Final Proposed Arena Design May Provide Opportunity to Increase Capacity Based on
             Configurations

                                Capacities - Based on 270 Degree Configuration (End Stage Concert)

                                                    John Paul          Proposed                        Percentage
                                                  Jones Arena             Arena       Difference       Difference
                            360 Degree                 15,405            15,000             (405)             -3%
                            270 Degree                 14,075            14,000              (75)             -1%
                            180 Degree                 12,719            12,000             (719)             -6%
                            Hockeyy                       NA               ,
                                                                         13,000               NA               NA
                            Basketball                 14,858            13,500           (1,358)           -10%

                            Notes: Proposed capacities are estimates - detailed analysis to be completed. Arena
                            configuration and curtain system will be important factor on capacities (e.g., horseshoe
                            shape, etc )
                            shape etc.)




Preliminary Draft – Subject to Revision                                                                                Page 22
                                                                 Confidential




                                      V. Potential Arena Sites




Preliminary Draft – Subject to Revision                              Page 23
V.          Potential Arena Sites
Site Selection – Key Considerations

  ARENA PROGRAM                           SITE REQUIREMENTS
                                              • Urban Sites
          Multi-Purpose
        • Multi Purpose Event Center              Site Area Requirement         Desirable: 6 acres
                                                                            Minimum: 5.05 acres
        • 15,000+ Seats                       • Suburban Sites
                                                  Site Area Requirement        Desirable: 65 acres
          20-30
        • 20 30 Suites                                                        without public transit

        • 500 Club Seats                      • Site Configuration allows acceptable building
                                                configuration and exterior spaces
          On-site/Adjacent
        • On site/Adjacent Premium
          customer parking spaces – 500       • Ability to build or lease parking spaces for premium
          spaces.                               customers adjacent to arena

                                                     i i      d          ki     d      i i hi
                                              • Proximity to adequate parking and transit within ½
                                                mile

                                              • Ability to accommodate service functions and
                                                television truck parking


Preliminary Draft – Subject to Revision                                                         Page 24
V.          Potential Arena Sites
Site Selection – Key Considerations

         Urban Design Factors                     Economic Factors
             • Adequate site area and dimension       • Property availability and relative costs
             • Configuration                          • Displacement and relocation
             • Public perception                      • Compensation
             • Fan experience                         • Development Costs
             • Visibility                             • Leverage community assets
             • Safety and security                    • Promote development and investment
                                                      • Potential positive impact on community

         Transportation Factors                   Timing Factors
             • Pedestrian circulation                 • Acquisition timing
             • Vehicular access                       • Approvals
             • Public transportation                  • Ownership issues
             • Parking quantity                       • Zoning
             • Parking proximity                      • Restrictions

         Site and Utility Factors                 Intangibles
               • Utility infrastructure                • Public Support
               • Environmental quality                 • Risk




Preliminary Draft – Subject to Revision                                                        Page 25
V.          Potential Arena Sites
Site Selection – Preliminary Screening

       Seven Sites Evaluated – Preliminary Screening

            Site #1                                             Existing Coliseum Site

            Site #2                             City Parking Lots Site (8th-10th Streets)

            Site #3                                                  The Diamond Site

            Site #4                                                           ABC Site

            Site #5                                                   City Stadium Site

            Site #6                                            John Perel Property Site

            Site #7                                                  Mayo’s Island Site

       Preliminary Site Evaluation Identified Four Preferred Sites

Preliminary Draft – Subject to Revision                                                      Page 26
V.          Potential Arena Sites




Preliminary Draft – Subject to Revision   Page 27
V.          Potential Arena Sites
Site Selection – Additional Screening




Preliminary Draft – Subject to Revision   Page 28
V.          Potential Arena Sites




Preliminary Draft – Subject to Revision   Page 29
V.          Potential Arena Sites




Preliminary Draft – Subject to Revision   Page 30
V.          Potential Arena Sites




Preliminary Draft – Subject to Revision   Page 31
                                                                        Confidential




                            VI.           Construction Cost Estimates




Preliminary Draft – Subject to Revision                                     Page 32
VI.         Construction Cost Estimates
Concept Estimate

       Preliminary Cost Estimate Prepared by Weston and Populous with Input from Hunt Construction

