I FENNEMORE CRAIG, P.C. Timotþ Berg (lttro. 004170) 2 Kendis Key Muscheid (No. 015212) Kevin M. Green (No. 025506) J 3003 North Central Avenue Suire 2600 4 Phoenix, AZ 85012-2913 Telephone : (602) 9 I 6-5000 5 Email : tberc(ò,fclaw.com Email : kmu-sðhei fô.fclaw. com 6 Email: ksreenlD.fèf aw.com Attorn eyffi I nte rv e nti on 7 Arizona Sports and Tourism Authority I Thomas C. Horne Arizona Attornev General 9 Kimberly Cygan (No. 013977) Assistant Attorney General l0 ArizonaAttorney General's Office, Tax Unit 1275 West Washington St. 11 Phoenix, A285007-1298 Telephone : (602) 542-8391 t2 Email: Tax@azag,.gov Attorney foìÓ e feiã'ant s l3 Arizona Department of Revenue and Gale Garriott t4 l5 SUPERIOR COURT OF THE STATE OF ARIZONA t6 ARIZONA TAX COURT t7 SABAN RENT-A-CAR, LLC; DS Case No. TX2010-001089 18 RENTCO, INC.; and PTNK, individually and in a representative STATEMENT OF FACTS IN SUPPORT t9 capacity, OF DEFENDANTS' MOTION FOR SUMMARY JUDGMENT 20 Plaintiffs, 2t v. (Assigned to the Hon. Dean Fink)

22 ARIZONA DEPARTMENT OF REVENUE, a political subdivision of 23 the State of Arizona; and GALE GARzuOTT, Director of the Arizona 24 Department of Revenue,

25 Defendants

26 {EMORE CRAIG, P.C

PuoDNrx 1 and 2

a J TOURISM AND SPORTS AUTHORITY dba THE ARIZONA 4 SPORTS AND TOIIRISM AUTHORITY, a political subdivision 5 of the State of Arizona,

6 Defendant-in- Intervention. 7 I

9 Pursuant to Rules 56(b) and 56(c)(2), Ariz. R. Civ. P., Defendants Arizona

10 Department of Revenue ("ADOR") and Gale Garriott ("Garriott) and Defendant-in-

11 Intervention Tourism and Sports Authority dba The Arizona Sports and Tourism l2 Authority ("AzSTA" and collectively with ADOR and Garriott, "Defendants") submit the

13 following statement of facts in support of their concurrently filed Motion for Summary t4 Judgment.

15 STATEMENT OF UNDISPUTED FACTS t6 L In November 2000, the majority of voters in Maricopa County approved I7 Proposition 302 that would fund, in part, AzSTA's programs and facilities. See A.R.S.

l8 $ s-83e(A). t9 2. Passage of Proposition 302 authorized, among other things, a local car

20 rental surcharge that would be used to partially fund AzSTA's activities (herein referred

2t to as the "AzSTA Tax"). ,See A.R.S. $ 5-839(B).

22 3. Plaintiffs' Complaint does not allege that the AzSTA Tax has been

23 applied in any manner inconsistent with the plain terms of A.R.S. $ 5-839(B). See

24 generally Plaintiffs' "Notice of Appeal and Complaint for Declaratory and Injunctive

25 Relief and Refund of Taxes Imposed Under A.R.S. $ 5-839" (the "Complaint").

26 4. Plaintiffs are Arizona entities that have engaged in the business of *i:,:i'""

1 I leasing motor vehicles in Maricopa County to third parties. See Complaint, $ II, fl 1; see 2 also December 7, 2010 Answer of ADOR and Garriott ("Answer"), p. 2, n 5; see also

I J AzSTA's January 24,2011 Answer in Intervention ("AzSTA Answer"), $ II, T 1. 4 5. Plaintiffs have been subject to transaction privilege taxes in Arizona, at

5 least in part, pursuant to the AzSTA Tax provisions. ,See Complaint, $ II, 1l l; see also

6 Answer, p.2,n 5; see also AzSTA Answer, $ II, T 1.

7 6. Plaintiffs filed an Administrative Class Claim for Refund of Taxes

8 ("Claim") on or about August 19,2009 with ADOR seeking a refund of the AzSTA Tax

