Your SlideShare is downloading. ×
2005 - Great Wall of China IMAX Theater & Film - Business Plan
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

2005 - Great Wall of China IMAX Theater & Film - Business Plan

1,232
views

Published on

Development of a destination film theater and film for permanent showing at the Great Wall’s most visited location, the Badaling Gate. Approximately a one-hour drive from central Beijing, this …

Development of a destination film theater and film for permanent showing at the Great Wall’s most visited location, the Badaling Gate. Approximately a one-hour drive from central Beijing, this attraction is enjoyed by 5 million visitors annually, including heads of state and dignitaries from around the world. Goal was to raise $12,000,000 and complete build out in time for 2008 Olympics in Beijing. We got close, but no cigar.

Published in: Entertainment & Humor

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,232
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. ______________________________________________________ Business Plan and Financial Projections Great Wall Media, LLC www.greatwallimax.com
  • 2. CONTENTSSection 1: A Brief OverviewSection 2: The Business Plan Background A Model: Success as a Destination Theater IMAX Affiliate Relations Program Opportunity to Acquire Theater & Film SponsorsSection 3: The Location: BadalingSection 4: The Venue & Film The Venue The IMAX Experience The Great Wall FilmSection 5: Risk Analysis Competitive Environment Competitive Advantages IMAX Success in ChinaSection 6: Financial Plan Investment Highlights Sources and Uses of Cash Five-Year Financial Assumptions Pro Forma Statements & Notes to Financial InformationSection 7: Operating TimelineSection 8: Exit StrategySection 9: Appendix Management Team Venue & Film Sponsorship Evaluation Project Factoids
  • 3. A BRIEF OVERVIEWConcept: To develop a major entertainment venue at the Great Wall of China in cooperation with the Peoples Republic of China, IMAX Corporation and a major film producer.Project: Development of a destination film theater and film for permanent showing at the Great Wall’s most visited location, the Badaling Gate. Approximately a one-hour drive from central Beijing, this attraction is enjoyed by 5 million visitors annually, including heads of state and dignitaries from around the world.Opportunity: Destination theaters are located in major tourist locations such as The Grand Canyon and Niagara Falls, as well as cultural venues such as the Smithsonian Museum in Washington, DC. Because destination films provide a more in depth story and picture than can be experienced in a short visit, a high percentage of visitors choose to enjoy a wide screen film of the location as a part of their experience. As in the case of the film shown at the Grand Canyon IMAX, a destination film can have a continuous run for decades- something not otherwise imaginable in the film industry. In addition, cross ownership of the theater and film can consolidate theater and distribution revenue to produce net revenue that general circulation films cannot achieve.Investment: $12,000,000 ($7M Film / $5M Theater, Land & Initial Operations)ROI: Return of Capital in 3 years, approximately 75% annual return on project cost.Status: Phoenician Industries has an exclusive development right agreement with the Badaling Tourism Development Authority, which is the State Company operating this facility. The Chinese government is in support of the concept, in particular as a 2008 Olympics attraction. Contacts with major sponsors for both the film and theater have been ongoing, and a major film producer has expressed interest in the film. Funding requirements are described in the financial section.
