The Music Center at the Heights

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The Music Center at the Heights Feasibility Validation Study: The Music Center at The Heights March 14, 2013 March 14, 2013 Mr. Jim Borland City Manager City of Huber Heights 6131 Taylorsville Road Huber Heights, OH 45424 Dear Mr. Borland: Conventions, Sports & Leisure International (“CSL”) is pleased to present this report regarding the feasibility of The Music Center at the Heights, a planned 4,500 seat, covered outdoor live music venue. The attached report summarizes our research and analyses and is intended to assist the City of Huber Heights (“City”) and other project stakeholders with making informed decisions regarding the planned music center development. The information contained in this report is based on estimates, assumptions and other information developed from research of the market, knowledge of the live music industry, interviews with potential user groups, and other factors, including certain information provided by the City. All information provided to us by others was not audited or verified and was assumed to be correct. Because procedures were limited, we express no opinion or assurances of any kind on the achievability of any projected information contained herein and this report should not be relied upon for that purpose. Furthermore, there will be differences between projected and actual results. This is because events and circumstances frequently do not occur as expected, and those differences may be material. We have no responsibility to update this report for events and circumstances occurring after the date of this report. Conventions, Sports & Leisure International 7501 Lone Star Drive, Suite 200 • Plano, TX 75024 • Telephone 972.491.6900 • Facsimile 972.491.6903 Mr. Jim Borland March 14, 2013 Page 2 of 2 We sincerely appreciate the opportunity to assist you with this project, and would be pleased to be of further assistance in the interpretation and application of the study’s findings. Very truly yours, CSL International TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................................................................................................................... ES‐1 1. INTRODUCTION ....................................................................................................................................................................................................... 1 2. LOCAL MARKET CHARACTERISTICS ............................................................................................................................................................................. 3 3. LIVE MUSIC INDUSTRY OVERVIEW ............................................................................................................................................................................ 15 4. MUSIC VENUE CASE STUDIES .................................................................................................................................................................................. 33 5. ESTIMATED DEMAND AND BUILDING PROGRAM VALIDATION ....................................................................................................................................... 41 6. FINANCIAL PROJECTIONS ........................................................................................................................................................................................ 58 7. ECONOMIC AND FISCAL IMPACTS ............................................................................................................................................................................. 70 8. MANAGEMENT OPTIONS ........................................................................................................................................................................................ 84 APPENDIX: FINANCIAL MODEL .......................................................................................................................................................................................... A‐1 Executive Summary 1. Introduction 2. Local Market Characteristics 3. Live Music Industry Overview 4. Music Venue Case Studies 5. Estimated Demand & Building Program Validation EXECUTIVE SUMMARY 6. Financial Projections 7. Economic and Fiscal Impacts 8. Management Options Appendix - Financial Model EXECUTIVE SUMMARY In August 2011, the Huber Height City Council approved the commencement of master planning for a regional mixed‐use destination called The Heights. The Heights is envisioned as a mixed‐use commercial development that will offer retail, restaurant, entertainment, hospitality, residential and office space designed to spur economic activity in northern Dayton. As part of The Heights mixed‐use master plan, the City of Huber Heights (“City”) is considering the development of The Music Center at The Heights, a 4,500‐seat, covered outdoor live music venue that would be developed at a cost of $18 million, including $16.5 million for construction and $1.5 million for land acquisition. It is envisioned that The Music Center at The Heights would host concerts, graduation ceremonies, festivals and other local and regional events. The City engaged Conventions, Sports & Leisure International (“CSL”) to provide an independent validation study of The Music Center at The Heights. In order to validate the feasibility of The Music Center at The Heights, CSL reviewed local market demographic and socioeconomic characteristics; reviewed industry trends, analyzed competitive and comparable facilities, and interviewed concert and other event promoters. Research results were used to estimate potential demand for The Music Center at The Heights, validate general building program elements necessary to accommodate demand, estimate potential financial operating results, quantify potential economic and fiscal impacts and evaluate potential facility management options. The following are key conclusions from a comprehensive, market‐based study of the viability of the proposed Music Center. LOCAL MARKET CHARACTERISTICS Concert promoters view several key market characteristics as critical to the success of their events, and therefore, represent important selection criteria when choosing an outdoor live entertainment venue. These attributes include local market demographic characteristics, transportation access, climate and competitive entertainment establishments in the local and regional market. The following is a summary of the key findings of the analysis of local market characteristics. Demographic Characteristics • The Music Center at The Heights’s primary market, defined as the Dayton metropolitan area, has a population of approximately 849,700. Approximately 5.7 million people reside within the combined primary and secondary markets of the Music Center (defined as the area within a 75‐mile radius of the site), an area that includes the Columbus and Cincinnati markets. Population growth in the region is anticipated to be lower than the national average growth rate over the next five years. • The primary market for The Music Center at The Heights exhibits slightly older demographics than the secondary market and the U.S. as a whole, with a higher median age and a higher percentage of the population aged 55 and over. The age demographics of the market area will need to be considered in identifying appropriate programming for The Music Center at The Heights. • The median income of households located within the primary market ($42,200) is approximately 14 percent below the national median, while the combined primary and secondary market median household income ($47,000) is approximately five percent lower than the ES‐1 EXECUTIVE SUMMARY national median. It will be important to consider the income demographics of the market when pricing tickets, seating and other offerings associated with the facility. • The primary market for The Music Center at The Heights is home to approximately 41,900 corporations. Approximately 800 of these companies have annual sales in excess of $5.0 million, representing the companies that may be most likely to have the wherewithal to support the facility through the purchase of premium seating, advertising and sponsorships. Approximately 5,700 companies exceed the $5.0 million threshold within the combined primary and secondary markets. Transportation Access • Huber Heights’ proximity to the Columbus, Cincinnati and Indianapolis markets, along with the Interstate highway access linking these markets to The Music Center at The Heights site, could make the facility a convenient stop for touring events routing through the region. However, artists and promoters may choose not to play the Dayton market if their tour already includes stops in Columbus and/or Cincinnati due to the proximity of those markets. Therefore, The Music Center at The Heights will likely compete with venues in Columbus and Cincinnati for events routing through the region or could be relegated to second leg shows for tours that go through Columbus or Cincinnati. Second leg shows occur towards the end of an artist’s tour and occur in or near markets visited earlier in the tour. • The Music Center at The Heights site appears to be well‐positioned to draw patrons from the regional market. The facility would enjoy a visible location along Interstate Highway 70, which links to major north/south arteries such as Interstate 70 five miles to the west, Highway 4/Highway 235 three miles to the east and Interstate Highway 675 six miles to the east. This visibility
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