regional municipality of wood buffalo sports and entertainment centres november 19, 2013

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Regional Municipality of Wood Buffalo Sports and Entertainment Centres November 19, 2013

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Page 1: Regional Municipality of Wood Buffalo Sports and Entertainment Centres November 19, 2013

Regional Municipality of Wood Buffalo

Sports and Entertainment Centres

November 19, 2013

Page 2: Regional Municipality of Wood Buffalo Sports and Entertainment Centres November 19, 2013

RMWB – Sports and Entertainment CentresPricewaterhouseCoopers LLP 2

What is a Sports and Entertainment Centre

November 19, 2013

• Commencing in the early 1990’s, central and western Canada have experienced a “boom” in the construction of new, state-of-the-art multi-purpose spectator arenas and event centres

• These new facilities contain many of the same amenities and features that exist within much larger NHL buildings, including:

• luxury suites• club seat areas• restaurants• retail outlets• enhanced food and beverage / concession areas• larger concourses• wider seating• corporate hospitality areas• better advertising positions and opportunities

Page 3: Regional Municipality of Wood Buffalo Sports and Entertainment Centres November 19, 2013

RMWB – Sports and Entertainment CentresPricewaterhouseCoopers LLP 3

What is a Sports and Entertainment Centre

November 19, 2013

• The main impact of these enhancements has been to:

• enhance the in-game experience of fans and thereby increase average attendance

• provide greater revenue generating opportunities to both the main tenant hockey club and the facility

• broaden the range of other events, including concerts, family shows, other sporting events, trade shows, corporate events, community events, etc. which can be booked into facility

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November 19, 2013

Western Financial Place, Cranbrook BC

Size: 4,300 seats (add-on to a large community recreation complex)

Location: suburban location

Date opened: 2000

Cost: $22.6 million (cost of add-on 4,300 seat facility; total project was approximately $30.0 million)

Lead tenant: Kootney Ice (WHL)

Sports and Entertainment Centre – Images

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November 19, 2013

Entertainment & Sports Centre, Abbotsford BC

Size: 7,000 seats

Location: suburban

Date opened: 2009

Cost: $80.0 million

Lead tenant: Abbotsford Heat (AHL)

Sports and Entertainment Centre – Images

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November 19, 2013

Enmax Centrium, Red Deer AB

Size: 5,800 seats (currently undergoing expansion to 7,000 seats)

Location: suburban (located in Westerner Park, a agricultural fair grounds complex)

Date opened: 1991

Cost: n/a

Lead tenant: Red Deer Rebels (WHL)

Sports and Entertainment Centre – Images

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November 19, 2013

Hershey Centre, Mississauga ON

Size: 5,400 seats (part of multi-pad arena and sport complex)

Location: suburban

Date opened: 1998

Cost: $22.0 million

Lead tenant: Mississauga Steelheads (OHL)

Sports and Entertainment Centre – Images

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RMWB – Sports and Entertainment CentresPricewaterhouseCoopers LLP 22

November 19, 2013

Budweiser Gardens, London ON

Size: 9,100 seats

Location: downtown

Date opened: 2002

Cost: $47.0 million

Lead tenant: London Knights (OHL)

Sports and Entertainment Centre – Images

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November 19, 2013

Rogers K-ROCK Centre, Kingston ON

Size: 5,200 seats

Location: downtown

Date opened: 2005

Cost: $46.5 million

Lead tenant: Kingston Frontenacs (OHL)

Sports and Entertainment Centre – Images

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November 19, 2013

Proposed new Event Centre, Thunder Bay ON

Size: 5,700 seats (proposed to be developed along side a 50,000 square foot of conference centre)

Location: downtown

Date opened: 2017

Cost: $106.1 million

Lead tenant: t.b.d.

Sports and Entertainment Centre – Images

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November 19, 2013

Concerts

Sports and Entertainment Centre – Uses

Page 32: Regional Municipality of Wood Buffalo Sports and Entertainment Centres November 19, 2013

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November 19, 2013

Family Shows

Sports and Entertainment Centre – Uses

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Sports and Entertainment Centres – Financing

November 19, 2013

• Project financing of sports and entertainments generally includes a combination of:

• municipal financing (including an up-front capital contribution and / or municipal debenture)

• federal / provincial government support (grants)• community fundraising• private equity (in the case of P3 arrangements)

