Downtown Racine Arena and Event Center Market Analysis

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Submitted to:

Jim Ladwig President/CEO Racine Area Manufacturers and Commerce 300 5th Street Racine, WI 53403

August 19, 2016

Jim Ladwig President/CEO Racine Area Manufacturers and Commerce 300 5th Street Racine, WI 53403

Dear Mr. Ladwig,

The Racine Area Manufacturers and Commerce (“RAMC” or “Client”) engaged Hunden Strategic Partners (HSP) to perform an arena feasibility, market, financial and impact study. The study included an analysis of the local and regional supply and demand, as well as comparable facilities to understand the optimal facility for the market. The attached is our report.

This deliverable has been prepared under the following general assumptions and limiting conditions: ! The findings presented herein reflect analysis of primary and secondary sources of information that are assumed to be correct. HSP utilized sources deemed to be reliable, but cannot guarantee their accuracy. ! No responsibility is taken for changes in market conditions after the date of this report and no obligation is assumed to revise this report to reflect events or conditions occurring after the date of this report. ! HSP has no control over construction costs or timing of construction and opening. ! Macroeconomic events affecting travel and the economy cannot be predicted and may impact the development and performance of the project.

We have enjoyed serving you on this engagement and look forward to providing you with continuing service.

Sincerely yours,

Hunden Strategic Partners

TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

EXECUTIVE SUMMARY

Hunden Strategic Partners was engaged by community stakeholders in Racine who are interested in determining the feasibility of developing an arena in downtown Racine. As investments and improvements in downtown occur, many stakeholders wondered if an arena or event center that is active primarily from fall through spring would generate energy, activity and improvement to business in downtown Racine, creating year-round set of event facilities. In addition to the arena, the project and analysis assumed an attached conference center hotel, likely USHL hockey tenant, potential NBA D- League tenant, and the need for additional quality function space other key components that will impact the overall attractiveness of the event and hospitality package.

The primary questions that HSP was requested to answer are: ! Is there enough potential activity and demand in the market to support the development of a new arena downtown, given the proximity to the Milwaukee and Chicago markets? Would concerts, family shows and other event be attracted to host an event in a new facility in Racine? ! Is there a realistic opportunity to attract an anchor tenant to such a facility? ! Are there events that are accepting lesser dates or less ideal accommodations currently that would improve or expand their activity at a new, smaller facility? ! How much would the arena cost and would it need ongoing financial support beyond the initial development? ! How would this ongoing arena activity benefit downtown Racine and all of Racine County? What impacts are expected? ! Is the downtown location critical and if so, why?

Many cities have used event facilities as activity and demand generators to enhance their downtowns and overall development efforts. The activity of arenas can generate consistent usage, which provides consistent nearby street-level activity for restaurants and bars and some retail. It also provides downtown employees and residents a major activity center nearby to walk to after work. Yet the facility itself must be able to generate enough events on the calendar to keep it operating without significant financial support. No arena pays completely for itself – the design and operating concept of any new facility should ensure that it can maximize revenues and minimize expenses for a net positive operating profile.

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! A team owner of a United States Hockey League (USHL has expressed interest in locating a team in Racine as soon as a new facility as ready, assuming the facility has the necessary seating and premium seating opportunities. ! The Milwaukee Bucks are in the process of identifying a city to locate an affiliated D-League team. Racine has made the short list of potential locations. Assuming the arena has the necessary seating and premium seating opportunities, an arena in Racine would be in a good position to secure the affiliated team. ! There are numerous examples of small markets similar in size to Racine that have successfully developed and supported small arenas (many with hockey teams) over the past several decades. Many of these are located in the United States’ Midwest, including lesser-populated areas within the region. ! Racine’s downtown is working to enhance its reputation as a fun, walkable city with more leisure time activities, at least in the warmer months via the development of an active retail, restaurant and bar scene. Initiatives such as the RootWorks Redevelopment Initiative will help revitalize the Belle Harbor District, Machinery Row District and River Loop, all which are within walkable distance to the proposed arena site. ! Parking has been shown to be available during event periods (after business hours and on weekends, without negatively impacting parking for existing restaurants and retailers. ! The addition of quality function space in addition to the events center and hotel will help to host higher revenue events, conferences, corporate events, trainings and conventions. ! The development of the arena will likely induce the development of a new connected conference hotel. This hotel should be a larger, select-service branded hotel relative to the existing downtown hotels. Such a hotel will induce more conventions, conferences and other events, in addition to what would be generated without such a hotel. ! The addition of an arena/event center under one operating entity or management contract will allow for combined operations and additional opportunities to minimize any operating loses between all facilities. The combined operations will engender cost savings and enhance revenue generation, likely lowering the current operating loss sustained by the Civic Centre facilities’ operations. ! The location of the arena in the downtown and adjoining a new conference hotel is critical for the operating success of the two facilities, as they can co-promote and co-host events. Also, the combined facility will allow for increased competitiveness for events, bringing more events downtown and into the hotels. Finally, there is already plentiful parking in the downtown area surrounding the arena site to support a new facility that will simultaneously help downtown businesses by having people park and walk by these businesses before and after events. The farthest that someone would need to park is minimal, under four blocks from the entrance of the facility. Additional wayfinding will help attendees find this plentiful parking nearby. This will also help the utilization of garages and lots that sit empty in the evenings. If an arena is developed by itself outside of downtown, more parking will need to be developed and the competitiveness of both the arena and the downtown hospitality package will be diminished, lowering the economic impact to the point of reconsidering the efficacy of the project.

The following provides more explanation of the findings.

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SWOT Analysis

This section presents HSP’s analysis of the arena and event center situation and presents a recommendation for Racine.

A SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis was conducted leading up to these recommendations. A SWOT analysis identifies critical factors that will impact the Project’s overall performance. It also suggests implications for the sizing and quality of the project given the current environment. Strengths and weaknesses are currently factors impacting the potential project as well as items inherent in the project or market, while opportunities and threats are potential and external factors impacting the success of the Project.

This section provides recommendations on the size and quality of the Project based on HSP’s review of the market and other factors. In addition, HSP’s experience with similar projects and how they have performed played a role in our recommendations and projections.

Strengths ! Strong Community Leadership. Community leadership has demonstrated a commitment to stimulating redevelopment and reinvestment in the community, especially the downtown area. ! Downtown Redevelopment and Authenticity. Downtown Racine has seen improvement based on private and public investment. A vibrant downtown consists of popular restaurants, shops and entertainment, providing a more visible face to the city and drawing more visitors from the surrounding areas. This helps the community as a whole and proves to visitors, residents and business owners that it is serious about a vision for itself. When private interests see development occurring on a regular basis downtown, they have more confidence to invest as well. The success of the Marina and many restaurants have given downtown very compelling life. It is also one of the keys to attracting Millennials, retirees and other new residents to move to Racine. ! Strong Market Opportunity for Hockey, Concerts and Family Shows. Based on interviews and other market analysis, there will be many new events and potential tenant(s) for the arena. The facility would fit a size range that is simply not available today and that is attractive to many potential events. Promoters were optimistic about bringing events to an arena in Racine due to its location between Milwaukee and Chicago. These events are literally already driving by Racine now, and would enjoy the opportunity to stop, put on a show and generate revenue. This benefits them and benefits Racine. The United States Hockey League (USHL) is eager to establish a presence in a new arena in Racine and the team would act as an anchor tenant, helping to generate significant revenue for the building. ! Net positive impact on a New Connected Hotel. Connecting a new arena to a new hotel would create an event complex that would be more competitive for various types of events than it is today. A connected arena and hotel will allow for even more events to be attracted to the combined complex. Cross-promoting event and function space will create a more appealing hospitality package. ! Access. Racine’s access off of I-94 gives it easy access to markets both to the north and south. A market of more than two million is available within a relatively short drive. Racine, with the new

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 4

facilities, will be a much better location for this widespread market to attend an event versus having to drive to Chicago or Milwaukee. ! Business Community Support. The business community supports the development of an arena. However, businesses will be cautious when considering partnerships with the facility to and other investments that will help the financial viability of the enterprise. ! Growing Content for Small Arenas. There has been a boom in small and mid-sized arenas across the US for 15 years and there is specific content (family shows, concerts, etc.) that has been developed for this size venue. There are many smaller and mid-sized venues across the U.S. than major arenas and so this provides the acts a steady stream of opportunity. A new facility would provide an opportunity for those acts to come to Racine.

Weaknesses ! Relatively Small Market. While the market is ideal in many ways, it also has a similar or smaller population than many markets that support similar arenas. However, as HSP has determined, there are numerous examples of arenas in small markets (many smaller than Racine) that have successfully supported hockey franchises and arenas.

Opportunities ! New Events for Racine. Currently, there is no opportunity for major or minor sports, concerts, family shows and other events to come to Racine. There is also very limited opportunity for many conventions and conferences to come to the market and even for local business to host meetings and tradeshows. There simply is no facility able to accommodate them. These events have very special needs and buildings without the technology and other amenities required by teams and promoters will not suffice. With the recommended enhancements, the number of events and activity to the facilities and downtown will be immense compared to the few events coming downtown to the Civic Centre now. ! Opportunity for Events Covered by Television. With a new facility, the community would have the opportunity to attract professional sports’ exhibition events that may be nationally televised, as well as collegiate and other major games that are also nationally televised. This will provide additional free positive press for the city that currently does not exist. When regional competitors play in the new facility, which will be covered on the news in the other markets. ! Catalytic Development. The proposed arena can serve as a catalytic development to retain and attract businesses, groups and visitors to downtown Racine. An event center/arena can be the catalytic development that generates year-round activity to support the development of restaurants and other downtown businesses, as well as residential growth. Businesses and entrepreneurs notice when the city is aggressive and takes an active role in improving itself via public-private partnerships, key public investments and other quality of life enhancements. These create an environment where others are then more willing to invest time, money, talent and effort into a new business in downtown, move there as residents, or visit with their group. New conventions that would not consider the area now, may be swayed if the event facilities are expanded in such a way, more restaurants exist and the hotel package is larger.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 5

! Economic, Fiscal and Employment Benefits. The Project will entice visitors to visit Racine businesses, restaurants and meeting/event facilities. These visits result in increased downtown spending, and in turn, an improved local business environment, additional tax collections and an increased number of employment opportunities. The visibility that visitors will have of the downtown from the new arena will show off the community to a new population that may consider visiting again or even moving to the community. Currently, many people outside Racine simply are not visiting as there are few places to hold events. ! Strong Relationship & Synergy with Neighboring Projects. A new arena project in Racine can benefit and partner with the Festival Hall and Memorial Hall to accommodate larger events which cannot be held in either of those two facilities.

Threats ! Cost – The cost of the project is not insignificant and will require a strong commitment from the public sector, along with private partner commitments for naming rights and other sponsorships. ! Locating the Project outside of Downtown – The arena will not succeed in terms of impact on the community if it is not downtown near the areas of activity, near other event and hotel properties and adjacent to Lake Michigan. It will be more expensive to build and parking will need to be built and paid for. Investments in the arena should be made to generate the higher event and revenue levels and minimize the operating expenses. In addition, pre- and post-event spending will be minimized if the arena is developed in an easy in/out location. By locating it downtown, the impact on the quality of life downtown and businesses will be dramatic. That same impact will simply not occur if the arena is not located within walking distance of the central business district.

Implications and Recommendations

As has been demonstrated in this report, the Racine market, its citizens, and events would benefit from a venue that fits a sizing need that is not currently being offered. There are a number of events that will come to such a facility that are not currently considering Racine as a destination.

Location. The 3.5-acre parcel in Downtown Racine on the southeast corner of Lake Avenue and Gas Light Drive. The area directly to the west of the DoubleTree Hotel Racine Harbourwalk is recommended, due primarily to its ability to connect to the hotel and Lake Michigan, as well as its proximity to existing nodes of restaurants, bars and entertainment along Gas Light Drive, Main Street, Lake Avenue and Sixth Street. The size allows the arena to have some attached loading opportunities as well as a connected hotel along Lake Avenue. There is an opportunity to extend Third Street east of Lake Avenue to create a plaza or pedestrian area that would provide more connectivity to the street. One of the primary purposes of this Project is to act as an economic development generator for downtown.

Event and Hospitality Package. Quality function space, ballrooms and meeting rooms above what is projected for the events center and hotel will help to attract more and larger meetings, conferences and conventions. Smaller markets can attract groups that do not like being one of many events in a larger facility/market or forced into accommodations that are not an ideal size or setting type. Enhancing the overall hospitality package will help opportunities to attract events such as citywide events.

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Total Capacity. A facility with approximately 3,800 seats in a hockey configuration is recommended, with the ability to accommodate approximately 5,000 for concerts.

Parking. There are two parking garages that flank the proposed arena site. The first parking garage is adjacent to the east of the site and fronts Gas Light Drive. The second parking garage is located on the west side of Lake Avenue between Third Street and Fourth Street. There are additional surface parking lots between Festival Park and Memorial Hall that are within walking distance of the site. It is assumed most arena events will take place during the evenings and on weekends. The downtown workforce will used the parking garages and lots during the day while the arena will primarily use them during the evening and weekends, increasing utilization. The incremental parking revenue generated from arena events could be used to service project funding.

Premium Seating. Premium seating supports the financial viability of the facility and provides local businesses and other organizations the opportunity to socialize with their stakeholders, clients and customers. Recommended premium seating includes: ! Six 16-seat suites with six barstools each ! Six 12-seat suites with four barstools each ! 16 total loge suites with four seats and four barstools each ! Additional club seating on the west and east ends

Additional food and beverage opportunities are available at the premium seating level, with the lounge, loge and suites all featuring food and beverage before and during events. As is standard with all new facilities, a premium lounge/restaurant at the loge level is critical to attracting higher spending attendees and corporate users.

In terms of support amenities, all the modern amenities, including locker rooms, offices, large and numerous restrooms and other support facilities are recommended. Connection to the assumed 135-room conference hotel is recommended so that more events can be lured to a shared, larger facility than if the two were separated.

Budget. Based on the recommended seating, amenities and finishes, an estimated budget for the recommended facility would be approximately $40 million The estimated costs is expected to vary based on site and development factors. Development costs for comparable facilities have ranged between $30 and $70 million over the last five to 15 years based on the size, amenities and quality of finishes.

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Demand and Impact Projections for Two Scenarios

Scenario One: USHL Hockey and D-League Tenants

The following table shows the expected number of events, by type.

Table 1 Projected Schedule of Events by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 31 31 31 31 31 31 31 31 31 31 NBA-D League 24 24 24 24 24 24 24 24 24 24 Family Shows 7 6 6 6 6 6 6 6 6 6 Concerts 7 6 6 6 6 6 6 6 6 6 Other Sporting Events 7 8 9 9 9 9 9 9 9 9 Graduations 3 3 4 4 4 4 4 4 4 4 Flat-Floor Events (Conventions, Other) 9 10 11 11 11 11 11 11 11 11 Meetings/Banquets 24 30 36 36 36 36 36 36 36 36 Total 112 118 127 127 127 127 127 127 127 127 Source: Hunden Strategic Partners

The assumed tenants, a USHL hockey team and an NBA D-League team, are expected to combine to host 55 home games. Family shows are projected to stabilize at six per year, with six concerts per year and nine other sporting events. Graduations, flat-floor events and meetings/banquets are expected to add 51 other annual events.

The next table shows the expected annual attendance by type of event.

Table 2 Projected Paid Attendance by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 103,700 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 NBA-D League 90,000 79,200 79,200 79,200 79,200 79,200 79,200 79,200 79,200 79,200 Family Shows 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Concerts 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Other Sporting Events 14,000 16,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 Graduations 2,700 2,700 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Flat-Floor Events (Conventions, Other) 8,100 9,000 9,900 9,900 9,900 9,900 9,900 9,900 9,900 9,900 Meetings/Banquets 2,400 3,000 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Total 279,700 253,300 257,700 257,700 257,700 257,700 257,700 257,700 257,700 257,700 Source: Hunden Strategic Partners

Attendance is projected to start at 279,700 and stabilize at approximately 257,700 annually, led by hockey attendance and followed by D-League, concerts, and family shows.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 8

Financial Projection

The following table shows the revenue and expenses expected for the arena, based on the above and other assumptions.

Table 3 Racine Events Center Financial Projection (thousands of inflated dollars)*

Fiscal Year Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Operating Revenue Rent $399 $396 $418 $429 $439 $450 $462 $473 $485 $497 Concessions 445 386 399 409 419 430 440 451 463 474 Merchandise 33 28 30 30 31 32 33 33 34 35 Catering 91 95 98 100 103 103 105 108 111 113 Parking 122 120 122 122 142 142 142 142 162 162 Premium Seating 77 52 64 68 72 82 86 89 93 97 Advertising and Sponsorship 228 233 239 245 251 258 264 271 278 284 Naming Rights 384 394 405 415 426 437 448 460 472 484 Facility Service Fee 400 358 361 361 361 361 361 361 361 361 Other Revenue 102 93 96 98 100 102 105 108 111 113 Total Revenue $2,281 $2,154 $2,232 $2,277 $2,345 $2,396 $2,445 $2,497 $2,569 $2,622 Operating Expense Fixed Salary - Permanent Staff $601 $616 $632 $647 $664 $680 $697 $715 $732 $751 Benefits - Permanent Staff 204 210 215 220 226 231 237 243 249 255 General and Administrative 215 220 226 232 237 243 249 256 262 269 Utilities 180 185 189 194 199 204 209 214 219 225 Repairs and Maintenance 145 149 152 156 160 164 168 172 177 181 Insurance 125 128 131 135 138 141 145 149 152 156 Communications 108 111 113 116 119 122 125 128 132 135 Advertising 60 62 63 65 55 57 58 59 61 62 Misc. 20 21 21 22 22 23 23 24 24 25 Variable Utilities $77 $80 $85 $87 $89 $92 $94 $96 $99 $101 Hourly Salaries and Benefits 350 363 388 398 408 418 428 439 450 461 Total Expenses $2,086 $2,143 $2,215 $2,271 $2,317 $2,375 $2,434 $2,495 $2,557 $2,621 Net Operating Income (Deficit) $195 $12 $16 $6 $28 $22 $11 $2 $12 $1 Deposit to Maintenance Reserve $68 $65 $67 $68 $70 $72 $73 $75 $77 $79 Management Fee $150 $154 $158 $162 $166 $170 $174 $178 $183 $187 Net Operating Income ($24) ($207) ($208) ($224) ($208) ($220) ($236) ($251) ($248) ($265)

* Assumes shared operations with existing event facilities Source: Hunden Strategic Partners

Total revenue is projected to increase from $2.3 to $2.7 million over the period. This includes the annual naming rights payment, which is not always counted as an operating revenue item, but instead used to support initial debt service. After accounting for all operating expenses, net operating income is projected to be negative $24,000 in the first year, increasing to $265,000 by the tenth year.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 9

Impact Analysis

The gross operations of the Project will generate a significant amount of economic activity and various taxes and will support a number of new jobs onsite. However, the critical analysis is the amount of net new spending generated by the Project in the community. The recapture of impact from residents having to travel less to Chicago and/or Milwaukee for meetings and entertainment is part of the net new spending generated by the Project. This scenario assumes the impact of a new downtown arena with a USHL Hockey team and NBA D-League team as tenants.

The arena is expected to generate more than 11,000 room nights per year. However, since there will be a 135-room hotel with function space, HSP has also assumed that there will be new hotel room nights to Racine due to the hotel/conference/arena package. It is assumed that nearly 33 percent of the room nights generated are new to Racine. Assuming a 65 percent occupancy rate at the hotel, then this is an additional 10,300 room nights per year in impact due to the project and approximately 21,500 new room nights per year, not to mention the more than 70,000 day trips per year from outside the County.

The fiscal impact of the Project is the benefit to the county and city via taxes generated, essentially through new lodging taxes. There is 5.1 percent sales tax levied in Racine County. However, five percent consists of state sales tax and the remaining 0.1 percent is a stadium tax.

Of the 71 counties in Wisconsin, 62 counties levy the 0.5 percent county tax allowable by state law. Racine is one of the nine counties in the state that has yet to levy the 0.5 percent county tax.

The following table shows the projections of the various taxes.

Table 4 Estimated Fiscal Impact - Tax Impacts from Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total

Local Taxes Collected Lodging Tax (6% to County/2% to City) $156 $77 $84 $87 $89 $103 $140 $189 $3,864 Total $156 $77 $84 $87 $89 $103 $140 $189 $3,864

* First year includes construction period spending on the project Source: Hunden Strategic Partners

Total net new taxes that benefit the city, county is expected to total $3.9 million over the first 30 years, led by the local lodging tax.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 10

The following table shows the summary of impacts for the Project.

Table 5 Summary of Impact (First 30 Years) - Arena

Net New Spending (millions) Direct $224 Indirect $77 Induced $90 Total $391 Net New Earnings (millions) From Direct $75 From Indirect $24 From Induced $27 Total $126 Net New FTE Jobs Actual From Direct 92 From Indirect 32 From Induced 37 Total 161 Local Taxes Collected (millions) Lodging Tax (6% to County/2% to City) $3.9 Total $3.9 Construction Impact (millions) New Materials Spending $16.0 New Labor Spending $24.0

Job-Years, From Construction 443

Source: Hunden Strategic Partners

The net new spending for the Project totals $391 million over the 30-year period, $126 million in new earnings, 161 new full-time equivalent jobs (Year 4) and $3.9 million in taxes collected from the ongoing operations and the one-time construction project impact.

The impacts on the community and ability to capture and host events and thousands of attendees during that time, not to mention the 161 ongoing full-time equivalent jobs, has additional value for the city and county when compared to the projected operating deficit of the facility.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 11

Scenario Two: USHL Hockey Tenant Only

The following table shows the expected number of events, by type.

Table 6 Projected Schedule of Events by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 31 31 31 31 31 31 31 31 31 31 Family Shows 7 6 6 6 6 6 6 6 6 6 Concerts 7 6 6 6 6 6 6 6 6 6 Other Sporting Events 7 8 9 9 9 9 9 9 9 9 Graduations 3 3 4 4 4 4 4 4 4 4 Flat-Floor Events (Conventions, Other) 9 10 11 11 11 11 11 11 11 11 Meetings/Banquets 24 30 36 36 36 36 36 36 36 36 Total 88 94 103 103 103 103 103 103 103 103 Source: Hunden Strategic Partners

With only one tenant, the arena is expected to host 88 events in year one and stabilize at approximately 103 events. The assumed tenants, a USHL hockey team only, is expected to host 31 home games. Family shows are projected to stabilize at six per year, with six concerts per year and nine other sporting events. Graduations, flat-floor events and meetings/banquets are expected to add 51 other annual events.

The next table shows the expected annual attendance by type of event.

Table 7 Projected Paid Attendance by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 103,700 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 Family Shows 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Concerts 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Other Sporting Events 14,000 16,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 Graduations 2,700 2,700 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Flat-Floor Events (Conventions, Other) 8,100 9,000 9,900 9,900 9,900 9,900 9,900 9,900 9,900 9,900 Meetings/Banquets 2,400 3,000 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Total 189,700 174,100 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 Source: Hunden Strategic Partners

Attendance is projected to start at 189,700 and stabilize at approximately 178,500 annually, led by hockey attendance and followed by concerts and family shows.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 12

Financial Projection

The following table shows the revenue and expenses expected for the combined operations of the arena and Civic Centre facilities as well as a hockey team as the sole tenant.

Table 8 Racine Events Center Financial Projection (thousands of inflated dollars)*

Fiscal Year Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Operating Revenue Rent $327 $322 $343 $351 $360 $369 $378 $388 $397 $407 Concessions $296 $264 $275 $281 $288 $296 $303 $311 $318 $326 Merchandise $33 $28 $30 $30 $31 $32 $33 $33 $34 $35 Catering $63 $66 $70 $72 $73 $73 $75 $77 $79 $81 Parking $83 $81 $83 $83 $96 $96 $96 $96 $110 $110 Premium Seating $77 $52 $64 $68 $72 $82 $86 $89 $93 $97 Advertising and Sponsorship $228 $233 $239 $245 $251 $258 $264 $271 $278 $284 Naming Rights $334 $343 $352 $361 $371 $380 $390 $400 $411 $422 Facility Service Fee $265 $239 $242 $242 $242 $242 $242 $242 $242 $242 Other Revenue $75 $69 $71 $73 $74 $76 $78 $80 $82 $84 Total Revenue $1,781 $1,698 $1,768 $1,806 $1,860 $1,904 $1,945 $1,988 $2,045 $2,090 Operating Expense Fixed Salary - Permanent Staff $601 $616 $632 $647 $664 $680 $697 $715 $732 $751 Benefits - Permanent Staff $204 $210 $215 $220 $226 $231 $237 $243 $249 $255 General and Administrative $220 $226 $231 $237 $243 $249 $255 $262 $268 $275 Utilities $135 $138 $142 $145 $149 $153 $157 $160 $164 $169 Repairs and Maintenance $110 $113 $116 $118 $121 $124 $128 $131 $134 $137 Insurance $125 $128 $131 $135 $138 $141 $145 $149 $152 $156 Communications $108 $111 $113 $116 $119 $122 $125 $128 $132 $135 Advertising $60 $62 $63 $65 $55 $57 $58 $59 $61 $62 Misc. $20 $21 $21 $22 $22 $23 $23 $24 $24 $25 Variable Utilities $59 $61 $66 $68 $69 $71 $73 $75 $77 $79 Hourly Salaries and Benefits $259 $269 $292 $299 $307 $315 $322 $330 $339 $347 Total Expenses $1,902 $1,954 $2,022 $2,073 $2,113 $2,166 $2,220 $2,276 $2,333 $2,391 Net Operating Income (Deficit) ($120) ($256) ($254) ($266) ($253) ($262) ($275) ($288) ($287) ($301) Deposit to Maintenance Reserve $53 $51 $53 $54 $56 $57 $58 $60 $61 $63 Management Fee $150 $154 $158 $162 $166 $170 $174 $178 $183 $187 Net Operating Income ($324) ($461) ($465) ($482) ($475) ($489) ($508) ($526) ($532) ($551)

* Assumes shared operations with existing event facilities Source: Hunden Strategic Partners

Total revenue is projected to increase from $1.8 to $2.1 million over the period. This includes the annual naming rights payment, which is not always counted as an operating revenue item, but instead used to support initial debt service. After accounting for all operating expenses, net operating income is projected to be negative $324,000 in the first year, increasing to $551,000 by the tenth year.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 13

Impact Analysis

The gross operations of the Project will generate a significant amount of economic activity and various taxes and will support a number of new jobs onsite. However, the critical analysis is the amount of net new spending generated by the Project in the community. The recapture of impact from residents having to travel less to Chicago and/or Milwaukee for meetings and entertainment is part of the net new spending generated by the Project. This scenario assumes impact of the downtown arena with only a USHL Hockey team as a tenant.

The arena is expected to generate more than 10,000 room nights per year. However, since there will be a 135-room hotel with function space, HSP has also assumed that there will be new hotel room nights to Racine due to the hotel/conference/arena package. It is assumed that nearly 33 percent of the room nights generated are new to Racine. Assuming a 65 percent occupancy rate at the hotel, then this is an additional 10,300 room nights per year in impact due to the project and approximately 10,300 new room nights per year, not to mention the more than 50,000 day trips per year from outside the County.

