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1089 Pensacola Civic Center Report 07 07 11.Pdf TABLE OF CONTENTS I. TRANSMITTAL LETTER II. INTRODUCTION &EXECUTIVE SUMMARY III. MARKET OVERVIEW IV. INDUSTRY TRENDS V. EXISTING OPERATIONS PROFILE –PENSACOLA CIVIC CENTER VI. COMPARATIVE MARKET ANALYSIS AND COMPARABLE ARENA VII. ANALYSIS AND OTHER CONSULTANT REPORT ABSTRACTS AND JOHNSON CONSULTING’S RECOMMENDATIONS I. TRANSMITTAL LETTER C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING July 7, 2011 Escambia Board of County Commissioners 2nd Floor, Matt Langley Bell, III Building 213 Palafox Place, Room 11.101 Pensacola, FL 32597-1591 Re: Pensacola Civic Center Economic Study Board of County Commissioners: C.H. Johnson Consulting, Inc. (Johnson Consulting) is pleased to submit this draft report to the Board of County Commissioners of Escambia County that provides analysis of different alternatives for the best use of the property and improvements associated with the Pensacola Civic Center in terms of facility offerings, operations, direct economic impact, quality of life and revenue generation to the County. This report provides an analysis of the economic and demographic characteristics of Escambia County and the broader region; reviews trends in the arena and meeting industries; identifies and analyzes the key characteristics of competitive and regional venues; provides recommendations relating to current and future operations of the Pensacola Civic Center; and provides financial and economic and fiscal impact analysis of the proposed modifications to the facility and its operations. Johnson Consulting has no responsibility to update this report for events and circumstances that occur after the date of this report. The findings presented herein, reflect analysis of primary and secondary sources of information. Johnson Consulting utilized sources deemed to be reliable but cannot guarantee their accuracy. Moreover, estimates and analysis presented in this study are based on trends and assumptions, which usually result in differences between the projected results and actual results. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, C.H. JOHNSON CONSULTING, INC. 6 East Monroe St. 5th Floor Chicago, Illinois 60603 Phone: 312.447.2010 Fax 312.444.1125 www.chjc.com [email protected] II. INTRODUCTION &EXECUTIVE SUMMARY C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING INTRODUCTION The Board of Commissioners of Escambia County engaged C.H. Johnson Consulting, Inc. (Johnson Consulting) to perform an economic study to analyze different alternatives for the best use of the property and improvements associated with the Pensacola Civic Center in terms of facility offerings, operations, direct economic impact, quality of life and revenue generation to the County. There can be a brighter future for the Pensacola Civic Center. In our view, the presence of the Civic Center results in a strategic asset for the region. The community is better off with it than without it. There have been a few strategic errors made in the past regarding the Civic Center: Its Masterplan called for a mid-sized exhibit hall to round out the arena product. The fact that this was never built has affected the attractiveness for flat show and convention events and requires the arena floor to be used for such activities, or they bypass the market. While the balance of downtown Pensacola has undergone, what we characterize as a wonderful and attractive redevelopment, the Civic Center itself, over time has become further and further disconnected from the downtown core. The evolution of the road network around the Civic Center has hemmed in the site. The recent deployment of its largest parking lots for the new Technological Park has affected patron convenience for parking and has hamstrung its accessibility somewhat further. So, to date, the Civic Center has been: Out of Sight- Out of mind Is under scrutiny for a variety of reasons Has compromised its ability to attract flat floor events, but has bought into ice events instead, and Has compromised its site attributes over time but the accumulation of these choices has now become a competitive liability. The balance of this report provides data justifying our recommendations for use by the County as it seeks to remedy these strategic short falls. Pensacola Civic Center, Pensacola, FL Section 2 Page 1 Best Use Economic Study July 2011 C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING Report Outline This report presents the results of the evaluation and outlines recommendations in regard to expansion of the Pensacola Civic Center. This report should be read concurrently and used in its entirety as each element of the analysis builds on information presented in successive sections. The contents of this report are organized as follows: Section 1 – Report Letter. Section 2 – Introduction, Methodology Review, and Executive Summary. Section 3 – Market Overview, which presents an economic and demographic overview of the local market, as defined by the Pensacola Metropolitan Statistical Area. The information in this section is an essential component in understanding the economic and market framework that supports the Civic Center. Section 4 – Industry Trends, which presents an overview of trends and factors in the arena and meetings industry that may impact the future use of the Pensacola Civic Center. Section 5 – Existing Facility Review, which contains profiles of the historic Pensacola Civic Center performance. This section includes demand profiles as well as financial. Section 6 – Comparative market analysis and comparable arenas, which presents the detailed profiles of competitive regional facilities, including both demand and financials. In addition, this section presents a mix of national comparable facilities that share similar demographics and characteristics to the Civic Center. Section 7 – Analysis and other Consultant report abstracts, as well as Johnson Consulting’s recommendations. This section presents Johnson Consulting’s recommendations based on conclusions of prior sections and research. About the Authors C.H. Johnson Consulting, Inc. is a nationally recognized real estate and economic development consulting firm with extensive experience in the development of public assembly facilities such as civic centers, convention centers, arena, hotels, and other multi-purpose facilities. Johnson Consulting served as the engagement manager for this project and conducted an analysis of different alternatives for the Pensacola Civic Center, Pensacola, FL Section 2 Page 2 Best Use Economic Study July 2011 C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING best use of the property and improvements associated with the Pensacola Civic Center. The market study, operations analysis, competitive positioning analysis, prepared the demand and operating projections, and provided general strategic advisory services. We have strong knowledge of the market having completed work on numerous facilities in Florida. METHODOLOGY In order to complete its assessment and recommendations concerning the Pensacola Civic Center, Johnson Consulting performed the following tasks: Analyzed economic and demographic characteristics of the metropolitan area, such as population, employment, and corporate presence, Toured the facility and met with the personnel responsible for its operation, Reviewed the operations of the Civic Center and evaluated management practices, Analyzed current and expected future trends in the entertainment and meetings industries as well as competitive arts industry, Interviewed local and regional event promoters and others in the meetings, hospitality, and entertainment industries, Interviewed local business leaders and economic development officials, Developed case studies on comparable facilities and markets, Analyzed the market’s ability to support a hockey program, Prepared a financial model and projections regarding the facility’s future operations with hockey and without hockey. Pensacola Civic Center, Pensacola, FL Section 2 Page 3 Best Use Economic Study July 2011 C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING EXECUTIVE SUMMARY The location of Pensacola creates an opportunity for it to serve as a metropolitan hub for a broader region extending to Mobile to the west, Panama City to the east, and Tallahassee to the northeast. The City of Pensacola and Escambia County region have done an outstanding job of becoming a tourist attraction with its amazing climate and fantastic beaches. Concurrently, there is an opportunity for the Civic Center to serve a regional role, coupled with the significant revitalization of Downtown Pensacola, making it a more vibrant and attractive site. This regional attraction is even more important with population within Escambia County projected to decrease in future years. The County’s ability to draw people from a regional location will help boost the local economy. The Pensacola Civic Center, over the last decade or so, has operated “out of sight – out of mind”. It has entered into the cross heirs of attention recently for several key reasons. Its debt and operating subsidy has historically (and obligatorily) been paid from Tourist Development taxes as well as County support. Largely due to a poorly written hockey lease and downward operating performance due to the economy, the Civic Center’s deficit
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