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  • 1. Charlotte Professional Lacrosse SportSummit2009 SPORTSUMMIT USER CONFERENCE PARIS, FRANCE. CONFERENCE: SEPT. 18-20
  • 2. Lacrosse is a High-Growth Sport Lacrosse is the fastest growing team sport in the United States with 10-year growth rate of 137.8% US Lacrosse Participation 10-Year Growth Trend 1300 2/3 of lacrosse participants fall into the highly desirable marketing demographic of young Males <25 years old Thousands of Participants 1040 780 40% of Participants come from affluent Families with Household incomes over $100,000 - compared to 25.8% of 520 the general population 260 Sporting Goods Manufacturers Association 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (c)charlotteprolacrosse.com 2
  • 3. And its positioned well to continue that growth What was once a niche sport played primarily in the Northeast United States is now expanding across the country: Growth in youth participation in newly fertile areas such as California and Minnesota have outpaced traditional strongholds like Connecticut over the past 8 years: Connecticut +179% California +232% Minnesota +900% High school lacrosse is now sanctioned in 21 states with Illinois becoming the 22nd in 2011 A record 60 teams will compete in the NCAA Division 1 men’s lacrosse championship this year (with 115,000 in attendance for the Final Four) New division 1 college varsity programs are popping up in states like Alabama, Arkansas, Georgia and Wisconsin (c)charlotteprolacrosse.com 3
  • 4. growing quickly in the carolinas North and South Carolina just sanctioned high school lacrosse for the 2009/10 season Rich Thomas, the commissioner of the SCLL, makes Lacrosse's growth There are over 60 high school and middle school boys and girls the sport sound as if it's fastest-growing transplant in South Carolina since kudzu. in South Carolina "With lacrosse, even though all you may have initially is a die-hard group, it spreads very reflects national teams now in charlotte quickly," Thomas said. "It really combines the field strategy of soccer with the offense and defense of trend basketball, the physical contact of ice hockey and open-field excitement of football." Updated 7/31/2008 9:28 PM The growth of the sport in football-crazy South Carolina is indicative of how fast lacrosse is growing nationwide. According to the National By Jim Halley, USA TODAY Federation of State High School Associations, - lacrosse has seen a 280% increase in participation Nearly 1,900 participants in the last decade, making it one of fastest growing high school sports in that period. In the first few years of the league, the South Carolina Lowcountry schools dominated. That changed shortly after Bill Harner, formerly the principal at Hilton Head Island, became the Superintendent of Schools for Greenville County and pushed for the sport at the club level. 11 local men’s & women’s collegiate teams including Queens "A lot of the athletic directors in the county didn't like the way he implemented it, but you have to give him credit," said Riverside boys lacrosse coach Brent Boling. "My former AD fought it, but when he finally let us on campus, we came in right behind University, Davidson, Belmont Abbey and Pfeiffer University By Richard Shiro, The Greenville (S.C.) News basketball in revenue the first year on campus. I Riverside High of Greer defeated Bluffton 21-17 for the have 70 kids come out for the team every year and South Carolina girls lacrosse championship in the spring. we keep about 30." Advertisement GREENVILLE, S.C. — Shane LeCroy was a volleyball coach who never played lacrosse before he started Men’s and women’s adult club teams are just now being established coaching it at Greenville. DeAnn Louis, a parent who was frustrated that Riverside (Greer, S.C.) couldn't find a girls lacrosse coach, decided to coach and learn the game at the same time. in Charlotte This past spring, LeCroy and Louis coached the boys and girls champions of the South Carolina Lacrosse League (SCLL). The league has grown from six high school teams in 2001 to an expected 32 boys teams and 28 girls teams next spring. The state's high school association will meet Friday to consider whether to officially sanction statewide play and state championships. (c)charlotteprolacrosse.com 4
  • 5. Charlotte Professional Lacrosse LLC Charlotte Professional Lacrosse LLC intends to take advantage of the sport’s growth potential in Charlotte by operating a men’s professional lacrosse franchise here. 2 viable options (c)charlotteprolacrosse.com 5
  • 6. Professional Lacrosse Leagues The MLL is the premier outdoor professional lacrosse league in North America Season is a 12-week season from mid-May to mid-August 6 team league: Boston, Chicago, Denver, Long Island, Toronto and Annapolis League underwritten by New Balance chairman Jim Davis The NLL is the premier indoor professional lacrosse league in North America Season is a 16-week season from January through April 11 team league: Boston, Buffalo, Calgary, Denver, Edmonton, Minneapolis, Orlando, Philadelphia, Rochester, Toronto and Washington Started in 1987 by midwest concert promoter Chris Fritz (c)charlotteprolacrosse.com 6
