Market and Economic Analysis Related to Future Uses of the Donald L. Tucker Center at Florida State University

Final Report May 2013

Submitted by:

4427 W. Kennedy Boulevard, Suite 200 Tampa, FL 33609

May 30, 2013

Mr. Cam Whitlock, Principal Architects: Lewis + Whitlock 206 West Virginia Street Tallahassee, Florida 32301

Dear Cam:

Crossroads Consulting Services LLC is pleased to present this market and economic analysis as part of the overall master planning process for the Donald L. Tucker Center. In accordance with our agreement, this report summarizes our research and analysis which is intended to assist Florida State University with its decisions regarding the future operations of the facility.

The information contained in the report is based on estimates, assumptions, and information developed from market research, industry knowledge, input from potential demand generators, as well as other factors including data provided by Florida State University and other secondary sources. We have utilized sources that are deemed to be reliable but cannot guarantee their accuracy. All information provided to us by others was not audited or verified and was assumed to be correct. Because the procedures were limited, we express no opinion or assurances of any kind on the achievability of any projected information contained herein and this report should not be relied upon for that purpose. Furthermore, there will be differences between projected and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. We have no responsibility to update this report for events and circumstances that occur after the date of this report. The accompanying report is restricted to internal use by Florida State University and may not be relied upon by any third party for any purpose including financing. Notwithstanding these limitations, it is understood that this document may be subject to public information laws and as such can be made available to the public upon request.

Although you have authorized reports to be sent electronically for your convenience, only the final hard copy report should be viewed as our work product.

We have enjoyed serving you on this engagement and look forward to the opportunity to provide you with continued service.

Sincerely,

Crossroads Consulting Services LLC

4427 W. Kennedy Boulevard ∙ Suite 200 ∙ Tampa, Florida 33609 ∙ Phone 813.281.1222 ∙ Fax 813.315.6040 www.crossroads-fl.com

Table of Contents

1 Introduction & Executive Summary 1

2 Market Overview 12

3 Historical Civic Center Operations 18

4 Competitive Environment 26

5 Input from Demand Generators 29

6 Comparable Facilities Analysis 40

7 Management Options 46

8 Renovation Cost Benefit Analysis 51

Table of Contents

Introduction and Executive Summary

Introduction

Originally opened in 1981 and renovated several times over the years, the Donald L. Tucker Center (Civic Center) offers 12,200 seats for basketball, 34 luxury suites, 468 club seats and the Spotlight Grill restaurant. There are three different components to the facility: the main arena, the 33,915 square foot (SF) exhibition hall and the terrace.

The Civic Center is currently owned and operated by the Tallahassee-Leon County Civic Center Authority (Authority) which is governed by a 13-member Board. The Authority is an independent special district that was organized for the purpose of planning, developing, operating and maintaining a comprehensive complex of civic, governmental, educational, recreational, convention and entertainment facilities for the use and enjoyment of the citizens of the Tallahassee area. It does not have any taxing authority and does not receive guaranteed funding from any entity including the City, County, and State. Historically, the City and the County mutually agreed to fund operating deficits up to a maximum of $125,000 each for a period of 40 years.

In June 2012, the Authority and Florida State University (FSU) agreed to enter into an agreement for the transfer of the Civic Center facility to FSU. This agreement will result in the transfer of all existing bank debt to FSU. In addition, FSU will assume full operational and financial responsibility of the facility. The Authority and FSU entered into an agreement for a one-year leaseback of the property to the Civic Center. The Authority released the City and the County from any further responsibility to pay annual operating deficits. However, the City will continue to provide $60,000 annually toward the Civic Center’s utility costs.

As part of its agreement, FSU agreed to the formation of a community advisory board to ensure that the community continues to have access to the property. From FSU’s perspective, this acquisition helps the Civic Center remain open and continue to host diverse events that benefit the community, allows the University to host large scale events such as commencement and convocation and better serves the men’s and women’s basketball programs.

Infrastructure demands, public accountability, changing economic conditions, tenant needs, marketing and sales opportunities, operational efficiencies, increasing competitive market and the growing demand for quality services by event producers and attendees are factors that pose a continuous challenge to public assembly facilities across the country.

As part of its on-going planning efforts, FSU retained the project team of Architects: Lewis + Whitlock, Populous and Crossroads Consulting Services LLC (Crossroads) to develop a master plan for the Civic Center which identifies renovation/enhancement options that will increase the facility’s overall marketability, competitiveness and financial performance. The master plan outlines recommended physical improvements to maintain the facility’s viability as a NCAA Division I basketball arena as well as to meet the broader sports and entertainment needs of both the University and the community.

1. Introduction and Executive Summary 1

FSU’s specific goals for the Civic Center renovation include, but are not limited to:

• Providing a better fan experience. • Enhancing revenue and sponsorship opportunities. • Providing an innovative setting that complements other University facilities and initiatives. • Assisting as a recruiting asset. • Offering superior acoustics. • Serving as the face of the University.

The work plan included qualitative and quantitative analyses that focused on the unique attributes of Tallahassee, historical operations of the Civic Center, market supply relative to demand for the Civic Center, potential demand segments, comparable facility operations, and cost/benefit analysis of future enhancements.

Crossroads was responsible for the market and economic analysis portion of the overall master plan. Our work plan included, but was not limited to, the following tasks:

• Conducting interviews and/or work sessions with key stakeholders including representatives from FSU. • Reviewing previous studies and documentation related to the project. • Analyzing select market attributes including demographic/economic data; higher education institutions; employment base; accessibility; lodging supply; existing facilities; and planned amenities/developments that may impact future demand for the Civic Center. • Analyzing historical operating data for the Civic Center. • Conducting interviews with existing and potential user groups including representatives from FSU athletics; area scholastic programs; State, regional and national youth and amateur sports organizations; event producers of various special athletic events; concert promoters; consumer show promoters; family show promoters; as well as community/civic organizations. • Analyzing operating data from comparable facilities. • Commenting on the programmatic and supporting infrastructure recommendations from a market perspective in order to better address potential target markets and accommodate multi-purpose event needs. • Summarizing estimated project costs of the recommended renovations/enhancements and their associated return on investment relative to achieving FSU’s stated objectives for the Civic Center.

The remainder of this report presents the findings and principal conclusions from our research.

1. Introduction and Executive Summary 2

Executive Summary

The following provides an executive summary of the study’s findings. The detailed analysis can be found in the sections that follow.

Market Overview

An area’s demographics play a key role in its marketability for various activities. In 2012, the population of Leon County (the primary market area) was nearly 280,000 compared to approximately 373,000 within the four-county Core Based Statistical Area (the secondary market area). Between 2012 and 2017, the population within both the primary and secondary markets is projected to experience minimal growth – an average annual increase of less than 1.0%. The median household income is approximately $43,000 in both the primary and secondary markets.

Tallahassee is home to several colleges and universities that are significant economic generators in the community. The students, faculty, staff and visitors at these institutions represent a target market for the Civic Center.

The overall strength of the economy, diversification and size of local businesses as well as competition from other existing facilities are factors that can impact premium seating sales, advertising, corporate sales and season ticket support. Approximately 30% of employment in the Tallahassee CBSA is government-related. The State of Florida (non-university) has nearly 31,000 employees followed by FSU with 6,450 employees and Leon County schools with 4,450 employees. As of January 2013, the annual unemployment rate for Leon County was 6.7%, which was lower than that for the State of Florida (7.8%) and the U.S. (7.9%). Tallahassee’s existing reputation for higher education and State government-related business provide an opportunity for the community to retain and/or capture more of those visitors via an enhanced Civic Center.

Vehicular accessibility along I-10 presents opportunities to draw attendees from throughout the State and the region. In addition, the Tallahassee Regional Airport is an asset that can be beneficial in attracting attendees and support personnel to certain events, particularly for those people who may only attend a portion of the event.

The diversity and supply of hotel rooms proximate to the Civic Center can be an important factor in attracting events, accommodating attendees and generating room nights. Tallahassee has 64 hotel properties that offer more than 5,800 hotel rooms. Although the lodging supply is diverse, availability is impacted by factors such as the State legislative session and special events held at FSU and other area institutions.

Historical Civic Center Operations

The mission of the Civic Center is to operate an exceptional facility offering world class entertainment and quality meeting space for the enrichment of the community and region. It strives to provide a safe and comfortable environment with the highest degree of service and professionalism. As such, the Civic Center hosts a variety of event activity with varying space needs and demands for amenities/support services.

1. Introduction and Executive Summary 3

The Civic Center has averaged 514 events and nearly 394,000 attendees annually over the past three fiscal years which provides a solid base of future business. Event activity has generally been fairly consistent over the past three fiscal years with the exception of a decline in food functions and meetings/lectures/seminars.

Over the last three years, food functions have averaged 70% of total events but only 13% of total attendance. Sporting events and graduations have accounted for 34% and 16% of total attendance, respectively. Graduations have averaged nearly 9,200 people over the last three years followed by concerts (3,700), family shows (3,400), and sporting events (3,200), respectively. Between FY 2009 and FY 2012, FSU men’s basketball averaged nearly 8,200 per game and FSU women’s basketball averaged almost 2,700 per game. Other than graduations, very few events require the Civic Center’s maximum capacity.

An analysis of lost business reports for calendar year 2012 indicates that the amount/type/availability of space at the Civic Center was not a primary reason for lost business. As such, increasing seating capacity or the amount of exhibit space does not appear to be an immediate need for the Civic Center.

According to the audited financial statements, the Civic Center has averaged operating income of approximately $337,000 between FY 2009 and FY 2011. Food/beverage accounted for 30% of operating revenue followed by reimburseable expenses (20%) and suite/club seat revenues (16%) during the profiled period.

Only 68% of the suites are sold indicating limited demand for the product which is likely attributable to factors such as employment base and general economic conditions.

In FY 2012, FSU basketball accounted for 15% of total Civic Center revenues. Concessions comprised more than 70% of FSU basketball-related revenues. As such, future improvements should seek to further enhance the marketability of concessions areas.

Concerts represented approximately 49% of non-FSU arena revenues followed by family shows (27%) and Broadway shows (12%). The profit margin per event averaged $90,000 for family shows and $81,000 for concerts. Future improvements should seek to further enhance the marketability and profitability of these event types.

Relative to financial performance, it is important to recognize that the University is performing on-going due diligence relative to historical financial reporting for the Civic Center. As such, some adjustments may ultimately be made to historical figures which could impact the findings of this report.

Competitive Environment

The existing supply of area facilities is relatively limited. There are no competitive arenas located within 150 miles of Tallahassee other than FAMU’S Lawson Center, which is primarily dedicated to university-related activity.

1. Introduction and Executive Summary 4

Two new, smaller entertainment facilities are in the development stages that will offer unique settings for more intimate entertainment acts. Cascade Park is a joint City/County amphitheater project that is slated to open later this year. Current plans call for approximately 1,500 fixed and 2,500 lawn seats. A new nightclub/restaurant is being planned by Live Nation as part of the College Town development which is anticipated to accommodate 2,000 people. Stakeholders view these new entertainment venues as complementary to the Civic Center based on their program elements and target markets and suggested they would further enhance the area’s ability to draw more, diverse entertainment acts.

Tallahassee also offers several meeting/banquet venues including special event facilities and hotels which primarily host conventions, conferences, tradeshows, meetings, banquets and smaller exhibitions. FSU offers three of the four largest meeting/banquet facilities. Although the Civic Center’s size allows it to accommodate relatively large groups, its amenities and technology are challenges for attracting certain groups. These limitations will likely become more prominent when the University assumes complete ownership/operation of the Civic Center given the high-quality features offered at its other assets.

The Civic Center’s seating capacity for basketball is consistent with the median (12,500) for arenas that currently or soon will host ACC men’s basketball teams. Several of the ACC arenas are significantly larger than the Civic Center because they serve other purposes (e.g., host collegiate football or professional sports) or they have a historically strong men’s basketball program. In addition, the Civic Center offers significantly more suites than the average or median of ACC arenas.

Input from Potential Demand Generators

The primary tenant at the Civic Center will continue to be the FSU men’s and women’s basketball teams. FSU men’s and women’s basketball have not historically been restricted by the Civic Center’s seating capacity. However, some desired improvements may achieve broader University goals (e.g., providing a first-class recruiting tool, becoming the face of the University, etc.) that may not directly result in increased usage or improved financial performance at the Civic Center.

Input was also obtained from existing and potential users in order to identify potential unmet demand and required program elements. Promoters of both arena events and meeting/exhibition events are generally pleased with customer service, food/beverage service, the facility’s downtown location, and proximity to FSU. Promoters also noted that the new ownership presents unique and positive opportunities to leverage media for their event activity.

Consolidation of venues and live entertainment combined with economic pressures on ticket buyers has created a very competitive environment for attracting concerts, family shows, Broadway shows and other similar spectator events. Arena event promoters noted the Civic Center’s age and lack of modern aesthetics as challenges. That said, representatives suggested that any future physical improvements take into account the following: the amount, proximity and pricing of parking; maintaining the current amount of floor space; and providing sufficient backstage and dressing room areas.

1. Introduction and Executive Summary 5

According to industry publications, there were 331 State/Regional and 231 National trade and professional associations headquartered in Florida in 2011 which provide a target market for the Exhibition Hall and Meetings Rooms. Meeting and exhibition event planners cited lack of sufficient parking, distance of parking from venue, columns in the Exhibition Hall, lack of modern technology, and antiquated lighting system as physical challenges.

Both arena and meeting/exhibition promoters indicated that factors such as market size, ticket sales, average ticket price realized, cost to utilize the facility, and overall support for events would impact their future decision regarding whether to play the facility/market rather than the physical building program.

Comparable Facilities Analysis

In order to assist in evaluating the types of renovations/enhancements necessary for the Civic Center to remain competitive, operating data from select new/renovated Division I arenas was analyzed. Like the Civic Center, five of the 11 profiled facilities serve as the primary arena in the market. While nine of the 11 (82%) profiled facilities are University-owned, only four are University-operated. The other seven arenas are operated by private management companies. Although the Civic Center offers the same seating capacity as the average of the peer facilities, it has significantly more suites and less club seats as profiled facilities.

As a point of reference, Georgia Tech reopened its arena in 2012 after a $50 million retrofit. The former Alexander Memorial Coliseum was renamed the McCamish Pavilion after a donor who gave $15 million to help finance the renovation. Major changes included reducing the seating capacity from 9,200 to 8,600; reconfiguring the seating bowl to one that mirrors the court rather than the original circular seating pattern; removing the 12 suites to provide space for a sideline club seat section; and providing improved courtside seating. The facility also removed a concourse wall in order to provide a more open view of the court from the concourse and installed theatrical lighting.

Profiled peer arenas hosted an average of 210 events and 566,900 in total attendance. Utilization is impacted by factors such as the physical product, market characteristics, accessibility, mission statement, booking policy, rental and labor rate structure, regionally competitive facilities, marketing efforts and general economic conditions. The Civic Center hosted more events than all of the profiled peer facilities but 30% fewer total attendees than the average of the profiled set.

One of the driving forces of an arena’s seating capacity is concert and other commercial activity which can generate substantial revenue. Some arenas can reduce their seating capacity through the use of curtaining. An analysis of event statistics from 2012 Pollstar reports, an industry resource that tracks box office statistics at facilities for available acts, further supported the cost consciousness of the Tallahassee market relative to entertainment events.

A comparison of select financial operations at the profiled peer facilities indicated that the Civic Center ranked fourth among the profiled facilities in terms of operating gain/loss. Based on audited financial statements, the Civic Center realized an operating gain of $246,000 in FY 2011 while the profiled facilities ranged from an operating gain of $711,000 to an operating loss of $1.0 million.

