MARKET ANALYSIS AND ECONOMIC IMPACT STATEMENT PREPARED FOR BASEBALL RHODE ISLAND APRIL 2015 INSPIRE. EMPOWER. ADVANCE. This Page Left Intentionally Blank TABLE OF CONTENTS SECTIONS EXHIBITS 1.0………….Preface A………….Providence Market Profile 2.0………….Executive Summary B……….....Comparable Market Profiles 3.0………….Market Analysis C……….....Fiscal Benefit Summary 4.0………….Economic & Fiscal Benefit D………….Economic Benefit Case Studies Analysis This Page Left Intentionally Blank PREFACE 1.0 - PREFACE In March of 2015, the PBC Associates, LLC engaged Brailsford & Dunlavey (“B&D”) to analyze the market potential for an AAA baseball stadium in downtown Providence, create a market-responsive facility program and associated development budget, and develop associated economic and fiscal benefit projections, which can also be referred to interchangeably as “economic and fiscal impacts”. To complete this assignment, B&D conducted a detailed market study to inform potential demand levels and quantify fiscal and economic benefits generated by the project on an annual and net present value basis. QUALIFICATIONS The findings of this study constitute the professional opinions of B&D personnel based on the assumptions and conditions detailed throughout. B&D conducted each analysis under several conditions and assumptions, outlined below: The analyses, recommendations, observations, and conclusions contained in this study represent the professional opinions of the B&D project team with such opinions based on original research conducted using primary, secondary, and tertiary sources and the project team’s professional experience The project team performed its work using industry and public information that is deemed reliable, but whose accuracy cannot be guaranteed. B&D makes no recommendation and provides no warranty as to such information’s accuracy or completeness. B&D makes no assurance and provides no guarantee that results identified in this study will be achieved. Economic and market conditions, management action or inaction, and implementation timing, as well as other important circumstances, often do not occur as planned and such deviations can be material. THE PROJECT TEAM WAS COMPRISED OF THE FOLLOWING INDIVIDUALS: Bill Mykins, Vice President, RA, LEED AP Rich Neumann, Vice President – Major Accounts Jason Thompson, Regional Vice President Bryan Slater, Project Manager April 2015 This Page Left Intentionally Blank EXECUTIVE SUMMARY 2.0 – EXECUTIVE SUMMARY APPROACH The objectives of this report are to identify market demand for a MiLB stadium in downtown Providence, develop an appropriate facility program and corresponding budget, and quantify economic and fiscal benefits from the project. To accomplish these objectives, B&D completed a detailed market analysis that culminates in a set of annual attendance projections. The projections serve as the basis for quantifying quantify economic and fiscal benefits to the state of Rhode Island. A summary of the key findings is outlined below while various detailed analyses are included in the report’s sections and exhibits. MARKET ANALYSIS The project site is located immediately south of downtown Providence, which is the economic hub and central business district for the Providence Metropolitan Statistical Area (MSA). The MSA has over 1.6 million people and is projected to grow slowly from 2014 to 2019. The area has elevated median age levels and household income measurements in comparison to national averages. While an evaluation of the MSA demographics provides required context to understand underlying market conditions, B&D relies upon drive time radii to develop projected attendance levels, which affect the vast majority of economic and fiscal benefits. According to data provided by the team, roughly 85% of all attendees in the previous year came from within a 30-minute drive time of the project site; therefore, B&D utilized this drive time area to evaluate the market in the context of comparable peers. Comparable Market Analysis B&D ranked Providence against all 30 AAA markets in terms of 30-minute drive time population (market size), retail sales (economic activity), and household income (market wealth). The project team selected nine of the 30 as comparable markets that possess a modern MiLB ballpark and most closely resemble Providence in terms of demographic characteristics. Within this set, Providence ranks seventh in terms of population, eighth in household size, and fifth in household income. When each market’s income figure is normalized for the cost of living index, Providence ranks last in the set. This apparent wealth disparity is less problematic for MiLB since franchises provide a wide variety of ticket price points and generally hold appeal across a wide cross section of income demographics. Providence