  • 7. MLL better option for charlotte market Game presentation is more traditional - Outdoor venues - Uses traditional collegiate and high school rules (except there is a two-point goal line located 16 yards out from each goal and a 60-second shot clock) May to August timing doesn’t directly compete with any other Charlotte-based major league sports Cost structure is more favorable for MLL as venue costs are substantially lower (indoor vs. outdoor) (c)charlotteprolacrosse.com 7
  • 8. investment opportunity Purchase operating rights to MLL franchise in Charlotte - Franchise fee (officially $1.5 million, but not really) - Fund operating costs - franchise will lose money in the near-term. Team will eventually operate profitably but long-term revenue streams are unpredictable at best in sports (due to winning/losing vs. fan expectations) Become an owner of the entire league - The MLL operates under a single entity ownership structure. Operating rights allow investor to become part owner of league vs. owner of specific team Multiple long-term exit options - Owning a piece of the league allows for two exit options: * Sell team operating rights * League gets purchased (c)charlotteprolacrosse.com 8
  • 9. Single entity ownership Single entity ownership allows leagues in their infancy/growth stages to contain player costs and market the league more effectively. It is also the structure currently preferred by larger leagues including the NFL and NHL - but their ships have already sailed. The single entity structure is preferred because it puts the league in a stronger position for the future with labor negotiations, merchandising sales contracts, broadcast rights negotiations and league and team marketing. The MLS is the largest sports league that operates under this structure. As an “owner” of the Charlotte team, investors would be part owner of the MLL league as a whole. League ownership percentage would depend on the number of teams for the 2011 season. One of the two following scenarios are likely for Charlotte’s entry into the MLL: 2 Scenarios We would Purchase the chicago We would be an expansion team with a Philadelphia Machine team from the league and counterpart and the league would expand to 8 teams. move them to Charlotte keeping the Chicago would continue to operate under league league at an even 6 teams control and travel to prospective markets for their “home” games (c)charlotteprolacrosse.com 9
  • 10. Charlotte’s MLL team Business to launch in July/August 2010 Start playing in May 2011 Games to be played in newly upgraded American Legion Memorial Stadium on the CPCC campus Team should have some recognizable players on the squad as many of the MLL’s players hail from top southeast institutions including UNC, Duke, Maryland, and Virginia. Potential for homegrown talent in the future (c)charlotteprolacrosse.com 10
  • 11. Capital Requirements & Capital requirements Proposed Schedule $3.5 Million $250K $250K $250K $3,000,000 $2,500,000 includes franchise fee $500K $250K $2,000,000 and capitalization for $1.5M $1,500,000 $1,000,000 expected operating losses $ 500,000 over2011 2012 2013 2014 seasons 2010 the first 5 2015 $0 (c)charlotteprolacrosse.com (c)StartYourDoc.com 11
  • 12. Important Milestones Raise $$ 2011 Season Kicks Off CLT VIP Meetings Launch PR Launch Company Hire Key Staff Expansion Draft Sponsorship Sales STH Sales/Mkting Group Sales/Mkting Game Sales/Mkting 2011 Schedule Out ’11 1 11 10 ‘10 0 0 0 0 11 ‘10 0 1 Feb ’1 July ‘1 Aug ‘1 Nov ‘1 Dec ‘1 Jan ’1 Oct ‘1 April ’ May ’ May ‘ March June Sept (c)charlotteprolacrosse.com 12
  • 13. How Charlotte Pro Lacrosse Will Create Value SportSummit2009 SPORTSUMMIT USER CONFERENCE PARIS, FRANCE. CONFERENCE: SEPT. 18-20
  • 14. Capital Requirements & Leverage Three factors Proposed Schedule charlotte’s Future growth $250K $3,000,000 $250K Continued growth of lacrosse $2,500,000 $250K $250K $500K $2,000,000 $1,500,000 long-term strength of MLL $1.5M $1,000,000 $ 500,000 $0 2010 2011 2012 2013 2014 2015 (c)charlotteprolacrosse.com (c)StartYourDoc.com 14
  • 15. Long the Charlotte Metro 2010 2015 2020 2025 1 New York City New York City New York City New York City 2 Los Angeles Los Angeles Los Angeles Los Angeles 3 Chicago Chicago Chicago Chicago 4 Dallas/Ft. Worth Dallas/Ft. Worth Dallas/Ft. Worth Dallas/Ft. Worth 5 Houston Houston Houston Houston 6 Philadelphia Atlanta Atlanta Atlanta 7 Atlanta Philadelphia Miami Phoenix 8 Miami Miami Washington DC Miami 9 Washington DC Washington DC Philadelphia Washington DC 10 Boston Phoenix Phoenix Philadelphia 11 Phoenix Riverside/San Bernardino Riverside/San Bernardino Riverside/San Bernardino 12 Detroit Boston Boston San Francisco 13 San Francisco San Francisco San Francisco Boston 14 Riverside/San Bernardino Detroit Detroit Detroit Estimated 500,000 additional people 15 Seattle Seattle Seattle Seattle 16 Minneapolis Minneapolis Minneapolis Minneapolis 17 San Diego San