1. Introduction and Executive Summary 6

Management Options

There are several potential management options for arena/civic center facilities including operating as an independent authority; operating through traditional governmental management such as a City/County departmental structure; operating as a University department; or contracting with a third party that specializes in managing similar facilities. The management approach is important because it typically impacts all aspects of operations including marketing, utilization, financial operations and overall efficiency of a facility. For instance, some publicly run facilities are limited in their capability to act as quickly as other management approaches. In addition, there is typically pressure on university assets to operate with a high degree of fiscal responsibility.

As such, some facilities owners choose to delegate the management of facility operations to some form of third party that provides industry knowledge and representation. In addition to these benefits, management through a third party can offer stability and insulation from political influence which can be desired attributes by customers, vendors, facility management and staff who typically prefer a continuity of purpose and ability to function within a business environment that is not affected by each political election.

Approximately 64% of the profiled peer facilities are privately operated. University facilities that also serve as the primary sports/entertainment venue in the community and/or want to maximize non- university event activity are increasingly choosing to contract with a private management company. Examples of privately operated facilities include BankUnited Center, Chaifetz Arena, Ford Center, John Paul Jones Arena, KFC Yum! Center and PNC Arena.

As FSU continues to evaluate future operations of the Civic Center and prioritize potential renovations/ enhancements, it should assess which ownership and/or management approach best meets its long-term objectives for the facility. Moving forward, the Civic Center needs to be operated in a first-class manner by an aggressive, experienced management team with strong industry contacts in order to enhance its marketability and competitiveness.

Potential benefits of operating the Civic Center through a third party management company rather than as a university department include, but are not limited to, providing greater latitude in staffing, compensation, contracts and incentive pay; increasing revenue generating potential; providing financial transparency, accountability and reporting; and allowing for greater autonomy while still being funded by public and private sources. In addition, there may be an opportunity to obtain some level of capital support as part of the management agreement which is typically accomplished through a one-time capital improvement contribution and/or a dedicated event marketing fund.

One common apprehension for universities considering third party management is losing control of the asset. However, third party management is an agent of the university charged with managing and promoting the asset. As such, the university can manage the amount and type of control that it retains through the terms of its management agreement. For instance, in most private management agreements, universities still retain ownership; approve the operating and capital budgets; provide input and direction regarding policy; receive regular financial and management reports; and have the ability to terminate the management company for cause. Typically, universities are actively involved in the hiring and/or approval of the facility’s general manager and have a designated contract

1. Introduction and Executive Summary 7

administrator that oversees the terms of the contract and serves as liaison between the university and the management company.

As all ownership, operational and financial responsibilities of the Civic Center transition to the University; it is recommended that the University strongly evaluate the merits of third party management in order to maximize utilization, marketability and financial performance. This recommended management approach is based on trends in the industry, the unique nature of the asset, and the University’s stated objectives for the Civic Center.

Market Demand for Recommended Civic Center Improvements

The Civic Center has fallen behind its competitive set in terms of overall condition and patron amenities. In addition, deferred maintenance is taking a toll throughout the Civic Center. Based on various research and analysis including a comparison of peer arenas at peer institutions and discussions and extensive feedback from representatives at FSU and other stakeholders, Populous prepared a detailed list of optimal building/renovation program recommendations by major area as compared to the existing Civic Center. Market research supported these recommendations, particularly relative to achieving the desired long-term goals of the University and the broader community.

Potential Impact of Remaining Status Quo

If the facility is not improved, remaining status quo relative to capital funding will likely result in a decrease in event activity over time that yields an operating loss. The table below compares the Civic Center historical three-year average to the estimated status quo in key metrics.

Comparison of Historical Three-Year Average to Estimated Status Quo Scenario at Civic Center Historical Three- Category Year Average Status Quo

Events 514 508 Event Days 588 564 Total Attendance 393,958 365,675

Incremental Impact to Event Activity Events -1% Event Days -4% Total Attendance -7%

Operating Revenues $7,016,000 $6,624,000 Operating Expenses $6,679,000 $6,749,000 Operating Gain/(Loss) $337,000 ($125,000)

Expense Coverage Ratio 105% 98% Incremental Impact to Financial Operations Operating Revenues -6% Operating Expenses 1% Operating Gain/(Loss) -137%

Notes: Status quo assumes no increase in capital funding over historical levels. Expense coverage ratio = operating revenues/operating expenses. Operating expenses do not include taxes, debt service or depreciation. Historical three-year average data was provided by Civic Center management and audited financial statements.

1. Introduction and Executive Summary 8

Recommended Civic Center Improvements

The project team developed a list of recommended needs from both a physical/facility perspective and from a competitive market perspective. These needs are based on our project team’s observations of the facility and its operations; conversations with current, former, and potential users of the facility; the competitive/comparable facility assessment; as well as input from FSU representatives.

Populous developed a prioritized statement of needs that addresses the key points of our project team’s analysis. The statement of needs includes associated order-of-magnitude cost estimates for each line item so that the overall quantitative and qualitative financial return can be evaluated.

Recommended facility improvements were grouped into the following categories that relate to the University’s stated goals for the master plan of the Civic Center as well as their relative cost and implementation timeframe:

Base level improvements include recommendations that seek to create a better fan experience, assist as a recruiting asset, improve acoustics and position the Civic Center in a better position to become the face of the University. As stated previously, some of these renovations/enhancements relate to required deferred maintenance and infrastructure improvements that would ideally be addressed within the next one to two years in order to enhance marketability and competitive position from both the patron and the event promoter perspective.

Intermediate level improvements focus on those improvements that can enhance revenue and sponsorship opportunities (e.g., suite and club level improvements) as well as those that address back- of-house needs.

Advanced level improvements represent a more ambitious set of facility changes that could help position the Civic Center for longer-term success in the marketplace. These changes involve significant upgrades to the building exterior (e.g., a new lobby addition) and/or repurposing of existing space (e.g., new meeting rooms/prefunction improvements).

Stand-alone improvements including expansion of the basketball practice facility and the Phase II site development can be completed at any time.

Cost estimates for this report were developed by Rider Levett Bucknell (RLB), professional cost estimators and cost consultants. The cost estimates reflect total project costs including both hard construction costs as well as soft costs such as design fees, testing, and contingency fees. Further, these costs reflect the value of the improvements in 2013 and do not include any future cost escalation. The conceptual, order-of-magnitude nature of this report precludes the development of detailed cost estimates as would be expected for an actual construction project. As such, the cost estimates included herein are compatible with the nature and scope of this study.

The table that follows summarizes the recommended Civic Center renovations/enhancements by the prioritized categories and the estimated impact to financial operations.

1. Introduction and Executive Summary 9

Total Cost Estimate for the Recommended Improvements to the Civic Center Impact to Financial Category of Improvements Cost Estimate Operations Base level $39,565,000 Low Intermediate level $41,387,000 Low/Moderate Advanced level $20,473,000 Low/Moderate Stand-Alone $19,050,000 Low/Moderate Note: Cost estimates are not additive as different options are presented for the University's consideration. Source: Populous.

Many of the recommended improvements will result in maintaining the facility’s existing base of business as well as other qualitative benefits such as serving as a recruiting asset and providing a first- class venue for both FSU and the community rather than a direct, quantitative impact on financial operations of the Civic Center. In addition, some revenue streams may flow to other University departments (e.g., Athletics) rather than directly to the facility’s operating bottom-line.

More detailed program and cost estimate data as well as conceptual drawings of the proposed renovations/enhancements can be found in the Master Plan document that Populous and Architects: Lewis + Whitlock prepared under separate cover.

Impact of Recommended Civic Center Improvements on Event Activity and Financial Operations

Based on market research, the financial analysis focused on quantifying the impact of recommended improvements to event activity and financial operations in terms of operating revenues and expenses. The following graph compares the status quo scenario (estimated to reflect a decline over historical Civic Center activity) to the estimated range of activity for an improved Civic Center.

Comparison of Estimated Annual Event Activity - Status Quo vs. Proposed Improvements 450,000 700

400,000 576 540 600 350,000 508

500 300,000

250,000 400 438,700 200,000 418,725 365,675 300 Total Attendance Total

150,000 of Events Number 200 100,000 100 50,000

0 0 Status Quo With Improvements (Low) With Improvements (High)

An improved Civic Center is estimated to generate 15% to 20% greater total attendance annually in a stabilized year of operations.

1. Introduction and Executive Summary 10

The following table compares the estimated operating revenues and operating expenses for an improved Civic Center to the status quo scenario in a stabilized year of operations. Operating revenues are estimated to increase by 11% to 14% relative to the status quo whereas operating expenses are estimated to increase between 0% and 2%. Under the status quo scenario, an estimated net operating loss of approximately $125,000 would be required to fund on-going operations.

Summary of Estimated Annual Civic Center Financial Operations Category Status Quo Range With Improvements Operating Revenues $6,624,000 $7,334,000 - $7,528,000 Operating Expenses $6,749,000 $6,731,000 - $6,894,000 Operating Gain/(Loss) ($125,000) $603,000 - $634,000

Expense Coverage Ratio 98% 109% - 109%

Incremental Impact to Operating Gain/(Loss) $728,000 - $759,000 Notes: Expense coverage ratio = operating revenues/operating expenses. Operating expenses do not include taxes, debt service or depreciation.

Overall Summary

Research indicates that the recommended improvements to the Civic Center will better accommodate both FSU men’s and women’s basketball from a fan and recruiting perspective as well as retain and increase the existing base of business at the facility that meets broader community needs. Most of the proposed improvements are synergistic to achieving both of these goals. While some enhancements may be outwardly obvious to facility users and patrons (e.g., new entrance, expanded lobby, new seats, etc.), others may involve deferred maintenance and back-of-house improvements but all will enhance the marketability and long-term functionality of the Civic Center.

The competitive facility assessment indicates opportunities for increased event activity and financial performance with the proposed renovations/enhancements. Although the proposed improvements to the Civic Center are estimated to generate both qualitative and quantitative benefits, these projects do not typically generate a positive return on investment relative to the required debt service.

Implementing the master plan through a phased approach will enhance the Civic Center’s marketability and competitive position for the next 15 to 20 years. In addition, this project represents another opportunity for the University to positively impact the broader economy.

Because the information presented in the executive summary is extracted from the more detailed analysis, it is important for the reader to review the report in its entirety in order to gain a better understanding of the research, methodology and assumptions used. The remainder of this report summarizes the key findings and conclusions from our research and analysis which can serve as a tool for the University’s on-going planning decisions related to future operations of the Civic Center.

1. Introduction and Executive Summary 11

Market Overview

Because general market conditions impact the Civic Center’s operations, this section of the report profiles select market characteristics including demographic/economic statistics, higher education institutions, area employment, accessibility, and lodging supply.

Demographic/Economic Data

Demographic and economic indicators are pertinent to estimating demand for several reasons. Event activity at the Civic Center is diverse and includes sporting events, concerts, family shows, consumer/tradeshows as well as various other civic/community events such as meetings/seminars, and social functions. Depending on the scope and nature of the event, the Civic Center draws from both area residents and out-of-town attendees.

In addition, event promoters/producers for certain event activity such as concerts, family shows, consumer shows and special events consider a variety of factors such as population, age distribution, and income characteristics when selecting markets to host their events. The demographic data presented in this report is based on the primary and secondary markets for the Civic Center as defined below. Demographic statistics are provided by Claritas, a Nielsen company that provides current and projected U.S. demographics based on U.S. census figures.

Population

Population serves as a base from which events at the Civic Center draw attendance and other forms of support. Local, civic based events tend to attract attendees from a relatively close primary market area such as Leon County. Exhibit, flat floor events as well as sports and entertainment events typically draw from a broader area considered the secondary market. For purposes of this analysis, the secondary market is defined as the CBSA which includes Leon County, Gadsden County, Jefferson County and Wakulla County. This area is also referred to as Florida’s Capital Region. Depending on the scope (e.g., State, regional, national), some events such as sports competitions/ tournaments can draw participants and spectators from an even larger radius.

Map of the Market Area

2. Market Overview 12

The table below shows the historical and projected trends in population for Leon County and the CBSA. In 2012, the population of the primary market area was nearly 280,000 compared to approximately 373,000 within the four-county CBSA. As such, the secondary market area provides an incremental population of nearly 94,000 from which to draw attendees. Between 2012 and 2017, the population within both the primary and secondary markets is projected to experience minimal growth – an average annual increase of less than 1.0%.

Trends in Population Data Leon County Tallahassee CBSA

2000 Census 239,452 320,304 2012 Population 279,589 373,235 2017 Projection 291,025 389,467

Average Annual Growth 2000-2012 1.4% 1.4% Average Annual Growth 2012-2017 0.8% 0.9%

Source: Claritas

Age Distribution

Analysis by age group is helpful since certain events at civic centers are targeted toward consumers who fall within specific age categories. As shown in the table below, nearly 60% of the population within in Leon County is within the ages of 18 and 54 years old, which is typically a target for concerts, sporting events, family shows and other spectator events. The broader CBSA population has a slightly higher median age with nearly 58% of the population is within the ages of 18 and 54.

2012 Population by Age Leon County Tallahassee CBSA Age Category Number % Number % Under 18 Years Old 58,529 20.9% 78,988 21.2% 18 - 34 Years Old 100,911 36.1% 121,977 32.7% 35 - 54 Years Old 65,722 23.5% 93,300 25.0% 55+ Years Old 54,427 19.5% 78,970 21.2%

2012 Median Age 28.7 31.8 Source: Claritas. Income Income offers a broad measurement of spending potential for a specific population because it indicates the general ability of individuals or households to purchase a variety of goods and services including admission to events. As shown in the table that follows, the 2012 median household income in Leon County ($43,000) was slightly higher than in the broader CBSA ($42,000). In addition, nearly 15% of the households in Leon County have income levels of $100,000 or more.

2. Market Overview 13

2012 Estimated Households by Household Income Leon County Tallahassee CBSA Income Category Number % Number % Less than $25,000 34,468 30.7% 44,950 30.8% $25,000 to $49,999 29,246 26.1% 39,803 27.3% $50,000 to $99,999 31,675 28.3% 41,275 28.3% $100,000 to $149,999 10,909 9.7% 13,138 9.0% $150,000 or more 5,805 5.2% 6,701 4.6%

2012 Median Household Income $42,959 $42,006 2012 Average Household Income $58,903 $56,793 2012 Per Capita Income $23,979 $22,723

Source: Claritas.

Higher Education Institutions

Tallahassee is home to several colleges and universities that are significant economic generators in the community. As shown below, these institutions have a combined enrollment of more than 78,000 students. These students along with faculty, staff and visitors represent a target market for attendees at the Civic Center. In addition, Tallahassee is located proximate to the National Collegiate Athletic Association (NCAA) South Eastern Conference territory and FSU is a member of the Atlantic Coast Conference (ACC) which may be beneficial in attracting certain collegiate and club sport tournaments.

Tallahassee Area Educational Institutions Total Institute Enrollment Florida State University 41,087 Tallahassee Community College 15,090 Florida A&M University 13,204 Keiser University 7,520 Lively Technical Institute 1,316 ITT Technical Institute 141 Total 78,358 Source: Tallahassee Economic Development Council.

Area Employment Base

A broad workforce distribution helps lessen a community’s dependency on support from any one single industry segment. Industry diversification also helps a local economy withstand economic downturns due to dependency upon one industry; should one industry fail, there are others upon which the local economy can rely. While Leon County offers employment in various industries, employment data shown in the following table indicates that 30% of the workforce is concentrated in government which is expected given that Tallahassee is the State capital. Other major employment industries include professional/scientific/management/administrative and educational, health and social services.