       Preliminary Cost Estimate Provided for Illustrative Purposes

       Construction Costs of Several Comparable Facilities were Evaluated

       E ti t Adj t d f 2012 C t ti St t R i l/L l M k t C diti
        Estimates Adjusted for                                                       Etc.
                               Construction Start, Regional/Local Market Conditions, Et

       Site Utilities and Environmental Issues may have Impact on Cost

       Preliminary Cost Estimate Does Not Include the Following

              Land Acquisition
              Off-Site Infrastructure
               Off Site
              Relocation
              Parking Structure (If Any)
              Other




Preliminary Draft – Subject to Revision                                                        Page 33
VI.         Construction Cost Estimates
Concept Estimate

                                                                                            Cost Estimate
                         Arena Design and Construction                                      $136,350,000
                            Survey                                              $50,000
                            Design                                          $10,500,000
                            Environmental                                      $150,000
                            Pre-Construction                                   $225,000
                            Owner Testing/Geo-Tech                           $1,500,000
                            Owner FF&E                                       $2,500,000
                            Insurance                                        $1,500,000
                            Arena Construction                             $113,925,000
                            Contingency                                      $6,000,000

                         Arena Construction Administration                                    $4,200,000
                            Project Management Fee and Reimbursement         $2,000,000
                               j                       l    /    i
                            Project Management Consultants/Contingency        $
                                                                              $500,000
                            Legal                                            $1,000,000
                            Public Information                                 $200,000
                            Arena Authority Administrative Expense             $500,000

                         Construction d Land Acquisition
                         C t ti and L d A i iti                                               $6,623,000
                                                                                              $6 623 000
                            Site Acquisition                             To be Determined
                            Demolition/Site Preparation                       $1,123,000
                            Richmond Coliseum Demolition                      $3,500,000
                            Other/Contingency                                 $2,000,000

                         Total                                                              $147,173,000



Preliminary Draft – Subject to Revision                                                                     Page 34
                                                                 Confidential




                                     VII.   Financial Analysis




Preliminary Draft – Subject to Revision                              Page 35
VII.        Financial Analysis
Financial Analysis

       Completed Analysis of Potential Financial and Operating Characteristics of a New Downtown
        Richmond Arena to Understand Potential Net Operating Income Generated by Proposed Facility

       BSG has Made Significant Assumptions Related to the Proposed Arena’s Operating Revenues
                                                                     Arena s
        and Expenses

       Information Obtained from Comparable Facilities and Our Database on Arena Operations

       In Order to Obtain Accurate and Relevant Information, BSG Agreed to Maintain Confidentiality
        of Facilities

       Operating Data Gathered from Over 36 Comparable Sports and Entertainment Facilities – List
        N       d      Facilities Based
        Narrowed to 20 F ili i B d on:
          Market Demographics
          Physical Characteristics (Age, Capacity, Premium Seating, Etc.)
          Tenants
          Climate
          Others

       Facilities Providing Information are Referred to as Arena A, B, C, etc.

       Arena Reference Letters have been Randomly Adjusted to Further Protect Identity


Preliminary Draft – Subject to Revision                                                        Page 36
VII.        Financial Analysis
Financial Analysis

       Comparable Data has been Adjusted, as Appropriate, to Reflect Current Dollars

       Baseline Assumptions Adjusted to Reflect Variables

              Market Demographics
              Ph i l Ch      t i ti (Age, Capacity, P
               Physical Characteristics (A C               i    Seating, Et )
                                                  it Premium S ti        Etc.)
              Tenant/Event Mix
              Number of Professional and Collegiate Sports Franchises
              Other Entertainment Alternatives
              Climate
              Cost of Living
              Other




Preliminary Draft – Subject to Revision                                                 Page 37
VII.        Financial Analysis
Cash Flow Summary

       Although Assumptions Appear Reasonable Based on Current and Anticipated Market Conditions,
        Actual Results Depend on Actions of Arena Owner, Management, Tenants, and Other Factors
        Both Internal and External to Project, which Frequently Vary

       It is Important to Note that Because Events and Circumstances May Not Occur as Expected, there
        May be Significant Differences Between Actual Results and those Estimated in this Analysis, and
        those Diff
        th                 May Be Material
               Differences M B M t i l