Diego Tampa-St. Petersburg Tampa-St. Petersburg 18 Tampa-St. Petersburg Tampa-St. Petersburg San Diego San Diego 19 St. Louis St. Louis Baltimore Orlando 8,750,000 20 Baltimore Baltimore St. Louis Baltimore 21 Denver Denver Orlando Denver 22 Pittsburgh Orlando Denver Las Vegas 6,562,500 23 Portland. OR Portland, OR Las Vegas St. Louis 24 Cincinnati Sacramento Portland Portland 4,375,000 25 Sacramento Pittsburgh Sacramento Austin 26 Orlando San Antonio San Antonio Sacramento 27 San Antonio Las Vegas Austin Charlotte 2,187,500 28 Cleveland Cincinnati Charlotte San Antonio 29 Kansas City Kansas City Cincinnati Cincinnati 0 30 Las Vegas Charlotte Pittsburgh Kansas City 31 San Jose Austin Kansas City Pittsburgh 32 Columbus Cleveland San Jose San Jose 33 Charlotte San Jose Columbus Nashville 2010 34 Indianapolis Columbus Cleveland Indianapolis 2015 35 Austin Indianapolis Indianapolis Columbus 2020 (c)charlotteprolacrosse.com 15 2025
  • 16. Long Lacrosse Here Both North and South Carolina are embracing lacrosse at the high school level which is driving participation across the states US Lacrosse has 4,800 members in North Carolina and about 900 of those are in Charlotte Charlotte ranks as the #2 North Carolina market behind the Research Triangle but is ahead of the other local hotbeds of Winston-Salem, Greensboro and Wilmington (according to the North Carolina chapter of US Lacrosse) (c)charlotteprolacrosse.com 16
  • 17. Long MAJOR LEAGUE LACROSSE Major League Lacrosse in its 10th season and is just now figuring things out. The initial owners had a quick-growth strategy that didn’t pan out. Too many teams operated on an underfunded basis and without sports business acumen. The League is now working to change that: Jim Davis at New Balance is becoming more involved. Lacrosse sales are 10% of New Balance’s domestic business and he is personally vested in the league’s long-term success NFL owners are increasingly looking at Lacrosse as filler for their venues now that MLS teams are moving to soccer specific venues. - Broncos Bowlen’s own the Outlaws - Patriots Krafts will come in within 5 years (c)charlotteprolacrosse.com 17
  • 18. Lacrosse will become viable as a pro sport this decade Lacrosse is poised to continue its rapid growth across the United states and in Canada. Even with growth, it will still be a comparatively small sport in the US sports industry. That said, the elevated income profile of its core consumer significantly raises its ability to support professional sports leagues. 1999 Total 2008 Total 2018 Projected Sport 10-Yr Growth Participants Participants Participants Lacrosse 480,000 1,127,000 134% 2,640,000 Snowboarding 3,600,000 5,900,000 64% 9,670,000 Mountain Biking 8,600,000 10,200,000 19% 12,097,000 Skateboarding 5,800,000 9,800,000 69% 16,560,000 Soccer 13,200,000 15,500,000 17% 18,200,000 Tennis 11,200,000 12,600,000 12.5% 14,175,000 Ice Hockey 2,100,000 1,900,000 -9.5% 1,720,000 Baseball 15,900,000 15,200,000 -4.4% 14,530,000 (c)charlotteprolacrosse.com 18
  • 19. keys to business success Run professional business operation with experienced sports management team Find viable venue. Primary considerations: location, cost & amenities Invest in revenue generating activities Keep overhead and non-revenue generating expenses extremely low Ingrain the team within the Charlotte community (c)charlotteprolacrosse.com 19
  • 20. Management team Jim McPhilliamy - 20+ years sports management experience - Senior Vice President Marketing, Charlotte Bobcats 2007-2009 - Partner in leading sports consulting firm Brandthink 2002-2007 - Held senior positions at major agencies DraftWorldwide and Digitas - Strategic advisor to multiple sports entities including the Tampa Bay Rays, Pittsburgh Pirates, Houston Rockets, the Atlanta Spirit (owners of Thrashers & Hawks), Minnesota Vikings, the NBA, Dale Earnhardt Inc. and more Wade Leaphart - experienced sales executive - Top sales executive 2 years in a row for Charlotte Bobcats - Extensive nascar experience and relationships Robert Carter - social media expert - Digital media specialist at Belk - Led Bobcats social and direct marketing campaigns (c)charlotteprolacrosse.com 20
  • 21. Venue: memorial stadium Location is ideal. Centrally located on the outskirts of Uptown Charlotte within 30-minute drive time for over 50% of the lacrosse target market (20,000+ Charlotte households with kids in house and income > $200K) Venue refurbished and reopening July ’10 City has already agreed to be our home stadium should team franchise be awarded Lowest cost structure in the league at $6,900 per game for rental (c)charlotteprolacrosse.com 21
  • 22. becoming relevant in clt CBS Radio group has already agreed to promote the team across their six stations on a revenue sharing basis - #1 WPEG-FM (Urban) - #2 WBAV-FM (Urban/Adult Contemporary) - #3 WSOC-FM (Country) - #5 WNKS-FM (Contemporary Hit Radio/POP) - #11 WKQC-FM (Adult Contemporary) - #15 WFNZ-AM (Sports Talk) CBS Radio also has agreed to “rent” us space at a steep discount within their office space - Saves money - Gives us access to dj’s/talent on an unlimited basis Sports Business Journal will do a recurrent reality feature on the business: good for sponsorship sales and attracting future investors (c)charlotteprolacrosse.com 22
