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Crossroads Market and Economic Analysis 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
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