  • 4. BUSINESS PLANBACKGROUNDPhoenician Industries has executed a letter of intent with the Badaling Tourism Authority to locate an 1IMAX theater at The Great Wall of China. Located just outside of Beijing, Badaling is the most popularentrance to The Great Wall hosting over 5 million annual visitors. A substantial number of the topgrossing IMAX films in history are continuously shown at major tourist destination locations such as theGrand Canyon, the Smithsonian Institute National Air & Space Museum and Niagara Falls.The Company has been working with Destination Cinema, Inc. (www.destinationcinema.com) and IMAXCorporation (www.imax.com) to develop a business plan to replicate this highly successful and provenmodel. In fact, with integrated revenue form syndication and distribution exceeding $300 million dollars,the film Grand Canyon: The Hidden Secrets, may be the most profitable movie ever made.A destination film at one of the world’s most recognized cultural monuments presents an exceptional andunique investment opportunity. The Great Wall of China is universally acclaimed as a “must see” place inChina, attracting more than 5 million annual visitors to our location. It is difficult to visualize a morepowerful location anywhere in the world for a destination theater that could rival The Great Wall of China.In addition to its long life as an important film attraction that millions will view on-site, research indicatesThe Great Wall Film will also have an extremely wide international distribution appeal.Taking advantage of relatively low initial capital requirements and low operating expenses in China, TheGreat Wall Theater and Film will be a highly profitable revenue center several decades into the future.A Model: Success as a Destination TheaterDestination Cinema, Inc. (DCI) owns and operates giant screen theaters in tourist locations throughoutNorth America, having pioneered the destination film and theater concept in 1984. One of the mostsuccessful producers of giant screen films, the company owns a film library specializing in destinationtopics and distributes giant screen films to theaters throughout the world. By combining the roles oftheater owner and film distributor, DCI holds a unique competitive advantage.From a cost standpoint, a Hollywood films budget, including marketing, can easily reach $80-$100+million. In contrast, an average destination theater construction budget, film production budget andmarketing budget is generally under $10 - $15 million total. For a Hollywood film 45% - 55% of revenue isretained theaters, and distribution fees reduce the net revenue further. By owning the theater and the film,a destination theater retains keeps substantially all of the gross box office revenue.National Geographic produces some of the large format films shown at the Destination Cinemas as wellas other large format films and television productions distributed worldwide. Recently, the Company hasreceived insight from National Geographic regarding production of the Great Wall Film and this project.21 IMAX licensing agreement is pending2 IMAX, DCI & National Geographic have provided insight and assistance; no formal agreements are in place
  • 5. A sampling of DCI theaters and films includes:Destination Cinema Film Opened GrossRevenueGrand Canyon IMAX Grand Canyon: Hidden Secrets 1984 $300+ MillionNiagara Falls IMAX Niagara: Miracles, Myths & Magic 1986 $100+ MillionNational Geographic Hearst Castle: Building the Dream 1996 $ 50+ MillionTheater at Hearst CastleDCI also distributes many large format films, including Mysteries of Egypt, to large format theatersworldwide. Since June of 1998, Mysteries of Egypt has grossed over $100 million, being shown at bothforeign and domestic theaters. Without the benefit of a destination theater located at the EgyptianPyramids, approximately 20% of the box office revenue is lost to independent theater owners showing thefilm.3IMAX Affiliate Relations Program“The key to our Affiliate Relations initiative is to ensure that all IMAX theaters reach their potential in termsof top line attendance and bottom line results. To this end, we are committed to working closely with alltheaters worldwide so that, together, we can achieve this goal. It’s a productive, two-way street and apartnership of value.” - Richard Gelfond & Brad Wechsler, Co-CEOs, IMAX CorporationThe purpose of the IMAX Affiliate Relations Program is to make all IMAX Theaters in their worldwidenetwork successful. By affiliating with IMAX, we will join a worldwide network of 235 theaters that have asuccessful track record of entertaining 800 million consumers over 30 years.Affiliate support comes in many forms – tangible marketing tools, key research and IMAX-sponsoredtraining seminars and conferences along with strategic advice and troubleshooting. IMAX makes acommitment to its affiliates to ensure success.By joining the IMAX affiliate network, we will also take advantage of the IMAX brand name, which hasbecome synonymous with the highest quality in out-of-home family entertainment.Consumers around the world identify IMAX with providing extraordinary and enlightening entertainmentexperiences. Through consumer research provided by the Angus Reid Group, IMAX has learned thatone of the incredible positives of an IMAX theater is when it is associated with institutional or culturalheritage as will be the position for the Great Wall of China IMAX Theater.Some key consumer research shows that 90% of IMAX visitors are very satisfied with their experienceand would recommend it to their friends, 75% of IMAX visitors consider a visit to an IMAX worth morethan a conventional cinema and a majority of consumers are willing to pay a premium to visit an IMAX.3 Opportunities may exist for a theater development at the Egyptian Pyramids