Of the 71 counties in Wisconsin, 62 counties levy the 0.5 percent county tax allowable by state law. Racine is one of the nine counties in the state that has yet to levy the 0.5 percent county tax.

The following table shows the projections of the various taxes.

Table 9 Estimated Fiscal Impact - Tax Impacts from Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total

Local Taxes Collected Lodging Tax (6% to County/2% to City) $148 $73 $80 $83 $85 $99 $133 $180 $3,682 Total $148 $73 $80 $83 $85 $99 $133 $180 $3,682

* First year includes construction period spending on the project Source: Hunden Strategic Partners

Total net new taxes that benefit the city, county is expected to total $3.7 million over the first 30 years, led by the local lodging tax.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 14

The following table shows the summary of impacts for the Project.

Table 10 Summary of Impact (First 30 Years) - Arena

Net New Spending (millions) Direct $185 Indirect $63 Induced $74 Total $322 Net New Earnings (millions) From Direct $62 From Indirect $20 From Induced $22 Total $104 Net New FTE Jobs Actual From Direct 75 From Indirect 26 From Induced 30 Total 131 Local Taxes Collected (millions) Lodging Tax (6% to County/2% to City) $3.7 Total $3.7 Construction Impact (millions) New Materials Spending $16.0 New Labor Spending $24.0

Job-Years, From Construction 443

Source: Hunden Strategic Partners

The net new spending for the Project totals $322 million over the 30-year period, $104 million in new earnings, 131 new full-time equivalent jobs (Year 4) and $3.7 million in taxes collected from the ongoing operations and the one-time construction project impact.

The impacts on the community and ability to capture and host events and thousands of attendees during that time, not to mention the 131 ongoing full-time equivalent jobs, has additional value for the city and county when compared to the projected operating deficit of the facility.

Conclusion

Essentially, the event complex is capturing economic spending from outside the county and supporting employment in Racine. By concentrating this currently disparate spending in one place, Racine, the downtown arena is creating a stronger economic engine and center of activity in Racine. This makes the community more sustainable and attractive to businesses and residents.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 15

SUMMARY OF CHAPTER CONCLUSIONS

The following is a summary of the primary data analyzed and results of each chapter in this report.

Project Overview

Hunden Strategic Partners was engaged by community stakeholders in Racine who are interested in determining the feasibility of developing an arena in downtown Racine. The development of a new downtown arena is assumed to be the home to a USHL hockey franchise and possibly an NBA D- League team. In addition to the arena, the project and analysis assumed an attached conference center hotel would be developed as part of the event and hospitality package, but not necessarily at the same time.

The analysis will help to understand how the Project can enhance the community as a destination for visitors, residents and businesses with the possible development of an arena and conference center hotel to provide sports, meeting, conference and large event opportunities. HSP understand the desire to offer citizens facilities that can be utilized in a number of ways so that it best serves the community, generate, incremental room nights in hotels, and economic activity from outside the area, and can retain and attract new residents by providing an improved quality of life.

By the end of the study, HSP will have gathered all available demand and competitive supply data, as well as comparable facility and industry design trend data to understand and recommend the optimal facility for the market and the likely tenants and other users. HSP has recently completed very similar studies for Fort Wayne, Indiana and Grand Junction, Colorado, with many of the same elements.

HSP met with key stakeholders, interviewed and surveyed existing and potential arena users, analyzed the competition, analyzed the market, and investigated comparable situations to understand the state of art in arena design today. The proposed Project is intended to optimize Racine’s ability to attract meetings, sports and entertainment to the community. HSP considered various elements when developing potentially a new event facility. The factors considered included: ! The demand and needs for indoor event and meeting facilities. ! The supply of meetings, sports and entertainment facilities in the market. ! The size and amenities needed to recapture, attract and support more events. ! Programming the proposed site in order to maintain a synergistic relationship with surrounding businesses, hotels and services. ! Enhancing the event facility supply and overall downtown experience to attract and support more destination events. ! Current conditions, size limitations and functionality of the proposed site.

The goal is to integrate critical elements that will optimize a downtown event facility that also increases economic activity from beyond the local area. Given the quality and capacity of the recommended new facility, opening the door to inducing new major events should be achievable. The Project assumes the following factors as baseline components.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 16

! An approximately 135-room, conference hotel connected to the arena will be developed as part of the Project. ! There are two existing parking garages that flank the proposed arena site located southeast at Fourth Street and Lake Avenue, and east along Gas Light Circle. The parking garages would be utilized for evening events. Additional parking is located near Festival Park. ! A USHL hockey team will be a tenant of the facility. ! A NBA D-League team will be a tenant of the facility. ! The new arena and Civic Centre’ facilities will be operated under one entity or management contract. ! The existing street grid is maintained to the greatest extent possible.

The proposed Project is intended to address the necessary needs to support increased visitation to Racine. The Project entails various components that can be considered in developing a downtown arena.

Site Analysis

A downtown arena will focus event activity downtown and leverage existing strengths, provide a unique and interesting site and walkable location and will be amongst other community assets. A downtown arena is a public asset and infrastructure that contributes to the quality of life and such facilities help to attract and retain employers, employees, students and visitors. All of these groups contribute to the economic vitality of an area and as such, an event center becomes a catalyst and driver of economic growth for an area if well conceived and located.

The ultimate site for a downtown arena should be highly visible and easily accessible from the major approaches into the downtown. Many of the attendees are visiting from outside the core downtown area, and wayfinding through signage and landmarks should be as simple as possible. For a downtown arena to be perceived as a public asset, strong design imagery can instill a sense of civic pride, which reinforces the high degree of Racine’s historic culture.

Based on the analysis, the optimal site is the approximately 3.5 acre site on the southeast corner of Lake Avenue and Gas Light Drive. It will focus event activity downtown and leverage existing strengths, provide a unique and interesting site and walkable location and will be amongst other community assets. It should be noted that the preliminary illustrative concept was developed to provide a visual sense of what could potential fit on the approximately 3.5-acre downtown site. The recommended development plan will slightly vary compared to the illustrative concept shown below.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 17

The following figure shows the overall site layout on the ground level.

Figure 1

Economic & Demographic Analysis

Racine is the county seat of Racine County, which comprises the Racine Metropolitan Statistical Area. The city is located on the shore of Lake Michigan between Milwaukee and Chicago. As of the 2015 census estimate, the population in Racine was 77,742. Racine is part of the Milwaukee Combined Metropolitan Area, which is home to more than two million people. Just south of the Racine city limits is Kenosha County, which is officially part of the Chicago Combined Metropolitan Area, with nearly ten million people. The entire region along the southern tip of Lake Michigan, from Benton Harbor/St. Joseph, Michigan, northwestward to Milwaukee contains over ten million people. Racine is one of the oldest and historically largest of the cities along this corridor. The county is a mix of suburban homes for Racine, Milwaukee’s south side, and Kenosha, industrial plants, and farms to the west. The median home value of $114,800 and a median household income of $55,055 make it an affordable place to live.

The following figure shows a map of the Racine area.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 18

Figure 2

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 19 face are getting the word out about events at a new Racine arena, especially in Chicago’s crowded media market, and the public’s possible reticence to driving into downtown Racine due to a lack of familiarity. Over time, as people become more familiar with downtown Racine, this will be less of an issue, especially if parking is easy, inexpensive, and a relatively quick in-and-out. Although the folks in Racine County would heavily use an arena in Racine, it is really positioned to have a more regional draw, depending on the type of event. And downtown Racine featuring a first-rate arena gives the city a demand generator and an influx of people before and after shows or events to dine, shop and stroll.

Local & Regional Event, Meeting, Sports & Entertainment Market Analysis

Analysis of the local and regional sports and entertainment supply indicates that there is a gap in the market that is not currently being accommodated. The local venues in Racine primarily consist of small meeting banquet/reception facilities. Festival Hall and Memorial Hall accommodate some sporting events currently, but the size, design, and age of the venues presents too many challenges to entirely overcome. The regional market does have many arenas within 100 miles of Racine, but the majority of these facilities are much larger indoor facilities made for professional and collegiate sporting events. A 3,500- to 5,000-seat venue located in downtown Racine would accommodate a gap in the existing market. HSP also believes there is enough support from the local corporate community to support a modest number of suites, club seats and advertising/sponsor opportunities in a facility.

Sports and Entertainment Industry Analysis & Trends

Communities and markets of all sizes across the country are upgrading, expanding and improving sports, entertainment and event facilities for a variety of reasons. For small markets with or without a university, small arenas provide an opportunity to host sports teams, concerts, family and ice shows, community events, trade shows and conventions, all of which draw attendees who have the potential to spend money in the community in the form of meals, lodging and recreational activities. There is growing demand by the sports and entertainment market as well as large multi-day events like festivals, so having a place to host these events is a way of enriching the community both socially and economically. Events are being programmed in smaller arenas up to large NBA and NHL arenas that can accommodate more than 20,000 visitors. Many of these venues are being designed as versatile entertainment and activity centers in order to maximize use. Events for smaller arenas continue to be developed. These events can find success in small metropolitan areas. These new venues are complex projects and require significant support from the business, political and civic leadership as well as from the entire community.

Case Studies and Comparable Market Metrics

There have been a number of new, smaller arenas built in the U.S over the past decade that offer similarities to the situation in Racine. HSP sought out similarly sized and designed arenas in smaller markets that have been built or renovated in the past 15 years to determine how the market could support the facility.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 20 bottom line, but also provide opportunities to develop partnerships in the community. Although large market cities are developing single purpose venues, small market cities have the challenge of developing flexible multipurpose venues that can attract a variety of events, while keeping the setting intimate for spectators.

The Project’s success will depend on how well the facility’s management and staff can meet the standards set by these comparable facilities. Not only do these venues offer insight into the usage and financial performance, they will also serve to benchmark industry competitive trends. For Racine, a new facility should include the amenities expected by both users (performers, event coordinators, talent, teams, etc.) and visitors.

As it relates to supportable seats, suites and premium seats, the comparable market metrics help confirm Racine’s initial thoughts in regards to the size of the arena. Based on the metrics, an arena of approximately 3,800 seats with hundreds of premium seating options is suggested.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 21

Report Layout ! Executive Summary ! Chapter 1 Project Overview and Site Analysis ! Chapter 2 Economic and Demographic Analysis ! Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis ! Chapter 4 Arena, Concert, Sports and Event Market Trends ! Chapter 5 Case Studies ! Chapter 6 Recommendations ! Chapter 7 Demand and Financial Projections ! Chapter 8 Economic, Fiscal and Employment Impact Analysis

About Hunden Strategic Partners

Hunden Strategic Partners is a full service real estate development advisory practice specializing in destination assets. The firm provides a variety of services for all stages of destination development in the following primary areas: ! Real estate market and financial feasibility and financial consulting ! Owner’s representation and operating consulting ! Strategy and master planning ! Public incentive analysis ! Economic, fiscal and employment impact analysis (cost/benefit) ! Economic and tourism policy/legislation consulting ! Organizational development ! Research and statistical analysis ! Developer solicitation and selection; Private management company solicitation and selection

Hunden Strategic Partners professionals have provided all of the above services for hundreds of client projects worldwide for the public, non-profit and private sectors. In addition, our professionals have prior professional career experience in municipal and state government, economic and real estate development, hotel operations and non-profit management. Over 80 percent of our clients are public entities, such as municipalities, counties, states, convention bureaus, authorities and other quasi-government entities empowered to conduct real estate, economic development and tourism activities.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 22

Limiting Conditions

HSP relied on primary and secondary sources of information for the assumptions made in this report and assumes these sources to be accurate. Assumptions created for the analysis were based on the data available to HSP during the study period as well as professional judgment.

The Projects are assumed to be owned and operated in a first-class manner by parties who have operated similar facilities.

No responsibility is taken for unforeseen events occurring after the date of the analysis, including war and terror attacks, natural disasters and major economic recessions.

This report is intended to be used as a tool for decision-making by the contracting parties related to this Project and for no other purpose.

Downtown Racine Arena Market and Feasibility Study Executive Summary – Page 23

TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

PROJECT OVERVIEW AND SITE ANALYSIS

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 2

! There are two existing parking garages that flank the proposed arena site located southeast at Fourth Street and Lake Avenue, and east along Gas Light Circle. The parking garages would be utilized for evening events. Additional parking is located near Festival Park. ! A USHL hockey team will be a tenant of the facility. ! Racine has been short listed as a potential location for the Milwuakee Bucks D-League team. An NBA D-League team as a tenant is assumed in one scenario. ! The new arena and Civic Centre’ facilities will be operated under one entity or management contract. ! The existing street grid is maintained to the greatest extent possible.

SITE ANALYSIS

The ultimate goal for a new downtown arena is to better provide the benefits of related offshoot business, for ease of traveling from outside the area, potential group demand, the local business community and any unaccommodated demand from nearby groups and organizations. The positive and negative aspects of a site should consider several factors, taking into account the city of Racine as well as the surrounding community and existing facilities.

The following considerations were taken under advisement when reviewing the downtown site.

Urban Issues ! Compatibility with Adjacent Land Uses: Land adjacent to potential site should not be used for low-density residential, where sensitivity of neighbors will be an issue, or noxious uses such as industry. Best case is tourism-related uses such as restaurants, transient housing and retail. ! Facility Image/Visibility: Site offers good views of a possible new facility from one or more favorable vantage points. ! Quality of User Experience: Visitors to the site are likely to have a pleasant experience, either because of scenic qualities of the site and surroundings, or because of vibrant urban development valued by visitors. ! Proximity to Existing Hotels is often a key determinant of preferred sites. ! Proximity to Dining/Retail/Entertainment is a secondary, but still very important criterion for selection of preferred sites. ! Proximity to Existing Parking Resources: If it is possible to legally utilize off-site parking resources to satisfy some of the parking demand generated by the facility, this can help to reduce the land required and site development cost of the facility.

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 3

! Business Development Potential (new/existing): An important urban consideration is whether land or available (vacant) buildings exist in proximity to the potential site such that new development of private businesses, housing, or retail could be catalyzed by the project.

Transportation ! Vehicular Access: An ideal site will be readily accessible to cars, buses and delivery vehicles using existing roadway systems. Proximate location to interstates and other major thoroughfares will provide easy access for visitors. Worst case is new roadways would be required; best case is existing roadways can handle expected traffic to the facility without modification. ! Adequacy of Proposed Parking Strategy: The site, together with any usable off-site parking resources, should be able to accommodate the parking demand generated by the proposed facility. ! Pedestrian Access: Is the site accessible to pedestrians (including disabled pedestrians)? Is there a good existing infrastructure of sidewalks, crosswalks and (if needed) protected intersections? ! Public/Alternative Transit: Is the candidate site served by public transit on existing routes, or by alternative transit systems such as ferries, light rail, streetcars, people movers, trails, greenways, etc.?

Site Factors ! Site Size, Configuration, and Shape: The overall size and shape of the site must be conducive to the type of development proposed. Generally, developments will require adequate land for open space, detention, parking, landscaping, etc. ! Potential Views from Site: Does the potential site offer unique vistas or prospects that add to its appeal? ! Topography/Slope: Sites without steep slopes to allow construction of buildings and parking without excessive grading, cut, or fill is preferred. Extensive site work can be very expensive. ! Geologic or Water Table Issues: Are there known issues with site geology (such as visible rock outcroppings) that would suggest difficulty in construction? Is the candidate site known to have a high water table that could require mitigation? ! Archeological Resource Issues: Is the potential site likely to trigger required archeological investigation in its development or redevelopment? This would be triggered if the site was part of earliest known settlement of the community, or was otherwise known to be historically sensitive. ! Demolition - Extent, Historic: Are there numerous structures that would have to be cleared to make the site suitable for development/redevelopment? If historic structures exist, local historic preservation or other groups may pose objections to development of the site.

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 4

! Environmental Issues/Remediation: The potential site should consider environmental issues requiring remediation or making development difficult. In addition to known hazardous materials, wetlands, streamway or floodplain issues should also be considered. ! Zoning/Regulatory Issues: Considerations should be given to the difficulty of zoning or land use changes if required. The best-case scenario is current zoning permits development of proposed facilities. ! Potential for Expansion: The ability to accommodate future expansion of the facility, if warranted, must be considered. If not, adjacent undeveloped land will be assessed in order to understand if there is available for acquisition in the future.

Cost Factors ! Land Acquisition Cost: The best-case scenario is the Client already owns the land. Next best- case option is publicly-owned land that can be made available without a purchase transaction. Less than ideal situations are when identified sites are privately-owned. The worst-case scenario would be multiple private owners requiring parcel assembly. The costs to acquire privately-owned parcels can be very costly and not feasible options for the project. ! Ability to Meet Proposed Schedule: Any encumbrances on the potential sites would make it difficult to place under development in accordance with proposed project timelines.

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 5

The following figure shows the map of Downtown Racine and includes the proposed arena site in relation to the Downtown Retail District as well as the adjacent marinas.

Figure 1-1

As the figure shows, the Harbourwalk Hotel (under renovation) and the core downtown area are within walking distance of the proposed arena project. Additionally, the existing Civic Centre facilities are within a half mile from the site.

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 6

The following figure shows the overall site layout on the ground level.

Figure 1-2

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 7

The following figure shows the second floor that consists of the lobby and concourse.

Figure 1-3

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 8

The following figure shows the suite level (third level) along with a general hotel layout on the east side of the arena.

Figure 1-4

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 9

The following figure shows the hotel floors 4, 5, 6 and 7.

Figure 1-5

Conclusion

One of the economic purposes to developing a downtown arena is to maximize the amount of economic impact gained from collateral development. An indoor sports facility is developed as a community investment in the meetings, sports, entertainment, and leisure, as well as the hospitality and tourism business. While this has the direct benefit of bringing visitors (and their related spending) to town, there is great benefit in new construction and jobs for the Project as well as complementary business opportunities.

A new arena should also leverage the existing hospitality infrastructure. The proximity to hotels is expected to generate incremental room nights as well as room nights in off-peak winter months. New retail, dining and entertainment opportunities may be created and the CVB should work with local businesses to reinforce the efforts to create partnerships and synergies to support efforts in attracting events to the area. The goal should be to make this area a unique destination and a necessary part of the Racine experience for both sports and non-sport attendees and tourists alike.

Downtown Racine Arena Market and Feasibility Study Chapter 1 - Page 10

TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal and Employment Impact Analysis

ECONOMIC & DEMOGRAPHIC ANALYSIS

Local market area characteristics such as population, demographics, a diversified economy, access, quality of downtown and tourist attractions influence the potential demand for an event center and entertainment district. This chapter profiles Racine, Wisconsin including an overview of the economic characteristics of the metropolitan market, as well as a description of local attractions.

The following figure shows a map of the Racine area.

Figure 2-1

Downtown Racine Arena Market and Feasibility Study Chapter 2 - Page 2

As shown, five suburban and/or undeveloped villages, including Caledonia, Mount Pleasant, Sturtevant, Wind Point and Elmwood Park, surround the city of Racine. These six cities total 137,878 citizens that live east of I- 41/94. Interstate 41/94 runs north-south approximately ten miles west of downtown Racine in a mostly rural environment. However, there are numerous businesses and even a few factories along the highway at the various interchanges.

Overview

Regional Access

Racine is primarily served by a single Interstate highway, simultaneously signed 41 and 94, a six-lane freeway that carries more than 100,000 vehicles per day. This is the single freeway that connects the major metropolitan areas of Chicago and Milwaukee, and other cities and suburbs in between. Milwaukee lies 25 miles to the north and Chicago’s city limits lie approximately 65 miles to the south. State highways 11 and 20 both run west out of Racine and are two-lane highways connecting the area with places such as Delavan, Lake Geneva, Whitewater, Janesville and Beloit, all in Wisconsin. To reach Racine from more distant locations, motorists would likely travel Interstate highways to larger centers such as Milwaukee or Chicago, then take I-94 to one of the Racine exits.

Airport Access

Batten International Airport serves Racine and is a public use airport. Racine is one of only three cities in Wisconsin to have an airport with customs intake capabilities. Commercial air service is provided by O’Hare International Airport in Chicago, IL and General Mitchell International Airport in Milwaukee, WI.

Batten International Airport is located two miles northwest of the central business district of Racine and is privately owned by the Racine Commercial Airport Corporation. In 2015, the airport had 47,000 airport operations, an average of 129 per day. As of March 2016, 79 aircrafts were based at the airport.

The closest large commercial airport is General Mitchell Int’l airport, serving the Milwaukee area and Chicago’s northern suburbs. Because it is smaller, less expensive, less sprawling, and traffic is lighter, it is often the preferred airport choice of many in the Chicago-Milwaukee area, however, it has far fewer non-stop destinations than O’Hare at 35, compared with more than 200. General Mitchell airport is served by every

Downtown Racine Arena Market and Feasibility Study Chapter 2 - Page 3

domestic airline in the U.S. in three concourses. After peaking in 2010 at 9,848,000 passengers, 2015’s total has leveled out at 6,549,000. The airport sees more than 200 daily departures.

Located 17 miles northwest of downtown Chicago, O’Hare is the second busiest airport in the United States in terms of passenger counts, but first in the number of total takeoffs and landings in 2014, handling more than 70 million passengers in 2014. The airport includes eight runways and five terminals totaling 182 gates. Terminal 5, also known as Concourse M, is the new international gateway. The airport underwent a $26 million renovation completed in 2014. In 2014, a new runway, a runway extension and a new control tower were completed. ORD serves as the headquarters hub for United Airlines and is one of American Airlines most important hubs. The airport has direct service to 210 domestic (153) and international (57) destinations. Only seven other airports in the world can claim the distinction of direct flights to more than 200 cities. The “El” elevated train transit’s Blue Line begins its route to downtown Chicago at O’Hare in an underground station.

General Mitchell International Airport is a civil-military airport that is five miles south of downtown Milwaukee, WI. It is the primary airport for Milwaukee and many of the travelers from Chicago’s northern suburbs use it instead of O’Hare or Midway. In 2005, an Amtrak railway station opened at the airport. In 2015, the airport had 111,486 aircraft operations, an average of 305 a day. There are 12 airlines that operate out of the airport. ! Aeromexico - Seasonal: Cancun ! Air Canada Express - Toronto-Pearson ! Alaska Airlines - Seattle/Tacoma ! American Airlines - Dallas/Fort Worth, Phoenix-Sky Harbor ! American Eagle - Charlotte, Chicago-O’Hare, Dallas/Fort Worth, Philadelphia ! Delta Air Lines - Atlanta, Detroit, Minneapolis/St Paul, New York-LaGuardia Seasonal: Orlando- MCO ! Frontier Airlines - Denver, Las Vegas, Orlando-MCO Seasonal: Atlanta, Dallas/Fort Worth, Fort Meyers, Philadelphia ! OneJet - Pittsburgh ! Southwest Airlines - Atlanta, Baltimore, Boston, Cancun, Dallas-Love, Denver, Fort Lauderdale, Kansas City, Las Vegas, Los Angeles, Minneapolis/St Paul, New York-LaGuardia, Orlando- MCO, Phoenix-Sky Harbor, San Diego (begins August 7, 2016), San Francisco, Seattle/Tacoma, St Louis, Tampa, Washington-National Seasonal: Fort Meyers, Montego Bay, Punta Cana ! United Airlines - Chicago-O’Hare (begins October 6, 2016), Denver (begins September 7, 2016) ! United Express - Chicago-O’Hare, Cleveland, Denver (ends September 6, 2016), Houston- Intercontinental, Newark

Downtown Racine Arena Market and Feasibility Study Chapter 2 - Page 4

Population

The following table shows population changes in the United States, Wisconsin, the MSA, Racine County and Racine.

Table 2-1 Population and Growth Rates Population Percent Change 1990 2000 2010 2015 Estimate 2000-2010 United States 248,709,873 281,421,906 308,745,538 321,418,820 9.7% Wisconsin 4,891,769 5,363,675 5,686,986 5,771,337 6.0% Racine MSA 175,034 188,831 195,408 195,080 3.5% Racine County 175,034 188,831 195,408 195,080 3.5% City of Racine 84,298 81,855 78,860 77,742 -3.7% City Pop. As % of Metro Area 48.2% 43.3% 40.4% 39.9% --

Source: U.S. Census Bureau, Hunden Strategic Partners

The U.S. population grew by 9.7 percent between the 2000 and 2010 census tracts, while the Racine MSA grew by 3.5 percent and Wisconsin grew by 6.0 percent. During the same period, the City of Racine’s population decreased by 3.7 percent.

Racine: An Unusual Marketplace within a Megalopolis

Racine is one of several mid-sized independent cities (“independent” as opposed to bedroom communities for larger metropolitan centers) along the coast of Lake Michigan between Milwaukee and St. Joseph/Benton Harbor to Milwaukee. Chicago‘s market size is the third largest on the continent with nearly ten million people, while Milwaukee’s is smaller. However, Milwaukee is still considered a major North American market at just over two million. Racine, with 195,000 people in its compact metropolitan area is, therefore, unusually compressed in its own market’s geographical size. Milwaukee’s suburbs begin approximately ten miles north of Racine, and similarly-sized Kenosha has its city limits beginning only two miles south of Racine. With Lake Michigan to its east, the only way for Racine’s own small metro area to spread is west, just as Kenosha and Waukegan do. Waukegan has generally become surrounded by Chicago’s northern suburbs, and has less of an impact on its own Lake County residents. They are more considered Chicago’s suburbs rather than Waukegan’s. Kenosha has its own small metropolitan area of 164,000, but has become part of the greater Chicago Combined Metropolitan Area. Kenosha now acts (with new suburban developments between the city and I-41/94) somewhat as a suburban market for both Milwaukee and Chicago. Racine is the most independent economy of the three intermediate cities between Chicago and Milwaukee. Racine is also now part of the greater Milwaukee Combined Metro Area, but Milwaukee’s southern suburbs have not reached Racine. This creates a small rural buffer between the two developed cities.

Despite the fact that Racine is part of Milwaukee and Kenosha is officially part of Chicago, the two cities are like siblings along the lakeshore. Their high school teams are rivals in sports. The citizens routinely drive to each other’s cities to shop, dine, or visit friends. People living in Kenosha County often work in Racine County and vice-versa. The same can be said for the southern suburbs of Milwaukee, acting as a sort of bedroom

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community for several employment centers in Racine, and vice versa. These cities are both independent, and yet the citizenry move remarkably nimbly from one city to the next.

In effect, Racine is at the center of a small metropolitan area, but is better thought of as part of a larger regional megalopolis - a linear string of cities over 200 miles long and ten million people. The distance that people will travel to get to Racine depends on the specialness of the event or need. It is safe to assume that people in Milwaukee’s southern suburbs rarely go to Racine because currently, Racine offers little that Milwaukee or nearby suburbs don’t also offer. However, if an arena with major events is placed in downtown Racine (featuring good marketing to get the word out), then people from Milwaukee’s farther suburbs, all the way to the northern suburbs of Chicago in Lake County may think little of traveling that distance. In that case, the marketplace increases from 200,000 people to more than 2.5 million within a drive of 60 to 90 minutes. But as the marketplace is larger, so is the considerable competition amongst other arenas, of which there are several that will be discussed later in this study.

