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Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
Civic economics show 2010
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Civic economics show 2010

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  • 1. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS ECONOMIC IMPACT OF PROPOSED GAMING FACILITIES SOUTH CENTRAL GAMING ZONE – SUMNER COUNTY DECEMBER 1, 2010
  • 2. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS BRIEF AGENDA • About Civic Economics • Overview of Scope • Economic Impact Approach • Economic Impact of Construction • Economic Impact of Operations • Non-Gaming Amenities
  • 3. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS About Civic Economics • Established in 2002 • Matt Cunningham in Chicago, Dan Houston in Austin • Diverse practice in scope and geography • Not a gaming/tourism practice
  • 4. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Scope of Work
  • 5. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Scope of Work • Economic impact of construction and operations of proposed facilities – Development of IMPLAN inputs from applicant submissions and Wells/Cummings • Review of competition for non-gaming activities – Focus on this year’s unusual amenities
  • 6. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Economic Impact Approach
  • 7. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Economic Impact Approach • IMPLAN, an industry-standard tool built on input-output modeling • Impacts calculated on a statewide basis • Focus is on equitable treatment of applicants – Developed a single model for both applicants
  • 8. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Economic Impact Approach • Used data supplied by applicants where possible – Any adjustments made for all applicants using the same methodology – Adjusted gaming and non-gaming revenues and employment projections
  • 9. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS NET Economic Impacts • The most important thing to learn today: – Economic impact analysis must focus on activity that is new to the study area – Activity that simply moves from one location or firm to another is not new to the area, and may be harmful to the local economy
  • 10. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS NET Economic Impacts • Export Revenue: • This refers to the portion of gaming revenues derived from non-Kansas visitors that would not, absent the proposed casino, have occurred in Kansas. • Import Substitution Revenue: • This refers to the portion of gaming revenues derived from Kansas residents that would, absent the proposed casino, have occurred outside of Kansas.
  • 11. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Economic Impact Reporting • Economic impacts are comprised of three separate categories. – Economic Output is the total production or sales derived from the project. – Employment is the total number of Kansans employed both on a full and part time basis in a given industry. – Wages is the amount of salaries and benefits paid to Kansas employees.
  • 12. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Economic Impact Reporting • For each of the categories listed above a direct effect, indirect effect, and induced effect has been calculated. – Direct effects capture the initial impact created. – Indirect effects are additional impacts derived from businesses providing products or services to the selected industries. – Induced effects are the result of increased household spending due to the direct and indirect effects.
  • 13. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Construction Impacts
  • 14. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Construction Impacts • Temporary economic activity associated with designing and building facilities and associated infrastructure • Used projected costs through 2016, but assumed all activity in 2011 – FBO for Peninsula, not for Global • Simply put, relative cost of proposed facilities drives relative outcomes
  • 15. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Construction Impacts
  • 16. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Construction Impacts
  • 17. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operating Impacts
  • 18. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operating Impacts • Used 2014 for first full year of analysis – Comparable to last year’s 2013 analysis • Steps to determine inputs: – Gaming revenue and operational scale – Calculation of net impacts from Cummings and Wells analyses – Final input modification for labor costs • Wells/Cummings do not include Park City
  • 19. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operating Impacts • Three Scenarios for each proposal – 2014: Development as proposed – 2016: Development as proposed – 2016: Assuming full build out • Peninsula proposes FBO by 2016, so numbers are unchanged in final scenario • Note: Did not calculate impacts on Peninsula alternate site. Impact reduced in proportion to gaming revenue.