  • 6. Opportunity to Acquire Theater & Film SponsorsAs a destination theater, The Great Wall IMAX will offer international corporations unique promotionalprograms through a best-in-class entertainment venue and a globally distributed film opportunity, eachoffering captive audiences of millions of consumers.Professional sports franchises have had enormous success offering corporations an opportunity to beassociated with unique venues (stadiums & arenas) and properties (teams). The Great Wall IMAX offerscorporations the opportunity to be associated with the world’s number one cultural monument.The Great Wall Theater offers corporations a unique venue (theater) as well as a unique property (film) todeliver their marketing messages to an audience rivaling most sports franchises. The Great Wall IMAXoffers many of the same signage and venue marketing and promotional opportunities offered at stadiumsand arenas while also offering two distinct advantages: a captive audience and exclusivity.When advertising at a stadium or arena, corporations must compete with the action on the field, floor,track, etc as well as the action in the stands. These advertisers are hoping to cut through the enormousamount of noise, distractions and clutter taking place at each event. The Great Wall IMAX Theaterprovides a captive audience immersed in a dark and quiet pre-film theater – the perfect opportunity todeliver targeted marketing messages (pre-film commercials) in an environment free of noise and clutter.Since most professional sports franchises have enormous annual budgets, they must acquire a multitudeof marketing and sponsorship clients causing an environment where most advertisers are lost in theshuffle. The Great Wall IMAX offers an opportunity for marketing exclusivity, ensuring a substantial returnon an advertiser’s marketing investment and marketing objectives.Among the many opportunities offered to corporations are:  On-Site Exposure – Theater naming rights, key venue signage, concourse displays, point of purchase displays, retail opportunities, co-branded materials and collateral  Comprehensive Media Package – Extensive online exposure, tourism industry co-op advertising, global PR effort, print and broadcast advertising schedule  Hospitality & Facility Usage – on-site promotions, presentations and demonstrations  Extended Usage & Visibility During 2008 Beijing Olympics  Film Sponsorships – pre-film commercial shown to all theater attendees, worldwide film distribution, product placement in film (when applicable), presenting sponsor of film  Official Status & Exclusivity – Complete exclusivity (except for our food & beverage provider), theater name usage rights in all corporate communicationsUsing industry standard evaluations provided by IEG, Incorporated (www.sponsorship.com), we have beenable to establish a value in the range of $920,000 per year for exclusive sponsorship opportunitiesinvolving The Great Wall Theater and The Great Wall film.Our limited current efforts have received a warm response from several potential theater and filmsponsors as well as potential pouring rights partners and film producers.Please view the Venue & Film Sponsorship Evaluation sheet in the appendix section of this document.
  • 7. THE LOCATION: BADALINGThe Great Wall of China is universally acclaimed as the world’s number one cultural monument. Locatedjust outside of Beijing, Badaling is China’s most popular entrance for the Great Wall, hosting in excess of5 million visitors each year.Since the founding of The People’s Republic of China in 1949, Badaling has welcomed more than 120million visitors, including 360 heads of countries and governments.Beijing has a population exceeding 13 million and also attracts more than 120 million tourists each year.A new 43-mile expressway connects Beijing to Badaling offering easy access by a 60-minute drive, busor train ride. Construction of a high-speed magnet train is being proposed to reduce the journey to lessthan 10 minutes, thereby increasing the number of visitors to Badaling.This locale will also provide The Great Wall IMAX Theater immense exposure during the 2008 BeijingOlympics. More than 4.4 million visitors are expected to the Beijing area for the Olympics. It is safe toassume that a substantial majority of these visitors will visit The Great Wall while in China.Plus, the Badaling Tourism Authority is also planning to distinguish this location by hosting varioussporting and public events. Present facilities to secure tourist satisfaction include a tram to the top of theGreat Wall, restaurants, shops and The Great Wall Museum. Plans are also underway for additionaltourist and cultural venues.In comparison to the Grand Canyon, which attracts 4+ million visitors each year, Badaling attracts over 5million annual visitors. A parallel can be made between the success of the Grand Canyon IMAX and Filmand the potential success of the Great Wall of China Theater and Film. In the near future, Badaling isalso anticipating increases in the number of annual visitors of approximately 5% - 8% as moreinternational tourists are visiting China and as new facilities and attractions are introduced to the area.