The only roadblock that downtown Racine would face as a local magnet for arena-driven commerce is that there is not perceived to be a quick route from I-41/94 into downtown Racine. All of Milwaukee and Chicago’s arenas are situated within blocks of an interstate highway. A downtown Racine’s arena would be located approximately ten miles from the Interstate highway, and just far enough for visitors to navigate through busy intersections with traffic signals and narrow city streets. Although people in the Chicago-Milwaukee Megalopolis are familiar with Racine from the perspective of the area near I-41/94, they are not generally familiar with the city’s street system, which may be daunting to some.

Diversified Economy

A healthy and diversified economy provides not only employment and disposable income for a market’s residents, but it also helps to insulate an area from economic downturns. Markets that have historically relied on one sector, such as manufacturing, have often had difficulty recovering from market shifts to other sectors, which leads to an overall loss of local income and employment. This situation will often lead to declining population trends as residents move to other areas with better opportunities.

The following table shows how the county employment total is diversified.

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Table 2-3

Racine County Employment by Industry - 2014 Description Employees Percentage of Total Total employment 90,932 100% By industry Farm employment 724 0.8% Nonfarm employment 90,208 99.2% Private nonfarm employment 80,799 88.9% Manufacturing 19,414 21.4% Health care and social assistance 11,749 12.9% Retail trade 10,351 11.4% Accommodation and food services 6,394 7.0% Administrative and waste management services 5,507 6.1% Other services, except public administration 5,146 5.7% Construction 3,609 4.0% Wholesale trade 3,539 3.9% Finance and insurance 3,108 3.4% Professional, scientific, and technical services 2,953 3.2% Real estate and rental and leasing 2,214 2.4% Arts, entertainment, and recreation 1,965 2.2% Educational services 938 1.0% Information 523 0.6% Management of companies and enterprises 435 0.5% Mining 99 0.1% Forestry, fishing, and related activities (D) N/A Utilities (D) N/A Transportation and warehousing (D) N/A Government and government enterprises 9,409 10.3% State and local 8,548 9.4% Local government 6,982 7.7% State government 1,566 1.7% Federal, civilian 332 0.4% Military 529 0.6%

Source: Bureau of Economic Analysis, Hunden Strategic Partners

Manufacturing is the top private industry by employment, accounting for 21.4 percent of total employment. The second and third major industries by employment are health care and social assistance retail trade. Government accounts for 10.3 percent of the total employment in Racine County. The area is dominated by manufacturing jobs. In the private sector, the top private industry accounts for almost double the percentage of total employment as the second major industry. As a result, the market is not as diversified and is more susceptible to economic shocks.

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Income and Housing

The depth and strength of a market’s employment base and income levels is an indicator of its ability to support tourism and event facilities, which in turn drive the demand at nearby airports. Indicators of a market’s overall wealth and growth can include trends in its income and employment.

The following table provides data on home ownership, income and retail sales, based on the latest data from the US Census Bureau.

Table 2-4 Income, Spending and Other Demographic Data Category United States Wisconsin Racine County Racine Homeownership rate, 2010-2014 64.4% 67.7% 69.8% 56.0% Median value of owner-occupied housing units, 2010-2014 $175,700 $165,900 $167,300 $114,800 Persons per household, 2010-2014 2.63 2.43 2.53 2.56 Median household income, 2010-2014 $53,482 $52,738 $55,055 $39,623 Persons below poverty level, percent, 2010-2014 14.8% 13.2% 13.1% 22.4% Total employment, 2014 121,079,879 2,450,254 68,267 -- Total employment, percent change, 2013-2014 2.4% 2.1% 1.1% -- Retail sales per capita, 2012 $13,443 $13,656 $11,201 $7,944

Source: US Census Bureau

The median value of owner-occupied homes is nearly $61,000 lower than the value of the national average in Racine, while Racine County’s values are $8,400 lower than the national average. Real estate values are determined by a combination of factors, including density, demand, income levels and school district strength.

Unemployment

The following figure shows the unemployment rate in the City, County, State and MSA in comparison to the national unemployment rate. High unemployment relative to the nation indicates there may be chronic economic structural concerns such as low education rates and mismatched industry and employment resources. An area dominated by one industry type may also see chronic unemployment levels higher than the nation as a whole. Cities or counties with balanced economies tend to weather economic downturns better and have unemployment rates that generally mimic the U.S. level.

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Figure 2-6 Unemployment Rates

20.0

18.0

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

US Unemployment Wisconsin Racine Racine MSA Racine County

Source: Bureau of Labor Statistics, Hunden Strategic Partners

As seen above, Racine has consistently had unemployment rates that have trended considerably above that of the county, MSA, state and national rate. The County and the MSA have identical unemployment rates due to the fact that the county comprises the MSA. Racine County/MSA has trended closely to the national unemployment rate and is currently at 4.7 and the national rate is at 4.5.

Metro Employment Index

High employment growth is indicative of a metropolitan area’s ability to purchase goods and services and possibly luxury items and leisure travel. A growing rate of population increase tends to mirror an employment increase. The following figure shows a five-year monthly history of the annual rate of employment growth in the Racine MSA.

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Figure 2-6

The following figures show maps of the MSA in comparison with other metro areas in the region.

Figure 2-7

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Figure 2-8

Figure 2-9

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Racine County’s business growth has been in a roller coaster cycle of ups and downs, with negative growth in all of 2013 and 2016, but with solid growth in 2011, 2012, and 2014. Since a high of 2.8 percent in October of 2014, the rate has steadily fallen to its current level of negative 1.5 percent.

Corporate Presence & Major Employers

The following table shows the largest employers in Racine, by number of full-time employees.

Table 2-8 Racine County Area Top Employers Number of Company Community Employees All Saints Health Care System City of Racine 2,661 SC Johnson and Son, Inc City of Racine 2,600 CNH America LLC City of Racine 2,500 Racine Unified School District City of Racine 2,500 InSinkErator City of Racine 1,000 Aurora Healthcare Hospital City of Burlington 970 City of Racine City of Racine 940 Ruud Lighting Village of Sturtevant 618 Nestle City of Burlington 500 BRP US Inc Village of Sturtevant 500 Andis Company Village of Sturtevant 450 Wal Mart Stores Inc Village of Mount Pleasant 430 Burlington School District City of Burlington 417 Wisconsin Services Corporation Village of Caledonia 380 Wisconsin Department of Corrections Village of Sturtevant 378 Society's Assests Inc City of Racine 334 Modine Manufactuing Co City of Racine 350 Racine Yacht Club Inc City of Racine 325 CNH America LLC City of Racine 300 Wisconsin Department of Workforce Development City of Racine 300 Echo Lake Foods City of Burlington 300 Wal Mart Supercenter City of Burlington 298 Saint-Gobain City of Burlington 289 Gateway Technical College City of Racine 275

Source: Collier County Department of Economic Development

All Saints Health Care System is the largest employer in the area with 2,661 employees. SC Johnson and Son, Inc is the second largest with 2,600 employees. The City of Racine has the largest employers in the county. The best-known brand from Racine is SC Johnson, home of Johnson’s Wax, and famously features a Frank Lloyd Wright-designed world headquarters. There are several factories and warehouse distribution

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centers that are located here primarily because of Racine’s access to the Chicago and Milwaukee area, and also because the location allows for room to grow, unlike more expensive highway-side land in Illinois.

Higher Education

Heavy populations of enrolled students suggest that the market will continue to reap the benefits of a more innovative and educated workforce.

The following table shows the academic institutions within 25 miles of Racine.

Table 2-9

Higher Education - Racine Distance from Highest Institution Location 53405 (miles) Degree Offered Enrollment Gateway Technical College Kenosha, WI 5.2 Associates 7,410 University of Wisconsin-Parkside Kenosha, WI 9.3 Masters 4,543 Carthage College Kenosha, WI 9.4 Masters 2,948 Sacred Heart School of Theology Franklin, WI 15.8 Masters 98 Alverno College Milwaukee, WI 21.1 Masters 2,389 University of Wisconsin-Milwaukee Milwaukee, WI 22.4 Doctorate 27,596 Marquette University Milwaukee, WI 22.9 Doctorate 11,745 Milwaukee Area Technical College Milwaukee, WI 22.9 Associates 16,712 Milwaukee Institute of Art and Design Milwaukee, WI 23.1 Bachelors 622 Mailwaukee School of Engineering Milwaukee, WI 23.1 Masters 2,810 Columbia College of Nursing Glendale, WI 24.8 Masters 151 Total Enrollment 77,024

Source: National Center for Education Statistics, HSP

Racine has 11 higher education institutions located within 25 miles. Together there are just over 77,000 people enrolled in the various institutions. University of Wisconsin-Milwaukee, with an enrollment of 27,596 students, is the largest institution.

Educational Attainment

The level of education in a community is generally linked to income potential, hence disposable income and long-term growth. Highly educated people have more options in their decision to choose employment and locate themselves and their families. The higher the education level, the stronger the labor market and the more disposable income that is available to spend on recreational activities, such as travel.

The following table shows the education attainment levels in the area.

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Table 2-10

Racine County Educational Attainment

Age 25+ Population Racine County Wisconsin United States Did not complete high school 8.3% 6.0% 7.6% Completed high school 31.7% 32.4% 27.8% Some college 23.8% 21.1% 21.1% Associates Degree 8.9% 9.9% 8.1% Bachelors Degree 15.5% 18.1% 18.4% Graduate Degree 8.0% 9.3% 11.2%

Source: US Census Bureau, Decision Date, Hunden Strategic Partners

The percentage of the population in Racine County that has attained a Bachelor’s Degree is 15.5 percent. This is three percentage points lower than the national attainment level and approximately 2.5 percentage points lower than the state level. Racine County has a high percentage of high school graduates and residents that have completed some college.

Top Regional Attractions

Located within or just adjacent to two large metropolitan areas, Racine, Kenosha, and Gurnee/Waukegan, Illinois are home to some regional centers of tourism. The largest and most notable that are in Wisconsin or northern Lake County, Illinois are listed below.

IKEA of Oak Creek

This planned 295,000 square-foot IKEA was recently announced to-be-built at an improved interchange at Drexel Avenue and I-41/I-94 in Oak Creek, just four miles north of the Racine County line. About 1.5 million to two million guests are expected to visit annually. It is due to open in spring of 2017.

Bristol Renaissance Faire The Bristol Renaissance Faire is a Renaissance fair held in a Renaissance-themed park in the Village of Bristol, WI. The fair runs for nine weekends from early July through Labor Day. It was founded in 1972 and was generically historic. Throughout the 1970s and 1980s, non-historical fantasy-based elements increased. The fair was purchased in 1989 and went back to a more historical approach. The annual attendance is approximately 190,000 over 18-weekend days.

Pleasant Prairie Premium Outlets

Located in Pleasant Prairie, WI, Pleasant Prairie Premium Outlets is an outlet mall that has 90 stores including Kate Spade New York, Michael Kors, Ugg Australia and more. This was one of the very first outlet centers built in the region, and despite newer centers having been built, this location remains popular.

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Alpine Valley Music Theater

Located just outside of Racine County in East Troy, WI, Alpine Valley Music Theater is a live music venue. It has a capacity for 37,000 people on rolling lawns. The amphitheater has a wooden roof and has been listed at number six on Rolling Stone’s list of “The Best Amphitheaters in America”.

Six Flags Great America

Six Flags Great America is one of the premier parks in the chain and in the region, with 13 world-class roller coasters, ten themed areas, a 20-acre waterpark, and a total of 52 rides, all on 304 acres. Its attendance is estimated to be between 2.7 and 3 million people per year. The park was originally opened in 1976 as Marriott’s Great America, part of Marriott’s entry into the amusement park business. They sold the park to Six Flags in 1984.

Gurnee Mills Outlet Mall

Located a 40-miute drive from either Chicago or Milwaukee, this 1991 outlet mall has nearly two million square feet, enough to make it the third-largest mall in the state and the largest that is all on one level. There are 200 stores in the property, and is visited by more than 20 million people annually. The mall was originally built by the Mills Corporation and was the largest outlet center in the world at that time.

Both Six Flags and Gurnee Mills are approximately 35 miles south from Racine. However, this section shows that the in-between region of Chicago and Milwaukee is a popular spot for large attractions that can draw people from both cities.

Top Racine Attractions

Racine has its own attractions, some of which are large and popular within the entire region. The following table shows the top attractions in the area as listed by the Racine County Convention and Visitor’s Bureau.

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Table 2-11 Rcine County Attractions Attractions Category Racine Zoo Zoo Malt House Theater Theater Racine Art Museum Museum Wustum Museum Museum Fortaleza Hall Historical Site Wind Point Lighthouse Historical Site Echo Park Park Horlick Athletic Field Stadiums/Athletic Field Racine Heritage Museum Museum River Bend Nature Center Nature Center

Source: Racine CVB

A few of these attractions are profiled briefly below.

Racine Zoo

The Racine Zoo was established in 1923. It is a 28-acre park located on the shores of Lake Michigan. It is accredited by the Association of Zoos and Aquariums and is visited by more than 85,000 guests each year.

Racine Art Museum

The Racine Art Museum is home to the nation’s largest collection of contemporary crafts. The museum’s exhibits change regularly to ensure that visitors can enjoy a new experience. The exhibits are located on two floors of galleries and come from the museum’s permanent collections, as well as works on loan from collections throughout the country.

Fortaleza Hall

Fortaleza Hall is a tribute to Sam Johnson. It is a 60,000-square foot facility that is the social center of SC Johnson’s headquarters campus, which was designed by Foster + Partner as an architectural attraction of its own right that both mirrors (in lines and curves) and contradicts (in its transparency, versus being opaque) Frank Lloyd Wright’s headquarter building, also in Racine. The building features a look at the company’s history.

Wind Point Lighthouse

Wind Point Lighthouse is the oldest and tallest working lighthouse on Lake Michigan. It is 108 feet tall. It was built in 1880 to warn ships away from the shallow waters of Wind Point. The light can be seen from 19 miles

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away. The lighthouse became fully automated in 1964. Tower climbs up the 144 stairs are offered on the first Sundays of June, July, August, September and October.

River Bend Nature Center

River Bend Nature Center is 78 acres of undisturbed woods, wetlands and nearly 4,000 feet of riverfront along the Root River. Its focus is on environmental education and outdoor recreation. It offers two buildings of meeting space and education and an outdoor pavilion. There are marked hiking trails that can be used for cross country skiing and snowshoeing in the winter.

Implications

Racine County’s population has grown substantially in the past 25 years, close to an estimated 195,000 people. Set between and amongst the metropolitan cities of Milwaukee and Chicago, home to more than ten million people, any attraction has a fair shot at drawing a crowd. Although most of the large attractions are set within visual sight of I-41/I-94, several highways such as Wisconsin Route 11 and 20 make it easy for people to travel off the Interstate to get to the core of these Lake Michigan cities such as Racine, Kenosha and Waukegan. The strong mix of employment centers in many sectors keeps the local economy stable. Racine lies 25 miles south of Milwaukee and is part of its media market. Racine is 65 miles north of Chicago’s city limits. It will not take much prompting for people to drive for an event in Racine from most of the Milwaukee metro area. If people in the northern Chicago suburbs are willing to drive to General Mitchell International Airport for flights, then they will likely be willing to buy tickets to events of interest at a downtown Racine Arena, especially if the route is well-marked. The reason so many regional attractions are located along I-41/I- 94 near Racine and Kenosha is because of the heavy traffic and ease of drivability. The only challenges to face are getting the word out about events at a new Racine arena, especially in Chicago’s crowded media market, and the public’s possible reticence to driving into downtown Racine due to a lack of familiarity. Over time, as people become more familiar with downtown Racine, this will be less of an issue, especially if parking is easy, inexpensive, and a relatively quick in-and-out. Although the folks in Racine County would heavily use an arena in Racine, it is really positioned to have a more regional draw, depending on the type of event. And downtown Racine featuring a first-rate arena gives the city a demand generator and an influx of people before and after shows or events to dine, shop and stroll.

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TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal and Employment Impact Analysis

LOCAL & REGIONAL EVENT, MEETING, SPORTS & ENTERTAINMENT MARKET ANALYSIS

In order to project the performance of a new sports and entertainment arena in Racine, it is important to understand the supply of the local and regional market. HSP analyzed the competitive supply of meeting, athletic facilities and performance/entertainment venues, both in Racine and the region, to determine if any gaps in the market exist.

Events at a new arena, especially sports events and concerts performed by touring acts, can draw people from far beyond the relatively small metropolitan area of Racine. The following maps show populations within various distances of Racine and the overlap of markets within the respective drive times.

The first maps show the drive-time from Racine, Milwaukee, Rockford and two of Chicago’s northern suburbs, Rosemount and Hoffman Estates.

Figure 3-1

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The map shows that a 20-minute drive from Racine encompasses a population is 156,000 within that drive- time boundary. Because there are large open and underserved spaces between Racine’s primary market and that of Milwaukee and Chicagoland area cities, it is appropriate to view maps that show 40-minute and 60- minute drive times.

Figure 3-2

In the 40-minute drive time map, the Milwaukee boundary overlaps most of the Racine area and nearly extends along I-94 to the southern edge of Racine’s area. This map also suggests that the overlap between Racine and Milwaukee will provide opportunity to draw from s larger population base outside of Racine. It is also instructive to note that Chicago’s television market through cable and satellite dish networks reach just south of Racine to

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Kenosha County and Racine falls within the Milwaukee media market. Advertising on Chicago and Milwaukee stations for concerts may pull more people from the northern suburbs of Chicago and the Milwaukee area or an event or show.

The next figure shows the 60-minute drive time population.

Figure 3-3

At 60-minutes, nearly all regional market boundaries in northern Illinois and southwest Wisconsin begin to overlap. The 2.1 million people within this area for Racine show that there is currently a large population that an arena in Racine could serve. At present, this population is either driving to Milwaukee for events or enduring the likely heavy traffic south to attend an event in downtown Chicago or even the facilities in the surrounding suburbs.

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The following figure shows Racine’s capturable area in the region.

Figure 3-4

As shown, the capturable area extends to Racine County’s northern border, just south of Kenosha County into northern Lake County and west into Walworth County. The population within the catchment area is approximately 475,000 people. Although there are more than 2.1 million people within a 60-minute drive, the Milwaukee and Chicago markets limit the capturable area.

Local Event, Meeting, Sports and Entertainment Facilities HSP evaluated the local event, meeting, sports and entertainment venues to determine both the supply of local facilities for events as well as the existing demand to determine how a downtown arena could impact the Racine market. The local supply in the Racine market currently is primarily made up of meeting facilities. No

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arenas are currently in the market. The facilities were determined by their location, facility components, and quality.

The following table summarizes the sports and entertainment venues in Racine, sorted by distance from the Racine Civic Centre.

Table 3-1 Local Meeting and Event Facilities

Distance from Total Function Exhibit Ballroom Meeting Breakout Walkable Venue City Downtown Space Space Space Space Rooms Hotel Rooms Racine Civic Centre Racine ------Memorial Hall Racine -- 20,185 8,400 4,900 6,885 3 121 Festival Hall Racine -- 16,750 15,700 -- 1,050 1 121 Fountain Banquet Hall Sturtevant 6.8 25,000 -- 25,000 ------Masonic Center* Racine 0.6 13,125 -- 4,500 8,625 3 -- Roma Lodge Banquet & Conference Center* Racine 6.0 11,250 -- 11,250 ------Racine Architect Hotel & Conference Center Racine 5.0 9,240 -- 6,600 2,640 8 469 Infusino's Italian Village* Racine 2.7 7,125 -- 7,125 ------The DeKoven Center* Racine 2.7 6,825 -- 5,250 1,575 4 39 South Hills Country Club* Franksville 11.6 6,000 -- 5,250 750 1 -- Gateway Technical College - Racine Campus* Racine 0.6 5,625 -- -- 5,625 6 -- Harbourwalk Hotel Racine Racine 0.5 3,068 -- -- 3,068 3 121 Ives Grove Golf Course* Sturtevant 9.1 2,250 -- -- 2,250 2 50 Racine Art Museum* Racine 0.1 1,050 -- -- 1,050 3 50 Average -- 4.2 9,807 12,050 8,734 3,352 3 139

*Function space was estimated based on room capacities at 15 sq. ft. per person Source: Cvent, Hunden Strategic Partners

The following map shows the local meeting and event venues in the Racine area.

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Figure 3-5

The Racine event, meeting, sports and entertainment options include a collection of event centers, golf courses, and specialty venues.

Racine Civic Centre

The Racine Civic Centre is comprised of three venues: ! Festival Hall ! Festival Park ! Memorial Hall

Festival Hall, located on the lakeshore in downtown Racine at 5 Fifth Street, offers nearly 17,000 square feet of total function space, including 15,700 square feet of exhibit space and a conference room of 1,050 square feet. Festival Hall is a versatile events facility that hosts symphony concerts, home shows, car shows, corporate events, wedding receptions, bridal shows, banquets, Christmas parties, fundraisers, meetings, and private functions. There is space in the facility for 90 8’x10’ booths.

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The following figure shows the interior of Festival Hall during a car show.

Figure 3-6

Conversations with facility management indicated that the facility’s versatility is an asset that is attractive to event planners. March is the slowest months for the venue, while June and July are typically the busiest. The scenic, waterfront view is another attractive aspect of the venue. The lighting and rigging options in the building needs to be improved, according to facility representatives, and storage is very limited in the venue. This presents a variety of challenges to caterers. Overall, due to the design and amenities of the facility, it is difficult to accommodate concerts or other performances at the venue.

Festival Park is a 30,000-square-foot park located next to Festival Hall. The park has a 70’x120’ Genesis tent that provides 8,400 square feet of covered space. The park is used primarily for festivals and fairs.

The next figure shows shows the lawn of Festival Park hosting a wedding ceremony.

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Figure 3-7

Memorial Hall, located at 72 Seventh Street in Racine, is the oldest of the three venues at the Civic Centre. The Hall offers nearly 21,000 square feet of total function space. The Diamond Auditorium features 8,400 square feet and can host concerts for 1,200 spectators with seats or 1,500 standing-room attendees. The auditorium also hosts large wedding receptions, roller derby and wrestling matches. There are four breakouts rooms with nearly 12,000 square feet of total meeting space. Three of the rooms have access to the veranda, which provides views of the lake. American Veterans and Disabled American Veterans meet regularly at the facility.

The following figure shows the Diamond Auditorium at Memorial Hall.

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Figure 3-8

Conversations with facility representatives indicated that Memorial Hall is increasing in popularity due to its historic offerings, but the facility presents numerous challenges. Parking is an issue, lighting, stage size, and acoustics all present issues. The venue only offers bathrooms on the bottom floor, and traversing the hallways can be confusing. Overall, the building presents a unique, historic space, but its many quirks and design limit its capabilities for hosting a variety of events.

The following four tables show the event data for the Racine Civic Center by event type. The data in the tables represents all three venues at the Racine Civic Centre combined.

The following table shows the total events by category for the Racine Civic Centre from 2013 through March 2016.

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Table 3-2 Racine Civic Center - Total Events 2013 - March 2016 Event Type 2013 2014 2015 2016 Event Totals Banquets 25 20 20 9 74 Concert 15 12 14 2 43 Broadway/Theatrical-Commercial 0 0 0 0 0 Community/Educational Theatrical 0 6 0 0 6 Family Shows 2 0 0 0 2 Convention 1 0 0 0 1 Meeting/Conference 11 19 14 7 51 Consumer Show 8 6 8 4 26 Trade Show 0 0 0 0 0 Wedding Reception 21 27 25 0 73 Community/Civic 42 66 45 9 162 Sporting 3 4 2 0 9 Recreational Sports 11 9 23 7 50 Film/Movie 0 0 0 0 0 Internal Use 5 0 8 4 17 Total 144 169 159 42 514 Average 10 11 11 3

Figures are representative of Memorial Hall, Festival Hall, and Festival Park Source: Racine Civic Center

As shown in the table, Community/Civic events account for the most annual events with approximately 50 events per year. There have been 74 Banquets, 73 Wedding Receptions, 51 Meeting/Conferences, and 50 Recreation Sports events over this time period, with a total number of events for the time period of 514.

The following table shows the total event days by category for the Racine Civic Centre from 2013 to March 2016.

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Table 3-3 Racine Civic Center - Event Days 2013 - March 2016 Event Type 2013 2014 2015 2016 Event Totals Banquets 26 20 20 9 75 Concert 18 16 21 2 57 Broadway/Theatrical-Commercial 0 0 0 0 0 Community/Educational Theatrical 0 6 0 0 6 Family Shows 2 0 0 0 2 Convention 1 0 0 0 1 Meeting/Conference 11 24 18 9 62 Consumer Show 13 10 11 7 41 Trade Show 0 0 0 0 0 Wedding Reception 21 27 25 0 73 Community/Civic 50 85 71 10 216 Sporting 4 5 3 0 12 Recreational Sports 12 9 81 19 121 Film/Movie 0 0 0 0 0 Internal Use 5 0 8 4 17 Total 163 202 258 60 683 Average 11 13 17 4

Figures are representative of Memorial Hall, Festival Hall, and Festival Park Source: Racine Civic Center

The table shows that Community/Civic events occupied the most days for the time period, of which many of the events last for several days at a time. Recreational Sports, Meeting/Conferences, and Consumer Shows hosted several multiple-day events as well. Over the last three years, there have been no trade shows held at the Civic Centre facilities.

The next table shows the total use days, which include setup and tear down days, by category for the Racine Civic Centre from 2013 to March 2016.

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Table 3-4 Racine Civic Center - Use Days 2013 - March 2016 Event Type 2013 2014 2015 2016 Event Totals Banquets 35 27 26 10 98 Concert 27 22 27 2 78 Broadway/Theatrical-Commercial 0 0 0 0 0 Community/Educational Theatrical 0 8 0 0 8 Family Shows 2 0 0 0 2 Convention 2 0 0 0 2 Meeting/Conference 11 25 20 13 69 Consumer Show 21 18 19 13 71 Trade Show 0 0 0 0 0 Wedding Reception 31 45 36 0 112 Community/Civic 71 93 80 10 254 Sporting 7 9 5 0 21 Recreational Sports 14 9 82 19 124 Film/Movie 0 0 0 0 0 Internal Use 5 0 8 4 17 Total 226 256 303 71 856 Average 15 17 20 5

Figures are representative of Memorial Hall, Festival Hall, and Festival Park Source: Racine Civic Center

The nine sporting events for the time period required 21 event days and the 50 Recreational Sports events occupied the Civic Centre for 124 event days.

The following table shows the total event attendance by category for the Racine Civic Centre from 2013 to March 2016.

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Table 3-5 Racine Civic Center - Event Attendance 2013 - March 2016 Event Type 2013 2014 2015 2016 Event Totals Banquets 7,715 6,770 6,410 1,010 21,905 Concert 20,975 18,600 23,100 750 63,425 Broadway/Theatrical-Commercial 0 0 0 0 0 Community/Educational Theatrical 0 3,760 0 0 3,760 Family Shows 1,050 0 0 0 1,050 Convention 100 0 0 0 100 Meeting/Conference 310 655 605 770 2,340 Consumer Show 7,025 5,725 4,800 4,150 21,700 Trade Show 0 0 0 0 0 Wedding Reception 4,875 6,115 5,780 0 16,770 Community/Civic 37,195 29,885 37,065 5,040 109,185 Sporting 6,700 7,675 6,000 0 20,375 Recreational Sports 2,390 1,060 2,450 565 6,465 Film/Movie 0 0 0 0 0 Internal Use 46 0 112 90 248 Total 88,381 80,245 86,322 12,375 267,323 Average 5,892 5,350 5,755 825

Figures are representative of Memorial Hall, Festival Hall, and Festival Park Source: Racine Civic Center

The table shows the Community/Civic events brought in nearly half of the total number of attendees to the venue. Concerts attracted more than 63,000 attendees for the time period. While recreational events generated a significant number of use days, these events did not attract high attendee visitation. Concerts and sporting events had the highest average attendance over the period with 1,475 and 2,264, respectively. These were the only two event categories that average more than 1,000 attendees.

