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Feasibility Analysis of a Potential New State Fairgrounds in Manchester

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Feasibility Analysis of a Potential New State Fairgrounds in Manchester, Tennessee 1 July 14, 2017 Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in INTRODUCTION July 14, 2017 Mr. Bo Roberts Chairman Tennessee State Fair and Exposition Commission 414 Union Street, Suite 1105 Nashville, Tennessee 37219 Dear Mr. Roberts: Conventions, Sports & Leisure International (CSL) is pleased to have completed our market, financial and economic feasibility analysis of a new fairgrounds complex at the Bonnaroo site in Manchester that would be a new home to the Tennessee State Fair. The attached document presents our research, analysis and findings and is intended to assist the Tennessee State Fair and Exposition Commission (Commission) and other stakeholders in evaluating the viability of the project. The analysis presented in this report is based on estimates, assumptions and other information developed from industry research, data provided by the study’s stakeholders, surveys of potential facility users and local representatives, discussions with industry participants and analysis of competitive/comparable facilities and communities. The sources of information, the methods employed, and the basis of significant estimates and assumptions are stated in this report. Some assumptions inevitably will not materialize and unanticipated events and circumstances may occur. Therefore, actual results achieved will vary from those described and the variations may be material. The findings presented herein are based on analysis of present and near-term conditions in Tennessee as well as existing interest levels by the potential base of users of the facility project. Any significant future changes in the characteristics of the local community, such as growth in population, corporate inventory, competitive inventory and visitor amenities/attractions, could materially impact the key market conclusions developed as a part of this study. As in all studies of this type, the estimated results are based on competent and efficient management of the potential facilities and assume that no significant changes in the demand markets or assumed immediate and local area market conditions will occur beyond those set forth in this report. Furthermore, all information provided to us by others was not audited or verified and was assumed to be correct. All market research and analysis associated with this study was completed by late 2016. This report has been prepared for the internal use of the Commission and should not be relied upon by any other party. The report has been structured to assist stakeholders in evaluating market demand, supportable program and the potential cost/benefit characteristics of a new fairgrounds complex at the Bonnaroo site in Manchester that would be a new home to the Tennessee State Fair, and should not be used for any other purpose. This report, its findings or references to CSL may not be included or reproduced in any public offering statement or other financing document. We sincerely appreciate the assistance and cooperation we have been provided in the compilation of this report and would be pleased to be of further assistance in the interpretation and application of our findings. Very truly yours, 2 CSL International Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in INTRODUCTION Study Background & Purpose To analyze the market, financial and economic feasibility of a new fairgrounds complex at the Bonnaroo site in Manchester that would be a new home to the Tennessee State Fair. The study updates and builds on portions of CSL’s 2012/2013 feasibility study of a redeveloped State Fairgrounds. This study was requested by the State of Tennessee to investigate the feasibility of a unique public/private partnership opportunity involving a new Fairgrounds that would involve and leverage Bonnaroo, its property, management, marketing expertise and association with Live Nation and AC Entertainment. 