  • 8. THE GREAT WALL OF CHINA IMAX THEATER & FILMThe VenueThe Great Wall IMAX Theater will create a uniquely memorable experience for its visitors by the verynature of the beautiful state-of-the-art venue in which the Great Wall film will be shown. Because IMAXfilms are shown on such an enormous screen, the buildings must be an exceptional, monolithicarchitectural experience.The Great Wall IMAX will be no exception. This 600-seat theater will showcase architecturalenhancements and structural features designed to pay tribute to the cultural heritage of the Great Wall.IMAX is a very special adventure that starts outside the building and then continues inside. This speciallydesigned venue will provide visitor-friendly amenities in the form of: The Welcome Zone – an open and inviting lobby that features interactive kiosks, retail opportunities, food and beverage sales and other consumer-oriented areas to provide visitors a complete experience while maximizing theater revenue. The Illumination Zone – a lunch and relaxation area where visitors can enjoy extended visiting time inside the theater either before or after viewing the Great Wall film. The Immersion Zone – the enormous auditorium where visitors will enjoy the Great Wall film.The IMAX ExperienceIMAX motion picture systems are the finest film systems in the world. Images of unsurpassed size, clarityand impact, enhanced by a superb specially designed six-channel, multi-speaker sound system areprojected onto giant rectangular screens providing audiences with truly memorable experiences.The giant screen is absolutely immense in comparison to a traditional theater screens. The IMAX screenis also perforated with thousands of tiny holes to allow the sound to flow through unimpeded. Speciallydesigned auditoriums with steeply pitched seating provide all viewers with perfect, full views.The extraordinary Great Wall Film presented at The Great Wall Theater will serve as a means by whichvisitors achieve an understanding of the world’s number one cultural monument. What will happen in TheGreat Wall Theater will be so realistic that no one will leave untouched.The Great Wall FilmThe Great Wall is embedded in the very soul of China. This will be a story of a people’s preserving spirit,monumental achievement, struggle and beauty all wrapped in the history of a great civilization.The story will be driven by high visual imagery and an original sound track. The musical score will beable to stand on its own in classical and traditional music themes and will deliver the sublime beauty ofThe Great Wall in its facets – seasons, weather, sun/moon rises, motion control, time lapses and more.Full color beauty shots with strict attention to methods will deliver a diversity of spectacular images.The Great Wall Film will be a documentary recounting one of the greatest cultural stories of worldcivilization with seamless continuity and beauty.
  • 9. RISK ANALYSISThe risks related to developing this project essentially mirror those undertaken to do business in China.Production of the Great Wall Film in China will involve no more risk than film production and marketingmost anywhere in the world. The theater component of the project involves legal and permitting matters;however, substantial capital will not be invested until construction has begun, with all licenses andconstruction permits in place.While corporate structure and permitting agreements can be complicated, the experience of most westernfirms entering the China market has been positive. IMAX theaters and films are now enjoying success inChina, with ticket price points that provide attractive margins.Competitive EnvironmentThe Great Wall IMAX Theater will enjoy status as a destination theater, providing a unique environmentvirtually free of competition. Currently there is a smaller, stand-up only theater at Badaling using theobsolete technology of “Circle Vision.” There is no promotion for the film, and admission is free. Thistheater would be closed upon the opening of The Great Wall IMAX.The only discernible competition would come in the form of new tourist venues being constructed atBadaling that would compete for visitors with limited time schedules. Nevertheless, it is unlikely any otherattraction will overshadow interest in visiting the Great Wall.Competitive AdvantagesThe foremost advantage held by the Great Wall IMAX Theater is its location. With a location at the mainentrance to the Great Wall of China, Badaling offers a current attendance exceeding 5 million annualvisitors. These visitors are there for the specific reason of touring the Great Wall and learning about theGreat Wall and its history. Visitors will seek to enhance their experience by visiting the Great Wall IMAXand enjoying the Great Wall film.By joining the IMAX affiliate program, Phoenician Industries has an advantage of an international filmdistribution network of 235 theaters worldwide. This network allows an opportunity to maximize box officerevenue for the Great Wall film.IMAX Success in ChinaOn February 9, 2005 IMAX Corporation announced that it signed agreements for the completion of twoadditional theaters, one in Beijing and one in Guangdong, bringing the total number of IMAX theaters tobe open in the People’s Republic of China by 2008 to 24. This makes China one of the fastest growingIMAX markets in its 35-year history.These new theaters reflect IMAXs continued success in executing its international growth strategy, aswell as the universal appeal of The IMAX experience, especially in China.According to Leng Xiaoming, Deputy Mayor of Dongguan City, “IMAX theaters have become an integralpart of science centers, museums and cultural centers around the world. We are excited to be able toprovide our future visitors with powerful and unique educational experiences that transcend culture,language and even politics. IMAX has already proven successful at the Shanghai Science andTechnology Museum where hundreds of thousands of Chinese have been inspired by the IMAXExperience.”
