GCG Gaming Business Plan

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Sample business plan for Newton Group Marketing's professional business plan writing services. …

Sample business plan for Newton Group Marketing's professional business plan writing services.

NOTE: The following business plan is fictional and project based, and is in now way affiliated with GCG Corporation.

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  • 1. Great Canadian Gaming Corporation Business Plan 2011 - 2013Great Canadian Gaming Corporation Page 1 of 35
  • 2. Table of ContentsExecutive Summary ................................................................................................................... 41.0 Business of the Company ..................................................................................................... 5 1.1 Business Summary & History ........................................................................................... 5 1.2 Industry Overview ............................................................................................................. 5 1.3 Current Situation of the Company ..................................................................................... 7 1.4 Goals and Objectives........................................................................................................ 7 1.5 Key Success Factors ........................................................................................................ 8 1.6 Structure of the Company ................................................................................................. 82.0 Product / Service Description ............................................................................................... 92.1 Detailed Description of Product/Service................................................................................ 9 2.2 Stage of Development of Product / Service ...................................................................... 9 2.3 Certification and Regulatory Standards Required ........................................................... 10 2.4 Customer Benefits Provided by Product/Service............................................................. 103.0 Market Analysis .................................................................................................................. 11 3.1 Target Market Profile ...................................................................................................... 11 3.2 Total Market Size............................................................................................................ 11 3.3 Trends ............................................................................................................................ 12 3.4 Estimated Company Sales and Market Share ................................................................ 12 3.5 Rules of Purchase .......................................................................................................... 134.0 Competition ........................................................................................................................ 14 4.1 Direct Competitors – Present and Future ........................................................................ 14 4.2 Indirect Competitors – Present and Future ..................................................................... 15 4.3 Substitute Products or Services ...................................................................................... 15 4.4 Competitive Edge ........................................................................................................... 15 4.5 Competitive Analysis Chart ............................................................................................. 165.0 Marketing Strategy ............................................................................................................. 17 5.1 Positioning ...................................................................................................................... 17 5.2 Sales Strategy and Tactics ............................................................................................. 18 5.3 Advertising and Promotion Plans .................................................................................... 18 5.4 Advertising and Promotion Calendar .............................................................................. 19 5.5 Pricing Strategy .............................................................................................................. 20 5.6 Channels of Distribution.................................................................................................. 20 5.7 Public Relations and Publicity Plan ................................................................................. 206.0 The Management Team ..................................................................................................... 21 6.1 Key Management Team Profiles, Qualifications, and Responsibilities ............................ 21 6.2 Board of Directors........................................................................................................... 22 6.3 Principal Advisors ........................................................................................................... 227.0 Operations.......................................................................................................................... 23 7.1 Location .......................................................................................................................... 23 7.2 Capital Equipment Requirements ................................................................................... 23 7.3 Labour Requirements ..................................................................................................... 23 7.4 Sources of Supply .......................................................................................................... 24 7.5 Production Process ........................................................................................................ 248.0 Implementation Schedule ................................................................................................... 26 8.1 Overall Schedule with Timelines ..................................................................................... 26 8.2 Potential Problems to achieving Deadlines ..................................................................... 289.0 Financial ............................................................................................................................. 29 9.1 Type and Amount of Financing Required ........................................................................ 29 9.2 Pro-forma Income Statement .......................................................................................... 30 9.3 Pro-forma Cash Flow Statement ..................................................................................... 31Great Canadian Gaming Corporation Page 2 of 35