2. Market Overview 14

2011 Employment by Industry for Leon County Industry Total Jobs % of Total Government and Government Expenditures 54,221 30% Professional, Scientific, Management, Administrative, etc. 25,608 14% Educational, Health and Social Services 22,504 12% Retail Trade 17,501 10% Arts, Entertainment, Accommodation and Food Services, etc. 17,373 10% Finance, Insurance, Real Estate and Rental and Leasing 14,735 8% Other Services 11,037 6% Construction 6,721 4% Information 3,568 2% Wholesale Trade 2,833 2% Manufacturing 1,994 1% Farm Employment 357 0% Agriculture, Forestry, Fishing and Hunting, Mining ND Transportation and Warehousing, and Utilities ND Total 180,872 99% Notes: ND denotes not disclosed due to confidentiality but the jobs for these industries are included in the total. Sorted in descending order by total jobs. Source: U.S. Bureau of Economic Analysis.

The State of Florida and the University represent the two largest employers in the Tallahassee CBSA. The largest private employers include Tallahassee Memorial Health Care and Publix Supermarkets.

Tallahassee CBSA Major Employers Company Total Jobs % of Total Company Total Jobs % of Total State of Florida (non-university) 30,918 49.0% Big Bend Hospice 275 0.4% Florida State University 6,450 10.2% General Dynamics Land Systems 250 0.4% Leon County Schools 4,444 7.0% Comcast Cable 250 0.4% Tallahassee Memorial Health Care Inc. 3,130 5.0% Tallahassee Primary Care Associates 229 0.4% City of Tallahassee 2,708 4.3% Danfoss Turbocor 210 0.3% Publix Supermarkets, Inc 2,084 3.3% Teligent EMS 166 0.3% Leon County 1,918 3.0% GT Technologies 163 0.3% Florida A&M University 1,888 3.0% First American Title Company 160 0.3% Walmart Stores, Inc. 1,300 2.1% Culpepper Construction 157 0.2% Capital Regions Medical Center 890 1.4% Tandem Health Care 152 0.2% ACS, A Xerox Company 852 1.3% Apalachee Center for Human Services 150 0.2% Tallahassee Community College 796 1.3% Miracle Hill Nursing & Convalescent 147 0.2% Capital City Bank Group 560 0.9% The Zimmerman Agency 140 0.2% Capital Health Plan 452 0.7% Tallahassee Democrat 133 0.2% St. Marks Powder 400 0.6% Proctor Dealerships 130 0.2% Westminster Oaks 367 0.6% Champion Chevrolet 121 0.2% Florida Bar 326 0.5% HealthSouth 120 0.2% Fringe Benefits Management Company 325 0.5% T-Formations 115 0.2% CenturyLink 278 0.4% Total 63,154 100% Source: Tallahassee Economic Development Council.

As of January 2013, the annual unemployment rate for Leon County was 6.7%, which was lower than that for the State of Florida (7.8%) and the U.S. (7.9%).

2. Market Overview 15

Accessibility The location and accessibility of a facility relative to the population base can impact its marketability for certain types of events. As shown in the map below, Tallahassee is located along Interstate 10, which provides the major east-west access in the State and region as well as links to several other interstates providing north/south access.

Regional Vehicular Access

Source: www.maps.google.com.

Commercial air service is provided by the Tallahassee Regional Airport which is serviced by four major airlines: American, Delta, United and US Airways. In 2011, the Tallahassee Regional Airport had 306,000 enplanements which are defined by the Federal Aviation Administration (FAA) as domestic, territorial and international passengers who board an aircraft in scheduled and non-scheduled service of aircraft. Providing proximate air access can be beneficial in attracting attendees and support personnel to certain events, particularly for those people who may only attend a portion of the event.

Lodging Supply

The diversity and supply of hotel rooms proximate Tallahassee Hotels to the Civic Center can be an important factor in Location Properties Number of Rooms attracting events, accommodating attendees and Northwest 26 2,294 generating room nights. Tallahassee has 64 hotel Southeast 18 1,614 properties that offer more than 5,800 hotel rooms Northeast 12 900 Downtown 7 894 according to data provided by Visit Tallahassee. Southwest 1 130 As shown in the adjacent table, the Northwest Total 64 5,832 section of town offers the most hotel rooms. Both Note: Sorted in descending order by number of rooms. the State Capitol and the Civic Center are located Source: Visit Tallahassee. downtown.

Factors such as the State legislative session and special events held at FSU and other area institutions impact hotel room availability for groups attending events at the Civic Center.

2. Market Overview 16

The Civic Center Authority entered in to various development agreements with certain private parties for the construction of a convention hotel and parking garage on its current site. In FY 2010 and FY 2011, approximately $1.1 million of the Authority’s funds had been used for initial development and design of the project. Progress has been delayed due to a pending lawsuit which is currently in the settlement stages. All parties have agreed to disburse funds held in escrow.

2. Market Overview 17

Historical Civic Center Operations

This section provides an overview of Civic Center operations in terms of its mission statement, historical utilization, reasons for lost business and historical financial operations which will serve as the baseline for assessing the impact of potential renovations/enhancements.

Mission Statement

Based on information from management, the mission of the Civic Center is to operate an exceptional facility offering world class entertainment and quality meeting space for the enrichment of the community and region. It strives to provide a safe and comfortable environment with the highest degree of service and professionalism.

Historical Utilization

The Civic Center’s event activity was analyzed for fiscal year (FY) 2010 through FY 2012. As shown in the following graph, the Civic Center has averaged 514 events and nearly 394,000 attendees annually over the past three fiscal years. Although the total number of events steadily decreased between FY 2010 and FY 2012, total attendance increased in FY 2012.

Civic Center Historical Events and Attendance (FY 2010 – FY 2012) 450,000 700 400,000 554 600 510 514 350,000 479

500 300,000 250,000 400

200,000 403,353 382,439 396,080 393,958 300

Total Attendance Total 150,000 200 Events Number of 100,000 100 50,000 0 0 FY 2010 FY 2011 FY 2012 Three-Year Average Source: Civic Center management.

Understanding the types of events hosted at the Civic Center can help assess the need for potential renovations/enhancements. The following table provides a detailed summary of historical Civic Center usage by major event type.

3. Historical Civic Center Operations 18

Summary of Historical Civic Center Usage by Event Type (FY 2010 - FY 2012) FY 2010 FY 2011 Event Event Average Total Event Event Average Total Event Type Events Days Length Attendance Attendance Event Type Events Days Length Attendance Attendance Sporting Event 43 54 1.3 3,242 139,401 Sporting Event 37 42 1.1 3,214 118,916 Graduation 7 12 1.7 9,186 64,300 Graduation 7 13 1.9 9,257 64,800 Concert 15 16 1.1 3,467 51,999 Concert 13 16 1.2 3,010 39,131 Food Function 388 409 1.1 147 57,038 Food Function 358 379 1.1 149 53,375 Family Show 6 9 1.5 3,667 22,000 Family Show 9 13 1.4 3,556 32,000 Theatrical Performance 12 18 1.5 1,875 22,503 Theatrical Performance 10 14 1.4 1,559 15,585 Trade Show 12 23 1.9 1,308 15,700 Trade Show 14 35 2.5 1,514 21,200 Meeting/Lecture/Seminar 46 56 1.2 513 23,590 Meeting/Lecture/Seminar 35 44 1.3 424 14,827 Other 22 27 1.2 283 6,222 Other 25 30 1.2 659 16,465 Convention 3 6 2.0 200 600 Convention 2 2 1.0 3,070 6,140 Total 554 630 403,353 Total 510 588 382,439 FY 2012 Three-Year Average

Event Event Average Total Event Event Average Total Event Type Events Days Length Attendance Attendance Event Type Events Days Length Attendance Attendance Sporting Event 44 53 1.2 3,164 139,214 Sporting Event 41 50 1.2 3,232 132,510 Graduation 7 13 1.9 9,114 63,800 Graduation 7 13 1.9 9,186 64,300 Concert 14 14 1.0 4,658 65,209 Concert 14 15 1.1 3,722 52,113 Food Function 331 360 1.1 136 45,040 Food Function 359 383 1.1 144 51,818 Family Show 6 9 1.5 2,764 16,585 Family Show 7 10 1.4 3,361 23,528 Theatrical Performance 11 15 1.4 1,677 18,450 Theatrical Performance 11 16 1.5 1,713 18,846 Trade Show 9 17 1.9 1,981 17,825 Trade Show 12 25 2.1 1,520 18,242 Meeting/Lecture/Seminar 35 37 1.1 330 11,545 Meeting/Lecture/Seminar 39 46 1.2 427 16,654 Other 20 25 1.3 488 9,769 Other 22 27 1.2 492 10,819 Convention 2 2 1.0 4,322 8,643 Convention 2 3 1.5 2,564 5,128 Total 479 545 396,080 514 588 393,958 Note: Sorted in descending order by three-year average total attendance. Source: Civic Center management.

During the profiled three-year period, activity levels for most event types fluctuated which is common at similar facilities. Graduations remained relatively consist in terms of events and attendance while the number of food functions and meetings/lectures/seminars have steadily declined. A detailed assessment of individual events held at the Civic Center indicated that very few required the total available seating capacity. Those that did were primarily prime ACC men’s basketball games, graduations and a few concerts. Although many of the exhibit oriented events required the total amount of available square footage, they can potentially utilize the arena floor to accommodate larger events based on date availability.

3. Historical Civic Center Operations 19

As shown in the following graphs, food functions have represented the largest percentage of events while sporting events and graduations, respectively, have accounted for the highest percentage of total attendance over the last three fiscal years.

Distribution of Total Events – Three-Year Average (FY 2010 – FY 2012) 80% 70% 70%

60%

50%

40%

30%

20% 8% 10% 8% 4% 3% 2% 2% 1% 1% 0% 0%

Source: Civic Center management.

Distribution of Total Attendance – Three-Year Average (FY 2010 – FY 2012) 40%

35% 34%

30%

25%

20% 16% 15% 13% 13%

10% 6% 5% 5% 4% 5% 3% 1% 0%

Source: Civic Center management.

3. Historical Civic Center Operations 20

Graduations have realized the highest average attendance over the last three fiscal years. It will be important that any future renovations/enhancements do not negatively impact FSU’s ability to host graduations and other key events.

Average Attendance by Event Type – Three-Year Average (FY 2010 – FY 2012) 10,000 9,186

7,500

5,000 3,722 3,361 3,232 2,564 2,500 1,713 1,520

492 427 144 0

Source: Civic Center management.

Events only using the arena component have averaged 14% of the total events and 54% of total attendance over the last three fiscal years.

Distribution of Events and Attendance by Facility Component Three-Year Average (FY 2010 – FY 2012) % of Total Events % of Total Attendance 100%

75%

50% 86%

54% 25% 46%

14% 0% Arena Only Other Arena Only Other

Source: Civic Center management.

3. Historical Civic Center Operations 21

Lost Business

An analysis of lost business reports for calendar year 2012 indicates that the amount/type/availability of space at the Civic Center was not a primary reason for lost business. As such, increasing seating capacity or the amount of exhibit space does not appear to be an immediate need for the Civic Center.

Summary of Lost Business Reports - CY 2012 Event Move-in/ Total Use Average Total Reason Events Days Move-out Days Days Attendance Attendance Internal Cancel 213 265 14 279 2,417 514,801 Date Released by Promoter 91 158 13 171 4,138 376,560 Chose Alternate Dates 73 113 5 118 3,239 236,432 Civic Center 100% Booked 8 13 0 13 4,404 35,230 Other 121 136 3 139 234 28,270 Lost Bid to Another City 19 19 1 20 368 6,995 Total 525 704 36 740 1,198,288 Note: Sorted in descending order by total attendance. Source: Civic Center management.

Other reasons include group funding/unable to pay deposit, postponed, too expensive, low attendance, requested space not available, multiple date hold and poor sales/poor ticket sales.

Historical Financial Operations

Based on audited financial statements, the Civic Center has averaged operating income of approximately $337,000 over the profiled period excluding non-operating revenues and expenses. Food/beverage revenue averaged 30% of total operating revenues and personnel costs including benefits averaged 52% of operating expenses during the profiled period.

Summary of Historical Civic Center Financials Three-Year Average Category FY 2009 FY 2010 FY 2011 Amount % of Total Operating Revenues Food/Beverage $2,219,000 $2,077,000 $2,097,000 $2,131,000 30% Amount Billed to Promoters and Others 1,511,000 1,362,000 1,378,000 1,417,000 20% Suites and Club Seats 1,284,000 1,051,000 1,005,000 1,113,000 16% Rental 686,000 600,000 591,000 626,000 9% Service and Handling Charges 475,000 339,000 369,000 394,000 6% Advertising and Commissions 400,000 383,000 353,000 379,000 5% Parking 391,000 345,000 331,000 356,000 5% Lease, Board and Regents 250,000 250,000 250,000 250,000 4% Promotions 177,000 239,000 284,000 233,000 3% Novelty Sales 92,000 81,000 55,000 76,000 1% Other 69,000 28,000 26,000 41,000 1% Total Operating Revenues 7,554,000 6,755,000 6,739,000 7,016,000 100% Operating Expenses Personnel Costs 3,124,000 2,913,000 2,844,000 2,960,000 44% Benefits 489,000 585,000 498,000 524,000 8% Utilities 732,000 660,000 657,000 683,000 10% Catering 578,000 530,000 621,000 576,000 9% Insurance 500,000 473,000 456,000 476,000 7% Materials/Supplies 488,000 401,000 317,000 402,000 6% General/Administrative 321,000 321,000 334,000 325,000 5% Promotions 237,000 178,000 160,000 192,000 3% Repairs/Maintenance 212,000 116,000 284,000 204,000 3% Contracted Services 203,000 207,000 188,000 199,000 3% Other 157,000 123,000 134,000 138,000 2% Total Operating Expenses 7,041,000 6,507,000 6,493,000 6,679,000 100% Operating Gain/(Loss) $513,000 $248,000 $246,000 $337,000

Note: Financials exclude non-operating income and expenses such as interest expense, letter of credit/bond fees, interest revenue, allocation to boosters, capital contributions, depreciation and amortiziation. Source: Audited financial statements.

3. Historical Civic Center Operations 22

Suite Revenues

Between FY 2009 and FY 2011, suite and club seat revenues averaged 16% of total Civic Center revenues. Potential options to optimize premium seating areas are being evaluated as part of the master plan. As of January 2013, 23 of the available 34 suites (68%) were leased at the Civic Center – most for either a five or ten year period. Several are leased by FSU and related entities (e.g., Seminole Boosters).

Civic Center Suites Sold - As of January 2013 Lease Term Number % One Year 4 17% Three Years 1 4% Five Years 9 39% Seven Years 0 0% Ten Years 9 39% Total Sold 23 68% Note: Total suite inventory is 34. Source: Civic Center management.

Depending on the location and lease term, the 12 unsold suites could potentially generate between $630,000 and $700,000 annually. Relative to master planning purposes, there is not a shortage of suite inventory but rather limited demand which is likely attributable to a combination of factors including general economic conditions and employment base.

Event Revenue Analysis

Understanding profitability by event type can assist in prioritizing potential improvements.

FSU Basketball

Revenues generated from FSU basketball accounted for 13% (or $885,000) of total Civic Center revenues in FY 2011 and 15% (or $1.04 million) in FY 2012.

Distribution of Civic Center Revenues – FSU Basketball vs. Non-FSU Basketball FY 2010-11 FY 2011-12 100%

75%

50% 87% 85%

25%

13% 15% 0% FSU Basketball Non-FSU FSU Basketball Non-FSU Basketball Basketball

Source: Civic Center management.

3. Historical Civic Center Operations 23

As expected, FSU men’s basketball games generate significantly more revenue than women’s games.

