Final Report Market, Financial Analysis, and Economic Impact for Idaho Falls, Idaho Multipurpose Events Center Idaho Falls, Idaho Prepared for City of Idaho Falls Submitted by Economics Research Associates Spring 2008 Reprinted January 4, 2010 ERA Project No. 17704 10990 Wilshire Boulevard Suite 1500 Los Angeles, CA 90024 310.477.9585 FAX 310.478.1950 www.econres.com Los Angeles San Francisco San Diego Chicago Washington DC New York London Completed Spring 2008 - Reprinted Jan 4, 2010 Table of Contents Section 1. Executive Summary.............................................. 1 Section 2. Introduction and Scope of Services .................... 7 Section 3. Idaho Falls, Idaho Overview ................................ 11 Section 4. Potential Anchor Tenants / Sports Leagues / Other Events ......................................................... 22 Section 5. Comparable Events Centers ................................ 43 Section 6. Events Center – Potential Sizing and Attendance .................................................... 54 Section 7. Financial Analysis – Base Case, High and Low Scenarios ....................................................... 56 Section 8. Economic Impact Analysis ................................... 83 Appendix. Site Analysis Proposed Idaho Falls Multipurpose Events Center ERA Project No. 17704 Page i Completed Spring 2008 - Reprinted Jan 4, 2010 General Limiting Conditions Every reasonable effort has been made to ensure that the data contained in this study reflect the most accurate and timely information possible, and they are believed to be reliable. This study is based on estimates, assumptions and other information reviewed and evaluated by Economics Research Associates from its consultations with the client and the client's representatives and within its general knowledge of the industry. No responsibility is assumed for inaccuracies in reporting by the client, the client's agent and representatives or any other data source used in preparing or presenting this study. This report is based on information that was current as of Spring 2008 or as noted in the report, and Economics Research Associates has not undertaken any update of its research effort since such date. No warranty or representation is made by Economics Research Associates that any of the projected values or results contained in this study will actually be achieved. Possession of this study does not carry with it the right of publication thereof or to use the name of "Economics Research Associates" in any manner without first obtaining the prior written consent of Economics Research Associates. No abstracting, excerpting or summarization of this study may be made without first obtaining the prior written consent of Economics Research Associates. This report is not to be used in conjunction with any public or private offering of securities or other similar purpose where it may be relied upon to any degree by any person other than the client without first obtaining the prior written consent of Economics Research Associates. This study may not be used for purposes other than that for which it is prepared or for which prior written consent has first been obtained from Economics Research Associates. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations. Proposed Idaho Falls Multipurpose Events Center ERA Project No. 17704 Page ii Completed Spring 2008 - Reprinted Jan 4, 2010 1. Executive Summary The Greater Idaho Falls Chamber of Commerce has retained Economics Research Associates (ERA) to prepare a 3rd party event center market and financial feasibility, as well as an economic impact analysis for the proposed multipurpose event center (MPEC) to be located in Idaho Falls, Idaho. Based on our conversations, it is our understanding that at this time no particular sports league has been targeted to be the MPEC’s anchor tenant. Idaho Falls, Idaho General Demographics Idaho Falls, Idaho located off Interstate 15, is situated in Bonneville County in Eastern Idaho. Idaho Falls is approximately one and a half hours west of the Wyoming border and two hours north of the Utah border. The region’s economy relies significantly on the Idaho National Laboratory (INL). In addition to the INL, the Idaho Falls economy is a service economy relying in particular on hotels, restaurants, retail and entertainment. A regional medical center (Eastern Idaho Regional Medical Center) serves as one of the major medical centers in Eastern Idaho. Idaho Falls is part of the Idaho Falls MSA and is also part of the Idaho Falls- Blackfoot Combined Statistical Area. The area serves as a gateway to some of the most visited outdoor attractions in North America such as Yellowstone Park and the ski slopes of the Rocky Mountains. The Idaho Falls Chukars (Short Season “A” affiliate of the Kansas City Royals) are one of the leading draws in the region. Melaleuca Field, which replaced McDermott Field, opened in 