9 remitted by their businesses from September 2005 through March 2008. See October 19,

t0 2010 Administrative Law Judge Decision, attached hereto as Exhibit l, p. 2,I3 .

ll 7 . On October 1,2009, ADOR denied Plaintifß' Claim. See id. atl6. t2 8. Plaintiffs subsequently filed a protest and requested a formal hearing.

t3 See id. at3,l7. l4 9. Plaintiffs' request for a formal hearing was forwarded to the Arizona

15 Office of Administrative Hearings, and their protest was scheduled for determination

t6 based on written memoranda. See id. t7 10. On October 19, 2010, the Administrative Law Judge issued a written

18 decision upholding ADOR's denial of Plaintiffs' Claim. See generallyExhibitl. t9 11. Among other things, the Administrative Law Judge concluded Plaintiffs

20 failed to establish "that the Tribunal has authority to determine the constitutionality of the

2l [AzSTA Tax]." See id. at 5,n 4. 22 12. On November 16, 2010, Plaintiffs filed their Notice of Appeal and

23 Complaint for Declaratory and Injunctive Relief and Refund of Taxes Imposed Under

24 A.R.S. $ 5-839 (the "Complaint"). See generally, Complaint. 25 13. The Cactus League, whose facilities are partially funded by the AzSTA 26 Tax, estimates that in 2007, 57Yo of spring training attendees in stadiums were from

NNEMORE CRAIC, P,C

PHoENt¡_ -J- I another state or country, and more than 50o/o of the attendees at spring training baseball

2 games were out-of-state visitors. See March, 2007 Cactus League Attendee Tracking

a J Survey, excerpts of which are attached hereto as Exhibit 2, pp.5-5F; see also A.R.S. $ 5-

4 808.

5 DATED this 18'h day of February,20ll.

6 FENNEMORE CRAIG, P.C.

7 I Timothy Berg 9 ",ØT_Kendis Key Muscheid Kevin M. Green 10 Attorneys for Defendant-Intervenor Arizona Sports and Tourism Authority 11 THOMAS C. HORNE t2

13

t4 Kimberly Cygal Attorneys for Defendants Arizona 15 Department of Revenue and Gale Garriott t6 I7 ORIGINAL FILED and COPIES of the 18 foregoing electronically transmitted this 18th day of February,20lI,to: t9 Shawn K. Aiken 20 Aiken. Schenk- Hawkins & Ricciardi P.C. 4742Ñorth24Û' Street, Suite 100 2l Phoenix, AZ 85016-4859 [email protected] 22 Gregory D. Hanley, admission ,pro hac vice pending 23 KICÍ

26 By

NNEMORE CRAIG, P.C

PüoDNrx -4- EXHIBIT 1 I IN THE OFFICE OF ADMINISTRATIVE HEAR¡NGS 2 Saban Rent-A-Car, 3 LLC, No. 1 0C-2010001O9S-REV DS Rentco,lnc. and pTNKr 4 License No.07-404300, ADMINISTRATIVE Petitioners, 5 LAW JUDGE DECISION

6 ONA DEPARTMENT OF REVENUE, 7 ransactlon Privilege and Use Tax Section, I Respondent. I

10 HEARING: 1l Conducted through written memoranda; hearing record concluded 12 as ofAugust 27, 2010.

13 APPEARANCES: Attomey shawn K. Aiken represented petitioners. Tax 14 counsel Robert Ridenour represented the Arizona Department of Revenue, 15 Transaction Privilege Audit.

16 ADMINISTRAT|VE LAW JUDGE: Kay A. Abramsohn

77 Based l8 on review of the written submissions, thè Administrative Law Judge makes the following l9 Findings of Fact, Conclusions of Law and order upholding the 20 Department's denial of a claim for refund.

21 FINDINGS OF FACT Petitioners 22 1' were engaged in the business of leasing motor vehicles to third parties. 23 saban Rent-A-car operated between January 200s and January 31, 2006. DS Rentco 24 operated from February 2006 through June 2002. pTNK operated

2_5 from July 2007 through March 2009.2

26 2. Arizona Revised Statutes ('A.R.S.") 5-839 imposes a car rentalsurcharge on the business 27 of leasing motor vehicles that are leased for less than one year. lmposed through proposition, 28 a to partially fund the Tourism and Sports Authority, the surcharge was approved 29 by voters in November 2000 and the taxes went into effect March 1, 30 2001- The surcharge is three and one-fourth percent of the gross proceeds

' The case caption is amended pursuant to rhe original petitlon flled to Department.