  • 23. Who Will Come Hardcore Lacrossers 25% 20% Casual Lacrosse Affluents 20% This group comprises 55% of attendees but represents 75% of Fickle Entertainment 35% ticket revenues Seekers Core Although this group only Family/Group Fun represents 25% of revenues, they make or break game day atmosphere 23
  • 24. Sold via direct sales Hardcore Lacrossers Casual Lacrosse Affluents There are an estimated 2,236 youth-to-collegiate school players in These educated and wealthy families send their children to the the Charlotte market. These kids play for their varsity, junior best private and public schools in the Charlotte metro area. The varsity, middle or grade school teams. There are an additional 315 children of these families have been exposed to lacrosse at school post-collegiate members of US Lacrosse in Charlotte (according to or elsewhere and play recreationally either in school or for fun but the NC Chapter of US Lacrosse). are not considered core fans of the sport (They play under 25 times per year). In total with the addition of clubs/academies factored in, we estimate there to be 3,000 core lacrosse players (a core player is These families have household incomes > $200,000 and index high one who plays frequently - 25 or more times per year) in Charlotte on lifestyle characteristics that parallel lacrosse lifestyle representing approximately 2,650 households. Based off school characteristics (index high on travel, snow skiing, sailing/jet skiing, team rosters and through some pretty easy research, we should be and skateboarding). Charlotte has about 21,000 of these families. able to identify and contact each and every one of these household 12,000 live within a 30-minute drive time of Memorial Stadium (the directly once the team launches. 30-minute drive time is an important indicator of likelihood of attendance for casual fans of a sport). We expect this target audience to grow rapidly in the Charlotte market at about an 8-10% annual rate for the foreseeable future. We have already purchased the mailing list for this group from This is important because this group will comprise our season ticket InfoUSA. This group overlaps with the core fan demographically, so base. To launch successfully, we need to sell 1,000 tickets per we estimate approximately 2,000 less households in our target silo game to this group. That equates to 312 season ticket accounts at here - 10,000 total. an average of 3.2 tickets per account (which is the norm for sports subscriptions on a STH-basis). We need to sell approximately 575 tickets/game to this group to start. This will be a combination of season ticket sales and single That is a penetration rate of around 12% and is within the realm of game offers. Since this group is less passionate about the sport, possibility with a sport with this much passion tied to it. the average size of their purchase will likely be 2.5 tickets per game. Therefore, we will require 1,380 purchases over the coarse of the season. We estimate this to be about 750 total customers from this group - a penetration rate of 7.5%. That is an aggressive number but there are many targets from the broader 21,000 group that live outside the fringe of the 30-minute drive time that will also come to games on less frequent basis. With them included, we believe we will have to do business with about 5% of this target 24 group in total. (c)charlotteprolacrosse.com
  • 25. influenced via marketing Family/Group Fun Fickle Entertainment Seekers These families and individuals are looking for entertainment options These young, post collegiate singles are looking for fun. They have for their tribe on weekends and throughout the week. These families entry-level to mid-management corporate jobs and have disposable have a wide income profile ($50,000 - $200,000 annually) but are income that will find its way to events, venues and happenings that driven by price/value regardless of where they fall. are deemed “cool enough.” There are 92,500 of these families in the Charlotte metro and we There are about 74,000 total people in this group within a 30-minute estimate a conservative 40% - or approximately 37,000 - live within a drive time of Memorial Stadium. - 62,000 singles with an additional 30-minute drive time of Memorial Stadium. These families are best 12,000 or so married couples without children. This group will travel reached through promotional offers via timely and targeted a little farther than other target audiences to attend a good event. advertising. This is a fickle group that may come for a while and then disappear. We need to sell approximately 575 tickets/game to this group to That said, it is one of the most important groups because they add to start. This will be a combination of group sales and single game the event‘s atmosphere making it cooler for everyone else. promotions. Since