ENTERTAINMENT VENUE FEASIBILITY STUDY

Transcription

1 ENTERTAINMENT VENUE FEASIBILITY STUDY Venture Waves, LLC Virginia Beach Ecnmic Develpment Authrity July 2018

2 July 30, 2018 Mr. Mike Culpepper, Managing Partner and Ms. Dnna MacMillan-Whitaker, Funder/Managing Partner Venture Realty Grup Virginia Beach, VA Virginia Beach Ecnmic Develpment Authrity Virginia Beach, VA Dear Mr. Culpepper, Ms. MacMillan-Whitaker, and the VBEDA: Stne Planning LLC, The Rney Sprts and Entertainment Grup, and Nielsen Sprts have cmpleted ur feasibility analysis f a ptential entertainment venue at the Dme site in Virginia Beach. The attached reprt presents the results f ur research, analysis, findings, and cnclusins and recmmendatins, and is intended t assist Venture Realty Grup and the VBEDA in evaluating the viability f the facility. The analyses presented in this reprt are based n estimates, assumptins, and ther infrmatin develped frm industry research, data prvided by VRG and thers, interviews with lcal and industry stakehlders, and analysis f ther facilities and markets. The surces f infrmatin and the basis f assumptins, estimates, and frecasts are stated in this reprt. Sme assumptins inevitably will nt materialize and unanticipated events and circumstances may ccur. Therefre, actual results achieved will vary frm thse described and the variatins may be material. The findings presented are based n analysis f present and near-term cnditins in the Virginia Beach area, as well as existing interest levels by ptential users fr a new facility. Any significant changes in the characteristics f the lcal cmmunity, such as change in ppulatin, crprate inventry, and/r cmpetitive facilities, culd materially impact cnclusins and recmmendatins develped in this study. As in all studies f this type, the estimated results are based n cmpetent and efficient management f the ptential facility and assume that n significant changes in the event markets r assumed immediate and lcal area market cnditins will ccur beynd thse set frth in this reprt. Furthermre, all infrmatin prvided t us by thers was nt audited r verified and was assumed t be crrect. This reprt has been prepared fr use by VRG and the VDEDA, and shuld nt be relied upn by any ther party. The reprt has been structured t prvide research, cnclusins and recmmendatins, and frecasts t strategically plan fr ptential new-facility develpment and shuld nt be used fr any ther purpse. This reprt and its findings may nt be included r reprduced in any public ffering statement r ther financing dcument. We very much appreciate the assistance and cperatin that has been prvided in the cmpletin f this reprt, and have enjyed wrking with yu. Shuld yu need anything else, please let us knw. Sincerely, Stne Planning LLC 2

3 Table f Cntents 1. Executive Summary 4 2. Lcal Market Analysis 9 3. Lcal and Reginal Cmpetitive Analysis Cmparable Facilities Cnclusins and Recmmendatins Operatinal Prjectins Ecnmic Impacts Surf Park Analysis 89

4 Sectin 1 Executive Summary

5 EXECUTIVE SUMMARY Stne Planning, The Rney Sprts and Entertainment Grup, and Nielsen Sprts were engaged by Venture Realty Grup and the Virginia Beach Ecnmic Develpment Authrity t cmplete a market and financial feasibility analysis f a new multipurpse entertainment venue (Event Center) in Virginia Beach. We have als prvided high-level, preliminary analyses f a surf park within the develpment, based n limited dcumentatin prvided t ur team. In general, this independent analysis is aimed at understanding the market fr a ptential new facility, recmmending majr characteristics f a new facility (if any), and frecasting the future peratins and ecnmic impacts f a new facility. The study analyzes the ptential fr a new facility in Virginia Beach, including analyses f: the lcal and reginal market that wuld supprt a new facility (including bth full-time residents and turists), the events industry, the lcal envirnment fr cmpetitive and cmplementary facilities, stakehlder feedback, cmparable facilities in ther markets, recmmendatins regarding a new facility, and frecasts f future peratins and ecnmic impacts f a recmmended facility. This executive summary prvides an verview f the analyses, research, recmmendatins, and frecasts that appear in the full reprt. The Lcal Market Virginia Beach is Virginia s largest city, with mre than 450,000 residents, and is part f the larger Hamptn Rads metr area with apprximately 1.7 millin residents. The Designated Market Area, as defined fr this study, has 1.5 millin residents and is strngly cncentrated in Virginia Beach. The DMA is relatively yung, affluent, educated, and emplyed. The DMA ppulatin is mre likely than the average US market t attend cncerts and many ther types f entertainment events. In additin t the full-time resident ppulatin, Virginia Beach is a majr turist market, with mre than 15 millin visitrs in

6 The Events and Facility Industry Entertainment venues have benefitted frm technlgical changes in the music industry that have led t a significant increase in the value f live cncerts t a perfrmer s incme. As a result, the number f shws has als increased significantly. Mre than ne-third f the tp 200 grssing entertainment turs typically sell 5,000 r fewer tickets per shw. Lcally, the need fr a 2,500-t-3,500-seat cmmercial venue at the beachfrnt was identified in studies that led t the Sandler Center s develpment, althugh n such facility has been built. There appears t be a strng need fr this type f facility in the market. The Virginia Beach market has a number f indr and utdr venues that hst free and ticketed entertainment events thrughut the year. Hwever, direct cmpetitin with the planned Event Center is expected t be relatively minimal, and any free events at the Event Center are generally expected t cmplement, and nt cmpete with, the city s Bardwalk prgramming. Cnclusins and Recmmendatins We believe that there is a market fr bth indr and utdr events at the capacities being cnsidered (up t apprximately 3,200 indrs and 5,000 utdrs). Als, the flexibility fr varius cnfiguratins fr indr events ffer artists and prmters a wide variety f ptins, such as general admissin, seated, cabaret, and/r a cmbinatin f multiple cnfiguratins. The invlvement f OVG is cnsidered t be a significant psitive factr fr the facility, based n the firm s resurces and relatinships; experience with facility planning, management, and prgramming; marketing and spnsrships; and ther aspects f facility and event peratins. In additin, OVG s primary representative fr the prject has significant experience in the lcal market. It is likely that mst f the cmmercial events that wuld be held at the Event Center will be new t the market. Hwever, the Event Center culd attract sme events that wuld therwise be held at existing lcal facilities such as Chrysler Hall and the NrVa in Nrflk and the Unin Bank & Trust Pavilin in Prtsmuth. Virginia Beach is well-lcated fr turing events, in relatin t markets such as Richmnd, Charltte, Washingtn DC/Baltimre, and thers. The facility s planned pen bking plicy will help t increase usage and encurage all prmters t bk shws. Multiple prmters that are active lcally (including thse that bk and perate existing facilities) have expressed interest in using the new facility. 6

7 Operating and Ecnmic Impact Prjectins Based n previus tasks, as well as ther research presented in Sectin 6, we have frecasted the future annual peratins f the Event Center. The fllwing table summarizes the estimated annual events and attendance, by event type. PROJECTED EVENTS AND ATTENDANCE # f Events Avg. Atten. Ttal Atten. Cncerts - Indr Reserved 30 2,167 65,000 Cncerts - Indr GA 40 2, ,750 Cncerts - Outdr 20 3,600 72,000 Cncerts - Minr ,000 Other Ticketed Sprts/Entertainment 5 2,250 11,250 Cmmunity Events 32 1,500 48,000 Private/Scial Events ,500 Festivals 3 3,000 9,000 Surf Park Events ,500 TOTAL ,000 Surce: Stne Planning Based n the prjected usage and ther assumptins, the fllwing table summarizes the Event Center s prjected perating revenues and expenses fr its first year. SUMMARY PRO FORMA ($000S) Operating Revenues Event Revenues $8,496 Nn-Event Revenues 743 Ttal Operating Revenues $9,239 Operating Expenses Event Expenses $6,641 Nn-Event Expenses 1,497 Ttal Operating Expenses $8,138 Net Operating Incme (Lss) $1,101 Surce: Stne Planning We assume a ttal f apprximately $9.2 millin in revenues and $8.1 millin in expenses, fr a resulting net incme f $1.1 millin. Over the curse f the Event Center s first ten years, net incme is assumed t be apprximately $1.0 millin t $1.1 millin per year. We have als estimated the future ecnmic and fiscal impacts frm the peratins and cnstructin f the Event Center. Impacts are generally based n spending that is attracted t the city frm utside f the city. 7

8 SUMMARY OF ECONOMIC/FISCAL IMPACTS FROM OPERATIONS ($000s) Operatins (Annual) Ttal Spending - Direct and Indirect $18,249 Ttal Jbs (Full-Time Equivalent) 105 Ttal Earnings $4,398 Rm Nights 20,970 New Tax Revenues t the City $232 Cnstructin (One-Time) Labr Expenditures $18,255 Sales f Materials $7,947 Emplyment 314 New Tax Revenues t the City $201 Surce: Stne Planning The peratinal impacts will recur frm year t year, and the facility is estimated t generate apprximately $18.2 millin in ttal net spending, 105 jbs and an assciated $4.4 millin in earnings, apprximately 21,000 htel rm nights, and $232,000 in city tax revenues per year. The cnstructin prject is estimated t generate a ttal f apprximately $18.3 millin in labr expenditures and 314 jbs, fr lcal residents as well as $7.9 millin in materials sales t lcal firms. Surf Park Analysis We have als cmpleted a high-level analysis f limited infrmatin prvided by Wavegarden related t the planned surf park. Based n ur review f this infrmatin and ther research, we prvide the fllwing bservatins: Wavegarden s methdlgies appear t be sund. Its assumed penetratin rates fr surf park users (bth lcal residents and turists) appear t be cnservative. Because f the wave technlgy and the attractin, surfers are expected t travel t Virginia Beach fr the facility; these induced visitrs are nt included in Wavegarden s usage estimates. The facility can als ptentially attract additinal training and cmpetitin uses that are nt included in its frecasts. Depending n the prliferatin f inland surf parks, a facility in Virginia Beach culd ptentially becme less unique in the future. 8

9 Sectin 2 Lcal Market Analysis

10 In this sectin, we prvide ecnmic and demgraphic data n the lcal and reginal market (including definitins f the market areas) in rder t give cntext n the envirnment in which a new entertainment venue wuld perate, as characteristics f the surrunding ppulatin are imprtant t the supprt f a venue. VIRGINIA BEACH AND MARKET DEFINITIONS Incrprated as a city in 1952, Virginia Beach is Virginia s largest city, with mre than 450,000 residents. It is an independent city and therefre nt part f a larger cunty, but is within the Hamptn Rads metr area that encmpasses parts f Virginia and Nrth Carlina including Nrflk (25 miles frm Virginia Beach), Newprt News (40 miles), Hamptn (30 miles), and ther cities. The metr area has a ppulatin f apprximately 1.7 millin peple, which is the 37 th -largest metr area in the cuntry and has a ppulatin that is similar t the metr areas f Nashville, Prvidence, Milwaukee, and Jacksnville. Virginia Beach is largely knwn as a resrt city due t its lcatin n the Atlantic Ocean and the muth f Chesapeake Bay. Its ceanfrnt has miles f beaches and cuntless htels, restaurants, and entertainment ptins. Hwever, in additin t its turism industry, the city als has multiple military bases, tw universities, a large business cmmunity with multiple crprate headquarters, and histric significance (it is the site f the first landing f English clnists, in 1607, and near Clnial Williamsburg, Jamestwn, and Yrktwn). The Nielsen DMA (Designated Market Area) is defined as a grup f cunties that frm a gegraphic area in which lcal market televisin viewership is measured. This is a nn-verlapping gegraphy fr planning, buying, and evaluatin f televisin audiences acrss varius markets, and is als cnsidered t define the lcal market fr cncerts and ther events. The DMA is shwn belw in red. 10

11 POPULATION The fllwing table shws the DMA s ppulatin since DMA POPULATION Year Ppulatin (000s) , , , , , , , , , ,525 Surce: Nielsen Scarbrugh 2017 The market currently has apprximately 1.5 millin residents. Overall, ppulatin grwth has been relatively lw, averaging 0.6 percent per year. The lcal zip cdes with the highest ppulatin, and their lcatin, are shwn in the table and map belw. 11

12 POPULATION BY ZIP CODE Zip Cde Ppulatin % f Ppulatin , % , % , % , % , % , % , % , % , % , % Surce: Nielsen Scarbrugh 2017 AGE The fllwing graph shws the age distributin f the DMA cmpared t the US. DMA AND US POPULATION BY AGE 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 46.0% 46.7% DMA US 32.9% 29.9% 23.4% 21.1% r lder Surce: Nielsen Scarbrugh 2017 As the graph shws, the DMA is relatively yung, as its 18-t-34 ppulatin is ten percent greater than that f the US as a whle (apprximately 33 percent cmpared t 30 percent). As a result, it has a lwer share f residents between the ages f 35 and 49, and its 50+ ppulatin is similar t that f the US. 12

13 INCOME AND EMPLOYMENT The fllwing graph shws the DMA s husehld incme levels cmpared t thse f the US. DMA AND US INCOME 30.0% 25.0% 20.0% 27.7% 26.1% 19.1% 16.8% DMA US 20.2% 16.9% 22.2% 19.3% 15.0% 13.9% 12.8% 10.0% 5.0% 0.0% Less than $35,000 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $249,999 Surce: Nielsen Scarbrugh 2017 Cmpared t the cuntry as a whle, the DMA is verrepresented in tw incme brackets - $50,000 t $75,000 and $100,000 t $250,000. Crrespndingly, it has a lwer share f residents with incmes belw $50,000. Natinwide, the mean husehld incme was apprximately $55,300 in Emplyment status f lcal residents, cmpared t that f the US, is shwn belw. DMA AND US EMPLOYMENT 60.0% 50.0% 40.0% 48.3% 43.5% DMA US 38.5% 40.3% 30.0% 20.0% 13.2% 16.2% 10.0% 0.0% Emplyed full-time (35 hurs r mre) Emplyed part-time (less than 35 hurs) Nt emplyed Surce: Nielsen Scarbrugh

14 Cnsistent with relatively high incme levels, the share f lcal residents wh are emplyed full-time (48.3 percent) far exceeds the natinal average f 43.5 percent. As a result, the share f part-time and unemplyed residents in the DMA is lw. The fllwing table shws the ten largest public and private emplyers in Virginia Beach and Hamptn Rads. LARGEST PUBLIC AND PRIVATE EMPLOYERS - VIRGINIA BEACH AND HAMPTON ROADS Virginia Beach Industry # f Civilian Emplyees Hamptn Rads Industry Lcatin # f Emplyees Naval Air Statin Oceana-Dam Neck Gvernment/Military 5,850 Huntingtn Ingalls Industries Manufacturing Newprt News 20,000+ Sentara Healthcare Medical and Surgical Hspitals 5,200 Sentara Healthcare Services Nrflk 20,000+ Jint Expeditinary Base Little Creek/Ft. Stry Gvernment/Military 3,600 Riverside Health System Services Newprt News 6,000-10,000 GEICO General Insurance Cmpany Aut and Other Vehicle Insurance Carriers 2,700 Nrflk City Public Schls Gvernment/Military Nrflk 6,000-10,000 General Grwth Prperties (Lynnhaven Mall) Retail Trade 2,600 Nrflk Naval Shipyard Gvernment/Military Prtsmuth 6,000-10,000 Gld Key/PHR Htels & Resrts Develper, Owner and Operatr f Htels 2,365 Virginia Beach Public Schls Gvernment/Military Virginia Beach 6,000-10,000 STIHL Incrprated Pwer Tls Manufacture 2,113 City f Virginia Beach Gvernment/Military Virginia Beach 6,000-10,000 Amerigrup (Anthem) Crpratin Insurance Carriers 1,850 Prtsmuth Public Schls Gvernment/Military Prtsmuth 3,000-5,000 Navy Exchange Service Cmmand Military and Gvernment Exchange Retail 1,550 Chesapeake City Public Schls Gvernment/Military Chesapeake 3,000-5,000 Engility Crp. Engineering Services 800 NASA Langley Research Center Gvernment/Military Hamptn 3,000-5,000 Surce: Virginia Beach Ecnmic Develpment, Hamptn Rads Ecnmic Develpment Alliance There is a strng military presence in the area, particularly in the brader Hamptn Rads regin, and many f the area s largest emplyers are military entities. Many f the ther larger emplyers are public bdies such as schl districts and city gvernments. Hwever, there are als many large private emplyers in the area, including Sentara Healthcare, the Riverside Health System, Gld Key/PHR Htels & Resrts, STIHL, and thers. Gld Key/PHR, STIHL, Anthem, Harmny Investments, Liberty Tax Service, and Clark Nexsen are all headquartered in Virginia Beach and emply 300 t nearly 2,400 peple. RESIDENT ACTIVITIES In additin t basic demgraphic data, Nielsen Scarbrugh has been measuring media, retail, and lifestyle habits n a natinal and lcal level fr mre than 40 years. Each year, Nielsen surveys ver 200,000 individuals in 129 US markets, maintaining a natinally representative sample and lcal market relevance. Scarbrugh insights prvide infrmatin n the shpping patterns, media behavirs, demgraphics, and distinctive lifestyles f the American cnsumer at a lcal, reginal, r natinal level acrss mre than 2,000 categries and brands. Nielsen leveraged its prprietary Scarbrugh market research database t prvide insights int the demgraphic prfile and size f the Nrflk DMA as well as cncertgers frm the DMA. Events and Places Visited The fllwing table shws the results f surveys f DMA residents related t events attended and places visited in the last 12 mnths, and as pssible, cmparisns t natinal indexes. 14