  • 10. FINANCIAL PLANInvestment HighlightsWith a base capitalization of $12 million4, the company will generate a net operating profit of $9,123,621by the end of Year 2. Net operating profit will total over $49 million over the 5-year period following theopening of the Great Wall Theater. The project will return its capital costs within three years and continueto produce exceptionally high returns on project cost, potentially for decades to come.Upon completion of the theater, the only ongoing costs are maintenance and operational expenses. TheGreat Wall film will produce continuous revenue, apart from the expense of film prints.The model for the Great Wall Theater is Grand Canyon IMAX Theater and film, which opened in 1984with an investment of approximately $5 million. Despite revenues to date exceeding $300 million, it isexpected that this film will be running well into the future. .Capital RequirementThe Company will require $12 million in additional capital to construct The Great Wall IMAX Theater andto produce The Great Wall Film.Sources & Uses of Cash SOURCES OF CASH Pre-Opening Year 1 Year 2 Year 3 Year 4 Year 5 Equity Funding $12,000,000 $0 $0 $0 $0 $0 Theater Ticket Sales N/A $6,000,000 $6,600,000 $7,260,000 $7,986,000 $8,784,600 Food & Beverage Sales N/A $900,000 $990,000 $1,089,000 $1,197,900 $1,317,690 Retail Sales N/A $1,500,000 $1,650,000 $1,815,000 $1,996,500 $2,196,150 Venue & Film Sponsorship N/A $920,000 $966,000 $1,014,300 $1,065,015 $1,118,266Worldwide Film Distribution N/A $2,054,364 $2,157,082 $2,264,936 $2,378,183 $2,497,092 USES OF CASH Pre-Opening Year 1 Year 2 Year 3 Year 4 Year 5 Capital Expenditures $10,250,000 $0 $0 $0 $0 $0 Operating Expenses $635,000 $584,000 $630,600 $681,630 $737,522 $798,749 Additional Variable Exp $0 $1,908,000 $2,095,200 $2,301,120 $2,527,632 $2,776,795 General & Administrative $30,000 $471,487 $513,662 $559,805 $610,301 $665,573 5 Cash Surplus $1,085,000 $9,495,877 $18,619,497 $28,520,178 $39,268,322 $50,941,0044 Base capitalization needs could increase if a decision is made to produce a 3D film5 Does not account for dividends paid to Company investors or taxes
  • 11. Notes to Financial InformationCapital Funding 1. Initial capital funding - $12,000,000Capital Expenditures 1. Land - $250,000 2. Theater Construction - $1.5 million 3. Theater Fixtures & Equipment - $1.5 million (assuming a 2D film) 4. Production of Great Wall Film - $7.0 million (assuming a 2D film)Revenue AssumptionsThe Company will assume an annual Great Wall Theater attendance of 1,000,000 consumers basedupon the following formula: 5,000,000 total visitors at Badaling, 20% capture rate = 1,000,000 tickets (600-seat capacity x 360 days/year x 8 shows/day = 1,728,000 full capacity; 1,000,000 tickets sold = 58% capacity). 1. Theater Ticket Sales – An opening ticket price of $6.00 is budgeted, with planned increases at an average of 10% each year (based on increases in both ticket price & attendance) 2. Food & Beverage Sales – Food and beverage sales can be projected at 15% of ticket sales based on current Asian market experience. 3. Retail Sales – Retail sales of $1.50 per attendee are assumed, with 10% annual growth 4. Venue & Film Sponsorship – Based upon a sponsorship evaluation using an industry standard formula provided by IEG, Incorporated, the project will generate initial venue and film sponsorship revenue of $920,000 with a 5% annual growth rate 5. Worldwide Film Distribution – Based upon industry data, the film will generate an average of $2,054,364 each year over a 5-year period, using the following formula: 131 film leases over 5 years = 26 film leases/year x 65,845 tickets sold/lease x $6/ticket = $10,271,820/year x 20% (our take) = $2,054,364/year with a 5% annual ticket price increaseOperating Expenses Assumptions 1. Initial Marketing Campaign – Initial marketing, advertising and promotion expenses are budgeted at $500,000 2. Ongoing Marketing Expense – Budgeted at 5% of theater ticket sales revenue 3. Community Relations & PR – $50,000 up