this audience will be targeted for group sales (groups of 10 or more), the average size of their purchase will likely We need to sell approximately 700 tickets/game to this group to be closer to 4 tickets per game. Therefore, we will require 750 start. This will be a will be almost all single game ticket sales. Since customer purchases over the coarse of the season. That equates to a this audience is primarily single, they may come as a group, but they penetration rate 2% - which is reasonable given our access to existing purchase individually. Therefore, we will require 4,000 customer group lists and our advertising relationships. Again, we expect some purchases over the coarse of the season from this group. That roll-over attendance from people who are in this target demo but equates to a penetration rate 5.4% - which is tough to hit. That said, outside the 30-minute drive-time boundary. we have already reached agreement with CBS Radio on a revenue sharing arrangement that will promote Charlotte Pro Lacrosse across their 9 different radio stations to help us reach this hard-to-get target group. Attracting this group is the focus of most of our advertising and social marketing efforts. (c)charlotteprolacrosse.com 25
  • 26. How Many Will Come: Year One % of Paid #/Per Game Attendance Hardcore Lacrossers 35% 1,000 Casual Affluents 20% 575 Family/Group Fun 20% 575 League Attendance 2008 2009 2011 Fickle Entertainment 25% 700 Denver 9,310 8,431 8,000 Seekers Boston 4,762 4,665 4,500 Comps N/A 450 Washington 2,914 3,200 3,300 (League, Sales, & Other) Charlotte Projected 3,300 Toronto Long Island N/A 2,430 2,596 3,405 3,000 3,500 TOTALS 100% 3,300 Chicago 2,911 2,569 N/A (c)charlotteprolacrosse.com 26
  • 27. How Many Will Come: Long-term Growth Memorial Stadium is a 15,000 seat venue. Success down the road would necessitate upgrades to Memorial Stadium or a change of venue. Both good scenarios if they should occur. Year Attendance Ticket Revenue 2011 (6 home games) 17,100 $381,480 2012 (6 home games) 19,878 $424,920 2013 (7 home games) 27,083 $556,063 2014 (7 home games) 31,815 $650,956 2015 (8 home games) 42,152 $952,963 2016 (8) 46,080 $1,050,000 2017 (8) 51,216 $1,200,000 2018 (8) 57,040 $1,343,000 2019 (8) 63,752 $1,515,000 2020 (8) 71,440 $1,741,000 2021 (8) 79,296 $1,945,000 2022 (8) 88,024 $2,155,000 2023 (8) 98,585 $2,415,000 2024 (8) 109,424 $2,680,000 2025 (8) 121,465 $2,975,000 (c)charlotteprolacrosse.com 27
  • 28. revenue streams: ticket-driven business 7-Year Revenue Projections $1,830,744** $1,750,000.00 * 14-game seasons $1,592,008** ** 16-game seasons $1,500,000.00 $1,414,325** $1,250,000.00 $1,009,804* $1,000,000.00 Camps & Clinics $854,065* = 16% Corporate Partnerships $750,000.00 $654,301 Merchandise Sales $551,157 = 14% Concessions & Parking $500,000.00 Group Sales = 70% Non-Premium Season Tickets $250,000.00 Luxury/Premium Seating $0 Single Game Tickets ’10/’11 ’11/‘12 ’12/‘13 ’13/‘14 ’14/’15 ’15/’16 ’16/’17 (c)charlotteprolacrosse.com 28
  • 29. Creating value: Long-term view The MLS launched in 1996 with 10 teams. They had six tough years and then started growing through a series of youth development initiatives. 15 years and an estimated $350M later (in team/ league losses), the MLS is expected to become profitable this season. Expansion teams are now selling in the $50M range. Team Value to Revs Value Revenue Operating Income Los Angeles Galaxy 2.8x $100 million $36 million $4 million Toronto FC 2.6x $44 million $17 million $2.1 million Chicago Fire 2.6x $41 million $16 million -$3.1 million FC Dallas 2.6x $39 million $15 million $.5 million New York 3.6x $36 million $10 million -$4.5 million DC United 2.7x $35 million $13 million -$3 million Houston Dynamo 3.3x $33 million $10 million -$1.8 million Colorado Rapids 2.8x $31 million $11 million -$2.2 million Real Salt Lake 4.2x $30 million $7 million -$2.1 million New England 2.7x $27 million $10 million -$1.5 million Chivas USA 2.4x $24 million $10 million -$1 million Columbus Crew 3.8x $23 million $6 million -$4.5 million Kansas City 4.4x $22 million $5 million -$2.9 million (c)charlotteprolacrosse.com Team Avgs 29 3.1x (2.8 med) $37m ($33m) $13 million -$1.5 million
  • 30. Capital Requirements & Long-term valuation Proposed Schedule 15-years Out $250K $3,000,000 $250K $2,500,000 $3.5M-$4.5M $2,000,000 $250K $250K $500K $1.5M in Annual Revenues $1,500,000 $1,000,000 $ 500,000 $10M - $12 M $0 2010 2011 2012 2013 2014 2015 Valuation (c)charlotteprolacrosse.com (c)StartYourDoc.com 30
  • 31. Capital Requirements & MY COMMITMENT Proposed Schedule 20% of franchise fee $200,000 or 20% of the negotiated franchise fee $250K $3,000,000 REINVEST IN THE TEAM BY FORGOING TEAM $250K $2,500,000 PRESIDENT’S SALARY FOR the first THREE YEARS $250K $250K $2,000,000 Team Presidents for minor/secondary league sports don’t make much but this will still save a lot in relation $500K to the entire budget. I will forgo the President’s salary of $250,000 a year for the first three years reducing required capital costs $750,000. $1.5M $1,500,000 $1,000,000 $ 500,000 $0 2010 2011 2012 2013 2014 2015 (c)charlotteprolacrosse.com (c)StartYourDoc.com 31