15 DMA RESIDENTS - EVENTS ATTENDED/PLACES VISITED IN THE LAST 12 MONTHS Event/Activity/Facility % f Ppulatin Index t Natinal Average Event/Activity/Facility % f Ppulatin Index t Natinal Average Music/Cncerts Sprts All cncerts (cmbined) 41.0% 29.3% Any prfessinal sprts event 31.4% -9.0% Any paid ticket music cncert 15.7% 7.5% Nrflk Tides baseball game 17.0% - Rck cncert 15.0% 9.5% High schl sprts event 15.8% -11.2% Other musical cncert (jazz, blues, etc.) 12.3% - Virginia Beach Sprtsplex event 5.4% - Cuntry music cncert 11.2% 14.3% Nrflk Admirals hckey game 5.1% - R&B/rap/hip-hp cncert 10.0% 66.7% Old Dminin University basketball game 4.2% - Veterans United Hme Lans Amphitheater Virginia Beach e 9.5% - Old Dminin University ftball game 4.1% - Chrysler Hall event 9.0% - Other prfessinal sprts event 3.9% - Symphny cncert, pera, etc. 7.5% 5.6% NASCAR 3.7% - Prtsmuth Pavilin event 4.7% - Washingtn Redskins ftball game 3.7% - Washingtn Natinals baseball game 3.4% - Other Event/Facility East Cast Surfing Champinships 3.2% - Mnster Jam (mnster trucks) 3.0% 76.5% Nrflk Scpe event 10.9% - Nrflk State University sprts event 3.0% - Hamptn Cliseum event 10.5% - Dver Dwns (fr hrse races) 2.8% - Other cllege basketball game 2.8% - Other Richmnd Internatinal Raceway event 2.7% - WWE (pr wrestling) 2.1% 31.3% Any theme park 45.0% 54.6% Cllege f William & Mary sprts event 1.8% - Busch Gardens (Williamsburg) 35.5% - Hamptn University sprts event 1.7% - Z 24.3% -8.3% MEAC Basketball Turnament 1.6% - State r natinal park 22.0% - Rck 'n' Rll Virginia Beach 1/2 Marathn 1.6% - Clnial Williamsburg 21.5% - University f Virginia sprts event 1.4% - Washingtn, D.C. museums 14.3% - Baltimre Ravens ftball game 1.3% - Washingtn, D.C. mnuments 13.7% - Other nightclub 13.1% - Arts/Culture Water Cuntry USA 10.4% - Ocean Breeze Water Park 9.3% - Arts & crafts fair r festival 16.4% - Times Square (in New Yrk City) 7.4% -5.1% Live theater 15.3% -19.9% Nauticus 7.3% - Virginia Aquarium and Marine Science Center 14.4% - Kings Dminin 6.9% - Cmedy club 10.7% 39.0% Health/wellness/fitness exp 6.5% 25.0% Art museum 10.3% -26.4% Jb fair/recruitment fair 6.4% 36.2% Virginia Living Museum 8.7% - Other theme park 5.9% - Children's Museum f Virginia 8.1% - Great Wlf Ldge 5.3% - Other museum 7.7% - Harbr cruise 4.6% - Dance r ballet perfrmance 6.5% 1.6% Virginia Air & Space Center 6.2% - Fergusn Center fr the Arts event 5.6% - Circus 5.4% 35.0% Ice shw 2.2% 4.8% Surce: Nielsen Scarbrugh 2017 In general, attending cncerts is the secnd-mst ppular activity in the market (41 percent f residents), fllwing nly theme parks. The share f lcal residents wh attended cncerts exceeds the natinal average by nearly 30 percent, and individual genres f cncert attendance are als verrepresented in the lcal ppulatin, such as: rck music 9.5 percent greater than the natinal average, cuntry music 14.3 percent greater, R&B/rap/hip-hp 66.7 percent greater, and Symphny and pera 5.6 percent greater. The genres abve are shwn in the rder f their ppularity lcally (i.e. rck music was attended by the largest share f residents, fllwed by cuntry, R&B/rap/hip-hip, and symphny/pera). Hwever, while R&B/rap/hip-hp shws were less attended than ther genres, it is relatively much mre ppular lcally cmpared t natinally than the ther genres. 15

16 In the Arts & Culture categry, cmedy clubs are als particularly ppular lcally (10.7 percent f residents, which exceeds the natinal index by 39 percent), as is the circus, while art museums are visited lcally less than they are natinally. Sprting events are generally attended less ften by lcal residents than they are acrss the US, althugh the Virginia Beach area lacks a majr prfessinal sprts franchise. Hwever, residents have attended lcal minr-league games and have traveled t nearby markets fr ther sprting events. Prfessinal wrestling is particularly ppular lcally (31 percent greater than the natinal average). Attendee Demgraphics and Behavirs The fllwing table summarizes the demgraphics f cncert attendees in the DMA, fr all cncerts as well as specific genres. CONCERT ATTENDEE DEMOGRAPHICS All (Cmbined) Rck Cncert Cuntry Cncert R&B/Rap/ Hip-Hp Symphny, Opera, etc. Other e.g. Jazz Millennials (18-34) 36.2% 41.2% 40.8% 45.2% 31.4% 19.4% [110] [125] [124] [138] [96] [59] Wealthy ($100k-$250k) 27.9% 32.0% 27.7% 17.1% 35.9% 29.3% [126] [144] [125] [77] [162] [132] Educated (Cllege Grad) 30.8% 31.7% 25.9% 24.5% 46.2% 37.6% [122] [127] [103] [97] [184] [150] Emplyed (Full-Time) 57.8% 70.0% 61.4% 57.1% 46.1% 50.9% [120] [145] [127] [118] [96] [105] Married 51.9% 52.9% 57.0% 31.9% 59.8% 53.3% [101] [103] [111] [62] [116] [103] Surce: Nielsen Scarbrugh 2017 The table shws whether a particular demgraphic grup is ver- r underrepresented as a share f cncert attendees cmpared t the general ppulatin in the DMA. Fr example, Millennials represent 36.2 percent f all cncert attendees lcally, which is ten percent mre than their share f the ppulatin (shwn by the index f 110). Overall, lcal cncert attendees tend t be yung, wealthy, educated, and emplyed, all f which are strengths f the lcal market. While the fllwing infrmatin des nt directly impact ptential demand fr the planned facility, it culd be useful fr marketing purpses and/r fr targeting tenants at The Wave. Nielsen Scarbrugh research shws the fllwing activities and behavirs that are particularly ver- r underrepresented fr lcal cncert attendees cmpared t the DMA ppulatin: 125 percent mre likely t have used Amtrak and 61 percent mre likely t have used an ndemand car service (such as Uber r Lyft) in the past week, 16

17 93 percent f cncert attendees ate at a quick-service restaurant in the last 30 days, led by Chick-fil-A (46 percent), McDnald s (40 percent), Wendy s (37 percent), and Tac Bell (30 percent). Cncert attendees are particularly verrepresented fr having gne t Starbucks (42 percent mre likely), Wingstp (40 percent), Qdba (36 percent), Papa Jhn s (28 percent), and Chanell s (26 percent). 86 percent f cncert attendees ate at a sit-dwn restaurant in the last 30 days, led by Applebee s, IHOP, Cracker Barrel, Olive Garden, Buffal Wild Wings, Glden Crral, Outback Steakhuse, and Ruby Tuesday (10 t 18 percent f attendees). Cncert attendees are particularly verrepresented fr having gne t Hters (67 percent mre likely), Buffal Wild Wings (50 percent), and T.G.I. Friday s (41 percent). The mst ppular type f restaurant fr lcal cncert attendees is Chinese (45 percent), fllwed by Mexican (38 percent), pizza (35 percent), Italian (22 percent), and seafd (22 percent). Cncert attendees are particularly verindexed fr sprts bars (52 percent mre likely), cffeehuses (46 percent), Mexican restaurants (31 percent), and Asian, Italian, steak, and ther upscale restaurants (23 t 27 percent). TOURISM AND AREA ATTRACTIONS Due t its climate, ceanfrnt, accessibility frm large ppulatin centers, and ther characteristics, Virginia Beach is a majr destinatin fr turism. While visitatin ccurs year-rund, turism peaks in the summer, fllwed by the spring and fall, and then winter. Htel demand and rates are cnsistent with this seasnality. The fllwing infrmatin summarizes data regarding the lcal turism industry. Accrding t Lngwds Internatinal, the ttal number f persn-trips t Virginia Beach in 2017 was 19 millin (including 10.1 millin vernight trips and 8.9 millin day trips), which represented a seven-percent increase ver Since 2013, the number f bth vernight and day trips t Virginia Beach have increased annually. Accrding t Lngwds, nearly half f vernight and day trips are cnsidered marketable trips, which include trips influenced by marketing effrts rather than visiting friends and relatives. Frty t 50 percent f travelers are visiting friends and relatives, and less than ten percent are business trips. The graph and chart belw shw the seasnality f turism, first by rm nights per seasn, fllwed by the number f visitrs per mnth. 17

18 VIRGINIA BEACH ROOM NIGHTS BY SEASON VIRGINIA BEACH TOURISM BY MONTH Fall, 24% Summer, 34% Winter, 16% Spring, 26% 16% 14% 12% 10% 8% 6% 4% 2% Surce: STR 0% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nv Dec Surce: Virginia Turism Crpratin Htel demand by mnth is cnsistent with the chart t the right abve; htel ccupancy and rates peak in July and August, fllwed by spring and fall. Accrding t the Virginia Turism Crpratin, in the brader Castal Virginia-Hamptn Rads regin, Virginia Beach is the mst ppular destinatin (38 percent f visitrs), fllwed by Williamsburg (36 percent), Nrflk (24 percent), and Richmnd and Newprt News (17 percent each). The mst ppular activities f these visitrs is shpping (28 percent), visiting relatives (27 percent), the beach (23 percent), and histric sites (19 percent). Accrding t Cntinental Research Assciates, the average length f stay peaks in the summer (4.7 nights), and is between 3.7 and 3.9 nights in spring, fall, and winter. The fllwing chart shws turists spending by type in Virginia Beach. VIRGINIA BEACH TOURIST SPENDING BY TYPE Entertainment, 9% Other, 16% Ldging, 54% Meals, 22% Surce: Cntinental Research Assciates 18

19 Attractins Lcal attractins include the fllwing: The Virginia Beach Bardwalk the three-mile Bardwalk, frm 2 nd Street t 40 th Street, includes a bike path, multiple stages, and the King Neptune statue. Alng the Bardwalk are multiple restaurants, bars, and shps. Event prgramming that ccurs at the Bardwalk is described in mre detail in the fllwing sectin. Surfing Virginia Beach is strngly assciated with surfing and is the hst f the East Cast Surfing Champinships. Surfing pprtunities are available thrughut the area. The Virginia Aquarium & Marine Science Center includes mre than 800,000 gallns f exhibits and the Natinal Gegraphic 3D Theater. Histric sites there are 18 sites n the Natinal Register f Histric Places in Virginia Beach, including the Adam Thrughgd Huse, the Francis Land Huse, and many thers. 19

20 Sectin 3 Lcal and Reginal Cmpetitive Analysis

21 This sectin includes an verview f the planned develpment, the music and entertainment industry, the lcal and reginal cmpetitive envirnment fr facilities, and he results f meetings and interviews with varius stakehlders. THE WAVE DEVELOPMENT AND EVENT CENTER The planned Event Center, which is the subject f this study, wuld be part f The Wave, a mixeduse develpment near the ceanfrnt (generally between 18 th and 20 th Streets and Baltic Avenue and Pacific Avenue) that wuld als include multifamily residential, retail and restaurants, a cinema, ffice space, parking, and a surf park. The Wave site is n the frmer site f the Virginia Beach Civic Center (als knwn as The Dme), a well-knwn cncert venue that pened in 1958 and was demlished in The Event Center, as preliminarily planned, wuld have the fllwing characteristics: 38,000 square feet, The ability t hst bth indr and utdr events, with a reversible stage that faces twards an indr club and an utdr amphitheater. The capacity fr an indr event culd range frm apprximately 2,400 (seated) t 3,200 (general admissin), and the utdr capacity culd be apprximately 5,000. In-huse sund and light equipment wuld be available t events. The multipurpse facility wuld be able t hst a wide range f events, including cncerts and ther entertainment, cmedy, speakers, scial events, flat-flr events, sprting events, and thers. The venue wuld als have ther, smaller indr and utdr spaces fr events, such as a VIP/hspitality lunge and utdr terraces. The facility will be perated by The Oak View Grup, a relatively new entity in the sprts and entertainment industry but led by executives with decades f industry experience, including lcally. Pharrell Williams, a Virginia Beach native and singer, sngwriter, and prducer wh has wn ten Grammy Awards and been nminated fr tw Academy Awards, is a partner in the Event Center. It is expected that Williams will regularly perfrm at the venue and create a branded festival, which will increase usage f the Event Center. 21

22 THE TOURING EVENTS INDUSTRY Turing events, such as cncerts, cmedians, and ther entertainment events, prvide a significant amunt f cntent fr venues f all sizes. This sectin fcuses primarily n cncerts and their characteristics, but als addresses ther types f turing events. Cncerts Turing cncerts typically prvide reliable bking pprtunities fr venues such as theaters, clubs, arenas, stadiums, and amphitheaters. Acts typically perfrm within a specific venue capacity range, based n their ability t sell an expected number f tickets in a given market, althugh the number f tickets sld and at varius prices will change frm market t market. Hwever, based n the typical market demand fr an act and the desire t perfrm in the same type and size f venue fr the purpses f shw prductin and planning, any tur will generally rute within a similar type and size f facility. These venues have benefitted frm recent technlgical changes within the music industry that have significantly affected hw peple cnsume music. Specifically, the intrductin f itunes in 2003 and mre recently, streaming music services, have greatly affected recrding musicians. In general, spending n physical album sales (and mre recently, digital sales) has decreased; this used t represent the bulk f a prfessinal turing artist s incme. As the cnsumptin f recrded music has shifted frm CDs t digital sales t streaming, each technlgy has been less prfitable t artists. With this revenue stream disappearing, many artists are turing mre than ever, t the benefit f venues. While music cnsumptin verall is grwing, it is shifting frm physical and digital sng/album sales t streaming as well as live perfrmances. Accrding t ne analysis f the tp turs, the annual number f shws has increased frm a lw f apprximately 6,000 in 2000 t 8,000 t 10,000 per year since then. As an example, Billbard estimated that Beyncé, 2016 s tp earner amng musicians, generated nearly $55 millin frm ticket sales and a relatively mdest $4.3 millin frm music sales. (Others n its list f the tp 50 earners als generated significantly mre frm perfrming than frm music sales, aside frm thse that did nt tur in 2016.) Frm 2016 t 2017, the sale f physical and digital music bth full albums and individual tracks cntinued its decline, with streaming services gaining in ppularity. Again, t replace the frmerly lucrative surce f revenue frm CD sales, artists are turing mre and mre. (Accrding t Billbard, frm 1990 thrugh 2000, the highest-selling album in the U.S. generally sld between five and ten millin cpies; frm 2005 n, it exceeded five millin nly nce.) 22