Distribution of FSU Men’s and Women’s Basketball Revenues

100% FY 2010-11 FY 2011-12

89% 75% 84%

50%

25%

16% 11% 0% Men's Women's Men's Women's Basketball Basketball Basketball Basketball

Note: Revenues exclude ticket related revenue. Source: Civic Center management.

Concessions accounts for the majority of non-ticket related revenue at FSU basketball games.

Distribution of FSU Basketball Revenues by Major Category 100% FY 2010-11 FY 2011-12 75% 75% 71%

50%

25% 9% 12% 10% 11% 5% 6% 0% Concessions Spotlight Grille Suites Parking

Note: Revenues exclude ticket related revenue. Source: Civic Center management.

The table below summarizes concessions per capita spending at FSU basketball games for FY 2011 and FY 2012.

Per Cap Spending for Concessions Event Type FY 2011 FY 2012 Men's Basketball 3.36$ 4.59$ Women's Basketball 2.47$ 2.77$ All Basketball 3.02$ 4.00$

Any future improvements should seek to further enhance the marketability of concessions areas.

3. Historical Civic Center Operations 24

Non-FSU Arena Events

The following table provides a revenue analysis of non-FSU arena events held at the Civic Center between November 2010 and April 2012. Combined, concerts and family shows generated approximately 79% of total attendance and 73% of the total net revenues at the Civic Center during the profiled period. As mentioned previously, the seating capacity currently offered is adequate for the market.

Revenue Analysis for Non-FSU Arena Events Held at the Civic Center (November 2010 - April 2012) Profit Margin Total Average Average % by Average $ Average $ Event Type Number Attendance Attendance Revenues Expenses Gain / (Loss) Event Type Per Event Per Attendee Concerts 15 55,876 3,725 $3,913,000 $2,703,000 $1,210,000 31% $81,000 $22 Family Shows 10 51,846 5,185 $2,190,000 $1,294,000 $896,000 41% $90,000 $17 Broadway Shows 10 13,929 1,393 $974,000 $627,000 $347,000 36% $35,000 $25 Comedy Shows 5 12,087 2,417 $653,000 $414,000 $239,000 37% $48,000 $20 Plays 1 $112,000 $53,000 $60,000 54% $60,000 FAMU Events 1 $85,000 $27,000 $58,000 68% $58,000 Charity Events 2 3,547 1,774 $67,000 $19,000 $48,000 72% $24,000 $14 Religious Events 1 $55,000 $13,000 $42,000 76% $42,000 Total 45 137,285 $8,049,000 $5,150,000 $2,900,000 36% $64,000

Percent of Total Total Event Type Number Attendance Revenues Expenses Gain / (Loss) Concerts 33% 41% 49% 52% 42% Family Shows 22% 38% 27% 25% 31% Broadway Shows 22% 10% 12% 12% 12% Comedy Shows 11% 9% 8% 8% 8% Plays 2% 1% 1% 2% FAMU Events 2% 1% 1% 2% Charity Events 4% 3% 1% 0% 2% Religious Events 2% 1% 0% 1% Total 100% 100% 100% 100% 100% Notes: There may be slight differences due to rounding. Attendance data was not available for all events. Source: Civic Center management.

3. Historical Civic Center Operations 25

Competitive Environment

One factor to consider when evaluating potential renovations/enhancements is the existing supply of area facilities. Facility size, program elements, configuration, geographic location, age, market focus and date availability are factors that impact how competitive or complementary area facilities are to a renovated/enhanced Civic Center. While this section provides an overview of select local and State facilities that offer elements similar in nature to those at the Civic Center, it is not meant to be an all- inclusive inventory of facilities. Because one of the University’s primary objectives for assuming operations of the Civic Center is to maintain the facility’s viability as a NCAA Division I basketball arena, this section also profiles the attributes of arenas that currently host ACC men’s basketball teams.

North Florida Sports/Entertainment Facilities

North Florida offers several venues that host various sports and entertainment events. As shown in the following table, the Civic Center has the second largest seating capacity among the profiled venues. Four of the profiled arenas host university athletics. FSU’s Ruby Diamond Concert Hall, Fallon Theatre and Moore Auditorium typically host smaller concerts, performing arts and entertainment acts. Similarly, FAMU’s Lee Hall Auditorium and TCC’s Fred Turner Auditorium offer more intimate seating capacities and serve as each school’s primary performing arts venue. Located adjacent to the FSU Student Union Center, the Oglesby Union Amphitheater was recently renovated and provides lawn seating for up to 5,000. None of the other profiled venues are located within 150 miles of Tallahassee which is pertinent because many entertainment acts require a minimum radius between venues which typically ranges anywhere between 50 and 100 miles.

North Florida Sports/Entertainment Venues Seating Facility Location Capacity Primary Uses Jacksonville Veterans Memorial Arena Jacksonville 15,000 Sports; entertainment Civic Center Tallahassee 12,200 FSU athletics; sports; entertainment; community events Stephen O'Connell Center Gainesville 11,700 UF athletics; entertainment Metropolitan Park Jacksonville 10,000 Concerts; festivals; community events Pensacola Bay Center Pensacola 10,000 Trade shows; sports; meetings; banquets; community events Al Lawson Jr. Multipurpose Center Tallahassee 9,600 FAMU athletics, entertainment UNF Arena Jacksonville 5,800 UNF athletics; NBA Magic training; entertainment Oglesby Union Amphitheater Tallahassee 5,000 FSU events; concerts; special events Ruby Diamond Concert Hall Tallahassee 1,260 FSU performing arts; entertainment; lectures Lee Hall Auditorium Tallahassee 1,200 FAMU events, entertainment, lectures Fred Turner Auditorium Tallahassee 495 TCC performing arts; entertainment; lectures Richard G. Fallon Theatre Tallahassee 490 FSU performing arts; entertainment Moore Auditorium at Olgesby Union Tallahassee 376 FSU student/faculty activities Note: Sorted in descending order by seating capacity. Sources: Individual facilities; secondary research.

A new amphitheater, Cascade Park, is a joint City/County project that is slated to open this year in downtown Tallahassee. Current plans call for approximately 1,500 fixed and 2,500 lawn seats. The CVB anticipates booking 10 larger shows annually while the City will handle local, community events. Efforts were made to partner with Live Nation but the national promoter declined.

4. Competitive Environment 26

In January 2012, ground breaking occurred for College Town, a planned residential, dining, shopping and entertainment district to be located just south of the FSU campus. The project, which is scheduled for completion in fall 2013, is intended to link downtown Tallahassee to the FSU campus while creating a vibrant urban-renewal community. The new development will be complementary to FSU’s current campus environment.

College Town will feature three- to five-story, urban-designed buildings surrounded by tree-lined, cobblestone pedestrian streets. The community will also offer restaurants, entertainment, shopping and residential options. With 136,000 SF of residential and commercial space planned, College Town will feature 71 loft-style apartments designed for upscale student housing and season ticket-holders. In addition, the new community's entertainment complex will feature a mix of retail, dining and shopping space. A new nightclub/restaurant is being planned by Live Nation as part of the College Town development which is anticipated to accommodate 2,000 people.

Stakeholders view these new entertainment venues as complementary to the Civic Center based on their program elements and target markets and suggested they would further enhance the area’s ability to draw more, diverse entertainment acts.

In addition to the profiled venues, there are several other sports/entertainment venues in the State and the region which can accommodate similar activity and ultimately represent potential competition to the Civic Center from a macro supply perspective.

Local Meeting/Banquet Venues

Tallahassee offers a variety of venues that host a diverse set of event activity including conventions, conferences, meetings, banquets, seminars, and other special events.

Local Meeting/Banquet Facilities Total Operating Breakout Function Facility Location Entity Rooms Space SF Civic Center (Exhibition Hall) Downtown University 6 33,915 FSU Conference Center FSU Campus University 11 20,000 University Center Club FSU Campus University 8 19,900 Oglesby Union Indoor Meeting/Ballroom FSU Campus University 18 15,940 Tallahassee Auto Museum Northeast Private 3 15,000 Oglesby Union Outdoor Plazas/Green FSU Campus University n/a 12,000 Challenger Downtown Non-Profit 6 9,400 Marriott Northeast Private 5 7,520 Ramada Northeast Private 9 6,500 Double Tree Downtown Private 7 6,000 FSU Alumni Center FSU Campus University 8 5,895 Hotel Duval Downtown Private 8 5,865 Goodwood Carriage House Conference Center Northeast Non-Profit 3 5,000 TCC Capital Center Downtown University 5 4,500 Governor's Inn Downtown Private 2 940 Average (Excluding Civic Center) 7 9,600 Sources: Individual facilities; secondary research.

4. Competitive Environment 27

The Civic Center, FSU Conference Center, University Center Club, and Oglesby Union offer the largest total function space, respectively. The FSU Conference Center is the area’s most technologically advanced meeting and learning facility. As such, this facility hosts academic conferences as well as government, non-profit, corporate and community events. The University Center Club is an upscale venue that overlooks Bobby Bowden Field at Doak Campbell Stadium. Although similar in size to the FSU Conference Center, this facility can host significantly larger groups. The Oglesby Union offers a 10,000 SF ballroom divisible by three in addition to 15 breakout rooms for various uses. In addition to this indoor space, the Oglesby Union offers several outdoor areas including the Union Green, Woodward Plaza, and a courtyard for a variety of uses.

While the Tallahassee Auto Museum can both accommodate approximately 1,000 guests, the amount of breakout space limits its ability to host certain groups. The Challenger, which is located within walking distance of the State Capitol, offers meeting space with advanced audio-visual services such as video- conferencing. Although located in a picturesque setting, the FSU Alumni Center offers limited technological capabilities for group business. Several hotels offer meeting/banquet space - the largest of which is the Marriott with 7,500 SF of total function space.

ACC Basketball Arenas

The following table profiles key attributes of arenas that currently host ACC men’s basketball as well as those which will host teams that will be joining the ACC over the next two seasons.

Profile of ACC Men's Basketball Arenas Seating School Arena Capacity Suites Club Seats Syracuse University Carrier Dome 34,600 41 0 North Carolina State University PNC Arena 21,600 61 2,000 University of Louisville KFC YUM! Center 22,100 75 2,400 University of North Carolina Dean Smith Center 19,700 0 0 University of Maryland Comcast Center 17,600 18 0 University of Virginia John Paul Jones Arena 14,900 19 0 Wake Forest University Lawrence Joel Veterans Memorial Coliseum 14,400 18 0 University of Pittsburgh Petersen Events Center 12,500 17 2,000 Florida State University Civic Center 12,200 34 468 University of Notre Dame The Joyce Center 11,400 0 5,000 Clemson University Littlejohn Coliseum 11,000 0 0 Virginia Polytechnic Institute Cassell Coliseum 9,800 0 0 Duke University Cameron Indoor Stadium 9,300 0 0 Boston College Conte Forum 8,600 8 0 Georgia Institute of Technology Hank McCamish Pavilion 8,600 0 300 University of Miami BankUnited Center 8,000 25 0 Average (Excluding the Civic Center) 14,940 19 780 Median (Excluding the Civic Center) 12,500 17 0 Notes: Sorted in descending order by seating capacity. Notre Dame, Pittsburgh and Syracuse will join the ACC in the 2013-14 season. Maryland is scheduled to depart the ACC in the 2014-15 season when Louisville will join. Sources: Individual facilities; secondary research.

Several of the arenas that are or will be hosting ACC teams are significantly larger than the Civic Center because they were built to serve other purposes (e.g., the Carrier Dome and PNC Arena) or they have a historically strong men’s basketball program that can support a larger seating capacity (e.g. KFC YUM! Center and Dean Smith Center). The Civic Center’s seating capacity is consistent with the median seating capacity of 12,500 and is adequate to meet the needs of FSU’s basketball programs.

4. Competitive Environment 28

Input from Demand Generators

As part of the market research, interviews/surveys were conducted with existing and potential users who represent sports, entertainment and exhibit/meeting events. Existing and potential users were asked how the Civic Center could be improved to enhance their event’s marketability, overall ingress/egress and/or revenue generation. Potential users were also asked what program elements and/or destination attributes are necessary to attract their event(s) to the Civic Center and, if interested, what their typical event statistics are. The input obtained is not intended to be statistically valid but rather provides a basis for evaluating what potential renovations/enhancements are required/desired by users in order to positively impact future Civic Center usage.

Arena Users

FSU Athletics

The primary tenant at the Civic Center will continue to be the FSU men’s and women’s basketball teams. As such, it is important to understand their requirements in terms of seating capacity and other related amenities, particularly in relation to the University’s stated objectives for the master plan. For instance, some desired improvements may achieve broader University goals (e.g., providing a first-class recruiting tool, becoming the face of the University, etc.) that may not directly result in increased usage or improved financial performance at the Civic Center.

FSU Men’s Basketball

As shown in the following graph, FSU men’s basketball has consistently ranked below the ACC average in both total season attendance and average attendance per game.

Comparison of FSU Men’s Basketball Season Attendance to ACC Average FSU ACC Average 200,000 174,723 173,118 168,490 164,541 161,579

150,000

139,904 137,047 126,359 130,173 117,381 100,000

50,000

0 2008-09 2009-10 2010-11 2011-12 Four-Year Average

Sources: ACC; NCAA.

5. Input from Demand Generators 29

Comparison of FSU Men’s Basketball Average Attendance to ACC Average

12,000 FSU ACC Average 10,483 10,335 9,872 10,060 9,551

9,327 8,000 7,897 8,062 8,156 7,336

4,000

0 2008-09 2009-10 2010-11 2011-12 Four-Year Average Sources: ACC; NCAA.

Average attendance as a percent of arena capacity helps mitigate differences in arena size. As shown below, FSU men’s basketball has averaged 67% of its arena capacity during the profiled four seasons compared to a conference average of 78%.

Comparison of Men’s Basketball Average Attendance as a % of Arena Capacity

100% 100% 99%

92% 88% 80%

77% 77% 77% 73% 69% 67% 60% 62% 61% 56%

40%

20%

0% Duke North Virginia Maryland Average Clemson Georgia Wake Virginia Florida NC State Boston Miami Carolina Tech Tech Forest State College Sources: ACC; NCAA.

5. Input from Demand Generators 30

The tables below illustrate total and average attendance by individual ACC team. FSU men’s basketball ranked among the lower third of ACC teams in terms of total attendance for each of the profiled seasons. FSU’s average attendance per game ranked 5th in the 2010-11 season.