  • 32. 10-year value projections vs. invested capital Title $8,000,000.00 $7,000,000.00 $6,000,000.00 $5,000,000.00 $4,000,000.00 Invested Capital $3,000,000.00 Team Valuation $2,000,000.00 (Valuation based on 2.8x Revenues) $1,000,000.00 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (c)charlotteprolacrosse.com 32
  • 33. OVERview of team financials Revenue Projections approach 5-year Revenue detail Ticket Sales & Pricing Sponsorship Sales Merchandise Sales Camps & Misc USES OF CAPITAL FRANCHISE FEE Start-Up Costs Business Operations overview SportSummit2009 Sales, General & Administrative SPORTSUMMIT USER CONFERENCE LAX Operations PARIS, FRANCE. CONFERENCE: SEPT. 18-20 Game Operations Marketing & Promotions
  • 34. financial projections approach Conservative revenue approach - Estimate what I really think on sales (and I’m a pessimist) - sales goals will exceed these estimates Fully fund all cost centers regardless of trade or in-kind expectations - Budget for all expense items even if I think they are obtainable at a discount and/or through in-kind trade Better to under-promise and over-deliver (c)charlotteprolacrosse.com 34
  • 35. Revenue Projections Overview Conservative Projected Revenues ’10/’11 ’11/’12 ’12/’13 ’13/’14 ’14/’15 ’15/’16 ’16/’17 REVENUES Single Game Tickets $99,000 $108,900 $139,755 $153,731 $232,792 $256,071 $281,678 Luxury/Premium Seats $126,120 $126,120 $147,140 $170,100 $194,400 $194,400 $220,800 Non-Premium Season Tickets $111,000 $133,200 $186,480 $223,776 $368,271 $441,926 $530,311 Group Sales $45,360 $56,700 $82,688 $103,359 $157,500 $160,000 $168,000 Corporate Partnership $72,000 $114,000 $143,760 $175,168 $221,097 $268,896 $320,223 Merchandise Sales $20,520 $23,854 $32,496 $38,177 $50,578 $55,300 $61,457 Concessions & Parking $56,186 $65,313 $88,978 $104,533 $138,487 $151,416 $168,275 Camps & Clinics $20,972 $26,214 $32,768 $40,960 $51,200 $64,000 $80,000 TOTAL REVENUES $551,157 $654,301 $854,065 $1,009,804 $1,414,325 $1,592,008 $1,830,744 EXPENSES Sales, General & Admin LAX Operations Game Operations Optimistic Projected Revenues $413,294 $393,250 $148,050 $469,635 $394,210 $159,690 $502,706 $429,624 $186,122 $844,377 $431,704 $204,435 $909,389 $469,195 $240,692 $963,463 $473,354 $247,921 $1,028,177 $477,513 $256,704 Marketing & Promotions ’10/’11 $100,050 ’11/’12 $106,765 ’12/’13 $126,606 ’13/’14 $134,220 ’14/’15 $171,702 ’15/’16 $158,144 ’16/’17 $170,730 REVENUES Misc, Camps & Clinics $19,923 $23,593 $27,853 $32,768 $38,400 $44,800 $52,000 Single Game Tickets $120,000 $130,000 $165,000 $185,000 $280,000 $305,000 $340,000 TOTAL EXPENSES $1,074,567 $1,153,893 $1,272,911 $1,647,504 $1,829,378 $1,887,683 $1,985,124 Luxury/Premium Seats $171,000 $171,000 $199,500 $223,860 $255,840 $255,840 $281,600 Non-Premium Season Tickets $133,000 $160,000 $225,000 $270,000 $440,000 $530,000 $635,000 OPERATING PROFIT/LOSS Group Sales -$523,409 -$499,592 -$418,846 -$637,700 $45,360 $56,700 $82,688 $103,359 -$415,053 $157,500 -$295,675 $160,000 -$154,381 $168,000 Corporate Partnership $96,000 $151,200 $198,100 $234,670 $289,219 $345,755 $385,787 Merchandise Sales $24,000 $28,000 $33,000 $40,000 $45,000 $50,000 $55,000 Camps & Clinics $20,972 $26,214 $32,768 $40,960 $51,200 $64,000 $80,000 TEAM VALUATION TOTAL REVENUES $1,543,240.26 $1,832,044.00 $2,391,380.71 $2,827,450.02 $610,332 $723,114 $936,056 $1,097,849 $3,960,110.38 $1,518,759 $4,457,622.78 $1,710,595 $5,126,082.18 $1,945,387 $28,800 $33,600 $39,600 $48,000 $54,000 $60,000 $66,000 EXPENSES Sales, General & Admin $663,294 $719,635 $752,706 $844,377 $909,389 $963,463 $1,028,177 LAX Operations $355,250 $356,210 $388,457 $390,537 $424,862 $429,021 $433,180 Game Operations $148,050 $159,690 $186,122 $204,435 $240,692 $247,921 $256,704 Marketing & Promotions (c)charlotteprolacrosse.com 35 $100,050 $106,765 $126,606 $134,220 $171,702 $158,144 $170,730 Misc, Camps & Clinics $19,923 $23,593 $27,853 $32,768 $38,400 $44,800 $52,000 TOTAL EXPENSES $1,286,567 $1,365,893 $1,481,744 $1,606,337 $1,785,045 $1,843,350 $1,940,791
  • 36. Ticket Sales: ticket sales by type Tickets By Type (per game) Charlotte Denver Boston Washington Toronto Long Island (projected) 4 Season Tickets 1,685 1,485 1,111 487 245 960 3 Group Tickets 1,185 1,547 113 310 173 840 Paid Attendance 5,168 3,912 1,720 1,346 1,450 2,850 3 1 Comp Tickets 3,263 753 1,480 1,250 1,955 450 2 Avg. Ticket Price $14.90 $16.40 $13.89 $27.72 $13.91 $22.31 Avg. Revenue/ $76,981 $64,151 $23,894 $37,304 $20,160 $63,580 3 Game * rank in league (c)charlotteprolacrosse.com 36
  • 37. Ticket Sales Projections (Annual Growth Rate) (c)charlotteprolacrosse.com 37