       As Illustrated in the Following Table, the Cash Flow Analysis Prepared Indicates Arena would be
        able to Generate a Positive Cash Flow from Operations

       Net Cash Flow from Operations (Before Consideration of Capital Replacement Reserve) would
        be Approximately $891,000 in Year 1

       Consideration should be Given to Establishing a Capital Repair, Replacement, and Improvement
        Fund

       Consideration should be Given to Developing Co-Promotion Account to Assist Management in
        Attracting Events/Shows to the Market

Preliminary Draft – Subject to Revision                                                           Page 38
VII.        Financial Analysis
                y(          )
Cash Flow Summary (Continued)
                  ARENA SUMMARY
                  ($ in 000s)
                                                       Year       1        2        3        4        5

                  Number of Events                              137      137      137      137      137
                  Annual Paid Attendance                        649      649      633      617      617

                  OPERATING REVENUES (Net)
                    Total Rental Revenue                       $985    $1,016   $1,043   $1,071   $1,105
                    Premium Seating Revenue                    $998    $1,052   $1,108   $1,167   $1,230
                    Advertising                                 468       484      501      518      536
                    Naming Rights                               425       442      460      478      497
                    Concessions                                 705       730      741      751      778
                    Novelties                                    59        61       61       60       63
                    Parking                                     249       258      267      276      286
                                    Fee/Rebate/Etc )
                    Other (Facility Fee/Rebate/Etc.)            793       793      777      761      761

                  TOTAL REVENUES                              $4,681   $4,834   $4,956   $5,084   $5,256

                  OPERATING EXPENSES
                    Arena Operating Expenses
                       Staffing                               $1,540   $1,594   $1,650   $1,707   $1,767
                       General and Administrative              1,020    1,056    1,093    1,131    1,170
                       Utilities                                 980    1,014    1,050    1,087    1,125
                       Management Fee                            250      259      268      277      287

                  TOTAL EXPENSES                              $3 790
                                                              $3,790   $3,922
                                                                       $3 922   $4 060
                                                                                $4,060   $4 202
                                                                                         $4,202   $4,349
                                                                                                  $4 349

                  NET CASH FLOW                                $891     $912     $896     $882     $907


Preliminary Draft – Subject to Revision                                                                    Page 39
VII.        Financial Analysis
                                                                                                                   NET CASH    ADMISSIONS TAX
Sensitivity Analysis                                                                                                FLOW            7.0%
                          BASE CASE                                                                                  $891           $650

                                                                                SENSITIVITY ANALYSIS
                                                                                                                   ADJUSTED    ADMISSIONS TAX
                          ASSUMPTION                                            ADJUSTMENT           NET IMPACT    CASH FLOW        7.0%
                          Number of Other Events
                             Increase                                                  10%                $239       $1,130         $715
                             Decrease                                                 (10%)               ($239)      $652          $585
                          Average Paid Attendance - (1)
                              Increase                                                 10%                $189       $1,081         $712
                              Decrease                                                (
                                                                                      (10%))              ($178)
                                                                                                          (    )      $713          $588
                          Premium Seating - Average Price
                              Increase                                                 10%                $145       $1,036         $650
                              Decrease                                                (10%)               ($145)      $746          $650
                          Premium Seating - Occupancy - (2)
                              Increase                                                 10%                $105       $997           $653
                              Decrease                                                (10%)               ($105)     $786           $647
                          Advertising
                              Increase                                                 10%                 $47       $938           $650
                              Decrease                                                (10%)                ($47)     $844           $650
                          Naming Rights
                              Increase                                                 10%                 $43       $934           $650
                              Decrease                                                (10%)                ($43)     $849           $650
                          Concessions/Novelties Per Capitas
                              Increase                                                 10%                 $76       $967           $650
                              Decrease                                                (10%)                ($76)     $815           $650
                          Operating Expenses
                              Increase                                                 10%                (    )
                                                                                                          ($379)      $512          $650
                              Decrease                                                (10%)               $379       $1,270         $650

                          (1) - Reflects general seating attendance only - does not include premium seating.
                          (2) - Increased occupancy may assume additional inventory for illustrative purposes.


