CITY OF RICHMOND Confidential PARTNERING COUNTIES ...€¦ · city of richmond confidential...

ConfidentialCITY OF RICHMONDPARTNERING COUNTIES CORPORATE SPONSORS

ARENA MARKET VALIDATION AND FINANCIAL FEASIBILITY STUDY

VOLUME I OF IIIEXECUTIVE SUMMARY

PRESENTED BY:BARRETT SPORTS GROUP, LLC

POPULOUS SPORTS ARCHITECTSWESTON SPORTS & ENTERTAINMENT

January 27, 2011

Page 0Preliminary Draft – Subject to Revision

y ,

PRELIMINARY REPORT – SUBJECT TO REVISION

Confidential


Table of ContentsI. Introduction

II. Market Analysis

III. Market SurveysyA. General Public SurveyB. Corporate Base Survey

IV. Preliminary Facility Characteristicsy y

V. Potential Arena Sites

VI. Construction Cost Estimates

VII. Financial Analysis

VIII. Economic Impact Analysisp y

IX. Major Development Considerations

X. Next Steps


p

Limiting Conditions and Assumptions

Confidential

I. INTRODUCTION


I. Introduction The Consulting Team is Pleased to Present Preliminary Findings in Connection with the Arenag y g

Market Validation and Financial Feasibility Study

Major Goals and Objectives Evaluate Local and Regional Market Demandg 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 C fi ti 12 217– 360 Degree Configuration 12,217– 270 Degree Configuration (End Stage) 10,385

“Luxury” Suites 12 “Club” Seats 668


Club Seats 668 Lacks Modern Amenities/Quality Finishes Requires Significant Infrastructure Improvements

Confidential

II. Market Analysis


II. Market Analysis

Comprehensive Review of Demographic Characteristics of Comparable Markets

1. Median Market Area Comparison

A. CBSA Designationi. Arena/Stadium Seat Inventory

B. Geographic Ring Comparisoni. 10 Mile Ring Statisticsii. 20 Mile Ring Statisticsiii. 30 Mile Ring Statistics

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

High Level Minor League Hockey (e g AHL/ECHL) Demographic Characteristics were


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

II. Market AnalysisGeneral Observations

Median Market Summary Comparison

Populationp– 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


II. Market AnalysisGeneral Observations

Median Market Summary Comparison

C B Corporate Base– Comparable to Market Average Based on Number of Companies with $50.0 Million or

More in Sales– Comparable to Market Average Based on Number of Companies with 500 or Morep g p

Employees

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

– Below Market Average Based on Radio Population

Seat Inventory 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

II. Market AnalysisCompetitive FacilitiesCompetitive Facilities

Competitive Facilities in Immediate Market Vicinity Provide Limited Direct Competition toProposed Arena

E t /T t– Events/Tenants– Premium Seating Leasing– Advertising/Sponsorship– Other

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

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


– Premium Seating Leasing (Limited)– Advertising/Sponsorship

II. Market AnalysisPromoter/User Interviews

Richmond Coliseum Lacks Amenities of Newer Facilities and is a Challenging Venue for Events

Loading Dock

Rigging Rigging

Backstage Areas/Star Areas

Promoters Would Prefer More Seats in the Lower Bowl as Compared to Current Configurationp g

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

Promoters Would Prefer Richmond Market Over Charlottesville

Promoters Acknowledged there are Few Shows that Currently Need Capacity of a Large Arenag 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


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 Seating is Not a Significant 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 N A A iti /S ti Ch t i ti ACC Focusing on Newer Arenas – Amenities/Seating 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


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


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 NotC 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 hasNot 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

Confidential

III. MARKET SURVEYS


III. Market SurveysMarket Surveys

Market Surveys were Conducted to Further Assess Potential Demand

W b B d S Web-Based Surveys Telephone Interviews

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

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

Summary Results Included Herein Reflect Expressions of Interest for Respondents Surveyed – MustConsider Expression of Interest vs Actual Buying Decision, and Sample Size vs Total Universe toAssess (Extrapolate) DemandAssess (Extrapolate) Demand

Given the Nature of the Surveys, the Research Does Not Focus on Development of a SpecificProbability 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 ofResponses for Certain Questions, Corporate Survey Results May Understate Total Demand