The following section profiles the event venues in Racine.

Racine Art Museum

The Racine Art Museum, just west of the Racine Civic Centre at 441 Main Street, offers three rooms with approximately 1,050 square feet of space to host meetings, conferences, retreats and seminars. The rooms seat 10 to 35 and can be rented for $250 to $350 per day.

Harbourwalk Hotel Racine

The Harbourwalk Hotel Racine, built in 1994, is located a half mile north of the Racine Civic Centre. The upscale property is currently going through a renovation and being converted into a DoubleTree property. The hotel has nearly 3,100 square feet of meeting space in three rooms, which can hold 20 guests up to 100 guests depending on the room and set up. The property hosts meetings and has 121 guest rooms.

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Masonic Center

The Masonic Center, built in 1856 was the private residence of Henry Durand and was deeded to the Masons in 1922. It is located just over a half mile south west of the Racine Civic Center. In 1923 the grand lodge rooms and the dining facilities were added to the back of the property. The center has two ballrooms with approximately 4,500 square feet of space that can hold up 100 up to 200 guests. There are three meeting rooms in the facility that total more than 8,500 square feet. The Masonic Center hosts meetings, weddings, and general social activities.

Gateway Technical College- Racine Campus

Gateway Technical College - Racine Campus, located approximately a half-mile south of the Racine Civic Centre. The facility has more than 5,600 square feet of meeting space in six rooms at the Conference Center. The Great Lakes room is the largest and can hold a maximum of 175 people. The Michigan Room can hold up to 80 people. The four other rooms can each hold up to 30 people and can be combined to accommodate larger groups.

Infusino’s Italian Village

Infusino’s Italian Village, opened in 1980, is located approximately three miles northwest of the Racine Civic Centre on Rapids Drive. The Banquet Hall has more than 7,100 square feet of space used for receptions and banquets.

The DeKoven Center

The DeKoven Center is located approximately three miles south of the Racine Civic Centre on 21st Street in Racine. The Center has been a college, a boy’s boarding school, a retreat and conference center and a summer camp for girls. The Episcopal Diocese of Milwaukee purchased the property in 1985. Since that time, it has been operated as an entity of the diocese with its own board of directors as a conference and retreat center. The center has six rooms with nearly 7,000 square feet of meeting space. Grand Hall can accommodate up to 250 for receptions, concerts, reunions, banquets, dances and meetings. The Assembly Hall can seat 100 and the other rooms can hold 10 to 45 for meetings and breakout sessions. The property has 39 rooms that can sleep up to 82 guests.

Racine Architect Hotel & Conference Center

The Racine Architect Hotel & Conference Center, built in 1985, is located five miles west of the Racine Civic Centre at 7111 Washington Avenue. The property is affiliated with Marriott Hotels under the Delta Hotels brand and has 222 guest rooms. The hotel has two ballrooms with a total of 6,600 square feet. The Lake Michigan Ballroom is the larger of the two, with 4,800 square feet that can host up to 450 guests. There are eight meeting rooms that offer 2,640 square feet of meeting space. The Conference Center can accommodate groups as large as 700. The Racine Architect Hotel hosts meetings, weddings and events.

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Roma Lodge Banquet & Conference Center

Roma Lodge Banquet & Conference Center, opened in the 1950’s, is located six miles west of the Racine Civic Centre at 7130 Spring Street. Roma has five banquet rooms with approximately 11,250 square feet of space. The rooms hold 25 to 700. There is a permanent bar in each banquet room. These spaces host parties, receptions, and meetings.

Fountain Banquet Hall

Fountain Banquet Hall, opened in 2007, is located nearly seven miles southwest of the Racine Civic Center on Durant Avenue in Sturtevant. Fountain is comprised of the North and South Halls, which have a combined space of 25,000 square feet. The larger North Hall holds up to 600 guests and can be split into two equal spaces. The South Hall can accommodate up to 350. The facility hosts wedding ceremonies and receptions, anniversaries, fundraisers, benefits, trade shows, corporate events and meetings.

Ives Grove Golf Course

The Ives Grove Golf Course, operated by H&H Fairway Enterprises since 1988, is located nine miles directly west of the Racine Civic Center in Sturtevant on Washington Avenue. The Clubhouse offers two rooms with approximately 2,250 square feet. The larger room can hold up to 100, with the smaller room holding 50. In 2007 the golf course constructed the Pavilion off of the Clubhouse, which can host up to 150 guests. This space has a permanent roof with canvas sides that can be raised and lowered as needed.

South Hills Country Club

The South Hills Country Club, established in 1927, is located nearly 12 miles northwest of the Racine Civic Centre just east of Interstate-94 in Franksville. This public golf course has an event hall with approximately 6,000 square feet. The Palmer Grand Ballroom seats up to 350 people. These spaces host receptions, banquets, luncheons, meetings and rehearsal dinners.

Implications

The local event, meeting, sports, and entertainment market in Racine lacks a large, multipurpose indoor venue for sports, shows, concerts, community events and meetings. Nearly all of the spaces are limited to hosting reception and banquet events. Festival Hall and Memorial Hall can host concerts and a variety of sporting events, but the capacity of both is limited, and there are no facilities with the technical capabilities to host larger touring acts. Despite the Civic Centre offering the largest spaces, none have accommodated tradeshows over the last three years. The local market lacks a venue that can attract popular touring acts and sporting events that can generate significant visitation, spending, and activity in downtown Racine.

Regional Sports, Entertainment and Event Facilities

Racine’s sport, concert, and family show facility competition comes from venues throughout southern Wisconsin and northern Illinois, mainly the Madison, Milwaukee and Chicago areas. The venues shown on the

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following table have been identified as the most directly competitive facilities in the region. The purpose of this analysis is to understand what opportunities may exist for Racine to pull from markets in the Madison, Milwaukee and Chicago areas.

Table 3-6 Regional Sports & Entertainment Facilities Cost (millions, Facility Location Distance Type Capacity Year Opened/Renovated 2016 dollars) Tenants United Center Chicago, IL 76 Arena 23,000 1994 $279.0 NBA, NHL BMO Harris Bradley Center Milwaukee, WI 26 Arena 20,000 1988 $182.0 NBA, NCAA Allstate Arena Rosemont, IL 65 Arena 18,500 1980 $72.6 NCAA, AHL, WNBA Kohl Center Arena Madison, WI 97 Arena 17,140 1988 $111.0 NCAA UW-Milwaukee Panther Arena Milwaukee, WI 26 Arena 12,700 1950/1998 $74.7 NCAA. IHL/AHL, MASL, WFTDA Sears Centre Arena Hoffman Estates, IL 70 Arena 11,800 2006 -- MASL, D-League Millennium Park Chicago, IL 77 Amphitheatre 11,000 2004 $77.7 -- Alliant Energy Center Madison, WI 95 Arena 10,231 1967 -- USHL UIC Pavilion Chicago, IL 70 Arena 10,000 1982/2001 -- NCAA,WFTDA, CIF House Of Hope Arena Chicago, IL 92 Arena 10,000 2005 -- -- Convocation Center At NIU DeKalb, IL 102 Arena 10,000 2002 $47.4 NCAA BMO Harris Bank Center Rockford, IL 89 Arena 7,500 1981/2006 $40.9 AHL Emil & Patricia Jones Convocation Center Chicago, IL 89 Arena 6,000 2007 $44.7 NCAA Odeum Expo Center Villa Park, IL 72 Arena 5,200 1981 -- AIF Eagles Ballroom Milwaukee, WI 27 Auditorium / Theatre 4,000 1926 -- -- Riverside Theater Milwaukee, WI 25 Auditorium / Theatre 2,400 1928/1984 -- -- Orpheum Theater Madison, WI 97 Auditorium / Theatre 1,700 1927 $10.1 -- Average 70 10,657 1983 $94.0 Source: Various Facilities, Pollstar, Hunden Strategic Partners

The following figure shows the map of the locations of the sports and entertainment venues in the region.

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Figure 3-9

Wisconsin

There are seven competitive sports and entertainment facilities in Wisconsin. Four are primarily sports venues and three are auditorium/theater venues. ! BMO Harris Bradley Center, built in 1988, is located in downtown Milwaukee, 26 miles north of Racine. The arena seats 20,000 spectators and hosts a variety of sporting events and concerts. This

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arena is home to the Milwaukee Bucks of the NBA and the Marquette University men’s basketball team. The facility is owned and operated by the Bradley Center Sports and Entertainment Corporation. The Bradley Center is scheduled to be demolished in two years’ time after the completion of the new arena district. The razed lot will likely be used for future commercial development. ! New Downtown Milwaukee Arena. The Milwaukee Bucks Organization, in conjunction with local government officials, recently broke ground on a $524 million arena in downtown Milwaukee. The construction of the 714,000-square foot arena is partially funded by the City of Milwaukee with its $250 million contribution. The approximately 17,500-seat arena will be part of a sports and entertainment district in downtown Milwaukee. This district will be home to residential buildings, retail locations and office space in addition to the arena. It is expected to be completed for the start of the 2018-2019 NBA season. ! Kohl Center Arena, opened in 1998, is located in Madison on the campus of the University of Wisconsin–Madison campus. The arena is home to the university’s men’s and women’s basketball teams and the men’s ice hockey team. The venue seats 17,140 for basketball and 15,359 for hockey. The arena is owned and operated by the University of Wisconsin–Madison. The Kohl Center also hosts graduations, concerts, ice-skating shows, career fairs, political gatherings, and conventions. ! UW-Milwaukee Panther Arena, built in 1950 and last renovated in 1998, is located in downtown Milwaukee. Panther Arena seats a maximum of 12,700 and is home to the Milwaukee Panthers men’s basketball team, Milwaukee Admirals hockey team of the IHL/AHL, Milwaukee Wave indoor soccer team of the MASL and the Brewcity Bruisers flat track roller derby team of the WFTDA. The arena is currently closed for renovations until October 2016. In addition to sporting events the arena hosts graduations, dance competitions, and concerts. UW-Milwaukee Panther Arena is owned and operated by the Wisconsin Center District. ! Alliant Energy Center is a multi-building complex, located in Madison, 95 miles northwest of Racine. Veterans Memorial Coliseum, built in 1967 and renovated in 2005, is the arena and centerpiece of the complex. The arena seats 10,231 and is home to the Madison Capitols hockey team of the USHL. The venue is owned and operated by Dane County and hosts head liner concerts, family shows, speakers and touring shows. ! Eagles Ballroom, opened in 1926, is located in Milwaukee and part of the Rave/ Eagles Club. The Eagles Ballroom features the original 25,000-square foot wooden dance floor with a balcony on the second floor surrounding the floor below. This room is the building’s showpiece. The ballroom hosts many popular concerts and can accommodate 4,000. ! Riverside Theater, built in 1928 and renovated in 1984, is located in Milwaukee. The Riverside Theater hosts concerts and lectures in the 2,450-seat theater, which has ten removable rows in the front of the main floor and would allow for the stage to be enlarged. ! Orpheum Theater, opened in 1927, is located in Madison on State Street. The theater was originally built as a vaudeville venue and movie theater with 2,400 seats. During a renovation in the 1960s 700 seats were removed leaving the capacity of the theater at 1,700. In 2013, the Orpheum Theater was purchased by the Gus Paras family and restored. This venue is currently booked and operated by Live Nation and hosts concerts, stand-up comedy shows, weddings and events.

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Illinois

There are ten sport and entertainment facilities in northern Illinois. Nine are arenas and one is an amphitheater. All of the sports venues host concerts as well. ! United Center, opened in 1994 and renovated in 2010, is an indoor sports arena located in Chicago. The facility is owned and operated by the United Center Joint Venture. The United Center is home to the Chicago Bulls of the NBA and the Chicago Blackhawks of the NHL. The arena hosts more than 80 games each year for the Bulls and Blackhawks, national headliner concerts, college sporting events, ice shows and the circus. The facility is currently undergoing a multi-phased renovation to upgrade food and beverage options, premium seating spaces as well as adding an indoor atrium space that will include offices, retail space and event space. ! Allstate Arena, opened in 1980, is a multi purpose arena located in Rosemont, which is owned and operated by the Village of Rosemont. The facility is currently home to the Chicago Wolves hockey team of the AHL, DePaul University’s men’s basketball team and the Chicago Sky of the WNBA. Allstate Arena has a maximum capacity of 18,500 and hosts touring shows, ice shows, the circus, wrestling and national headliner concerts. ! Sears Centre Arena, opened in 2006, is a multi-purpose arena located in Hoffman Estates. The arena can seat 3,000 to 6,000 for theater events, 8,362 for hockey, lacrosse, soccer and football games, 10,000 for basketball games and 11,800 for concerts. Sears Centre Arena is owned by the Village of Hoffman Estates and is operated by General Spectrum. The arena is currently home to the Chicago Mustangs soccer team of the MASL and will be the home of the Windy City Bulls basketball team of the NBA D-League in the fall of 2016. Sears Centre Arena hosts a variety of family shows, ice shows, ice skating competitions and concerts in addition to the sporting events. ! Millennium Park, opened in 2004, is a public park located in Chicago operated by the Chicago Department of Cultural Affairs. The centerpiece of the park is the Jay Pritzker Pavilion, an amphitheater with 4,000 fixed seats and room for 7,000 in the lawn. The pavilion is home to the Grant Park Symphony Orchestra and Chorus and the Grant Park Music Festival. Jay Pritzker Pavilion hosts a wide range of music series, concerts and performing arts events. ! Convocation Center at Northern Illinois University, built in 2002, is a multi-purpose arena located in DeKalb on the campus of Northern Illinois University. The arena seats 10,000 and is home to the university’s basketball teams, volleyball, wrestling, gymnastics and the women’s indoor track and field squad. The facility is owned and operated by Northern Illinois University. The venue hosts graduations, convocation ceremonies, concerts, job fairs, and expositions. ! House of Hope Arena, built in 2005, is a multipurpose arena located in Chicago. The House of Hope Arena is home to the Salem Baptist Church of Chicago and can seat 10,000. The arena hosts family shows, concerts, sports, cultural events religious conferences bridal expos and the Chicago Bulls summer camp. ! UIC Pavilion, opened in 1982 and renovated in 2001, is a multi-purpose arena located in Chicago on the campus of the University of Illinois at Chicago. The Pavilion seats up to 10,000 and currently is home to the university’s basketball teams, the Windy City Rollers flat track roller derby team of the WFTDA and the Chicago Eagles indoor football team of the CIF. The venue is owned and operated by the University of Illinois at Chicago and hosts sporting events and concerts.

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! BMO Harris Bank Center, opened in 1981 and renovated in 2006, is a multi-purpose arena located in downtown Rockford. The arena seats 7,500 and is home to the Rockford IceHogs hockey team of the AHL. The venue is owned by Rockford Area Venues & Entertainment Authority and operated by SMG. BMO Harris Bank Center hosts sporting events and concerts. ! Emil & Patricia Jones Convocations Center, opened in 2007, is a multi-purpose arena located in Chicago on the campus of Chicago State University. The center seats 6,000 and is home to the university’s men’s and women’s basketball teams. The Convocation Center, owned and operated by Chicago State University, hosts graduations, concerts, theatrical productions, government job fairs and family shows. ! Odeum Expo Center, opened in 1981, is a convention center located in Villa Park. The convention center has two exhibit halls with more than 41,000 square feet of exhibit space. The South Hall is used as an arena for indoor soccer and football with 2,500 seats for these events. The venue can seat up to 5,200 for boxing, MMA, wrestling and concerts. The Odeum Expo Center, owned by Phil Greco and operated by Brad Walsh, is currently home to the Chicago Blitz indoor football team of the AIF.

Implications

The regional competitive supply of sports and entertainment venues features a variety of arenas and performance venues. While there is a significant competition, analysis suggests that there is a void of facilities, specifically in the 3,500 to 5,000 capacity range, located between Chicago and Milwaukee. A downtown Racine arena will likely not compete with the major metropolitan markets for popular touring shows. Racine’s strongest competition will come from smaller venues in Rockford, Waukegan, Hoffman Estates, and potentially some smaller theaters in Milwaukee.

Potential Tenants and Event Demand

Minor League Sports

As previously stated, many event and arena facilities have professional and amateur sports tenants. This section discusses the two most likely tenants.

A USHL hockey team is expected to be a very likely tenant of a downtown Racine arena. The other potential tenant is an NBA-D League team affiliated with the Milwaukee Bucks. However, this is expected to be less likely than a hockey team but still a viable opportunity. The NBA-D League team will be assumed as a tenant in once scenario as part of this analysis.

USHL

The USHL, founded in 1947 and headquartered in Chicago, is the top junior level ice hockey league in the United States with 17 teams in eight states throughout the Midwest. The league is for players 20 years and younger and is strictly an amateur league, allowing all participants to be eligible for NCAA college hockey. The USHL season consists of 60 games, which typically begin in October and end in April.

The following figure shows a map of the USHL teams.

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Figure 3-10

As shown, USHL teams are currently in the Midwest with the highest concentration in Iowa and Nebraska. The 18th team of the league is currently dormant in Indianapolis. The USHL consists of the Eastern and Western Conferences.

The following table summarizes the USHL teams by conference their respective home arenas.

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Table 3-7 USHL Teams Team Founded Arena Capacity Location Eastern Conference Bloomington Thunder 2014 U.S. Cellular Coliseum 7,000 Bloomington, Illinois Cedar Rapids RoughRiders 1999 Cedar Rapids Ice Arena 4,000 Cedar Rapids, Iowa Chicago Steel 2000 Fox Valley Ice Arena 2,800 Geneva, Illinois Dubuque Fighting Saints 2010 Mystique Ice Center 3,079 Dubuque, Iowa Green Bay Gamblers 1994 Resch Center 8,709 Green Bay, Wisconsin Madison Capitols 2014 Alliant Energy Center 10,321 Madison, Wisconsin Muskegon Lumberjacks 2010 L. C. Walker Arena 5,100 Muskegon, Michigan USA Hockey National Team Dev. Program 1996 USA Hockey Arena 3,504 Plymouth, Michigan Youngstown Phantoms 2003 Covelli Centre 5,717 Youngstown, Ohio Western Conference Des Moines Buccaneers 1980 Buccaneer Arena 3,408 Urbandale, Iowa Fargo Force 2008 Scheels Arena 4,000 Fargo, North Dakota Lincoln Stars 1996 Ice Box 5,010 Lincoln, Nebraska Omaha Lancers 1986 Ralston Arena 4,000 Ralston, Nebraska Sioux City Musketeers 1972 Gateway Arena 9,500 Sioux City, Iowa Sioux Falls Stampede 1999 Denny Sanford PREMIER Center 10,678 Sioux Falls, South Dakota Tri-City Storm 2000 Viaero Event Center 4,047 Kearney, Nebraska Waterloo Black Hawks 1962 Young Arena 3,500 Waterloo, Iowa

Source: USHL, Hunden Strategic Partners

As the table shows, the teams in the Eastern Conference of the USHL are in Illinois, eastern Iowa, Ohio, Michigan and Wisconsin. The average capacity for the nine venues in this conference is 5,581. As the table shows the teams in the Western Conference of the USHL are in Iowa, Nebraska, North Dakota and South Dakota. The average capacity for the eight arenas in this conference is 5,518. These markets and arenas are analyzed in greater detail in Chapter 5 of this report.

USHL teams pay for all uniforms and equipment and players live with local families, who receive a small stipend for food expenses, and either continue school or work part-time jobs. Due to their schedules, more than 90 percent of games are on weekends, which many NHL and college scouts attend. Average attendance at regular season games for the 2014–15 season was 2,715 with 1,384,820 fans attending games during the season.

NBA – D League

The NBA D-League is the National Basketball Association's minor league basketball organization. The D- League started with eight teams in the fall of 2001. In March 2005, started to develop into a true minor league farm system, with each NBA D-League team affiliated with one or more NBA teams. At the conclusion of the 2013–14 NBA season, 33 percent of NBA players had spent time in the NBA D-League, up from 23 percent in 2011. There are currently 22 teams in the league and all are affiliated with an NBA team. There are eight teams that currently do not have a D-League team: Atlanta, Denver, L.A. Clippers, Milwaukee, Minnesota, New Orleans, Portland and Washington

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Some data points to note for the league generally and when an NBA D-League team shares an arena with a more popular hockey team can include: ! The basketball team’s home games would be likely held on Tuesdays, Thursday, Fridays, Saturdays, and Sundays, although the team could struggle to get prime weekend dates if hockey has preference. ! Teams can average lower attendance than hockey generally, although it varies. ! NBA D-League teams typically prefer a 3,000- to 5,000-seat venue. That is the direction the D- League is heading. Most D-League teams are in smaller, newer arenas. ! A facility’s ability to broadcast games is very important.

As previously mentioned, HSP assumed a D-League team as a tenant of the downtown Racine arena for the analysis.

Independent Producers/Private Management

In conversations with independent show producers and private arena managers, it was stated that a new smaller arena downtown could attract more concerts and events than those that are held in the market today. There are a number of “circuits” or event types that tour the country in smaller arenas. Such arenas are the fastest growing type of venue and tours are specifically designed for these, both physically and financially.

Independent promoters indicated the following about the market opportunity in Racine during conversations: ! Advertising on local radio and TV is a key component for any promoter. ! Any hockey-focused arena must be designed with concerts in mind to avoid issues. Many hockey arenas present challenges. ! A new arena will enjoy a honeymoon phase the first few years following development. It is important that the venue establishes a good reputation and performs well during this time. ! A 3,500- to 5,000-capacity venue is lacking in the market, and represents an opportunity. ! A small- to mid-size arena in Racine will likely attract country shows and older rock acts. ! Racine will not compete for larger acts that want to be in Chicago. ! An established management company with previous relationships with promoters is a necessity for this type of development. ! Establishing relationships and a sense of comfort with promoters throughout the first few years is key to the success of the venue.

Stakeholder Interviews

HSP reached out to various key stakeholders in the local community to not only better understand the current market situation and opportunity in downtown Racine, but also to gauge the interests in sponsorships and premium seating from local businesses. The following table summarizes the local stakeholders that HSP interviewed.

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Table 3-8 Racine Stakeholder Conversations Name Organization Amanda Gain Racine Civic Centre Amy Connolly Director, Department of City Development Brad Jaeck Photographic Design Carol Hansen Photographic Design Craig Leipold Owner Minnesota Wild Dave Blank President/CEO Real Racine Doug Nicholson Bar/Restaurant owner George Whitaker CNHI America Jenny Trick Racine County Economic Development Jerry Franke WISPARK Jim Ladwig RAMAC Joel Beck Robert W Baird Jonathan Delagrave County of Racine Executive Kelly Semrau VP Global Affairs - SC Johnson Mayor Dickert Mayor of Racine Megan Bednar VenuWorks Steve Peters VenuWorks Tad Ballantyne Property Owner/Developer Tom Burke Modine Tom Conran Greenwood Hospitality Group

Source: Hunden Strategic Partners

Conversations with these stakeholders indicated that the there is a general level of excitement and optimism about the prospect of an arena development in downtown Racine. Racine needs and anchor and attraction downtown, and an arena development will allow Racine to take the next step as a city and destination, according to conversations. Currently, outside of First Friday and a few festivals and parades, there is little activity in downtown Racine that attracts community members and generates activity. The marina is a scenic area that is viewed as a great asset locally, and a new arena development located near the water and marina will only enhance the offerings of downtown. Many of the larger local companies would like to hold their larger annual events in Racine, and there was interest in utilizing this facility for those events. Stakeholders view this project as a magnet to surrounding businesses and development downtown, and an entertainment venue is the best way to achieve that goal. There is great energy and support in the community for an economic catalyst, and this Project is viewed as the development to jumpstart the transition.

While feedback from local stakeholders was generally positive, there were a variety of questions and concerns regarding an arena development in downtown Racine. Nearly every conversation included comments about access and parking issues as potential challenges to a downtown event venue. Other stakeholders are concerned about the financing of the venue, and don’t wish to see a tax increase. Stakeholders believe that, in order for this to be successful, strong leadership and a defined vision are necessary. In addition, as has been

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discussed, there are a variety of sports and entertainment options within the region, and a few stakeholders indicated that they wouldn’t be interested in a USHL game when there are NBA and NHL venues within driving distance of Racine. Others indicated that the primary focus of downtown Racine should be attracting new businesses and understand a new downtown arena can be a catalytic development that helps to create an environment that can attract business downtown.

From a premium seating and sponsorship standpoint, the majority of stakeholders from the business community expressed interest and desire in participating in whatever way they can. There was a consistent message of support and willingness to get involved from local businesses, as many viewed the opportunity as a worthwhile investment.

Conclusion

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TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

SPORTS AND ENTERTAINMENT INDUSTRY ANALYSIS & TRENDS

The Arena Industry in the United States

The nationwide trend to build new sports and entertainment facilities in recent years has impacted markets large and small. The majority of large metropolitan areas with major professional sports franchises have opened new arenas in the last ten to 15 years and even small markets with minor-league sports teams have done the same.

In addition to hosting sports events, the venues are also typically multipurpose facilities that can accommodate events such as concerts, family shows and other community-oriented events. Depending on a facility’s orientation and a market’s needs, it can also be used for events such as meetings, conventions and trade and consumer shows. The advent of amenities such as luxury suites, club seating, private restaurant areas and others have created new, potentially lucrative revenue streams for facility owners, although these are not always present in facilities – especially if there is not anchor sports tenant. In addition, naming rights and expanded sponsorship programs have also significantly increased opportunities for facility-based revenues.

These facilities have often been developed in markets or near markets with larger existing arenas. There are a number of mid-sized markets with multiple arenas of varying sizes that focus on different market opportunities. Some of these include Boise, Idaho; Omaha, Nebraska; the Tri-Cities in Nebraska; Albuquerque, New Mexico; and three facilities in Maine/New Hampshire. Many others, however, are located in smaller markets that are the largest economic center in a larger geographic region, such as Racine.

In order for a facility to have the ability to generate these revenue streams, it is sometimes helpful, but not always, for it to have one or more full-time tenants, such as a college or a professional sports franchise. A profession/amateur basketball or hockey team, for example, provides a facility with approximately 30 to 40 or more guaranteed event dates. A men’s or women’s collegiate basketball program will generally play approximately 15 to 20 home games per season and a volleyball program can add another 10 to 15 home matches. In addition, the revenues generated from premium seating, luxury suites, naming rights and other sponsorships are heavily dependent on the existence of one or more sports tenants. These sporting events allow customers and advertising partners with regular access to a venue and a schedule of annually repeating, relatively high-profile events for entertaining clients and friends, rewarding employees and

Downtown Racine Arena Market and Feasibility Study Chapter 4 - Page 2 maintaining a strong local presence. Facilities without an anchor tenant can generate similar revenue streams, but not to the extent of a facility with an anchor tenant.

