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  • 1. 0 Presented to: Kansas Lottery Gaming Facility Review Board Presented by: Dean M. Macomber Macomber International, Inc. December 1, 2010 REVIEW OF ANCILLARY DEVELOPMENT South Central Zone
  • 2. INTRODUCTION
  • 3. ASSIGNMENT REVIEW THE ANCILLARY AMENITIES AS PROPOSED BY EACH APPLICANT FOR THE SOUTH CENTRAL ZONE GAMING LICENSE  Global Gaming Solutions, LLC (“GGS”)  Peninsula Gaming Partners, LLC (“PGP”) Definition Ancillary Amenities = Non-Gaming Facilities
  • 4. PROCESS  REVIEWED APPLICANT SUBMISSION MATERIAL  MACOMBER INTERNATIONAL, INC. (“MI”) EXTRACTED INFORMATION PERTINENT TO THE ANCILLARY DEVELOPMENT REVIEW AND CATEGORIZED IT AS FOLLOWS: I. Goal Set II. External Considerations III. Internal Considerations IV. Targeted Market Segments V. Product Marketing Plan VI. Demand Stimulation Marketing Plan VII. Sum of the Parts • MI THEN COMPARED AND RATED EACH SUBMISSION
  • 5. PROCESS … continued  THIS PRESENTATION WILL FOCUS ON HOW THE ANCILLARY DEVELOPMENT PROPOSAL OF EACH APPLICANT: o Satisfies and optimizes the State of Kansas goals set forth by its gaming legislation. o Supports and optimizes the gaming effort. o Act as independent activities.  BY ITS NATURE THIS REVIEW, EVALUATION, AND CONCLUSIONS IS … o Part objective, tangible, and quantitative o Part subjective, intangible, and qualitative
  • 6. QUALIFICATIONS This review and evaluation was conducted solely by Dean M. Macomber, President, Macomber International, Inc.  36 years in the gaming industry.  Held operation positions ranging from Dealer to President.  Worked as a consultant for a public accounting firm as well as my own company, MI.  Involved in the opening of 7 casinos and 2 takeovers.  Projects have included: o Scope: 200 unit slot operation to >$2B mega Casino-Resorts. o Positioning: Locals’, Regional, Domestic/International; Value driven slot to VVIP table game operations; and virtually everything in between. o Location:  Operations: Nevada, New Jersey, Canada, Macau  Consulting: U.S., Canada, Caribbean, Latin America, Europe, Asia, Australia, Internet gaming, and technology o Projects similar to South Central Zone: Grove, OK; 2 in IA (not with PGP); 3 in suburban/rural WA; Pendleton, OR; Gary, IN; southeast WI; Greater LA market, CA  65 domestic/international presentations, university casino gaming courses, 14 articles  Masters Hotel School of Administration, Cornell University plus undergraduate Marketing
  • 7. CONTEXT
  • 8. CONTEXT Development and subsequent operation will take place in the grip of the Financial Crises The dynamics of casino demand show that the ‘inner’ and ‘middle’ ring markets produce the greatest volume and ‘quality’ gaming demand, i.e., more or less within 100 miles of the site. Extensive and well developed competition already exists in many feeder markets, particularly the outer markets where the greatest population densities reside. Most of the Midwest and the South Central Zone in particular is inherently a middle market.
  • 9. CONCLUSION The first and second goals of the Kansas gaming statutes – jobs and income to the State – are best achieved and sustained by each South Central Zone development … First being … The Best Locals’ Casino It Can Be … and then second being … The Best Regional Casino It Can Be And, the derivative second conclusion is that gaming will be (and must be) the marketing and profit engine for each casino.
  • 10. CONCLUSION … continued Experience elsewhere shows that the driving considerations for a Local /Regional gamers are:  First and foremost … the games and gaming experience: e.g., selection of games, price/cost/time-on-device, incentives, playing environment.  A distant but still important second … the food, i.e., the minimum expectation is good food but preferably great food. In either case value pricing is expected and appreciated.  Everything else comes next: parking, beverage, entertainment, hotel. Consequently, the primary goal of ancillary development should (must?) be to support gamers.
  • 11. CONCLUSION … continued Achieving the third goal of the Kansas gaming statutes – generating tourism – follows after gaming and the gaming experience is fully supported. The proposals validate these contentions:  Visitors within 100 miles : Total Visits 84% to 90%  Gamers : Non-gamer visits 96%  Gaming revenue : Total Revenue 87% to 91%  Gaming departmental profit : EBITDA 121% to 201% MI’s review and evaluation took place in this context and based upon these conclusions.