  • 3. 9.4 Pro-forma Balance Sheet ............................................................................................... 3210.0 Key Risks ......................................................................................................................... 34 10.1 External Environment Risks .......................................................................................... 34 10.2 Internal Environment Risks ........................................................................................... 34 10.3 Marketing Risks ............................................................................................................ 34 10.4 Human Resource Risks ................................................................................................ 3411.0 Contingency Plans............................................................................................................ 35 11.1 Contingency Plan if Objectives not met......................................................................... 35 11.2 Contingency Plan if Objectives Exceeded..................................................................... 35Great Canadian Gaming Corporation Page 3 of 35
  • 4. Executive SummaryIntroductionGreat Canadian Gaming Corporation is a multi-jurisdictional gaming and entertainmentoperator, which has successfully operated in locations across Canada and Washington State forthe past 20 years. The Company has seen its most growth in the past 10 years, surpassing$400 million for the first time in 2008.River Rock Casino Resort is the company’s flagship location and its sales for the third quarter of2010 has increased by $3.7 million, when compared to the third quarter of last year. With thislocation seeing an increase of 15,000 people each week with the recent completion of theCanada Line Skytrain in Richmond, BC, Great Canadian is planning to improve customer visitsby leveraging the quality and quantity of shows offered at its 950-seat show theatre.The MarketThis business plan will outline the goals and strategies to generate an increase in River Rockcustomer visits for the 25-35 age demographic, which makes up approximately 28% of itsmarket. This target is seen as attainable through the planned quality of the upcomingentertainment, and a growing reputation of the show theatre over the preceding years. The totalsize of this market in the Lower Mainland is approximately 181,860 people.Financial ConsiderationsThe Company is seeking to obtain loan financing for the amount of $500,000. This loan amountis expected to be repaid within 8 months and will produce a 112% ROI over a three year period.The following is the sales, expenses and profits for the show theatre sales. 2012 2013 2014SALES $2.07M $3.62M $4.50MEXPENSES $1.74M $3.37M $4.00MPROFIT $0.33M $0.25M $0.50MThis target is seen as attainable through the planned quality of the upcoming entertainment, anda growing reputation of the show theatre over the preceding years. This business plan willdiscuss the tactics and strategies to generate a significant increase in River Rock visits from itsshow theatre entertainment and implement a successful transition to a stronger entertainmentdestination in the Lower Mainland.Great Canadian Gaming Corporation Page 4 of 35
  • 5. 1.0 Business of the Company1.1 Business Summary & HistoryGreat Canadian Gaming Corporation (Great Canadian) is a multi-jurisdictional gaming andentertainment operator. The company operates in British Columbia, Ontario, Nova Scotia,Canada and Washington State in the US. The Company operates ten casinos, a thoroughbredracetrack that offers slot machines, four standard bred racetracks, a hotel and conferencecentre, two show theatres, a community gaming centre, a bingo hall and various food andbeverage and entertainment facilities. In Canada, it operates its casinos in managed marketswith barriers to entry and under long-term agreements as partners with provincial lotterycorporations. (Great Canadian Gaming Corporation, 2009)Great Canadian has been in business for approximately 30 years and the companys growthhas taken place in the last ten years. The Company began operating temporary charity casinosin various locations in 1982, had expanded its operations in British Columbia by 1997 and in1998 the charity casino system was replaced by government management and the BritishColumbia Lottery Corporation assumed oversight of all casinos in the province. Great Canadianlisted its shares on Toronto Stock Exchange in 2004. The Company is headquartered inRichmond, British Columbia and employs approximately 4,500 people. (Great Canadian GamingCorporation, 2009)1.2 Industry OverviewMajor participants in the world gaming industry are:Harrah’s Entertainment, Inc.Harrah’s Entertainment is a privately owned company that owns, operates, or manages 52casinos in 7 countries comprising the U.S., England, Scotland, Canada, Uruguay, Egypt, andSouth Africa. Its facilities had an aggregate of approximately 3 million square feet of gamingspace and approximately 39,000 hotel rooms. The company was founded in 1937 and is basedin Las Vegas, Nevada.Its casino entertainment facilities include land-based casinos, riverboat ordockside casinos, managed casinos, combination greyhound racetrack and casino, combinationthoroughbred racetrack and casino, and harness racetrack and casino, as well as hotel andconvention space, restaurants, and non-gaming entertainment facilities. The company’sproperties operate primarily under the Harrah’s, Caesars, and Horseshoe brand names. It alsoowns the World Series of Poker tournament and brand. Harrah’s 2009 revenues and net incomerespectively were $8,9074 Billion and $827.6 Million. (Bloomberg Businessweek, 2010)Great Canadian Gaming Corporation Page 5 of 35
  • 6. MGM Resorts InternationalMGM Resorts International is a publicly traded company that owns casinos in 3 countries.MGM owns 17 casinos in the US, six of these in Las Vegas as well as one casino in China.MGM also owns hotel properties in Dubai. Their 2009 revenues and net loss respectively were$5.979 Billion and -$1.292 Billion. (MGM Resorts International, 2010)Las Vegas Sands Corp.Las Vegas Sands Corp is a publicly traded company that owns eight casinos in three countries.Of the US properties, three are in Las Vegas, and one property is in Pennsylvania. Three of theremaining properties are in China, and the last was recently opened in Singapore as of April2010. Their 2009 revenues and net loss respectively were $4.929 Billion and -$368.7 Million.(Las Vegas Sands Corp., 2010)Penn National Gaming, Inc.Penn National Gaming owns 24 casinos in total. In the US, Penn National has 15 casinos, fourracetracks with slot machines, seven horse racetracks, and five locations for off track wagering.Penn National also has one casino in Ontario, Canada. Their 2009 revenues and net lossrespectively were $2.369 Billion and -$267.4 Million. (Penn National Gaming, Inc., 2010)Ameristar Casinos, Inc.Ameristar is publicly traded and owns seven casinos in the US. Their 2009 revenues and netloss respectively were $1.215 Billion and -$4.667 Million. (Ameristar Casinos, Inc., 2010)Boyd Gaming CorporationBoyd Gaming is publicly traded and owns 15 Casinos in the US. Seven of the casinos arelocated in Las Vegas, two in Atlantic City, one in Illinois, one in Indiana, three in Louisiana, andone in Mississippi. Their 2009 revenues and net income respectively were $990.6 Million and$108.2 Million. (Boyd Gaming Corporation, 2010)The gaming industry in Canada is composed of sales from betting and gaming forms such asbingo, lottery, pari-mutuel (horse racing), and slots and from casino table game activities(excluding online activities).Canadian Gaming IndustryThe gaming industry in Canada is composed of sales from betting and gaming forms such asbingo, lottery, pari-mutuel (horse racing), and slots and from casino table game activities(excluding online activities).The Canadian Gaming Industry is a 15.34 billion dollar industry, which has grown by 50% overthe past 10 years.Great Canadian operates in the provinces of British Columbia, Ontario and Nova Scotia, whichaccount for 13%, 35.7% and 2.6% of the Canadian Gaming Industry respectively in 2009. (HLTAdvisory Inc., Canadian Gaming Industry Overview, July 2010).Great Canadian Gaming Corporation Page 6 of 35