Because of the availability of these new revenues, facilities can now be partially financed through project- based revenues such as naming rights and long-term commitments for premium seating and/or sponsorships rather than purely through general obligation bonds, municipal property tax revenue or outside sources of university revenues or borrowing. However, these revenues are often not sufficient to entirely finance and operate a project such as an arena. As a result, facility development typically still involves other forms of private investment or contributions and public assistance, such as land contributions, dedicated tax revenue or fees, property tax abatement, individual and corporate giving, or others.

This section describes relevant aspects of the arena industry as they relate to the Racine market, including a review of recent and planned arena construction, discussion of event types and their characteristics and others. Many university arenas are not used for non-university events, therefore both university and non- university facilities are discussed.

Recent and Planned Arena Development in the U.S.

The following table summarizes a sample of smaller arena projects (defined as having 10,000 or fewer seats) that have opened since 2003. Other projects have been built or are in various stages of planning, but this table lists a representative set of facilities that have been completed. This table will begin to demonstrate the size and type of facilities that are being built, as well as the markets that are expected to support them, their tenants and their offerings.

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Table 4-1 New Arenas Since 2003 with Less Than 10,000-seat Capacity 2010 MSA # of # of Annual Total Estimated Opened/ # of Club Term Facility Name MSA Population Tenant(s) Permanent Luxury Naming Naming Cost Expected Seats (Years) (000s) Seats Suites Rights rights (millions) Opening

Pro Sports/Municipal Use Allentown Arena Allentown, PA 816.0 AHL 8,500 36 986 ------$272.0 2014

Cross Insurance Center Bangor, ME 153.9 None 8,078 12 n/a $200,000 15 $3,000,000 $65.0 2013

Cedar Park Center Austin, TX 1,783.5 AHL, NBADL 6,660 22 541 ------2009

Seattle-Tacoma-Bellevue, ShoWare Center 3,309.0 WHL, WFTDA 7,500 20 500 $317,500 10 $3,175,000 $68.0 2009 WA Huntington Center Toledo, OH 651.0 ECHL 8,000 20 n/a $300,000 7 $2,100,000 $105.0 2009

Town Toyota Center Wenatchee, WA 110.0 NAHL,IFL 5,000 26 397 $200,000 5 $1,000,000 $45.0 2008

US Cellular Arena Bloomington-Normal, IL 158.0 MISL 7,000 24 700 $345,000 6 $2,070,000 $37.0 2006

Denver-Boulder-Greeley, Not 1stBANK Center 3,090.0 None 6,000 25 900 -- 5 $45.0 2006 CO Disclosed Santa Ana Star Center Albuquerque, NM 887.0 NAHL, IFL 6,500 26 500 $500,000 5 $2,500,000 $43.0 2006

Tim's Toyota Center Prescott, AZ 211.0 CHL, AIF 5,100 20 500 $175,000 10 $1,750,000 $24.0 2006

Stockton Events Center Stockton-Lodi, CA 649.0 ECHL, AIF 10,000 24 500 ------$45.0 2005

Covelli Centre Youngstown-Warren, OH 565.0 USHL, WFTDA 5,700 24 500 $120,000 3 $360,000 $41.0 2005

Texas A&M-CC, Not American Bank Center Corpus Christi, TX 428.0 6,000 11 302 -- 10 $50.0 2004 NAHL, LSFL Disclosed Fort Collins - Loveland, Budweiser Events Center 299.0 ECHL, IFL 5,211 24 777 $75,000 20 $1,500,000 $25.0 2003 CO Comcast Arena at Everett Events Seattle - Tacoma - 3,168.0 WHL, NLL, RDCL 8,250 20 750 $740,000 10 $7,400,000 $63.0 2003 Center Bellevue, WA McAllen - Edinburg - CHL, D-League, State Farm Arena 774.0 5,500 25 500 $200,000 5 $1,000,000 $20.0 2003 Mission, TX LSFL ECHL,WCC, WAC, Orleans Arena Las Vegas - Paradise, NV 1,649.0 7,000 22 220 ------$150.0 * 2003 LFL, PASL-Pro Beaumont - Port Arthur, Ford Arena 383.0 ABA 8,200 15 750 $250,000 5 $1,250,000 $70.0 2003 TX Tyson Events Center Sioux City, IA-NE 143.0 USHL, APFL 10,000 27 0 $200,000 20 $4,000,000 $28.1 2003

Average 1,012.0 7,063 22 548 $278,654 9 $2,392,692 $66.5 2006

College-Led Arenas Univ. of South University of South Dakota Vermillion, SD 10.5 6,000 ------$48.9 2016 Dakota Baltimore-Columbia- SECU Arena 2,710.5 Towson University 5,200 4 340 ------$62.0 2013 Towson MD Trojan Arena Troy, AL 18.0 Troy 5,200 7 0 ------$40.0 2012

Dallas-Fort Worth- Univ. Texas - College Park Center at UTA 6,526.5 5,000 3 1,000 ------$79.0 2012 Arlington, TX Arlington Xavier Univ. of Xavier Univ. of Louisiana Arena New Orleans, LA 1,024.6 5,000 0 0 ------$24.0 2012 Louisiana South Bend-Mishawaka, Major Compton Family Center 318.0 Univ. of Notre Dame 5,141 4 250 -- -- $48.0 2011 IN-MI Gift Bowling Green State Major Stroh Center Toledo, OH 650.0 5,000 8 500 $7,700,000 $7,700,000 $26.0 2011 Univ. Gift Phoenix-Mesa- Grand Canyon University Arena 4,192.8 Grand Canyon Univ. 5,000 yes yes ------$38.0 2011 Scottsdale, AZ Auburn Arena Albany, GA 164.0 Aurburn 9,600 12 450 ------$92.5 2010

Major O'Reilly Family Event Center Springfield, MO 436.0 Drury Univ. 4,000 yes 0 $6,000,000 $6,000,000 $12.0 2009 Gift Cincinnati-Middletown, Bank of Kentucky Arena 2,134.0 Northern KY Univ. 9,000 12 0 -- -- $6,000,000 $64.0 2008 OH-KY-IN Charleston-North TD Arena 664.0 Coll. of Charleston 5,000 0 0 $100,000 6 $600,000 $36.0 2008 Charleston, SC Univ. of Northern Major McLeod Center Waterloo-Cedar Falls, IA 163.0 7,000 0 0 $4,000,000 $4,000,000 $20.0 2006 Iowa Gift Major McCarthey Athletic Center Spokane, WA 471.0 Gonzaga 6,000 0 0 -- -- $25.0 2004 Gift Miami-Fort Lauderdale- Not BankUnited Center 5,413.0 Univ. of Miami 7,000 25 0 -- 10 $48.0 2003 Pompano Beach, FL Disclosed Average 1,659.7 5,943 6 195 $4,450,000 8 $4,860,000 $44.2 2010

* Includes hotel and casino. Source: US Census Bureau, Venues Today, Revenues from Sports Venues, Individual Facilities

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As the table shows, markets of various sizes have built sports and entertainment facilities. The arenas shown in the table range in size from 4,000 to 10,000 seats and most have premium seating and suites. These facilities demonstrate what each market feels are an appropriate venue, given its market characteristics. All but the 1stBANK Center in Colorado have at least one sports tenant, including collegiate and minor league teams. The number of suites averages 22 and the number of club seats averages 548 for non-collegiate facilities. Naming rights revenue per year averaged nearly $300,000. Naming rights for collegiate venues are often a one-time gift provided upfront by a donor tied to the university.

A new arena in Racine is likely, however not guaranteed, to be the home of a USHL team. A hockey team in the arena guarantees usage during the months of October through April. In a typical year 30 home games will be played throughout the year, which drives demand for the arena while also keeping it available to be used for other events throughout the rest of the year and during off-days in the season.

Concert and Event Trends

Concerts can be a major source of revenue for an arena. Arenas today are often designed and operated as much as music venues as sports venues.

Because of recent consolidation in the music industry, a few large event promoters generally control the concert industry and the availability of acts. As a result, it is wise for management of an independent arena to explore forming a strong alliance with at least one key promoter, depending on the local/regional competitive landscape. This type of arrangement would not have to be exclusive and the arena would be able to contract with all interested promoters. Further, the facility itself could also promote, or co-promote with another organization, certain events (by taking on some of the risk and funding some upfront expenses in exchange for a higher share of event revenues) to keep a vibrant calendar going.

The following table shows the revenue breakdown for the concert and music promotion industry.

Table 4-2 Concert & Event Promotion Industry - Products & Services Segmentation Event Type Percentage of Industry Revenue Industry Revenue (millions) Live Music Concerts 58.1% $13,305 Theater and Opera Performances 15.6% $3,572 Non-franchise Sporting Events 14.6% $3,343 Fairs, Pageants, Ethnic Festivals, Other 8.6% $1,969 Symphony and Classical Music Concerts 1.7% $389 Dance Performances 1.0% $229 Public Appearances and Speeches 0.4% $92 Total 100% $22,900

Source: IBISWorld

As shown, live music concerts are the largest touring segment in the industry. Live music concerts are responsible for $13.3 billion, nearly 60 percent of the industry’s total revenue. Theater and opera performances and non-franchise sporting events that are growing segments are responsible for $3.6 billion and $3.3 billion in industry revenue, respectively.

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! Live music concerts - The Concert and Event Promotion industry promotes different events, including dance performances, sporting events and concerts. Live music concerts generate the majority of industry revenue: an estimated 58.1 percent. Events in this segment include live music performances at clubs, music theaters, arenas and amphitheaters, as well as local and regional music festivals. Events can range in size from an attendance of fewer than 500 people to more than 100,000. As a proportion of industry revenue, this industry segment has experienced slight increases during the five years. The number and popularity of club and theater-level concerts has risen in line with consumers' increasing use of the Internet as a tool for music discovery. ! Non-franchise sporting events – Non-franchise sports, such as boxing matches and rodeos, are estimated to bring in about 14.6 percent of industry revenue in 2012. Sporting events tend to be less price-sensitive than arts related events. Moreover, sporting teams can perform using the same equipment at every show (e.g. an ice hockey rink or basketball court), which also lowers the cost of staging a performance. ! Theatrical performances - Theatrical performances, such as plays, musicals and operas, account for an estimated 15.6 percent of industry revenue. Demand for this segment has declined slightly over the past five years due to declines in gifts, donations and grants supporting performing arts. Other events include state fairs, agricultural fairs, pageants and all other festivals and events that are not related to sports or performing arts.

Typically, to initiate live entertainment events or tours, booking agents directly contract with performers to represent them for defined periods. Booking agents then contact promoters, who will contract with them or directly with performers to arrange events and tours. Booking agents generally receive fixed or percentage fees from performers for their services. Promoters earn revenue primarily from the sale of tickets, as well as percentages of revenue from concessions and ancillary services. Promoters pay the performers under one of several different formulas, which may include fixed guarantees, percentages of ticket sales or the greater of guaranteed amounts or profit sharing payments based on total ticket revenue. ! Admission Fees - Nearly half of industry revenue (47.3 percent) is received from admission fees to the events promoted. As stated above, venues typically share revenue from ticket sales under a number of different formulas, including a fixed percentage of box-office receipts, profit collected over artist guarantees or through ticketing or facilities fees included in ticket prices. The proportion of industry revenue collected by promoters through ticket sales has fallen from 53.3 percent of industry revenue in 2007. This decline can be attributed to promoters expanding their revenue streams to include receipts from the sale of concessions, merchandise and ancillary services. ! Food and Beverage - Food, beverage and merchandise sales have grown as a proportion of industry revenue over the five years to 2012 to make up about 15.8 percent of industry revenue. Revenue from these operations generally has a higher profit margin than revenue from other services. Therefore, fluctuations in these revenue streams can have notable impacts on operating income. ! Advertising and Sponsorships - Advertising and corporate sponsorship deals generate about 12.7 percent of total industry revenue. Common advertising and sponsorship deals include signage and promotional programs, venue naming rights, on-site representation and the sale of online ad space. Contributions, gifts and grants also make up a significant proportion of industry revenue, particularly for establishments that operate as nonprofits. While this segment comprises

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8.2 percent of total industry revenue, the proportion is closer to 40 percent for tax-exempt establishments. For the vast majority of these contributions, $9 of every $10 comes from the private sector. Government programs, such as the National Endowment for the Arts, provide additional funding opportunities.

The industry has also been helped by the popularity of other touring events that are typically considered to be concerts, although many could also be called family shows. Other positives for the industry include the continued growth in the theater and club-level event segment and increasing per-head ancillary spending. Music theaters that typically have a capacity of between 1,000 and 6,500 people and clubs with capacities of less than 1,000 have grown increasingly popular over the past five years. Events held at these venues are considerably more affordable to attend on average than their arena and amphitheater counterparts, making them attractive to consumers who find attending larger events too expensive given the current economic conditions.

Additionally, there are more theater and club-level acts touring successfully than ever before, with the Internet helping expand the public's ability to discover new music and artists. A national tour can typically include 25 to 75 performances and most arena concerts are held from the fall to spring. In the summer, most concerts take place in amphitheaters and other outdoor venues, particularly in recent years with the growing popularity of music festivals in the U.S.

The most popular, well-established acts that once toured only large stadiums are now filling arenas and amphitheaters for multiple shows to smaller audiences. While stadium tours and limited stadium performances will continue to be staged, even groups like the Rolling Stones, Billy Joel, Elton John and U2 are also booking performances at smaller arenas and amphitheaters.

The table below shows the market segmentation for the concert and music promotion industry.

Table 4-3 2015 Concert & Event Promotion Industry - Market Segmentation Demographic Type Market Percentage Industry Revenue (millions) Men ages 21 to 45 26.4% $6,626 Women ages 21 to 45 24.3% $6,099 Women ages 46 and older 12.6% $3,163 Men ages 46 and older 12.1% $3,037 Corporations 10.0% $2,510 Men ages 20 and younger 7.5% $1,883 Women ages 20 and younger 7.1% $1,782 Total 100% $25,100

Source: IBISWorld

The Concert and Event Promotion industry targets very diverse audiences depending on the scale and type of event. Performances range from those of child entertainers, such as Disney on Ice, to classical symphonies by philharmonic orchestras that are more popular with older generations. The bulk of events (live music concerts and sporting events) target men and women aged 21 to 45. This age demographic makes up 50 percent of the target market and is responsible for more than $12 billion of industry revenue. Over the last

Downtown Racine Arena Market and Feasibility Study Chapter 4 - Page 7 decade, this segment has remained consistent because this age group is most consistently employed and thus, has the disposable income to spend on industry events. Additionally, the number of attendees older than 45 has increased slightly over the past five years as more touring artists and events have appealed to this demographic, which tends to have more disposable income and available leisure time.

Men and women between the ages of 21 and 45 account for 26.4 percent and 24.3 percent of the visitors to the average performing arts venue. Combined, this age group accounts for more than half of the industry’s market. The corporate market is primarily associated with the largest establishments in the industry, those facilities with premiums seating and entertainment areas such as stadiums and arenas.

The size of events can range from large festivals hosting upwards of 100,000 attendees to local community events with fewer than 500 attendees. Corporate support for this industry is usually in the form of purchasing premium seating, luxury suites or sponsoring events. Corporate interest is most often directed toward large sporting events, sponsorship of music concerts, tours and major arts festivals within the industry. Domestic economic conditions generally influence corporate support.

Secondary and Tertiary Markets for Concerts

Secondary and tertiary markets have demonstrated that they can sustain a robust concert business. Recent years have been excellent for secondary markets, with such top acts as Cher, the Eagles and many others playing a number of venues in smaller markets. According to industry sources, many acts are finding that they do not reach all their fans by only playing major markets. While smaller markets typically have smaller capacity facilities and are less likely to support high-ticket prices, tour managers like to add smaller-market dates to touring schedules if they offer a stopover between larger markets. Racine offers this opportunity. Instead of the road crew spending the night halfway between Milwaukee and Chicago or other Midwestern cities, they can generate revenue on that stopover with a smaller arena show. In addition, the trend to tour more, as well as the construction of new small facilities across the country, has also helped to attract concerts to small markets.

In recent years, a number of popular touring concerts performed in smaller arenas throughout the country. For the most part, these acts would not be expected to sell out a large sized arena, particularly for multiple dates, and would therefore be more likely to book a smaller arena. But in other cases, major acts have also performed in small facilities in smaller markets, as previously described. The following information provides examples of recent tours that are relevant to this discussion.

An example of a major act that can sell out 20,000-seat arenas but also plays smaller venues is the Foo Fighters. Their recent tours included NBA/NHL arenas as well as 5,000- to 10,000-seat arenas such as Wachovia Arena in Wilkes-Barre, PA; the Glens Falls (NY) Civic Center; the Mid-America Center in Council Bluffs, IA; and the Pensacola Civic Center. With ticket prices from $23 to $55, shows at the Mid-America Center and Pensacola Civic Center generated more than $300,000 in gross ticket sales.

As discussed, there are a variety of non-sports events that play in smaller arenas. The key then is to have a competitive niche within the overall regional market and a strong management company that can book strong acts.

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Family Shows

Family shows generally are not as great a revenue producer for facilities as top concerts, but they have shown notable growth in the past few years. Tickets for family shows typically cost less than concerts in order to entice families to attend. Yet what family shows may lack in revenue, they more than make up for in reliable year-round bookings, as the touring schedules are more consistent than those of concerts. Further, family shows can agree to long-term booking arrangements with a facility and commonly hold several performances over multiple consecutive days. However, like the concert industry, most of the larger family shows are controlled by a small group of companies.

The following table shows the various companies and family show productions across the country.

Table 4-4 2014 Family Events Productions Company # of US Touring Units # of US Shows Average Ticket Price AEG Themestar LLC 2 550 $15.50 Monster X Tour 1 27 $17.50 Feld Entertainment 11 5,000+ $20-$25 Harlem Globetrotters 2 278 $29.00 HIT Entertainment 4 NA $10-$39 Koba Entertainment 10 600 $25.00 NETworks Presentations 7 650 $40-$240 Dreamworks Theatricals/Broadway Across America 30+ 4,000 $89.00 S2BN Entertainment 1 NA $40.00 Stars on Ice, an IMG Production 1 50 $48.00 VEE Corporation 6 1,600 $10-$35 World Wrestling Entertainment 4 241 $42.00

Source: Venues Today, Various Organizations

In addition to the companies listed above, other organizations also produce dirt-show events, such as various types of rodeos and other events. In general, family shows are more willing to play smaller markets than are other live events such as concerts. Ringling Bros. recently introduced a one-ring event for smaller markets and facilities and the Harlem Globetrotters occasionally play in high school gyms. The events listed above typically play in a wide range of markets and facilities, including smaller markets such as Racine. For example, DreamWorks Theatricals will make stops in a number of NBA and NHL arenas, in addition to small facilities.

An additional category of events is non-university and non-tenant sporting events, similar to concerts and family shows, there is also often overlap between what can be considered a sporting event and a family show. For example, professional wrestling or a motorsports event can be categorized as either. Other sporting events that would not be considered family shows, such as a high school game or tournament, could also be held in a new arena.

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Minor League Sports

As previously stated, many event/arena facilities are home to professional sports tenants. These tenants are critical for filling the schedule on a regular basis and giving companies a reason to spend more on naming rights, premium seating and other sponsorship opportunities. This section discusses minor leagues that can be housed in small to mid-sized arenas.

The following table summarizes the characteristics of numerous minor leagues that would play in a mid-sized arena, including their average attendance and seating capacity, average market size, presence of premium seating, season, geography and availability of new or expansion franchises.

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Table 4-5

Potential Minor League Opportunities for Arenas

League Teams Capacity Range Geography League Status Regional Teams Basketball

NBA D-League 16 3,200 to 19,000 Nationwide League is expanding None

Annual expansions, ABA 77 600 to 12,800 Nationwide relocations and Denver, CO teams folding

PBL 11 1,000 to 12,000 Upper Midwest Slow Expansion None

Indoor Football

Reconstituted after AFL 17 10,500 to 23,000 Nationwide None collapse in 2009

Annual expansions, IFL 16 2,100 to 11,100 Nationwide relocations and Fort Collins, CO teams folding

Nationwide but Questionable, league AIFA 9 4,800 to 10,500 Pueblo, CO Midwest not stable

Annual expansions or APFL 8 1,000 to 8,000 Western Midwest None relocations

Annual expansions, CIFL 6 2,500 to 14,800 Primarily Midwest relocations or league None transfers Hockey

No expansion AHL 30 4,800 to 20,500 Nationwide planned; relocation None possible

Midwest and Expansion and CHL 14 4,800 to 17,000 None Southwest relocation is possible

Expansion and ECHL 20 3,900 to 13,700 Nationwide Windsor, CO relocation is possible Soccer

Mid-Atlantic and Folded but MISL 7 4.500 to 12,500 None Midwest reestablished in 2009

Annual expansions, Midwest, Southwest, Denver , CO (2), PASL-Pro 12 1,500 to 10,050 relocations or league Mexico and Canada Monument, CO transfers

Lacrosse

East, Midwest, West NLL 9 6,500 to 21,500 Recent contraction Denver, CO and Canada

Source: Revenues from Sports Venues, HSP

Basketball. Professional basketball has several minor league options. In 2002 the NBA formed its own minor league, the National Basketball Development League, or the “D-League”. The NBA Development League, the

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D-League, started with eight teams in 2002, and for the 2016-17 season the league has 22 teams. The goal of the NBA is to have a development team for each NBA franchise, however not all have an affiliation yet. The only NBA D-League team that is regionally located to Racine is the Windy City Bulls, which is an affiliate to the Chicago Bulls but serves a different market than Racine. The NBA team in Milwaukee, the Bucks, does not currently have a D-League affiliate team. The Milwaukee Bucks issued a request for proposals for interested cities to be the location of the organization’s D-League starting in the fall of 2017. There are multiple cities vying for the opportunity to be the location of the team.

Other basketball leagues include the Premier Basketball League, a new league as of the 2008-09 season, and the American Basketball Association, an existing league. The ABA currently has teams in Chicago, Indiana and Michigan however no teams are located within the regional area of Racine.

Football. Arena football is another sport that has a minor league using arenas for games. The Arena Football League (AFL) plays in larger arenas and recently folded and reconstituted. The AFL franchises play in larger arenas, with average capacity of over 17,000 seats.

Arena football has other minor leagues that are in constant state of change, developing and dissolving. Currently there are two leagues that have relative stability: the Indoor Football League (IFL), a new name for two leagues that have merged (the former Intense Football League and United Indoor Football), the American Indoor Football League, which was re-launched in 2012, and the Champions Professional Indoor Football League, which began play in 2013.

One issue that a proposed minor league indoor football program would face is the cost of development and yearly operations of the team. Each league charges a franchise fee for joining the league, but the fees vary from a low of $10,000 for the APFL to $300,000 for the IFL league. The initial startup costs, including the field turf, goalposts, nets and player equipment, would make the first year the most expensive. Yearly operations costs vary as well, with more than fifty percent of the costs going to player salaries and worker’s compensation insurance. Also included in the cost is the annual franchise fee that the league charges to pay for administrative costs. The IFL estimates that the yearly budget for its team average $420,000 per year per team. The APFL does not pay its players but provides equipment, transportation and health insurance for those who do not have it through other means. Therefore, the yearly budget for each team is much less, averaging approximately $150,000 per year.

Soccer & Lacrosse. Other possible indoor sports are indoor soccer and indoor lacrosse. The latest indoor soccer league, the Major Indoor Soccer League, folded in 2008 and reconstituted in 2009 as Professional Arena Soccer League. In March 2014, a merging of the MISL and PASL formed the MASL with 23 teams playing in its inaugural season in 2015. Of the 23 teams, three are based in Mexico.

Indoor lacrosse, primarily played in the northeast and Canada, has one professional league, the National Lacrosse League (NLL) and these are generally in larger markets. The NLL currently has nine total teams, with four based in Canada.

Based on the above discussion, Racine would definitely want to seek a minor league team as a major tenant to supplement the use of the facility. Having both a hockey and basketball tenant would be ideal, although it would pose some calendar/scheduling issues, as their seasons overlap. Several reasons exist to recruit a minor league team to the proposed Project, but the most important would be to create and maintain a

Downtown Racine Arena Market and Feasibility Study Chapter 4 - Page 12 consistent revenue stream and activity for the facility. When considering a minor league team, several factors should be considered, as follows: ! History of Stability of Leagues and Teams. If a league is stable and has teams that have existed for several years, those teams are viable and would have a better revenue stream that insures use and revenue to the facility. Except for the NBA D-League, basketball leagues and teams do not have a record of stability. Arena and indoor football has some stability, but may not have a franchise available. Other indoor football leagues have a less attractive history of stability. ! Community Interest. A major factor in determining whether to recruit a minor league team is interest in the community for that team. Without community support attendance will be low and the team would be unsuccessful.

Arena Size Requirements. Certain minor leagues have seating capacity requirements or floor area requirements that a developer must consider. Arena football requires a field area that is larger than some basketball-only arenas.

Based on the above, and other factors set forth in the description of the minor leagues, it appears that the best minor league options for a facility in Racine would be hockey (USHL) and potentially an NBA-D League basketball.

Industry Metrics

In 2010, IAVM released a benchmarking survey report that provides valuable insights into where a 5,000- to 7,500-seat venue may be positioned in relation to the industry. The survey also inquired as to the nature of facility ownership and management. Results were broken out into three different groupings based on size. This was determined by the operational differences between large, medium and small-sized arenas. The groups included facilities with over 12,000 seats, those with 7,500 to 12,000 seats and those with less than 7,500 seats.

The following table provides insights into arena operations regarding capacity, attendance and events.

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Table 4-6 Capacity, Attendance & Events at Surveyed Arenas

Less than 7,500 7,500 to 12,000 More than 12,000 All Facilities Seats Seats Seats Maximum approved occupancy capacity 12,255 6,788 10,519 18,580 Annual number of attendees (000s) 501.7 172.8 313.0 1,109.3 Number of event days 111 102 114 138 Annual number of events/clients 61 76 53 59 Nummber of fixed seats, including suites 10,083 4,773 8,437 16,933 Number of accessible seats 486 263 199 291 Number of courtside seats 247 253 122 286 Total of number of suites 31 16 13 44 Premium seating is available 59% 43% 47% 83% Standing room only is permitted 44% 52% 37% 42%

Source: IAVM Benchmarking Survery Report 2010

As shown, the proposed Racine Project would mostly compare to the smaller sized venues. Venues with seating capacities less than 7,500 averaged an annual attendance of approximately 173,000 and 76 total events, averaging roughly 2,300 visitors per event. It is important to note that, even with small seating capacities, 43 percent of arenas have premium seating adding critical revenue to the bottom line. Also of note is that a full season of a tenant team, like hockey, was considered one event in this survey. So the 76 average total events represented 76 unique events. Smaller arenas had more events on average than larger venues.

The 2013 IAVM Operating Expense and Revenues survey took place in the spring of 2014, the most recent survey to date, and consisted of 58 total arenas. These included 19 small arenas (up to 7,500 seats), 19 medium arenas (7,501 – 12,000) and 13 large arenas (over 12,000). 44 of the arenas surveyed are publicly owned and 14 are privately owned, while 26 are publicly managed and 32 are managed by a separate company or non-profit.