Preliminary Draft – Subject to Revision                                                                                                         Page 40
                                                               Confidential




                              VIII. Economic Impact Analysis




Preliminary Draft – Subject to Revision                            Page 41
VIII. Economic Impact Analysis
Economic/Fiscal Impacts – Overview

       Construction and Operation of the Proposed Arena will Generate Economic and Fiscal Impacts in
        the Greater Richmond Area

              City of Richmond
              Chesterfield County
              Hanover County
              Henrico County

       Economic Impacts Typically Measured by

              Direct Spending (Initial Spending)
              Indirect Spending (Dollars Spent through Interaction of Local Industries)
              I d d S di (D ll S t th                h Household S di P tt
               Induced Spending (Dollars Spent through H       h ld Spending Patterns))
              Fiscal Impacts
              Employment Impacts
              Labor Income Impacts



Preliminary Draft – Subject to Revision                                                       Page 42
VIII. Economic Impact Analysis
Economic/Fiscal Impacts – Overview

       Findings Included Herein Reflect Evaluation of Gross Economic and Fiscal Impacts to be Generated
        by the Proposed Arena

       Although Assumptions Appear Reasonable Based on Current and Anticipated Market Conditions,
        Actual Results Depend on Actions of Arena, Management, Tenants, and Other Factors Both Internal
        and External to Project, which Frequently Vary
                           j              q     y    y

       It is Important to Note that Because Events and Circumstances May Not Occur as Expected, there
        May be Significant Differences Between Actual Results and those Estimated in this Analysis, and
        those Differences May Be Material




Preliminary Draft – Subject to Revision                                                          Page 43
VIII. Economic Impact Analysis
Economic/Fiscal Impacts – Construction

       Construction of the Proposed Arena will Generate Considerable Economic Impacts for the
        Greater Richmond Area During the Construction Period (Presented in 2012 Dollars)

       Figures Reflect Gross Impacts

                                        (                 )
                         PROPOSED ARENA (DOWNTOWN RICHMOND)
                                                               Construction
                                                              (2012 Dollars)
                         Direct Economic Output                    $93,810,000
                         Indirect Economic Output                  $39,050,000
                         Induced Economic Output                   $38,840,000

                         Total Economic Output                    $171,700,000

                         Full-Time Equivalent Employment                 1,114
                         Labor Income                              $60,370,000


       N             f Labor/Materials E
        Note: 60% of L b /M                  di      Sourced i the L l M k B d on L l
                                    i l Expenditures S     d in h Local Market Based Local
        Construction Industry Input

Preliminary Draft – Subject to Revision                                                  Page 44
VIII. Economic Impact Analysis
Economic/Fiscal Impacts – Construction

       Construction of the Proposed Arena will Generate Fiscal Impacts for the Greater Richmond Area
        on a One-Time Basis (Presented in 2012 Dollars)

       Figures Reflect Gross Impacts
                                   PROPOSED ARENA (DOWNTOWN RICHMOND)
                                                                     Construction
                                                                    (            )
                                                                    (2012 Dollars)
                                   Hotel Occupancy Tax Revenue
                                      Hotel Sales Revenue                    $19,887
                                      Hotel Tax Rate                          8.00%
                                      Hotel Occupancy Tax Revenue             $1,591

                                   Car Rental Tax Revenue
                                      Car Rental Revenue                    $113,478
                                      Car Rental Rate                         4.00%
                                      Car Rental Tax Revenue                  $4,539

                                   Sales Tax Revenues                     $1,376,000
                                       State Sales Tax Rate                    4.0%
                                       State Sales Tax Revenue            $1,100,723
                                       Local Sales Tax Rate                    1.0%
                                       Local Sales Tax Revenue             $275 181
                                                                           $275,181
       Note: 60% of Labor/Materials Expenditures Sourced in the Local Market Based on Local
        Construction Industry Input
Preliminary Draft – Subject to Revision                                                         Page 45
VIII. Economic Impact Analysis
                  p        p
Economic/Fiscal Impacts – Operations

       On-Going Operations of the Proposed Arena will Produce Considerable Economic Impacts for the
        Greater Richmond Area on an Annual Basis (Presented in 2014 Dollars)

            Arena Operations
            Non-Resident Spending

                        PROPOSED ARENA (DOWNTOWN RICHMOND)
                                                                 Annual Operations
                                                                   (2014 Dollars)
                        Direct Economic Output                          $25,990,000
                        Indirect Economic Output                        $12,050,000
                        Induced Economic Output                          $9,790,000