III. Market SurveysMarket Surveys – General Public

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

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

Approximately 45% (680) of Respondents were Aware that a Renovation or New ArenaDevelopment was Being Studiedp g

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

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

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

R d t G ll S t d R t d Ri h d C li C t ti f N


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

III. Market SurveysMarket Surveys – General Public

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

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

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

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


III. Market SurveysMarket Surveys – Corporate Basey p

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

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

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

Respondents Strongly Opposed Doing Nothing and Maintain Status Quo – Not RenovatingColiseum or Building a New ArenaColiseum or Building a New Arena

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

Luxury Suites Loge Boxes Cl b Seats


Club Seats

III. Market SurveysMarket Surveys – Corporate Basey p

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


Confidential

IV. Preliminary Facility Characteristics


IV. Preliminary Facility CharacteristicsPreliminary Program RecommendationsPreliminary Program Recommendations

Arena Characteristics

Capacity – 360 Degree 15 000 Capacity 360 Degree 15,000 Capacity – 270 Degree (End Stage) 14,000 Luxury Suites 15 – 25 Loge Boxes 15 – 20 Club Seats 500 – 650 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 TournamentsNCAA Tournaments Arena Football Concerts/Family Shows Conventions/Meetings Other


Other


Capacity Comparison – Richmond Coliseum and Proposed Arena

Final Proposed Arena Design May Provide Opportunity to Increase Capacity Based onConfigurationsConfigurations

Richmond Proposed Net

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

Coliseum Arena Increase360 Degree - (1) 12,217 15,000 2,783270 Degree 10,385 14,000 3,615180 Degree 8,315 12,000 3,685Hockey 10,454 13,000 2,546Basketball 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 (e.g., horseshoe shape, etc.)( g , p , )(1) Coliseum management indicated largest set-up has been for 12,800 seats. Capacity listed at 13,410.



Capacity Comparison – John Paul Jones Arena and Proposed Arena

Final Proposed Arena Design May Provide Opportunity to Increase Capacity Based onConfigurationsConfigurations

John Paul Proposed Percentage

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

Jones Arena Arena Difference Difference360 Degree 15,405 15,000 (405) -3%270 Degree 14,075 14,000 (75) -1%180 Degree 12,719 12,000 (719) -6%Hockey NA 13,000 NA NAy ,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.)


Confidential



V. Potential Arena SitesSite Selection – Key Considerations

ARENA PROGRAM

• Multi Purpose Event Center

SITE REQUIREMENTS• Urban Sites

Site Area Requirement Desirable: 6 acres

Site Selection Key Considerations

• Multi-Purpose Event Center

• 15,000+ Seats

• 20 30 Suites

Site Area Requirement Desirable: 6 acresMinimum: 5.05 acres

• Suburban SitesSite Area Requirement Desirable: 65 acres

without public transit• 20-30 Suites

• 500 Club Seats

• On site/Adjacent Premium

without public transit

• Site Configuration allows acceptable building configuration and exterior spaces

• On-site/Adjacent Premium customer parking spaces – 500 spaces.

• Ability to build or lease parking spaces for premium customers adjacent to arena

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

• Ability to accommodate service functions and


television truck parking

V. Potential Arena SitesSite Selection – Key Considerations

Urban Design Factors • Adequate site area and dimension • Configuration

Economic Factors • Property availability and relative costs• Displacement and relocation

Site Selection Key Considerations

Configuration • Public perception • Fan experience• Visibility • Safety and security

Displacement and relocation • Compensation • Development Costs • Leverage community assets • Promote development and investmentSafety and security

Transportation Factors• Pedestrian circulation

Promote development and investment• Potential positive impact on community

Timing Factors• Acquisition timing

• Vehicular access • Public transportation • Parking quantity • Parking proximity

• Approvals • Ownership issues • Zoning • Restrictions

Site and Utility Factors • Utility infrastructure • Environmental quality

Intangibles • Public Support • Risk


V. Potential Arena SitesSite Selection – Preliminary ScreeningSite 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 SiteSite #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



V. Potential Arena SitesSite Selection – Additional ScreeningSite Selection Additional Screening








Confidential

VI. Construction Cost Estimates


VI. Construction Cost EstimatesConcept Estimate

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

Preliminary Cost Estimate Provided for Illustrative Purposes 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 Et Estimates Adjusted for 2012 Construction Start, Regional/Local Market Conditions, Etc.