The following table summarizes the arenas’ gross revenue metrics per seat, attendee, and event day in 2013.

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Table 4-7 2013 Arena Gross Revenue Metrics Category Per Seat Per Attendee Per Event Day Ticket Sales & Box Office Fees $93.19 $2.38 $10,847 Total Food & Beverage $187.00 $4.02 $19,058 Merchandise/Novelty Sales $32.80 $0.76 $2,967 Event Facility Rent $80.34 $2.19 $6,165 Event Day Suite Rental $14.76 $0.29 $535 Utility Services $6.37 $0.12 $535 Advertising/Sponsors/Sponsorship Fees $45.54 $0.77 $3,339 Equipment Rental $7.65 $0.19 $637 Total Event Labor - Total $59.86 $1.35 $5,214 Event Labor - Guest Services $17.51 $0.45 $1,491 Event Labor - Security $17.13 $0.46 $1,795 Seat/Suite License Fees $79.49 $2.18 $18,608 Maintenance/Facility Fees $24.16 $0.65 $2,375

Source: IAVM

As the table shows, the primary revenue generator for these arenas is food and beverage, followed by ticket sales, event facility rentals and seat and suite license fees.

Implications

Arena and multipurpose event center development for mid-sized metropolitan markets and suburban areas of major markets have been increasing in the last decade for a variety of reasons. Smaller venues provide an opportunity to host the size of events that make financial sense for many market sizes, including performing arts, concerts, family shows and community events, not to mention trade shows and conventions. Many of these events that tour the U.S. have few opportunities to perform in small- to mid-sized venues (2,500 – 10,000 seats) between Milwaukee and Chicago. Producers of these events can often make more money in a smaller venue than a larger one as rental and other deal components are more favorable. Also, acts and teams like to play in facilities that are similar in size to the audience. Most performers or teams do not like to play within a large facility that is only partially filled.

More content (events, performing acts, etc.) has been developed to tour these smaller venues. Racine should be able to host a number of concerts, family shows and other events and should be able to induce new events to the market and accommodate other events that currently are not being optimally accommodated at other venues currently.

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TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

CASE STUDIES AND COMPARABLE MARKET METRICS

Comparable Arenas

The purpose of investigating comparable facilities is two-fold. It is important to understand if and how such facilities have performed in similar markets and what implications their performance or physical program should have on what is recommended in Racine. Also, investigating their demand history (attendance, event types and number of events) as well as specific line item revenue and expense detail provides a top-down and bottom-up approach to understanding how a similar facility could perform in Racine.

HSP has reviewed a number of facilities and discusses them as well as implications below.

Table 5-1

Comparable Arena Summary

Seating Capacity Year Cost (millions, Facility Location MSA Population Basketball Ice Events Concert Opened/Renovated 2016 dollars) Suites Club Seats Main Tenants Silverstein Eye Centers Arena Independence, MO** 2,087,471 -- 5,800 7,000 2009 $66.2 29 -- ECHL Budweiser Events Center Loveland, CO 270,382 5,400 5,350 7,200 2003 $36.0 25 776 ECHL, IFL General Motors Centre Oshawa, Ontario 356,177 -- 5,180 7,300 2006 $52.3 27 530 OHL, CLax Sanford Center Bemidji, MN 45,672 -- 4,700 -- 2010 $38.5 25 -- NCAA, IFL United Wireless Arena Dodge City, KS 34,536 5,300 4,373 5,300 2011 $42.2 13 -- CPIFL Ralston Arena Ralston, NE* 915,312 4,600 4,000 4,356 2012 $37.9 14 177 USHL, CPIFL Cedar Rapids Ice Arena Cedar Rapids, IA 266,040 -- 4,000 -- 2000 $9.2 14 -- USHL Average -- 567,941 5,100 4,772 6,231 2007 $40.3 21 494 --

*Omaha-Council Bluffs Metro Area **Kansas City Metro Area Source: Various Facilities, Pollstar, U.S. Census Bureau, Hunden Strategic Partners

The comparable facilities were chosen based on the facility size, design, local area demographics and year of original construction or major renovations. The cities where the facilities are located are cities with MSA populations between 34,000 and more than two million people. The facilities were all built or renovated in the past 16 years and have hockey capacities ranging from 4,000 to 5,800.

Three facilities are able to accommodate more than 7,000 people for concerts. The Silverstein Eye Centers Arena in Independence, Missouri has the largest capacity for ice events. Some facilities also host basketball events as well. The average cost of the venues, adjusted for inflation, was approximately $40 million.

Silverstein Eye Centers Arena – Independence, MO

The city-owned and managed $66.2 million arena was opened in 2009 in Independence, Missouri. The arena was built utilizing Community Improvement District bonds from taxes collected from local businesses surrounding the heavily-traveled intersection of Interstate 70 and 470, US 40, and Missouri Highway 291 in the heart of the eastern metropolitan area. The Silverstein Eye Centers Arena totals 131,972 square feet, and

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 2 is a multi-purpose facility with a 75,000-square foot arena bowl with 5,800 fixed seats, 29 luxury suites, a bar/grill and the Centerpoint Community Ice Rink.

The following figure shows the arena during a Missouri Mavericks game.

Figure 5-1

The following figure shows the exterior of the arena.

Figure 5-2

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There is free parking for 2,000 cars on the south side of the property. Sound and lighting features are built to current professional sporting facility standards, including a 360-degree LED ribbon board and two Daktronics video boards. The facility offers an NBA/NCAA regulation basketball court, four locker rooms, three-star dressing rooms, 2,500 padded movable seats, 500 VIP premium floor seats, a premium lounge with the club and suite seating, six full-service concession stands, and seven box office windows. The total seating can surpass 7,000 for concerts.

The following table summarizes Silverstein Arena’s 2014 events.

Table 5-2

Silverstein Eye Centers Arena Event Analysis - 2014 Event Type Event Total Percent Total Hockey 41 49% Other 17 20% Indoor Soccer 14 17% Graduation 7 8% Concert 5 6% Total 84 100%

Source: Silverstein Eye Centers Arena

The venue’s total turnstile last year was 321,000, of which 200,000 had paid. Family ice shows at the Arena had the highest average attendance, more than 6,300 spectators per game, followed by high school sporting events and hockey games.

Although the vast majority of events currently consist of Mavericks and Comets home games, other events include concerts, particularly by up and coming youth-oriented country and Christian performing artists such as Chris Tomlin and Brantley Gilbert. Other shows and concerts have included Curious George, Celtic Woman, Goo Goo Dolls, and Larry the Cable Guy. In addition, the arena hosts numerous graduation ceremonies at the high school and college levels. The secondary ice rink in a connected building wing is home to the Centerpoint Community Ice Rink, and is open every day in two-hour sessions for public ice- skating, which is particularly popular during the day and evenings on Friday and Saturdays.

The arena is managed privately through the in-house Independence Center Management Corporation and General Manager Mike Young, who has previously managed Kemper Arena in Kansas City. Prior to November 2011, Global Entertainment managed the facility. The primary tenants of the one-level arena are the ECHL Missouri Mavericks and the Major Indoor Soccer League (MISL) Missouri Comets. The Missouri Mavericks average the highest attendance in the ten-team Central Hockey League at 5,552 attendees per game, over the course of a 33-game home season, for a total of over 183,000 attendees before joining the ECHL as an expansion team in the 2014-2015 season. In the 2015-2016 season, the Mavericks averaged approximately 5,154 attendees per game, ranking sixth in the league.

The MASL franchise, the Missouri Comets, average 4,291 attendees per game over the course of a 13-home- game season, and rank near the top in the league for attendance. Ticket pricing ranges from $15 to $45, with most tickets costing $15, $18, or $22.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 4

The table shows the Independence Events Center’s 2013 Budget.

Table 5-3

Silverstein Eye Centers Arena 2013 Operating Budget Item 2013 Rental Income Gross Ticket Revenue $836,592 Facility Rental Revenue $608,382 Sponsorship Revenue Other Event Revenue $204,827 Event Charges ($1,882,375) Net Service Income Facility Income Suite Ticket Revenue $28,210 Suite Rental Revenue $21,627 Facility Fee Revenue $274,636 Ticket Conv/Fee Revenue $18,674 Ancillary Income Ice Rental & Public Skate $981,182 Food & Beverage $1,852,251 Catering/Suites Novelty $19,708 Parking Other Income City Capital Reserve Fee $112,189 Premium Seat Income $452,297 Marketing Revenue $363,464 Sponsorship/Advertising - Trade Misc. Income $21,449 Total Operating Income $3,913,113 Opeerating Expenses Indirect Expenses Personnell $1,413,713 Team $318,276 Sales Expense $26,000 Food & Beverage $496,962 Operations Event Services $298,404 Premium Services Overhead $1,564,973 Other Expenses Suite Commissions $19,264 Advertising Commissions $18,712 Sponsors Fulfillment Expense $495 Total Operating Expenses $4,156,799

Net Operating Income (Loss) ($243,686)

Source: Spectra, Hunden Strategic Partners

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As the table shows, the Silverstein Eye Centers Arena experienced a net loss of more than $243,000 in 2013. The venue generated nearly $3.9 million in operating income last year, including $1.8 million from food and beverage, $450,000 from premium seating, and $363,000 from marketing. Overhead was the largest operating expense at $1.5 million, followed by personnel and food and beverage. The facility experienced a net loss of more than $232,000 in rental income due to the $1.9 million in event charges.

Location relative to Downtown. Independence is a suburb included in the Kansas City metropolitan area. The site is located approximately nine freeway miles east of Arrowhead Stadium, home of the Kansas City Chiefs, and Kauffman Stadium, home of the Kansas City Royals. The intersection surrounding the Silverstein Eye Centers Arena is a popular hotel destination for ticketholders of Royals and Chiefs games.

Figure 5-3

The location of the arena relative to the intersection can be seen above. Although the facility is not downtown, the immediate area includes the over 1,000,000-square foot super-regional shopping mall, several big box-

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 6 styled shopping centers, a Bass Pro Shop Outdoor World, Costco, Sam’s Club, AMC Theaters, and multiple hotels and chain restaurants.

Kansas City’s Sprint Center arena, seating over 18,000 in the center of the metropolitan area, books the city’s biggest events and shows within 200 miles. However, with high rental and user fees, the entire metropolitan area benefits from having a first-rate professional mid-sized arena with a more flexible schedule and reasonable rental fees in the Silverstein Eye Centers Arena, near a population base that is likely to use it more often than a downtown arena such as Kemper Arena or Municipal Auditorium.

Both the Sprint Center and the Silverstein Eye Centers Arena indoor arenas cater to different audiences and community needs. While the Sprint Center offers major sporting events such as NCAA basketball tournament events and high-dollar shows and concerts (surrounded by the new Power and Light entertainment district) in downtown Kansas City, Silverstein Eye Centers Arena offers a convenient location at a major highway crossroads within an easy 30-minute drive of over 600,000 suburban residents on the Missouri side of the metro area. With free parking and lower-priced events, the arena is highly accessible and affordable, hosting non-major-league professional sports and community events, and has carved a niche within the regional market.

Budweiser Events Center – Loveland, Colorado

The Budweiser Events Center is a 7,200 seat multipurpose arena in Loveland, Colorado. Owned by Larimer County and operated by Spectra, the arena is the home of the Colorado Eagles Hockey Team, the Colorado Ice Indoor Football Team, and the Colorado Lightning Indoor Soccer Team. The venue offers 777 club seats and 24 luxury suites.

Figure 5-4

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 7

Constructed in 2003 at a cost of $28 million, the arena has hosted musical acts including David Bowie, Rod Stewart and ZZ Top, as well as comedian Larry the Cable Guy. The arena also hosts performances such as Ringling Bros Barnum & Bailey Circus, the Wiggles and Sesame Street Live.

Located an hour from Denver and Cheyenne, The Budweiser Events Center is part of a larger 374,000- square foot fairground complex called the Ranch which is the official name of the new Larimer County Fairgrounds and Events Complex. Phase 1 of the project includes six buildings and roughly 150 acres of site work. The Ranch includes the Ranch-Way Feeds Indoor arena, two livestock pavilions, the First National Bank Exhibition Building, and the Thomas M. McKee Building. The Budweiser Events Center and Ranch has become a sports, entertainment and agricultural hub.

The Budweiser Events Center is located 45 minutes north of the 1stBank Center in Broomfield, Colorado. Both venues attract the types of events that the Denver Pepsi Center is unwilling or unable to accommodate. Home of the Denver Roller Dolls and former home of the Rocky Mountain Rage, the 1stBank Center seats up to 7,500 patrons and typically hosts mid-sized concerts and family shows.

The following table shows the breakdown of events at the facility from March of 2014 through February of 2015.

Table 5-4 Budweiser Event Center Event Analysis - March 2014 - February 2015 Event Type Event Count Athletic 67 Show 9 Concert 8 Graduation 7 Rodeo/Horse Show 5 Expo 3 Motorsports 2 Religious 1 Total 102

Source: Budweiser Event Center

As the table shows, the Budweiser Events Center hosted a total of 102 events in the calendar year, including 67 athletic events, nine shows, eight concerts and five rodeo and horse events. Banquets typically add 80 – 100 additional events.

For the calendar year of 2014, the Budweiser Events Center hosted 203 events in 2014, including 88 banquets, 14 family shows, 40 hockey games and 12 concerts. The Center had a total turnstile attendance of 304,000, 263,000 of which had purchased tickets. Hockey games had the highest average attendance at the Budweiser Events Center, more than 3,700 spectators per game, followed by graduations and concerts.

Location relative to Downtown. The Budweiser Events Center is not located downtown as it is part of a larger fairgrounds complex that serves multiple stakeholder groups. It is, however, located along I-25, so has strong visibility.

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The figure below shows the facility.

Figure 5-5

The usage for fairgrounds events is one key reason the facility is not located downtown and this is not necessarily uncommon. The benefit is that multiple event types and usage. The challenge is the lack of surrounding walkable restaurants and other activities. Essentially, people come and go from events without much economic activity before or after. Downtown is completely out of the equation. From a development and construction perspective, even though the location is not ideal for economic impact, it is a higher quality facility built for many event types, unlike many fairgrounds buildings that are cheaper and pre-engineered. These inhibit this types of events that can be held onsite.

General Motors Centre, Oshawa, Ontario

Opened in 2006, General Motors Centre is a $45 million, 5,180-seat arena located in Oshawa, Ontario, an exurban community located approximately 27 miles east of Toronto. The arena, owned by the City of Oshawa, includes 258 standing room only seats, 23 private suites and 4 group/party suites.

Since its opening in 2006, the arena has hosted hundreds of events including concerts, sporting events, public ice skating, family entertainment, all star games, curling, professional wrestling and community activities. Spectra provides the Arena with full-service management.

The following figure shows the exterior of General Motors Centre in Oshawa, Ontario.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 9

Figure 5-6

The Arena has served as the venue for big-name concerts and entertainment shows, including Elton John, Mötley Crüe, KISS, Cirque du Soleil, Tom Jones, Tim Allen, Alan Jackson, Disney Live, Jeff Dunham, John Mellencamp and professional wrestling.

The following figure shows the Arena set up for a hockey game.

Figure 5-7

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 10

In 2007, the General Motors Centre welcomed its first sports team tenant – The Oshawa Generals, a junior hockey team in the Ontario Hockey League (OHL). Currently, the General Motors Centre also is home to the Durham TurfDogs, a Canadian professional indoor lacrosse team, while also hosting the 2015 Pan American Games for boxing and weightlifting.

The following table shows the facility’s 2014 operating income.

Table 5-5

General Motors Centre 2014 Income Statement Item 2014 Operating Income/Expense Income Naming Rights 73,005 Exclusivity Rights 44,855 Suite Revenue 313,815 Food and Beverage Revenue 154,100 Advertising 193,471 Fulfillment Fee (New Era Tickets) 30,000 Ice Rentals 814,307 Atm Surcharge 11,389 Interest and Dividends 28,497 Ticket Order Revenues 51,743 Pro Shop Sales 981 Room Rental Revenue 7,900 Miscellaneous 34,271 Suite Ticket Revenue 64,084 Facility Fee Revenue 145,981 Ticket Conv/Fee Revenue 306,008 Concessions 874,947 Suite & Show Catering 225,722 Restaurant 325,530 Parking 32,199 Total Operating Income 3,732,805 Expense Indirect Expenses Executive 169,696 Box Office 200,399 Finance 240,745 Events 112,929 Operations 1,512,188 Marketing 57,974 Group Sales 20,558 Coporate Sales 79,374 Food and Beverage 658,620 Ice Rental 278,060 Overhead Burden 642,241 Event Expenses 44,747 Total Operating Expenses 4,017,531 Net Operating Income (Loss) (284,726)

Source: Spectra, Hunden Strategic Partners

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As the table shows, the facility experienced a net operating loss of $284,726 in 2014. The facility’s primary income generators in 2014 were ice rentals and concessions, while the major expenses were operations and food and beverage.

Location and Location within the Community. Despite being located near Toronto, the facility serves a community that is nearly separate from the Toronto market, as it is located nearly 30 miles away. The map below shows the distance and separation from Toronto.

Figure 5-8

Oshawa is located near the top center of the map and is as far to the outside of Toronto as Hamilton is to the west. There is a large area of undeveloped and non-populated area between the small city and the larger Toronto area.

The next aerial shows the location of the arena in the community.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 12

Figure 5-9

The General Motors Centre is located in the downtown area of this small city, approximately one block off of the main two streets, King and Bond Streets.

Sanford Center – Bemidji, MN

Owned by the city of Bemidji and operated by VenuWorks, the Sanford Center is a 4,700-seat multipurpose arena that opened in 2010. Located just outside of downtown Bemidji, the venue is located more than 200 miles north of Minneapolis. The $35 million facility is home to the Bemidji State Beavers of the NCAA and was the former home of the Minnesota Axemen of the Indoor Football League.

The following figure shows the Sanford Center.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 13

Figure 5-10

The arena is attached to the George W. Neilson Convention Center, which offers a 10,000-square foot ballroom and three meeting rooms. In total, the entire facility features 193,000 square feet of space. The arena features 25 suites and is the home to a variety of events including hockey games, concerts, rodeos, conventions and graduation ceremonies.

The following figure shows a hockey layout at the facility.

Figure 5-11

The following table shows the attendance breakdown for the facility in 2015.

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Table 5-6

Sanford Center - 2015 Event Summary Event Type Events Event Days Use Days Attendance Avg. Attendance Banquets 32 32 32 5,580 174 Concert 18 18 21 32,146 1,786 Broadway/Theatrical-Commercial 3 3 22 1,163 388 Family Shows 2 2 3 1,585 793 Convention 4 11 11 4,159 1,040 Meeting/Conference 86 130 130 10,241 119 Consumer Show 2 2 3 903 452 Trade Show 9 15 17 9,890 1,099 Wedding Reception 15 15 15 3,445 230 Community/Civic 105 164 164 22,621 215 Sporting 48 48 48 72,150 1,503 Recreational Sports 52 69 69 3,292 63 Internal Use 9 10 10 649 72 Total for Year 385 519 545 167,824 436

Source: Sanford Center

As is shown in the table, there were a total of 385 events in 2015. This means there were a handful of days with more than one event booked. There were more community/civic events than any other event type during the year. However, sporting events attracted 40,000 more attendees than the next highest event type. Overall, the Sanford Center had more than 160,000 attendees during 2015.

The following table summarizes the facility’s operating budget for 2015.

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Table 5-7

Sanford Center Operating Revenues & Expenses Item 2015 Income Building Rent - Arena $124,885 Building Rent - Meeting Rooms $71,519 Facility Lease $241,760 Suite Leases $17,677 In-House Equipment $43,287 Reimbursed Event Labor $342,589 Reimbursed Expenses Other $105,928 Box Office Fees $27,234 Facility Fees $120,182 Co-Promotional Revenue ($15,272) Merchandise $15,416 Reimbursed Credit Card Fees $14,520 Reimbursed Event Advertising $39,175 Ticket Rebate Revenue $54,934 Parking Revenue $162,371 Vending & Pouring Revenues $0 Interest Income $326 Signage & Sponsorships $412,683 Food & Beverage Sales $1,285,005 Total Income $3,064,219 Cost Of Goods Sold $333,908 Gross Profit $2,730,311 Expense Personnel Services $1,652,716 General & Administrative $27,110 Occupancy $502,816 Travel & Motor Vehicle $46,874 F&B Expenses $46,529 Services / Operations $417,793 Event Expenses $349,805 Cash Over / Short $2,204 Total Expense $3,045,846 Net Operating Income (Loss) ($315,535)

Source: VenuWorks

As the table shows, the Sanford Center generated a net loss of $315,535 in 2015. The facility’s total income, which was just over $3 million and was primarily generated though food and beverage sales, signage and sponsorships, in addition to reimbursed event labor. The major expense items for the arena were personnel services, operations and event expenses.

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Location relative to Downtown. The facility is not located downtown, but along the waterfront. As is shown in the figure below, there was an available site along the water in this uniquely situated community. Downtown sites were not as available.

Figure 5-12

As shown, the challenge is the lack of any easy or walkable pre- and post-event activities without driving. This is not ideal for drinking and driving and not ideal for downtown restaurants and other activities. Parking is plentiful, but the space the entire development takes up is much larger than necessary than if it had been built in an urban environment.

United Wireless Arena – Dodge City, KS

Opened in 2011, United Wireless Arena is a 5,500-seat arena located in Dodge City, Kansas, approximately 333 miles west of Kansas City. The United Wireless Arena is a multi-purpose facility within an entertainment district in Southwest Kansas, alongside the Boot Hill Casino and Hampton Inn and Suites. The arena, owned by Dodge City and Ford County, has a floor that is 16,000 square feet.

Since its opening in 2011, the arena has hosted hundreds of events including concerts, sporting events, public ice skating, family entertainment, motorsports, trade shows, rodeos, comedy tours and community activities. The Arena is also equipped with a multi room conference center. VenuWorks operates the Arena.

The following figure shows the exterior of United Wireless Arena in Dodge City.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 17

Figure 5-19

The Arena has served as the venue for big-name concerts and entertainment shows, including Miranda Lambert, Lynyrd Skynyrd, ZZ Top, Straight No Chaser, Eli Young Band, Mannheim Steamroller Christmas, Ringling Brothers and Barnum & Bailey Circus and Disney Live!

The following figure shows the arena set up for a concert.

Figure 5-20

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 18

In 2014, the United Wireless Arena welcomed its first sports team tenant – The Dodge City Law indoor football team. Their inaugural season started in February 2014 and extended through May. The Dodge City Law was honored as the CPIFL franchise of the year after their first successful season.

The United Wireless Arena also offers a 7,000-square foot conference center. The conference center space is equipped with on-site food and beverage services. It has a capacity for 450 banquet seats and 900 lecture seats, a moveable wall system built in, IT support and production/audio-visual equipment on site. The Hampton Inn and Suites in Dodge City serves as the conference center hotel.

The following table shows the operating performance of the facility.

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Table 5-9

United Wireless Arena Operating Revenues & Expenses Item 2015 Income Facility Rent Revenue $273,300 Ticket Revenue/Co-Pro Revenue $674,600 Facility Fee/Ticket Rebate $170,875 Ticket Office Revenue $4,250 Concession Revenue $299,940 Merchandise Revenue $15,800 Catering Revenue $585,150 Reimbursed Event Labor $14,400 Reimbursed Contract Labor $91,100 Reimbursed Expenses $125,800 In-House Equipment Revenue $18,200 Reimbursed Insurance Revenue $10,200 Vending Income $0 ATM Revenue $720 Contractual Income $480,438 Interest Income $60 Ice Revenue $26,000 Room Change Charge Revenue $0 Total Income $2,790,833 Cost of Goods Sold $281,573 Gross Profit $2,509,260

Expense Personnel Services $1,183,653 General & Administrative $104,740 Occupancy $641,759 Travel and Motor Vehicle $24,300 Event Expenses $900,515 Food & Beverage Expense $56,100 Services/Operations $358,193 Total Expense $3,269,260

Net Operating Income ($760,000)

Source: United Wireless Center

United Wireless Arena generated an operating loss of $760,000 in 2015. The facility’s total income, which was just under $2.8 million, was primarily generated through ticket revenue and catering/food and beverage revenue. The major expense items for the arena were personnel services and event expenses.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 20

Location relative to Downtown. This is another smaller community that developed an arena next to a casino. While there is some synergy between these demand generators, they impact would have been much bigger for the community had both been developed in the downtown area. There is simply nothing surrounding the developments that enhance the life of the community or the economy. There is nothing to support spending time and money before and after events.

Figure 5-21

Ralston Arena – Ralston, NE

Ralston Arena is a multi-purpose arena in Ralston, a suburb of Omaha. Built in 2012 for $36.8 million, it is the home for the Omaha Lancers of the USHL. In addition to the capacity of 4,000 for ice events, the arena can hold 4,600 for basketball and 4,356 for concerts. The facility, which is owned and operated by the City of Ralston, offers premium suites and loge seating in addition to general seating. The arena floor features 16,327 square feet of space, making it useful for trade shows and conventions, in addition to sports and concerts.

The following figure shows the interior of the Arena during an Omaha Lancers game.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 21

Figure 5-13

Construction on the arena broke ground in June 2011, and officially opened in October 2012 with a Rodney Atkins Concert. Since then, the arena has hosted a variety of acts including Martina McBride, Creedance Clearwater Revival, and the Kidz Bop tour. The facility also hosts a variety of local events, such as state championship sports, job fairs, and high school graduations.

The following table summarizes Ralston Arena’s 2014 events.

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Table 5-8

Ralston Arena Events October 2012 - October 2014

Event Type Event Total Percent Total USHL 66 35% Other 47 25% Summit League Men's Basketball 24 13% CPIFL 14 7% Concert 10 5% Graduation/Commencement 7 4% Omaha Rollergirls 6 3% Expo 6 3% Show 4 2% LFL 3 2% Total 187 100%

Source: Ralston Arena

As the main tenant, Omaha Lancers games accounted for 35 percent of the events hosted during the time period. The University of Nebraska – Omaha Men’s basketball team also played a significant number of games in the arena. Events listed as “Other” ranged from high-school athletics to various festivals and community functions. The Omaha Beef of the Champions Professional Indoor Football League accounted for seven percent of the events held in Ralston Arena. Non-athletic events such as concerts and graduations are also important to the venue, and accounted for a combined nine percent of all events.

Since opening in 2012, the Ralston Arena has missed performance projections and has an annual operating deficit. The coverage of annual operating deficit combined with debt service payments has required the City to consider and implement new measures to subsidize the arena. In the fall of 2015, the Mayor announced a plan to implement a 2.5 percent restaurant tax, raise property taxes by 34 percent and cut city programs to meet the arena’s $3.5 million debt payment. However, the following measures were implemented: ! The Ralston City Council voted to: ! Increase property taxes 4.3 percent ! Combined cuts of $234,900 from the city’s public safety, streets, wastewater, and culture and recreation operating budgets ! Utilize funds from the city’s keno fund ! Raise prices at the arena ! Institute a 2.5 percent restaurant tax that has a sunset clause (tax is reviewed every four years)

In addition to these short-term measures, the City is expected to ask state lawmakers for more turnback tax incentives in 2017. By expanding provisions of the state turnback incentive law would allow Ralston to collect state sales tax generated from businesses around the arena to go back to the city for the arena. The Ralston

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Arena has a 600-yard radius to capture state sales tax. The bill to extend the collection period is expected to help Ralston defray arena costs long-term.