front and an ongoing budget of 2% of total theater ticket sales revenue 4. Theater & Film Collateral – $50,000 up front and an ongoing budget of 2% of theater ticket sales – includes programs, tickets, brochures, posters, promotional items, etc 5. Website Development - $20,000 up front expense 6. Website Maintenance - $5,000 up front and ongoing budget of $1000 per month 7. Activation of Sponsorship – 10% of sponsorship income will be used to “activate” the sponsorship by producing custom signage, custom media campaigns, on-site promotions and provide audience tracking to ensure the sponsor will achieve maximum ROI
  • 12. Additional Variable Expenses 1. Food & Beverage Expenses – Budgeted to be 28% of total food and beverage sold 2. Retail Goods Expense – Budgeted to be 60% of total retail goods sold 3. IMAX Affiliate Fee – 7% of theater ticket sales revenue (assuming we affiliate with IMAX) 4. Anticipated Badaling Rent, Participation, etc.– Budgeted as 5% of theater ticket sales 5. Reprinting of the Great Wall Film – Budgeted as an annual expense of $36,000 General & Administrative Expenses 1. Theater General Manager - $24,000 annual salary with annual increase of 5% 2. Theater Assistant Managers – Total of $16,000 annual salary with annual increase of 5% 3. Hourly Labor – 12hrs/day x 30 days/month x 10 employees/day x $3/hr = $10,000/mo 4. Maintenance of Fixtures & Equipment (accounts for physical depreciation) – 0.5% of theater revenue (Tickets, F&B & Retail) 5. Security & Utilities – $30,000 up front and an ongoing budget of 0.5% of theater revenue 6. Miscellaneous Operating Expenses – 2% of total company revenueIncome Statement Pre Opening Year 1 % Sales Year 2 % Sales Year 3 % Sales Year 4 % Sales Year 5 % SalesRevenue Theater Ticket Sales $ - $ 6,000,000 52.8% $ 6,600,000 53.4% $ 7,260,000 54.0% $ 7,986,000 54.6% $ 8,784,600 55.2% Food & Beverage Sales $ - $ 900,000 7.9% $ 990,000 8.0% $ 1,089,000 8.1% $ 1,197,900 8.2% $ 1,317,690 8.3% Retail Sales $ - $ 1,500,000 13.2% $ 1,650,000 13.3% $ 1,815,000 13.5% $ 1,996,500 13.7% $ 2,196,150 13.8% Venue & Film Sponsorship $ - $ 920,000 8.1% $ 966,000 7.8% $ 1,014,300 7.5% $ 1,065,015 7.3% $ 1,118,266 7.0% Worldwide Film Distribution $ - $ 2,054,364 18.1% $ 2,157,082 17.4% $ 2,264,936 16.8% $ 2,378,183 16.3% $ 2,497,092 15.7%Total Revenue $ - $ 11,374,364 100.0% $ 12,363,082 100.0% $ 13,443,236 100.0% $ 14,623,598 100.0% $ 15,913,798 100.0%Expenses Operating Expenses $ 635,000 $ 584,000 5.1% $ 630,600 5.1% $ 681,630 5.1% $ 737,522 5.0% $ 798,749 5.0% Additional Variable Expenses $ - $ 1,908,000 16.8% $ 2,095,200 16.9% $ 2,301,120 17.1% $ 2,527,632 17.3% $ 2,776,795 17.4% General & Administrative $ 30,000 $ 471,487 4.1% $ 513,662 4.2% $ 559,805 4.2% $ 610,301 4.2% $ 665,573 4.2%Total Expenses $ 665,000 $ 2,963,487 26.1% $ 3,239,462 26.2% $ 3,542,555 26.4% $ 3,875,454 26.5% $ 4,241,116 26.7%Income From Operations $ (665,000) $ 8,410,877 73.9% $ 9,123,621 73.8% $ 9,900,682 73.6% $ 10,748,144 73.5% $ 11,672,682 73.3%
  • 13. OPERATING TIMELINEThe Company has an informal association with IMAX Corporation and a development agreement withThe Badaling Tourism Authority. This business plan initiates with month 1 as the time period whenfinancing is in place and all theater construction and film production can begin simultaneously. Theater: Tasks that need to be completed prior to month 1 are completing the financial plan, corporate formation, selecting the specific building site, building design, the acquisition of any necessary building permits, complete development agreement with Chinese authorities, finalize design of the theater, select construction firm and schedule film production with film producer. Film: Following the completion of these tasks, the construction of the theater and the production of the film can take place simultaneously over a 12 to 15-month period.With financing in place and pre-construction tasks complete by 2007, Opening Day at The Great Wall ofChina IMAX Theater should be prior to the 2008 Beijing Olympics.