  • 7. 1.3 Current Situation of the CompanyThe Great Canadian Gaming Corporation has seen strong revenues of $382.2 million in 2009.This is substantial growth since 2000, where revenues were $54.3 million. Revenues in 2008were $403.7 million and 2009 was the first time in the past 10 years that revenues havedeclined. The Great Canadian Gaming Corporation sees a steady increase in quarterlyrevenues with the first quarter starting in January being the lowest in revenues and the lastquarter ending in December having the highest revenues.This economic slowdown for the company in 2009 has caused a reduction in revenues and soThe Great Canadian Gaming Corporation had to “take a conservative approach toward capitaldeployment. Certain projects have been deferred, and revised timelines for their developmentwill not be issued until greater clarity is available around future market conditions.” (Corporation,2010)Currently the revenues for the first six months of 2010 are $190 million, which is on track tomirror 2009. The first six months of 2009 had revenue of $189.9 million with table games andslot machines generating 27% and 42% of revenue respectively. Revenues at River RockCasino Resort for the first three quarters of 2010 increased by $3.7 million from 2009. (DigitalJournal, 2010)The Great Canadian Gaming Corporation will be adding additional rooms to the River Rockhotel. “The Company will be adding additional rooms to the Rock Rock’s hotel. “This five-storeytower will add 193 rooms to River Rocks hotel capacity, and create an additional driver for bothhospitality and gaming volumes at the property. We anticipate opening this tower during thefourth quarter of 2011, and that completing its construction will require further costs ofapproximately $26.0 million.”Ross J. Mcleod,http://www.digitaljournal.com/pr/159207#ixzz15gV8msHx,November 10,20101.4 Goals and ObjectivesThe Great Canadian Gaming Corporations goal is to increase the amount of visitors for 2010 atthe River Rock Casino.The objective is to obtain a loan of $500,000 from a financial institution to bring in high profileand local comedians and musicians to increase the amount of visitors of a youngerdemographic by 10% (Statistics Canada, Perspectives on Labour and Income, Gambling, July2009). With many newly renovated or newly built facilities The Great Canadian GamingCorporation can use these new expanded facilities to increase the number of visitors aged 25-35. The variety of entertainment will be targeted to a younger demographic with current,trendyacts being featured. A greater amount of advertising will be featured to inform the public of thenew current entertainment.Great Canadian Gaming Corporation Page 7 of 35
  • 8. The 25-35 age demographic accounts for approximately 28% of the gambling demographic.(Statistics Canada. Perspectives on Labour and Income, Gambling, July 2009.)This accounts for $28.8M of Great Gaming’s annual sales of $102.9M (2009 annual grosssales).Therefore a $3M increase in sales results in a 10% increase in total River Rock sales derivedfrom the 25-35 aged demographic.1.5 Key Success FactorsThe Great Canadian Gaming Corporations key success factor has been the lack of competition.This is due to the fact that Crown corporations responsible for gaming have taken steps to limitthe amount of gaming facilities in Canada. Key success factors for the future will be to increasethe diversity of the entertainment that The Great Canadian Gaming Corporation provides toattract a larger range of demographics.1.6 Structure of the CompanyThe Great Canadian Gaming Corporation is a Corporation and is publicly traded on the Torontostock exchange. Ross J. McLeod is the CEO with 30 years of experience in the hospitalityindustry. Ron N. Baker is the newly appointed President as of May 2010. Milton Woensdregt isthe Chief Financial Officer with 27 years of senior accounting and management experience.Earnest C. Beaudin is the Lead Director and Joanna Brierley is the Secretary of the ExecutiveBoard.Great Canadian Gaming Corporation Page 8 of 35
  • 9. 2.0 Product / Service Description2.1 Detailed Description of Product/ServiceThe services River Rock Casino through their River Rock Show Theatre are concerts andshows with the use of their River Rock Show Theatre. River Rock will reach out to numerousmusic artists and comedians and book them to perform at their theatre. The theatre is 21,000sqft and can seat 950 people and River Rock is focusing on bringing in music acts that are eitherlocal, established or starting to make a name for themselves.The comedic acts will be well known and have done shows in throughout North America and therest of the world.The company will book music and comedy artists such as examples listed below.Music Artists ComediansBruno Mars Margaret ChoAegis Fang Anjelah JohnsonBrandon Flowers Russell PetersFar East Movement Aziz AnsariIvana Santilli Chelsea HandlerGreat Canadian offers gambling and gaming services through the following operations: tencasinos, a thoroughbred racetrack (with slot machines), three standard bred racetracks (twooffer slot machines and one offers both slot machines and table games). They also have twoshow theatres, a community gaming centre, a hotel & conference centre, a bingo hall, andvarious associated food and beverage and entertainment facilities.2.2 Stage of Development of Product / ServiceThe development of the theatre location is a finished product. The River Rock Show Theatre isa 21,000 square foot entertainment venue that features a state of the art seating system thatcan transform the theatre into different layouts such as a convention/meeting room.River Rock will be booking more acts to increase the usage of the theatre. As more customerscome to the theatre due to the performer, more awareness will be developed leading to a betteroverall impression of River Rock.Great Canadian Gaming Corporation Page 9 of 35
  • 10. 2.3 Certification and Regulatory Standards RequiredEach province has a Crown Corporation in charge of gaming and regulating the industry. TheGreat Canadian Gaming Corporation also operates in Washington where the industry isregulated by the Washington State Gambling Commission.British Columbia has the British Columbia Lottery Corporation which conducts and manageslotteries, casinos and commercial bingo halls. It oversees all gaming services providers andgaming workers, B.C.s horse racing industry and licensed gaming events. The Branch alsomanages responsible gambling programs and manages the distribution of gaming fundsreceived by organizations. (BCLC, 2010)Ontario is governed by the Ontario Lotto and Gaming Corporation (OLG, 2010) manageslotteries, casinos, and horse racing. Nova Scotia is regulated by the Nova Scotia Alcoholwhich manages alcohol and gaming licenses in the province. (Province of Nova Scotia, 2010)2.4 Customer Benefits Provided by Product/ServiceGreat Gaming Casino’s flagship location, River Rock Casino, currently offers a high level ofconvenience to its market with free parking and Canada Line Skytrain transportation access.With the requested raising of $500,000 Great Canadian