Offrce of Adminisbative Hearings 1400 West Washtngtrcn, Suite lOi Phoenlx. Arizone BSffiT (602) s42-9826 from the business of leasing motor vehicles, or 1 two dollars fìfty cents on each rental, whichever is more. The law specifies 2 that when a rental is for purposes of temporary replacement, as defined in statute, the surcharge 3 is lÍmited to $2.50 per vehicle. The surcharge does not apply to leases of vehicles 4 that are made to car dealerships, repair facilities or insurance companies who subsequently provide 5 that vehicle to a person whose own car ís being repaired or servíced. 6 3. Petitioners fìled their Administrative Class Claim 7 for Refund of Taxes ("Claim") on August 19, 2009. See Exhibit petitioners,written I A: see a/so hearing filing of the Claim with attachments. The refund period I claímed was the four years preceding the filing and fon¡vard (through the date the Department ceases f0 to collect the surcharge).t The'Claim argues that the surcharge violates tl the U.S. Constitution by discriminating against out-of-state interests. The Claim argues that the surcharge 12 violates the Arizona Constitution alleging the proceeds are being used for purposes 13 other than pennitted in the Arizona Constitution Article 14, Section 9. ln the Claim, 14 Petítioners indicate that the amount of the refund cannot be determined, but estimate 15 the amount to be approximately ten million dollars per year.a 16 4. By letter dated August 28, 2009, the Department informed Petitioners that 17 the Claim was not a valid claim for the reason that it did not speciff the name, address 18 and tax number of each claimant and did not state an amount requested. The l9 Department requested addítional documentation. see Exhibit B. 20 5- Petitioners clarified the Claim with the requested information in a tetter 21 dated September 28, 2009. See Exhibit C. Petitíoner clarified that the Claim involved 2. the-periocis September 2005 through March 2OOg.5 23 6. By letter dated October 1, 2009, the Department denied the Claim. See 24 Exhibit D. 25