23 U.S. MUSIC INDUSTRY RETAIL REVENUE (ADJUSTED FOR INFLATION) $18.0 $16.0 $14.0 Physical Digital Dwnlads Streaming $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $ Surce: RIAA In 2017, accrding t Pllstar, new recrds cntinued t be set in Nrth America fr the number f tickets sld (mre than 46 millin), the average ticket price (mre than $78 fr the tp 100 turs), and ttal grss sales ($8 billin). As the fllwing charts shw, these figures have generally been grwing ver recent years, and the increase in ticket prices has nt stpped demand fr tickets. TOTAL NORTH AMERICAN TICKETS SOLD (MILLIONS) AVERAGE N.A. TICKET PRICE AND TOTAL N.A. GROSS (BILLIONS) $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Avera ge N. A. Ticket Price (Tp 100 Turs) Ttal N.A. Grss (Billins) $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $ $ $0.0 Surce: Pllstar Surce: Pllstar As mentined abve, turing acts generally perfrm in similar facilities thrughut an individual tur, and nt all acts are available t a given facility (nr can all markets supprt the ticket prices and number f tickets that need t be sld in rder t supprt a shw). The chart belw shws the distributin f average tur attendance fr Pllstar s 200 tp-grssing turs frm

24 2016'S TOP 200 GROSSING TOURS BY AVERAGE ATTENDANCE 25,000 r Mre, 7.0% 15,000-24,999, 9.0% Less than 5,000, 35.5% 12,000-14,999, 11.0% 10,000-11,999, 9.0% 5,000-7,499, 17.5% 7,500-9,999, 11.0% Surce: Pllstar Mre than ne-third f the tp 200 turs achieved an average f less than 5,000 per shw; these were typically held in theaters, clubs, and small arenas. Anther 18 percent averaged between 5,000 and 7,499 per shw; as a result, mre than half f the turs that are amng the 200 highest-grssing turs did nt sell mre than 7,500 tickets per shw. In additin, the turs that are utside f the tp 200 als prvide prgramming pprtunities t smaller venues. Specific examples f acts that sld n mre than 5,000 tickets per shw, n average, include Willie Nelsn, Chris Yung, Jhn Fgerty, the Avett Brthers, and ZZ Tp. Acts in the 5,000-t-7,500 range included Alabama Shakes, Chris Stapletn, Ellie Gulding, and Paul Simn. Other Turing Entertainment Events In additin t cncerts, there is a wide range f ther turing events that are available t venues, althugh, similar t cncerts, the specific events ften change frm year t year based n turing decisins. Because f the varying nature f these events, its verall industry is nt necessarily quantifiable in the same way as cncerts; hwever, we have researched available infrmatin in rder t prvide a better understanding f the types and scale f events, and the facilities that they perfrm in. Family shws this subcategry alne is quite diverse and can include a large share f nncncert turing events. Family shws are typically geared twards children f varying ages and can include circuses, a rtating cllectin f Disney-themed events (such as Disney n Ice, Frzen, and thers), Sesame Street Live, and many thers. Cirque du Sleil als turs with multiple shws, and althugh many f them are ppular enugh fr NBA- and NHL-sized arenas, thers can perfrm in smaller arenas and theaters. Many family shws were amng 24

25 the wrld s tp turs in 2017, including Disney On Ice (third, behind U2 and Guns N Rses, with nearly three millin tickets sld), eight different Cirque du Sleil shws, Paw Patrl Live!, Marvel Universe Live!, and Harry Ptter in Cncert. Hwever, many f these events require a typical arena flr cnfiguratin rather than a stage. Unlike cncerts and many ther events, family shws typically hld multiple perfrmances ver cnsecutive days (up t as many as eight r mre perfrmances), and their turing seasn cincides with that f mst ther indr events (fall t spring). Ticket prices are typically much lwer than fr cncerts, and attendance fr an individual perfrmance is typically less than 3,000. Cmedy cmedy shws are particularly ppular nw, and many cmedians are amng the tp-grssing entertainment events. The grwing ppularity f cmedy has created new cntent fr theaters, clubs, and arenas. Tday, cmedians such as Jerry Seinfeld, Amy Schumer, and Jim Gaffigan typically perfrm in larger theaters as well as arenas and averaged ticket sales f apprximately 3,500 t 7,000 in Sprts/cmpetitin events ther turing events, but with a sprts r cmpetitive cmpnent, include the Harlem Glbetrtters, WWE, mtrsprts and Mnster truck events, Prfessinal Bull Riders, rdes, and thers. In additin, many f these events have multiple subturs that are geared twards different audiences and facility sizes. Hwever, because f the nature f these events, they typically require an arena with a basketball and/r hckeysized event flr, rather than a theater r club cnfiguratin with a stage. Hwever, sprts such as bxing and MMA can be accmmdated within a club r theater. Others ther turing events can include speakers, religius events, and ther types f entertainment. Similar t cmedians, speakers, entertainers, jurnalists, authrs, and intellectuals such as Theresa Caput, Neil degrasse Tysn, Andersn Cper, and thers have prvided a new cntent surce fr venues that did nt previusly exist at a significant level. T capitalize n this trend (as well as the ppularity f cmedy), ne majr bking agency/management cmpany (Madisn Huse) recently launched a speaker and cmedy divisin that will prvide additinal cntent t venues. Event Prmters Anther majr change that has affected the live entertainment industry has been the cnslidatin f prmters. Tw cmpanies Live Natin and AEG are by far the largest prmters in the US and wrldwide and cntrl a great deal f talent. Live Natin is significantly larger than AEG, and has grwn in part by acquisitins f ther prmters, including Huse f Blues, which was the industry s secnd-largest prmter when it was acquired by Live Natin in Als, in 2010, Live Natin merged with Ticketmaster, the industry s largest ticketing prvider. 25

26 In additin t serving as a cncert and festival prmter and ticketing service, Live Natin als wns and perates venues and sells spnsrships. As f late 2017, Live Natin prmted nearly 30,000 events fr mre than 4,000 artists and wned, perated, r had an equity interest in 222 venues wrldwide (including Virginia Beach s Veterans United Hme Lans Amphitheater). Thrugh this cnslidatin and prmter wnership f venues, mre venues nw have exclusive prmter relatinships, whereby a prmter (and ptentially facility wner) such as Live Natin will nt wrk with ther prmters at their facility. Hwever, in mst cases, a mre pen structure is in place, and any prmter can ptentially wrk with a venue; this is the case at Veterans United Hme Lans Amphitheater, and generally allws fr a larger universe f events t perfrm at a venue. Fr example, if AEG cntrls a tur and is lking fr a large amphitheater in the Virginia Beach market, it culd bk the VUHLA rather than be shut ut, assuming the arrangement makes business sense fr bth AEG and Live Natin. The fllwing chart shws the share f the nearly 124 millin tickets sld wrldwide in 2017 by Live Natin, AEG, and the next 98 prmters cmbined. WORLDWIDE TICKET SALES BY PROMOTER, 2017 Others in Tp 100, 46% Live Natin, 42% AEG, 12% Surce: Pllstar Live Natin sld 42 percent f wrldwide tickets (52.5 millin), fllwed by AEG with 12 percent (14.4 millin). Live Natin s market share des nt include prmters that it has acquired a majr share f, r has exclusive deals with, such as: OCESA/CIE the third-largest prmter in the wrld, with mre than fur millin tickets sld, dminates Mexic and Suth America, and has an exclusive distributin deal with Live Natin. C3 Presents in 2014, Live Natin purchased a cntrlling share f C3 Presents, which was the wrld s 17 th -largest prmter in 2017 (1.1 millin tickets sld). C3 Presents is the prmter f many leading festivals, including Lllapalzas in the US and Suth America, the Austin City Limits Music Festival, and many thers. 26

27 Frank Prductins earlier this year, Live Natin acquired a majrity share f Frank Prductins, ne f the cuntry s largest independent prmters (and 23 rd wrldwide, with 673,000 tickets sld in 2017). LOCAL AND REGIONAL FACILITIES This sectin identifies relevant lcal indr and utdr facilities, and their characteristics and ptential cmpetitiveness with the Event Center. LOCAL FACILITIES AND THEIR CHARACTERISTICS Indr Theaters and Clubs Lcatin Cncert Capacity Driving Distance frm The Dme (Miles) Year Opened Owner Operatr Ptential Cmpetitin with Event Center The Sandler Center Virginia Beach 1, City f Virginia Beach Spectra LOW The NrVa Nflk 1, (repened) AEG AEG MEDIUM Chrysler Hall Nflk 2, City f Nrflk City f Nrflk MEDIUM Fergusn Center fr the Arts Newprt News 1, Christpher Newprt University CNU LOW Outdr Amphitheaters Veterans United Hme Lans Amphitheater Virginia Beach 20, City f Virginia Beach Live Natin LOW Unin Bank & Trust Pavilin Prtsmuth 6, City f Prtsmuth IMGing MEDIUM Indr Arenas Ted Cnstant Cnvcatin Center Nflk 9, Old Dminin Univ. Spectra NONE Nrflk Scpe Nflk 13, City f Nrflk City f Nrflk NONE Hamptn Cliseum Hamptn 13, City f Hamptn City f Hamptn NONE Virginia Beach Sprts Center Virginia Beach n/a 0.5 TBD City f Virginia Beach City f Virginia Beach NONE Free Venues Virginia Beach Bardwalk Virginia Beach Varius 0.2 n/a City f Virginia Beach IMGing LOW Twn Pint Park Nflk 45, City f Nrflk Nrflk Festevents NONE Waterside District Nflk 3, The Crdish Cmpanies The Crdish Cmpanies NONE Surce: Individual facilities, Stne Planning Indr Theaters and Clubs The Sandler Center fr the Perfrming Arts (Virginia Beach) The Sandler Center pened in 2007 as a replacement fr the 1,000-seat Pavilin Theatre, as a need fr better and larger facilities in Virginia Beach was identified. The facility is wned by the City f Virginia Beach and perated by Spectra and NS2, wh guarantee a minimum f 37 turing events per year t the facility (thrugh prmting/cprmting r as rentals), which prvide greater expsure and visibility t the facility, beynd its tenant events. 27

28 The theater s perfrmance hall has a capacity f 1,300 and an utdr perfrmance plaza has 18,000 square feet. A number f smaller venues are als available within the facility: the lbby (capacities f 250 seated/400 standing), the Miller Studi Theatre (125/200), the Wd Rm (50/60), and tw classrms (50/60 each). The theater has nine resident cmpanies (which have pririty n event dates ver ther events), including the Virginia Beach Chrale, Virginia Musical Theatre, and the Virginia Symphny Orchestra, but als hsts ther turing entertainment events such as cncerts, family shws, and cmedians. It als hsts the Ynt Wednesdays? free summer cncert series n the utdr plaza and the Winter Cncert Series in the Miller Studi Theatre. Daily rental rates fr the perfrmance hall are $2,750 (perfrmance days) and $1,750 (nnperfrmance days) fr cmmercial grups and $2,000 and $1,250 fr nn-prfits. The utdr plaza is $1,500 fr cmmercial grups and $12,500 fr nn-prfits. Smaller facilities range frm $300 t $1,200 per day (cmmercial) and $250 t $850 per day (nn-prfit). The Sandler Center als charges a $1-per ticket facility surcharge fr tickets less than $21, and $2 fr tickets priced abve $21. The fllwing infrmatin summarizes peratinal characteristics f the Sandler Center s fiscal year: 480 ttal events and 195,747 attendees, including: Resident cmpanies: 169 events and 47,490 attendees, Great Perfrmance Series: 25 selected cmmercial events (such as Ams Lee, Celtic Thunder, Peter Framptn, and Vince Gill) and apprximately 55,000 attendees. Next year, the Series is expected t increase t 40 t 45 shws, Ynt Wednesdays?: 14 weekly events and apprximately 43,000 ttal attendees, and Winter Cncert Series: apprximately 2,000 attendees ver eight weeks f perfrmances. $1.5 millin in grss ticket revenue, $107,000 in facility surcharge revenue, and $141,000 in admissin taxes, The chart belw shws ticket sales by city: 28

29 SANDLER CENTER TICKETS BY CITY, Other, 14% Sufflk, 2% Prtsmuth, 2% Nrflk, 10% Newprt News, 1% Hamptn, 1% Chesapeake, 12% Virginia Beach, 57% Surce: Pllstar Accrding t Pllstar, the average attendance fr all ticketed entertainment events in the last three years was 969, with an average ticket price f apprximately $51. Sandler Center Planning Studies Prir t the cnstructin f the Sandler Center, a number f studies that identified the need fr the facility, and thers, were cmmissined. These studies were cmpleted by late 2002; hwever, many f their cnclusins and recmmendatins are still relevant, as described belw. The lcal and reginal markets were cnsidered t be strng, with a yung, affluent, and welleducated ppulatin that has a high prpensity t participate in events and is cncentrated in Virginia Beach. A 1,000- t 1,200-seat multipurpse theatre (which became the Sandler Center) was recmmended as a replacement f the Pavilin Theatre, as it was inadequate and there was n ther theatre in Virginia Beach between 750 and 2,000 seats, r in the regin between 900 and 1,500 seats. In additin t the facility described abve, a 300-t-500-seat multipurpse cmmunity venue and a 2,500-t-3,500-seat cmmercial venue at the beachfrnt in partnership with a cmmercial presenter were als recmmended. The latter venue still des nt exist in the market and is the type f venue studied in this reprt. 29

30 The NrVa (Nrflk) The NrVa riginally pened in 1917 as a 2,000-seat Vaudeville theater and later served as a mvie theater. It repened in 2000 as a 1,450-seat club and is nw wned by AEG. It primarily hsts turing cncerts and has reprted an average f apprximately 128 per year in the last three years. The average attendance f these shws was 1,110, with an average ticket price f $28. A wide range f music genres are represented, thrugh acts such as Tyler, the Creatr, the Pixies, Cake, Charli XCX, KRS-ONE, Twenty One Pilts, Band f Hrses, and Run the Jewels. The NrVa is wned and exclusively prmted by AEG, but its rental rate is knwn t be apprximately $6,500. Chrysler Hall (Nrflk) Chrysler Hall is Nrflk s primary perfrming arts venue and is lcated in dwntwn Nrflk. It is wned by the City and perated by its Department f Cultural Facilities, Arts and Entertainment as part f its Seven Venues (alng with the Scpe Arena, the Attucks Theatre, the Wells Theatre, Harrisn Opera Huse, Harbr Park, and Open Air Events). The theater has a number f tenants, including the Virginia Symphny Orchestra, Nrflk Frum, the Virginia Arts Festival, the Virginia Ballet, and the Generic Theatre, but als hsts cncerts, family shws, cmedians, and ther entertainment. Accrding t the facility, ttal usage is apprximately 150 events and 150,000 attendees. The theater s capacity is 2,488 fr ticketed perfrmances and its published rental rate is $12,500, including all frnt-f-huse expenses. Its Dress Circle has capacities f 250 (seated) and 450 (standing) fr private events such as meetings and parties, and the Stage Left Lunge has a 50-persn capacity fr smaller events. In the last three years, the facility has reprted apprximately 50 nn-tenant entertainment events per year, with an average attendance f apprximately 1,400 and an average ticket price f $52. These events have included ppular cncerts (Rbert Plant, Gladys Knight), family shws (Alvin and the Chipmunks: Live, Disney Live), Bradway shws and musicals (Ragtime, The Nutcracker), cmedians (Bill Burr, Hannibal Buress), and thers. 30