  • 14. EXIT STRATEGYThe Project will generate substantial positive cash flow in early operations, and can be developed withoutdebt, using equity investment and sponsorship underwriting. The revenue potential will be severalhundred million dollars over a period of more than 20 years. Since investment capital will be returnedearly, motivation for an early exit from the project may not be a critical factor. However options toliquidate the investment would be many, including most of the major international entertainmentcompanies, corporate sponsor organizations and international investment funds. Typically, media andentertainment properties are priced for sale at a range of approximately 4-8 times net earnings. SUMMARYThe project will occupy an exclusive piece of real estate at the world’s number one cultural monument.The venture will be an extremely high profile business opportunity in the Chinese market, and potentiallythe “flagship” of sponsorship opportunities in China. The synergy of a destination film and theater isunique. A destination film can be only moderately successful in the distribution market place, yet generatelarge and continuing revenues for decades on site. However it is anticipated in this case that the GreatWall Film will be successful on a stand alone basis, which (depending on cross ownerships) can providethe theater with a paid for film. The rate of return on investment is exceptional, with recovery of capitalcost in less than 3 years. Unlike most business investments and ventures in China, the Great Wall IMAXwill offer its investors both a high level of recognition and credibility in the China marketplace.
  • 15. APPENDIX A: MANAGEMENT TEAMManagement TeamPhoenician Industries, LLC is an Arizona Limited Liability Corporation experienced in international realestate, Internet technology and entertainment media. The principals of Phoenician Industries have beeninvolved in entertainment and documentary productions with Sony Entertainment, PBS and others andhave successfully developed over 5 million square feet of real estate in the United States, UnitedKingdom, Mexico and Ukraine.Richard ShawRichard Shaw has diversified, international business experiences across several industries, includingretail, most types of real estate, finance, privatization, marina development, entertainment propertydevelopment, consulting and related legal work. Richard has served as head of a public tax-exemptfinancing agency, and director of a state agency in Arizona. His consulting experience includes venturesinvolving US and foreign privatization, corporate governance and training Former Soviet Union businessconsultants for Harvard University/USAID. Richard’s strengths include developing legal and businesssolutions focusing on issues inside complex legal, business and political environments. His businessexperience has been that of a founder or co-founder in several start-up companies, with substantialinternational and 3rd world experience. Richard’s direct real estate development experience exceeds 5million square feet of income property. His transactional and financing experience exceed 1 billion USD.Richard is a member of the California Bar Association, and is also active in alumni affairs of Arizona StateUniversity and Harvard University. As a side note, he employs conversational fluency in Spanish, and arudimentary usage of Russian.Brian PilslBrian Pilsl formed Great Wall Media, LLC for the purpose of developing and marketing sponsorshippackages for the Great Wall IMAX Theater and Film. He has also been instrumental in developing thebusiness plan and marketing effort aimed at acquiring potential partners in the form of financiers and filmproducers. He brings over 10 years of entrepreneurial, business development, direct advertising andsports sponsorship experience. Brian has successfully developed and marketed 2 previous businessplans that have garnered over $2 million in initial capital infusions. In addition to his responsibilities withGreat Wall Media, LLC and Phoenician Industries, Brian also heads Golfers Direct, LLC(www.golfersdirect.net). Golfers Direct is an outdoor advertising company with over 8,000 sites in Arizona,California, Hawaii and Nevada. Brian was born in Kansas City, Missouri and received his BachelorDegree in Economic Management with a minor in Business Administration from Kansas State University.