26

27 2 Despite the changes in name, Petitioners did not obtain new transaction privilege - license ntlmb"rrl- Attachment C contains copies of muftiple privilege 28 transaction tax returns, startiig with January 2005 and tending with March 2008. ln the Claim, 29 Petitioners referenced their fìled tax retums on which are designated amounls for the surcharoe. s 30 Tne oãpartment did not receive a return for either october 2007 or January 2008. See Department,s hearing memorandum. 7 Petitioners filed f ' their protest requesting a formal hearing and the Department subsequently forwarded 2 the matter to the Arizona office of Administrative Hearings to be set for formal administrative petitioner 3 hearing. requested that the matter be resolved through consideration 4 of the Claim, and the matter was scheduled for determination through written 5 memoranda. B. Article 14, Section g of the 6 Arizona Constitution states "No moneys derived from fees, excises, or license taxes relating 7 to registration, operation, or use of vehicles on the public I highways or streets or to fuels ... used for the propulsion of vehicles on the public highways or streets, o shall be expended for other than highway or street purposes ... " 10 9. ln wiitten responsive argument to the Claim, 11 the Department argued that Petítioners have not made any showing of any discrÍminatory 12 treatment of any out-of- state residents and have not isolated any amounts of the 13 surcharge paid by out-of-state customers. The Department further argued that the surcharge ís 14 not in violation of the Arizona constitution because it is a tax on the business of leasing vehicles 15 and is not a tax on the use of the vehicles. Finally, the Department argued that 16 neither the Tribunal nor the Department have any authority to determine constítutionality.o 17 APPLICABLE LAW 18 1. The Arizona legislature has imposed a privilege t9 tax on persons engaging in certain businesses in the state. Generally, the tax is measured by the gross 20 proceeds of sales or gross income arising from certain business activities. The 21 Arizona transaction privilege tax is not a sales tax or a tax on sales, but is instead 22 a tax on the privilege of engaging in business measured by gross income c.r gross recelpts 23 fro,.n that business. State Tax Comrnrissio n v. Garrett Corporation,Tg Ariz.3gg, 3g1 2g1 p.Zd 24 , (1955); 208 sfafe Tax commissíon v. euebedeaux chevrolet,ll Ariz. 280, 2g9,226 25 P.2d 549 (1e51). 26 2' A.R.S. S 5-839 mandates that the Departrnent collect a car rental 27 surcharge on the gross proceeds or gross income from the business of leasing motor 28 vehicles. 29 6 30 Moulton v. Napolilano, 205 Ariz. 506. 513. 73 P.3d 637. 644 (App. 200a) (citing Esfafe of Bohn v. Waddell,174 An2.239, 249, B4B p.2d 324.334 (1993)). The business I 3- of leasing tangible personat property is an activity subject to the Arizona transaction privilege tax under A.R.S. 2 S 42-5071. The tax base for leasing activity is the gross proceeds of sales or gross income from 3 the business under A.R.S: S 42-5071 with some specific exceptions.t A.R.S. 42-soz1(D) provides 4 S that the tax base does not include amounts attributable to the car rental surcharges 5 imposed under A.R.s. S 28-5810 and A.R.s. S 48-4234. The statute does not specify 6 a tax base exclusion for the rental surcharge imposed under A.R.S. 5-S99. 7 S 4. "Gross proceeds of sales" 'the proceeding I means value or accruing from the sale of tangible personal property without any deduction on accounf of the cost 9 of property sold, expense of any k¡nd orlosses, but cash discounts allowed l0 and taken on sales are not included as gross income." see A.R.s. emphasis added 1t S42-s001(5), here. "Gross income" rneans "the gross receipts of a taxpayer derived from trade, 12 business, commerce, or sales and the value proceeding or accruing from the sale of 13 tangibfe personal property or service, or both, and without any deduction on account of 14 losses." See A.R.S. 542-500f (4). 15 5. A.R.S. S 42-5023 provides that a person's gross proceeds are presumed 16 to be the tax base for the business activity until the contrary is established by the 17 taxpayer. f8 6. A.R.s. s 42-110s(c) provides that a person who is subject to the 19 [transaction] taxes shall keep and preserve suitable records necessary to determine the 20 tax for which the person is liable for the timitatíons periods. 21 CONCLUS¡ONS OF LAW 2, 1. Pursuant to A.R.s. 542-1004(A), the Department is charged with the 23 administration and enforcement of the Arizona tax provisions. 24 2. Generally, Arizona case law provides that departmental determinations 25 are presumed conect and the burden is on the taxpayer to overcome this presumption. 26 See Arizona Sfafe Tax Commr.ssion v. Kieckhefer.E A.R.S. S 42-12sS was enacted in 2f 2004 to provide that the Department might have the burden of proof regarding factuat 28

29 t None of the stated exceptions 30 t in AR.S. S 42-507f (B) would be applicabte in frts matter. 6z Ari¿ l02. i9i p.2d7às (1948). 4 issues that are relevant f to ascertaining the tax liability of a taxpayer in certain circumstances. A.R.S. 4Z-12SS provides 2 S as follows: The department has the burden of proof 3 by a preponderance of the evidence in any administrative or judicial proceeding regarding any factual 1 issue that is relevant to ascertaining the tax liability ót alaxpayrr. Îhit section does not abrogate any provision of this 5 title or tifle 43 ihat requíres a taxpayer to substantiate an item of income or expense. Thís section 6 applíes to a factual issue if a preponderance of the evidence demonstrates that: 7 1. The taxpayer asserts a reasonable dispute regarding the issue. I 2. The taxpayer has fully cooperated with the deþartment regarding the issue incfuding providing, I within a reasonable period of time, accéss to-and inspection of all witnesses, information anci documents within the taxpaye/s 10 control, as reasonably requested by the department. 3. The taxpayer has kept and maintained records as required by this 1l title, title 43 or by the department. 12 3. ln the case of a claim for refund, the law requires that the taxpayer 13 substantiate the claim. Here, Petitíoners argue that the voter imposed surcharge is 14 unconstitutional. Therefore, the Administrative Law Judge concludes that A.R.S. g 42- 15 1255 does not appfy to place the burden on the Department, and Petítioners continue to 16 .r.{j: bear the burden of proof that the Department has failed to take into account the tax laws 17 or is mistaken about the facts. See a/so A.A.C. R15-10-118. The Administrative Law t8 Judge concludes that Petitioners have not met their burden in this regard. 19 4. Petitioners have not demonstrated that the Tribunal has authority to 20 determine the constitutionality of the surcharge. 21 5. The Tribunal is bound to apply the Arizona laws as enacted and, if 22 available, as interpreted by the courts. A.R.S. g 5.849 squarely applied to petitioners, 23 business. Therefore, the Department's denial of refund, of a surcharge due pursuant to 24 A.R.S. S 5-849, is an appropriate determination. The Administrative LawJudge 25 concludes that the Department properly denied Petitioners'Claim for refund. 26 Petitioners' appeal should be denied. 27 ilt 28 ilt 29