31 The City f Nrflk is planning apprixmately $40 millin r mre f imprvements t the facility, including apprximately 100 additinal seats, expanded restrms and lbby areas, and imprved systems and F&B areas. Fergusn Center fr the Arts (Newprt News) The Fergusn Center is a theater and cncert hall that is lcated n Christpher Newprt University s campus. The facility includes tw cncert halls and smaller event spaces, and pened in The primary venue in the Center is Diamnstein Cncert Hall, with 1,725 seats; thers include the 453-seat Peebles Theater and the 200-seat Studi Theater, as well as rehearsal halls, a dance studi, arts studies, an art gallery, classrms, and thers. The facilities present a wide range f perfrmances, ranging frm Bradway shws t ppular music and ther entertainment, in additin t perfrmances by the Virginia Symphny Orchestra, the CNU Department f Music and Department f Theater and Dance. In 2017, the facility reprted 12 ticketed entertainment events, including Mamma Mia, Ben Flds, Manhattan Transfer, and Stephen Stills and Judy Cllins. Average attendance in the last three years has been 1,460, with an average ticket price f $64. The facility charges a cnvenience fee fr nline and phne sales that ranges frm $3 t $25, depending n the ticket price, and a $5 per rder fee frm its bx ffice. Outdr Amphitheaters Veterans United Hme Lans Amphitheater (Virginia Beach) This amphitheater is wned by the City f Virginia Beach and perated by Live Natin, and pened in It is ne f the larger amphitheaters in the US, with a capacity f 20,000 (7,500 cvered pavilin seats and 12,500 generaladmissin lawn seats), and therefre hsts sme f the largest turing acts such as Kenny Chesney, the Dave Matthews Band, and Bruce Springsteen & the E Street Band. Hwever, sme smaller shws nly sell the cvered pavilin seats. The facility als has five dedicated parking lts, and parking fees are typically added t the ticket price. 31

32 The facility has hsted an average f 27 shws per year frm 1999 thrugh 2016, with an average attendance f slightly mre than 10,000. In 2016, 32 shws had an average paid attendance f 9,823; paid attendance fr each shw is shwn belw VUHLA EVENT ATTENDANCE 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Surce: City f Virginia Beach Paid attendance ranged frm 2,570 (Fifth Harmny) t 19,687 (Jimmy Buffett). In additin t Fifth Harmny, nly tw shws attendance were belw r near the expected 5,000-persn capacity f the Event Center s udr capacity the G G Dlls (3,487 paid) and Gwen Stefani (5,066 paid). Hwever, the actual turnstile attenance f the Gwen Stefani shw was 6,611. Three ther shws had paid attendance f 5,000 t 6,000: Dipl (5,285), G-Eazy (5,718), and Slipknt (5,783). Accrding t facility representatives, its shws d attract turists but specific data is nt available. Unin Bank & Trust Pavilin (Prtsmuth) The Unin Bank & Trust Pavilin is lcated acrss the Elizabeth River frm dwntwn Prtsmuth and pened in 2001 (thrugh 2016, it was knwn as the ntels Pavilin). The facility has a capacity f 6,500, with 3,500 cvered and reserved seats, and 3,000 uncvered, general-admissin lawn seats. The facility is wned by the City f Prtsmuth and perated by IMGing. In the last three years, the facility has hsted an average f 14 cncerts per seasn. In 2018 (as f mid-april), 17 shws are scheduled. Accrding t Pllstar, cncerts had an average attendance f apprximately 4,300 and an average ticket price f $39. 32

33 The facility ffers tw types f premium seats: seasn seats and bx seats. Seasn seats include parking, access t the VIP Club (full bar, pre-shw perfrmances, fd, restrms, and beer and wine tastings), a private entrance, and advance ticket access. Bx seats are sld in grups f fur, six, and eight, and include in-bx F&B service, parking, VIP Club access, a private entrance, and advance ticket access. The facility s published rental rate is $5,000 r 10 percent f ticket sales, plus facility expenses. The facility als charges a $1 facility fee. Accrding t the City f Prtsmuth, the facility has tw full-time equivalent staff psitins and ttal perating expenses in 2016 were apprximately $306,000. This included apprximately $60,000 in salaries and benefits, $26,000 in repairs and maintenance, and $39,000 in utilities (electricity, water and sewer, and gas). This des nt include IMGing s expenses. This spring, structural prblems with the facility s rf caused its temprary clsing and the relcatin f multiple events t ther area venues. The facility is expected t repen this summer. Indr Arenas Ted Cnstant Cnvcatin Center (Nrflk) The Cnstant Cnvcatin Center is n the campus f Old Dminin University and is wned by ODU and perated by Spectra. The facility s primary user is ODU athletics, but it als hsts a wide range f ther sprting events, cncerts, ther entertainment, and nn-athletic university events. Its cncert capacity is 10,000, which is much larger than the Event Center s planned capacity. In a recent year, the arena hsted apprximately 230 events, including 40 ODU athletic events. Other events included: 17 cncerts with an average attendance f apprximately 3,900, 104 meetings, trade shws, and ther similar events with an average attendance f apprximately 270, 12 nn-odu sprting events with an average attendance f apprximately 1,600, Eight family shws with an average attendance f apprximately 2,400, Ten ther entertainment events with an average attendance f apprximately 850, and Fur religius events with an average attendance f apprximately

34 While the arena hsted a significant number f cncerts, its cncerts are cnfigured fr arenas rather than theaters r clubs, and n average are larger than the maximum capacity f the planned Event Center. In additin, these cncerts are generally held frm fall thrugh spring and therefre wuld nt cmpete with an utdr amphitheater. Nrflk Scpe (Nrflk) The Nrflk Scpe is a City f Nrflk-wned and -perated arena (which is part f SevenVenues) that pened in Its current tenant is the Nrflk Admirals f the ECHL and its cncert capacity is 13,000, which is als much larger than the Event Center s planned capacity. Hwever, the Scpe s Prism Theatre cnfiguratin has a 4,000-persn capacity. The Scpe als has exhibit halls that have a maximum capacity f 3,850 seated attendees, and fur smaller meeting rms. The arena s published rental rate is $28,500, and $20,000 fr the Prism Theatre. In a recent year, the arena hsted apprximately 110 events and 250,000 attendees, including the fllwing: 60 sprting events (primarily hckey games) with an average attendance f apprximately 2,300, 11 cncerts with an average attendance f apprximately 2,100, Ten family shws with an average attendance f apprximately 3,300, Nine ther entertainment events with an average attendance f apprximately 230, and 14 religius events with an average attendance f apprximately 3,200. In the last three years, the Scpe s average ticket price fr entertainment events has been apprximately $31. In cnjunctin with ptential renvatin plans fr Chrysler Hall, the city is als cnsidering imprvements t the Scpe that culd include adding 4,000 seats and six t 12 luxury suites. While the Scpe s cncerts are generally smaller than the Cnstant Cnvcatin Center s, the facility wuld als be minimially cmpetitive with the Event Center due t factrs such as seasnality and physical requirements. 34

35 Hamptn Cliseum (Hamptn) The Hamptn Cliseum is a City f Hamptn-wned and - perated arena that pened in In the past, it had many minr-league sprts tenants but current des nt have ne. The arena has a maximum cncert capacity f 13,800, which makes it the largest indr arena in the immediate area. In a recent year, the arena hsted apprximately 95 events. The mst cmmn event type was cnsumer and trade shws (23), primarily due t the exihibit halls. Other events included 22 family shws, 17 sprting events, 11 religius events, and ten cncerts. In recent years, the arena s average attendance fr music and entertainment events has been apprximately 6,100, with an average ticket price f $57. Similar t the market s ther arenas, the Cliseum wuld nt be cmpetitive t the Events Center fr entertainment acts. Published daily rental fees are $5,000 r 10 percent f grss ticket revenues fr the arena and $3,000 fr cnventins. The City f Hamptn charges a ten-percent admissins tax n ticket sales, and the facility has a $4.50 facility fee that is added t the ticket price. Fr nn-ticketed events, an $8-per car parking fee is charged. Virginia Beach Sprts Center (Virginia Beach) The planned Virginia Beach Sprts Center is nt an arena per se like the Cnstant Cnvcatin Center, Scpe, and Cliseum, as these facilities all hst majr, ticketed sprts and turing entertainment events. The Sprts Center wuld be an indr sprts and recreatinal facility fcused primarily n hsting yuth and ther amateur turnaments that wuld generate ecnmic impacts t the city frm turnaments, as well as prvide lcal residents with fitness and recreatinal facilities. As planned, the facility wuld be adjacent t the Virginia Beach Cnventin Center and feature the fllwing elements: 130,000 t 150,000 square feet, Multipurpse sprts curts that can be used fr basketball and vlleyall (12 high schl basketball curts r six cllegiate curts, r 24 vlleyball curts), as well as ther indr curt sprts, Seating fr apprximately 3,000 spectatrs, including 1,500 t 2,000 at a champinship curt, Supprt space fr cncessins and catering, ffices, team and fficials areas, strage, and thers. 35

36 In rder t supprt the primary rientatin f turnaments, the facility is expected t priritize all weekend usage fr turnaments utside f nine mnths fr scheduling purpses. This facility is nt expected t be cmpetitive with the Events Center, and culd benefit it frm turnaments needs fr an ffsite venue fr entertainment, awards banquets, pening and clsing ceremnies, and ther uses. Free Venues and Prgramming Virginia Beach Bardwalk (Virginia Beach) The three-mile bardwalk in Virginia Beach (which is three blcks east f the Dme site) stretches frm 2 nd Street t 40 th Street between the beach and htels, restaurants, shps, bars, and ther vendrs. During the summer, free entertainment is ffered nightly at fur ceanfrnt stages (at 7 th, 17 th, 24 th, and 31 st Streets), and ther free and paid events ccur n the beach. The bardwalk and beach have bth permanent and temprary stages fr events. The city s bardwalk and beach events are prduced by IMGing, and include cncerts and music festivals, fd festivals, Mnster truck events, air shws, farmers markets, and thers. Majr events include the Neptune Festival and its Bardwalk Weekend, the Patritic Festival (cncerts, exps, and vendrs), and the weeklng East Cast Surfing Champinships. The fllwing map indentifies the events held at the Bardwalk and their lcatin. 36

37 Twn Pint Park (Nrflk) Twn Pint Park is an eight-acre waterfrnt park n the Elizabeth River that is lcated next t the Nauticus science center and museum (r the Natinal Maritime Center) and the USS Wiscnsin, and includes the Armed Frces Memrial. The park pened as it currently exists in 2009, and hsts free and ticketed utdr cncerts, festivals, and ther special events. The park is prgrammed by the nnprfit Nrflk Festevents n behalf f the city, and can accmmdate as many as 45,000 peple. In 2018, frm early May thrugh early December, a ttal f 14 events are scheduled, including wine and beer festivals, fd festivals, a Latin music festival, a 4 th f July picnic, a Virginia Symphny Orchestra perfrmance, a jazz festival, a bat shw, a Christmas market, and thers. 37

38 Waterside District (Nrflk) The Waterside District is a market in dwntwn Nrflk, n the Elizabeth River. The riginal Waterside pened in 1983 but repened in May 2017 after redevelpment by The Crdish Cmpanies. The entertainment and dining district has a number f restaurants, bars, cffeeshps, and thers. It als hsts free and paid events, including cncerts, mvies, fitness classes, and thers. Its 2017 grand pening featured a free Weezer cncert. STAKEHOLDER FEEDBACK The Lcal Market The market is cnsidered t functin as tw distinct markets, separated by the James River, with Newprt News and Hamptn t the nrth and Virginia Beach and Nrflk t the suth. Lcal Facilities and Events Since the Bathuse was destryed by Hurricane Isabel in 2003, the market s club shws have mved t the NrVa. The Unin Bank & Trust Pavilin is a very gd facility but its lcatin is challenged, and its shws d nt perfrm quite as well as they d in cmparable markets. It is thught that the majrity f tickets sld fr its events are t Virginia Beach residents. Due t its nine resident cmpanies, the Sandler Center has very few available dates fr cmmercial/turing events. Because f all f the free utdr events, it is difficult t sell tickets fr indr events in the summer. It is thught that an event cannt play in the market mre than nce within 18 mnths. Smaller, pavilin-nly events held at the Veterans United Hme Lans Amphitheater are there because there is n gd alternative in the market. The free cncert series at the 31 st Street bardwalk stage des nt allw beer sales n the lawn, has n backstage amenities, and is difficult t lad. 38

39 The Event Center The facility is expected t cmpete primarily with The NrVa (indr) and The Unin Bank & Trust Pavilin (utdr) fr ticketed cncerts. Secndary cmpetitin fr indr events wuld be with Chrysler Hall and the Fergusn Center. It is thught that ticket sales fr the Unin Bank & Trust Pavilin are generally clser t 2,000, and these events culd ptentially be held indrs at the Event Center (particularly at the beginning and end f the utdr seasn). An advantage f the indr venue ver Chrysler Hall, the Fergusn Center, and thers will be its flexibility fr varius cnfiguratins with its lack f permanent seating. Free utdr prgramming at the Event Center is nt expected t detract frm similar events currently being held at the beach; additinal events culd be added at the Event Center. Outdr shws culd ptentially be held frm mid-april thrugh early Nvember in Virginia Beach. There is a definite need fr an additinal indr club in the market, with a capacity that is larger than Chrysler Hall but smaller than the Cnstant Center. 39

40 Sectin 4 Cmparable Facilities

41 This sectin describes the characteristics f a set f venues that are similar t the planned Event Center. All three facilities identified have bth indr and utdr cnfiguratins and are multipurpse venues that can hst cncerts, sprts, scial and cmmunity events, and ther ticketed and free events. There are nt many true indr/utdr venues acrss the US that are similar t the planned Event Center, althugh sme large amphitheaters can hst indr events in smaller cnfiguratins. Hwever, the success f the existing indr/utdr venues is leading t the planning f additinal facilities like them, particularly in markets that cannt necessarily supprt year-rund events utdrs. In additin t the three facilities described in mre detail belw, we als nte that the develpment f (primarily indr-based) multipurpse music/entertainment venues within larger mixed-use districts in urban areas is becming mre ppular. While this has been cmmn in gaming facilities, prjects led by develpers such as Crdish have als included perfrmance venues within larger districts, in rder t attract visitrs fr the brader develpment. Newer and planned prjects in ther markets further demnstrate the cncept, including: The Cca-Cla Rxy, Metr Atlanta pened in 2017 as part f The Battery Atlanta, a 1.5 millin-square ft develpment next t the Atlanta Braves new SunTrust Park in Cumberland that includes apprximately 20 restaurants, 600 multifamily residential units, a htel, an ffice twer, and ther cmmercial develpment. The Live Natin venue has 53,000 square feet and a capacity f 3,600. It can accmmdate general admissin, theater-style, and permanent seating fr cncerts, meetings, and private events. In the apprximately 12 mnths since its pening, it has hsted mre than 40 ticketed entertainment events with average ticket sales f 2,100. Missin Ballrm, Denver recently annunced by AEG and develper Westfield, the 60,000-square ft venue is expected t pen in 2019 within the 14-acre Nrth Wynkp mixed-use district in Denver. The facility will have a maximum capacity f apprximately 4,000 but a mveable stage will allw fr varius capacities dwn t 2,200; it will als ffer sund and lighting, multiple bars, and tw VIP/reserved areas. Lincln Yards, Chicag in dwntwn Chicag s adjining Lincln Park and Bucktwn neighbrhds, develper Sterling Bay is redevelping a frmer industrial site with mre than 70 acres f ffice, residential, htel, retail, and entertainment space, and has partnered with Live Natin n three t five venues, including a 20,000-seat stadium, a 6,000- t 8,000- seat venue, and thers. 41