• Once open, operational responsibility can take the form of:• the municipality assumes all operating and financial risk• the municipality transfers a portion of operating risk to a

third party management company, but still retains all financial risk

• the municipality annually contributes a fixed amount to the building, with a private partner taking on any additional financial risk

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November 19, 2013

• Examples:• Kelowna

• City contributed $6.0 million up front and guaranteed $11.0 million in project debt

• City makes fixed annual payment to private partner in return for 1,500 hours of community access per year

• Private partner operates facilities with no additional obligation to municipality

• Kingston• Project financed through a combination of municipal reserves,

debentures, provincial grant, community fundraising and donations from local businesses

• Facility operations contracted to third party operator, who has put their management fee “at risk” (i.e., if the facility does not generate the level of net operating income projected, the operator does not earn its base management fee; if net operating profits are exceeded, the operator is entitled to retain a percentage of those excess proceeds

Sports and Entertainment Centres – Financing

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November 19, 2013

• Examples:• London

• City contributed $32.5 million up front and guaranteed $7.0 million in project debt

• Private partner contributed $2.5 million and is obligated to repay project debt

• Private partner operates facilities with no obligation to municipality

• Brampton• City contributed $7.0 million up front and guaranteed $15.5 million

in project debt• Private partner contributed $2.0 million• Private partner operates facilities and repays debt from net

operating income• City covers first $0.5 million of any operating loss (after debt

service), private partner covers next $0.25 million of any operating loss. City and private partner equally share any additional operating loss over $0.75 million

Sports and Entertainment Centres – Financing

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November 19, 2013

• Impetus to construct new Sports and Entertainment Centres has generally arisen from three factors:

• need to replace an aged “arena” facility• desire to achieve broader economic development goals• desire to enhance quality of life factors

• Broader economic development goals include:• sports and entertainment event hosting (and attracting events

that would not previously have considered coming to the community because of its lack of a suitable venue)

• visitor attraction and increased spending by visitors attending events held at the facility; and

• incremental investment and economic development impacts resulting the siting of the facility and its ability to (a) support complementary developments in its environs and (b) support new investment by broadening the range of amenities available within the community

Sports and Entertainment Centres – Benefits

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November 19, 2013

• Positive benefits which have resulted from new Sports and Entertainment Centres constructed since the mid 1990’s include:

• In Prince George BC, the CN Centre has had an “enormous beneficial impact on the community”, with positive benefits resulting from “the flood of visitors that come to town for events”.

• Kelowna BC similarly has realized significant benefits – when the facility was completed, Prospera Place was “on the outskirts of the downtown core” and “since its completion, other businesses and city buildings have popped to make the downtown something to behold”…”this venue helped a thriving cultural district develop in the surrounding area”.

• In Oshawa ON, the GM Centre is credited for producing economic spin-offs in the downtown core, attracting non-residents to the city, and for driving the “night time economy”. Moreover, with the opening of the GM Centre, the downtown commercial vacancy rate decreased from 21% in 2006 to approximately 11% by early 2011; in addition 83% of all building permits, by value, issued in downtown Oshawa between 1994 and 2011 where issued after the GM Centre opened (roughly $540 million).

Sports and Entertainment Centres – Benefits

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November 19, 2013

• In Guelph ON, the City made a number of investments in its downtown “cultural infrastructure” (including the Sleeman Centre, River Run Theatre and Market Square development), projects which have proven to draw people to the district, generate higher property values, support enhanced retail economies and provide associated returns from an enhanced tax base.

• In the case of Kamloops and Victoria, their Event Centres have been noted to contribute financially to downtown businesses, providing an enhanced vitality of surrounding businesses, including restaurants, bars, specialty retail shops and have contributed to the liveability of their respective downtown cores.

Sports and Entertainment Centres – Benefits

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November 19, 2013

Sports and Entertainment Centre – Benefits to RMWB• In addition to the above identified social, development and economic

development benefits, a number of direct and indirect economic benefits can arise within Fort McMurray and across the Regional Municipality of Wood Buffalo as a result of the construction and on-going operation of the Sports and Entertainment Centre.

• The quantitative economic benefits include:• Spending Impacts: the impact resulting from the purchase of

goods and services• Employment Impacts: the increase in employment resulting

the purchase of goods and services• Income Impacts: the increase in personal income resulting

from increases in employment• Tax Impacts: the amount of personal income and sales taxes

(including HST, where such amounts are able to be estimated) and property tax which various levels of government could reasonably expect to receive as a result of a project’s development and operation