30 I ORDER Based on the foregoing, 2 lT lS ORDERED the Department's 3 denial of Petitioners'Claim is upheld and I Petitioners' appeal is denied. ORDERED and DATED this day, October 19,2010. 5

6

7 ' lY'Lf l,UWitln*¿* I Kay A. Abramsohn o f0

11 Original sent by Certified mail 12 with Blue appeal sheet 13 this.Jrt day of October, 2010 to:

14 Shawn K. Aiken

15 Aiken Schenk Hawkins & Ricciardi PC 4742 North 24th Street, Ste 100 16 Phoenix, AZ 85016 1f Counsel for Petitioners f8 t9 Copy sent by mailthis &¿"V of October, 20i0 20 Gale Gariott, Director Department of Revenue 21 ATTN: Robert Ridenour, TP Tax Appeals 22 1600 West Monroe Phoenix, 85007 23 M-

24 By 25

26

27

28

29

30 APPEAL OF DECISION OF HEARING OFFICER

This Decislon will become the Flnal Order of the Arizona Department of Revenue (Department) unless an appeal is filed by the taxpayer(s) or the Sectlon.

Th_e taxpaye(s) has three possible procedures to follow to appeal this Decision of the Hearing Officer.

1. APPEAL TO D¡RECTOR, PRESERVING RIGHT TO LATER APPEAL.TO STATE BOARD OF TAX APPEALS

Under procedure 1. a written petition setting forth specifìc reasons forthe objections must be filed with the Director of the Department within 30 days after the taxpayer(s) receives this Decision. See Arizona Administrative Code (A.A.C.) R15-10-131.

The original written petition should be titled "Notioe of Appeal of Decision of the Hearing Officef and mailed to: Directo¡'s Office, Arizona Department of Revenue, 1600West Monroe, 9th Floor, Phoenix, Arizona 85007-2650. For more information call (602) 716€090. Also, a copy of your appeal petition should be sent to the Section of the Department that issued you the determination. Written requests for an extension of time to fife the appeal will be considered by the Director provided that good cause has been shown and provided that such requests are rnade within the original 30day period. A MAILED PETITION MUST BE POSTMARKED ON OR BEFORE THE DUE DÁTE. The Director will review the entiie Director's those selecting procedure; matter and issue a Decision. For taxpayers - this the Directo/s Declsion is the Final Order of the Department.

lf no appeal petition is sent to the Director within 30 days aftor taxpâye(q) receives tnis Decision, then this Decision of the Hearing Ofñcer automatlcally becomes the Flnal Order of the Department (no additional decision will be sent by lhe Department), and taxpaye(s) may activate the second available procedure to appealthis Decision.

2. APPEAL TO THE STATE BOARD OF TAX APPEALS

Procedure 2 available to taxpayer(s) is an appeal of the Final Order of the Department, whether it was the Hearing Office¡'s Decision or the Directods Decision, to the StàtetBóârd of TaxAppeals, 100 North 1Sth Avenue, Suite 140, Phoenix, Arizona 85007. An appealmust be filed withln 30 days after the Decision has become final. Authority for this procedure iS found in A.A.C. Rl5-10-132 and Arizona Revised Statutes (A"R.S.) $ 42-1253; 'Appeatforms and other information may be obtained by calling the State Bqqrd at (602).364:11.02,.