                        Total Economic Output                           $47,830,000

                        Full-Time Equivalent Employment                         894
                        Labor Income                                    $15,300,000



       Figures Reflect Gross Impacts – Must Consider Existing Impacts and Potential Reductions in Future

Preliminary Draft – Subject to Revision                                                           Page 46
VIII. Economic Impact Analysis
Economic/Fiscal Impacts – Operations

       On-Going Operations of the Proposed Arena will Produce Fiscal Impacts for the Greater
        Richmond Area on an Annual Basis (Presented in 2014 Dollars)
                               O OS   A   A( O    O     C  O )
                             PROPOSED ARENA (DOWNTOWN RICHMOND)
                                                                Annual Operations
                                                                  (2014 Dollars)
                             Hotel Occupancy Tax Revenue
                                Hotel Sales Revenue                     $1,793,353
                                                                        $1 793 353
                                Hotel Tax Rate                              8.00%
                                Hotel Occupancy Tax Revenue              $143,468

                             Car Rental Tax Revenue
                                Car Rental Revenue                        $52,147
                                Car Rental Rate                            4.00%
                                Car Rental Tax Revenue                     $2,086

                             Sales Tax R
                             S l T Revenues                              $826,000
                                                                         $826 000
                                 State Sales Tax Rate                       4.0%
                                 State Sales Tax Revenue                 $660,433
                                 Local Sales Tax Rate                       1.0%
                                 Local Sales Tax Revenue                 $165,108
                                                                         $165 108
       Figures Reflect Gross Impacts – Must Consider Existing Impacts and Potential Reductions in
        Future
Preliminary Draft – Subject to Revision                                                      Page 47
VIII. Economic Impact Analysis
Other Benefits

       Proposed Downtown Arena Generates Other Significant Impacts for the Greater Richmond Area
        that are Less Explicit and More Difficult to Quantify

            Catalyst for Redevelopment

            Catalyst for Economic Development

            National (and Potentially International) Exposure

            Community Pride and Identity

            Prestige Associated with Facility/Teams/Events

            Improved Quality of Life/Additional Entertainment Alternatives

            Team/Facility Contributions and Donations to Local Charities/Causes

            New Marketing/Advertising Opportunities for Local (and National) Businesses

            Other

Preliminary Draft – Subject to Revision                                                     Page 48
                                                                     Confidential




                      IX.         Major Development Considerations




Preliminary Draft – Subject to Revision                                  Page 49
IX.         Major Development Considerations
Opportunities

       New Downtown Arena Appears to be a Viable Project in Terms of Market and Financial Feasibility
         Operating Surplus as Compared to Current Deficit

       Corporate Community and General Public Surveys Indicate Potential Support

       Quality of Life Benefits
         Potential to Attract Regional and National Events – Regional Events Center/Draw
         Potential to Add Entertainment Alternatives to Market

       Potential Catalyst for Redevelopment/Revitalization
         Opportunity for Mixed-Use Destination Oriented Development

       P t ti l S         ith Other Richmond F iliti – P t ti l O
        Potential Synergy with Oth Ri h                                 ti     d Financial B fit
                                            d Facilities Potential Operating and Fi    i l Benefits

       Limited Competition in the Immediate Market
          Professional Sports (Collegiate Sports Present Competition)
          No State-of-the-Art Public Assembly Facilities
                State of the Art

       Region Appears to be a “Good-Fit” for Sports Events/Concerts/Family Shows/Conferences/Etc.

       Promoters/Users Prefer Richmond Market

       Significant Economic Impact Associated with Construction and Ongoing Operations

Preliminary Draft – Subject to Revision                                                          Page 50
IX.         Major Development Considerations
Challenges

       Project Costs/Funding – Significant Issue
          Public/Private Investment
          Public Sector Participation (Feasibility to be Determined)

       Potential Corporate Support – Historical
          Premium Seating
          Advertising/Sponsorship

       Regional Competition
         John Paul Jones Arena

       SportsQuest Development – Potential Arena
         $250 Million, 250 Acre Mixed Use Sports Complex in Chesterfield County, VA
         W C              Include Indoor A
           West Campus to I l d I d       Arena – A
                                                  Approximately 6 500 S
                                                        i                  (Target D
                                                             l 6,500 Seats (T           b
                                                                                   December 2012)
         Public/Private Partnership