  • 16. APPENDIX B: SPONSORSHIP EVALUATIONBefore signing any sponsorship, best practice companies will have a third-party evaluation of the propertybeing considered. The term property here refers to the IMAX Theater & Film as a single sponsorship“property”. To measure the rights and benefits offered in a sponsorship package, the evaluation accountsfor both Intangible Benefits and Tangible Benefits as detailed below. INTANGIBLE ASSET DESCRIPTION 3 out of 4 consumers feel that a visit to an IMAX theater is worth more than aPrestige of Property conventional cinema. In fact, the majority would pay a $2 premium and 33% would pay a $3 premium. State-of-the-art venue will be located at the main entrance to The Great WallRecognizablity & Awareness of China, hosting more than 5 million annual visitors. Also will co-brand with IMAX, which has experienced great success in China. 90% of IMAX visitors are extremely or very satisfied with their experience andAudience Loyalty 89% of IMAX visitors would recommend IMAX theaters and films. Audience tracking will detail ROI for the sponsor Complete venue, not just category, exclusivityCategory Exclusivity (except for our food/beverage provider) Audience is completely immersed in the experience provided by our sponsorProtection from Ambush – there are no a’ la Carte benefits to be sold. Clutter is almost non-existent except for minimal benefits provided to ourDegree of Sponsor Clutter food/beverage provider. Turnkey promotions can be co-developed to allow sponsors to engage theAbility to Activate audience. With only one sponsor as our partner, we can be flexible and move quickly to ensure maximum activation and success During pre-construction phase, Sponsor’s creative team can provide inputComplete Creative Customization regarding interior design and layout of theater to provide optimum activation opportunities. Location alone will provide media & PR coverage in addition to our annualMedia Coverage Potential advertising budget. Also will negotiate trade with our beverage partner to associate with their marketing and distribution efforts. Full reporting will be provided to sponsor to use to establish short-term andEstablished Track Record long-term ROI.Potential for Cause Marketing Chance to align sponsor with the renovations of The Great Wall of China
  • 17. TANGIBLE ASSET REACH AMOUNT TOTAL ANNUAL VALUEID on Tickets 1,000,000 $.0025-$.05 $26,250(with coupon on back)ID on Program Book 500,000 $.0025-$.05 $13,125ID/Content Integration on Property Website 500,000 $.0025-$.05 $13,125(tickets also sold online)Venue Signage 1,000,000 $.0025-$.05 $26,250(both static & electronic)Name/Signage on Venue Exterior 5,000,000 $.0025-$.05 $131,250 TV Rate30-Second Pre-Film Commercial 1,000,000 $50,000 (estimated) CardTitle Sponsorship/Placement in Film 1,000,000 $.0025-$.05 $26,250(Venue)Title Sponsorship/Placement in Film 1,700,000 $.0025-$.05 $44,625(Worldwide Distribution)Product Sampling 500,000 $.04-$.15 $47,500ID on Property Media Buy $300,000 10% $30,000 Average Value of Tangible Benefits: $ 400,000 Average Value of Intangible Benefits: $ 520,000 (1.3x the tangible benefits) Total Average Annual Sponsorship Value: $ 920,000
  • 18. APPENDIX C: PROJECT FACTOIDS Badaling means “giving access in every direction” The Wall at Badaling has a length of 3,741 meters with an average height of 8 meters and a high of 15 meters. The top of the Wall can permit 5 horses to be ridden abreast. A new expressway connects Beijing to the Great Wall at Badaling. Tour buses make the trip in about 90 minutes. Government sponsored tour buses make the trip every 20 minutes in the morning leaving from different locations in Beijing. According to Nielsen Media Research, China’s advertising market – worth more than $10 billion in 2002 – is set to continue with double-digit growth and should overtake Japan as the world’s second largest ad market by 2010. According to The US-China Business Council, China’s foreign direct investment inflows surpassed those of the United States in 2002, making China the world’s leading destination for foreign funds. To date more than 100 of the Fortune 500 companies active in China have established R&D centers in China along with companies from India, Japan and South Korea. According to the IEG Sponsorship Report, February 12, 2001 - Saab generated over $6 million in car sales from its sponsorship of an IMAX film. According to Reuters, June 8, 2004 – Ford has tripled their output in China, the world’s fastest growing automotive market, in order keep pace with General Motor’s who is investing more than $3 billion to double its output by 2007. According to Bloomberg, June 4, 2004 – Citigroup, Inc., the world’s largest financial services company, plans to begin offering life insurance products in China after receiving regulatory approval to start a venture with the Shanghai municipal government. According to BBC, June 8, 2004 – Home Depot, the world’s largest home improvements retailer, announced plans for an aggressive push into China, hoping to become the biggest player in the market. In 2001, Phillips Petroleum Company became the sole corporate sponsor of the International Friendship Forest, located at the Badaling entrance to The Great Wall of China. According to the Reno Gazette-Journal, June 10, 2004 – the Nevada Commission on Tourism officially opened an office in Beijing, citing statistics that of the billion of domestic Chinese, at least 300 million can afford to travel. Badaling is located in Yanqing County, approximately 70 kilometers Northwest of the center of Beijing. Badlaing is a mountain pass of the Jundu Mountains and is the highest point of the North end of the Guan’gou Gorge, in which the Juyongguan Pass lies. In 1987, Badaling was listed as a “World Cultural Heritage” by the United Nations.