3. AF'PEAL TO TÆ( COURT

ii Office of Administrative Hearings 1400 Wcst Washingtorç Suire l0l - phocnír. A¡izona 85007 Tclcphone (602)-542-9826 FAJ( (ó02)-j42-982? Janice K. Brewer Cliff J. Vanell Governor Director

10120t2010

Shawn K. Aiken Aiken Schenk Hawkins & Ricciardi pC 4742 North 24th Street, Ste 100 Phoenix, AZ 85016

Re: l0C-2010001O9S.REV

Saban Rent-A-Car, LLC, DS Rentco,lnc., and PTNK, License No. 07-404300,

Petitioners,

ARIZONA DEPARTMENT OF REVENUE, Transaction Privilege and Use Tax Section,

Respondent.

Dear Mr. Aiken:

Please find the decision of the Office of Administrative Hearings for the above entitled matter.

Mission Statement: We willcontribute to the qualiry of life in rhe srate of Arizona by fairly and impanially hearing the contested matters of our fellow citizens arising out of state regulatíon. EXHIBIT 2 CACTUS LEAGUE ATTENDEE TRACKING SURVEY (March,2007)

Introduction This Attendee Tracking Survey, conducted for the Cactus League and Goals Baseball Association, \ryas designed to provide an estimate of the current expenditure impacts that 2007 Cactus League baseball game attendees have on the Arizona economy. This project was also designed to profile (in general and expenditure terms) Cactus League attendees, including a comparison of local area and out- of-area fans. Ultimately, these expenditure impacts and profiles will be used to better market and promote the Cactus League "product" to baseball fans nationwide.

This tracking study included two major components: (1) an in- person survey of 2007 Cactus League baseball game attendees conducted at nine facilities in the Phoenix and Tucson metropolitan areas; and (2) an estimation of Cactus League attendee expenditure impact on the Anzona economy.

Results from this study have been compared to prior surveys conducted by FMR Associates (in 2003) and Behavior Research Center (in 1993 and 1998) for the Cactus League Association. As much as possible, FMR replicated these prior surveys - in terms of sampling, questionnaire design, interviewing procedures, data processing and expenditure analysis - in order to provide the most direct comparison of results between the four studies. The 1998 study included ten Cactus League teams that played in eight locations. The 2003 and 2007 projects reflect the addition of the Kansas City Royals and Texas Rangers at the Surprise facility - bringing the total teams studied to 12 (playing in nine locations).

Areas of Investigation - The following areas of investigation were considered the central points for this Cactus League Attendee Tracking Survey:

1. Demographic Profiling of Cactus League Attendees - What is the demographic profile of 2007 Cactus League attendees in terms of gender, age, household income and employment status? Where do they live (metropolitan Tucson or Phoenix, elsewhere in Arizona or another state or country)? How does this profile compare to the 2003 survey?

Cactus League, March, 2007 I-1 2. Out-of-Area Visitor Profiling and Expenditure Patterns - How important is attending spring training games in out- of-area attendees' decision to visit metro Tucson or Phoenix? How long do out-oÊarea visitors stay in the Phoenix or Tucson area and what are their estimated per- category expenditures (in terms of lodging, food and beverages, entertainment, transportation and retail shopping) during their stay? Where do out-of-area visitors stay? Do they rent a vehicle? How many people are in their haveling party? How have out-oÊarea visitor expenditures and profiles changed since 2003? What types of activities do out-of-area visitors participate in while staying in Arizona for spring training? What Arizona destinations do they visit?

J. Game Attendance and Expenditure Patterns - What is the size of the "t¡lical" game party and how much do they spend to attend a Cactus League spring training game? How many 2007 spring haining games do attendees plan to attend this season? How do these patterns compare to the 2003 study?

4. Attendee-Based Expenditure Impacts - What are the estimated Direct Expenditures and Total Expenditure Impact of 2007 Cactus League attendees, both overall and in terms of geography (Pima County, Maricopa County and other areas of Arizona)?

Methodology To accomplish the goals of this study, all interviews were Overview conducted in-person, supervised by FMR Associates, during the 2007 Cactus League season between March 8th and March 26th at seven locations in Phoenix and two in Tucson. The specific procedures used to select the sample are explained in detail in the Appendix of this report.

Sample This study is based on 2419 intercept interviews conducted at Composition and home games of each of the 12 Cactus League teams in nine Weighting locations. There were approximately 200 interviews completed at each team's home stadium over a two-day period - comprised of 100 weekday and 100 weekend interviews. All interviews were conducted among paid attendees, excluding attendees who were provided their admission free-oÊcharge.