2007 with 3,400 seats and eight luxury suites. Holt Arena in Pocatello (approximately 50 miles away) is the nearest sports-focused events center in the region. The 8,000-seat multi-purpose arena serves as home to the Idaho State University (ISU) Bengals. Idaho Falls currently has 19 hotels with approximately 1,800 rooms, with another four hotels due to open soon. Some form of conference facility is currently offered at 12 of the area hotels. Other conference facilities include the Civic Auditorium, the ISU/IU Center for Higher Education, the University Place Auditorium, and the Willard Arts Center and Colonial Theater. Local Residential Market ERA used geographic information systems (GIS) software to calculate and project all demographic and socioeconomic data presented herein. The software program, called ESRI Business Information Solutions (BIS), uses US Census Bureau data to project demographics for 2007 and 2012. Proposed Idaho Falls Multipurpose Events Center ERA Project No.17704 Page 1 Completed Spring 2008 - Reprinted Jan 4, 2010 According to ESRI BIS data, the United States market within 10 miles of the Idaho Falls site had a resident population of over 100,000 as of 2007. The 20- and 50-mile U.S. markets had resident populations of approximately 125,000 and 190,000, respectively, as of 2007. Projection figures indicate that population growth will remain steady in all three markets. In 2012, population in the 10-mile market is expected to increase to 115,000, at an average annual rate of 2.2 percent. The 20- and 50-mile markets will grow at a similar annual rate of 2.3 percent and 2.1 percent, respectively. Events Center Size Based on the market analyses, it is our estimate that the Events Center is to be as follows: • Approximately 4,500 to 5,500 seats • Approximately 15 to 25 suites (10 to 15 seats per suite) • Approximately 300 to 400 club seats • Events Center club area • Conference/Meeting Rooms • Clear exhibition space for trade shows • Large Production Kitchen • Team Offices • Administrative Offices • Team Store • Locker Rooms/Auxiliary Dressing Rooms • Trainers Room Attendance Results Table 1-1 presents a summary of the forecasted number and type of events, as well as the estimated paid attendance per event, for year 1. It should be noted that certain events will not be assumed to occur each year. Also, it is assumed in the base case that a minor league hockey franchise is the anchor tenant of the building. These event and attendance assumptions are based on the Idaho Falls market area as described within this analysis. ERA has estimated that a majority of the attendees would be from the primary and secondary market areas, and a smaller number from the tertiary market. Proposed Idaho Falls Multipurpose Events Center ERA Project No.17704 Page 2 Completed Spring 2008 - Reprinted Jan 4, 2010 Table 1-1 Base Case Events and Attendance (Year 1) Number Average Paid Total Paid Event of Events Attendance - (1) Attendance Anchor Tenants Hockey 36 3,600 129,600 Concerts Major 7 4,400 30,800 Minor 5 3,300 16,500 Performing Arts / Theater 0 0 0 Family Shows Wrestling 2 3,900 7,800 Circus 4 2,600 10,400 Ice Shows 2 3,600 7,200 Thrill 2 1,600 3,200 Children 4 2,300 9,200 Other Sports Major Ice 2 3,700 7,400 Motor Sports 2 2,800 5,600 Boxing 2 3,200 6,400 Rodeo / Equestrian 5 2,800 14,000 Miscellaneous (HS Basketball, HS Hockey) 5 1,000 5,000 Trade Shows / Festivals Trade/Exhibits 10 1,000 10,000 Religious/Cultural 2 800 1,600 Averages/Totals 90 264,700 (1) Includes luxury suite and club seat seating. Note: Some numbers may not add up due to rounding. Source: Economics Research Associates Proposed Idaho Falls Multipurpose Events Center ERA Project No.17704 Page 3 Completed Spring 2008 - Reprinted Jan 4, 2010 Financial Results Table 1-2 provides cash flow summaries for the proposed Idaho Falls Multipurpose Events Center for the first five years of operation (before debt service). Table 1-2 Base Case Cash Flow – Proposed Idaho Falls Events Center (Dollars in 000) Year 12 345 Number of Events 90 90 92 92 91 Annual Paid Attendance (000) 265 255 259 262 253 Operating Revenues Ticket Revenues $516 $479 $509 $552 $533 Other Revenues 3,119 3,035 3,171 3,315 3,297 Total Operating Revenues $3,635 $3,514 $3,680 $3,867 $3,829 Total Operating Expenses $2,962 $3,015 $3,090 $3,160 $3,229 Surplus / Deficit from Operations (before debt service) $672 $499 $590 $708 $601 Note: Some numbers may not add up due to rounding. Source: Economics Research Associates Economic Impact ERA’s approach towards economic impact calculation is based on operating expenditures of a facility instead of revenues generated on-site. This approach takes into account the actual dollars spent in the local economy and disregards profits and direct margins that are often invested elsewhere. Though the approach provides conservative results, it is more realistic in terms of ‘net’ impacts to the local economy.