  • 12. PROPONENT’S SUBMISSION EVALUATION AND REVIEW Global Gaming Solutions, LLC(“GGS”) Peninsula Gaming Partners, LLC(“PGP”)
  • 13. TOTAL PROJECT – full build out and 2016  Both are designated as “destinations,” “regional” and “entertainment” destinations.  Both claim to have conceptualized and designed their projects specific to Midwest, Sumner County dynamics.  Both invest $280M to $285M  Both will depend largely upon gamers and visitors within 100 miles of the site. GGS PGP CONCEPT “Entertainment destination” “Regional destination” THEME Midwest / Sumner County EXPERIENCE Midwest successful operations POSITIONING Mid-market … 3-star hotels Average food check $9 to $13 INVESTMENT $280M “all in” $285M “all in” VISITORS 2016 <100 mi. >100 mi. Total Gamers Non-gamers Total 2,113K 84% 417K 16% 2,530K 100% 2,429K 96% 101K 4% 2,530K 100% 2,611K 90% 291K 10% 2,902K 100% 2,786K 96% 116K 4% 2,902K 100%
  • 14. GAMING (a reference point) – 2016  Both are proposing virtually the same gaming capacity  GGS’s forecast spend per visitor is 84% of PGP’s.  GGS is forecasting 86% of the gaming visitors and 78% of the GGR of PGP.  Profit margins are the same so GGS departmental profit is also 78% of PGP. * MI calculations ** GGS table includes poker GGS PGP Capacity 2000 slots 40 tables 20 poker 2000 slots 50 tables 20 poker Demand – physical Demand – financial 2.4M gamers $157M GGR 2.8M gamers $202M GGR GGR/visitor $64 $76 Utilization* Physical Financial – WPPD 39% $172 42% $214 Slot revenue Table** Poker Total Revenue Depart. Profit Margin $135M $ 22M n.a. $157M $ 82M 52% $170M $ 30M $ 3M $202M $105M 52%
  • 15. DINING – full build out, all by 2016  GGS: Partnering with Emerging Brands/ Jimmy’s Egg and Rock bottom.  GGS: Higher margin may be due to 3rd party involvement.  PGP: Higher BE average check implies higher ‘quality.’  PGP: Loss leader average check implies attempt to use food as a marketing tool  PGP forecasting twice the total comp $ of GGS although GGS shows $0 on P&L. GGS PGP DESCRIPTION (ave. check) Deli $10 Sports bar $14 Buffet $15 Upscale $35 Snack bar $ 7 Food court $ 9 Buffet $11 Upscale $43 CAPACITY “S.F.” = square feet 510 seats 21,377 S.F. 430 seats 22,250 S.F. AVE. CHECK* $13 average $10 breakeven $ 9 average $14 breakeven UTILIZATION* 73% ave. day 84% ave. day REVENUE – cash REVENUE – comp REVENUE - total PROFIT/(LOSS) Margin $7.0M $0.0M $7.0M $1.8M 25% $ 3.9M $ 4.8M $ 8.7M ($3.0M) - 34% * MI calculations BE average check = total departmental expense / total covers
  • 16. BARS / LOUNGES – full build out, all by 2016  Both propose two bars, each with a casino bar plus one other.  GGS casino bar is a “center bar.”  PGP proposes a stage in their casino bar while GGS proposes a stage in their Lounge.  GGS’s margin may be due to 3rd parties.  GGS’s revenue is 66% of PGP’s but has 82% of PGP’s capacity. * MI calculation GGS PGP DESCRIPTION “S.F.” = square feet Center casino bar 2,700 S.F. Lounge and bar 2,000 S.F. Casino bar 2,700 S.F. Sports bar 3,000 S.F. CAPACITY 4,700 S.F. 5,700 S.F. AVE. CHECK n.a. n.a. UTILIZATION* 75% ave. day 71% ave. day REVENUE – cash REVENUE – comp REVENUE - total PROFIT/(LOSS) Margin $3.8M $0.0M $3.8M $2.7M 73% $5.8M $0.0M $5.8M $0.9M 16%