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 Infrastructure Relocation Parking Structure (If Any) Other


VI. Construction Cost EstimatesConcept Estimate

Arena Design and Construction $136,350,000Survey $50,000Design $10,500,000

Cost Estimate

Environmental $150,000Pre-Construction $225,000Owner Testing/Geo-Tech $1,500,000Owner FF&E $2,500,000Insurance $1,500,000Arena Construction $113,925,000Contingency $6,000,000

Arena Construction Administration $4,200,000Project Management Fee and Reimbursement $2,000,000

j l / i $Project Management Consultants/Contingency $500,000Legal $1,000,000Public Information $200,000Arena Authority Administrative Expense $500,000

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


Total $147,173,000

Confidential

VII. Financial Analysis


VII. Financial AnalysisFinancial Analysis

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

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

Information Obtained from Comparable Facilities and Our Database on Arena Operations

In Order to Obtain Accurate and Relevant Information, BSG Agreed to Maintain Confidentialityof Facilities

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

VII. Financial AnalysisFinancial AnalysisFinancial 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 (A C it P i S ti Et ) Physical Characteristics (Age, Capacity, Premium Seating, Etc.) Tenant/Event Mix Number of Professional and Collegiate Sports Franchises Other Entertainment AlternativesOther Entertainment Alternatives Climate Cost of Living Other


VII. Financial AnalysisCash 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 FactorsBoth Internal and External to Project, which Frequently VaryBoth Internal and External to Project, which Frequently Vary

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

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

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

Consideration should be Given to Establishing a Capital Repair, Replacement, and ImprovementFund


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

VII. Financial AnalysisCash Flow Summary (Continued)y ( )

ARENA SUMMARY($ in 000s)

Year 1 2 3 4 5

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

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

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

OPERATING EXPENSESArena Operating Expenses

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

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


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

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

VII. Financial AnalysisSensitivity Analysis NET CASH ADMISSIONS TAXSensitivity Analysis

FLOW 7.0%BASE CASE $891 $650

ADJUSTED ADMISSIONS TAXASSUMPTION ADJUSTMENT NET IMPACT CASH FLOW 7.0%

SENSITIVITY ANALYSIS

Number of Other Events Increase 10% $239 $1,130 $715Decrease (10%) ($239) $652 $585

Average Paid Attendance - (1)Increase 10% $189 $1,081 $712Decrease (10%) ($178) $713 $588( ) ( )

Premium Seating - Average PriceIncrease 10% $145 $1,036 $650Decrease (10%) ($145) $746 $650

Premium Seating - Occupancy - (2)Increase 10% $105 $997 $653Decrease (10%) ($105) $786 $647Decrease (10%) ($105) $786 $647

AdvertisingIncrease 10% $47 $938 $650Decrease (10%) ($47) $844 $650

Naming RightsIncrease 10% $43 $934 $650Decrease (10%) ($43) $849 $650

Concessions/Novelties Per CapitasIncrease 10% $76 $967 $650Decrease (10%) ($76) $815 $650

Operating ExpensesIncrease 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.

Confidential

VIII. Economic Impact Analysis


VIII. Economic Impact AnalysisEconomic/Fiscal Impacts – Overview

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

City of Richmond Chesterfield County Hanover CountyHanover 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 H h ld S di P tt ) Induced Spending (Dollars Spent through Household Spending Patterns) Fiscal Impacts Employment Impacts Labor Income Impacts


Labor Income Impacts

VIII. Economic Impact AnalysisEconomic/Fiscal Impacts – OverviewEconomic/Fiscal Impacts Overview

Findings Included Herein Reflect Evaluation of Gross Economic and Fiscal Impacts to be Generatedby 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 Internaland External to Project, which Frequently Varyj q y y

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


VIII. Economic Impact AnalysisEconomic/Fiscal Impacts – ConstructionEconomic/Fiscal Impacts Construction

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

Figures Reflect Gross Impacts

PROPOSED ARENA (DOWNTOWN RICHMOND)( )Construction

(2012 Dollars)Direct Economic Output $93,810,000Indirect Economic Output $39,050,000Induced Economic Output $38,840,000

Total Economic Output $171,700,000

N 60% f L b /M i l E di S d i h L l M k B d L l

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


Note: 60% of Labor/Materials Expenditures Sourced in the Local Market Based on LocalConstruction Industry Input