Summary of ACC Men's Basketball Total Season Attendance by Team 2008-09 2009-10 2010-11 2011-12 Four-Year Average Team Total Rank Total Rank Total Rank Total Rank Total Rank North Carolina 315,519 1 337,934 1 287,155 1 362,867 1 325,869 1 Maryland 306,858 2 268,673 2 268,380 2 224,090 3 267,000 2 NC State 242,206 3 224,131 3 220,457 3 257,638 2 236,108 3 Virginia 173,716 5 172,389 6 172,659 5 168,349 4 171,778 4 Wake Forest 181,832 4 177,498 4 174,781 4 138,802 7 168,228 5 Duke 158,338 6 158,338 7 158,338 6 149,024 6 156,010 6 Virginia Tech 150,627 7 176,159 5 142,907 7 151,113 5 155,202 7 Clemson 135,619 8 151,442 8 140,917 8 125,249 9 138,307 8 Florida State 126,359 10 117,381 10 139,904 9 137,047 8 130,173 9 Georgia Tech 127,583 9 127,669 9 97,523 10 73,933 11 106,677 10 Boston College 105,418 11 90,394 11 90,509 11 79,985 10 91,577 11 Miami 72,599 12 75,411 12 80,963 12 70,854 12 74,957 12 Total 2,096,674 2,077,419 1,974,493 1,938,951 2,021,884 Average 174,723 173,118 164,541 161,579 168,490 FSU as a % of ACC Average 72% 68% 85% 85% 77%

Summary of ACC Men's Basketball Average Attendance by Team 2008-09 2009-10 2010-11 2011-12 Four-Year Average Team Total Rank Total Rank Total Rank Total Rank Total Rank North Carolina 21,035 1 17,786 1 19,144 1 20,159 1 19,531 1 Maryland 17,048 2 16,792 2 14,910 2 13,182 3 15,483 2 NC State 13,456 3 13,184 3 13,779 3 13,560 2 13,495 3 Wake Forest 12,122 4 11,833 4 9,199 7 8,675 6 10,457 4 Virginia 10,219 5 10,141 5 10,156 4 10,522 4 10,259 5 Duke 9,314 7 9,314 7 9,314 6 9,314 5 9,314 6 Virginia Tech 9,414 6 9,272 8 8,932 8 8,395 7 9,003 7 Clemson 8,476 8 9,465 6 8,289 9 7,828 9 8,515 8 Florida State 7,897 9 7,336 10 9,327 5 8,062 8 8,156 9 Georgia Tech 7,505 10 7,979 9 6,095 10 4,929 10 6,627 10 Boston College 5,548 11 5,317 11 5,324 11 4,705 11 5,224 11 Miami 4,537 12 4,713 12 4,763 12 3,936 12 4,487 12 Average 10,483 10,335 9,872 9,551 10,060 FSU as a % of ACC Average 75% 71% 94% 84% 81% Note: Sorted in descending order by four-year average. Source: NCAA.

5. Input from Demand Generators 31

FSU Women’s Basketball

The following graphs compare FSU’s women’s basketball total and average attendance per game to the ACC average in both categories. FSU women’s basketball has consistently attracted slightly less total attendance than the ACC average.

Comparison of FSU Women’s Basketball Total Attendance to ACC Average

60,000 FSU ACC Average 46,865 41,413 41,630 42,161 38,734 40,000 44,351 41,378 40,049 39,941 33,985

20,000

0 2008-09 2009-10 2010-11 2011-12 Average Sources: ACC; NCAA.

By contrast, average attendance at FSU women’s basketball games has been slightly above the ACC average.

Comparison of FSU Women’s Basketball Average Attendance to ACC Average

4,000 FSU ACC Average

2,884 3,000 2,568 2,485 2,473 2,421

2,000

2,957 2,670 2,660 2,586 2,428 1,000

0 2008-09 2009-10 2010-11 2011-12 Average Sources: ACC; NCAA.

5. Potential Demand Generators 32

As shown below, FSU women’s basketball has averaged 22% of its arena capacity during the profiled four seasons compared to an average of 24%.

Comparison of Women’s Basketball Average Attendance as a % of Arena Capacity

60% 59%

50%

40%

36% 34% 30% 28% 24% 24% 23% 20% 22%

17% 15% 10% 13%

8% 6% 0% Duke North Maryland NC State Average Virginia Virginia Florida Georgia Boston Miami Clemson Wake Carolina Tech State Tech College Forest Sources: ACC; NCAA.

5. Potential Demand Generators 33

The tables below illustrate total and average attendance for women’s basketball by individual ACC team. FSU women’s basketball has consistently ranked 5th or 6th among the 12 ACC teams in terms of both total and average attendance per game.

Summary of ACC Women's Basketball Total Season Attendance by Team 2008-09 2009-10 2010-11 2011-12 Four-Year Average Team Total Rank Total Rank Total Rank Total Rank Total Rank Maryland 133,336 1 101,062 1 87,745 2 96,401 1 104,636 1 Duke 93,639 2 76,322 2 88,667 1 75,054 2 83,421 2 Virginia 58,122 4 65,506 3 57,908 3 63,039 3 61,144 3 North Carolina 74,404 3 51,855 4 52,995 4 44,710 4 55,991 4 Florida State 44,351 5 41,378 5 40,049 6 33,985 6 39,941 5 Virginia Tech 31,621 7 40,485 6 40,100 5 33,593 7 36,450 6 NC State 34,377 6 37,331 7 30,563 8 41,504 5 35,944 7 Georgia Tech 19,967 9 20,271 8 36,011 7 13,545 11 22,449 8 Boston College 24,892 8 20,058 9 20,461 9 11,852 12 19,316 9 Miami 17,523 11 13,791 11 18,491 10 22,515 8 18,080 10 Wake Forest 17,980 10 17,697 10 11,673 12 14,981 9 15,583 11 Clemson 12,168 12 11,201 12 14,899 11 13,625 10 12,973 12 Total Attendance 562,380 496,957 499,562 464,804 505,928 Average Attendance 46,865 41,413 41,630 38,734 42,161 FSU as a % of ACC Average 95% 100% 96% 88% 95%

Summary of ACC Women's Basketball Average Attendance by Team 2008-09 2009-10 2010-11 2011-12 Four-Year Average Team Total Rank Total Rank Total Rank Total Rank Total Rank Maryland 8,889 1 4,812 1 5,161 2 5,356 2 6,055 1 Duke 6,689 2 4,770 2 5,216 1 5,361 1 5,509 2 Virginia 3,419 4 3,853 3 3,048 3 3,152 3 3,368 3 North Carolina 3,916 3 2,881 4 2,944 4 2,630 4 3,093 4 Florida State 2,957 5 2,586 5 2,670 5 2,428 6 2,660 5 Virginia Tech 1,976 7 2,381 6 2,359 6 2,584 5 2,325 6 NC State 2,292 6 2,333 7 2,183 7 2,306 7 2,278 7 Georgia Tech 1,331 9 1,448 8 2,118 8 1,042 9 1,485 8 Boston College 1,464 8 1,433 9 1,364 9 790 11 1,263 9 Miami 974 11 726 12 925 11 1,407 8 1,008 10 Wake Forest 999 10 983 10 687 12 788 12 864 11 Clemson 761 12 800 11 931 10 908 10 850 12 Average Attendance 2,884 2,485 2,473 2,421 2,568 FSU as a % of ACC Average 103% 104% 108% 100% 104% Note: Sorted in descending order by four-year average. Source: NCAA.

5. Potential Demand Generators 34

Arena Event Promoters/Producers

Feld Motorsports

Feld Motorsports, the largest promoter of indoor motorsports, holds its Monster Jam at the Civic Center annually. The Civic Center’s seating capacity is sufficient for their needs. Safety is the single most important criteria to the promoter. Having the ability to retract the first few rows of seats to create a safety barrier of six to eight feet from floor to first row of seating is optimal. The promoter seeks flexible and creative rental terms and anticipates continuing to host this event at the Civic Center. Historically, attendance has been sufficient to warrant an annual event in the market with two weekend performances. Adequate parking, floor access for large vehicles, dressing room access for show participants and the current floor space are requirements to accommodate the show.

Feld Entertainment

Feld Entertainment hosts the Ringling Brothers and Barnum & Bailey Circus and Disney Live events at the Civic Center. The Ringling Brothers Circus is the gold unit which is a smaller production that travels via road rather than train. The gold unit is a less expensive production and allows Feld Entertainment to play smaller markets. From a production perspective, the existing Civic Center is sufficient for the circus and Disney Live.

Promoter representatives mentioned that any physical improvements to the backstage, loading dock, and parking lot areas would positively impact their events. One specific challenge noted was that the market does not typically generate the same amount of revenues as other similarly sized markets. The ability to cross promote with the FSU campus including faculty and staff is viewed as a positive, particularly opportunities to leverage media inventory.

Cirque Du Soleil

Cirque Du Soleil has played the Civic Center in recent years with its high-quality, artistic entertainment shows. Cirque Du Soleil has two types of shows: resident and touring. The resident shows play in the same city for a set amount of time generally in multi-year terms. Cities that are currently home to resident shows include Las Vegas, Nevada, Los Angeles, California, and Orlando, Florida. The touring shows are split into two distinct types of shows – arena shows and big top shows. The productions are designed to play either an indoor arena or a tented type of venue in an open outdoor environment.

From a production perspective, the venue is able to accommodate both their front-of-house and back-of- house needs. The routing of a Cirque Du Soleil is based on the ability to play in profitable markets. Two issues affect all venues and routing in Florida: there are two big top shows that regularly play Miami and Tampa and there is a resident show in Orlando that plays year-round. These two issues provide limited windows for how Cirque Du Soleil is routed in the region.

Promoter representatives indicated that they play Tallahassee as they travel from Gainesville to New Orleans, Louisiana. From a routing perspective, this is ideal for both the venue and the show. However, representatives indicated that Tallahassee is a tertiary market. Although Gainesville and Jacksonville are not particularly strong markets, they do provide a natural route and are markets that they envision playing at some point in the future.

5. Potential Demand Generators 35

Beginning in 2014, there will only be one touring production of Cirque Du Soleil in North America creating a smaller inventory of possible tour dates. This will, most likely, create fewer regular opportunities for the Civic Center to host Cirque Du Soleil shows as the most profitable markets will become the most desirable markets to play.

The crew and artists associated with the touring show are flexible in creatively utilizing backstage space for dressing rooms, production and managers offices, and catering. Any reduction of back-of-house space would be a concern to large-scale shows especially one like Cirque Du Soleil that has over 100 people traveling with them. If a physical therapy room could be made available it would be ideal for their needs.

Vee Corporation

Vee Corporation is a family show promoter with events including Sesame Street Live. According to representatives, the Civic Center staffing and labor is higher than average. These expenses impact where they route their acts and is likely a major factor in why they have not played the Civic Center in the last seven years.

AEG Live

AEG Live is an international concert and live event promotions company. AEG Live is responsible for some of the largest concert events in the U.S. AEG Live promotes one to two concerts per year in the Civic Center. Representatives indicated that the venue is strategically located as shows route across the Southeast. According to representatives, although the Civic Center is an older facility with less modern amenities, it meets the needs of most touring concerts from a production perspective.

AEG Live representatives mentioned that the Civic Center’s challenges are market driven, not program- related. The relatively small market size combined with the inability to sell a higher ticket price make the economics difficult for many acts to play Tallahassee over other more profitable markets. As such, Tallahassee is often only considered when acts add more dates. Representatives stated that any reduction in the number of backstage dressing rooms and production rooms would be detrimental in attracting concert activity to the venue.

World Wrestling Entertainment

World Wrestling Entertainment (WWE) has historically played the Civic Center every two years. The venue meets the needs of their live touring show from a production perspective and Tallahassee’s location was viewed as a positive from a routing perspective. Ticket sales do not warrant that the event be held in Tallahassee on an annual basis. Ultimately, ticket sales dictate market potential, not venue enhancements. If sales grow then WWE management would likely respond and look to add more shows into the market.

WWE representatives have experienced situations where a new owner comes in and creates new revenue streams through facility fees or additional fees. They cautioned that these types of fees are paid for by the fans and with a market that is strained to support shows now it may be detrimental to the venue.

5. Potential Demand Generators 36

SB2N Entertainment

SB2N Entertainment is a promoter and producer of a variety of international concerts and events. SB2N promoted the Yo Gabba Gabba children’s show at the Civic Center. Tallahassee is a convenient route for events. Representatives of SB2N indicated that they had a positive experience hosting their event at the Civic Center and are excited about the marketing and cross-promotional opportunities with FSU once it assumes ownership. Ultimately, the sales figures determine whether a show will play a market or not. However, a strong and dynamic marketing support team can be advantageous to attracting promoters to a market.

Icon Entertainment

Icon Entertainment is the primary promoter of Jeff Dunham, a highly popular comedic entertainer worldwide who played the Civic Center in 2008 and February 2013.

Icon Entertainment representatives cited that the Civic Center meets the needs of the tour from a production perspective and routing through Tallahassee is convenient for the tour. The show will play Estero, Kissimmee, Tampa, and Columbus, Georgia in 2013. Icon purposefully did not route through Jacksonville or Gainesville to provide more opportunity for Tallahassee to be successful.

Ticket sales in 2008 were not strong. Icon representatives were hoping that the second time in the marketplace would result in increased ticket sales which is the trend nationally. The promoter was confident that between the positive shift in the economy since 2008 and playing the market for a second time they would see stronger sales. This year’s date was not competing with FSU football and was a Sunday afternoon matinee show which typically sells as well as a Saturday evening performance. The show is sold out in most markets in North America with Tallahassee being among the weakest.

The Icon representative feels that the marketplace is the concern and its lack of interest in shows that are trending sell-outs in most markets including Florida markets. The aesthetics of the venue does not tend to distract an eager ticket buyer, rather ticket sales determine where a show will continue to route.

Leon County Graduations

Leon County Schools host five of their graduations at the Civic Center including Lincoln High School, Chiles High School, Rickards High School, Godby High School, and Leon High School. Attendance at the graduation ceremonies range from 6,000 to 12,000 based on the school size.

Representatives from Leon County Schools indicated that they have always been pleased with the Civic Center and are appreciative that the graduation dates are protected and available annually. The overall experience is positive and they anticipate the continuation of their events at the Civic Center.

Representatives indicated that they have a challenge with a lack of sufficient parking for their events. They choose to utilize floor speakers and do not use the house speakers and have complaints about the acoustics for those located farthest from the stage. They also see a slight increase on an annual basis for their event costs but their budgets rarely rise to meet these increases.

5. Potential Demand Generators 37

Meeting Rooms and Exhibition Hall Event Users

Florida Department of Law Enforcement

The Florida Department of Law Enforcement utilized the Civic Center Exhibition Hall for many years to host their certification examinations. They held events once per month with attendance ranging from 100 to 400. Event representatives liked the site logistics including the parking, the access to restrooms and had minimal technology requirements.

The Florida Department of Law Enforcement recently moved all of their monthly events out of the Civic Center Exhibition Hall to the Florida Public Safety Institute in Havana, Florida where they were able to get more favorable rental terms which resulted in significant cost savings.

East Coast Shows

East Coast Shows has been promoting consumer shows at the Civic Center Exhibition Hall for nearly 20 years. The Boat Show utilized the Exhibition Hall and outside terrace for 19 years. They have ceased promoting the Boat Show recently primarily due to a diminishing number of boat retailers in the Tallahassee area. The Boat Show is dependent on having vendors display their products and the economic downturn saw many of the vendors go out of business.

East Coast Shows representatives noted that challenges for the Boat Show included the amount of available parking when FSU was playing a home game at the Civic Center and the price of parking.

The Home Show continues to be held at the Civic Center Exhibition Hall. Although the columns in the Exhibition Hall, the lack of modern technology, and the antiquated lighting system are not preferable, they are able to work around those issues. The single biggest challenge for the Home Show is the price of parking and accessibility to spaces.

The Rotary Club of Tallahassee

The Rotary Club of Tallahassee hosts a weekly luncheon and business meeting in the meeting rooms of the Civic Center. They have been meeting at the Civic Center for many years and anticipate similar event activity for the foreseeable future. The Rotary Club of Tallahassee has approximately 125 to 150 people attend their weekly meetings.

The promoter of the event indicated that management has been accommodating to their needs, particularly when there was a booking conflict. The food and beverage services were cited as being of high quality and they are generally satisfied with the service.

Rotary representatives indicated that the facility is dated, the lighting is not warm and inviting, and the parking lot location creates a long walk for their attendees. Ideally any renovation would seek to address these issues. Strengths of the Civic Center include the food and beverage service, free parking, and the pricing structure for their event. They plan to continue to host their events at the Civic Center.

