Operating Agreement Llc for Cabin - PowerPoint by ntb13247

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									South Germantown
Recreational Park (SGRP)
Community Tennis Center
May 6, 2010




                       Jack Schore Tennis LLC
                        Jack Schore
                        Kevin Dowdell
                       Anne Pallie
1
Discussion Topics
_____________________________________________


•   Vision
•   Strategy
•   People
•   Opportunity
•   Programming
•   Facility
•   Deal
•   Business Model and Investor Criteria
•   Q&A


2
Vision
_____________________________________________
Build and operate a first-class community tennis center
•   Highest quality staff and programming
•   Indoor (12), outdoor (8) courts and fitness center
•   Customer-service driven
•   Partnerships
•   Multi-sport/Academic camp destination
•   Affordable
•   Profitable


       Win-win for community and investors!

3
Strategy: SWOT Analysis
_____________________________________________
Strengths                                 Weaknesses
•#1 community performer for 30 years      •No membership fees
•Won competitive bid for site             •20 year lease limit (phase I)
•Diverse leadership skills
•Highest quality staff
•Low cost public ground lease
•Ability to fill off-peak time slots
•High job growth region
Opportunities                             Threats/Risks
•Underserved demand                       •Bureaucratic delays
•Promotional partnerships (e.g.,soccer)   •Financing, due to economy
•Proximity to 16 elementary schools
•Group and “wraparound” programming
•Summer camp revenues
•Expansion: Phase II and regional brand

4
Strategy: Competitive Advantages
_____________________________________________

• People
    – Jack Schore‟s 30 year track record and reputation
    – Engaging/customer-oriented staff
    – Multifunctional “ambassadors”

• Location/Proximity
    – 2M people entered SGRP in 2009
    – 16 elementary schools within 5 miles

• Barriers to entry
    – Economically infeasible to build indoor courts on private land
    – Unavailability of public land

5
People
_____________________________________________

Jack Schore
• Founder, owner and Head Coach, Bullis Tennis Center, Potomac, MD (30 yrs.)
• National reputation as leading tennis coach
• Mid-Atlantic Tennis Hall of Fame Member
• Influenced the lives of ~40,000 families in Montgomery County

Kevin Dowdell
• Fmr. CEO, Boys & Girls Clubs of Greater Washington
• Fmr. VP of Business Development for Home Box Office
• Fmr. Executive Director, Arthur Ashe‟s Safe Passage Foundation
• BSE, Princeton Univ. (Co-Captain, Varsity Tennis); MBA, Wharton School of Business

Anne Pallie
• 30+ yrs. experience in commercial real estate development
• Managing partner for $350M+ in commercial real estate developments
• Arranged acquisition and restructuring of $3B+ in tax-exempt financed debt


6
Opportunity: Indoor Tennis Demand
_____________________________________________


Indoor Courts        Priv.     Pub.    Tot.    Demand * Variance
Montgomery Cty. (all) 24        12      36       100      (64)
Upper Mont. Cty.      11         0      11        43      (32)




* Demand = 10,000 residents per court, according to the US Tennis
   Association. Montgomery Cty population in „13 = 1M. Upper
   Montgomery Cty. population in „13 = 430,000;

7
Opportunity: General Tennis Demand
_____________________________________________

• Lottery required to reserve courts at only 2 public
  indoor centers in Montgomery County (Cabin John
  and Wheaton).
• Germantown SoccerPlex has 16,000+ names in database
  and has offered to partner.
• 16 elementary schools are within 5 miles of site.
• 50% of Montgomery County Tennis Assoc. (MCTA)
  leagues are played in PG County.
• 25% of MCTA members live in Upper County and must
  travel to play in leagues.
• Fast growing area for high paying jobs
• QuikStart format (small courts and equipment for kids) is
  powerful.

8
Opportunity
_____________________________________________




    Tennis has grown 25% since 2003 (and 43% since 2000).
9
Programming
_____________________________________________

• Two (2) four court “bubbles” designed primarily for:
     – Instructional bubble: Group lessons, competition and
       leagues
     – Reservation bubble: Seasonal and spot time and lessons
• Ages 4 to 104 welcome!
• Spring Tennis Festival -- $2 for 3 weeks of group
  lessons
• Competitive junior programs
• Educational programming for youth
• “Wraparound” fitness programs
• Tournaments and events
• International camp destination
10
Facility
_____________________________________________

• ~9 acres in SGRP
• Fall, 2011 opening planned
• Phase I
     – 8 indoor courts permanently covered by a “bubble” structure
         • 20’ median for fitness, yoga, Pilates, stretching, etc.
     – 4 new lit outdoor courts plus 2 existing courts
     – 1,600 sq. ft. clubhouse with Wi-Fi (office, training, education)
     – 42 parking spaces, storm water management and paths
• Phase II options (based on mutual agreement)
     – 4 additional indoor courts
     – 2 additional lit outdoor courts
     – Fitness center


11
Facility: Sample Visuals
_____________________________________________




12
Facility: Site Layout
_____________________________________________




13
Deal: Key Terms
_____________________________________________


• JST to design, finance, construct, operate and maintain
  facility
• 20 year ground lease
• Rental fees
     – Yrs 1 thru 4:     $0
     – Yrs. 4 thru 6:    $50K
     – Yrs. 7 thru 20:   $135K
•    No real estate taxes
•    Improvements inure to County at end of lease
•    Capital repair fund
•    Phase II lease extension option contemplated
14
Key Assumptions
_____________________________________________