also ranks solidly in terms of retail sales (6th), which provide a macro-level view of economic activity in a marketplace. April 2015 2-1 BASEBALL RHODE ISLAND | MARKET ANALYSIS AND ECONOMIC IMPACT STATEMENT Total Total Household Average HH Normalized HH Market Population Households Size Income Income Charlotte, North Carolina 1,594,727 615,835 2.59 $79,306 $85,092 Columbus, Ohio 1,525,226 609,151 2.50 $75,683 $82,264 Gwinnett, Georgia 1,557,315 697,932 2.23 $84,078 $87,948 Indianapolis, Indiana 1,563,166 533,725 2.93 $74,249 $85,148 Oklahoma City, Oklahoma 1,129,392 315,894 3.58 $68,959 $75,201 Round Rock, Texas 1,118,509 431,266 2.59 $79,157 $82,887 Sacramento, California 1,706,897 618,430 2.76 $74,733 $66,953 Salt Lake City, Utah 1,295,498 426,333 3.04 $78,684 $74,230 Tacoma, Washington 1,392,223 522,851 2.66 $73,609 $67,223 Average 1,431,439 530,157 2.70 $76,495 $76,922 Providence, RI 1,387,276 546,001 2.54 $76,846 $62,274 Comparable Rank 7th / 10 5th / 10 8th / 10 5th/10 10th/10 NOTES: All data is w ithin 30-minute driv e-time of AAA Ballpark. Source: www.sitesusa.com; C2ER FIGURE 2.1: Comparable Market Demographic Characteristics Attendance Review & Projections The Pawtucket Red Sox ranked in the top five of MiLB in terms of reported paid attendance in every year from 2005 to 2009. However, attendance declined sharply from its 2005 peak of over 9,500 per game to the 2014 average of 7,400 per game. The table below contrasts Pawtucket’s attendance levels with that of the International League (IL) and Pacific Coast League (PCL). Pawtucket’s attendance has fallen by 23% since 2005 while the two AAA leagues remained relatively stable. The attendance peak in 2005 is representative of the Providence region’s ability to effectively support a franchise while the consistent league average figures demonstrates the stability of MiLB. Paid Attendance 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 PCL 6,581 6,606 6,607 6,479 6,356 6,306 6,152 6,033 6,036 6,270 IL 6,652 6,495 6,857 7,161 7,207 6,946 6,761 6,629 6,961 7,241 Pawtucket 9,561 9,289 8,861 9,097 8,937 8,343 8,270 7,551 7,827 7,367 PCL 100% 100% 98% 97% 96% 93% 92% 92% 95% IL 98% 103% 108% 108% 104% 102% 100% 105% 109% Pawtucket 97% 93% 95% 93% 87% 86% 79% 82% 77% Source: MiLB FIGURE 2.2: Paid Attendance Levels for PCL, IL, Pawtucket (2005 to 2014) 2-2 BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE. EXECUTIVE SUMMARY Market population is the primary factor influencing attendance levels at MiLB games. B&D evaluated Pawtucket’s average attendance levels as a function of market size against comparable markets from 2010 to 2014. During that time span, Pawtucket had an attendee capture ratio of 39% while comparable markets had a capture ratio of 36%, meaning that for every 100 people in the local market 39 people attended a game. This comparatively high percentage in spite of an aging ballpark speaks to the team’s popularity in the region and the local market’s solid demographic profile. The table below shows market capture ratios for each comparable market, with the red bar representing total reported paid attendance levels from 2010 to 2014 and the blue bar representing 30-minute drive time population. Market Capture Analysis Sacramento Charlotte Indianapolis 2010-2014 Avg. Gwinnett Attendance Columbus Market Pawtucket 549,596 Population Tacoma Salt Lake City Oklahoma City 1,425,444 Round Rock 0 400000 800000 1200000 1600000 FIGURE 2. 3: Market Capture Graph Though Pawtucket has a strong attendance history, new ballparks generally spur meaningful attendance increases. B&D analyzed seven new ballpark projects and found they increased average attendance by 19% from the average five years prior to opening. In consideration of attendance histories, peer market attendance levels, and the effect that a new ballpark can have on attendance levels, B&D developed three attendance scenarios for an AAA franchise in a downtown Providence ballpark assuming a total capacity of 10,000. Paid Attendance Actual Paid Attendance Actual Events (2017) Attendance (2021) Attendance AAA Baseball Conservative 70 8,600 6,794 7,740 5,805 Moderate 70 9,250 7,308 8,325 6,244 Aggressive 70 9,900 7,821 9,158 6,868 Conservative 70 602,000 475,580 541,800 406,350 Moderate 70 647,500 511,560 582,750 437,080 Aggressive 70 693,000 547,470 641,060 480,760 FIGURE 2. 4: AAA Attendance Scenarios April 2015 2-3 BASEBALL RHODE ISLAND | MARKET ANALYSIS AND ECONOMIC IMPACT STATEMENT First-year paid attendance projections range from 9,900 (aggressive scenario) to 8,600 (conservative scenario). Fifth-year projections range from under 9,160 (aggressive) to 7,740 (conservative). The moderate scenario, which B&D considers most likely, projects 9,250 paid attendees in the first year and 8,325 in the fifth year.