Cacfus League, March, 2007 r-2 As in prior studies, the final in-tab sample was weighted to reflect the actual attendance distribution of the 12 Cactus League teams. Display 1 below summarizes the "raw" (unweighted) sample (N:2,419), along with 2007 Cactus League attendance figures (with a comparison to 2003 attendance) and the weighted 2007 sample (N:2,406). The tables in this study, as well as the expenditure impact calculations, are based on this weighted sample.

Display I 2007 Cactus Leazue Attendance and Sample Weighting

2003 2007 Number of Interviews 2003 2007 % of Total 7o ofTotal Unweighted Weighted Attendance Attendance Attendance Attendance Samole Samole Shicago Cubs HoHoKam Stadium, Mesa) 133"223 17s.891 12.501 14.3o/a 191 34 Jan Francisco Giants Scottsdale Stadium) t33,249 148,98t 12.501 12.Zo/a t9s 29: leattle Mariners 'Peoria Snorts Comnlex) 101-37( 126.13',, 9.501 10.4o/a 204 25 Los Angeles Angels 'Tempe Diablo Stadium) 96.024 10s.86J 9.0o/( 8.7o/n 20( 2t( lan Diego Padres 'Peoria Sports Complex) 88,70ç 100,061 8.301 8,20Á 192 l9f )akland Athletics 'Phoenix Municioal Stadium) 82-131 95.05t 7.701 7.1o/n t9( t8( \rizona Diamondbacks 'Tucson Electric Park) l0l,76t 94,291 9.601 7.80Á 212 l8: fexas Rangers 'Surprise Recreation Campus) 80.081 86.864 7.501 7.lo/n 203 t71 Shicago White Sox 'Tucson Electric Park) 12.863 86,39; 6.801 7.lo/n 213 t7( Kansas City Royals 'Surprise Recreation Campus) 50.07( 78,74',, 4.701 6.So/n t9( l5: Wilwaukee Brewers 'Maryvale Baseball Park, lhoenix) 60,s71 61.88t 5.701 5.lo/" 201 t2: lolorado Rockies Hi Corbett Field, Tucson) 65,3 I ( 57,35J 6.101 4.8o/t 20( l1 1,065,381 11217,551 100.0% 100.ïo/t 2,415 2,401

Cactus League, March, 2007 I-3 Place of Residence - In a reversal from the 2003 study, significantly more Cactus League attendees are local residents of another state or country (from 48olo to 570lo). and fewer are residents of the mehopolitan Tucson or Phoenix areas (from 480lo to 390lo). The rest are from outlying areas of Arizona (4o/o, identical to 2003). The increase in Cactus League attendees from another state or country is similar between both Phoenix (from 55Yo to 62%) and Tucson (from 28Yo to 36%) attendees. Consequently, one-half of Tucson attendees are local residents (down from 6l%o), while 36% (down from 44o/o) of Phoenix attendees are local residents. More Tucson attendees are from elsewhere in Aizona (l4o/o, compared to lo/o of Phoenix attendees).

Similar to 2003, visitors from another state or country skew older (more often 45 or older) than do local resident attendees (most are 34 or younger). Non-local attendees have much higher incomes.

The teams that attract the greatest percentage of non-local attendees are the San Francisco Giants (74yo, up from 610/0), the San Diego Padres (70yo, up from 48%) and the Seattle Mariners (68%, unchanged). The teams that are more likely to draw "local" crowds are: the White Sox (65%, up from 57o/o), the Kansas City Royals (59yo, unchanged) and the Diamondbacks (44o/o, down from 67%).

Similar to prior studies, out-of-area visitors are most likely to "come from" California (41%), illinois (12%) and V/ashington (ll%). The Giants (72%), the Oakland Athletics (66%) and the Angels (55%) are most likely to attract fans from California. Slightly more than one-half of Illinois residents (51%) attend White Sox games, while the Mariners (47%) are most likely to attract fans from Washington.