  • 20. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operational Scale • Applicants projected both non-gaming and gaming revenues – Gaming revenue applied here is average of Cummings and Wells mid-case • Non-gaming revenues were adjusted in proportion to average Wells/Cummings and applicant gaming estimates
  • 21. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Revenue Forecasts Number of Slot Machines 1550 Number of Slot Machines 1500 Number of Gaming Tables 60 Number of Gaming Tables 52 Number of Hotel Rooms 80 Number of Hotel Rooms 150 Number of Restaurants 3 Number of Restaurants 3 Estimated gaming revenue: Applicant 140,438,700$ Estimated gaming revenue: Applicant 165,812,555$ Estimated gaming revenue: Wells 108,685,160$ Estimated gaming revenue: Wells 178,683,731$ Estimated gaming revenue: Cummings 141,200,000$ Estimated gaming revenue: Cummings 192,100,000$ Average of Wells & Cummings 124,938,360$ Average of Wells & Cummings 185,391,866$ Ratio of Wells/Cummings to Applicant 0.89 Ratio of Wells/Cummings to Applicant 1.12 Hotel Revenue 1,953,483$ Hotel Revenue 4,201,793$ Food & Beverage Revenue 8,661,821$ Food & Beverage Revenue 13,254,002.59$ Retail Revenue 73,394$ Retail Revenue 1,235,116.12$ Entertainment 1,565,747$ Entertainment N/A Other Revenue (Travel Plaza) 6,227,404$ Other Revenue (Fees and Leases) 926,959.33$ ADJUSTED REVENUE FORECASTS, 2014 (in 2014 dollars) Based on contractually obligated development scheduled for completion by 2014 GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS PROJECT SCOPEPROJECT SCOPE SOURCE: Applicant Submissions, Wells Scenario 3, Cummings GB4, PB4, Civic Economics PENINSULA GAMING, MULVANE GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS GLOBAL GAMING, WELLINGTON
  • 22. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Revenue Forecasts Number of Slot Machines 1800 Number of Slot Machines 2000 Number of Gaming Tables 60 Number of Gaming Tables 60 Number of Hotel Rooms 80 Number of Hotel Rooms 300 Number of Restaurants 3 Number of Restaurants 4 Estimated gaming revenue: Applicant 155,694,600$ Estimated gaming revenue: Applicant 202,342,739$ Estimated gaming revenue: Wells 120,499,558$ Estimated gaming revenue: Wells 209,183,759$ Estimated gaming revenue: Cummings 155,800,000$ Estimated gaming revenue: Cummings 213,400,000$ Average of Wells & Cummings 138,149,779$ Average of Wells & Cummings 211,291,880$ Ratio of Wells/Cummings to Applicant 0.89 Ratio of Wells/Cummings to Applicant 1.04 Hotel Revenue 2,230,486$ Hotel Revenue 8,199,540$ Food & Beverage Revenue 9,524,790$ Food & Beverage Revenue 15,105,642$ Retail Revenue 80,524$ Retail Revenue 1,223,782$ Entertainment 1,889,621$ Entertainment 7,259,386$ Other Revenue (Travel Plaza) 7,985,813$ Other Revenue (Fees and Leases) 1,056,459$ ADJUSTED REVENUE FORECASTS, 2016 (in 2016 dollars) GLOBAL GAMING, WELLINGTON PENINSULA GAMING, MULVANE GAMING REVENUE PROJECTIONS GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS SOURCE: Applicant Submissions, Wells Scenario 4, Cummings GB5, PB5, Civic Economics PROJECT SCOPE PROJECT SCOPE Based on contractually obligated develoment scheduled for completion by 2016
  • 23. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Revenue Forecasts Number of Slot Machines 2000 Number of Slot Machines 2000 Number of Gaming Tables 60 Number of Gaming Tables 60 Number of Hotel Rooms 200 Number of Hotel Rooms 300 Number of Restaurants 5 Number of Restaurants 4 Estimated gaming revenue: Applicant 172,994,000$ Estimated gaming revenue: Applicant 202,342,739$ Adjusted up based on 200 additional slots Estimated gaming revenue: Wells 135,385,558$ Estimated gaming revenue: Wells 209,183,759$ Estimated gaming revenue: Cummings 160,528,732$ Estimated gaming revenue: Cummings 213,400,000$ Average of Wells & Cummings 147,957,145$ Average of Wells & Cummings 211,291,880$ Ratio of Wells/Cummings to Applicant 0.86 Ratio of Wells/Cummings to Applicant 1.04 Hotel Revenue 2,478,318$ Hotel Revenue 8,198,930$ Food & Beverage Revenue 10,583,100$ Food & Beverage Revenue 15,104,517$ Retail Revenue 89,471$ Retail Revenue 1,223,691$ Entertainment 2,099,579$ Entertainment 7,258,845$ Other Revenue (Travel Plaza) 8,873,126$ Other Revenue (Fees and Leases) 1,056,381$ ADJUSTED REVENUE FORECASTS, 2016 (in 2016 dollars) Based on applicant's proposed full build-out GLOBAL GAMING, WELLINGTON PENINSULA GAMING, MULVANE GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS*ADJUSTED NON-GAMING REVENUE PROJECTIONS SOURCE: Applicant Submissions, Wells Scenario 4, Cummings GB6, PB5, Civic Economics Values carried from above * Non-gaming revenue for Global is projected to increase in proportion to additional slot machines PROJECT SCOPE PROJECT SCOPE GAMING REVENUE PROJECTIONS
  • 24. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Net Gaming Revenue Adjustment • Cummings and Wells analysis allows an estimate of gaming revenue flows among states • This analysis uses the sum of: – Import Substitution – Export
  • 25. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Money Flows Across State Lines
  • 26. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Money Flows Across State Lines
  • 27. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Money Flows Across State Lines
  • 28. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Adjustment for Labor Cost • Applicant submissions over three years are widely divergent on jobs and labor costs • IMPLAN assumes excessive labor relative to revenue for a new industry in Kansas • Solution: We have applied the average of current applicant labor cost submissions:
  • 29. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Finally, on to the numbers …
  • 30. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operating Impact YEAR OPERATOR TOTAL OUTPUT 2014 GLOBAL 118,749,883$ PENINSULA 144,652,664$ 2016 GLOBAL 136,237,230$ PENINSULA 188,994,697$ 2016 FBO GLOBAL 156,263,782$ PENINSULA 188,994,697$ Source: Applicant Submissions, IMPLAN, Civic Economics OPERATING IMPACTS COMPARISON ECONOMIC OUTPUT IN THEN-YEAR DOLLARS RELATIVE IMPACTS
  • 31. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operating Impact, Global
  • 32. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Operating Impact, Peninsula
  • 33. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Non-Gaming Competitive Impacts • New Gaming Spending • Non-Gaming Amenities
  • 34. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS New Gaming Spending by Kansans • Remaining projected revenue after NET is new gaming spending by Kansans • This is money that previously went to other discretionary activity • Beyond scope here to evaluate sources of that money, but totals are as follows
  • 35. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS New Gaming Spending by Kansans • Primary competitive impact on region is diversion of discretionary spending to gaming from other activities • In comparing proposals, these values should be thought of as an offset against economic impact gains from gaming
  • 36. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS
  • 37. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Standard Non-Gaming Amenities • Global – Food and beverage services – Hotel rooms – Entertainment venue – Golf course improvements • Peninsula – Food and beverage services – Hotel rooms – Entertainment venue
  • 38. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Novel Non-Gaming Amenities • Global Road Race Course – To open after 2016, so not included in impact analysis above – Rough cost of $7 Million • Peninsula Equestrian Center – Arena, barns, and support facilities for horse shows, rodeos, etc.
  • 39. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Global Road Race Course • Global has not provided an impact study or data that would allow us to produce one • Global did not include incremental gaming revenue from track in submissions • Auto racing and gaming may well make a complementary match, as anticipated at Kansas Speedway • Should additional information appear, Civic Economics will review at Board’s request
  • 40. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Peninsula Equestrian Center • Peninsula provided a study by Crossroads Consulting estimating events, attendance, and impact • Civic Economics was asked to consider the reasonability of that study • We reviewed that and another Crossroads study for York County, SC • We do not take a position on the gaming benefits of horse facilities
  • 41. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Crossroads Study • Use of IMPLAN appears solid • Outputs of a model are driven by inputs, so that is the issue here • Are estimates of events, usage, visitation, and visitor spending reasonable for this facility? • Two items for comparison: – OKC Fair Park – York County, SC
  • 42. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Crossroads Assumptions
  • 43. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Crossroads Impact Findings
  • 44. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS State Fair Park, OKC • Peninsula Facility • 560 stalls (400 Permanent) • Indoor arena seating ~4000 for equine events • State Fair Park • 2520 stalls (1189 permanent) • Indoor arena seating ~10,000 for equine events
  • 45. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS State Fair Park, OKC • 2010 events (from okstatefairpark.com): – 27 distinct events, some of which overlap – 114 event days – Average 4.2 days/event – Assuming usage days at 1.179, total usage at 134 days • “Horse Show Capital of the World” • Site does not include visitation numbers • Unable to find economic impact study of the facility
  • 46. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS OKC State Fair Park vs. Peninsula • OKC accommodates 3x to 4x as many horses • Primary arena seats more 2x • 27 events, 114 event days, 134 usage days • Crossroads forecasts usage of 75% - 88% of that achieved at far larger OKC facility
  • 47. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS York County, SC • Crossroads provided feasibility and impact study to York County in 2009 • Multi-Use Events Center highly focused on equine and ag events • Separate design study proposes 300- 600 stalls with an indoor, climate- controlled arena
  • 48. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS York County, SC • Due to different event classes, cannot make clear comparisons between event forecasts • Mid-, high-impact events (25-28) comparable to estimates for Sumner (21-24) • Visitation forecast for Sumner exceeds those for York by ~2.5x • Visitor difference drives difference in total spending and impacts
  • 49. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Crossroads: Two Questions • How can Sumner facility perform at 75% or better compared to much larger OKC? • Why is visitation forecast much higher at Sumner than at York? • Your satisfaction with these answers will drive Board’s reading of Morowitz estimates of incremental gaming revenue due to facility.
  • 50. KRGC: FACILITIES REVIEW BOARD MEETING DECEMBER 1, 2010, TOPEKA, KANSAS Thank you. CivicEconomics.com dhouston@ or mattc@

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