Transcript Sakimay First Nations Feasibility Study – Economic

Assessing the Potential of an OHL /
AHL Franchise in Thunder Bay
Study Presentation to Thunder Bay City
Council
December 14, 2009
© Deloitte & Touche LLP and affiliated entities
Background
Project Overview
‒ Deloitte retained by the City of Thunder Bay to assess the ability of the city to support an OHL /
AHL franchise and a new multi-use spectator event centre
‒ Report addresses the following elements:
• The long-term viability of an OHL / AHL Team operating successfully in Thunder Bay
• The impact on an OHL / AHL Team on other existing hockey teams in Thunder Bay
• A review of leases which other municipalities have with OHL teams
Scope of Review
‒ History of hockey in Thunder Bay
‒ History of the Ontario and American Hockey Leagues
‒ Assessment of the operating potential of new multi-use spectator event centres
‒ Assessment of the economic benefits of OHL / AHL teams and spectator event centre
‒ Overall conclusions and recommendations
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Hockey in Thunder Bay
‒ City has had a long and successful history of hosting junior, senior and
semi-professional hockey. City has hosted teams playing in a broad
number of leagues:
• Thunder Bay Junior Hockey League
• Thunder Bay Hockey League
• United States Hockey League
• Colonial / United Hockey League
• Superior International Junior Hockey League
• Thunder Bay Junior B Hockey League
• OHA Senior A Hockey League
‒ Most popular and perhaps most successful team is the Lakehead
University Thunderwolves. Success appears to be driven by:
• Quality of the on-ice product
• Quality of the league vis-à-vis other levels of hockey currently being
played in Thunder Bay
‒ Despite the City’s long hockey history, Thunder Bay has never been
home to a Major Junior A (Tier I) franchise.
‒ Location has also been an issue in keeping teams in the City
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Ontario Hockey League
Overview
‒ In operation since 1974, the OHL is one of three Tier 1
Major Junior hockey leagues operating in Canada
‒ Comprised of 20 teams – 17 located in Ontario, 2 in
Michigan and 1 in Pennsylvania
‒ Produce the highest percentage of players drafted into
the National Hockey League
‒ Teams generally attract some 4,000 fans per game
‒ League has realized significant jumps in attendance
coinciding with the construction of new multi-purpose
spectator event facilities
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2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Barrie
Belleville
Brampton
Erie
Guelph
Kingston
Kitchener
London
Mississauga
Niagara
North Bay
Oshawa
Ottawa
Owen Sound
Peterborough
Plymouth
Saginaw
Sarnia
Sault Ste. Marie
Sudbury
Toronto
Windsor
3,724.0
3,065.8
2,381.4
3,515.1
3,229.4
2,392.4
4,880.1
3,648.4
2,615.7
-2,383.7
2,375.0
7,798.9
2,384.8
2,560.9
2,711.1
-4,271.4
2,880.5
4,057.5
1,421.0
3,081.2
3,711.8
3,158.1
2,316.8
3,912.1
3,348.7
2,177.0
5,260.8
3,905.4
2,532.5
-2,314.2
2,832.5
9,142.7
2,553.6
2,575.5
3,145.0
-4,269.0
3,090.3
3,851.0
1,170.5
3,091.8
3,842.0
3,108.0
2,301.2
4,268.8
3,371.3
1,913.5
5,590.7
7,604.2
2,641.0
--3,282.4
9,022.6
2,526.7
2,821.7
3,178.0
4,025.7
4,105.2
2,854.4
3,465.1
1,063.7
3,196.3
3,728.4
2,785.4
2,173.5
4,266.2
3,665.1
1,978.5
5,904.9
8,362.0
2,903.9
--3,219.3
8,647.3
2,578.1
2,828.1
3,012.7
4,263.2
4,017.4
2,828.7
3,397.6
1,004.4
3,189.4
3,889.6
2,879.3
2,628.4
4,428.3
4,066.6
2,095.1
5,911.3
9,038.1
3,739.3
--2,872.2
9,236.5
2,771.9
3,116.2
3,226.0
4,191.0
3,546.2
3,150.2
4,261.4
1,356.9
2,718.3
3,816.1
2,605.6
2,734.2
4,080.5
4,046.3
2,198.0
5,951.3
9,090.6
2,995.7
--3,013.9
8,207.3
2,725.8
3,430.4
2,657.6
4,337.2
3,495.9
3,483.4
4,601.6
1,009.1
2,696.4
3,846.0
2,788.5
2,579.4
3,591.8
4,205.2
2,247.0
5,887.0
9,034.0
2,225.4
--4,459.6
8,062.5
2,867.7
3,305.9
2,702.4
4,266.7
3,383.1
4,503.8
4,483.8
1,164.2
3,064.1
3,537.0
2,773.4
2,509.5
3,526.6
4,154.2
2,551.0
6,038.2
9,012.9
2,138.3
2,772.9
-5,133.6
8,103.3
2,474.9
3,101.0
2,641.5
3,932.6
3,715.0
4,622.7
4,162.1
-3,343.7
3,486.4
2,970.3
2,404.6
3,526.4
4,071.0
3,093.4
6,245.9
9,006.5
2,393.0
2,961.9
-4,794.0
7,865.5
2,417.8
2,963.4
2,342.9
3,731.6
3,490.5
4,434.4