VIII. Economic Impact AnalysisEconomic/Fiscal Impacts – Construction

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

Figures Reflect Gross ImpactsPROPOSED ARENA (DOWNTOWN RICHMOND)

Construction(2012 Dollars)( )

Hotel Occupancy Tax RevenueHotel Sales Revenue $19,887Hotel Tax Rate 8.00%Hotel Occupancy Tax Revenue $1,591

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

Sales Tax Revenues $1,376,000State Sales Tax Rate 4.0%State Sales Tax Revenue $1,100,723Local Sales Tax Rate 1.0%Local Sales Tax Revenue $275 181


Note: 60% of Labor/Materials Expenditures Sourced in the Local Market Based on LocalConstruction Industry Input

Local Sales Tax Revenue $275,181

VIII. Economic Impact AnalysisEconomic/Fiscal Impacts – Operationsp p

On-Going Operations of the Proposed Arena will Produce Considerable Economic Impacts for theGreater 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 $25,990,000Indirect Economic Output $12,050,000Induced Economic Output $9,790,000

Total Economic Output $47,830,000

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


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

VIII. Economic Impact AnalysisEconomic/Fiscal Impacts – Operations

On-Going Operations of the Proposed Arena will Produce Fiscal Impacts for the GreaterRichmond 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 353Hotel Sales Revenue $1,793,353Hotel Tax Rate 8.00%Hotel Occupancy Tax Revenue $143,468

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

S l T R $826 000Sales Tax Revenues $826,000State Sales Tax Rate 4.0%State Sales Tax Revenue $660,433Local Sales Tax Rate 1.0%Local Sales Tax Revenue $165 108


Figures Reflect Gross Impacts – Must Consider Existing Impacts and Potential Reductions inFuture

Local Sales Tax Revenue $165,108

VIII. Economic Impact AnalysisOther Benefits

Proposed Downtown Arena Generates Other Significant Impacts for the Greater Richmond Areathat 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

Confidential

IX. Major Development Considerations


IX. Major Development ConsiderationsOpportunities

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

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

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

IX. Major Development ConsiderationsChallenges

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

Potential Corporate Support – Historical Premium Seating Advertising/Sponsorship

Regional Competition John Paul Jones ArenaJohn Paul Jones Arena

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

Anchor Tenant Commitment


Minor League Hockey WNBA/NBA D League

IX. Major Development ConsiderationsOther 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


Confidential

X. Next Steps


X. Next StepsNext Steps

Evaluate Financing Alternatives and Prepare Definitive Sources/Uses of Funds

li d i f Coliseum Study Group to Review Draft Report

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 P i S O h Pl Develop Private Sector Outreach Plan

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


g )

Confidential

LIMITING CONDITIONS AND ASSUMPTIONS


Limiting Conditions and AssumptionsThis 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 otherpurposes 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 suchfindings and recommendations shall be Client’s responsibility.

Ownership and management of the arena are assumed to be in competent and responsible hands Ownership and Ownership and management of the arena are assumed to be in competent and responsible hands. Ownership andmanagement can materially impact the findings of this analysis.

Any estimates of historical or future prices, revenues, rents, expenses, occupancy, net operating income, mortgage debtservice, capital outlays, cash flows, inflation, capitalization rates, yield rates or interest rates are intended solely foranalytical purposes and are not to be construed as predictions of the analysts. They represent only the judgment of theauthors based on information provided by operators and owners active in the market place, and their accuracy is in no way

dguaranteed. 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 theoperating potential of the facility. Due to rapid changes in the external factors, the actual results may vary significantlyoperating potential of the facility. Due to rapid changes in the external factors, the actual results may vary significantlyfrom 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 asmay 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 mainbody 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 bythe parties to whom it is addressed. Other parties should not rely on the findings of this report for any purpose and shouldperform their own due diligence.

Our performance of the tasks completed does not constitute an opinion of value or appraisal, or a projection of financialperformance or audit of the facility in accordance with generally accepted audit standards. Estimates of value (ranges) havebeen prepared to illustrate current and possible future market conditions.


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.

Date post:	09-Feb-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

CITY OF RICHMOND Confidential PARTNERING COUNTIES ...€¦ · city of richmond confidential...

Documents