  • 17. ENTERTAINMENT – full build out, by 2016  GGS: 1400 seat multi- use theater mimic-ing their highly utilized Riverwind model.  PGP proposes a larger multi- use center for enter- tainment and equine events. * MI calculation GGS PGP DESCRIPTION Event / Conv. Center Event/ Conv. Center Equine Support Ctr. CAPACITY Seats Space (S.F. = sq. ft.) Pre-function Breakout rms. 1,400 seats 42,549 S.F. 1,657 S.F. 1,360 S.F. 3,000 seated/ 4,200 concerts 100,000 S.F. 1,200 S.F. unclear 1,500 seats covered, outdoor arena, 24 acres Implied attend. @ $X ave. ticket Implied events @ Y attend./event* ~ 55,000 $35 ticket 55 annually 1000/show ~ 200,000 $35/ticket 80 annually 2500/show REVENUE – cash REVENUE – comp REVENUE - total PROFIT/(LOSS) Margin $1.9M $0.0M $1.9M ($0.5)M - 25% $4.2M $2.7M $7.0M ($0.5)M - 8%
  • 18. ENTERTAINMENT … continued GGS PGP GGS’s Event Center is positioned as a flexible entertainment venue with meeting / convention capabilities (pre- function area, 4 breakout rooms, and flat ground floor in Event Center with non-fixed seats, movable partitions). PGP’s Event Center is positioned as an equine-based multi-use entertainment venue with meeting / convention capabilities (pre- function area, 2 breakout rooms in hotel). Tout their extensive experience with entertainment in Oklahoma … 49 acts appeared at their Riverwind Casino in Oklahoma City in 2009. The equine nature of the center is supported with stalls, feed, wash area(s), dirt storage area(s), and cleaning/odor control capabilities. Entertainment would ostensibly be stars, acts, and shows appearing on stage. Entertainment would be equine based events in the indoor or outdoor arenas plus ostensibly stars, acts, and shows appearing on the stage.
  • 19. HOTEL – by 2016 and full build out GGS PGP By 2016 Comparables Sq. ft. per room Other amenities After 2016 80-100 rm., 3-star, $10M Holiday Inn Express/La Quinta Suites 320 standard/620 premium Business center, pool, spa, exercise area, small meeting area, brkftst. area. 120 key, 4-star, $10-$15M* 300 rm., 3-star, $38M Hol. Inn Exprss./Hilton Grdn Inn 450 standard/900 premium Business center, pool, spa, fitness center, laundry, 2 meeting rooms None Ave. occ. / ADR 71% / $97 85% / $84 REVENUE PROFIT Margin $2.5M $2.5M 100% $0.0M $0.0M 0% OTHER 3rd party to manage first hotel. Expect initial 30% to 40% comped increasing to 70% in a stabilized year, translates into 56 to 70 rooms/night. *2nd hotel subject to market conditions Equity stake, but 3rd party management. Initial room block 5 MW/10 WE. Comps 7%-10% + discount rooms 20% = 30% casino, ~ 90 rooms/night.
  • 20. RV PARK – 2016 and full build out GGS PGP 2016 Year 10 Existing 37 space RV Park with 2 lodges, 1 cabin. Add 60 spaces. $7M 100 space RV Park with water/electric hookup. Results No utilization, price, or financial results segregated out or shown No utilization, price, or financial results segregated out or shown
  • 21. RETAIL – 2016 and full build out GGS PGP 2016 1,200 S.F. store 650 S. F. store Goods/items sold Sundries and logo merchandise. Gift shop, sundries, and logo merchandise* REVENUE – cash REVENUE – comp REVENUE – total PROFIT Margin $0.1M $0.0M $0.1M $0.0M 0% $0.2M $1.0M $1.2M $0.4M 34% MI: high comp revenue suggests possible Loyalty Club “points for merchandise” program may be credited here as comp revenue.