4,198.2
-5,063.4
OHL Average
3,273.1
3,415.3
3,709.1
3,737.7
3,956.2
3,858.8
3,932.7
4,012.2
4,073.1
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Ontario Hockey League
Building Boom
‒ Since 1996, 10 new 5,000+-seat multi-use spectator facilities have been constructed:
• Barrie Molson Centre (1996) – 4,200 seats
• Sarnia Sports and Entertainment Centre (1998) – 5,000 seats
• Brampton Powerade Centre (1998) – 5,000 seats
• Mississauga Hershey Centre (1998) – 5,400 seats
• Guelph Sleeman Centre (2000) – 5,100 seats
• London John Labatt Centre (2002) – 9,100 seats
• Sault Ste. Marie Essar Centre (2005) – 5,000 seats
• Oshawa General Motors Centre (2006) – 5,400 seats
• Kingston K-Rock Centre (2008) – 5,200 seats
• Windsor WFCU Centre (2008) – 7,000 seats
‒ Buildings designed to mimic NHL venues and contain many of the same amenities found within
these buildings:
4
• luxury suites
• club seats
• in-house restaurants
• retail outlets
• enhanced food & beverage
• larger concourses
• wider seating
• better advertising opportunities
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Ontario Hockey League
Fort William Gardens
5
Confidential Phase 1 Report – Proposed Multi-Plex Facility
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Ontario Hockey League
Essar Centre – Sault Ste. Marie
6
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Ontario Hockey League
K-Rock Centre - Kingston
7
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Ontario Hockey League
General Motors Centre - Oshawa
8
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Ontario Hockey League
WFCU Centre - Windsor
9
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Ontario Hockey League
John Labatt Centre - London
10
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Ontario Hockey League
Sleeman Centre - Guelph
11
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American Hockey League
Overview
‒ In operation since 1936
‒ 29 teams have direct affiliations with NHL parent teams
‒ Teams stocked with younger, recently drafted players
who have yet to make an NHL roster (plus aging
veterans)
‒ Teams generally attract 5,000 to 6,000 fans per game
‒ League has witnessed significant franchise relocations
• at one time there have been 15 different Canadian
teams
• currently one team is “dormant”
• 40 different teams / centres have existed
in the 2000s
• Less than 50% of the league’s 29 teams
predate the 2000-01 season
‒ Player and coach salaries covered by NHL
parent club
‒ Team travel costs generally higher compared
to OHL teams
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2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Albany
Binghamton
Bridgeport
Chicago
Cincinnati
Cleveland
Edmonton
Grand Rapids
Hamilton
Hartford
Hershey
Houston
Iowa
Kentucky
Louisville
Lowell
Manchester
Manitoba
Milwaukee
Norfolk
Omaha
Peoria
Philadelphia
Portland
Providence
Quad City
Quebec
Rochester
Rockford
Saint John
San Antonio
Springfield
St. John's
Syracuse
Toronto
Utah
Wilkes-Barre
Worcester
3,515.5
---5,001.1
---4,969.3
7,099.1
6,347.7
--4,461.4
4,866.0
3,483.2
---4,713.8
--8,571.2
4,610.1
7,700.8
-4,330.1
8,529.2
-3,763.3
-4,427.4
3,293.8
5,169.9
--8,253.4
6,246.6
3,868.0
-4,448.4
8,139.0
5,459.6
3,226.9
-7,046.7
5,489.3
6,715.0
6,118.9
5,428.1
---4,103.6
8,199.1
7,043.4
6,329.2
4,541.4
--8,450.2
4,400.0
8,127.7
-4,720.6
7,682.5
-5,085.5
-4,623.1
5,069.7
5,306.0
-6,096.4
8,337.5
5,119.6
3,726.2
4,038.2
4,561.1
8,113.9
5,188.7
3,561.5
-7,215.7
4,724.4
5,845.5
7,822.4
5,124.8
---4,123.4
8,986.6
7,037.8
5,073.2
4,632.2
--7,488.2
4,423.2
8,000.3
--6,640.5
-3,938.7
5,038.0
4,283.8
4,984.2
5,113.7
-6,354.0
8,304.1
4,678.1
3,454.2
4,360.0
4,864.9
8,005.8
4,536.0
4,212.2
-6,727.4
5,110.6
5,514.5
7,469.5
5,362.7
---4,029.4
9,140.9
6,914.1
4,575.0
3,991.9
--7,261.1
4,072.0
7,497.7
--7,425.5
--4,947.6
3,705.1
4,799.5
5,286.3
4,587.2
5,672.8
8,298.2
4,832.4
3,703.6
4,633.5
5,403.1
9,209.8
4,962.0
4,178.3
8,853.8
6,660.0
5,793.8
5,142.6
7,595.0
5,669.8
---4,001.7
9,052.6
8,626.6
4,930.0
4,191.0
--7,967.3
4,339.2
7,542.1
--8,447.4
--4,556.5
3,713.7
4,828.5
5,504.8
-4,800.6
8,196.6
4,391.4
4,025.1
4,045.1
3,695.6
7,932.1
-3,547.5
-6,547.7
5,119.7
5,044.5
7,702.3
5,800.1