5. Potential Demand Generators 38

Tallahassee Fitness Festival

The Tallahassee Fitness Festival is produced and promoted by Eventions, LLC which is a regional event planner. Five Fitness Festivals have been hosted at the Civic Center and a sixth event is planned for 2013. The one-day event utilizes the Exhibition Hall and the Meeting Rooms and has 150 vendors and approximately 2,000 attendees. Strengths include the downtown location, the Civic Center staff, and positive brand association with Civic Center that their sponsors feel is beneficial. The event promoter cited the availability of parking, the walking distance from the parking lot to the Exhibition Halls and the Meeting Rooms and the cost of parking as challenges – particularly for gala-type events.

From a physical perspective, the Exhibition Hall was referred to as a “concrete jungle” with poor lighting and acoustics. The costs associated with making the Exhibition Hall and Meeting Rooms more appealing to vendors and attendees are expensive. From a manpower perspective, it is expensive and time-consuming to host events at the Civic Center. Additionally, the promoter is concerned with the rental cost and terms finding that there are many add-on expenses where other venues they work with include those ancillary costs such as pipe and drape or linens.

The promoter has experienced challenges with having arena-based events occurring at the same time as their Fitness Festival. They have had the circus and an FSU basketball game occur on the same day as their event. There have been noise issues with the sounds from the arena being heard in the Meeting Rooms and Exhibition Hall. The promoter has explored other options for hosting this event. Desired requirements include contiguous space, more modern furnishings, lighting, and technology as well as available, close parking to the venue.

Tallahassee Society of Association Executives

The Tallahassee Society of Association Executives (TSAE) organizes events throughout the Tallahassee area for their members including roundtables, education sessions, study groups, monthly luncheons, and an annual trade show and meeting. Events are held at a wide variety of venues on the FSU campus, the Civic Center, local governmental buildings, and cafes. The TSAE recently hosted their 25th Annual Trade Show and Education Day at the Civic Center Exhibition Hall and Meeting Rooms. They also host several regular meetings at the Civic Center in the meeting rooms.

The younger membership base of the TSAE is looking for new locations to host their events. The biggest challenge for the TSAE is the outdated condition of the Civic Center, and more specifically, the Exhibition Hall and Meeting Rooms. Although the service and food/beverage operations are strong, it is difficult to overcome the physical aesthetics of the venue. TSAE continues to utilize the Civic Center because of its size and the lack of alternative options in Tallahassee. The cost to utilize the Civic Center is another concern, particularly relative to the quality of amenities offered and the composition of the Tallahassee market (e.g., state employees).

5. Potential Demand Generators 39

Comparable Facilities Analysis

In order to help gauge the types of renovations/enhancements necessary for the Civic Center to remain competitive, operating data from newer/renovated Division-I arenas was analyzed based on interviews with management, industry resources, published reports and our internal database. The data shown in this report is based on available information for each of the profiled facilities. It should be noted that not all facilities are directly comparable to the Civic Center but can still offer a frame of reference for program and operating strategies. In addition, individual facilities are not identified in the comparative operating tables and graphs because some information was provided confidentially.

Ownership/Operating Structure

The table below summarizes the ownership/operator structure of the profiled peer facilities. Similar to the Civic Center, five of the 11 profiled facilities serve as the primary arena in the market.

Profiled Peer Facilities Primary Arena Arena University Serving the Market Owner Operator Auburn Arena Auburn University Yes University University Bank United Center University of Miami No University Private Chaifetz Arena Saint Louis University No University Private Comcast Center University of Maryland No University University Ford Center University of Evansville Yes City Private Hank McCamish Pavilion Georgia Institute of Technology No University University John Paul Jones Arena University of Virginia Yes University Private KFC YUM! Center University of Louisville Yes Authority Private Mizzou Arena University of Missouri Yes University University UCF Arena University of Central Florida No University Private USF Sun Dome University of South Florida No University Private Note: Sorted in alphabetical order by arena name. Sources: Facility management; secondary research.

While nine of the 11 (82%) profiled facilities are University–owned, only four are University-operated. The other seven arenas utilize private management companies to operate their asset.

Ownership/Management Structure at Profiled Facilities 100% 82% Ownership Management 80% 64% 60%

40% 36%

20% 9% 9% 0% 0% University Private/Authority Public Sources: Individual facility management; other research.

6. Comparable Facilities Analysis 40

Building Program

As shown in the following table, the Civic Center is the oldest of the profiled arenas and offers a slightly lower seating capacity for basketball than the profiled set. Newer arenas also offer loge seating which is typically comfortable seats that are located on the front several rows of the arena and separated from the general seating.

Profiled Peer Facilities - Building Program Elements

Year Built/ Seating Club Arena University Renovated Capacity Suites Seats KFC YUM! Center University of Louisville 2010 22,100 75 2,400 Comcast Center University of Maryland 2002 17,500 18 0 Mizzou Arena University of Missouri 2004 15,100 24 1,000 John Paul Jones Arena University of Virginia 2006 14,900 19 0 Civic Center Florida State University 1999 12,200 34 468 Chaifetz Arena Saint Louis University 2006 10,100 16 1,450 USF Sun Dome University of South Florida 2012 10,000 0 600 UCF Arena University of Central Florida 2007 9,500 16 500 Ford Center University of Evansville 2011 9,320 21 515 Auburn Arena Auburn University 2010 9,100 12 627 Hank McCamish Pavilion Georgia Institute of Technology 2012 8,600 0 300 BankUnited Center University of Miami 2003 8,000 25 0 Average of Peer Facilities 12,200 21 700 Notes: Sorted in descending order by seating capacity. Seating capacities vary by individual source but provide an order of magnitude comparison. Sources: Facility management; secondary research.

Utilization

The following graph depicts the total number of events and attendance hosted at profiled peer arenas. Utilization is impacted by factors such as the physical product, market characteristics, accessibility, mission statement, booking policy, rental and labor rate structure, regionally competitive facilities, marketing efforts and general economic conditions. As shown, profiled arenas host an average of 210 events and 566,900 attendees annually. The Civic Center hosted more events than all of the profiled peer facilities but 30% fewer attendees than the average of the profiled set.

Summary of Utilization at Profiled Peer Facilities 1,250,000 500 479

1,000,000 400

750,000 270 300 253 242 210 500,000 200 145 140 Events Total Total Attendance Total

250,000 100 566,900 491,500 418,000 396,100 383,900 341,000 1,200,300

0 0 Arena 1 Average Arena 2 Arena 3 Civic Center Arena 4 Arena 5 Sources: Individual facilities; secondary research.

6. Comparable Facilities Analysis 41

Overview of Concert/Commercial Event Activity

One of the driving forces of an arena’s seating capacity is concert and other commercial activity which can generate substantial revenue. Some arenas can reduce their seating capacity through the use of curtaining. Pollstar is a trade publication covering the worldwide concert industry and retains information primarily from the agents, managers and promoters who are producing concerts and other entertainment acts. Their online resource provides a list of acts playing at specific venues for the past two decades along with detailed box office statistics for available acts. As a point of reference, the following tables summarize reported event attributes from 2012 Pollstar reports for the profiled arenas for which data was available; not all acts report detailed event statistics. The majority of profiled arenas are privately managed.

Summary of 2012 Pollstar Reports for Profiled Peer Facilities Average Average Tickets Attendance/ Gross Ticket Ticket Arena Events Performances Sold Performance Sales Price KFC Yum Center 18 19 189,173 9,956 $12,526,956 $66 Chaifetz Arena 24 43 146,348 3,403 $6,183,255 $42 John Paul Jones Arena 17 21 86,286 4,109 $4,622,735 $54 Ford Center 9 14 64,188 4,585 $3,163,757 $49 USF Sun Dome 9 13 34,911 2,685 $1,833,342 $53 UCF Arena 11 11 42,977 3,907 $1,298,687 $30 Civic Center 4 4 17,213 4,303 $667,912 $39 Mizzou Arena 1 1 7,905 7,905 $456,880 $58 BankUnited 1 1 6,690 6,690 $448,110 $67 Average 10 14 66,188 4,728 $3,466,848 $52 Note: Sorted in descending order by gross ticket sales. Source: Pollstar.

The tables that follow provide the 2012 Pollstar report for each facility including a list of the artists.

KFC Yum Center - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Van Halen 1 1 17,048 17,048 17,048 100% $1,544,983 $91 Jimmy Buffett 1 1 18,150 18,150 18,150 100% $1,528,752 $84 Bruce Springsteen 1 1 16,699 16,699 20,491 81% $1,394,816 $84 Roger Waters 1 1 12,547 12,547 14,666 86% $1,295,669 $103 Justin Bieber 1 1 16,334 16,334 16,344 100% $1,158,153 $71 Red Hot Chili Peppers 1 1 13,186 13,186 15,299 86% $761,089 $58 KISS/Motley Crue 1 1 6,050 6,050 9,401 64% $672,485 $111 Dave Matthews 1 1 10,301 10,301 12,449 83% $639,514 $62 Carrie Underwood 1 1 10,069 10,069 10,538 96% $593,576 $59 Miranda Lambert 1 1 13,100 13,100 13,100 100% $578,575 $44 Eric Church 1 1 10,549 10,549 10,549 100% $423,078 $40 Sugarland 1 1 7,543 7,543 9,114 83% $386,105 $51 New Edition 1 1 6,957 6,957 8,572 81% $375,380 $54 Big Time Rush 1 1 5,917 5,917 8,340 71% $321,445 $54 Harlem Globetrotters 1 2 10,697 5,349 10,322 52% $259,758 $24 Jeff Dunham 1 1 5,428 5,428 5,428 100% $246,974 $46 Tour of Gymnastics 1 1 5,157 5,157 6,496 79% $217,760 $42 Royal Comedy Tour 1 1 3,441 3,441 7,808 44% $128,844 $37 Total 18 19 189,173 9,956 $12,526,955 $66

6. Comparable Facilities Analysis 42

Chaifetz Arena - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Cirque du Soleil 1 6 8,719 1,453 3,833 38% $505,707 $58 Muse 1 1 7,708 7,708 7,708 100% $461,930 $60 Def Leppard/Poison 1 1 6,055 6,055 6,625 91% $454,805 $75 Phish 1 1 7,425 7,425 9,978 74% $445,500 $60 Disney on Ice 1 7 22,842 3,263 5,988 54% $436,790 $19 Batman Live 1 6 9,945 1,658 5,706 29% $413,664 $42 The Black Keys 1 1 9,097 9,097 9,097 100% $403,784 $44 Blake Shelton 1 1 7,590 7,590 7,590 100% $383,718 $51 Eric Church 1 1 8,420 8,420 8,420 100% $296,315 $35 Phineas and Ferb 1 4 11,305 2,826 3,650 77% $291,108 $26 Tour of Gymnastics 1 1 5,248 5,248 6,893 76% $286,369 $55 Mike Epps 1 1 5,169 5,169 6,523 79% $278,678 $54 Rickey Smiley 1 1 4,752 4,752 6,415 74% $268,988 $57 Bassnectar 1 1 4,987 4,987 4,987 100% $198,652 $40 Wiz Khalifa 1 1 4,294 4,294 5,030 85% $174,381 $41 Steve Harvey 1 1 3,396 3,396 4,157 82% $166,138 $49 Fred Hammond 1 1 3,903 3,903 6,679 58% $155,150 $40 Mel Waiters 1 1 2,962 2,962 5,084 58% $143,938 $49 Mac Miller 1 1 3,774 3,774 6,581 57% $116,994 $31 Royal Comedy Tour 1 1 2,196 2,196 4,579 48% $98,735 $45 Smashing Pumpkins 1 1 2,153 2,153 4,197 51% $96,019 $45 OMG Girlz 1 1 2,416 2,416 9,773 25% $61,130 $25 TNA Wrestling 1 1 644 644 2,513 26% $24,830 $39 Showdown Drumline 1 1 1,348 1,348 8,907 15% $19,932 $15 Total 24 43 146,348 3,403 $6,183,254 $42

John Paul Jones Arena - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Dave Matthews Band 1 2 23,961 11,981 13,864 86% $1,554,153 $65 Bruce Springsteen/E Street Band 1 1 9,931 9,931 13,000 76% $921,966 $93 Jason Aldean 1 1 13,416 13,416 13,416 100% $631,262 $47 Miranda Lambert 1 1 8,410 8,410 8,410 100% $333,242 $40 Eric Church 1 1 7,911 7,911 8,507 93% $321,043 $41 Foxworty/Engval/Larry 1 1 5,463 5,463 6,352 86% $240,795 $44 Mamma Mia 1 1 1,938 1,938 2,199 88% $104,147 $54 Riverdance 1 1 1,981 1,981 4,515 44% $96,549 $49 Celtic Woman 1 1 1,646 1,646 3,158 52% $77,884 $47 Fiddler on the Roof 1 1 1,630 1,630 2,230 73% $76,800 $47 Disney Live 1 2 3,269 1,635 2,045 80% $64,642 $20 The Harlem Globetrotters 1 1 1,630 1,630 6,770 24% $49,058 $30 Young Frankenstein 1 1 932 932 2,201 42% $41,357 $44 Steve Aoki 1 1 1,492 1,492 3,790 39% $37,211 $25 TNA Wrestling 1 1 705 705 4,816 15% $26,522 $38 Sesame Street Live 1 3 1,127 376 8,984 4% $25,282 $22 Newsboys 1 1 844 844 2,176 39% $20,822 $25 Total 17 21 86,286 4,109 $4,622,734 $54

6. Comparable Facilities Analysis 43

Ford Center - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Elton John 1 1 10,088 10,088 10,088 100% $950,995 $94 Cirque du Soleil 1 6 9,357 1,560 3,026 52% $509,635 $54 Lady Antebellum 1 1 9,399 9,399 9,399 100% $448,950 $48 James Taylor 1 1 4,393 4,393 5,000 88% $290,598 $66 Eric Church 1 1 8,157 8,157 8,157 100% $287,160 $35 Jeff Dunham 1 1 6,452 6,452 6,452 100% $280,662 $44 Rowdy Frynds/Hank Wm 1 1 4,186 4,186 6,000 70% $212,376 $51 Winter Jam 1 1 8,549 8,549 8,549 100% $94,557 $11 Harlem Globetrotters 1 1 3,607 3,607 8,527 42% $88,824 $25 Total 9 14 64,188 4,585 $3,163,757 $49

Sun Dome at University of South Florida - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Elton John 1 1 10,009 10,009 10,009 100% $906,665 $91 Florence & The Machine 1 1 4,580 4,580 6,819 67% $198,318 $43 The Kings Men 1 1 4,043 4,043 6,245 65% $157,488 $39 Fresh Music Festival 1 1 2,882 2,882 6,336 45% $148,897 $52 Mythbusters 1 1 2,799 2,799 4,916 57% $119,987 $43 The Story Tour 1 1 3,006 3,006 4,955 61% $111,448 $37 Wiz Khalifa 1 1 2,814 2,814 5,295 53% $96,862 $34 Sesame Street Live 1 5 3,920 784 3,816 21% $79,649 $20 Luminate/Beckah Shae 1 1 858 858 6,256 14% $14,028 $16 Total 9 13 34,911 2,685 $1,833,341 $53

University of Central Florida Arena - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Miranda Lambert 1 1 6,513 6,513 7,110 92% $306,736 $47 Eric Church 1 1 5,456 5,456 6,066 90% $193,363 $35 Rise Against 1 1 5,251 5,251 6,357 83% $189,509 $36 Mac Miller 1 1 3,810 3,810 8,003 48% $149,002 $39 Casting Crowns 1 1 4,231 4,231 7,949 53% $129,851 $31 Lynyrd Skynyrd 1 1 1,732 1,732 5,581 31% $84,650 $49 Meek Mill/Tyga 1 1 1,858 1,858 7,789 24% $73,892 $40 Pretty Lights 1 1 2,637 2,637 4,848 54% $73,322 $28 Winter Jam 1 1 4,513 4,513 9,200 49% $47,484 $11 Aziz Ansari 1 1 6,522 6,522 8,002 82% $42,706 $7 Alesso 1 1 454 454 8,010 6% $8,172 $18 Total 11 11 42,977 3,907 $1,298,686 $30

Tucker Civic Center - Pollstar 2012 Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Miranda Lambert 1 1 6,620 6,620 6,760 98% $295,333 $45 Eric Church 1 1 5,540 5,540 7,377 75% $196,375 $35 Casting Crowns 1 1 3,367 3,367 5,000 67% $89,678 $27 Riverdance 1 1 1,686 1,686 1,809 93% $86,526 $51 Total 4 4 17,213 4,303 $667,912 $39

6. Comparable Facilities Analysis 44

Mizzou Arena - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Rascal Flatts 1 1 7,905 7,905 9,000 88% $456,880 $58 Total 1 1 7,905 7,905 $456,880 $58

Bank United Center - 2012 Pollstar Report Average Average Tickets Attendance/ Gross Ticket Ticket Headline Artist Events Performances Sold Performance Capacity % Sales Price Drake 1 1 6,690 6,690 6,690 100% $448,110 $67 Total 1 1 6,690 6,690 $448,110 $67 Note: Sorted in descending order by gross ticket sales at facility.