will offer an increase in quality andfrequency in its show theatre entertainment for the younger demographics of men and womenaged 25-35.Show ServicesThese shows will provide high levels of “newness”, excitement and entertainment to this marketthrough celebrity and current popular musicians and comedians. It will offer new improvedshows that this venue has never offered and an increase in frequency of its popularentertainment. The Company will sell an attractive package with its show theatre tickets,coupling it with slot machine credit and a free drink. This will encourage show participants toenter the other areas of the casino after each show and purchase gambling services.Gambling ServicesRiver Rock Casino offers some of the most modern, quality gambling products such as slotmachines, card games, food and drinks and service in the Lower Mainland. The November 19,2009 completion of various upgrades at the facility has lead to an extensive slate ofenhancements. Despite the weakened economy, these redevelopments combined to generatesignificant improvements in visitation, table drop, and slot coin-in at the facility during the fourthquarter of 2009. (Annual report, 2009)Great Canadian Gaming Corporation Page 10 of 35
  • 11. 3.0 Market Analysis3.1 Target Market ProfilePrimary MarketNew shows intended to attract younger demographics. Currently shows are geared towards anolder demographic with a list of current shows including “Retro Rock, Orient Expressione, andKenny Rogers” (Rock, 2010).River Rock will be going after a local younger demographic of men and women aged 25-34 withthe new list of performers. The geographic reach of River Rock Casino is larger than othercasinos due to its unique location, situated right at a skytrain station allowing for easiertransportation than any other show theatre or casino in the lower mainland.The psychographic of the target market is that they have an interest in new current music andstandup comedy, as well as they do not see a casino in a negative manner. There are manyother entertainment options available to the target audience and a large marketing campaignand well known celebrities will be used at the beginning of the target market shift to get theaudience to become interested enough to purchase.3.2 Total Market Size“The 21-to-40 gambling crowd has become a growing, lucrative market that will grow evenstronger with the right attention.”Dennis Conrad, Associates, R. K. (2010). Casinos gaming and wagering. Harrahs Entertainment, CasinoJournal.This market is growing with 71% of casino executives participating in a survey conducted for arecent industry trade show say they expect resorts to redesign themselves with young patronsin mind. (Associates, 2010)Currently the age range of 25-44 accounts for 33% of the population in the Lower Mainlandbased on 2006 census data accounting for a total of 379,541 people. From 2001 to 2006 thepopulation of the lower mainland increased their casino spending from $198 per household to$239 per household. It is becoming more socially acceptable to go to a casino in the lowermainland, and based on a survey done by Harris interactive 40% of Americans are planning onattending an entertainment activity or show at a casino in the next 12 months.Goodwin, T. (2006, 07 07). Statistics from extensive casino gambling poll. Retrieved from CasinoGambling Web: http://www.casinogamblingweb.com/gambling-news/casino-gambling/statistics_from_extensive_casino_gambling_poll_released.htmlGreat Canadian Gaming Corporation Page 11 of 35
  • 12. 3.3 TrendsIncrease in Traffic Due To Canada SkytrainAs part of a $30 million Canada Line Skytrain renovation in Vancouver, gamblers and othervisitors can now gain easy access to River Rock Casino off at the Canada Lines BridgeportStation and walk directly to the casino via a new covered walkway to the resorts third floor.Once in the resort, customers take the spiral escalator that drops them on the doorstep ofdozens of slot machines and gaming tables.This Canada Line access has provided River Rock Casino with an extra 15,000 extra customerseach with and a 15% increase in guests. Management has reported that the majority of theirguests now come from the Canada Line. These guests include older demographics fromOakridge, Kerrisdale, Yaletown and younger crowd as they can drink and not have to drive. Theincreased drinking and driving restrictions in British Columbia could also encourage a furtherincrease in traffic to the casino. (Morton, 2009)Entertainment at CasinosIn a 2006 poll, among those who say they are at least somewhat likely to visit a casino in thenext 12 months (49%), 40 percent are planning on attending an entertainment activity/show.The poll also showed that people are seeking for more of an entertainment experience whenvisiting a casino to gamble. (Goodwin, 2006)Socioeconomic trendCurrently there is a decline in younger gamblers as the number of gamblers aged 19-34 hasdecreased from 57% (1992) to 42% (2008). River Rock Casino hopes to capture this decliningdemographic with an increase in quality music and comedy entertainment.(SOURCE: Statistics Canada. Perspectives on Labour and Income, Gambling, July 2009.)3.4 Estimated Company Sales and Market ShareTo forecast the three years of sales in theatre tickets sold, River Rock will assume that duringthe first year they will be selling 60% of seats available, 75% for the second, and 90% for thethird year for their normal shows. As for the high profile shows, 10% of the seats will bereserved for VIP tickets and 90% for regular price.The goal is to have a show every weekend (Friday, Saturday, and Sunday), and start off withhaving two high profile performers in year one and increase by two every year. Each high profilefile performance will consist of three concerts.The table below shows the expected sales and shows.Great Canadian Gaming Corporation Page 12 of 35
  • 13. Year 1 Year 2 Year 3 # of # of # of Concert Concert Concert s Sales s Sales s Sales $ High $ $ 1,254,326.1 Profile 6 627,163.08 9 940,744.63 12 7 Norma $ $ l $ 2,678,079.6 3,213,695.6 Shows 35 714,154.58 105 9 105 3 $ $ $ 1,341,317.6 3,618,824.3 4,468,021.7 Totals 7 1 93.5 Rules of PurchaseRiver Rock Casino customers require the live shows to appeal to their demographic, and mustperceive gambling after the events to be desirable and socially acceptable. They require easilyaccessible and affordable parking, with the casino being within 30-60 minutes driving distance.Customers who choose to gamble must also perceive their odds of winning to be fair(BC Responsible Gaming)Great Canadian Gaming Corporation Page 13 of 35