5,156.3
--3,634.9
8,612.3
8,078.6
5,299.5
4,210.0
3,271.1
4,780.0
7,161.5
4,874.0
6,809.3
--6,988.5
--4,443.9
3,473.4
-5,420.3
4,361.9
-8,130.7
--
3,966.3
3,887.5
4,385.8
7,830.3
---6,866.4
4,887.6
4,562.9
8,671.1
6,422.0
4,818.1
--2,801.1
7,593.1
7,769.0
5,700.6
4,684.4
3,543.3
4,254.7
6,697.8
5,260.4
6,634.5
--7,338.6
--4,132.3
3,324.8
-5,248.6
3,829.3
-8,030.0
4,602.1
3,940.0
4,069.3
4,196.2
7,473.8
-5,974.1
-6,897.6
4,574.8
4,405.3
8,770.4
6,279.8
3,789.0
--2,102.4
6,706.2
7,807.2
5,517.5
4,240.5
-4,440.9
6,678.7
4,860.9
6,106.9
3,522.7
-6,835.1
3,826.4
-4,520.2
3,481.1
-5,442.4
4,348.2
-7,666.6
4,343.6
3,538.8
3,916.8
4,527.9
7,315.9
-5,934.3
-7,447.6
4,623.8
4,190.2
8,987.5
5,982.0
4,322.0
--2,293.2
5,882.2
7,769.0
5,877.7
4,109.1
-4,019.0
6,459.4
4,828.3
6,343.0
3,034.9
-4,079.7
3,908.8
-5,167.0
3,951.6
-5,210.7
3,728.5
-6,983.7
3,902.2
AHL Average
5,472.6
5,895.4
5,679.4
5,594.8
5,960.5
5,487.6
5,471.9
5,269.6
5,115.0
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Multi-Use Spectator Event Facilities
Uses
Operations
‒ Depending on the market, new multi-purpose spectator event centres can make or lose money
from operations (Fort Williams Gardens loses $400,000 to $500,000 annually)
Lease Agreements
‒ Leases in new buildings generally run for a 10 / 15 / 20 period and provide the OHL team tenant
with priority booking access. In addition:
• rent generally based on a portion of gross ticket revenue
• teams / building “split” food & beverage and advertising
• building retains revenue from club seats and suites
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Economic Benefits
Team
‒ As an economic entity, the operations of an OHL / AHL team will create employment and spending
within the community
‒ Fosters visitor attraction, increased room night demand and spending (scouts, agents, player
families, etc.)
‒ Provides “brand name” marketing for the community
‒ Supports local philanthropic endeavours
Building
‒ As an economic entity the operations of a multi-use spectator event facility will create employment
and spending within the community
‒ The construction of the building could generate $90 million in total spending impacts and support
more than 550 person years of employment
‒ Used by local economic development / marketing officials as part of the “quality of life” package to
help attract business and investment, and to assist in luring professionals to Thunder Bay
‒ Allows the city to attract a broader range of other sporting, entertainment and corporate events to
the community
‒ Buildings have been used as catalysts for additional entertainment-related economic development
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Conclusions
Can an OHL / AHL Team Operate Successfully in Thunder Bay
‒ Attendance projected to average 4,200 per game over the course of a season
‒ Experience is that teams playing in new buildings will experience a “honeymoon” period of
significantly higher average attendance and some games will attract significantly more fans
‒ Recommended building size is roughly 5,200 to 5,600 seats – cost would be $50 million - $60
million
‒ An OHL / AHL team will require a new, larger building in order to be successful
‒ As most buildings will strive to achieve break-even operating results, 100% of the cost of the
building would be borne by the City of Thunder Bay, offset somewhat by the sale of naming rights
and other building sponsorships
Impact on Existing Teams
‒ OHL / AHL will have little impact on most existing Thunder Bay teams
‒ OHL / AHL will likely have significant impact on the Lakehead University Thunderwolves,
particularly from an attendance and corporate sponsorship perspective
‒ City should attempt to secure some form of covenant / guarantee from the OHL / AHL team that it
will be resident in the City for the long term
Terms and Conditions in a New Facility
‒ OHL / AHL provided with priority booking rights as “featured tenant”
‒ OHL / AHL to pay rent based on gross ticket sales – team and building to share other revenue
streams (including concessions, advertising, etc.)
15
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Questions
16
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