As shown, profiled arenas commonly host concerts, comedy acts, touring sports events, and family shows. Attendance and average ticket prices can vary significantly based on factors such as capacity, local/regional competition, and area demographics.

Financial Operations

Comparing financial performance at comparable facilities can offer a good frame of reference from which to benchmark historical and projected financial operations of the existing Civic Center and any potential enhancements/renovations. It is important to recognize that facilities vary in their methods of financial reporting and, as such, not all categories or line items are uniformly reported. Consequently, for purposes of this analysis, adjustments have been made to the financial information as reported by the facilities in order to try to make the data as consistent as possible for comparative purposes. For instance, operating revenues do not include any public funding or tax revenue such as hotel/motel tax collections for any of the profiled facilities. Similarly, facility operating expenses exclude depreciation expense, debt service, large asset purchases, and any effect of taxes.

The following table illustrates operating revenues, operating expenses and operating gain/(loss) for the profiled peer facilities. Individual facilities are not identified in the comparative tables because some information from privately operated facilities was provided confidentially. Operating expenses at competitive/comparable facilities can vary significantly based on factors such as building program, site size, management structure, event activity, age of venues, energy efficiency resources, and contracted services. The Civic Center’s financial operating gain ranks fourth among six profiled facilities which ranged from operating income of $711,000 to an operating loss of $1.0 million.

Summary of Financial Operations at Profiled Peer Facilities Operating Operating Operating Arena Revenues Expenses Gain / (Loss) 1 $9,031,000 $8,320,000 $711,000 2 $1,405,000 $851,000 $554,000 3 $1,878,000 $1,461,000 $417,000 Civic Center $6,739,000 $6,493,000 $246,000 4 $7,200,000 $8,000,000 ($800,000) 5 $2,022,000 $3,042,000 ($1,020,000) Average (excluding Civic Center) $4,307,200 $4,334,800 ($27,600) Median (excluding Civic Center) $2,022,000 $3,042,000 $417,000 Note: Sorted in descending order by operating gain. Sources: Facility management; secondary research.

6. Comparable Facilities Analysis 45

Management Alternatives

There are several potential management options for arena/civic center facilities. While the governance structure should play a significant role in oversight, establishing and administering policy as well as maintaining accountability for the facility, the management team should be responsible for overseeing the day-to-day operations of the facility including implementing the mission statement and operating policies. Consequently, the management approach is important because it typically impacts all aspects of operations including marketing, utilization, financial operations and overall efficiency of a facility. For instance, management’s ability to effectively negotiate rental rates and be flexible in implementation of the booking policy can directly impact utilization, financial performance and/or economic impact generated from the venue. In some instances, publicly run facilities are limited in their capability to act as quickly as other management approaches.

As such, some facilities owners choose to delegate the management of facility operations to some form of third party that provides industry knowledge and representation. In addition to these benefits, management through a third party can offer stability and insulation from political influence which can be desired attributes by customers, vendors, facility management and staff who typically prefer a continuity of purpose and ability to function within a business environment that is not affected by each political election.

Examples of existing management options at arena/civic center facilities include, but are not limited to, the following:

 Operating as an independent authority.  Operating through traditional governmental management such as a City/County departmental structure.  Operating as a University department.  Contracting with a third party that specializes in managing similar facilities.

Each of these alternative approaches to management can be found within the public assembly facility industry and are discussed in more detail on the pages that follow.

Independent Authority

In many states, an authority is a political subdivision of one or more governmental entities (e.g., City, County and/or State) that is allowed by an act of local or state legislature. Authorities are usually governed by a Board of Directors that provides oversight and accountability. The Civic Center is currently managed under this structure by the Tallahassee-Leon County Civic Center Authority until the sale of the asset to FSU is finalized this summer. The KFC Yum! Center at Louisville University and PNC Arena at North Carolina State University are examples of arenas owned by an authority structure. However, both of these venues are operated by third party management companies.

7. Management Alternatives 46

This form of management structure is typically pursued when a fiscal resource is created or allocated by a unit(s) of government and when an inter-local agreement is pledged to the authority for specific purposes. In many cases, the authority is tasked with the planning, design, financing, construction, operations and improvement to a designated project(s).

One primary objective of creating an authority can be to obtain a funding source that can allow for the independent operations of the facility. This approach has value if there is a political consensus and will help to identify a revenue stream from existing or new fiscal sources that can help stabilize the operations of a public assembly facility and provide for its long-term improvement and maintenance.

While authorities often provide autonomy and independence, they are typically most effective when they control a revenue source that is dedicated to funding operations and/or retiring debt service. Authorities can also be beneficial when multiple jurisdictions and/or entities are involved in the funding and/or operations of public assembly facilities.

Traditional Governmental Management

Historically, public assembly facilities are one of the few public assets that operate in a semi-business atmosphere requiring contractual agreements, frequent short term lease/use of facilities by customers, management of part-time and temporary staff resources for numerous events and partnership with third party vendors and tenants. These operating conditions are unique within the public services provided by government whose natural inclination is to apply one set of guidelines to all municipal departments.

Unlike many municipal services where citizens do not have a choice, event promoters/producers have a variety of facilities to choose from when deciding where to host their event. In addition, attendees have a variety of options where they can spend their discretionary income. Given the competitiveness among arenas/civic centers, these facilities need to operate in a manner that is consistent with well-established industry practices.

As with any governmentally run facility, the goals and objectives may change with each political cycle. For instance, the number and diversity of events may be the primary objective of one official and fiscal performance may be the priority of another. These changes in the facility objectives can be counter- productive if not managed effectively. As such, clearly defining a mission statement that reflects community consensus and operating objectives (e.g., generating economic impact) can allow a facility to set forth an operating and marketing strategy that is consistent and long-term in implementation. This approach also can provide a more stable environment for event promoters/producers when considering a facility for future use. In general, governmentally operated facilities are more successful when management has the ability and the authority needed to aggressively operate and book the facility without incurring onerous procedures.

An example of a governmentally run facility is the Lawrence Joel Veterans Memorial Coliseum, home to Wake Forest University’s men’s and women’s basketball programs. This facility is currently owned by the City of Winston-Salem and operated through the Winston-Salem Public Assembly Facilities Commission, an 11 member volunteer commission of the City. However, Wake Forest University is in the process of negotiating a deal with the City to own and operate the facility.

7. Management Alternatives 47

University Department

Collegiate facilities are sometimes owned and operated by the University. Examples include Auburn Arena, Comcast Center and Mizzou Arena. Universities typically manage a facility that they own. They are often overseen by the broader University facilities or athletics departments.

The university structure appears to work well with facilities that want the ability to solicit donations and volunteer labor hours from a defined set of users and/or alumni who typically have higher disposable incomes. Annual memberships, sponsorships and other forms of ongoing support can be collected from the private or public sector, typically through a foundation. In many cases, donations are tax deductible. Further, tenants can maintain a high level of input into the facility’s usage and future development when a relatively small group of university stakeholders represent the Board. University departments can also provide legal and/or tax advantages relative to other options.

Because most universities are dependent on external funding from private or public sources such as government grants and direct donations, ongoing funding is one of the challenges of a university structure. Any changes to the funding of the overall entity can impact the ability to hire and retain staff as well as sustain facility operations. University department structures are typically more effective when they have a dedicated source of funding for ongoing operations and/or retiring debt service such as an endowment or athletics facilities fees charged to the student population.

Third Party Management Company

Many municipalities around the country utilize the services of a private management company (e.g., AEG, Global Spectrum, SMG, etc.) to manage the operations of their facilities. Examples of privately operated facilities include Bank United Center, Chaifetz Arena, Ford Center, John Paul Jones Arena and the KFC Yum! Center.

Private management companies can address a variety of needs and issues confronted by universities that, in many cases, result in a more effective and efficient means of facility operations than university run venues. Although some comparable facilities realize an operating deficit, these facilities are usually developed because of the broader university and community objectives they can achieve. Consequently, these facilities typically aim to attract events that draw patrons from outside the immediate market area who spend money on hotels, restaurants, and other similar services. Given these unique economics and the financial constraints for many universities, there is sometimes a conflict for the management team which struggles to balance hosting events that operate at a profit and positively impact the facility’s financial performance, accommodating tenant team needs, and hosting events that do not necessarily contribute positive cash flow but generate significant economic impact to a community.

As such, private management of a public assembly facility may be more effective under certain conditions which include, but are not limited to, the following:

 University policy constraints may limit a university’s ability to retain and hire qualified personnel that are experienced in the industry and compensated for their skill set relative to other similar positions in the industry.

7. Management Alternatives 48

 Union labor will be involved and the university is unable or unwilling to negotiate a favorable contract for rates.  Efficient operations will likely be hampered by strong political/university influence and operating autonomy is desired.  Facility management will likely be unable to effectively negotiate rates and other concessions and consequently would not be as competitive with other facilities because of university constraints in negotiating financial terms with event promoters.  Contract approval requirements would likely be onerous and time consuming.  Universities have limited funds for significant maintenance requirements and/or capital improvements to facilities and a third party contractor agrees to provide funding as part of its management agreement.

Typically the management company charges a base management fee in addition to a performance or incentive fee. The performance or incentive fee is capped at the annual base management fee amount and is usually tied to measurable operating results such as increasing the number of events and/or attendance and/or improving the financial operations as compared to a baseline benchmark target.

Private management contracts have become more common at collegiate facilities in recent years and, as such, facility owners are demanding more from them. Some universities have required the management company to commit capital funds for the project to help ensure they have a vested interest in its operational success. Sources of such commitments may include naming rights, sponsorships and advertising contracts. Private management contracts are including an increasingly higher portion of the fee based on performance. Various regulations restrict management contracts for facilities financed by tax exempt bonds which include, but are not limited to, the following:

 Limiting performance or incentive fees to the negotiated base fee.  Limiting the term of the agreement.  Excluding distribution of profits to the management company.

One common apprehension for universities considering third party management is losing control of the asset. However, third party management is an agent of the university charged with managing and promoting the asset. As such, the university can manage the amount and type of control that it retains through the terms of its management agreement. For instance, in most private management agreements, universities still retain ownership; approve the operating and capital budgets; provide input and direction regarding policy; receive regular financial and management reports; and have the ability to terminate the management company for cause. Typically, universities are actively involved in the hiring and/or approval of the facility’s general manager and have a designated contract administrator that oversees the terms of the contract and serves as liaison between the university and the management company.

7. Management Alternatives 49

Potential risks associated with third party management include, but are not limited to, the following:

 The university does not control all aspects of its asset including hiring of personnel, determining the event mix, ensuring quality service and overseeing ongoing repairs and maintenance of the facility.  Third party management could potentially be less sensitive to users, especially those that are locally based and do not generate significant financial profitability or economic impact.

As the University continues to explore the merits of improvements, it should evaluate which ownership and/or management approach best meets its long-term objectives for the facility. The Civic Center should seek to be operated in a first-class manner by an aggressive, experienced management team with strong industry contacts in order to enhance its competitiveness which could be accomplished by any of the profiled management options. As with any business operation, there are several approaches to managing facilities, each of which has advantages and disadvantages depending on the situation.

Typically there is pressure on most university assets to operate with a high degree of fiscal responsibility. Potential benefits of operating the Civic Center through a third party management company rather than as a university department include, but are not be limited to, providing greater latitude in staffing, compensation, contracts and incentive pay; increasing revenue generating potential; providing financial accountability and reporting; and allowing for greater autonomy while still being funded by public and private sources.

As all ownership, operational and financial responsibilities of the Civic Center transition to the University; it is recommended that the University strongly evaluate the merits of third party management in order to maximize utilization, marketability and financial performance. This recommended management approach is based on trends at collegiate arenas, the unique nature of the asset, and the University’s stated objectives for the Civic Center.

It is important to recognize that the structuring of certain contractual agreements such as management agreements can impact the tax status. As stated previously, the mission of the venue should be established and supported by the terms of any management agreement.

7. Management Alternatives 50

Renovation Cost/Benefit Analysis

Building Program Recommendations

Based on various research and analysis including a comparison of peer arenas at peer institutions and discussions and extensive feedback from representatives at FSU and other stakeholders, Populous prepared a detailed list of optimal building/renovation program recommendations by major area as compared to the existing Civic Center. The following table summarizes feedback on these programmatic and supporting infrastructure recommendations from a market perspective:

Element Observations Spectator Facilities  New seats are needed to enhance fan experience  Diversifying seating options and increasing versatility is advantageous  Number of suites can be reduced  Adding more loge seats and club seating areas presents an affordable alternative for both donors and non-donors  Branding the student section is an affordable upgrade that meets desired goals  Total seating capacity should not be reduced

Meeting and Exhibit Space  Upgrading overall quality and circulation of all space will enhance customer and promoter experience and allow for better integration with existing FSU facilities  Technology and lighting upgrades are needed  Expansion does not appear warranted in the short-term relative to potential upside demand, other priorities and order- of-magnitude development costs  Overall quality of space needs to be improved

Food and Retail Facilities  Updated and more student-friendly concession stands will improve customer experience and revenue generating capability  Integrated team store can enhance FSU fan experience and FSU branding but should be relatively limited square footage as its revenue generating capability is minimal

Circulation/Back of House Space  Improves operational functionality and customer service  Back-of-house support space should not be reduced

Technology Upgrades  Implementing technological upgrades will improve operational functionality and customer experience and be an expectation relative to other FSU facilities  Improving acoustics and lighting throughout the facility is a priority to enhance overall marketability

8. Renovation Cost Benefit Analysis 51

Objectives of any potential renovations/enhancements are to meet the University’s stated goals and enhance overall marketability and competitiveness without fundamentally changing the total seat count. As stated earlier, relatively few events held at the Civic Center approach total seating capacity – typically key FSU men’s basketball games and a limited number concerts. Despite these demand factors, some promoters noted there needs to be a critical mass of sellable seats available at the facility for them to consider it a viable venue to play, particularly in a tertiary market like Tallahassee. Ultimately, profitability dictates what events play what markets. In some instances, a smaller seating capacity can be mitigated by the management team’s ability to leverage its relationship with promoters.

Populous developed two options for seating reconfigurations as part of the master plan. Both of the recommended options presented by Populous maintain the total seat count while improving the quality and type of seating at the Civic Center.