Overall. out-of-area visitors represent 44 states - as well as the District of Columbia. Canada. Germany and Mexico. Refer to Detailed Table 5a in the Appendix of this report for a complete list of the state or country of residence among out-of-area visitors. Detailed Table 5b includes a frequency count of the zip codes of all out-of-area visitors surveyed, based on the unweighted data from this study. Overall, 1,035 U.S. Postal Zip Codes were provided by respondents, as well as three foreign countries.

Cactus League, March, 2007 Table 5 Place of Residence

1993 I 998 2003 2007 Metro Area Total Total Total Total Tucson Phoenix vletropolitan Phoenix/Tucson 4lol 3901 4801 39V" 5001 360/ llsewhere in Arizona 401 3o/t 4o/( 40Á l40l lol \nother state or countrv 55o/( 5801 4gol 57o/¡ 360/( 6201 N:24s? N:2406 N472 N:1932

Team San Los San Chicago Francisco Seattle Angeles Diego Arizona Cubs Giants Mariners Ansels Padres Diamondbacks vletropolitan Phoenix/Tucson 4001 2501 300/< 4001 28% 4401 llsewhere in Arizona 001 lol 2o/( 201 2% 2001 \nother state or country 6001 7401 6801 5801 7001 3601 N:345 N:29s N:251 N:2lC N:l98 N:I81

Team Chicago Kansas Oakland Texas White City Milwaukee Colorado Athletics Rangers Sox Rovals Brewers Rockies

Vf etrop olitan Phoenix/Tucs on 4lol 400/, 6501 5901 3lo/. 4Ùot, llsewhere in Arizona 30/< lol l00/( 101 2o/. l0o/, \nother state or countrv 5701 5901 2501 40% 6701 50v, N:l8( N:l71 N:17C N:157 N:123 N:l I

Question: Is your permanent place of residence in the metropolitan (PhoenilTucson) area, elsewhere in Arizona or in another state or country?

Cactus Leagte, March, 2007 5-F Importance of Spring Training on Visitation Decision - Nearly all (96%, up from 93%) of out-of-area attendees said that attending spring training games was a reason for visiting the metro Tucson or Phoenix area. This includes more than two-thirds (68%, up from 58% in 2003) who say that it was the "primary" reason for their decision. Out-of- area visitors who attended San Francisco Giants (78o/o), Los Angeles Angels (77%), Oakland Athletics (73%), San Diego Padres (73%) and Milwaukee Brewers (73%) games are most likely to say that attending a spring training game is the primary reason they came to the Phoenix area. Those who attended a Chicago White Sox game are most likely to that attending spring training games was only a minor reason (19%) for traveling to Tucson. Out-oÊarea attendees who attended a Cacfus League game in Tucson are less likely to say that spring training was a primary reason for visiting the area (56% versus 70o/o among Phoenix game attendees). Overall, only 4o/o say spring training was not a reason for visiting the Tucson or Phoenix metro area.

Cacfu s League, March, 2007 6 Table 6 Importance of Spring Training on Visitation Decision (Among Out-of-Area Visitors)

t993 1998 2003 2007 Metro Area Total Total Total Total Tucson Phoenix Drimarv reason 630/, 6lo/, 580Á 68Vo 5601 700/, \ maior reason l60l l90l l80l l60h l60l l60t \. minor reason 140/< 140/, l80l 12o/" l60l llo/, Vol a reason 701 60/, 701 4V" llol 3o/' N:1289 N=l466 N:23 N:l231

Team San Los San Chicago Francisco Seattle Angeles Diego Arizona Cubs Giants Mariners Aneels Padres Diamondbacks Drimary reason 64% 7801 68% 77% 7301 5401 \ maior reason 20% 901 t8% t2% l60l 2lol \ minor reason l4o/o 901 l3o/t 6% l20l l40l Vol a reason 2% 301 lol 6% 0o/( llol N=207 N:221 N:176 N:126 N:143 N:l0i

Team Chicago Kansas Oakland Texas White City Milwaukee Colorado Athletics Ransers Sox Royals Brewers Rockies Drimarv reason 730/< 540/, 5lo/( 640/, '7301 660/; \, maior reason l4o/( 2701 llol 200/, 170l l5o/' \ minor reason l00l 120Á l90l l20l 801 150/, Vol a reason 301 60/( 2001 4% lol 40/, N:l1C N:l02 N:60 N:65 N:85 N:6f

Cactus League, I[l4:arch, 2007 6-F