3 Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in INTRODUCTION Bonnaroo Music Festival • Originally established by AC Entertainment in 2002. • Four-day event held annually in Manchester, TN starting the second Thursday in June. • Live music from a variety of styles including indie rock, classic rock, hip hop, jazz, pop, alternative and others. • Notable acts have included Elton John, Nine Inch Nails, Paul McCartney, The Beach Boys, James Brown, Metallica, Mumford and Sons, Red Hot Chili Peppers, Willie Nelson, Jay Z, Bob Dylan and The Black Keys. • Attendance has historically been between 70,000 and 100,000 for the event. However, 2016 attendance was down over recent levels at approximately 45,000. • In 2016, Bonnaroo was acquired by Live Nation Entertainment, one of the largest global entertainment companies in the world with connections to some of the most highly sought after musical and promoted acts. • Potential for Live Nation/AC Entertainment/Bonnaroo to manage via contract a new State Fairgrounds located adjacent to the current Bonnaroo site. An experienced 4 fairgrounds manager and facility team would be retained. Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in INTRODUCTION Study Components 1. Site visit, facility/community tours 2. Stakeholder & community outreach 3. Existing TN State Fairgrounds review 4. Manchester market conditions analysis 5. Competitive & comparable facilities 6. In-person & telephone user surveys 7. Market supportable program 8. Event/utilization analysis 9. Financial operating estimates 10. Economic impacts 11. Cost/benefit conclusions 5 Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in INTRODUCTION Fairgrounds Nashville Current Home of TN State Fair 9 1 2 3 10 7 8 16 4 5 1 Creative Arts Building 13 12 6 2 Annex Building 3 Exhibitor's Building 4 Banquet Building 5 Agriculture Building 6 Vaughn Building 11 7 Wilson Hall 8 Judging Arena 14 9 Sports Arena 10 Grandstand 11 Rabbit Barn 15 12 Shed 2 13 Shed 3 6 14 Shed 4 15 Shed 5 Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in LOCAL ANALYSIS MARKET LOCAL 16 Pulling Shed Fairgrounds Nashville Historical Event Activity – Utilization Days 600 529 528 500 22 30 48 427 48 Fair 400 36 385 57 16 363 366 Concert 24 Fight/Wrestling 18 333 48 32 27 Other 300 25 48 Other Animal Event 64 56 48 227 182 Flea Market 48 45 28 40 Meeting/Banquet 28 Utilization Days 200 Public/Consumer Show 158 Roller Derby 134 152 119 146 100 155 171 86 86 74 76 64 0 7 2009 2010 2011 2012 2013 2014 2015 Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in LOCAL ANALYSIS MARKET LOCAL Note: Adjustments were made to 2009 through 2011 data reflecting utilization days within indoor event space usage only. Source: CSL International, facility management, 2016. Tennessee State Fair Recent Financial Operating Results 2015 2014 2013 2012 Revenue Admission $444,395 $469,158 $440,615 $390,751 Commissions and Fees on Midway 314,876 329,222 329,364 361,100 Grants 154,550 13,925 13,400 88,975 Donations and Sponsorships 92,450 148,326 77,904 69,042 Vendor Space Rental 77,378 71,530 61,762 57,137 Parking Fees 63,754 67,764 66,918 0 Contributed Account and Legal Services 26,900 33,180 34,350 34,915 Exhibit Entry Fees 20,644 18,911 18,511 16,404 Other Income 12,416 11,133 10,535 5,336 Total $1,207,363 $1,163,149 $1,053,359 $1,023,660 Expenses Fairgrounds Rental $180,416 $171,870 $175,882 $67,805 Advertising/Public Relations 199,288 232,852 203,249 189,495 Fair Entertainment 137,430 128,203 116,317 101,399 Premiums 120,502 115,949 104,744 91,309 Salaries 144,578 123,730 117,554 96,700 Contract Services 101,955 86,749 87,814 78,139 Exhibit Judging and Supplies 62,024 57,597 52,128 41,539 Other Fair Expenses 104,010 123,247 86,165 61,896 Management/General 128,663 105,773 102,613 94,379 In-kind Accounting/Legal 26,900 33,180 34,350 34,915 Total $1,205,766 $1,179,150 $1,080,816 $857,576 8 Net Operating Profit/(Deficit) $1,597 ($16,001) ($27,457) $166,084 Feasibility Study of a Potential New State Fairgrounds Feasibility Fairgrounds StudyNew State Potential of a Tennessee Manchester, in HISTORICAL OPERATIONS HISTORICAL Source: Tennessee State Fair, 2016 Fairgrounds Nashville Key Demographic Metrics State of Demographic Variable 30-minute 60-minute 90-minute 180-minute 240-minute Tennessee U.S. Population (2000) 734,150 1,408,305 2,132,536 8,183,251 15,271,553 5,689,283 281,421,906 Population (2010) 851,641 1,727,504 2,527,638 9,041,304 16,928,975 6,346,105 308,745,538 Population (2016 est.) 937,334 1,908,073 2,750,009 9,485,370 17,731,439 6,698,359 316,296,988 % Change (2000-2016) 27.7% 35.5% 29.0% 15.9% 16.1% 17.7% 12.4% Population (2021 est.) 1,021,054 2,083,662 2,960,340 9,868,794 18,441,691 7,010,634 327,981,317 % Change (2016-2021) 8.9% 9.2% 7.6% 4.0% 4.0% 4.7% 3.7% Avg. Household Inc. (2016 est.) $78,530 $74,639 $68,355 $62,142 $65,588 $63,685 $72,809 Avg. Household Inc. (2021 est.) $85,767 $81,896 $75,192 $68,211 $71,934 $69,792 $83,937 % Change (2016-2021) 9.2% 9.7% 10.0% 9.8% 9.7% 9.6% 15.3% Median Age (2016, in years) 36.1 36.6 36.7 39.0
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