Comparison of Civic Center Seat Count - Existing vs. Recommended Category Existing Option 1 Option 2 Existing End-Stage Option 1 Option 2 Lower Bowl - General Seating 6,666 6,600 - 6,700 5,600 - 5,700 5,652 5,600 - 5,800 5,500 - 5,600 Suite/Club Seat Level 1,471 1,400 - 1,500 1,800 - 1,900 1,037 1,200 - 1,300 1,200 - 1,300 Upper Bowl - Club Seating 3,504 3,900 - 4,000 3,900 - 4,000 2,711 2,700 - 2,900 2,800 - 2,850 Total 11,641 11,900 - 12,200 11,300 - 11,600 9,400 9,500 - 10,000 9,500 - 9,750

Percent of Total Category Existing Option 1 Option 2 Existing End-Stage Option 1 Option 2 Lower Bowl 57% 55% - 55% 50% - 49% 60% 59% - 58% 58% - 57% Suite/Club Seat Level 13% 12% - 12% 16% - 16% 11% 13% - 13% 13% - 13% Upper Bowl 30% 33% - 33% 35% - 34% 29% 28% - 29% 29% - 29% Total 100% 100% - 100% 100% - 100% 100% 100% - 100% 100% - 100% Note: Suite/club seat level includes general seating, suites, loge seating, club seating, and restaurant. Source: Populous.

Preventative Maintenance

On-going preventive maintenance and capital upkeep of arenas/civic centers are imperative for their long-term marketability and financial efficiency. It is clear that deferred maintenance is taking a toll throughout the Civic Center. As such, many of the items identified in our project team’s recommended base level improvements would come under the heading of deferred or preventive maintenance. Ideally, the University should seek to address these items as soon as possible.

Preliminary Construction Cost Estimates

The project team developed a list of recommended needs from both a physical/facility perspective and from a competitive market perspective. These needs are based on our project team’s observations of the facility and its operations; conversations with current, former, and potential users of the facility; the competitive/comparable facility assessment; as well as input from FSU representatives. This assessment takes into account opportunities and threats to the mission of the Civic Center that will need to be addressed in the future.

Populous developed a prioritized statement of needs that addresses the key points of our project team’s analysis. The statement of needs includes associated order-of-magnitude cost estimates for each line item so that the overall quantitative and qualitative return on investment can be evaluated.

Recommended facility improvements were grouped into the following categories that relate to the University’s stated goals for the master plan of the Civic Center as well as their relative cost and implementation timeframe:

8. Renovation Cost Benefit Analysis 52

Base level improvements include recommendations that seek to create a better fan experience, assist as a recruiting asset, improve acoustics and position the Civic Center in a better position to become the face of the University. As stated previously, some of these renovations/enhancements relate to required deferred maintenance and infrastructure improvements that would ideally be addressed within the next one to two years in order to enhance marketability and competitive position from both the patron and the event promoter perspective.

Intermediate level improvements focus on those improvements that can enhance revenue and sponsorship opportunities (e.g., suite and club level improvements) as well as those that address back- of-house needs.

Advanced level improvements represent a more ambitious set of facility changes that could help position the Civic Center for longer-term success in the marketplace. These changes involve significant upgrades to the building exterior (e.g., a new lobby addition) and/or repurposing of existing space (e.g., new meeting rooms/prefunction improvements).

Stand-alone improvements including expansion of the basketball practice facility and the Phase II site development can be completed at any time.

Cost estimates for this report were developed by RLB, professional cost estimators and cost consultants. RLB is part of the architectural consultant team working with Populous and Architects: Lewis + Whitlock to develop cost estimates associated with the design concepts generated for the Civic Center Master Plan. The cost estimates reflect total project costs including both hard construction costs as well as soft costs such as design fees, testing, and contingency fees. Further, these costs reflect the value of the improvements in 2013 and do not include any future cost escalation. The conceptual, order-of- magnitude nature of this report precludes the development of detailed cost estimates as would be expected for an actual construction project. As such, the cost estimates included herein are compatible with the nature and scope of this study.

The table that follows summarizes the recommended Civic Center renovations/enhancements by the prioritized categories along with the estimated cost by line item where appropriate, the general relationship of the improvement to the University’s goals, and the estimated impact to financial operations. Many of the recommended improvements will result in maintaining the facility’s existing base of business as well as other qualitative benefits such as serving as a recruiting asset and providing a first-class venue for both FSU and the community rather than a direct, quantitative impact on financial operations of the Civic Center. In addition, some revenue streams may flow to other University departments (e.g., Athletics) rather than directly to the facility’s operating bottom-line.

8. Renovation Cost Benefit Analysis 53

Recommended Base Level Improvements University Goals Enhance Impact to Cost Better Fan Revenue/ Recruiting Great Face of the Financial Recommendation Estimate Experience Sponsorship Innovative Asset Acoustics University Operations Site improvements $ 7,432,000 a a a Low Required deferred maintenance and infrastructure enhancements per ICES report $ 11,507,000 a a Low New video scoreboard and ribbon boards $ 4,442,000 a a a a Low New sound system $ 635,000 a a a a Low Acoustical treatment in arena seating bowl $ 1,024,000 a a a a Low New arena way-finding and graphics $ 566,000 a a a Low Meeting/exhibit hall cosmetic updates $ 10,311,000 a Low Wireless infrastructure enhancements $ 365,000 a a Low Arena seat replacement (if no seating overlays are planned) $ 3,283,000 a a Low Total $39,565,000 Recommended Intermediate Level Improvements University Goals Enhance Impact to Cost Better Fan Revenue/ Recruiting Great Face of the Financial Recommendation Estimate Experience Sponsorship Innovative Asset Acoustics University Operations Arena seat replacement (if not done in base level improvements) $ 19,164,000 a a Low Seating bowl overlays/arena improvements $ 1,377,000 a a Low Suite and club level improvements $ 14,029,000 a a a Moderate Courtside club $ 2,823,000 a a a Moderate Back of house/loading dock/locker room expansion $ 3,994,000 a a Low Total $41,387,000 Recommended Advanced Level Improvements University Goals Enhance Impact to Cost Better Fan Revenue/ Recruiting Great Face of the Financial Recommendation Estimate Experience Sponsorship Innovative Asset Acoustics University Operations New lobby addition $ 4,881,000 a a a a Low New meeting rooms/prefunction improvements $ 15,592,000 a a Moderate Total $20,473,000 Recommended Stand-Alone Improvements University Goals Enhance Impact to Cost Better Fan Revenue/ Recruiting Great Face of the Financial Recommendation Estimate Experience Sponsorship Innovative Asset Acoustics University Operations Basketball practice facility expansion $ 19,050,000 a a a Low Phase II (build-out) site development TBD a a a a Moderate Total $19,050,000

More detailed program and cost estimate data as well as conceptual drawings of the proposed renovations/enhancements can be found in the Master Plan document that Populous and Architects: Lewis + Whitlock prepared under separate cover.

8. Renovation Cost Benefit Analysis 54

Financial Analysis

A facility’s physical state relative to that of its competitive supply has an impact on its marketability, resulting financial performance and return on investment. This section discusses the impact of the recommended improvements at the Civic Center to event activity and financial operations.

Crossroads Consulting developed an order-of-magnitude estimate that compares the Civic Center’s historical operating revenues and operating expenses before taxes, depreciation and debt service to those with the recommended improvements for a stabilized year of operations. The financial estimate and related assumptions are based on information from primary and secondary sources including, but not limited to, historical Civic Center operations, general market attributes, input from existing/potential users and area stakeholders as well as data on comparable facilities. This analysis is also based on certain hypothetical assumptions pertaining to operations of the Civic Center, attendance levels and other related financial assumptions provided by and agreed to by FSU. The accompanying analysis was prepared for internal use by FSU for its planning efforts related to future operations of the Civic Center and should not be used or relied upon for any other purpose.

The analysis performed was limited in nature and, as such, Crossroads Consulting does not express an opinion or any other form of assurance on the information presented in this report. As with all estimates of this type, we cannot guarantee the results nor is any warranty intended that they can be achieved. The estimates of operating revenues and operating expenses are based on the anticipated size, quality and efficiency of the renovated/enhanced facility. Since these estimates and assumptions are based on circumstances that have not yet transpired, they are subject to variation. Further, there will usually be differences between estimated and actual results because events and circumstances frequently do not occur as expected, and those differences may be material.

The University continues to review the accuracy of historical financial reporting for the Civic Center. As such, any future adjustments to historical figures could impact the findings of this report.

General Assumptions

General assumptions used in this analysis include, but are not limited to, the following:

 The recommended improvements outlined earlier are completed.  The facility is operated by a private management company.  The facility is aggressively marketed.  A high level of quality customer service is maintained.  No other similar, competitive facilities are built in the region.  Amounts are presented in current dollars and reflect a stabilized year of operations.

It should be noted that these assumptions are preliminary in nature and will continue to be refined as decisions related to the building program, broader development plan and other operating characteristics continue to evolve.

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Potential Impact of Remaining Status Quo

Market research suggests that remaining static will likely result in a decline of event activity and attendees over time, resulting in an operating loss. The largest decrease is estimated to occur in commercial events (e.g., concerts, family shows, and theatrical performances) historically held at the Civic Center. The table below compares the Civic Center historical three-year average to the estimated status quo in key metrics.

Comparison of Historical Three-Year Average to Estimated Status Quo Scenario at Civic Center Historical Three- Category Year Average Status Quo

Events 514 508 Event Days 588 564 Total Attendance 393,958 365,675

Incremental Impact to Event Activity Events -1% Event Days -4% Total Attendance -7%

Operating Revenues $7,016,000 $6,624,000 Operating Expenses $6,679,000 $6,749,000 Operating Gain/(Loss) $337,000 ($125,000)

Expense Coverage Ratio 105% 98% Incremental Impact to Financial Operations Operating Revenues -6% Operating Expenses 1% Operating Gain/(Loss) -137%

Notes: Status quo assumes no increase in capital funding over historical levels. Expense coverage ratio = operating revenues/operating expenses. Operating expenses do not include taxes, debt service or depreciation.

Impact to Event Activity

The financial analysis is based on several factors including an estimate of utilization for the recommended improvements that was developed from the research previously referenced. Subsequent to renovation, event activity typically experiences a “ramp up” period to a stabilized level of activity which occurs for several reasons. For instance, some groups that book their event years in advance may not want to risk that a facility’s construction is delayed and not completed in time for their event. In addition, some groups may choose to let management “fine tune” its operations before hosting an event at a renovated/enhanced facility. However, it is important to recognize that the overall utilization at any facility is typically dependent on a number of factors (e.g., market size; accessibility; nearby amenities; size, configuration and quality of the facilities offered; effectiveness of the management team in booking the facility; date availability; cost, etc.) and is rarely consistent. As such, the estimated range of utilization shown in the following table compares an improved Civic Center to the status quo scenario for a stabilized year of operations.

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Summary of Estimated Civic Center Event Activity

Category Status Quo Range With Improvements Events Sporting Event 41 41 - 41 Graduation 7 7 - 7 Concert 10 15 - 17 Food Function 365 375 - 400 Family Show 5 7 - 8 Theatrical Performance 8 11 - 12 Trade Show 11 12 - 12 Meeting/Lecture/Seminar 39 45 - 50 Other 20 24 - 26 Convention 2 3 - 3 Total 508 540 - 576 Impact to Events 32 - 68 6% - 13% Total Attendance Sporting Event 131,200 139,400 - 139,400 Graduation 64,400 64,400 - 64,400 Concert 37,000 60,000 - 68,000 Food Function 52,925 54,375 - 58,000 Family Show 17,000 23,800 - 27,200 Theatrical Performance 13,600 18,700 - 20,400 Trade Show 17,600 18,000 - 18,000 Meeting/Lecture/Seminar 17,550 20,250 - 22,500 Other 10,000 12,000 - 13,000 Convention 4,400 7,800 - 7,800 Total 365,675 418,725 - 438,700 Impact to Total Attendance 53,050 - 73,025 15% - 20%

Remaining status quo will likely yield a loss of events and attendance at the Civic Center as competitive facilities continue to improve their physical product and overall customer experience. By contrast, the event activity reflected in this analysis is anticipated to be incremental net new to the community. In addition, the recommended facility improvements combined with continued development/ redevelopment efforts to the surrounding area are anticipated to generate broader financial benefits to the University.

Impact to Financial Operations

The following table compares the estimated operating revenues and operating expenses for an improved Civic Center to the status quo scenario in a stabilized year of operations.

Summary of Estimated Annual Civic Center Financial Operations Category Status Quo Range With Improvements Operating Revenues $6,624,000 $7,334,000 - $7,528,000 Operating Expenses $6,749,000 $6,731,000 - $6,894,000 Operating Gain/(Loss) ($125,000) $603,000 - $634,000

Expense Coverage Ratio 98% 109% - 109%

Incremental Impact to Operating Gain/(Loss) $728,000 - $759,000 Notes: Expense coverage ratio = operating revenues/operating expenses. Operating expenses do not include taxes, debt service or depreciation.

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Operating Revenues

The following table compares the estimated operating revenues by major line item for an improved Civic Center in a stabilized year of operations to the status quo scenario:

Summary of Estimated Annual Civic Center Operating Revenues

Category Status Quo Range With Improvements Operating Revenue Food/Beverage $1,982,000 $2,238,000 - $2,301,000 Amount Billed to Promoters and Others 1,346,000 1,488,000 - 1,530,000 Suites and Club Seats 1,057,000 1,146,000 - 1,180,000 Rental 595,000 657,000 - 670,000 Service and Handling Charges 374,000 414,000 - 426,000 Advertising and Commissions 360,000 398,000 - 409,000 Parking 331,000 374,000 - 384,000 Lease, Board and Regents 250,000 250,000 - 250,000 Promotions 221,000 245,000 - 252,000 Novelty Sales 71,000 81,000 - 82,000 Other 37,000 43,000 - 44,000 Total Operating Revenue $6,624,000 $7,334,000 - $7,528,000

Impact to Operating Revenue 11% - 14%

Operating Expenses

The following table compares the estimated operating expenses by major line item for an improved Civic Center in a stabilized year of operations to the status quo scenario:

Summary of Estimated Annual Civic Center Operating Expenses

Category Status Quo Range With Improvements

Operating Expenses Personnel Costs 2,960,000 2,812,000 - 2,871,000 Benefits 524,000 498,000 - 508,000 Utilities 683,000 717,000 - 751,000 Catering 547,000 605,000 - 634,000 Insurance 524,000 547,000 - 547,000 Materials/Supplies 402,000 422,000 - 422,000 General/Administrative 325,000 341,000 - 341,000 Promotions 202,000 211,000 - 221,000 Repairs/Maintenance 231,000 214,000 - 224,000 Contracted Services 199,000 219,000 - 223,000 Other 152,000 145,000 - 152,000 Total Expenses $6,749,000 $6,731,000 - $6,894,000

Impact to Operating Expenses 0% - 2%

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Overall Summary

Research indicates that the recommended improvements to the Civic Center will better accommodate both FSU men’s and women’s basketball from a fan and recruiting perspective as well as retain and increase the existing base of business at the facility that meets broader community needs. Most of the proposed improvements are synergistic to achieving both of these goals. While some enhancements may be outwardly obvious to facility users and patrons (e.g., new entrance, expanded lobby, new seats, etc.), others may involve deferred maintenance and back-of-house improvements but all will enhance the marketability and long-term functionality of the Civic Center.

The competitive facility assessment indicates opportunities for increased event activity and financial performance with the proposed renovations/enhancements. Although the proposed improvements to the Civic Center are estimated to generate both qualitative and quantitative benefits, these projects do not typically generate a positive return on investment relative to the required debt service.

Implementing the master plan through a phased approach will enhance the Civic Center’s marketability and competitive position for the next 15 to 20 years. In addition, this project represents another opportunity for the University to positively impact the broader economy.

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