       Anchor Tenant Commitment
          Minor League Hockey
          WNBA/NBA D League
Preliminary Draft – Subject to Revision                                                     Page 51
IX.         Major Development Considerations
Other Considerations

       Larger Arena Consideration (18,000+ Seats)
          Limited Additional Events (ACC Tournament – Frequency Issue)
          Impact on Anchor Tenants (Event Related Expenses)
               p                      (              p     )

       Market Limitations for Major League Consideration (e.g. NBA/NHL)
          Corporate Base
          Media Market
            – Television
            – Radio




Preliminary Draft – Subject to Revision                                    Page 52
                                                          Confidential




                                          X. Next Steps




Preliminary Draft – Subject to Revision                       Page 53
X.          Next Steps
Next Steps

       Evaluate Financing Alternatives and Prepare Definitive Sources/Uses of Funds

       Coliseum Study Group to Review Draft Report
          li        d              i      f

       Consulting Team to Finalize Report

       Develop Strategy to Generate Consensus/Support for Project

       Retain Project Advisor to Guide Planning Process

       Evaluate Viability of Mixed-Use Destination Oriented Development

       D l Pi          Sector O
        Develop Private S             h Plan
                               Outreach Pl

       Attract Potential “Anchor” Tenants and Local Ownership Group(s) (AHL/ECHL/NBA D
        League/WNBA/Etc.)
            g              )



Preliminary Draft – Subject to Revision                                                Page 54
                                                     Confidential




               LIMITING CONDITIONS AND ASSUMPTIONS




Preliminary Draft – Subject to Revision                  Page 55
Limiting Conditions and Assumptions
This analysis is subject to our contractual terms, as well as the following limiting conditions and assumptions:

               The analysis has been prepared for internal decision making purposes of the Client only and shall not be used for any other
                purposes without the prior written permission of Barrett Sports Group, LLC.
               The analysis includes findings and recommendations; however, all decisions in connection with the implementation of such
                findings and recommendations shall be Client’s responsibility.
               Ownership and management of the arena are assumed to be in competent and responsible hands Ownership and  hands.
                management can materially impact the findings of this analysis.
               Any estimates of historical or future prices, revenues, rents, expenses, occupancy, net operating income, mortgage debt
                service, capital outlays, cash flows, inflation, capitalization rates, yield rates or interest rates are intended solely for
                analytical purposes and are not to be construed as predictions of the analysts. They represent only the judgment of the
                authors based on information provided by operators and owners active in the market place, and their accuracy is in no way
                guaranteed.d
               Our work has been based in part on review and analysis of information provided by unrelated sources which are believed
                accurate, but cannot be assured to be accurate. No audit or other verification has been completed.
               Current and anticipated market conditions are influenced by a large number of external factors. We have not knowingly
                withheld any pertinent facts, but we do not guarantee that we have knowledge of all factors which might influence the
                operating potential of the facility. Due to rapid changes in the external factors, the actual results may vary significantly
                from estimates presented in this report.
               The analysts reserve the right to make such adjustments to the analyses, opinions, and conclusions set forth in this report as
                may be required by consideration of additional data or more reliable data which may become available.
               The analysis is intended to be read and used as a whole and not in parts. Separation of any section or page from the main
                body of the report is expressly forbidden and invalidates the analysis.
               Possession of the analysis does not carry with it the right of publication. It shall be used for its intended purpose only and by
                the parties to whom it is addressed. Other parties should not rely on the findings of this report for any purpose and should
                perform their own due diligence.
               Our performance of the tasks completed does not constitute an opinion of value or appraisal, or a projection of financial
                performance or audit of the facility in accordance with generally accepted audit standards. Estimates of value (ranges) have
                been prepared to illustrate current and possible future market conditions.
               The analysis shall not be used in any matters pertaining to any financing, or real estate or other securities offering,
                registration, or exemption with any state or with the federal Securities and Exchange Commission.
               No liability is assumed for matters which are legal or environmental in nature.

Preliminary Draft – Subject to Revision                                                                                                    Page 56

				
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