Alliant Energy Center Market, Financial, Facility, and Impact Analysis

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Alliant Energy Center Market, Financial, Facility, and Impact Analysis Alliant Energy Center Market, Financial, Facility, and Impact Analysis Submitted to: Mark Clarke Executive Director Alliant Energy Center 1919 Alliant Energy Center Way Madison, WI 53713 March 29, 2017 March 29, 2017 Mark Clarke Executive Director Alliant Energy Center 1919 Alliant Energy Center Way Madison, WI 53713 Dear Mr. Clarke, The County of Dane (Client) engaged the Hunden Strategic Partners (HSP) Team, including MKSK Landscape Architecture, Urban Design & Planning and Sink Combs Dethlefs Architects, to perform a market, financial, facility and impact analysis to determine the optimal future use of the Alliant Energy Center (AEC) and its on-site assets. The attached is our final report. This deliverable has been prepared under the following general assumptions and limiting conditions: ! The findings presented herein reflect analysis of primary and secondary sources of information that are assumed to be correct. HSP utilized sources deemed to be reliable, but cannot guarantee their accuracy. ! No responsibility is taken for changes in market conditions after the date of this report and no obligation is assumed to revise this report to reflect events or conditions occurring after the date of this report. ! HSP has no control over construction costs or timing of construction and opening. ! Macroeconomic events affecting travel and the economy cannot be predicted and may impact the development and performance of the project. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, HUNDEN STRATEGIC PARTNERS TABLE OF CONTENTS ------------ Executive Summary Chapter 1 Alliant Energy Center Profile Chapter 2 Economic & Demographic Analysis Chapter 3 Arena, Concert & Event Market Analysis; Trends Chapter 4 Convention Center Industry Trends Chapter 5 Meetings & Events Market Analysis Chapter 6 Equine & Livestock Trends Chapter 7 Livestock Market Analysis Chapter 8 Indoor Sports Trends, Market Analysis & Tournament Opportunity Analysis Chapter 9 Hotel Market Analysis Chapter 10 National Ag-Expo-Event Complex Examples Chapter 11 Recommendations, Drawings & Budgets Chapter 12 Demand & Financial Projections Chapter 13 Economic, Fiscal, & Employment Impact Analysis EXECUTIVE SUMMARY The County of Dane (County) engaged the Hunden Strategic Partners (HSP) Team, including MKSK Landscape Architecture, Urban Design & Planning and Sink Combs Dethlefs Architects, to perform a market, financial, facility and impact analysis to determine the optimal future use of the Alliant Energy Center (AEC) and its on-site assets. The HSP Team analyzed the operations of the AEC as well as the physical condition of the AEC’s existing facilities. HSP then reviewed the market characteristics, including competitive supply and unmet demand within both the local and regional marketplace, to understand the future opportunity for the AEC. The primary questions that the HSP Team answered include: ! What does the AEC currently offer? What is the condition of the AEC facilities and how are they performing? Is there opportunity for improvement with the existing facilities? ! Does the Coliseum need to be replaced to be competitive or can it be renovated? ! How do economic and demographic trends of Madison and Dane County impact the future opportunity for the Alliant Energy Center? ! What is the market opportunity for concerts, entertainment, conventions, meetings, sports, and livestock events at an enhanced AEC? Are there markets opportunities that are not being sought that could generate activity and impact at the AEC? ! What are comparable complexes throughout the country doing to remain competitive? What can be learned from those situations? ! What are the implications and recommendations based on the market analysis? What does the recommended facility and master plan look like? What are the governance options for the AEC? ! How will the recommended projects perform? What is the projected economic, fiscal, and employment impact of the recommended improvements? The AEC is a multipurpose complex based in an agricultural tradition, but that has hosted nearly every type of event imaginable due to its wide variety of facility types. Indoor and outdoor facilities and grounds offer a myriad of options for event producers, including agricultural/equine/bovine and related, conventions, conferences, consumer shows, trade shows, concerts, family shows, hockey and festivals, among others. The three main indoor facilities are the Exhibition Hall and Conference facilities, the New Holland Pavilions and the Coliseum. The primary outdoor grounds include Willow Island and Quann Park. Owned and operated by the County, the AEC generates an operating profit annually, which