42 EXPRESS LIVE! Clumbus, Ohi EXPRESS LIVE! was the cuntry s first cmbinatin indr-utdr cncert venue, and is lcated in dwntwn Clumbus Arena District. The District als includes the NHL Clumbus Blue Jackets 20,000-seat Natinwide Arena, the Clumbus Clippers (AAA) 10,000-seat Huntingtn Park, and parks, ffice, residential, and cmmercial uses. The City f Clumbus has apprximately 860,000 residents, and its metr area has apprximately tw millin residents. Facility Planning The cncept fr EXPRESS LIVE! develped ut f a desire t expand upn the successful indr venue mdel, but add an utdr cmpnent, similar t what had previusly been develped with larger indr/utdr amphitheaters in the Philadelphia and Hartfrd markets. EXPRESS LIVE! was privately develped by PrmWest. Facility Characteristics EXPRESS LIVE! has a reversible stage that serves an utdr amphitheater (capacity 5,200) and an indr club (capacity 2,200). In additin t the tw main event venues, The Basement is a 300- capacity club attached t the facility, and the 400-capacity A&R Music Bar is next dr (bth are als wned and perated by PrmWest). The facility ffers built-in sund and light equipment, which is fairly unique in that mst venues have t rent this equipment r use what an artist turs with (either f these ptins requires expensive labr csts fr setup and teardwn). The built-in equipment is particularly efficient fr private events. This plug and play aspect reduces perating and prductin csts (in many cases t less than 42

43 $10,000 per event), which increases bking pprtunities. The facility is lcated within Clumbus 75-acre Arena District, which includes: Natinwide Arena, Huntingtn Park, The 2.2-acre McFersn Cmmns Park, Battelle Plaza, Mre than 1,000 residential units, 1.5 millin square feet f Class-A ffice space, and 300,000 square feet f retail, restaurant, and entertainment venues. The Arena District has multiple parking lts and garages, as shwn belw in blue. 43

44 44

45 Seating charts fr varius cnfiguratins and setups are shwn belw. Indr Reserved Seating Indr GA Indr WWE Indr MMA Outdr Reserved Seating Outdr GA 45

46 Facility Usage The facility hsts a wide range f events, including cncerts, festivals, sprts, and private events such as weddings, prms, trade shws, scial events, meetings, and thers. Indr events are held yearrund, and utdr amphitheater events are bked frm May thrugh September. Accrding t Pllstar, the facility hsted an average f 87 ticketed entertainment events per year in the last three years, with an average attendance f 2,091 and an average ticket price f $ Ttal annual attendance fr these shws was mre than 180,000. Virtually all f these events were cncerts, althugh ne WWE event was held. In additin t events n the main stage (indr and utdr), The Basement has hsted 85 shws per year (with an average attendance f 199 and an average ticket price f $13.60), and the A&R Music Bar has hsted an additinal 67 shws (with an average attendance f 287 and an average ticket price f $16). Cmbined, the three venues hsted apprximately 240 ticketed events per year, nt including private/nn-ticketed events. EXPRESS LIVE! COMPLEX TICKETED EVENTS, 2016 AND EXPRESS LIVE! (Indr/Outdr) The Basement A&R Music Bar Surce: Pllstar Financial/Operating Infrmatin The fllwing infrmatin summarizes varius financial and peratinal characteristics f EXPRESS LIVE!. Management The facility is wned and perated by PrmWest; the cmpany als wns and perates the adjacent Basement and A&R Music Bar and Clumbus Newprt Music Hall, as well as Pittsburgh s Stage AE 46

47 (which is mdeled after EXPRESS LIVE!) and the Bunbury Music Festival in Cincinnati. Premium Seating EXPRESS LIVE! ffers the fllwing premium seating ptins: VIP Bx Suites these are sld n a seasn and event basis. Seasn suites include fur tickets, a parking pass, persnal ccktail service fr utdr cncerts, Express VIP Lunge access fr utdr cncerts (pen pati seating, cmplimentary snacks, private bar and restrms), pririty ticket rdering fr ther PrmWest cncerts, and ther ffers. On an individual event basis, the suites include fur tickets, ccktail service fr utdr cncerts, and Express VIP Lunge access. VIP Party Bx eight t 12 reserved seats, with persnal ccktail service and Express VIP Lunge access fr utdr cncerts, VIP Party Deck 15 t 30 reserved seats, with persnal ccktail service and Express VIP Lunge access. 47

48 STAGE AE Pittsburgh, Pennsylvania Stage AE is knwn as the secnd indr/utdr cncert venue in the cuntry, and is mdeled after Clumbus EXPRESS LIVE!. Stage AE, like its Clumbus cusin, is lcated in a destinatin district that is a majr driver f the city s Nrth Side as the Nrth Shre. The surrunding area includes PNC Park (hme f the MLB Pittsburgh Pirates), Heinz Field (hme f the NFL Pittsburgh Steelers and University f Pittsburgh ftball), the Carnegie Science Center, Rivers Casin Pittsburgh, and the Andy Warhl Museum. The City f Pittsburgh has apprximately 305,000 residents, and its metr area has nearly 2.4 millin residents. Facility Planning The land under Stage AE is wned by a subsidiary f the Pittsburgh Steelers and Cntinental Develpment. The venue is wned and perated as jint venture between PrmWest and a subsidiary f the Steelers. The riginal plan was t build an utdr-nly venue because an earlier butique amphitheater n Pittsburgh s Suth Side was clsing due t redevelpment and cmmunity backlash ver sund issues. But the cmbinatin f the market needing a mdern, year-rund club and the desire f the develpers t have smething perating frm January thrugh March, when neither the Steelers r Pirates play, led t the indr-utdr design. The cnfiguratin f the venue, with utdr sund facing the Ohi River, precluded sund issues frm reccurring in the cmmunity. Facility Characteristics Stage AE has three separate event spaces: the utdr amphitheater (capacity 5,000), the indr 48

49 Music Hall (capacity 2,300 fr cncerts, 450 fr a seated events, and 1,500 fr a standing event), and indr Club at Stage AE (capacity 400). The indr facility is 35,000 square feet. A single reversible stage is used fr the amphitheater and Music Hall. The utdr amphitheater s pit accmmdates 1,000 in a seated cnfiguratin and 2,500 fr GA, and the lawn seats 3,000 in GA. Only ne seated shw has been held utdrs. The lawn is set at a five-percent grade. The ttal area f the utdr amphitheater is 90,000 square feet (70,000 square feet fr audience space and 20,000 square feet fr the plaza, restrms, and cncessins). Similar t EXPRESS LIVE!, Stage AE als has built-in sund and light equipment, which reduces the true hard csts f prducing an event t apprximately $7,500. The facility is lcated n Pittsburgh s Nrth Shre, which includes a range f ther develpments and attractins, including: The Pittsburgh Steelers Heinz Field, The Pittsburgh Pirates PNC Park, The Carnegie Science Center, Rivers Casin Pittsburgh, The Andy Warhl Museum, The Children s Museum f Pittsburgh, Five htels, Multiple restaurants, and Multiple parking lts and garages (the facility des nt have its wn dedicated parking). 49

50 Seating charts fr varius cnfiguratins and setups are shwn belw. Indr Reserved Seating Indr GA Indr Bxing Indr MMA Outdr Reserved Seating Outdr GA 50

51 Facility Usage Stage AE s cnfiguratins hst a wide range f event types. Ticketed events are primarily cncerts, but have als included festivals and an MMA match in recent years. Indr cncerts are bked yearrund, and utdr amphitheater cncerts are held frm May thrugh September. Nn-ticketed events have included scial events, business events, fashin shws, bar mitzvahs, fundraisers, and thers. The fllwing chart shws the reprted number f ticketed events held at Stage AE s main stage (indr and utdr) and its Club cnfiguratin in 2016 and STAGE AE TICKETED EVENTS, 2016 AND Stage AE (Indr/Outdr) Club at Stage AE Surce: Pllstar An average f apprximately 100 Stage AE events have been held per year, with an average attendance f 1,785 and an average ticket price f $ The 400-seat Club has hsted nine and 21 cncerts in the last tw years, with an average attendance f 269 and an average ticket price f $ Accrding t the facility, additinal infrmatin related t usage is as fllws: Apprximately 190 events per year, with ttal attendance f 300,000 (225,000 ticketed), Of the apprximately 100 main stage shws, 70 are indrs and 30 are utdrs (the number f utdr shws has ranged frm 15 t 33), 25 utdr shws are scheduled fr 2018, 55 private events, with average attendance ranging frm 150 t 10,000, and 15 additinal events related t Steelers and University f Pittsburgh ftball games at Heinz Field. 51

52 Financial/Operating Infrmatin The fllwing infrmatin summarizes varius financial and peratinal characteristics f Stage AE. Management Similar t EXPRESS LIVE!, Stage AE is perated by PrmWest. Premium Seating Stage AE ffers the fllwing premium seating ptins: Premium Bxes the facility has 29 indr and 29 utdr bxes, with fur seats each. (American Eagle als has a dedicated utdr bx fr 30 peple.) Indr bx seats range frm $75 t $150 each, and utdr bx seats are $125 each. Crs Light Party Deck fr utdr cncerts, 32 reserved seats n an elevated platfrm behind the mix bth, with a small bar and chairs. The deck is sld fr $4,500 per shw, and is als used fr private events. Spnsrships AE, a brand f Pittsburgh-based American Eagle, purchased the facility s naming rights. Other categry spnsrships (including telecmmunicatins, banking, and autmbile) als generate significant revenues t the facility. Operatins The facility s csts t pen the venue are apprximately $7,500 fr the main indr stage, and $17,500 fr the amphitheater. Rates charged t facility renters are generally duble the cst. 52

53 THE PAVILION AT TOYOTA MUSIC FACTORY Irving, Texas The Pavilin at Tyta Music Factry is an indr-utdr entertainment venue that is part f a 17-acre, mre-than-$200- millin mixed-use develpment (Tyta Music Factry) in Irving. In additin t the Pavilin, the develpment includes a mvie theater, mre than 20 restaurants and bars, and an utdr plaza, and is next t the Irving Cnventin Center and multiple htels. The City f Irving has apprximately 238,000 residents, and is part f the Dallas-Frt Wrth Metrplex, which has apprximately 7.4 millin residents. Facility Planning In 2007, Irving vters agreed t cntribute funding ($40 millin) twards an entertainment cmplex as well as the adjacent cnventin center (which pened in 2011). There was an identified need fr lcal entertainment and attractins, as the area was primarily knwn fr its ffice space. Develped by The ARK Grup, the Tyta Music Factry pened in September The reprted cst f the Pavilin was apprximately $40 millin. Facility Characteristics The facility has indr and utdr capabilities, but unlike EXPRESS LIVE! and Stage AE, all perfrmances face in the same directin. The smallest indr capacity is 2,500 fr perfrmances, and that can be expanded t include anther ring f seats that increases indr capacity t 4,000. Beynd the indr facilities, 65,000 square feet f utdr lawn seating brings capacity t 8,000. Seating 53

54 expansins are made pssible thrugh retractable walls. In additin, the Texas Lttery Plaza has a capacity f 1,500 fr events. The facility is lcated in Irving s Las Clinas neighbrhd and includes the fllwing: Alam Drafthuse Cinema a seven-screen mvie theater. Texas Lttery Plaza an utdr plaza and perfrmance space. Restaurants and entertainment (mre than 200,000 square feet) Bar Luie, Bar Manzanilla, Glria s Latin Cuisine, C-Bar, Hwy 61 Suth, Martini Ranch, Texas Jamhuse & Marketplace, Bi Na Braza Brazilian Steak Huse, Burgerim, Freshii, Grimaldi s Cal Brick Over Pizzeria, Kabuki Japanese Restaurant, Kitchen 101, Nsh & Bttle Market, Pp Factry, TCBY, Thirsty Lin Gastrpub & Grill, Tp Rund Rast Beef, Vilet Rm, and Yard Huse. A planned 100,000 square feet f ffice space (which will be ccupied by the Eths Grup). Event parking is available in tw garages: the Tyta Music Factry Garage (adjacent t the facility) and the Urban Twers Garage (behind the facility). Self-parking is $10 and valet parking is $20. Seating charts fr varius cnfiguratins and setups are shwn belw. 54

55 Indr 2,500 Capacity Indr 4,000 Capacity Outdr 8,000 Capacity Facility Usage In the facility s first eight mnths f peratin, it hsted 59 ticketed events with an average attendance f 3,355 and an average ticket price f nearly $55. Events were primarily cncerts but als included five cmedy shws, speakers such as Bill and Hillary Clintn, and musicals and festivals. The facility als hsts private events such as meetings, charity events, and ther entertainment. Financial/Operating Infrmatin The fllwing infrmatin summarizes varius financial and peratinal characteristics f the facility. 55

56 Management Live Natin is the facility s peratr and exclusive prmter. Premium Seating The facility includes the Tyta Lunge. Spnsrships The facility has ten funding partners (Tyta, the Texas Lttery, Verizn, Crs Light, Jim Beam, Cca-Cla, Direct Energy, Whataburger, ServiceKing, and Albertsns). Tyta purchased naming rights fr ten years (ther terms are nt available). The deal als includes the facility s VIP area, called the Tyta Lunge. e pen-air pavilin. The Pavilin at Tyta Music Factry will hst a 56

57 Sectin 5 Cnclusins and Recmmendatins

58 This sectin prvides ur market-based cnclusins and their implicatins fr the Event Center s ptential usage, rientatin, facilities, and ther characteristics. THE LOCAL MARKET Virginia Beach is Virginia s largest city, with mre than 450,000 residents, and is part f the larger Hamptn Rads metr area with apprximately 1.7 millin residents. The Designated Market Area, as defined fr this study, has 1.5 millin residents and is strngly cncentrated in Virginia Beach. The DMA is relatively yung, affluent, educated, and emplyed. The DMA ppulatin is mre likely than the average US market t attend cncerts and many ther types f entertainment events. In additin t the full-time resident ppulatin, Virginia Beach is a majr turist market, with mre than 15 millin visitrs in While lcal residents are expected t be the primary audience fr mst Event Center events, turists d cmprise a meaningful share f attendees at lcal venues such as the Sandler Center and Veterans United Hme Lans Amphitheater. Events near the beach, which is ne f the largest turist attractins in Virginia Beach, shuld have a greater ability t capture turists. THE COMPETITIVE ENVIRONMENT Entertainment venues have benefitted frm technlgical changes in the music industry that have led t a significant increase in the value f live cncerts t a perfrmer s incme. As a result, the number f shws has als increased significantly. Demand fr cncerts has als increased (based n the number f tickets sld per year), despite rising ticket prices. Mre than ne-third f the tp 200 grssing entertainment turs typically sell 5,000 r fewer tickets per shw. Lcally, the need fr a 2,500-t-3,500-seat cmmercial venue at the beachfrnt was identified in studies that led t the Sandler Center s develpment, althugh n such facility has been built. There appears t be a strng need fr this type f facility in the market. The Virginia Beach market has a number f indr and utdr venues that hst free and ticketed entertainment events thrughut the year. Hwever, direct cmpetitin with the planned Event Center is expected t be relatively minimal: Fur indr theaters (which have capacities ranging frm apprximately 1,300 t 2,500) are generally used by their tenant grups and have limited available dates fr 58

59 cmmercial events. The primary indr cmpetitin fr the Event Center will be frm Nrflk s Chrysler Hall and the NrVa and t a lesser extent, the Sandler Center. Three indr arenas have capacities f 9,000 r mre and are generally riented twards sprting events and arena-based cncerts that are t large fr the Event Center. Of the market s tw primary utdr amphitheaters, ne (Veterans United Hme Lads Amphitheater) has a capacity f 20,000 and attracts the largest turing cncerts, but can als hst smaller shws in a pavilin-nly cnfiguratin. Smaller shws are generarlly held there because f the lack f an alternative ptin with a mre apprpriate capacity. The Event Center s utdr amphitheater wuld cmpete mre directly with Prtsmuth s Unin Bank & Trust Pavilin, but the lcatin f the Event Center is thught t be significantly better. Bth Virginia Beach and Nrflk als free events; Virginia Beach s is within walking distance f the Wave site at the Bardwalk. Hwever, any free events at the Event Center is generally expected t cmplement, and nt cmpete with, the city s Bardwalk prgramming. The cncept f building multipurpse entertainment venues in urban, mixed-use develpments is ppular, and indr/utdr venues that are similar t the Event Center have shwn the ability t generate year-rund usage and prfitability. EVENT CENTER IMPLICATIONS AND RECOMMENDATIONS We believe that there is a market fr bth indr and utdr events at the capacities being cnsidered (up t apprximately 3,200 indrs and 5,000 utdrs). The flexibility fr varius cnfiguratins fr indr events ffer artists and prmters a wide variety f ptins, such as general admissin, seated, cabaret, and/r a cmbinatin f multiple cnfiguratins. The invlvement f OVG is cnsidered t be a significant psitive factr fr the facility, based n the firm s resurces and relatinships; experience with facility planning, management, and prgramming; marketing and spnsrships; and ther aspects f facility and event peratins. In additin, OVG s primary representative fr the prject has significant experience in the lcal market. The planned smaller facilities within the Event Center, such as VIP seating and rftp terraces, will fill a niche and prvide additinal pprtunities t generate revenue n event and nn-event days n the main stage. It is likely that mst f the cmmercial events that wuld be held at the Event Center will be new t the market. Hwever, the Event Center culd attract sme events that wuld therwise be held at existing lcal facilities such as Chrysler Hall and the NrVa in Nrflk and the Unin Bank & Trust Pavilin in Prtsmuth. 59