In addition to financial struggles, the arena had been through three general managers in a year and a half. The City still believes they can turn things around, but several missteps in projections and management have made this more challenging.

Location within the Community. The arena is located approximately nine miles southeast of the downtown Omaha area and larger athletic venues including CenturyLink Center and TD Ameritrade Park. Immediately adjacent to the arena is a Holiday Inn hotel. Other commercial developments in the area include scattered dining options and a large Menard’s store. To the south, the arena is bordered by a suburban neighborhood.

The following figure shows the location of the facility.

Figure 5-14

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 24

As is shown, there are several large parking lots surrounding the arena.

Cedar Rapids Ice Arena – Cedar Rapids, IA

Opened in 2000, Cedar Rapids Ice Arena is a $9.2 million, 4,000-seat arena located in Cedar Rapids, Iowa. The arena, owned by the City of Cedar Rapids, includes 4,000 seats, 14 suites, a Bud Light Fan Cave, and a Bills Bros Balcony for group events.

The following figure shows the exterior of Cedar Rapids Ice Arena in Cedar Rapids, IA.

Figure 5-15

Since opening, the arena has hosted hundreds of events including concerts, sporting events, public ice skating, family entertainment, curling, broomball and community activities. VenuWorks manages the facility.

The following figure shows the Arena set up for a hockey game featuring the Bud Light Fan Cave.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 25

Figure 5-16

The main tenant of the Cedar Rapids Ice Arena is the Cedar Rapids Roughriders of the USHL. Seating options like the one shown prior offer fans a unique experience for viewing games. Guests can request unlimited food and drink packages, as well as special video board recognition.

The following table shows the facility’s financials from July 2014 to June 2015.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 26

Table 5-9

Cedar Rapids Ice Arena Operating Revenues & Expenses

Item 2015 Income Building Rental $83,745 Facility Fee $33,141 Concession Commissions $1,705 Merchandise $3,910 Catering Revenue $5,628 Reimbursed Wages $992 Reimbursed Outside Exp. $1,577 Equipment Rental $825 Signage/Sponsorships $10,800 Pay Lockers $240 Public Skate $68,611 Skate Rental $12,340 Learn to Skate $33,831 Adult Hockey $42,513 Youth Hockey $29,287 Private Ice $232,251 Stick Time $12,309 Pick up Hockey $1,972 Camps / Clinics $3,550 Free Style $6,051 Private Lessons $3,764 Private Parties $13,814 Event Related Revenue $164 Misc. Income $8,711 Food and Beverage Revenue $620,334 Sales Discounts ($28) Total Income $1,232,035 Cost of Goods Sold $164,009 Gross Profit $1,068,025

Expense Personnel Services $492,355 General and Admin $11,214 Occupancy $459,519 Travel & Motor Vehicle $128 Services / Operations $199,456 Sponsorship Fulfillment $23,430 Total Expense $1,186,101

Net Operating Income (Loss) ($118,076)

Source: VenuWorks

As the table shows, the Cedar Rapids Ice Arena experienced a net operating loss of $118,076 over the time period.

Location relative to Downtown. The facility is located approximately 2.5 miles southwest of the downtown area. Cedar Rapids Ice Arena is located in a cluster of athletic venues including tennis courts, as well as

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 27 stadiums for baseball and football. The arena is located in a primarily residential area. With the exception of one Bar & Grill, the arena directly impacts few businesses in the surrounding area. This location inhibits the impact the facility has on pre- and post-event spending on restaurants and other activities. It also minimized the economic and fiscal impact of the facility, as well as the utilization of shared parking. In this way, the facility serves as a host for hockey games and certain events, but does not act as an economic development tool like it would if it were located in a walkable, urban environment.

The facility’s location is shown below.

Figure 5-17

The downtown area is visible in the upper right corner of the figure. The Cedar River separates the downtown area from much of the residential developments, as well as the Arena.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 28

Implications

Communities develop arenas in many small markets and they can be successful, depending on the metrics used to measure success. Many of the facilities experienced operating losses. However, the impact of the facility on the community can be far greater.

For many communities, developing an arena is critical to keeping a team. For others, it is developed to enhance downtown. Many communities are short-sighted and often pennywise and pound-foolish when it comes to arena development. Many choose low-cost sites where massive surface parking can be developed. Yet in a downtown environment, those extra parking acres are unnecessary, as plentiful parking already exists that goes unused in the evenings.

In addition, the impact of spending in an arena is minimal if the facility is developed in a non-synergistic setting. Money spent onsite goes to the promoter, the team or the talent and then leaves town. There is very little spending before and after. Restaurants and retailers are not supported or benefited in these easy- in/easy-out environments. Truly, the benefits are few and fleeting when facilities are not developed in a downtown environment. Yet, if developed within walking distance to hotels, restaurants and retailers, these businesses are made more feasible from the consistent activity onsite and offsite. Also, if the facility is attached to a hotel, as assumed in Racine, the hotel can benefit from more, better and larger events.

MARKET METRICS

In addition to analyzing physically comparable arenas, HSP has also analyzed comparable markets that host other USHL teams. HSP analyzed these comparable markets to not only demonstrate that there are many examples of markets similar to Racine supporting the development and operations of a small- to mid-sized arena, but also to identify metrics that can be used and applied to the recommendations of capacity and premium seating options for a new downtown arena. For example, based on the number of businesses in the area, what does that imply for supportable premium seating? The following tables provide some insight.

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The following table summarizes the comparable markets, location, population characteristics and tenants.

Table 5-10

USHL Market Metrics Media Market # of Employment Arena Location Team MSA Population Population # of Firms > 500 in MSA Denny Sanford Premier Center Sioux Falls, SD Sioux Falls Stampede 248,351 675,377 496 126,439 Veterans Memorial Coliseum (Alliant Energy Center) Madison, WI Madison Capitols 866,475 940,471 871 294,596 Resch Center Green Bay, WI Green Bay Gamblers 306,241 1,114,030 503 147,819 Tyson Events Center Sioux City, IA Sioux City Musketeers 169,069 409,932 348 75,330 Covelli Center Youngstown,OH Youngstown Phantoms 565,773 764,722 674 204,749 U.S Cellular Coliseum Bloomington, IL Bloomington Thunder 190,345 639,443 398 81,655 L.C Walker Arena Muskegon, MI Muskegon Lumberjacks 1,027,703 2,023,545 262 50,553 Scheels Arena Fargo, ND Fargo Force 233,836 621,655 465 112,641 Ice Box Lincoln, NE Lincoln Stars 318,945 714,938 509 136,275 Viaero Event Center Kearney, NE Tri-City Storm 158,113 714,938 138 24,238 Cedar Rapids Ice Arena Cedar Rapids, IA Cedar Rapids RoughRiders 262,421 865,042 492 123,972 Ralston Arena Ralston, NE* Omaha Lancers 915,312 1,071,236 1,107 396,923 USA Hockey Arena Plymouth, MI** Team USA 4,302,043 4,793,062 2,136 1,584,892 Young Arena Waterloo, IA Waterloo Black Hawks 625,384 865,042 317 79,084 Buccaneer Arena Urbandale, IA Des Moines Buccaneers 611,549 1,111,418 966 286,276 Mystique Ice Center Dubuque, IA Dubuque Fighting Saints 92,384 865,042 252 52,953 Fox Valley Ice Arena Geneva, IL*** Chicago Steel 9,551,031 9,528,359 3,878 3,924,203 Average 1,202,646 1,630,485 812 453,094

Racine, WI 195,080 2,326,973 298 68,419 Actual Actual Actual Actual

*Omaha-Council Bluffs, NE-IA Metro Area **Detroit-Warren-Dearborn, MI Metro Area ***Chicago-Naperville-Elgin, IL-IN-WI Metro Area Source: U.S. Census Bureau, Various Facilities, Hunden Strategic Partners

As the table shows, Racine’s population statistics are slightly below the average of the comparable markets. However, it should be noted that some teams are located in suburbs of larger metropolitan areas such as Chicago and Detroit. The markets range in metro area size from approximately 90,000 to more than 9.5 million. The media markets are larger for all of the markets, and average approximately 1.6 million. Included in the Milwaukee media market, Racine’s reach is significantly larger than the average. Because premium seating and suites are typically purchased by local or regional companies (or large non-profits), the number of these in a community are a good metric to determine the number of premium seating opportunities that could be supported. The table shows the number of firms with over 500 employees, as well as the total employment in the metro area.

The following figure displays all current USHL market locations.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 30

Figure 5-22

As shown in the figure, the comparable USHL arena markets are located throughout the Midwest region of the United States.

The following figure shows general facility information and seating statistics for the comparable arenas.

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Table 5-11

USHL Market Metrics Basketball Hockey Concert Other Arena Location Opened Cost (millions) Capacity Capacity Capacity Suites Suite Seats Premium Seats Denny Sanford Premier Center Sioux Falls, SD 2014 $117.0 12,000 10,678 13,000 22 264 500 Veterans Memorial Coliseum (Alliant Energy Center) Madison, WI 1905 -- -- 10,231 10,231 8 96 -- Resch Center Green Bay, WI 2002 $45.0 9,729 8,709 9,729 25 400 900 Tyson Events Center Sioux City, IA 2003 $52.0 6,731 6,731 10,000 30 480 -- Covelli Center Youngstown,OH 2005 $42.0 5,900 5,717 7,000 24 240 500 U.S Cellular Coliseum Bloomington, IL 2006 $37.0 -- 5,600 8,000 24 240 700 L.C Walker Arena Muskegon, MI 1960 $2.0 6,000 5,100 6,300 8 128 75 Scheels Arena Fargo, ND 2008 $25.0 6,000 5,000 5,000 40 640 96 Ice Box Lincoln, NE 1905 -- -- 4,212 5,010 3 50 300 Viaero Event Center Kearney, NE 2000 $10.5 4,047 4,047 5,000 20 800 -- Cedar Rapids Ice Arena Cedar Rapids, IA 2000 $6.7 -- 4,000 -- 14 280 20 Ralston Arena Ralston, NE 2012 $36.8 4,600 4,000 4,356 14 228 177 USA Hockey Arena Plymouth, MI 1996 $22.0 -- 3,504 -- 4 56 688 Young Arena Waterloo, IA 1994 $4.3 3,500 3,500 3,500 ------Buccaneer Arena Urbandale, IA 1961 -- -- 3,408 -- 2 10 -- Mystique Ice Center Dubuque, IA 2010 $7.1 -- 3,079 -- 11 110 100 Fox Valley Ice Arena Geneva, IL 1997 $15.0 -- 2,800 ------Average 1987 $30.2 6,501 5,313 7,261 17 268 369

Source: Various Facilities

As indicated in the figure, the average year opened for the comparable arenas is 1986, for an average cost of approximately $30 million. The average hockey seating capacity is 5,313. The average number of suites is 17 with an average of 268 total suite seats and an average of 369 other premium seating options. Several of the arenas host additional events beyond hockey, including basketball games and concerts. Concert capacity ranges from 3,500 to 13,000.

The following table shows market metrics for the comparable arenas.

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Table 5-12

USHL Market Metrics Seats/100 Other Premium Metro Area Seats/100 Seats/100 Suites/100 Suite Seats/ Seats/ 100 Arena Location Population Media Market Employed Firms 500+ 100 Firms 500+ Firms 500 + Denny Sanford Premier Center Sioux Falls, SD 4.3 1.6 8.4 4.4 53 101 Veterans Memorial Coliseum (Alliant Energy Center) Madison, WI 1.2 1.1 3.5 0.9 11 -- Resch Center Green Bay, WI 2.8 0.8 5.9 5.0 80 179 Tyson Events Center Sioux City, IA 4.0 1.6 8.9 8.6 138 -- Covelli Center Youngstown,OH 1.0 0.7 2.8 3.6 36 74 U.S Cellular Coliseum Bloomington, IL 2.9 0.9 6.9 6.0 60 176 L.C Walker Arena Muskegon, MI 0.5 0.3 10.1 3.1 49 29 Scheels Arena Fargo, ND 2.1 0.8 4.4 8.6 138 21 Ice Box Lincoln, NE 1.3 0.6 3.1 0.6 10 59 Viaero Event Center Kearney, NE 2.6 0.6 16.7 14.5 580 -- Cedar Rapids Ice Arena Cedar Rapids, IA 1.5 0.5 3.2 2.8 57 4 Ralston Arena Ralston, NE* 0.4 0.4 1.0 1.3 21 16 USA Hockey Arena Plymouth, MI** 0.1 0.1 0.2 0.2 3 32 Young Arena Waterloo, IA 0.6 0.4 4.4 ------Buccaneer Arena Urbandale, IA 0.6 0.3 1.2 0.2 1 -- Mystique Ice Center Dubuque, IA 3.3 0.4 5.8 4.4 44 40 Fox Valley Ice Arena Geneva, IL*** <0.1 <0.1 0.1 ------Average 1.8 0.7 5.1 4.3 85.2 66.4

Racine, WI 3,362 14,965 3,488 13 254 198 Implied Implied Implied Implied Implied Implied

Based on the average seats/100 metro population of 1.8 and seats/100 employed of 5.1, the implied numbers for a new arena in Racine are shown. The table indicates that a new Racine arena could support an implied number of 3,362 seats based off the metro population and 3,488 seats based off of the employed market. This is right around the number that is currently contemplated for the facility. However, because Racine is included in the larger Milwaukee media market, the metrics would suggest an arena of 14,965 seats, which is in line for a large venue that can accommodate major touring acts and professional sports. Downtown Milwaukee is currently in the planning process to develop a new NBA arena for the Milwaukee Bucks.

Based on the metrics for firms with more than 500 employees, the implications for premium seating for Racine is provided. As is shown, the metrics indicate that Racine could support 13 suites and approximately 250 suite seats. In addition, it is implied that Racine could support approximately 200 other premium seats such as club or loge seats.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 33

Implications

This chapter presents a range of venues that all have similar characteristics that can be related to the objectives of the proposed arena. While differences are found between each facility, each venue’s business model is focused on accommodating the needs of the community.

Tenants provide a stable event schedule and help to supplement each facility’s usage and financials. Newer venues integrating flexible function space are able to support and attract new groups and events, which generates positive and new economic impact on the city. In addition, maximizing revenue-generating features such as naming rights, sponsorships, premium seating and concessions in the venue not only benefits the bottom line, but also provide opportunities to develop partnerships in the community. Although large market cities are developing single purpose venues, small market cities have the challenge of developing flexible multipurpose venues that can attract a variety of events, while keeping the setting intimate for spectators.

Downtown Racine Arena Market and Feasibility Study Chapter 5 - Page 34

TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

RECOMMENDATIONS AND SWOT ANALYSIS

Existing Conditions and Critical Factors

Based on HSP’s analysis, the following was determined: ! The market, while relatively small locally, is situated between to major markets and encompasses a larger capture market that is attractive to concert and other event promoters. Given Racine’s location nearly equidistant from Milwaukee and Chicago, it makes a logistically smart stopover or mid-market arena for many acts, family shows and other events traveling between larger metro areas. ! A team owner of a United States Hockey League (USHL) has expressed interest in locating a team in Racine as soon as a new facility as ready, assuming the facility has the necessary seating and premium seating opportunities. ! The Milwaukee Bucks are in the process of identifying a city to locate an affiliated D-League team. Racine has made the short list of potential locations. Assuming the arena has the necessary seating and premium seating opportunities, an arena in Racine would be in a good position to secure the affiliated team. ! There are numerous examples of small markets similar in size to Racine that have successfully developed and supported small arenas (many with hockey teams) over the past several decades. Many of these are located in the United States’ Midwest, including lesser-populated areas within the region. ! Racine’s downtown is working to enhance its reputation as a fun, walkable city with more leisure time activities, at least in the warmer months via the development of an active retail, restaurant and bar scene. Initiatives such as the RootWorks Redevelopment Initiative will help revitalize the Belle Harbor District, Machinery Row District and River Loop, all which are within walkable distance to the proposed arena site. ! Parking has been shown to be available during event periods after business hours and on weekends, without negatively impacting parking for existing restaurants and retailers. ! The addition of quality function space in addition to the events center and hotel will help to host higher revenue events, conferences, corporate events, trainings and conventions. ! The development of the arena will likely induce the development of a new connected conference hotel. This hotel should be a larger, select-service branded hotel relative to the existing downtown hotels. Such a hotel will induce more conventions, conferences and other events, in addition to what would be generated without such a hotel. ! The addition of an arena/event center under one operating entity or management contract will allow for combined operations and additional opportunities to minimize any operating loses between all facilities. The combined operations will engender cost savings and enhance revenue generation, likely lowering the current operating loss sustained by the Civic Centre facilities’ operations. ! The location of the arena in the downtown and adjoining a new conference hotel is critical for the operating success of the two facilities, as they can co-promote and co-host events. Also, the

Downtown Racine Arena Market and Feasibility Study Chapter 6 – Page 2

combined facility will allow for increased competitiveness for events, bringing more events downtown and into the hotels. Finally, there is already plentiful parking in the downtown area surrounding the arena site to support a new facility that will simultaneously help downtown businesses by having people park and walk by these businesses before and after events. The farthest that someone would need to park is minimal, under four blocks from the entrance of the facility. Additional wayfinding will help attendees find this plentiful parking nearby. This will also help the utilization of garages and lots that sit empty in the evenings. If an arena is developed by itself outside of downtown, more parking will need to be developed and the competitiveness of both the arena and the downtown hospitality package will be diminished, lowering the economic impact to the point of reconsidering the efficacy of the project.

The following provides more explanation of the findings.

SWOT Analysis

This section presents HSP’s analysis of the arena and event center situation and presents a recommendation for Racine.

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potential events. Promoters were optimistic about bringing events to an arena in Racine due to its location between Milwaukee and Chicago. These events are literally already driving by Racine now, and would enjoy the opportunity to stop, put on a show and generate revenue. This benefits them and benefits Racine. The United States Hockey League (USHL) is eager to establish a presence in a new arena in Racine and the team would act as an anchor tenant, helping to generate significant revenue for the building. ! Net positive impact on a New Connected Hotel. Connecting a new arena to a new hotel would create an event complex that would be more competitive for various types of events than it is today. A connected arena and hotel will allow for even more events to be attracted to the combined complex. Cross-promoting event and function space will create a more appealing hospitality package. ! Access. Racine’s access off of I-94 gives it easy access to markets both to the north and south. A market of more than two million is available within a relatively short drive. Racine, with the new facilities, will be a much better location for this widespread market to attend an event versus having to drive to Chicago or Milwaukee. ! Business Community Support. The business community supports the development of an arena. However, businesses will be cautious when considering partnerships with the facility to and other investments that will help the financial viability of the enterprise. ! Growing Content for Small Arenas. There has been a boom in small and mid-sized arenas across the US for 15 years and there is specific content (family shows, concerts, etc.) that has been developed for this size venue. There are many smaller and mid-sized venues across the U.S. than major arenas and so this provides the acts a steady stream of opportunity. A new facility would provide an opportunity for those acts to come to Racine.

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provide additional free positive press for the city that currently does not exist. When regional competitors play in the new facility, which will be covered on the news in the other markets. ! Catalytic Development. The proposed arena can serve as a catalytic development to retain and attract businesses, groups and visitors to downtown Racine. An event center/arena can be the catalytic development that generates year-round activity to support the development of restaurants and other downtown businesses, as well as residential growth. Businesses and entrepreneurs notice when the city is aggressive and takes an active role in improving itself via public-private partnerships, key public investments and other quality of life enhancements. These create an environment where others are then more willing to invest time, money, talent and effort into a new business in downtown, move there as residents, or visit with their group. New conventions that would not consider the area now, may be swayed if the event facilities are expanded in such a way, more restaurants exist and the hotel package is larger. ! Economic, Fiscal and Employment Benefits. The Project will entice visitors to visit Racine businesses, restaurants and meeting/event facilities. These visits result in increased downtown spending, and in turn, an improved local business environment, additional tax collections and an increased number of employment opportunities. The visibility that visitors will have of the downtown from the new arena will show off the community to a new population that may consider visiting again or even moving to the community. Currently, many people outside Racine simply are not visiting as there are few places to hold events. ! Strong Relationship & Synergy with Neighboring Projects. A new arena project in Racine can benefit and partner with the Festival Hall and Memorial Hall to accommodate larger events which cannot be held in either of those two facilities.

Implications and Recommendations

Downtown Racine Arena Market and Feasibility Study Chapter 6 – Page 5

Total Capacity. A facility with approximately 3,800 seats in a hockey configuration is recommended, with the ability to accommodate approximately 5,000 for concerts.

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The following figures show examples of the types of spaces that would be found in the arena. The first is an end stage concert at a similar facility.

Figure 8-1

The next figure shows the home team locker room for the new similar arena in Allentown, Pennsylvania.

Figure 8-2

Downtown Racine Arena Market and Feasibility Study Chapter 6 – Page 7

The next figure shows a standard suite.

Figure 8-3

The next figure shows an arena football setup in the Allen Events Center.

Figure 8-4

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The next figure shows an example of a restaurant at the Allentown facility.

Figure 8-5

The next figure shows a banquet setup on the event floor.

Figure 8-6

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The next figure shows a tradeshow on the event floor.

Figure 8-7

The next figure shows the event floor setup for a wrestling event.

Figure 8-8

The next figure shows suite level restrooms and public concourse restrooms.

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Figure 8-9

Figure 8-10

The next figure shows an example of a suite level bar.

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Figure 8-11

The final figure shows an example of a concourse at a small arena facility.

Figure 8-12

The next chapter will show projections of performance at the recommended downtown arena.

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TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

DEMAND AND FINANCIAL PROJECTIONS

Based on the analysis conducted, HSP has developed two demand and financial projections for the proposed arena. The first scenario assumptions are based on the recommendations in the prior chapter and assume shared operations and management of the arena and Civic Centre facilities. The projections also assume a USHL hockey team and an NBA D-League team as tenants.

Scenario One: USHL Hockey and D-League Tenants

The following table shows the expected number of events, by type.

Table 7-1 Projected Schedule of Events by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 31 31 31 31 31 31 31 31 31 31 NBA-D League 24 24 24 24 24 24 24 24 24 24 Family Shows 7 6 6 6 6 6 6 6 6 6 Concerts 7 6 6 6 6 6 6 6 6 6 Other Sporting Events 7 8 9 9 9 9 9 9 9 9 Graduations 3 3 4 4 4 4 4 4 4 4 Flat-Floor Events (Conventions, Other) 9 10 11 11 11 11 11 11 11 11 Meetings/Banquets 24 30 36 36 36 36 36 36 36 36 Total 112 118 127 127 127 127 127 127 127 127 Source: Hunden Strategic Partners

The next table shows the expected average attendance by type of event.

Table 7-2 Projected Average Attendance by Category and Year

Turnstile Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 3,800 3,389 3,389 3,389 3,389 3,389 3,389 3,389 3,389 3,389 NBA-D League 3,947 3,135 3,135 3,135 3,135 3,135 3,135 3,135 3,135 3,135 Family Shows 4,421 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 Concerts 4,421 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 Other Sporting Events 2,105 1,900 1,900 1,900 1,900 1,900 1,900 1,900 1,900 1,900 Graduations 947 855 855 855 855 855 855 855 855 855 Flat-Floor Events (Conventions, Other) 900 900 900 900 900 900 900 900 900 900 Meetings/Banquets 100 100 100 100 100 100 100 100 100 100

Source: Hunden Strategic Partners `

There is expected to be a novelty effect when the arena opens, with larger crowds the first year the facility is opened. The attendance levels are expected to stabilize in by the third year.

The next table shows the expected annual attendance by type of event.

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Table 7-3 Projected Paid Attendance by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 103,700 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 NBA-D League 90,000 79,200 79,200 79,200 79,200 79,200 79,200 79,200 79,200 79,200 Family Shows 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Concerts 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Other Sporting Events 14,000 16,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 Graduations 2,700 2,700 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Flat-Floor Events (Conventions, Other) 8,100 9,000 9,900 9,900 9,900 9,900 9,900 9,900 9,900 9,900 Meetings/Banquets 2,400 3,000 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Total 279,700 253,300 257,700 257,700 257,700 257,700 257,700 257,700 257,700 257,700 Source: Hunden Strategic Partners

Attendance is projected to start at 279,700 and stabilize at approximately 257,700 annually, led by hockey attendance and followed by D-League, concerts and family shows.

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Financial Projection

The following table shows the revenue and expenses expected for the combined operations of the arena and Civic Centre facilities, based on the above and other assumptions.

Table 7-4 Racine Events Center Financial Projection (thousands of inflated dollars)*

* Assumes shared operations with existing event facilities Source: Hunden Strategic Partners

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Scenario Two: USHL Hockey Tenant Only

The following table shows the expected number of events, by type.

Table 7-5 Projected Schedule of Events by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 31 31 31 31 31 31 31 31 31 31 Family Shows 7 6 6 6 6 6 6 6 6 6 Concerts 7 6 6 6 6 6 6 6 6 6 Other Sporting Events 7 8 9 9 9 9 9 9 9 9 Graduations 3 3 4 4 4 4 4 4 4 4 Flat-Floor Events (Conventions, Other) 9 10 11 11 11 11 11 11 11 11 Meetings/Banquets 24 30 36 36 36 36 36 36 36 36 Total 88 94 103 103 103 103 103 103 103 103 Source: Hunden Strategic Partners

The next table shows the expected average attendance by type of event.

Table 7-6 Projected Average Attendance by Category and Year

Turnstile Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 3,800 3,389 3,389 3,389 3,389 3,389 3,389 3,389 3,389 3,389 Family Shows 4,421 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 Concerts 4,421 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 3,990 Other Sporting Events 2,105 1,900 1,900 1,900 1,900 1,900 1,900 1,900 1,900 1,900 Graduations 947 855 855 855 855 855 855 855 855 855 Flat-Floor Events (Conventions, Other) 900 900 900 900 900 900 900 900 900 900 Meetings/Banquets 100 100 100 100 100 100 100 100 100 100

Source: Hunden Strategic Partners `

There is expected to be a novelty effect when the arena opens, with larger crowds the first year the facility is opened. The attendance levels are expected to stabilize in by the third year.

The next table shows the expected annual attendance by type of event.

Table 7-7 Projected Paid Attendance by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 103,700 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 93,000 Family Shows 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Concerts 29,400 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 25,200 Other Sporting Events 14,000 16,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 Graduations 2,700 2,700 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Flat-Floor Events (Conventions, Other) 8,100 9,000 9,900 9,900 9,900 9,900 9,900 9,900 9,900 9,900 Meetings/Banquets 2,400 3,000 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Total 189,700 174,100 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 Source: Hunden Strategic Partners

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Attendance is projected to start at 189,700 and stabilize at approximately 178,500 annually, led by hockey attendance and followed by concerts and family shows.

Financial Projection

The following table shows the revenue and expenses expected for the combined operations of the arena and Civic Centre facilities as well as a hockey team as the sole tenant.