  • 38. Sponsorship Overview As with most sports leagues, there are rules on restricted and non- restricted commercial partnership categories. Restricted categories are non-sellable at the local level as the league reserves those rights on a national basis. This is because they believe the rights are worth more collectively. The following categories are currently restricted at the MLL league level thought there is some give-and-take depending on circumstances: Tourism Financial services Airline Personal Care Internet services Apparel/Footwear Products Lacrosse equipment Beverages OTC Medications Overnight delivery QSR Restaurants Anti-smoking/Drug services Ice Cream Organizations Personal Credit cards Computer games accessories Insurance (c)charlotteprolacrosse.com 38 Automobiles Telecommunications
  • 39. Sponsorship Overview Given league restrictions, initial sponsorship sales will rely on established relationships with local clientele Once a demographic profile of our audience is established, we will leverage access to our core audience to garner new high-end accounts We will consciously position our brand to attract the city’s emerging energy sector (c)charlotteprolacrosse.com 39
  • 40. Sponsorship Annual Projections 2011 2012 2013 2014 2015 2016 2017 # of Games 6 6 7 7 8 8 8 Renewals 0 4 6 7 8 9 10 Renewal $$$/game $12000 $12667 $14376 $15924 $18425 $20684 Renewal Revenues $48000 $76000 $100632 $127395 $165823 $206843 New Sales 6 5 4 4 4 4 4 New Sale $$$/game $2,000 $2,200 $2,420 $2,662 $2,928 $3,221 $3,543 New Sales Revenue $72000 $66000 $67760 $74536 $93702 $103073 $113380 Total Accounts 6 9 10 11 12 13 14 Total Revenue $72000 $114000 $143760 $175168 $221097 $268896 $320223 Revs per Account $12000 $12667 $14376 $15924 $18425 $20684 $22873 Assumptions - Renewal Percentage 75% - Escalator per year 10% (c)charlotteprolacrosse.com 40
  • 41. Merchandise Merchandise represents a small but important part of the Charlotte Pro Lacrosse budget. Although insignificant financially, the more people wearing our gear - the more free marketing we receive. The following represents sales estimates and assumptions for merchandise: Based on a $3 per cap (Boston’s 2009 per caps) and 50% margin on goods sold 2011 2012 2013 2014 2015 2016 2017 Paid Attendance/Yr 17,100 19.878 27,083 31,815 42,152 46,080 51,216 Show Rate 80% 80% 80% 80% 80% 80% 80% $1.50/Attendee $20,520 $23,854 $32,496 $38,177 $50,578 $55,300 $61,457 (c)charlotteprolacrosse.com 41
  • 42. Camps & Clinics Camps & Clinics can be divisive within a city’s lacrosse community since it can easily be perceived as infringing upon others livelihoods. More research on how to best approach camps & clinics in the Charlotte market must be done prior to any type financial analysis. That said, margins are about 20% for daytime/commuter camps/clinics and 30% for overnight camps. Entry strategy may be to “endorse” existing camps and provide players in return for a percentage of the revenues. This is an income/expense item that requires more exploration and may take time to grow into. (c)charlotteprolacrosse.com 42
  • 43. Use of capital: Four primary expenditures 7-Year Cost Projections $1,985,045** $1,940,791** $2,000,000.00 $1,843,350** $1,806,337* $1,750,000.00 $1,431,744* $1,500,000.00 $1,315,893 $1,236,567 $1,250,000.00 $1,000,000.00 $750,000.00 = .5% Start-Up Costs = 2% Misc, Camps & Clinics $500,000.00 = 8.5% Franchise Fee = 53% Sales, General & Admin $250,000.00 Marketing & Promotions = 36% Game Presentation $0 Lacrosse Operations ’10/’11 ’11/’12 ’12/’13 ’13/’14 ’14/’15 ’15/’16 ’16/’17 * 14-game seasons (c)charlotteprolacrosse.com **43 16-game seasons
  • 44. Franchise fee: Timing is right The league is “officially” asking for $1.5 for new franchises. They are also interested in upgrading the current state of ownership in the league in three ways: Bring in people who have pro sports management backgrounds/ EXPECTED experience ACTUAL Bring in groups that will conduct the proper due diligence and FRANCHISE FEE: properly capitalize their franchise Bring in groups that show interest in participating in Lax United $1,000,000 Marketing (the league’s broadcast arm) (c)charlotteprolacrosse.com 44
  • 45. additional consideration LAX United Marketing LUM has been spun off and granted to rights to produce and deliver all MLL games and to market and produce certain national and international events that would be associated with MLL. This is a similar structure to the MLS where broadcast rights are housed under the Soccer United Marketing banner. As a team owner, we have the right to purchase ownership units in LUM. LUM is expected to lose about $1M this season and will probably lose similar sums in the future. Jim Davis and New Balance are currently covering all these costs. In my opinion, the upside is at least a decade away. That said, a reduction in the franchise fee is worth some due diligence some serious consideration with LUM. The League offices are preparing financial information for Charlotte Pro Lacrosse to review. (c)charlotteprolacrosse.com 45