  • 14. 4.0 Competition4.1 Direct Competitors – Present and FuturePresent CompetitorsOther live entertainment venues with shows on the weekends such as the Orpheum, QueenElizabeth Theatre, and the Vogue Theatre would be in direct competition with the River RockShow Theatre. All of these theatres are located in downtown Vancouver with seating capacitiesranging from around 1,000-2,900.The Orpheum has 2,780 seats and positions itself through a variety of shows. It showcases theVancouver Symphony, Opera, rock concerts, and stand-up comedians.The Queen Elizabeth Theatre has 2,781 seats and positions itself by showcasing ballet, opera,orchestra, and theatre productions at its venue.The Vogue Theatre has 1,144 seats and positions itself through having rock performances suchas The Trews and Bedouin Soundclash. Stand-up comedians such as Bob Saget, and localbands perform at the Vogue.Other gambling facilities in the Lower Mainland are in direct competition with River Rock suchas Edgewater Casino located in downtown Vancouver. The Edgewater Casino has a 430 seatshow theatre that is positioned mainly towards video events with an 18ft tall high definitionprojection screen and a state of the art surround sound system.The Grand Villa Casino located in Burnaby has a restaurant lounge area with a big screentelevision for watching sporting events.The Starlight Casino located in New Westminster has a sports bar with 120 video screens whichattract customers to watch sporting events.Cascades Casino located in Langley has a 420 seat theatre with large high definition videoscreens for sporting events. Live performances mainly consist of jazz, blues, and R&B.Future CompetitorThere is a casino planned for downtown construction to replace the Edgewater Casino and bethree times the size. It is currently expected to be finished by 2013. This new casino has yet tobe named and is going to be positioned as a Vegas style destination casino. (Rockel, 2010)Great Canadian Gaming Corporation Page 14 of 35
  • 15. 4.2 Indirect Competitors – Present and FutureOnline GamblingThe online gaming industry has grown from $87M (2002) to $4.7B (2010). By 2014 onlinegambling is expected to grow to over US$7B. Examples include online poker, etc. ( iGamingBusiness)Clubs and Smaller VenuesMany acts prefer this medium since it costs less and there is not as much set up costs. Theartist can do a shorter show and tickets are usually cheaper than going to an actual theatre forthe customer.YouTube and Video Upload SitesAlmost anything can be found on the Internet and many people will wait for a concert or show tobe uploaded online rather than pay to watch. A lot of previous shows of the artist or comedianwill be posted on YouTube so only loyal fans will pay to watch their shows.DVD’s and Blu-RayMany artists and acts have their concerts come out in these mediums. Rather than pay a higherprice for a ticket, customers will wait for a DVD or Blu-Ray to come out than go to a concertwhere they it may be too noisy or the crowd can have unexpected behavior. With Blu-Rayquality, it can be almost as if you’re at a concert.4.3 Substitute Products or ServicesFor the casinos and gaming sector as a whole, almost any leisure activity can act as asubstitute, which can be taken up with minimal switching costs and may also be cheaper thangaming for consumers. Aside from cost advantages, some customers may value social aspectsof using non-gambling forms of gaming facilities. The threat of substitutes in this sector isstrong. (Source: Datamonitor, United States - Casinos & Gaming, March 2010)4.4 Competitive EdgeRiver Rock Casino’s floor is open 24 hours a day and 7 days a week. Theatre shows are moreintimate with a smaller theatre when compared to large venues such as Rogers Arena, and ThePacific Coliseum. River Rock Casino has the largest show theatre out of all the casinos in thelower mainland allowing them to attract larger performers.River Rock is able to give value for the consumer due to the lower ticket price when comparedto similar sized venues since the majority of the casino’s revenues come from slots machinesand table games. This allows the casino to reduce the ticket price to bring in more consumersto use its gambling facilities enticing them with a free $5 gaming chip with the purchase of atheatre ticket.Great Canadian Gaming Corporation Page 15 of 35
  • 16. Any new company attempting to enter this sector would require large amount of capital to set upa casino, employ staff and acquire gaming equipment. However, the willingness of customers toswitch from one gaming company to another and easy access to suppliers are conductive to theentry of new players. The likelihood of new entrants to this sector is assessed as a moderateoverall. Datamonitor. (2010). Great Canadian Gaming Corporation. New York: Datamonitor.The strong barriers to entry to the gaming industry in Canada have assisted in the growth ofGreat Canadian Gaming Corporation due to reduced competition. (Corporation, 2010)4.5 Competitive Analysis ChartComparing casinos that compete with River Rock that also have show theatres. Edgewater Casino River Rock Cascades CasinoShow theatre 430 950 seats 420# Hotel Rooms 0 220 (193 more to be 77 added end of 2011)Restaurants 2 5 3Gaming space 30,000sq ft 70,000sq ft 50,000sq ftParking spaces Underground valet 1,200 spaces in a Large outsideavailable parking large multilevel patrolled parking area structureEase of Access Drive or two block Drive or casino is Must drive or bus walk from Stadium located at Bridgeport with one bus route to skytrain station skytrain station on the location the Canada linePool N/A Yes N/AThe River Rock Casino has the largest show theater when compared to its main casinocompetitors. The River Rock Casino has the highest amount of amenities and largest gamingspace for patrons to utilize after viewing a performance.Great Canadian Gaming Corporation Page 16 of 35
  • 17. 5.0 Marketing Strategy5.1 PositioningRiver Rock offers competitively priced, high quality musical and comedy performances as a pullstrategy to attract the 25-35 aged market in Lower Mainland. They offer a wide variety ofadditional services for its clients to enjoy including food, drinks and gambling. River Rock alsoencourages the use of these services by offering a free alcoholic drink and slot or table gamecredit with the show ticket.The customers will perceive the theatre’s entertainment as high quality and relativelycomparable to shows offered downtown as an example, yet at a lower price. River Rock ispositioned as one of the most high class gambling establishment in the Lower Mainland. This isreinforced with the company’s recent upgrades to the facility and focus on high quality service.Great Canadian Gaming Corporation Page 17 of 35
  • 18. 5.2 Sales Strategy and TacticsThe success of this marketing strategy is reliant on advertising and promotion efforts, which willbe discussed in detail in the following section.5.3 Advertising and Promotion PlansThe primary strategy is to use the show theatre to bring in more guests onto the casino floor byadding incentives such as free drinks and a $10.00 credit that can be used for table games orslot machines with every ticket purchased. These tickets must be redeemed on the same dateof the performance.Sales PromotionIn order to bring more guests onto the casino floor, River Rock Show Theatre will be including afree drink and free credits for the slot machines or table games. At the end of everyperformance, the performer will remind the guests to use their free drinks and credits that comewith the ticket and encourage them to continue their night at the casino. This reminder at theend of each performance will be included in each performer’s contract.Social MediaRiver Rock will be using social media to promote the new shows they are presenting throughthe means of Facebook and Twitter. These pages will display information about what kind ofshows are up coming and when they will be presented. On these pages there will also beinformation about “What to do after the show” that will explain with each ticket purchase they willreceive a free drink, and a $10.00 credit that can be used for either table games or slotmachines.NewspaperRiver Rock will promote their upcoming shows with advertisements in the local daily MetroVancouver newspapers, 24, and the Georgia Straight, which have a combined readership of95,800. The advertisements will feature the date of the show, details of the sales promotionincluded with the show, as well as a call to action to both where the ticket can be bought and thecasino website. (Advertise. (2010, September). Retrieved from Metro Vancouver:http://www.metronews.ca/vancouver/advertise)(Straight Facts. (2010). Retrieved from Georgia Straight: http://www.straight.com/straightfacts)Newspaper advertisements will run every day for a week before the show, from Monday toFriday. The advertisements will be a 40 line banner in each newspaper. This will total to amonthly cost of $11,720 for promoting Class A performances and a cost of $5,860 per month forpromoting class B performances.Metro Vancouver, 24 Hours (Vancouver), and Georgia Straight.(2010, January 1). Retrieved from Card Online: http://cardonline.ca/Great Canadian Gaming Corporation Page 18 of 35