Table 7-8 Racine Events Center Financial Projection (thousands of inflated dollars)*

* Assumes shared operations with existing event facilities Source: Hunden Strategic Partners

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Combined Management Staffing Allocations

The projected performance looked at shared operations and management of the arena and existing Civic Centre facilities. The projects also assumed a connected hotel. With the other Civic Centre facilities under one operating entity or management contract, operating efficiencies are expected to be realized. Combined, lean, efficient and expert management over multiple shared facilities is the way to share human resources and costs over multiple facilities with shared back of house for maximum impact.

Based on HSP’s analysis, as well as consultation with private management entity VenuWorks, the following breakdown of staffing was projected the arena and existing Civic Centre facilities.

Table 7-9

Racine Arena & Existing Facilities Staffing Allocations Full-Time Labor Annual $ Arena % Existing Facilities % Total % Arena $ Existing Facilities $ Executive Director 122,000 68% 32% 100% 82,960 39,040 Associate Director 75,000 68% 32% 100% 51,000 24,000 Business Manager 50,000 70% 30% 100% 35,000 15,000 Box Office Manager 39,000 65% 35% 100% 25,350 13,650 Accounting Clerk 36,000 60% 40% 100% 21,600 14,400 Executive Assistant 36,000 72% 28% 100% 25,920 10,080 Dir. Of Sales/Mktg 63,000 65% 35% 100% 40,950 22,050 Guest Services Manager 48,000 85% 15% 100% 40,800 7,200 Concessions Manager 48,000 95% 5% 100% 45,600 2,400 Event Coordinator 42,000 85% 15% 100% 35,700 6,300 Event Coordinator 42,000 85% 15% 100% 35,700 6,300 Operations Manager 54,000 80% 20% 100% 43,200 10,800 Asst. Operations Manager 44,000 80% 20% 100% 35,200 8,800 Custodial Manager 39,000 80% 20% 100% 31,200 7,800 Conversions Manager 39,000 80% 20% 100% 31,200 7,800 Bonus Pool 33,000 60% 40% 100% 19,800 13,200 Total Full-Time Labor 810,000 74% 26% 100% 601,180 208,820

Part-Time Staffing (Non-Event) Annual Ticket Office 30,000 95% 5% 100% 28,500 1,500 Administrative 40,000 72% 28% 100% 28,800 11,200 Food & Beverage 175,000 85% 15% 100% 148,750 26,250 Operations 240,000 60% 40% 100% 144,000 96,000 Total Part-Time Labor (Non-Event) 485,000 72% 28% 100% 350,050 134,950

Total Labor 1,295,000 73% 27% 951,230 343,770

Source: Hunden Strategic Partners

As shown, total labor costs, including full- and part-time, are expected to total nearly $1.3 million on a generally stabilized basis. Approximately 73 percent of the costs/time would be allocated to arena activities, while 27 percent would be allocated to the Civic Centre facilities.

The following is an explanation of the assumptions used for each line item:

Revenue

Rent. Typically, the facility will make an arrangement with users for a base amount of rent and a share of revenue, which can include a share of ticket, concession and/or novelty revenue. The details depend on the act, promoter and the leverage the facility has. This can depend on many factors.

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Concessions. Concessions are figured based on a per attendee basis. Visitors spend more or less depending on the type of event. These revenues are often shared with the event itself.

Merchandise. Merchandise revenues are also figured based on a per capita basis, although the level of such sales is often much lower than concessions. In addition, the concert or event often expects to keep the majority of revenue from such sales, although this is negotiated on a case-by-case basis.

Catering. Catering is part of the premium seating and ticket experience. Today’s venues have multiple levels of premium experiences, from suites to club/loge seats to the pre- and during-event dining experiences at the club or lounge area. Depending on the type of event, catering yields different amounts of revenue and this all flows to the building, netting out direct expenses.

Parking. Parking is not expected to be a major revenue stream for the facility, as the number of spaces will be limited onsite. However, there are two adjacent parking garages that are assumed to be available for event parking. A new arena is expected to increase the use of the adjacent garages, especially at night and on weekends. The parking fee is assumed to be $6 per car.

Premium Seating. There are 12 suites programmed into the building, including six larger suites and six smaller suites. The average seat count per suite is 14 seats. The program also includes approximately 200 premium loge seats. The rate for the season for club/loge seats is $975 while the annual lease for the suites averages $13,300.

Advertising & Sponsorship. Advertising revenue is generated from signage inside and outside the building, as well as electronic signage on scoreboards and ribbon boards. The model includes an assumption of $335,000 in annually available revenue from advertising and sponsorships, with 85 percent sold and a 20 percent fee paid to the agency/broker that places the advertising. This can also be done in-house.

Naming Rights. Naming rights for major event facilities depends on a number of factors, but is most influenced by the assumed number of eyeballs or impressions generated on television, radio and to attendees. This is the reason that facilities with major league tenants with television contracts and high viewership can generate larger naming rights deals. While there will not be any major league tenants in this facility, there is value to the events that will occur there. HSP has conservatively estimated that the arena, with events during nine to ten months per year, including concerts, sports and family shows, should be able to support a naming rights deal of $384,000 per year with two tenants and $334,000 with one tenant, increasing at the rate of inflation.

Facility Service Fee. The facility service fee is assumed to range between $1.35 and $1.58 per attendee and is placed on all tickets at the facility as a way to support operations. The fee will range depending on the event type.

Other Revenue. Other revenues are minimal and include any other small revenue items, such as ATM fees, etc.

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Expenses

Personnel. Personnel costs are made up of permanent position salaries and part-time wages as well as benefit costs.

General & Admin. This line item includes a wide variety of expenses, including the supplies and general office and other standard operating items in an event facility. It can be figured as a percentage of revenue but also can be figured based on the average of similar facilities.

Utilities. Utilities are both fixed and variable due to the higher usage necessary during events. These are figured based on multiple metrics, including the size of building/volume of space and number of event days.

Repairs & Maintenance. Repairs and maintenance costs are a constant challenge and expense in major event facilities. The expense level assumed can vary with the level of activity and is assumed based on the average of similar sized facilities, although should be less due to the slightly lower level of activity since there is not a hockey tenant assumed.

Insurance. Insurance expenses cover many items, from insurance on the building and damage from a variety of incidents and weather, to liability insurance.

Communications. Communications costs in arenas are a significant expense, not just due to the phone, cabling and other typical communication costs, but due to the high expectation that attendees have for using their smartphones at full speeds. This means that today’s facilities must have robust Internet and WiFi capabilities, with numerous access points and wide bandwidth so that thousands of users can be utilizing their devices simultaneously for calls, texts, social media and streaming video. The communication expense was derived from the average of similarly-sized facilities.

Advertising. Advertising expense is composed primarily of print and online media, as any co-promotion funding for radio or television advertising for self-produced or co-produced events. The amount is based on the amount spent at similar facilities.

Other. Other expenses include a number of expenses not included in the major line items above, such as accounting, legal, and a variety of smaller items.

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TABLE OF CONTENTS

------Executive Summary

Chapter 1 Project Overview and Site Analysis

Chapter 2 Economic and Demographic Analysis

Chapter 3 Local and Regional Event, Meeting, Sports and Entertainment Market Analysis

Chapter 4 Arena, Concert, Sports and Event Market Trends

Chapter 5 Case Studies

Chapter 6 Recommendations

Chapter 7 Demand and Financial Projections

Chapter 8 Economic, Fiscal & Employment Impact Analysis

ECONOMIC, FISCAL AND EMPLOYMENT IMPACT ANALYSIS

The gross operations of the Project will generate a significant amount of economic activity and various taxes and will support a number of new jobs onsite. However, the critical analysis is the amount of net new spending generated by the Project in the community. The recapture of impact from residents having to travel less to Chicago and/or Milwaukee for meetings and entertainment is part of the net new spending generated by the Project. HSP compared the impact of a new downtown arena with two tenants versus a single hockey tenant. The first scenario will discuss the impacts of the two tenant scenario followed by the single hockey tenant.

Scenario One: USHL Hockey and D-League Tenants

In order to determine the impact of these net new events and improved performance of existing events, HSP made assumptions about the various event types and how many new daytrips and overnights will occur as a result. This is filtered by a number of factors, set forth in the table below. When reading from left to right, the table results in a net number of new overnights and daytrips to Racine County compared to the overall activity at the new facility.

Table 8-1 Metrics and Assumptions Used to Determine Net New Vistors to Racine at the New Arena

Percent of Non- Number of Non- Percent of Racine Visitors Percent of Total Percent of Non- Racine Visitors Visitors Non- Who Stay Visitors Staying Racine Visitors Staying Visitors per Room Nights Number of Non- % Net New to Net New Room Net New Day Racine County Overnight Overnight Making a Daytrip Overnight Room Night Generated Racine Daytrips Racine Nights to Racine Trips to Racine Minor League Hockey 25% 15% 4% 85% 3,825 1.9 2,013 21,675 100% 2,013 21,675 Minor League Hockey - Preseason 25% 10% 3% 90% 43 1.9 22 383 100% 22 383 NBA-D League 25% 5% 1% 95% 1,125 1.9 592 21,375 100% 592 21,375 Family Shows 40% 33% 13% 67% 3,881 2.3 1,687 7,879 100% 1,687 7,879 Concerts 60% 33% 20% 70% 5,821 2.1 2,772 12,348 100% 2,772 12,348 Other Sporting Events 55% 33% 18% 67% 2,541 1.9 1,337 5,159 100% 1,337 5,159 Graduations 70% 50% 35% 50% 945 1.7 556 945 90% 500 851 Conventions, Expos & Large Flat Floor Events 70% 50% 35% 50% 2,835 1.5 1,890 2,835 90% 1,701 2,552 Meetings/Banquets 60% 40% 24% 60% 576 1.2 480 864 70% 336 605 Total 54.1% 15.8% 7.7% 92.3% 21,592 1.90 11,350 73,463 99.1% 10,962 72,826

Source: HSP

After making assumptions for the percentage of attendees at each event to be from outside of Racine County’s limits (54 percent) and then further reducing those by the number who would stay overnight (16 percent of non-Racine visitors), the model results in a number of non-Racine visitors who would stay overnight, or more than 21,500. When dividing by nearly two visitors per room night, the result is 11,350 room nights and more than 73,000 non-Racine day trips. However, not all events or attendees will be new to Racine. This set of assumptions results in an estimate of net new room nights to Racine of more than 10,900 and nearly 73,000 new day trips.

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The basis for the impacts will be the net new room nights due to the Project as well as the net new day trips, which have a lower economic impact than overnights. The daily spending by visitors and the overnight spending by overnight visitors all contribute to the economic impact of the Project.

These are shown in the next table.

Table 8-2

Estimated Spending Per Visitor per Trip - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 20 Spending per New Visitor - Overnight Onsite Food & Beverage $4.75 $4.89 $5.04 $5.19 $5.35 $5.51 $5.67 $5.84 $6.02 $6.20 $8.33 Offsite Food & Beverage $19.90 $20.50 $21.11 $21.75 $22.40 $23.07 $23.76 $24.47 $25.21 $25.96 $34.89 Total Food & Beverage $24.65 $25.39 $26.15 $26.94 $27.74 $28.58 $29.43 $30.32 $31.23 $32.16 $43.22 Lodging Spending $23.85 $24.56 $25.30 $26.06 $26.84 $27.65 $28.48 $29.33 $30.21 $31.12 $41.82 Retail Spending $10.31 $10.62 $10.94 $11.27 $11.60 $11.95 $12.31 $12.68 $13.06 $13.45 $18.08 Transportation Spending $9.21 $9.48 $9.77 $10.06 $10.36 $10.67 $10.99 $11.32 $11.66 $12.01 $16.14 Other Spending $7.88 $8.11 $8.36 $8.61 $8.86 $9.13 $9.40 $9.69 $9.98 $10.28 $13.81 Total Direct Spending $75.89 $78.17 $80.51 $82.93 $85.42 $87.98 $90.62 $93.34 $96.14 $99.02 $133.07

Spending per Visitor - Day Trip Onsite Food & Beverage $4.25 $4.38 $4.51 $4.64 $4.78 $4.93 $5.07 $5.23 $5.38 $5.55 $7.45 Offsite Food & Beverage $14.33 $14.76 $15.20 $15.66 $16.13 $16.61 $17.11 $17.62 $18.15 $18.69 $25.12 Total Food & Beverage $18.58 $19.14 $19.71 $20.30 $20.91 $21.54 $22.18 $22.85 $23.53 $24.24 $32.58

Retail Spending $7.42 $7.65 $7.88 $8.11 $8.35 $8.61 $8.86 $9.13 $9.40 $9.69 $13.02 Transportation Spending $6.63 $6.83 $7.03 $7.24 $7.46 $7.68 $7.92 $8.15 $8.40 $8.65 $11.62 Other Spending $5.91 $6.08 $6.27 $6.45 $6.65 $6.85 $7.05 $7.27 $7.48 $7.71 $10.36 Total Direct Spending $38.54 $39.69 $40.88 $42.11 $43.37 $44.68 $46.02 $47.40 $48.82 $50.28 $67.58 Source: HSP

The per-person per-visit spending for overnight guests totals $75.89 in Year 1 and increases with inflation. The daily spending per person for day trips is $38.54 in the first year. Lodging spending is essentially half of the hotel room rate due to the fact that nearly two people are assumed to share each room rented.

Economic, Earnings, Employment and Fiscal Impact

In addition to the expected revenue generated onsite, the increased economic activity will result in higher fiscal activity, income and employment for the Racine economy.

HSP uses the IMPLAN input-output multiplier model, which determines the level of additional activity in the Racine economy due to additional inputs. For example, for every dollar of direct new spending in Racine, the IMPLAN model provides multipliers for the indirect and induced spending that will result.

The net new and recaptured direct spending discussed earlier in the chapter is considered to be the Direct Impact.

Downtown Racine Arena Market and Feasibility Study Chapter 8 – Page 3

! Induced Impacts embody the change in spending due to the personal expenditures by employees whose incomes are affected by direct and indirect spending. For example, a waitress at a restaurant may have more personal income as a result of the visitor’s visit. The amount of the increased income that the employee spends in the area is considered an induced impact. ! Fiscal Impacts represent the incremental tax revenue collected by the city and county due to the net new economic activity. The fiscal impact represents the government’s share of total economic benefit. Fiscal impacts provide an offset to the potential public expenditures required to support the development. ! Employment Impacts include the incremental employment provided not only onsite, but due to the spending associated with it. For example, the direct, indirect and induced impacts generate spending, support new and ongoing businesses, and ultimately result in ongoing employment for citizens. HSP will show the number of ongoing jobs supported by the project and provide the resulting income and income taxes generated.

Direct, Indirect and Induced Impacts

The table below shows the direct net new spending, based on the analysis.

Table 8-3 Direct Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total

Food & Beverage $1,866 $1,775 $1,888 $1,945 $2,003 $2,322 $3,121 $4,195 $84,709 Lodging $976 $963 $1,052 $1,083 $1,116 $1,293 $1,749 $2,359 $47,319 Retail $755 $719 $765 $788 $811 $941 $1,264 $1,699 $34,310 Transportation $675 $642 $683 $704 $725 $840 $1,129 $1,517 $30,639 Other Local Spending (Recreation, etc.) $594 $565 $601 $619 $638 $740 $994 $1,336 $26,973 Total $4,866 $4,664 $4,989 $5,139 $5,293 $6,136 $8,257 $11,106 $223,950 Source: Hunden Strategic Partners

Spending on food and beverage is the largest component of new spending to Racine, followed by lodging spending. Over the period, a total of nearly $224 million in direct new spending is projected from the Project over 30 years.

The next table shows the direct, indirect and induced spending from the Project, based on the IMPLAN multipliers.

Table 8-4 Direct, Indirect & Induced Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total Net New Spending Direct $4,866 $4,664 $4,989 $5,139 $5,293 $6,136 $8,257 $11,106 $223,950 Indirect $1,665 $1,595 $1,706 $1,757 $1,810 $2,098 $2,823 $3,797 $76,582 Induced $1,964 $1,881 $2,012 $2,072 $2,135 $2,475 $3,330 $4,478 $90,315 Total $8,495 $8,141 $8,707 $8,969 $9,238 $10,709 $14,410 $19,381 $390,847 Source: Hunden Strategic Partners

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The direct spending totals $224 million over the period, while the indirect and induced spending add another $77 and $90 million, respectively. In total, $390 million in economic impact is projected.

The following table shows the new earnings associated with the new economic activity.

Table 8-5 Net New Earnings from Direct, Indirect & Induced Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total Net New Earnings From Direct $1,637 $1,567 $1,675 $1,726 $1,777 $2,061 $2,772 $3,728 $75,197 From Indirect $525 $504 $539 $555 $572 $663 $892 $1,200 $24,194 From Induced $582 $558 $597 $615 $633 $734 $988 $1,328 $26,786 Total $2,744 $2,629 $2,811 $2,895 $2,982 $3,457 $4,652 $6,256 $126,178 Source: Hunden Strategic Partners

By the fifth year of operation, $3 million of new direct, indirect, and induced earnings are projected, with a total of nearly $126 million over the period.

The table below shows the estimated full-time equivalent jobs created by the Project.

Table 8-6 Net New Full-Time Equivalent Jobs from Direct, Indirect & Induced Earnings - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Average Net New FTE Jobs From Direct 96 89 92 92 92 92 92 92 92 From Indirect 33 31 32 32 32 32 32 32 32 From Induced 39 36 37 37 37 37 37 37 37 Total 168 156 161 161 161 161 162 162 162 Source: Hunden Strategic Partners

New full-time equivalent jobs (FTE’s) are projected to vary over the period based on the net new spending, averaging approximately 162 over the period. This is not the number of jobs onsite, but the number of new full-time equivalent jobs supported in the Racine economy due to the activity at the Project (not including construction).

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Fiscal Impact

Of the 71 counties in Wisconsin, 62 counties levy the 0.5 percent county tax allowable by state law. Racine is one of the nine counties in the state that has yet to levy the 0.5 percent county tax.

The following table shows the projections of the various taxes.

Table 8-7 Estimated Fiscal Impact - Tax Impacts from Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total

Local Taxes Collected Lodging Tax (6% to County/2% to City) $156 $77 $84 $87 $89 $103 $140 $189 $3,864 Total $156 $77 $84 $87 $89 $103 $140 $189 $3,864

* First year includes construction period spending on the project Source: Hunden Strategic Partners

Total net new taxes that benefit the city, county is expected to total $3.9 million over the first 30 years, led by the local lodging tax.

Construction Impact

The one-time construction of the Project will impact the area as spending will occur via the purchase of materials (40 percent of the budget) and the payment of labor and service providers (60 percent of the budget). The net Racine impacts are shown below for the construction impact.

Table 8-8

Construction Impact Impact Direct Materials Spending $ 16,000,000 Indirect Spending $ 4,480,000 Induced Spending $ 7,140,000 Total $ 27,620,000

Direct Labor Spending $ 24,000,000 Employment (Job Years) 443

Source: Hunden Strategic Partners

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The total spending from materials spending is estimated to total $27.6 million while there is expected to be nearly $24 million in earnings from labor spending. This will support approximately 443 job-years, which is one full-time job for one year.

The following table shows the summary of impacts for the Project.

Table 8-9 Summary of Impact (First 30 Years) - Arena

Job-Years, From Construction 443

Source: Hunden Strategic Partners

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Scenario Two: USHL Hockey Tenant Only

Table 8-10 Metrics and Assumptions Used to Determine Net New Vistors to Racine at the New Arena

Percent of Non- Number of Non- Percent of Racine Visitors Percent of Total Percent of Non- Racine Visitors Visitors Non- Who Stay Visitors Staying Racine Visitors Staying Visitors per Room Nights Number of Non- % Net New to Net New Room Net New Day Racine County Overnight Overnight Making a Daytrip Overnight Room Night Generated Racine Daytrips Racine Nights to Racine Trips to Racine Minor League Hockey 25% 15% 4% 85% 3,825 1.9 2,013 21,675 100% 2,013 21,675 Minor League Hockey - Preseason 25% 10% 3% 90% 43 1.9 22 383 100% 22 383 Family Shows 40% 33% 13% 67% 3,881 2.3 1,687 7,879 100% 1,687 7,879 Concerts 60% 33% 20% 70% 5,821 2.1 2,772 12,348 100% 2,772 12,348 Other Sporting Events 55% 33% 18% 67% 2,541 1.9 1,337 5,159 100% 1,337 5,159 Graduations 70% 50% 35% 50% 945 1.7 556 945 90% 500 851 Conventions, Expos & Large Flat Floor Events 70% 50% 35% 50% 2,835 1.5 1,890 2,835 90% 1,701 2,552 Meetings/Banquets 60% 40% 24% 60% 576 1.2 480 864 70% 336 605 Total 39.4% 13.3% 10.8% 89.2% 20,467 1.90 10,758 52,088 98.8% 10,369 51,451

Source: HSP

After making assumptions for the percentage of attendees at each event to be from outside of Racine County’s limits (39 percent) and then further reducing those by the number who would stay overnight (13 percent of non-Racine visitors), the model results in a number of non-Racine visitors who would stay overnight, or more than 20,000. When dividing by nearly two visitors per room night, the result is nearly 11,000 room nights and more than 52,000 non-Racine day trips. However, not all events or attendees will be new to Racine. This set of assumptions results in an estimate of net new room nights to Racine of more than 10,300 and more than 51,000 new day trips.

These are shown in the next table.

Downtown Racine Arena Market and Feasibility Study Chapter 8 – Page 8

Table 8-11

Estimated Spending Per Visitor per Trip - Arena

Economic, Earnings, Employment and Fiscal Impact

In addition to the expected revenue generated onsite, the increased economic activity will result in higher fiscal activity, income and employment for the Racine economy.

The net new and recaptured direct spending discussed earlier in the chapter is considered to be the Direct Impact.

From the direct spending figures, further impact analyses will be completed. ! Indirect Impacts are the supply of goods and services resulting from the initial direct spending. For example, a visitor’s direct expenditure on a hotel room causes the hotel to purchase linens and other items from suppliers. The portion of these hotel purchases that are within the local economy is considered an indirect economic impact. ! Induced Impacts embody the change in spending due to the personal expenditures by employees whose incomes are affected by direct and indirect spending. For example, a waitress at a restaurant may have more personal income as a result of the visitor’s visit. The amount of the increased income that the employee spends in the area is considered an induced impact. ! Fiscal Impacts represent the incremental tax revenue collected by the city and county due to the net new economic activity. The fiscal impact represents the government’s share of total economic

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benefit. Fiscal impacts provide an offset to the potential public expenditures required to support the development. ! Employment Impacts include the incremental employment provided not only onsite, but due to the spending associated with it. For example, the direct, indirect and induced impacts generate spending, support new and ongoing businesses, and ultimately result in ongoing employment for citizens. HSP will show the number of ongoing jobs supported by the project and provide the resulting income and income taxes generated.

Direct, Indirect and Induced Impacts

The table below shows the direct net new spending, based on the analysis.

Table 8-12 Direct Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total

Food & Beverage $1,442 $1,390 $1,492 $1,536 $1,583 $1,835 $2,466 $3,313 $66,871 Lodging $923 $915 $1,002 $1,033 $1,064 $1,233 $1,668 $2,250 $45,106 Retail $585 $564 $606 $624 $643 $745 $1,001 $1,346 $27,161 Transportation $522 $504 $541 $557 $574 $665 $894 $1,202 $24,255 Other Local Spending (Recreation, etc.) $459 $443 $475 $489 $504 $584 $785 $1,055 $21,300 Total $3,931 $3,817 $4,116 $4,240 $4,367 $5,063 $6,814 $9,167 $184,693 Source: Hunden Strategic Partners

Spending on food and beverage is the largest component of new spending to Racine, followed by lodging spending. Over the period, a total of nearly $185 million in direct new spending is projected from the Project over 30 years.

The next table shows the direct, indirect and induced spending from the Project, based on the IMPLAN multipliers.

Table 8-13 Direct, Indirect & Induced Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total Net New Spending Direct $3,931 $3,817 $4,116 $4,240 $4,367 $5,063 $6,814 $9,167 $184,693 Indirect $1,342 $1,303 $1,405 $1,447 $1,490 $1,727 $2,325 $3,127 $63,016 Induced $1,583 $1,536 $1,657 $1,706 $1,758 $2,038 $2,743 $3,689 $74,335 Total $6,856 $6,656 $7,178 $7,393 $7,615 $8,828 $11,882 $15,983 $322,044 Source: Hunden Strategic Partners

The direct spending totals $185 million over the period, while the indirect and induced spending add another $63 and $74 million, respectively. In total, $322 million in economic impact is projected.

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The following table shows the new earnings associated with the new economic activity.

Table 8-14 Net New Earnings from Direct, Indirect & Induced Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total Net New Earnings From Direct $1,315 $1,276 $1,376 $1,417 $1,459 $1,692 $2,277 $3,062 $61,714 From Indirect $425 $413 $445 $459 $472 $548 $737 $992 $19,980 From Induced $470 $456 $492 $507 $522 $605 $814 $1,095 $22,073 Total $2,210 $2,145 $2,313 $2,382 $2,454 $2,844 $3,828 $5,150 $103,767 Source: Hunden Strategic Partners

By the fifth year of operation, $2.5 million of new direct, indirect, and induced earnings are projected, with a total of nearly $104 million over the period.

The table below shows the estimated full-time equivalent jobs created by the Project.

Table 8-15 Net New Full-Time Equivalent Jobs from Direct, Indirect & Induced Earnings - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Average Net New FTE Jobs From Direct 76 72 75 75 75 75 75 75 75 From Indirect 26 25 26 26 26 26 26 26 26 From Induced 31 29 30 30 30 30 30 30 30 Total 133 126 131 131 131 131 131 131 131 Source: Hunden Strategic Partners

New full-time equivalent jobs (FTE’s) are projected to vary over the period based on the net new spending, averaging approximately 131 over the period. This is not the number of jobs onsite, but the number of new full-time equivalent jobs supported in the Racine economy due to the activity at the Project (not including construction).

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Fiscal Impact

Of the 71 counties in Wisconsin, 62 counties levy the 0.5 percent county tax allowable by state law. Racine is one of the nine counties in the state that has yet to levy the 0.5 percent county tax.

The following table shows the projections of the various taxes.

Table 8-16 Estimated Fiscal Impact - Tax Impacts from Net New Spending (000s) - Arena

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Year 30 Total

Local Taxes Collected Lodging Tax (6% to County/2% to City) $148 $73 $80 $83 $85 $99 $133 $180 $3,682 Total $148 $73 $80 $83 $85 $99 $133 $180 $3,682

* First year includes construction period spending on the project Source: Hunden Strategic Partners

Total net new taxes that benefit the city, county is expected to total $3.7 million over the first 30 years, led by the local lodging tax.

Construction Impact

Table 8-17

Construction Impact Impact Direct Materials Spending $ 16,000,000 Indirect Spending $ 4,480,000 Induced Spending $ 7,140,000 Total $ 27,620,000

Direct Labor Spending $ 24,000,000 Employment (Job Years) 443

Source: Hunden Strategic Partners

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The following table shows the summary of impacts for the Project.

Table 8-18 Summary of Impact (First 30 Years) - Arena

Job-Years, From Construction 443

Source: Hunden Strategic Partners

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