60 Virginia Beach is well-lcated fr turing events, in relatin t markets such as Richmnd, Charltte, Washingtn DC/Baltimre, and thers. The facility s planned pen bking plicy will help t increase usage and encurage all prmters t bk shws. Multiple prmters that are active lcally (including thse that bk and perate existing facilities) have expressed interest in using the new facility. The planned built-in sund and light capabilities f the Event Center will make the facility mre efficient and cst-effective t attract and prduce events with minimal extra cst. Many smaller turing shws, fr example, d nt travel with their wn prductin equipment and wuld therwise require mre expensive equipment rentals. It will als make the venue mre attractive fr private events. The utdr cmpnent f the Event Center is expected t hst bth ticketed and free events. While this is pssible, it will require advance planning and have peratinal implicatins t the facility and the surrunding develpment: Seating lawn fr free events and festivals, the seating area wuld likely be relatively flat. Hwever, as an amphitheater with ticketed shws, a lawn wuld ideally have a grade f five t seven percent. Fr a capacity f apprximately 5,000, a ttal f apprximately 90,000 square feet is recmmended (fr bth seating areas and supprt space/circulatin). Reducing the utdr ftprint t 70,000 square feet wuld reduce capacity t apprximately 3,500. Cntrlled area fr ticketed events, the facility will need t be separated frm the rest f the develpment in rder t limit access t tickethlders nly. This wuld require permanent r temprary fencing, access t restrms and cncessins, and ther infrastructure. This may als require relcating a public walkway and clsing streets. Surrunding develpment shuld a cntrlled area be in place (temprarily r permanently), the develper/peratr wuld need a plicy related t access t ther attractins at the Wave (such as restaurants) n event days. Sund due t the expected sund levels (particularly frm paid shws), the develper/peratr shuld practively plan fr decibel limits and curfews related t the surrunding develpment and neighbrhd. Other the utdr stage shuld extend 14 feet frm the building, with a grundaccessible ramp, rf, and dwnstage rigging. We assume that these matters will be satisfactrily addressed and will allw the Event Center t hst a significant level f bth ticketed and free events utdrs. 60

61 Sectin 6 Operatinal Prjectins

62 In this sectin, we summarize frecasts f future peratins f the Event Center, based n the assumptins described in the previus sectin. Operating prjectins are based primarily n the fllwing: Recmmendatins/assumptins fr a new facility, Interviews with industry prfessinals and ther stakehlders, Our team s experience in the peratins f facilities and events, and Analysis f the peratins f cmparable facilities. FUTURE EVENT CENTER OPERATIONS Based n ur previus tasks (including stakehlder interviews, analysis f cmparable facilities, and recmmendatins fr a new facility), we have frecasted the future peratins f the assumed facility. The prjectin perid cvers the first ten years f the facility s peratins, and fr the purpses f inflatin, we assume that the new facility will pen in Our prjectin is based n all ptential uses f the cmpnents f the Event Center, including its main stage (indr and utdr) as well as smaller facilities within the Event Center and uses assciated with the adjacent surf park. Event and Attendance Demand The fllwing tables summarize ur estimates f annual events and attendance (per-event averages and ttals) fr the facility s first ten years. These estimates are based n ur market research, including interviews with ptential facility users and analysis f cmparable facilities. 62

63 PROJECTED ANNUAL EVENTS Cncerts - Indr Reserved 30 Cncerts - Indr GA 40 Cncerts - Outdr 20 Cncerts - Minr 40 Other Ticketed Sprts/Entertainment 5 Cmmunity Events 32 Private/Scial Events 50 Festivals 3 Surf Park Events 3 TOTAL 223 Surce: Stne Planning PROJECTED AVERAGE ATTENDANCE Cncerts - Indr Reserved 2,167 Cncerts - Indr GA 2,719 Cncerts - Outdr 3,600 Cncerts - Minr 300 Other Ticketed Sprts/Entertainment 2,250 Cmmunity Events 1,500 Private/Scial Events 250 Festivals 3,000 Surf Park Events 500 Surce: Stne Planning PROJECTED TOTAL ATTENDANCE Cncerts - Indr Reserved 65,000 Cncerts - Indr GA 108,750 Cncerts - Outdr 72,000 Cncerts - Minr 12,000 Other Ticketed Sprts/Entertainment 11,250 Cmmunity Events 48,000 Private/Scial Events 12,500 Festivals 9,000 Surf Park Events 1,500 TOTAL 340,000 Surce: Stne Planning As the tables shw, ttal annual attendance is estimated t be 340,000 per year, based n apprximately 225 events per year. In general, we have assumed that apprximately half f the 63

64 facility s ticketed events will be prmted in-huse and half will be rented t ther prmters; this, and ther assumptins, are described in mre detail belw. Ticketed Indr Cncerts (Reserved and General Admissin) Event and attendance data fr lcal indr venues, and thers with indr capabilities, are shwn in Sectins 3 and 4. The fllwing table shws event and attendance data fr a range f indr clubs acrss the cuntry with capacities ranging frm 2,000 t 3,000. EVENTS AND ATTENDANCE OF SELECTED CLUBS Facility Name Lcatin # f Cncerts Average Attendance Capacity % f Capacity Diamnd Ballrm Oklahma City , % Echstage Washingtn DC 46 2,803 3, % Electric Factry Philadelphia 82 1,904 2, % Fillmre Charltte Charltte 93 1,480 2, % Fillmre Detrit Detrit 83 2,077 2, % Fillmre Philadelphia Philadelphia 102 2,229 2, % Huse f Blues N. Myrtle Beach 46 1,330 2, % Huse f Blues Bstn 167 1,900 2, % The Palladium Wrcester, MA 61 1,416 2, % Stere Live Hustn 23 1,482 2, % Minimum , % Average 75 1,748 2, % Maximum 167 2,803 3, % Surce: Pllstar, Stne Planning These clubs hsted 23 t 167 shws in 2017, with an average f 75. The attendance average was apprximately 1,750 (r 71 percent f capacity), with a wide range f results. In Virginia Beach, we assume a ttal f 70 indr shws per year, with an verall average attendance f apprximately 2,500 (the maximum capacity fr seated shws is expected t be 2,400, and 3,200 fr GA shws). We assume that mre than half f the indr cncerts will be in a GA cnfiguratin. Further, we assume that half f the GA shws and half f the reserved shws will be prmted inhuse (the financial implicatins f self-prmtin vs. rental are described later in this sectin). Ticketed Outdr Cncerts These events are typically turing cncerts that will be held at the utdr amphitheater cmpnent f the venue, similar t events at the VUHLA and Unin Bank & Trust Pavilin. Event and attendance data fr similar utdr venues lcally and in ther markets are shwn in Sectins 3 and 4, and the fllwing table shws additinal event and attendance data fr utdr amphitheaters with capacities f apprximately 4,000 t 7,000 acrss the cuntry. In general, these facilities have utdr cmpnents nly, and are in a variety f market sizes with differing cmpetitive envirnments. 64

65 EVENTS AND ATTENDANCE OF SELECTED AMPHITHEATERS Facility Name Lcatin # f Cncerts Average Attendance Capacity % f Capacity Ascend Amphitheater Nashville 39 5,008 6, % Blue Hills Bank Pavilin Bstn 52 3,812 5, % Cal Cast Credit Unin Open Air Theatre San Dieg 25 3,267 4, % Charltte Metr Credit Unin Amphitheatre Charltte 30 2,996 4, % Chene Park Amphitheatre Detrit 28 3,038 6, % Cuthbert Amphitheater Eugene, OR 26 3,160 5, % Daily's Place Amphitheater Jacksnville 33 3,392 5, % Fraze Pavilin Kettering, OH 39 2,386 4, % Jacbs Pavilin At Nautica Cleveland 21 2,758 4, % Kka Bth Amphitheatre Cary, NC 11 4,351 7, % Marymr Park Marymr, WA 21 4,034 5, % Pinewd Bwl Theater Lncln, NE 8 3,498 5, % PNC Pavilin At Riverbend Cincinnati 19 2,599 4, % Red Hat Amphitheater Raleigh 35 3,521 5, % Rse Music Center At The Heights Huber Heights, OH 28 2,692 4, % State Bank Amphitheatre At Chastain Park Atlanta 34 3,906 6, % Minimum 8 2,386 4, % Average 28 3,401 5, % Maximum 52 5,008 7, % Surce: Pllstar, Stne Planning As the table shws, the average facility hsted 28 cncerts, which is generally cnsidered t be a fairly full seasn f utdr shws (nly three facilities had mre than 35 events, and mst were between apprximately 20 and 35). Average attendance at these facilities was apprximately 3,400, r 64 percent f capacity. We assume a ttal f 20 utdr amphitheater cncerts per year at the Event Center, with an average attendance f 3,600 (r apprximately 70 percent f capacity). Similar t indr cncerts, we assume that half f these shws will be self-prmted and half will be rentals. Ticketed Cncerts Minr We als assume that the facility will hst smaller cncerts in its ther facilities, such as the third- and furth-flr decks and hspitality rm (indrs and utdrs). Based n their planned sizes and capacities, we assume that these areas will hst 40 minr cncerts per year, with an average attendance f 300. Other Ticketed Events Sprts/Entertainment As previusly described, the indr cmpnent f the Event Center can als be cnfigured fr events such as bxing/mma, cmedy, speakers, and ther entertainment events. We assume a ttal f five such events per year (all f which will be rentals), with an average attendance f 2,

66 Cmmunity Events This categry includes free prgramming events that wuld generally take place at the utdr venue. We assume an average f ne nn-ticketed event per week frm April thrugh Nvember, with an average attendance f 1,500 per week. Private/Scial Events These events can include banquets, crprate events, weddings, bar mitzvahs, hliday parties, and thers, and are generally assumed t be held in the main indr facility but culd als be held n the utdr decks r hspitality rm. We assume a ttal f 50 such events per year (all f which will be rentals), with an average attendance f 250. Festivals We assume the facility will hst three ne-day festivals per year, with an average attendance f 3,000. As described earlier in this reprt, it is expected that Pharrell Williams will help t develp at least ne festival fr the facility. Surf Park Events We assume that the Event Center s decks and hspitality rm will be used fr three surf park events per year, with an average attendance f 500. Operating Revenues and Expenses Based n frecasted event and attendee demand, peratins f similar facilities, ther aspects f the market analysis, and ur team s experience with facility and event peratins, we have prepared a ten-year prjectin f perating revenues and expenses fr the assumed facility. The fllwing describes the assumptins and methdlgy used t estimate the financial perfrmance f the prject, beginning with a pr frma financial statement that summarizes prjecting perating revenues and expenses, and the assumed annual net revenue. (Fr all items, we assume a twpercent inflatin rate per year, unless therwise indicated.) The new facility s prjected financial statement fr its first ten years is shwn belw. 66

67 VIRGINIA BEACH EVENT CENTER OPERATING PRO FORMA FINANCIAL STATEMENT ($000s) Operating Revenues Event Revenues Tickets (frm Prmted Shws) $4,512 $4,603 $4,695 $4,789 $4,884 $4,982 $5,082 $5,183 $5,287 $5,393 Prmter Prfit Facility Fee Bx Office Fee Cnvenience Fee Event Expense Reimbursement Net F&B 1,988 2,028 2,069 2,110 2,152 2,195 2,239 2,284 2,330 2,376 Net Merchandise Nn-Event Revenues Premium Seating (Premium Prtin) $167 $171 $174 $178 $181 $185 $188 $192 $196 $200 Seasn Tickets (Premium Prtin) VIP Club Naming Rights Other Advertising/Spnsrships Other Revenues Ttal Operating Revenues $9,294 $9,449 $9,607 $9,769 $9,934 $10,102 $10,274 $10,449 $10,627 $10,809 Operating Expenses Event Expenses Huse Expenses $2,674 $2,728 $2,782 $2,838 $2,895 $2,953 $3,012 $3,072 $3,133 $3,196 Talent Fees 2,601 2,653 2,706 2,760 2,815 2,872 2,929 2,988 3,047 3,108 Advertising Catering Other Nn-Event Expenses Salaries and Benefits $709 $723 $737 $752 $767 $783 $798 $814 $830 $847 Utilities Repairs and Maintenance G&A Insurance Ttal Operating Expenses $8,138 $8,301 $8,467 $8,636 $8,809 $8,985 $9,165 $9,348 $9,535 $9,726 Net Operating Incme (Lss) $1,156 $1,148 $1,141 $1,133 $1,125 $1,117 $1,109 $1,100 $1,092 $1,083 Surce: Stne Planning As the table shws, in the first year, the Event Center s prjected net perating incme is apprximately $1.2 millin, based n $9.3 millin in revenues and $8.1 millin in expenses. This NOI is prjected t remain relatively cnsistent at $1.1 millin per year. Descriptins f individual line items, and majr underlying assumptins, appear belw. Operating Revenues Event Revenues Tickets (frm Prmted Shws) This line item includes revenues frm the sale f tickets frm shws prmted by the facility. Mst f 67

68 this revenue is a passthrugh, and there is a crrespnding expense fr the share f ticket revenue that is paid t perfrmers at these events. Revenue is calculated as paid attendance multiplied by the average ticket price. It is initially cllected by the facility/prmter but the majrity is then paid t the perfrmer. A sample f average ticket prices at similar utdr amphitheaters and indr clubs is shwn belw. AVERAGE TICKET PRICES OF SELECTED AMPHITHEATERS AND CLUBS Amphitheater Name Lcatin Capacity Average Ticket Ascend Amphitheater Nashville 6,800 $40.70 Blue Hills Bank Pavilin Bstn 5,000 $49.26 Cal Cast Credit Unin Open Air Theatre San Dieg 4,635 $41.33 Charltte Metr Credit Unin Amphitheatre Charltte 4,983 $34.48 Chene Park Amphitheatre Detrit 6,000 $44.74 Cuthbert Amphitheater Eugene, OR 5,000 $35.86 Daily's Place Amphitheater Jacksnville 5,500 $60.65 Fraze Pavilin Kettering, OH 4,300 $35.58 Jacbs Pavilin At Nautica Cleveland 4,600 $39.07 Kka Bth Amphitheatre Cary, NC 7,000 $41.27 Marymr Park Marymr, WA 5,000 $46.04 Pinewd Bwl Theater Lncln, NE 5,500 $49.11 PNC Pavilin At Riverbend Cincinnati 4,100 $48.28 Red Hat Amphitheater Raleigh 5,500 $37.00 Rse Music Center At The Heights Huber Heights, OH 4,200 $49.17 State Bank Amphitheatre At Chastain Park Atlanta 6,900 $55.27 Price Minimum 4,100 $34.48 Average 5,314 $44.24 Maximum 7,000 $60.65 Club Name Lcatin Capacity Average Ticket Diamnd Ballrm Oklahma City 2,200 $25.57 Echstage Washingtn DC 3,000 $37.57 Electric Factry Philadelphia 2,600 $33.92 Fillmre Charltte Charltte 2,000 $29.19 Fillmre Detrit Detrit 2,888 $35.29 Fillmre Philadelphia Philadelphia 2,500 $33.51 Huse f Blues N. Myrtle Beach 2,067 $25.28 Huse f Blues Bstn 2,425 $33.53 The Palladium Wrcester, MA 2,660 $28.68 Stere Live Hustn 2,078 $34.63 Price Minimum 2,000 $25.28 Average 2,442 $31.72 Maximum 3,000 $37.57 Surce: Pllstar, Stne Planning Assumed average ticket prices (fr ticketed events nly) fr the Event Center are shwn belw. 68