•Capital Expenditure                        $3.2M
•Debt interest rate                         6%
•Equity preference                          8.5%
•Capacity utilization                       69%
•Mid-Case Scenario
     •Revenue ramp-up (Yrs 1 to 5):         65%/ 75%/ 85%/ 90%/ 100%
     •Staff expense ramp-up (Yrs 1 to 4):   75%/ 85%/ 95%/ 100%
•Low-Case Scenario
     •Revenue ramp-up (Yrs 1 to 5):         30%/ 40%/ 50%/ 55%/ 65%
     •Staff expense ramp-up (Yrs 1 to 4):   40%/ 50%/ 60%/ 65%
•High-Case Scenario
     •Revenue ramp-up (Yrs 1 to 5):         100%
     •Staff expense ramp-up (Yrs 1 to 4):   100%

15
Revenue and Expense Structure (year 5)
_____________________________________________


Revenues
     Instructional Bubble     Reservation         Outdoor
             50%                Bubble             21%
                                 29%
                                                              $1.8M



Expenses and margin
        Employees           Ops   Utili-   Operating Margin
          47%               8%    ties          36%           $1.8M
                                  8%




16
Deal: Scenario Analysis
_____________________________________________

Year One ($000)         Low-Case         Mid-Case    High-Case
Revenue                   541              1,172        1,803
Expense                   414                555          655
Operating Income          127                617        1,147

IRR                        13%                 20%      34%

Break-even point = 45% capacity utilization.




17
Business Model Notes
_____________________________________________

• Value proposition: FUN, social, accessible, affordable,
  high quality tennis -- often in groups.

• Profit formula:
     – Instructional bubble: 4 to 8 people/ct. minus instructor
       expense.
     – Reservation bubble: 2 to 4 people/ct. and no instructor expense.


• Resources needed: $1.5M debt, $1.7M equity (including
  $300K from partners) and promotional partners.

• Processes needed: Bureaucracy facilitation and online
  scheduling and payment software.
18
Investor Criteria Notes
_____________________________________________

• People: Reputation, leadership skill sets,, customer service and
  staff ambassadors.

• Opportunity: Unmet demand, partnerships, unique location,
  summer camp, group programming, “wraparound” programming
  and expansion (phase II and regional brand).

• Context: Barriers to entry, tennis growth, job growth in area,
  public goals/constraints and governmental budget challenges.

• Risk/Reward:
     – Risk of time and invested capital
     – Reward of enjoyment, financial returns, lease extension and brand
       expansion

19
Appendix
_____________________________________________




20
 Sample Programming Plan (Instructional Bubble)
 _____________________________________________
Time            M          T              W             Th          F            Sa             Su
6 to 6:30
6:30 to 7
                                      Early Birds
7 to 7:30
7:30 to 8
8 to 8:30
8:30 to 9                           Open Court Time
9 to 9:30
9:30 to 10
10 to 10:30
10:30 to 11                                                                                   Tourn.
11 to 11:30                                                                                   Players
                                     Adult Groups
11:30 to 12
12 to 12:30
12:30 to 1
                                                                              Young Beg/Intermediate
1 to 1:30
1:30 to 2
2 to 2:30
                               Tot and School Program
2:30 to 3
                                                                                  Players o n Ris e
3 to 3:30
3:30 to 4
4 to 4:30                  Young Beginner/Intermediate
4:30 to 5
                                                                                  Adv HS Players
5 to 5:30
5:30 to 6     Adv HS     Tourn.                       Tourn.    Players o n
6 to 6:30     Players    Players                      Players      Ris e
6:30 to 7
7 to 7:30                 Adult                       Adult
7:30 to 8     Tourn.    Beginners       Tourn.      Beginners
8 to 8:30     Players      (A)          Players        (A)                                  Potential
                                                                                             League
8:30 to 9
                          Adult                       Adult                   Potential     (or party)
9 to 9:30
                        Beginners                   Beginners                  League
9:30 to 10
                           (B)                         (B)                    (or party)
10 to 10:30
10:30 to 11
11 to 11:30
11:30 to 12




 21   Stable pro forma assumes 69% capacity utilization.
Demographics
_____________________________________________

Population                        2000    2008     2013       CAGR
Montgomery Co. (000)              873     958      1,006       1.1%
Germantown (000)                   55      61        TBD       TBD


Germantown market* (000)          344      400       431       1.7%
HH income ($000)                   94      129       159       6.8%
Minorities                         28%      34%       38%      N/A




* Germantown market area includes: Clarksburg, Darnestown, Frederick,
   Gaithersburg, Germantown, Poolesville, Potomac and Urbana.


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      Planning/Commissioner Approval
                           Signed Lease
       Signed Development Agreement
                          Close on Loan
                         Close on Equity
            Engineering Phase I (30%)
           Engineering Phase II (70%)
         Engineering Phase III (100%)
           Preliminary Contractors Bids
                              Permitting
                  Final Contractor Bids
   Construction (Bubbles and Modular)
                             Inspections
                         Equip Facilities
Website (project info./mail-list sign-up)
               Website (fully designed)
                    Sign up on Property
                 Staff: Job Descriptions
                        Staff: Recruiting
                     Staff: Interviewing
                             Staff: Hiring
                          Staff: Training
                        Private Opening
                         Public Opening




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