is a feat unto itself. Most public event facilities operate at a deficit, so require public funds for debt service, annual capital outlays and operating losses. In the case of the AEC, the operations generate a profit, leaving less burden on the taxpayers of Dane County. Based on historic performance and attendance, HSP determined the current visitation and economic impact of the existing AEC. The following table summarizes the impact of the AEC in 2016. Alliant Energy Center Market, Financial, Facility, and Impact Analysis Executive Summary – Page 2 Table 1 Summary of Visitation & Impacts at Major AEC Components - Current Current New or Current Attributed Recaptured Current Room Annual Spending Annual Local Taxes Component Attendance Daytrips Nights (millions) FTE Jobs (000s) Ex Hall/Conference/Parking 323,448 164,890 92,277 $34 1,145 $1,031 Coliseum 186,862 107,479 19,089 $15 543 $246 Pavilions 141,977 45,593 56,461 $15 492 $604 Willow Island & Quann Park 157,000 102,950 9,103 $11 395 $135 Total 809,287 420,913 176,930 $76 2,575 $2,017 Source: Hunden Strategic Partners In 2016, the complex attracted approximately 809,000 attendees from its top events. Top events, which generate more then $10,000 in revenue, account for approximately 94 percent of AEC’s total attendees. HSP’s calculations indicate that the AEC generated nearly 177,000 room nights, $76 million in spending, supported 2,575 full-time equivalent jobs in the local economy, and generated $2.0 million in local sales and lodging tax impacts to the community. Clearly the facility has a positive impact on the community – and generates operating profit. However, there are challenges and opportunities, as with any physical complex that must compete and be sustained amidst the challenges of time and changing conditions. HSP’s analysis determined that, although the AEC’s place in the local community is well received, the complex cannot prosper, or be sustainable, without continued reinvestment. The primary area of concern on the campus is the condition of the Veterans Memorial Coliseum, as both event organizers and attendees continue to express frustration with the quality of the aging venue and most arena-style events, such as concerts and family shows pass it by for other quality venues in other markets. One of the most important determinations made during the analysis was whether or not the Coliseum needed to be replaced in order to allow Madison the opportunity to compete again for prime concerts, family shows and sporting events. After numerous market interviews with experts and promoters, including physical analysis by Sink Combs Dethlefs, HSP determined that a new arena development on the AEC campus is not necessary. Conversations with local, regional, and national promoters and industry professionals indicate that a renovation to the Coliseum will provide nearly the same incremental benefit as a new-build for about half of the cost. The Exhibition Hall is very well received in the market. Its challenge is that, while the size and flexibility of the exhibit hall is one of the complex’s greatest assets, the AEC does not offer the complete package of meeting facilities, walkable hotel options, and amenities necessary to accommodate modern conventions, conferences and meetings. Existing users want the facility to expand to accommodate their growing need for space. The market is demanding an expansion by 50 percent of the size of the exhibit hall. In addition, many users (including many who cannot currently meet in Madison due to facility size constraints), require a large ballroom and numerous breakout meeting rooms in order to host their event. Yet in order to host these large events and be competitive, the number of hotel rooms within walking or a very short driving distance is too Alliant Energy Center Market, Financial, Facility, and Impact Analysis Executive Summary – Page 3 few. The number of hotel rooms currently is about 400 too few, and with the recommended expansion, there will be a need for another large block of rooms. Investment in the campus has already resulted in tangible benefits on the campus, as evidenced by the increased activity following the $24 million development of the New Holland Pavilions. Since opening the New Holland Pavilions in the latter half of 2014, the number of agricultural-related shows increased from 18 in 2014 to 43 in 2016. Connectivity within the campus and connectivity to the surrounding neighborhoods is currently inhibited by a number of physical and other existing conditions. The HSP plan seeks to create both a sense of place on the AEC campus with a walkable district of restaurants (Restaurant Row) and a sense of connectivity to the neighborhoods, recreational areas, downtown and commercial districts surrounding the campus. The Madison and Dane
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