  • 22. PARKING – 2016 and full build out GGS PGP 2016 POST 2016 0.9M square feet paved parking 2,357 parking spaces 485 valet spaces 384 employee spaces 27 RV space 996 space parking garage 3,353 total spaces Ostensibly, the parking garage could be built sooner if demand so dictates. 1.5M sq. ft. paved parking 3,965 parking spaces 200 valet spaces 295 employee spaces 100 RV spaces No additional 3,965 parking spaces
  • 23. ANCILLARY REVENUE – 2016 GGS PGP Total Total Cash Comp % Rev CRITICAL GAMING SUPPORT ACTIVITIES FOOD $ 7.0M $ 8.7M $ 3.9M $ 4.8M 55% BEVERAGE $ 3.8M $ 5.8M $ 5.8M $ 0.0M 0% ENTERTAINMENT $ 1.9M $ 7.0M $ 4.2M $ 2.7M 39% HOTEL $ 2.5M $0.0M* $0.0M* $0.0M* n.a. RETAIL $ 0.1M $ 1.2M $ 0.2M $ 1.0M 85% Subtotal $15.3M $22.7M $14.1M $ 8.5M 37% % Total Rev. Comp Expense/%GGR 8.5% $4.0M/ 2.6% 10.0% $8.5M/4.2% TRAVEL PLAZA $ 9.0M ATM/CHK/LEASES $ 1.0M TOTAL ANC. REV. $24.3M $23.7M
  • 24. ANCILLARY REVENUE – 2016 GGS PGP Total Total Cash Comp % Rev CRITICAL GAMING SUPPORT ACTIVITIES FOOD $ 7.0M $ 8.7M $ 3.9M $ 4.8M 55% BEVERAGE $ 3.8M $ 5.8M $ 5.8M $ 0.0M 0% ENTERTAINMENT $ 1.9M $ 7.0M $ 4.2M $ 2.7M 39% HOTEL $ 2.5M $0.0M $0.0M $0.0M n.a. RETAIL $ 0.1M $ 1.2M $ 0.2M $ 1.0M 85% Subtotal $15.3M $22.7M $14.1M $ 8.5M 37% % Total Rev. Comp Expense/%GGR 8.5% $4.0M/ 2.6% 10.0% $8.5M/4.2% TRAVEL PLAZA $ 9.0M ATM/CHK/LEASES $ 1.0M TOTAL ANC. REV. $24.3M $23.7M
  • 25. MARKETING – 2016 GGS PGP $ % TR $ % TR COMP EXPENSE Includes pref. guest expense if applicable $ 3.9M 2% $ 8.5M 4% BAD DEBT EXPENSE $ 0.0M n.a. $ 0.2M nil ADVERTISING AND PROMOTION $10.0M 6% $25.2M 11% TOTAL MARKETING $14.0M $33.9M % TR $ TR 8% $181M 15% $226M OTHER MARKETING $2.4M $ unk. $ unk. Entert. CoS Golf Speedway $4.9M Enter. CoS
  • 26. M.I.C.E. – by 2016 and full build out M.I.C.E. = Meeting, Incentive, Convention and Exhibition GGS PGP M.I.C.E. 42,549 square foot multi-use event center with 1,657 S.F. pre-function area plus 1,360 S.F. breakout room space (4 rooms) 100,000 square foot multi-use event/equine center, includes 31,700 S.F. pre-function space and 1,200 S.F. breakout room space (2 rooms) in hotel. AS SUPPORTED BY HOTEL OPERATIONS (previously reviewed) HOTEL by 2016 Sq. ft. per room Other amenities After 2016 80-100 rm., 3-star, $10M 320 std./620 prem. Business center, pool, spa, exercise area, small meeting area, brkfst area. 120 key, 4-star, $10-$15M* 300 rm., 3-star, $38M 450 std./900 prem. Bus ctr., pool, spa, fitness center, laundry, 2 mtg. rms. None
  • 27. TRAVEL PLAZA – full build out, by 2016 GGS PGP By 2016 OnCue travel plaza. 5000 S.F. convenience store and other premises. None Goods/items sold Convenience: snacks, beverage, and limited hot food. Trucker services: overnight parking, showers, and laundry. Fuel: multiple unleaded octanes, multiple ethanol, and diesel. REVENUE – cash REVENUE – comp REVENUE – total PROFIT Margin $9.0M $0.0M $9.0M $0.6M 7%
  • 28. TOURIST ACTIVITIES – full build out GGS PGP (with MI adjustments) HOTEL 80 – 100 room, 3-star 120 room, 4-star subject to market conditions TRAVEL PLAZA Previously described GOLF COURSE RENOVATION Upgrade greens and clubhouse (“destination clubhouse”) of Wellington Municipal Golf Course SPEEDWAY 260 ac. Sports car racecourse for vintage car, motorcycle, performance production racing ADDITIONAL 420-acres AVAILABLE HOTEL 300 room, 3-star EQUESTRIAN CENTER Previously described