  • 19. TransitRiver Rock will be using transit advertisements to promote their upcoming shows through bothsky train station advertisements as well as in-train banners. There will be 15 advertisementseach of vertical and interior cards and platform poster advertisements at 8 Class A Skytrainstations. The Class A Skytrain stations include Burrard, Granville, Broadway and Metrotown, allof which have high foot traffic, and will therefore generate the most awareness for the shows.Each interior card will cost $41, vertical cards will cost $109, and platform posters will cost $616and will cycle for the 4 weeks prior to the show.Translink. (2010). Products and Rates. Retrievedfrom Vancouver Transit Advertisment:http://www.vancouvertransitadvertising.com/dev/wordpress/products-and-rates/5.4 Advertising and Promotion Calendar Strategy Tactic / Vehicle Description Why Useful? Timing Facebook Run update on Facilitates the Daily twitter Twitter Twitter and artist’s current updates, regular,Social Media Facebook daily. method of weekly promotion Facebook pasts. Beginning April 2012 Metro Vancouver There will be There will be These Vancouver 24 banner ads Metro and 24 advertisement Georgia Straight placed that will newspapers that will be starting in promote the up- are distributed April 2012Newspaper coming on the sky train performances, in that will have a the very large reach. entertainment section. In performers Each performer This will add an At the end of contracts will end their incentive to visit everySales show by the casino floor performance.Promotion advising the after the audience to visit performance the casino floor Advertising at 8 Posters River Rock Starting in April stations and 30 in displaying the Casino is 2012 with doubleTransit train poster ads upcoming shows located on the promotionsAdvertising at River Rock Canada line before class A route performancesGreat Canadian Gaming Corporation Page 19 of 35
  • 20. The first show will be May 6, 2012, and will act as a premiere for River Rock’s new upgradedshow theatre. There will be two large performers in Year 1 (May 6, 2012 - May 2013), the firstone being May 6, 2012. Each large performer will do three shows. In addition to these specialshows, River Rock’s show theatre will feature 1-2 shows per week of trendy local musicians orcomedians which are popular with the 25-35 age demographic.In Year 2 River Rock plans to increase its number of special celebrity performers to three, andfour performers in Year 3. The special shows will feature a celebrity musician or comedian suchas Chris Rock.5.5 Pricing StrategyThe pricing strategy that River Rock Show Theatre will be using will be a competition based.Prices will be set lower than the competitors because River Rock will be trying to attract theaudience to the casino floors after each show. The price for low profile tickets will averagearound $35.00, high profile performers will average around $75.00 and VIP will be priced higherat $440.00 a ticket.5.6 Channels of DistributionTo attend River Rock’s shows and concerts, the targeted customers will have to purchasetickets. River Rock uses Ticketmaster for all their shows at the theatre so that will not change forthe new acts that they will be bringing in as mentioned in section 2.1 of the business plan.Customers can purchase tickets at a physical Ticketmaster store or online atwww.ticketmaster.ca and print out a paper copy of the ticket. It’s the same thing as an actualticket with the seat number, authenticity bar code, name of the concert or artist and time andplace of the event. Being able to print it is for the convenience of the customer if they do nothave the time to go to a physical store.5.7 Public Relations and Publicity PlanThe River Rock Casino will keep investors informed through bimonthly newsletters which willhighlight upcoming shows, expected profits and traffic as well as success points from pastshows.The publicity for these shows will be done through articles in the entertainment section of localMetro Vancouver newspapers. These articles will profile local artists and their upcoming showdates at the River Rock theatre.Great Canadian Gaming Corporation Page 20 of 35
  • 21. 6.0 The Management Team6.1 Key Management Team Profiles, Qualifications, and ResponsibilitiesThe following are the profiles of the Key Management Team, along with their qualifications, andresponsibilities sourced from the Great Canadian Gaming Corporation website.Director Executive Chairman, Chief Executive Officer - Great Canadian GamingCorporationRoss J. McLeodRoss J. McLeod has over 30 years of experience in the hospitality industry and served as aDivisional Director of Operations for the Pacific National Exhibition. An acknowledged expert incommunity charity gaming and a respected and major contributor to British Columbias currentregulatory framework for casino gaming, Mr. McLeod is responsible for the evolution of thecharitable gaming industry in British Columbia. In 1999, Mr. McLeod was recognized by hispeers for his industry leadership and awarded Canadas most prestigious gaming award, theOutstanding Contribution to the Canadian Gaming Industry Award.Ross J. McLeod. (2009). Retrieved from Great Canadian Gaming Corporation: http://www.greatcanadiancasinos.com/overview/governance/ross_mcleod.aspxDirector, PresidentGreat Canadian Gaming CorporationRod N. BakerMr. Baker is the President of Great Canadian, a position he has occupied since March of 2010.Prior to assuming this role, Mr. Baker served as a consultant to the company from June of 2008.In his capacity as a consultant, Mr. Baker was responsible for developing and implementing theefficiency improvement initiatives that allowed Great Canadian to remain both profitable andcompetitive during the global economic recession. Prior to joining Great Canadian, Mr. Bakerworked in the field of merchant banking, both managing and investing in private and publiccompanies throughout North America. Mr. Baker’s background also includes various roles withseveral large Canadian based investment dealers.Rod N. Baker. (2009). Retrieved from Great Canadian Gaming Corporation: http://www.greatcanadiancasinos.com/overview/governance/rod_baker.aspxLead DirectorGreat Canadian Gaming CorporationEarnest C. BeaudinA member of the Law Society of British Columbia, Mr. Beaudin was one of the founding partnersof the Vancouver law firm Alexander Holburn Beaudin & Lang. Mr. Beaudin left the firm andprivate law practice in 1986 to become the President, Chief Executive Officer and GeneralCounsel of Decker Management Ltd. Decker Management Ltd.s primary focus is healthcareGreat Canadian Gaming Corporation Page 21 of 35