69 ASSUMED AVERAGE TICKET PRICES (PROMOTED EVENTS) Cncerts - Indr Reserved $42.00 Cncerts - Indr GA $32.00 Cncerts - Outdr $46.00 Cncerts - Minr $16.00 Other Ticketed Sprts/Entertainment $38.00 Surce: Stne Planning Ttal ticket revenues frm prmted shws are estimated t be apprximately $4.5 millin in As previusly described, much f this revenue will be passed alng t perfrmers (as shwn later in this sectin). Prmter Prfit Fr ticketed events prmted by the facility, we assume that it will retain a prfit f 15 percent f any ticket revenues greater than shw expenses. Fr sme events, expenses will exceed revenues and the facility will lse mney n prmtin (but prfit frm ancillary revenues such as F&B and fees). Overall, we assume that the facility, as a prmter, will generate a small prfit n an annual basis. Facility/Ticket Fees Fr ticketed events at the facility, we assume three types f fees that culd ptentially be added t a ticket price: Facility Fee this wuld enacted by the facility as an additinal revenue surce that culd be used r justified t help fund nging peratins, and althugh nt all facilities charge a facility fee, it is cmmn. In the Virginia Beach market, examples f facility fees are $1 t $2 at the Sandler Center, $2 at the NrVa, and $9 at the VUHLA (which includes parking) and $1 fr parking at the Unin Bank & Trust Pavilin. Nt including parking charges, fees at ther clubs and amphitheaters are typically $5 r less. Bx Office Fees are charged fr ticket sales at the physical bx ffice, which generally represent the minrity f sales. Hwever, a fee fr bx ffice peratins and staffing is cmmn; the Fergusn Center charges $6 fr bx ffice ticket sales. Cnvenience/Service Fees are similar t bx ffice fees but are charged fr nline and phne ticket sales. These charges generally increase as a ticket price increases, and unlike facility and bx ffice fees, cnvenience fees are generally shared with a ticketing partner that prvides the service. Lcally, the Fergusn Center s cnvenience fee ranges frm $3 t $25, and review f tickets fr sale at the VUHLA, NrVa, and Unin Bank & Trust Pavilin indicate cnvenience fees in the range f apprximately 20 t 50 percent f a ticket s price. In additin, the VUHLA and Unin Bank & Trust Pavilin als charge a flat rder prcessing fee f $4 and $3.55, respectively. 69

70 Our assumptins regarding per-ticket fees, including the fees charged, the percent f tickets that a fee applies t, and revenue sharing, are summarized belw. Fr the facility fee, we assume that $1 f the ttal fee is allcated fr parking. These fees are nt inflated in later years f the prjectin. ASSUMED TICKET FEES Facility Fee Bx Office Fee Per-Ticket Fee % t Facilty Per-Ticket Fee % Sld at BO % t Facilty Per-Ticket Fee Cnvenience Fee % Sld Online/ Phne Cncerts - Indr Reserved $ % $ % 100% $ % 50% Cncerts - Indr GA $ % $ % 100% $ % 50% Cncerts - Outdr $ % $ % 100% $ % 50% Cncerts - Minr $ % $ % 100% $ % 50% Other Ticketed Sprts/Entertainment $ % $ % 100% $ % 50% Cmmunity Events n/a n/a n/a n/a n/a n/a n/a n/a Private/Scial Events n/a n/a n/a n/a n/a n/a n/a n/a Festivals $ % $ % 100% $ % 50% Surf Park Events n/a 100% n/a n/a n/a n/a n/a n/a % t Facilty Surce: Stne Planning Cmbined, the facility s share f facility, bx ffice, and cnvenience fees are estimated t be apprximately $1.5 millin in the facility s first year. Event Expense Reimbursement Event expenses are described in mre detail belw, but generally represent the cst f hsting an event and include ushers, bx ffice, stage hands, and ther items. We assume that these expenses will generally be marked up by 20 percent t 33 percent fr cmmercial events that are rented t ther prmters, but are charged at cst fr cmmunity events. This revenue is estimated t range frm apprximately $380,000 t $450,00 per year. Net Cncessins/Merchandise The facility will als generate revenue frm fd and beverage and merchandise sales. Fr F&B, the per-attendee spending will vary frm event t event, as well as frm shw t shw within a certain event categry (fr example, F&B sales fr a hard rck cncert wuld generally exceed thse fr a Christian cncert). We have reviewed the F&B sales f similar venues in rder t guide ur assumptins fr per-capita spending. Als, we assume that this service will be prvided in-huse and that the assciated cst f gds sld will be 55 percent. Similarly, attendees can als buy varius kinds f event-related merchandise at events, althugh the vast majrity f this revenue will be retained by the perfrmer r event (the facility will typically receive a cmmissin f 10 t 20 percent, depending n whether the facility r prmter prvides the assciated labr). Our assumptins regarding per-capita sales and the facility s net share f sales are summarized belw. 70

71 PER-CAPITA F&B AND MERCHANDISE ASSUMPTIONS Per-Capita Sales % t Facility Per-Capita Sales % t Facility Cncerts - Indr Reserved $ % $ % Cncerts - Indr GA $ % $ % Cncerts - Outdr $ % $ % Cncerts - Minr $ % $ % Other Ticketed Sprts/Entertainment $ % $ % Cmmunity Events $ % n/a n/a Private/Scial Events $ % n/a n/a Festivals $ % $5.00 n/a Surf Park Events $ % $5.00 n/a F&B Merchandise Surce: Stne Planning In the facility s first year, net F&B and merchandise revenues are estimated t be apprximately $2.0 millin and $88,000, respectively. Nn-Event Revenues Premium Seating We assume that the facility will have ten utdr and ten indr bxes that can be leased n an annual basis. Bxes that are nt leased can be rented n an event basis. Assumptins regarding the indr bxes are as fllws: the bxes will accmmdate an average f five peple each (such as half fr fur peple and half fr six peple), 80 percent will be leased annually, the annual rate begins at $15,000 (t be inflated in later years), nt including tickets, fr any available bxes, 50 percent will be rented n an event basis fr $250 (nt including tickets), and an assumed 10 percent f revenues fr sales expenses/cmmissins. Assumptins regarding the utdr bxes are as fllws: the bxes will accmmdate an average f five peple each (such as half fr fur peple and half fr six peple), 100 percent will be leased annually, the annual rate begins at $5,000 (t be inflated in later years), nt including tickets, 71

72 fr any available bxes, 50 percent will be rented n an event basis fr $500 (nt including tickets), and an assumed 10 percent f revenues fr sales expenses/cmmissins. Based n these assumptins, net premium seating revenues are prjected t be apprximately $170,000 t $200,000 per year. Seasn Tickets We assume that the facility will sell 100 seasn tickets per year fr utdr cncerts, with an average per-ticket price f $70 (which is a premium ver the average utdr ticket price f $45). This $35 premium is cnsidered t be the seasn ticket revenue, and is estimated t be apprximately $45,000 t $55,000 per year. VIP Club We assume that the facility will have a versin f a VIP/membership club that will prvide benefits such as early access t tickets, experiences, preferred parking/entrances, and thers. Fr the purpses f this prjectin, we assume 100 members pay an annual fee f $250 (nt including any tickets), with an assciated facility cst f 10 percent. As a result, estimated net revenue is apprximately $23,000 t $28,000 per year. Naming Rights We assume the Event Center will have a naming rights spnsr (and culd ptentially have different naming spnsrs fr the indr and utdr cmpnents f the facility). Based n the naming rights revenues f ther indr and utdr facilities, we assume that the Event Center generates a grss ttal f $350,000 per year, less 10 percent f assciated csts, and this amunt is inflated in later years. Other Advertising/Spnsrships Facilities such as the Event Center will typically have multiple spnsrs ther than a naming spnsr. These culd include a naming spnsr f an annual cncert series, signage, puring rights (alchlic and nn-alchlic), and ther cmpanies that can have exclusive r nn-exclusive rights in a categry such as banking, healthcare, and thers. Based n the planned rientatin and usage f the Event Center, as well as the spnsrship revenues f ther similar facilities, we estimate apprximately $180,000 in nn-naming spnsrships in the facility s first year, net f assciated csts (t be inflated in later years). 72

73 Other Revenues Other revenues include smaller amunts that are nt captured in ther line items, such as ATM fees and thers. We assume that these revenues will be $15,000 per year. Ttal Operating Revenues Based n the assumptins described abve, we estimate that ttal facility revenues will be apprximately $9.3 millin in 2017 and increase t $10.8 millin in Expenses Event Expenses Huse Expenses As described abve, these expenses represent the expenses assciated with the peratin f events, and range frm $2,500 t $5,000 fr smaller events, t $15,000 fr indr cncerts and $35,000 fr utdr cncerts. There is generally a markup charged t events and an assciated revenue; hwever, the expenses are estimated t be apprximately $2.7 millin in the facility s first year. Talent Fees Talent expenses represent the share f ticket sales that are paid t the perfrmers at the facility frm prmted cncerts. Because the perfrmer will typically be paid a guaranteed, predetermined amunt befre tickets are sld, their share f ticket revenues (as a percent) will vary based n hw many tickets are ultimately sld and at what prices. Fr sme shws, ticket sales will be less than an artist s guarantee; ther times, strng ticket sales will generate excess revenues fr a facility. Overall, apprximately 66 f ticket sales will be paid t perfrming artists, which is cnsistent with the share f fees paid t perfrmers at ther facilities. Advertising We assume that the facility s advertising expenses fr individual events will range frm $1,000 fr cmmunity events, t $5,000 t $10,000 fr indr and utdr cncerts, t $25,000 fr festivals. Based n the assumed number f events, ttal advertising expenses are estimated t begin at apprximately $820,

74 Catering Backstage catering expenses will als vary frm event t event, and are assumed t range frm $1,000 fr minr cncerts, t $3,000 fr majr cncerts and $7,500 fr festivals. Based n the number f events, catering expenses are estimated t be apprximately $360,000 in the facility s first year. Other Expenses We assume that ther, miscellaneus expenses n a per-event basis will range frm $500 t $5,000, and will ttal apprximately $183,000 in the facility s first year. Nn-Event Expenses Salaries and Benefits We assume a full-time staff f ten peple, as described belw. Assumed salaries and benefits (25 percent f salaries) are als shwn. ASSUMED STAFFING PLAN GM $85,000 Ops Manager 50,000 Prductin Manager 45,000 Marketing Directr 60,000 Sales Directr 70,000 BO Manager 50,000 Business Manager 60,000 Receptinist 30,000 Custmer Service 45,000 F&B Manager 50,000 Ttal Salaries $545,000 Benefits $136,250 TOTAL SALARIES/BENEFITS $681,250 Surce: Stne Planning In the facility s first year, salaries and benefits expense is assumed t be apprximately $710,000. This amunt is inflated in later years. Utilities We estimate that utilities expenses will be apprximately $390,000 in the facility s first year, based n the expenses f ther facilities and the planned usage f the Event Center. 74

75 Repairs and Maintenance We estimate that repairs and maintenance expenses will be apprximately $155,000 in the facility s first year, based n the expenses f ther facilities and the planned usage f the Event Center. General and Administrative We estimate that G&A expenses (fr items such as travel and entertainment, supplies, unifrms, and thers) will be apprximately $130,000 in the facility s first year, based n the expenses f ther facilities and the planned usage f the Event Center. Insurance We assume that general liability insurance will be $0.25 per attendee and prperty insurance will be $100 per event, and a ttal f apprximately $110,000 in the facility s first year. Ttal Expenses Based n the assumptins described abve, we estimate that ttal expenses will be apprximately $8.1 millin in 2020 and increase t $9.7 millin in Net Operating Incme (Lss) Based n the estimated revenues and expenses, net perating incme is prjected t be apprximately $1.1 millin per year. 75

76 Sectin 7 Ecnmic Impacts

77 This sectin estimates the ecnmic and fiscal impacts that wuld be captured in Virginia Beach based n the cnstructin and peratins f the Event Center. The impact analysis fcuses n ne future year f impacts, which wuld recur n an annual basis but vary based n actual facility demand. THE CONCEPT OF ECONOMIC IMPACTS In general, ecnmic impacts estimate the incremental spending, as well as the resulting jbs, incme, and tax revenues, that are captured by a gegraphic area as a result f an event. In this case, event can refer t anything ranging frm a weather event t the presence f an institutin, industry, r facility, t an event such as a cncert. Fr the purpses f this analysis, the event is the cnstructin and nging peratins f the Event Center in Virginia Beach. Fr an entertainment venue, ecnmic impacts t an area (such as Virginia Beach) are generally cnsidered t be based n the spending f nn-lcal residents that cme t the area primarily fr the purpse f attending a facility event. As an example, the spending by a Virginia Beach resident wh attends a cncert at the Event Center is cnsidered t be part f the ecnmic activity created by the facility, but nt the ecnmic impacts. A Nrflk resident wh travels t Virginia Beach fr an event wuld generate ecnmic impacts frm her visit. Hwever, althugh lcal residents spending at the facility is nt cnsidered t be part f the ecnmic impacts, sme f this spending culd technically be cnsidered an impact, as the Event Center will bring sme shws (and the assciated spending) t Virginia Beach that have previusly gne t Prtsmuth and Nrflk. Als, if a New Yrk resident travels t Virginia Beach fr a beach vacatin, and happens t attend an Event Center event while in twn, his impact wuld be credited t ther turism and nt the Event Center r its event. Because Virginia Beach is such a ppular turist destinatin, these turists will create ecnmic activity frm their facility attendance but will be separated frm the ecnmic impacts. Ecnmic impacts that can be estimated include the fllwing: Spending fr a new facility, this includes the actual spending by event attendees fr purchases f tickets, fd and drinks, merchandise, and ther items, bth within the facility and thrughut the city. The spending that is captured lcally (which wuld nt include ticket sales that are retained by a nn-lcal artist but des include spending at a lcal restaurant) is part f a facility s ecnmic impacts. This spending can be separated int grss and net impacts. Grss impacts include the spending by lcal residents, as described abve, and can be cnsidered the full ecnmic activity assciated with an arena. This spending by lcal residents is cnsidered t be 77

78 transfer spending that wuld have therwise been spent lcally (fr example, at a mvie), althugh sme wuld likely leave the area fr entertainment in ther markets. Net impacts, which are a subset f grss impacts, nly include the spending by nn-lcal residents. Jbs and Incme these impacts estimate new emplyment and the assciated incme earned by lcal residents as a result f the new spending described abve. Fr example, spending captured at lcal restaurants will supprt that industry s emplyment base and will lead t incme fr its emplyees. Fiscal impacts represent new tax revenues that are created by the spending impacts. Tax revenues, particularly at the lcal level, can include amusement taxes frm ticket sales and htel taxes frm htel stays. Cnstructin impacts in additin t the impacts generated frm peratins, the cnstructin f the facility will als create ecnmic and fiscal impacts, t the extent that lcal firms and individuals participate in the cnstructin prject. In additin t the direct spending impacts, ecnmic multipliers are applied t estimate later runds f spending befre the initial spending leaves the lcal ecnmy. Fr example, sme f the spending captured by a lcal restaurant is then spent n varius items t supprt the restaurant s peratins, and these multipliers estimate the amunt that is spent lcally based n the presence f suppliers and ther industry partners within a gegraphic area. This later spending r indirect impacts are added t the direct impacts t estimate ttal impacts. ECONOMIC IMPACTS FROM OPERATIONS We estimate the ecnmic impacts generated by ne year f facility peratins, as described belw. Facility Revenues The revenues generated by the facility can represent a significant part f the verall ecnmic activity that it creates. This revenue includes spending fr items such as tickets, cncessins, and thers that are described and shwn in the financial analysis f facility peratins, althugh sme f these revenues are retained by an event, prmter, and/r artist rather than the Event Center. The fllwing table summarizes the grss revenues generated by facility peratin, regardless f the ultimate recipient f the revenues. These grss revenues are cnsidered separately fr the surce f the spending and their recipients later in this sectin. 78