  • 46. STart-up costs: $40,000 This business does not require large fixed-cost start-up expenditures and as such most of the first-year expenses that could be considered “start-up” are covered in the Sales, General & Administrative annual budget. Several exceptions: Legal Fees associated with forming the business ($15,000) SALES, GENERAL & ADMINISTRATIVE Salaries & Benefits President/GM $413,294 2011 $300,094 $0 $469,635 2012 $359,319 $0 $502,706 2013 $389,296 $0 $844,377 2014 $726,581 $275,000 $909,389 2015 $781,589 $285,000 $963,463 2016 $839,382 $300,000 $1,028,177 2017 $900,625 $315,000 Graphic Design for team logo, uniforms and business ($15,000) VP, Business Development $100,000 $108,000 $116,640 $125,971 $136,049 $146,933 $158,687 Sr. Director Marketing $55,000 $59,400 $64,152 $69,284 $74,827 $80,813 $87,278 Director Operations $35,000 $36,750 $38,588 $40,517 $42,543 $44,670 $46,903 Sales Manager $30,000 $31,800 $33,708 $35,730 $37,874 $40,147 $42,556 Sales Associate $19,000 $20,140 $21,348 $22,629 Printing of stationary, business cards, and other business related Sales Associate $18,000 $19,080 $20,225 $21,438 $22,725 $24,088 Intern $9,000 $9,000 $9,000 $10,000 $10,000 $12,000 $12,000 Sales Commissions & Bonus Pool (avg. 5% of sales) $17,750 $30,525 $36,880 $45,406 $60,448 $69,674 $81,981 Payroll Taxes, Workers Comp, etc.) $30,844 $36,684 $39,756 $45,767 $50,415 $54,789 $59,515 Health Insurance $22,500 $29,160 $31,493 $39,681 $42,855 $46,284 $49,987 - # of people covered 5 6 6 7 7 7 7 stationary ($2,500) - cost/person per year $4,500 $4,860 $5,249 $5,669 $6,122 $6,612 $7,141 Operational Expenses $59,200 $54,696 $56,121 $58,789 $67,022 $61,481 $63,073 Rent $18,000 $18,540 $19,096 $19,669 $20,259 $20,867 $21,493 Computers & Copiers $10,000 $3,000 $3,090 $3,183 $10,000 $3,000 $3,090 Office Supplies $6,000 $6,180 $6,365 $6,556 $6,753 $6,956 $7,164 Postage/Shipping $1,800 $1,854 $1,910 $1,967 $2,026 $2,087 $2,149 Cel Phones $6,000 $7,200 $7,200 $8,400 $8,400 $8,400 $8,400 Telephone $3,600 $3,708 $3,819 $3,934 $4,052 $4,173 $4,299 Travel $9,000 $9,270 $9,548 $9,835 $10,130 $10,433 $10,746 Meals & Entertainment $1,800 $1,854 $1,910 $1,967 $2,026 $2,087 $2,149 One-time set-up/purchase charges for technology, phones, Meetings $3,000 $3,090 $3,183 $3,278 $3,377 $3,478 $3,582 Other Operational Expenses $54,000 $55,620 $57,289 $59,007 $60,777 $62,601 $64,479 Insurance $18,000 $18,540 $19,096 $19,669 $20,259 $20,867 $21,493 Accounting Fees $12,000 $12,360 $12,731 $13,113 $13,506 $13,911 $14,329 Legal Fees $15,000 $15,450 $15,914 $16,391 $16,883 $17,389 $17,911 IT Fees $3,000 $3,090 $3,183 $3,278 $3,377 $3,478 $3,582 printers, etc. ($5,000) Misc. $6,000 $6,180 $6,365 $6,556 $6,753 $6,956 $7,164 Miscellaneous deposits and expenses ($2,500) (c)charlotteprolacrosse.com 46
  • 47. Expense Projections Overview ’10/’11 ’11/’12 ’12/’13 ’13/’14 ’14/’15 ’15/’16 ’16/’17 REVENUES Single Game Tickets $99,000 $108,900 $139,755 $153,731 $232,792 $256,071 $281,678 Luxury/Premium Seats $171,000 $171,000 $199,500 $223,860 $255,840 $255,840 $281,600 Non-Premium Season Tickets $111,000 $133,200 $186,480 $223,776 $368,271 $441,926 $530,311 Group Sales $45,360 $56,700 $82,688 $103,359 $157,500 $160,000 $168,000 Corporate Partnership $72,000 $114,000 $143,760 $175,168 $221,097 $268,896 $320,223 Cost Projections Merchandise Sales $20,520 $23,854 $32,496 $38,177 $50,578 $55,300 $61,457 Camps & Clinics $20,972 $26,214 $32,768 $40,960 $51,200 $64,000 $80,000 TOTAL REVENUES $539,852 $633,868 $817,447 $959,031 $1,337,278 $1,502,032 $1,723,269 EXPENSES Sales, General & Admin $413,294 $469,635 $502,706 $844,377 $909,389 $963,463 $1,028,177 LAX Operations $355,250 $356,210 $388,457 $390,537 $424,862 $429,021 $433,180 Optimistic Cost Projections Game Operations $148,050 $159,690 $186,122 $204,435 $240,692 $247,921 $256,704 Marketing & Promotions $100,050 $106,765 $126,606 $134,220 $171,702 $158,144 $170,730 Misc, Camps & Clinics $19,923 $23,593 $27,853 $32,768 $38,400 $44,800 $52,000 TOTAL EXPENSES $1,036,567 $1,115,893 $1,231,744 $1,606,337 $1,785,045 $1,843,350 $1,940,791 OPERATING PROFIT/LOSS -$496,715 -$482,025 -$414,297 -$647,306 -$447,767 -$341,318 -$217,522 + Franchise Fee Payment -$150,000 -$150,000 -$150,000 -$150,000 -$150,000 CAPITAL REQUIREMENTS -$646,715.17 -$632,025.34 -$564,297.07 -$797,306.12 -$597,766.83 -$341,317.54 -$217,522.30 Annuity Factor (2%) 1 0.9804 0.9612 0.9423 0.9238 0.9057 0.8375 -$646,715.17 -$619,637.64 -$542,402.34 -$751,301.56 -$552,217.00 -$309,131.30 -$182,174.93 -$1,266,352.81 -$1,808,755.15 -$2,560,056.71 -$3,112,273.71 -$3,421,405.01 -$3,603,579.94 Value of Franchise $1,511,584.26 $1,774,830.40 $2,288,850.87 $2,685,286.78 $3,744,379.38 $4,205,689.91 $4,825,152.12 3133000 3735400 $514,991.45 $604,189.53 $842,485.36 $946,280.23 $1,085,659.23 250000 245100 240300 735400 750000 -0.38656894109 -0.395553764 -0.443029061 -23.63% -0.24098137555 (c)charlotteprolacrosse.com 47 22.50% 3% deal together 560000 $280,497.07
  • 48. Sales, General & Admin expenses (c)charlotteprolacrosse.com 48
  • 49. LAX operations expenses (c)charlotteprolacrosse.com 49
  • 50. Game operations (c)charlotteprolacrosse.com 50
  • 51. Marketing & Promotion (c)charlotteprolacrosse.com 51
  • 52. 7 Year pro forma P & L (c)charlotteprolacrosse.com 52
  • 53. Contact information Jim McPhilliamy jmcphillliamy@charlotteprolacrosse.com c 917-822-3600 o 704-333-4600 53