  • 22. issues while Decker Construction Ltd. is principally involved in residential development andconstruction. Mr. Beaudin continues to hold the position of President and CEO of both divisions.Earnest C. Beaudin. (2009). Retrieved from Great Canadian Gaming Corporation: http://www.greatcanadiancasinos.com/overview/governance/earnest_beaudin.aspx6.2 Board of DirectorsThe Board of Directors consists of Earnest C. Beaudin, Brian E. Egli, Larry Campbell, PeterMeredith, Adrian R. Thomas, Ricahrd S. Buski, Thomas W. Gaffney, and David L. Prupas.Directors and Officers. (2009). Retrieved from Great Canadian Gaming Corporation: http://www.greatcanadiancasinos.com/overview/governance/6.3 Principal AdvisorsFor booking talent, artists and comedians, River Rock will be affiliated with the following firmsand companies:William Morris Endeavor Entertainment – http://www.wma.comCreative Artists Agency - http://www.caa.com/International Creative Management - http://icmtalent.com/United Talent Agency - http://www.unitedtalent.com/The agencies listed above are known as the “big four” who dominate the entertainment industry.They have hundreds of agents globally, and own the rights to numerous mediums. Theseagencies represent a large portion of the entertainment world, from television, commercials,musicians and sports figures.Great Canadian Gaming Corporation Page 22 of 35
  • 23. 7.0 Operations7.1 LocationRiver Rock Casino Resort is located on 8811 River Road Richmond, British Columbia. Theoffice space for the marketing and promotions employees for the show theatre will be set up atthe head office location at 350 - 13775 Commerce Parkway Richmond, British Columbia. Thiswill allow for ease of communication and transportation between the marketing managers andRiver Rock staff.7.2 Capital Equipment RequirementsOffice SpaceOffice equipment is required for two new employees. The current office has phone and Internetconnection established; therefore the new employees only require computers and work space.TheatreEach artist requires different equipment to perform at the show theater. River Rock provides thebasic equipment for the venue. If an act has any special requirements for their show, they willprovide their own equipment to fulfill these needs.7.3 Labour RequirementsMarketingTwo marketing managers will be hired to run the new marketing campaign for the show theatre.These two employees will be experienced in creating and running a marketing campaign. Theirpay will be based on the industry average for a marketing coordinator with a starting salary of$70,614 with bonuses and pay increases based on performance.Pay scale. (2010). Pay scale Canada. Retrieved from Pay scale:http://www.payscale.com/research/CA/Job=Marketing_Communications_Manager/SalaryThe Show TheaterIncreased staff will be required for the show theatre since it will be operating at a higher thannormal capacity and frequency. These staff will be part time and paid an hourly wage of $13 perhour. The increased attendance of the show theatre during the weekends will require the hiringof additional table staff or adding hours to the table game employees current schedule.Great Canadian Gaming Corporation Page 23 of 35
  • 24. 7.4 Sources of SupplyTicketmaster – the show theatre tickets will be supplied from Ticketmaster. The prices for theshow will vary depending on the performer. In addition to ticket price there will be other costssuch as service charge, building facility charge, processing charge and shipping or e-ticketconvenience charge. Management will not be using any other ticket distributors other thanTicketmaster. River Rock will track ticket sales to compare with promotion usage and casinosales.The “Big 4” talent agencies – William Morris Endeavor, Creative Artists Agency, InternationalCreative Management and United Talent Agency will be River Rock’s source for booking talentand shows. River Rock chose the Big 4 as they are amongst the largest agencies in NorthAmerica and provide access to a wide variety of performers. The Big 4 are located globally andprices vary depending on the talent, location, and amount of shows requested.7.5 Production Process Contact Agency Set-up and Negotiations show Advertising Talent Arrival and PromotionContact Agency – River Rock’s marketing team will have a list of comedians and music actsthat they want to have performing at the theatre. The list will be separated with Class A andClass B performers. Class A are celebrity-level performers that are more established orcommand a higher fee or arrangements. Class B are performers that are on the rise or localacts that have a steady, existing fan base. River Rock will contact the “Big 4” talent agencies tobook talent and see who’s available.Negotiations – River Rock will contact the agent of the performer they want booked and ensurethe availability of the performer will coincide with the theatre’s schedule as to avoid conflicts.Great Canadian Gaming Corporation Page 24 of 35
  • 25. Cost of performer, accommodations, number of shows and length of shows will all be negotiatedand completed before the next step commences.Advertising and Promotion – Once both parties have agreed on negotiations. River Rock andthe performer’s marketing team will devise an advertising and promotion plan. Costs andmagnitude of advertising will vary depending on the performer. River Rock will use social mediaand newspaper and transit advertisements to promote upcoming shows. Tickets will be sold atTicketmaster outlets or on Ticketmaster.ca.Talent Arrival – Once the performer and the agent arrives, River Rock Resort will provideaccommodations at the River Rock Casino Resort. The River Rock marketing team will discusswith the performer on songs that they will perform on the night of the show and if it’s a comedianthen the topic of material they will perform.Set Up and Show – River Rock staff will assist in theatre stage set up, according to theperformer. After a couple of practice rehearsals, the performance will begin later on that eveningor the next day.Great Canadian Gaming Corporation Page 25 of 35
  • 26. 8.0 Implementation Schedule8.1 Overall Schedule with TimelinesThe following will outline a general schedule for Class A and Class B music and comedyperformers at the River Rock show theatre venue. Each Class A performer is scheduled forthree consecutive shows. Each Class B performer is scheduled for two shows performing onFriday and Saturday night.In the case a performer cancels or is unable to perform, management will maintain a smallnumber of Class B performers able to step in on short notice. Shows will be scheduled such thatthey avoid conflicts with large Vancouver events, such as playoff hockey games and largeconcerts at Rogers Arena in order to maximize show attendance.Each month The Company will raise awareness and create “buzz” through advertisement andpromotions one month in advance of upcoming shows.April 2012Advertise and promote upcoming entertainers for May 2012 and increase the quality andquantity of shows at the River Rock’s show theatre venue.May 2012Class A: 3 showsClass B: 6 showsJune 2012Class A: 0 showsClass B: 10 shows(Two additional shows booked on Wednesdays)July 2012Class A: 3 showsClass B: 9 shows(Two additional shows booked on Wednesdays)August 2012Class A: 0 showsClass B: 10 shows(Two additional shows booked on Wednesdays)September 2012Class A: 0 showsClass B: 9 showsGreat Canadian Gaming Corporation Page 26 of 35