79 GROSS REVENUES GENERATED BY THE FACILITY ($000s) Grss Ticket Sales $10,142 Prmter Prfit 4 Grss Fd and Beverage Sales 3,475 Grss Merchandise Sales 834 Naming Rights 364 Other Advertising and Spnsrships 182 Facility/Ticket Fees 1,526 Event Expense Reimbursement 378 Premium Seating (Premium Prtin) 186 Seasn Tickets (Premium Prtin) 50 VIP Club 26 Other 16 TOTAL $17,182 Surce: Stne Planning The amunts in the table d nt necessarily match thse in the pr frma statement; fr example, while the Event Center is estimated t capture $4.5 millin in ticket revenues frm its prmted shws, the $10.1 millin shwn abve represents ticket sales frm all facility events. In additin, net F&B and merchandise sales are shwn in the pr frma, while grss amunts are cnsidered here. Attendee Spending Outside f the Facility The ther cmpnent f the ecnmic activity generated by a facility s peratin is the mney spent by event attendees n items such as ldging, transprtatin, meals, entertainment, and shpping utside f the facility but as a result f their trip t the facility. Based n analysis f event characteristics at ther similar facilities, the gegraphical characteristics f the regin, and thers, we have made assumptins regarding the gegraphic rigin f attendees, whether they stay in Virginia Beach vernight, and their spending characteristics utside f the Event Center (spending within the facility is included as facility revenue abve). Attendees Gegraphic Origin Because impacts are being cnsidered fr Virginia Beach, we differentiate between facility attendees wh are city residents and thse wh live utside f the area. Spending by all attendees is calculated as the grss spending impact; hwever, nly thse wh are nn-lcal residents are cnsidered in the calculatins f net ecnmic impacts, which are the true impacts t the city. Fr these assumptins, we have primarily based ur estimates n characteristics f actual attendees frm past events at ther facilities, as well as ther events held at ther facilities in the area, based n available data. While many factrs can influence the share f nn-lcal attendees at a facility, and this percentage can vary widely frm event t event, we have assumed average characteristics acrss each event type. Fr Event Center events, we assume that the share f lcal attendees and turists 79

80 that are in twn fr reasns ther than a facility event will range frm 40 t 70 percent. Events such as surf-related events and festivals are assumed t have mre nn-lcal attendees than events such as minr cncerts and cmmunity events. Types f Travelers Event attendees are further divided int tw ther categries: daytrippers r vernight travelers. The majrity f attendees will be daytrippers, including all lcal residents. Hwever, a share f attendees will stay vernight befre, during, and/r after an event; in general, we assume that a small share f attendees t many event types will stay vernight. Fr mst events, this share is assumed t be 15 percent r less. Fr less-frequent events such as festivals and surf events, the share f vernight attendees will be higher. Nt all vernight visitrs will stay in htels; many typically stay with friends and family and therefre d nt pay fr htel rms. We assume that 85 percent f vernighters will pay fr htel rms. Fr all vernight attendees in htels, we assume an average f tw peple per htel rm. In additin, accrding t Virginia Beach Ecnmic Develpment, the average turist stay in the city ranges frm mre than 3.5 nights t nearly five nights, depending n the time f year. Hwever, because mst Event Center events will take place ver ne day, we assume a shrter average stay that is mre cnsistent with the event length. Out-f-Facility Spending Assumptins Assumptins related t ut-f-facility spending by event attendees is based n factrs such as past studies f turists spending in Virginia Beach, adjusted fr assumed spending characteristics f attendees f Event Center events. Daily spending has been separated int fur categries: fd and beverage, retail and entertainment, ldging, and transprtatin and ther. Overnight attendees are generally assumed t spend mre than daytrippers, as they will spend mre time in the city and have ldging expenditures. Our assumptins f spending by categry is als cnsistent with the percent f spending by type as reprted by VBED. Estimates f daily spending apply t attendees f all event types, and assumed daily spending varies by categry, and with the exceptin f ldging, applies t all daytrippers and vernight travelers (daytrippers, by definitin, will nt spend mney n htels). The fllwing table summarizes all assumptins related t attendee rigin, type f traveler, daily spending, and ther characteristics. 80

81 ASSUMED ATTENDEE CHARACTERISTICS Cncerts - Indr Reserved Cncerts - Indr GA Cncerts - Outdr Cncerts - Minr Other Ticketed Sprts/ Entertainment Cmmunity Events Private/Scial Events Festivals Surf Park Events Attendees' Gegraphic Origin Frm Virginia Beach (All Daytrippers)/Nn-Event Center Turists 60% 60% 60% 70% 60% 75% 55% 45% 40% Frm Outside f Virginia Beach Daytrippers 35% 35% 25% 29% 38% 25% 35% 35% 20% Stay Overnight 5% 5% 15% 1% 2% 0% 10% 20% 40% Subttal 40% 40% 40% 30% 40% 25% 45% 55% 60% Out-f-Event Center Spending Assumptins Fd and Beverage/Persn/Day Daytrippers $10.00 $10.00 $10.00 $10.00 $10.00 $2.50 $2.50 $10.00 $10.00 Stay Overnight $20.00 $20.00 $20.00 $20.00 $20.00 $5.00 $5.00 $20.00 $20.00 Retail and Entertainment/Persn/Day Daytrippers $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 Stay Overnight $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Transprtatin and Other/Persn/Day Daytrippers $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 Stay Overnight $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Ldging/Persn/Day Daytrippers $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Stay Overnight $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 Htel-Related Assumptins Peple per Rm Nights per Visit Lcatin f Spending % f Overnight Visitrs in Htels 85% 85% 85% 85% 85% 85% 85% 85% 85% Percent f Spending Captured in Virginia Beach 90% 90% 90% 90% 90% 90% 90% 90% 90% Surce: Stne Planning Grss Direct Spending Based n the assumptins described abve, as well as the frecasts f facility events and attendance and facility revenues, the fllwing table summarizes the ttal grss direct spending generated by the presence and peratin f the Event Center. The first line (spending generated by the facility) has previusly been described, and the spending captured thrughut Virginia Beach by all event attendees is als summarized, based n the assumptins described abve. TOTAL DIRECT SPENDING - GROSS Ttal Grss Facility Revenue $17,182,000 Spending Outside the Facility Ldging $2,902,000 Fd and Beverage $3,172,000 Retail and Entertainment $1,817,000 Transprtatin and Other $1,026,000 Ttal Spending Outside the Facility $8,917,000 Ttal Grss Direct Spending - Inside and Outside f the Facility $26,099,000 # f Rm Nights 20,970 Surce: Stne Planning 81

82 Grss vs. Net Impacts The ttal ecnmic activity summarized abve des nt represent actual ecnmic impacts; it merely shws the ttal spending generated by facility peratins, including transfer spending by lcal residents. In this sectin, transfer spending is deducted frm ttal spending t arrive at the estimated ecnmic impacts t Virginia Beach. In ther wrds, fr the purpses f calculating ecnmic impacts t the city, all spending by city residents and thse in twn fr ther purpses is subtracted. Spending impacts t the city related t ut-f-facility spending as well as spending n tickets, F&B and merchandise, and ticket fees are based n assumptins f attendee rigin and their spending characteristics, as previusly shwn. Hwever, ther revenues captured by the facility itself are analyzed separately. In general, 90 percent f facility revenues such as thse frm cncert prmtin, expense reimbursements, premium and seasn tickets, and a VIP club are cnsidered t be net impacts t the city, as there may be slight verlap f pprtunities between the Event Center and the VUHLA. Hwever, because the VUHLA already has a naming partner and n ther similar facility exists in the city, 100 percent f naming rights revenue is cnsidered t be a net impact. We have estimated the net ecnmic impacts t Virginia Beach frm the Event Center. In ther wrds, we estimate the amunt f spending that is captured within the city but riginates utside f the city. The estimated net ecnmic impacts are shwn in the fllwing table. TOTAL DIRECT SPENDING - GROSS AND NET Grss Net t Virginia Beach In-Facility $17,182,000 $7,463,000 Outside the Facility Ldging $2,902,000 $2,902,000 Fd and Beverage $3,172,000 $1,253,000 Retail and Entertainment $1,817,000 $690,000 Transprtatin and Other $1,026,000 $451,000 Ttal - Outside the Facility $8,917,000 $5,296,000 Ttal Direct Spending $26,099,000 $12,759,000 Rm Nights 20,970 20,970 Surce: Stne Planning 82

83 Multiplier Effect and Indirect Spending As the spending frm the direct ecnmic activity takes place in the city s ecnmy, it will trigger ther, indirect, levels f ecnmic activity. Fr example, the perating businesses that are affected by facility use (including the facility itself and htels and restaurants, retail stres, and thers) will purchase varius gds and services frm lcal and reginal vendrs (e.g., utilities, inventry, supplies, labr, and the like). As this ccurs, these wrkers and vendrs receive incme and, in turn, make purchases f gds and services themselves. Within each rund, sme spending ccurs in the lcal ecnmy and sme flws utside f that ecnmy (referred t as leakage ). The ttal amunt f spending that stays within the lcal ecnmy includes bth the first rund ( direct ) and all subsequent runds f ecnmic activity ( indirect ). These ttal impacts are estimated thrugh the use f multipliers applied t the estimates f direct impacts. The multipliers, which are calculated by the federal gvernment and are unique t each gegraphic area, are regarded as the mst reliable and accurate measure f indirect spending that is available. Multipliers differ frm area t area because f gegraphy; prximity t ther business centers and the size f an area will affect the length f time that direct spending is retained by an ecnmy befre fully leaking ut. In additin, different sectrs f an ecnmy have unique multipliers, based n their wn prximity t ther industry-specific ecnmies, vendrs and suppliers, and the like. Fr this analysis, we have utilized multipliers develped by IMPLAN fr Virginia Beach. Varius multipliers fr different industries are used, as every type f spending that cmprises the direct impacts ( Categry ) has a multiplier, based n a crrespnding Industry Sectr. As the table belw shws, the multipliers fr varius industries generally range frm apprximately 1.5 t 1.8. In ther wrds, a multiplier f 1.5 indicates that ttal ecnmic activity is estimated at 1.5 times the estimate f direct impacts; this includes the direct impacts (at 1.0) and the indirect impacts (at 0.5). Multipliers typically increase as the size f a gegraphic area increases, as it takes mre time fr later runds f spending t leave a larger area (fr example, Virginia cmpared t Virginia Beach). 83

84 VIRGINIA BEACH MULTIPLIERS - SPENDING Categry Industry Sectr Multipliers Facility Revenues Grss Ticket Sales Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Prmter Prfit Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Grss Fd and Beverage Sales Fd Services and Drinking Places Grss Merchandise Sales Retail Trade Naming Rights Bradcasting/Telecmmunicatins Other Advertising and Spnsrships Bradcasting/Telecmmunicatins Facility/Ticket Fees Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Event Expense Reimbursement Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Premium Seating (Premium Prtin) Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Seasn Tickets (Premium Prtin) Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities VIP Club Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Other Perf. Arts, Spectatr Sprts, Museums, Zs, Parks, Related Activities Spending Outside the Facility Fd and Beverage Fd Services and Drinking Places Retail and Entertainment Retail Trade; Perf. Arts, Spectatr Sprts, etc Ldging Accmmdatin Transprtatin and Other Transit and Grund Passenger Trans Surce: US Department f Cmmerce, Stne Planning Based n these multipliers, ttal (direct and indirect) net spending is summarized belw. TOTAL NET SPENDING - DIRECT AND INDIRECT Net t Virginia Beach Ttal Net Direct Spending $12,759,000 Net Indirect Spending In-Facility $2,290,000 Outside f Facility Ldging $1,637,000 Fd and Beverage $773,000 Retail and Entertainment $485,000 Transprtatin and Other $305,000 Ttal Indirect Spending $5,490,000 Ttal Spending - Direct and Indirect $18,249,000 Surce: Stne Planning As the table shws, including bth direct and indirect spending, ttal spending impacts are estimated t be apprximately $18.2 millin frm the Event Center. 84

85 Jbs and Payrll The peratin f the Event Center creates jbs bth within the facility and thrughut the city. The facility s use and attendees spending will als supprt jbs thrughut the area, at htels, restaurants, retail stres, and the like (frm bth direct and indirect spending). Emplyment and incme impacts t Virginia Beach refer t jbs and incme that are captured by residents nly. Average hurly and annual wage infrmatin fr varius types f ccupatins are prvided by the US Department f Labr s Bureau f Labr Statistics, based n data cmpiled fr the Virginia Beach metr area in Similar t spending, multipliers are used t estimate indirect emplyment and earnings, based n the direct estimates. The fllwing table summarizes emplyment and incme multipliers used in the calculatin f indirect jbs and earnings. VIRGINIA BEACH MULTIPLIERS - EMPLOYMENT AND EARNINGS Categry Emplyment Multipliers Earnings Multipliers Facility Operatins Cncessins, Fd and Beverage Retail and Entertainment Ldging Transprtatin and Other Surce: US Department f Cmmerce, Stne Planning The table belw shws the ttal (including direct and indirect) net jbs and payrll generated within Virginia Beach by the facility. 85

86 TOTAL JOBS AND EARNINGS T Virginia Beach EMPLOYMENT Facility Full-Time Equiv. Facility Operatins Staff 13 Outside f the Facility Ldging 27 Fd and Beverage 39 Retail and Entertainment 17 Transprtatin and Other 9 Ttal Jbs (Full-Time Equivalent) 105 EARNINGS Facility Operatins - all FT and PT $987,000 Ldging $1,122,000 Fd and Beverage $1,236,000 Retail and Entertainment $660,000 Transprtatin and Other $392,000 Ttal Earnings $4,398,000 Surce: Stne Planning As the table shws, the new facility is estimated t supprt an incremental 105 jbs and apprximately $4.4 millin in wages. FISCAL IMPACTS FROM OPERATIONS As previusly described, fiscal impacts represent new public-sectr tax revenues that are generated based n the presence and use f the facility. The fllwing table summarizes applicable taxes and the spending that they apply t and their rates. We assume that tax rates will remain unchanged in the future. This fiscal impact analysis includes new sales, ldging, meals, and admissin taxes at the city level. These taxes and their rates are summarized belw. 86

87 LOCAL TAXES AND RATES City Tax Rate Sales Tax 1.0% Meals Tax Meals Tax Cmpnent 5.5% Sales Tax Cmpnent 1.0% Ldging Tax Ldging Tax Cmpnent 8.0% Sales Tax Cmpnent 1.0% Admissin Tax 10.0% Surce: Stne Planning The new tax revenues attributable t the facility are summarized in the fllwing table. We shw the taxes generated by bth the grss direct spending (which includes lcal residents) as well as by the net spending (which nly includes visitrs wh are in Virginia Beach because f the facility). LOCAL FISCAL IMPACTS Grss Net Sales Tax $122,000 $65,353 Meals Tax $365,569 $143,259 Ldging Tax $232,152 $232,152 Admissin Tax $1,014,150 $403,740 TOTAL $1,733,871 $844,504 Surce: Stne Planning ECONOMIC AND FISCAL IMPACTS FROM CONSTRUCTION The assumed cst f the Event Center is $35 millin. Based n lcal cnstructin-related multipliers and the share f materials and services t be surced lcally, the fllwing table summarizes the estimated ecnmic and fiscal impacts frm the cnstructin prject. 87

88 CONSTRUCTION IMPACTS ($000s) Ecnmic Impacts Sales f Materials $7,947 Ttal Emplyment 314 Ttal Labr Incme $18,255 Fiscal Impacts BPOL $133 City Sales Tax $23 Meals Tax $44 Ldging Tax $1 Surce: City f Virginia Beach, Stne Planning Apprximately $8 millin is estimated t be paid t lcal firms, and the ttal impacts (including direct and indirect) t lcal wrkers are apprximately 315 jbs and $18.3 millin in wages. Fiscal impacts t the city are estimated t be a ttal f apprximately $200,

89 Sectin 8 Surf Park Analysis