  • 27. October 2012Class A: 0 showsClass B: 9 showsNovember 2012Class A: 0 showsClass B: 8 showsDecember 2012Class A: 0 showsClass B: 10 showsJanuary 2013Class A: 0 showsClass B: 8 showsManagement performs casino-show theatre sales assessmentFebruary 2013Class A: 0 showsClass B: 8 showsMarch 2013Class A: 0 showsClass B: 10 showsApril 2013Class A: 0 showsClass B: 8 showsSummary May 2012-April 2013Total Shows PlannedClass A: 6Class B: 105AssessmentIn September 2012 management will assess the use of gambling credits, increase in casino flowand casino sales in comparison to show theatre attendance. If Year 1 show theatre strategyproves profitable for casino, The Company will increase the number of Class A performers andmaintain the same number of total shows.Year 2 and Year 3 Show Theatre ScheduleYear 2-3 Class A performers (9 shows)Great Canadian Gaming Corporation Page 27 of 35
  • 28. -105 Class B performancesYear 3-4 Class A performers (12 shows)-105 Class B performances8.2 Potential Problems to achieving DeadlinesThe accuracy of the show theatre schedule could be affected primarily by Class A performercancellations. These cancellations could be due to factors such as illness or performerscheduling conflicts. The Company plans to minimize these risks through binding contractualagreement. A cancelled Class A performer act could offset negative word of mouth for the RiverRock show theatre. A second potential problem is the advanced booking time or the possibilityof changing performers. Management estimates an 8 month advance booking time-frame.8.3 MilestonesJanuary 2011Obtain a $500,000 loan by September 1, 2011.September 2011-April 2012Book Year 1 schedule. Begin scheduling September 2011, will be completed by April 2012.January 20128 month assessment of show theatre patron casino usage. January 2012September 2012-April 2013Book Year 2 schedule. Begin scheduling September 2012.January 201320 month assessment January 2013September 2013-April 2014Book Year 3 schedule. Begin scheduling September 2013.January 201428 month assessment January 2014Great Canadian Gaming Corporation Page 28 of 35
  • 29. 9.0 Financial9.1 Type and Amount of Financing RequiredAmount of Financing Required:$500,000The highest negative cumulative cash flow for the River Rock Show Theatre is the month ofDecember 2011, with a negative cumulative cash flow of $439,172. This represents themaximum amount of financing the Show Theatre is expected to require. To compensate for thepossibility of underestimating financing requirements, a buffer of 13.9% will be included in thetotal financing amount. This brings the amount of financing to $500,000.Type of Financing:The Show Theatre will use debt financing from a financial institution to meet the financingrequirement.Financing Contingency Plan:If returns are not seen as quickly as expected additional short term financing or line of credit willbe used.Great Canadian Gaming Corporation Page 29 of 35
  • 30. 9.2 Pro-forma Income StatementGreat Canadian Gaming Corporation Page 30 of 35
  • 31. 9.3 Pro-forma Cash Flow StatementGreat Canadian Gaming Corporation Page 31 of 35
  • 32. 9.4 Pro-forma Balance SheetGreat Canadian Gaming Corporation Page 32 of 35
  • 33. 9.5 Notes to Financial Statements and Important Financial AssumptionsRelated Income statement and cash flow assumptions:The class A artists are paid 50% when the artist is booked for the show and the remainder whenthe artist performs. Class B artists are paid 25% of their expected ticket sales when booked andthe remaining 75% after the performance.It is assumed that the class B acts draw 60% show theater capacity crowds in 2012. Projectedcapacity for 2013 is 75% of show theatre capacity for class B shows, as well as a 90% showtheatre capacity for 2014.All performers’ tickets go on sale 4 months prior to the show date.Class A artists are expected to sell 100% of the tickets in the first month of the tickets beingoffered.Cash flow specific assumptions:The class A artists are paid 85% of ticket revenue with 50% paid when the artist is booked andthe remainder when the artist performs. Class B artists are paid a total of 65% of ticket revenuewith 25% of their expected ticket sales when booked and the remaining 75% of their payment ofticket sales after the performance.Class A artists are expected to sell 100% of the tickets in the first month of being offered. Ticketsales for class B artists are expected to have 50% of sales in the first month and the remaining50% over the next 3 months with 10% in the second month of tickets offered, 10% in the thirdmonth and 30% in the month of the performance. Ticket master forwards cash received fromthe sales of the tickets within the same month of the ticket being sold.Balance Sheet Assumptions:Amortization for the theatre is straight-line method over 25 years.Great Canadian Gaming Corporation Page 33 of 35
  • 34. 10.0 Key Risks10.1 External Environment Risks - Terms of operational service agreements with lottery corporations - Changes to gaming laws that may impact the Company’s operational service agreements - Pending, proposed or unanticipated regulatory or policy changes Corporation, G. C. (2010). Annual report 2009. Richmond: Great Canadian Gaming Corporation. - Cancellations of Class A entertainers due to health or other reasons - Class A entertainers are unavailable for specific dates10.2 Internal Environment Risks - Unable to obtain key Class A entertainers that fit with the casino’s target market. - Not a sufficient number of show attendees flow to casino proceeding shows10.3 Marketing Risks - The current marketing and promotions outlined in this plan does not create sufficient awareness for shows consistently throughout the year10.4 Human Resource RisksDependence on key personnelCorporation, G. C. (2010). Annual report 2009. Richmond: Great Canadian Gaming Corporation.RISK RESPONSENot a sufficient number of show attendees Track casino credit & free drink usageflow to casino proceeding showsUnable to obtain key Class A entertainers that Post-pone schedule until a suitable fitfit with casino target marketMarketing and promotions not sufficient in Increase advertisement and promotionscreating show awareness spending and assess resulting casino profitabilityGreat Canadian Gaming Corporation Page 34 of 35
  • 35. 11.0 Contingency Plans11.1 Contingency Plan if Objectives not metIf River Rock Doesn’t Reach Sufficiently Show CapacitySpend more money and marketing efforts in increasing awareness and interest in the shows atRiver Rock. Examples include radio contests or direct mail marketing towards target market.If show attendees fail to move to casino following showsManagement will undergo close analysis between show demographics, gambling credit usageand casino sales, and test various fan bases to determine which are most profitable for casino.Potentially spend additional monies as well as write contractual agreements with the performerswhich include celebrity appearance gambling after shows to encourage consumer involvementon the gambling floor.Execute direct marketing with past show attendees to market upcoming shows and createrepeat visits11.2 Contingency Plan if Objectives ExceededIf celebrity Class A performers create profits which exceed projections-Management will adjust upcoming show schedules to increase the ratio of Class A performers.Great Canadian Gaming Corporation Page 35 of 35