  • 29. TOURIST ACTIVITIES – full build out GGS PGP (with MI adjustments) TRAVEL PLAZA $8M Previously described GOLF COURSE RENOVATION $3M Upgrade greens and clubhouse (“destination clubhouse”) of Wellington Municipal Golf Course SPEEDWAY $7M to $10M 260 ac. Sports car racecourse for vintage car, motorcycle, performance production racing TOTAL TOURIST INVEST. $18M-$21M % of total $280M investment 6%-8% Forecast Tourist visitors 417,000 HOTEL with MI ADJUSTMENT 300-rm. Hotel $38M Less GGS 220-rm. 1 & 2 - $25M “Net” large hotel add $13M EQUESTRIAN CENTER with MI ADJUSTMENT Total Event/Equine/ Convention Complex $25M Less GGS 1400 seat MI adj. - $10M “Net” Equine add $15M TOTAL TOURIST INVEST. ADJ. ~$28M % of total $285M investment 10% Forecast Tourist visitors 291,000
  • 30. TOURIST ACTIVITIES – full build out GGS PGP (with MI adjustments) TRAVEL PLAZA $8M Previously described GOLF COURSE RENOVATION $3M Upgrade greens and clubhouse (“destination clubhouse”) of Wellington Municipal Golf Course SPEEDWAY $7M to $10M 260 ac. Sports car racecourse for vintage car, motorcycle, performance production racing TOTAL TOURIST INVEST. $18M - $21M % of total $280M investment 6%-8% Forecast Tourist visitors 417,000 HOTEL with MI ADJUSTMENT 300-rm. Hotel $38M Less GGS 100-rm. Hotel 1 - $13M “Net” large hotel add $25M EQUESTRIAN CENTER with MI ADJUSTMENT Total Event/Equine/ Convention Complex $25M Less GGS 1400 seat MI adj. - $10M “Net” Equine add $15M TOTAL TOURIST INVEST. ADJ. ~$40M % of total $285M investment 14% Forecast Tourist visitors 291,000
  • 31. JOBS – 2016  GGS forecasts 1,103 FTEs vs. GGP’s 879.  The primary variance is in gaming with GGS showing 141 more FTE’s or 21% greater than PGP even though PGP having 4% more capacity.  The 68 more FTE’s in GGS Entertain./Retail may be due to the Travel Plaza. It is likely that the number of employees and labor cost may not be apples-to-apples due to accounting treatment of third-party employees. * MI calculations GGS PGP CASINO 660 519 HOTEL 67 73 FOOD 185 186 BEVERAGE ENTERTAINMENT 134 66 RETAIL OTHER 20 6 G & A 37 20 TOTAL 1,103 879 LABOR $ % Tot. Rev.* Labor/Employ.* $31.2M 17% $28,269 $35.0M 16% $39,843
  • 32. PHASING GGS PGP + 9 MONTHS – PHASE 1A Nov. 2011 1310 slots, 32 table games 50 seat snack bar, several F&B kiosks +14 MONTHS – PHASE 1A 1300 slots, 30 tables, 20 poker tables 100 seat food court, 250 seat buffet, 140 seat sports bar, steakhouse 50 seat center bar, 90 seat show lounge 1400 seat event center +18 MONTHS – PHASE 1B 80 to 100 room 3-star hotel +21 MONTHS – PHASE 1B Nov. 2012 1500 slots, 42 table games, 10 poker Food court (2 outlets), 250 seat buffet, 110 seat steakhouse 100,000 sq. ft. indoor arena 150 room 3-star hotel, 20 space RV park
  • 33. PHASING – Non-critical to Gaming GGS PGP +36 MONTHS – PHASE 1B 1550 slots, 40 tables, 20 poker tables Golf course renovation + clubhouse and Travel Plaza +45 MONTHS – PHASE 2 Nov. 2014 2000 slots, 50 table games, 20 poker 3-star hotel expanded to 300 rooms, 40 space RV park 24 acre Equine/Rodeo Center expansion +60 MONTHS – PHASE 1B 1800 slots, 40 tables, 20 poker tables BEYOND 2016 PHASE 2A Yr. 7: 2200 slots, 40 tables, 20 poker Yr. 8: 996 space parking garage Yr. 10: 120 key 4-star hotel + additional RV spaces + race track. FUTURE DEVELOPMENT Additional hotel Master planned retail development Phase 2 expansion of Equine Center 100 space RV Park
  • 34. PHASING - Summary GGS PGP  Opens with permanent facility but 5 mo’s. after PGP – Month 14. Opens with 1300 slots, 30 tables, 20 poker tables and full FB&E.  Gets to 2200 slots, 40 tables, 20 poker in Year 7  80 to 100 room hotel opens in Month 18  Opens 5 months ahead of GGS but with interim facility – Month 9. Opens with 1310 slots, 32 table games  Full permanent facility with full FBE, 1500 slots, 42 tables, 10 poker, and 150 room hotel opens Month 21  Gets to 2000 slots, 50 tables, 10 poker and expansion to 300 room hotel in Month 45 (approx. Year 4) Performance: GR / Tot. Rev. 2013 $129M / $141M 2016 $157M / $181M Performance: GR / Tot. Rev. 2013 $148M / $163M 2016 $202M / $226M
  • 35. P&L – 2016  Higher PGP gaming revenue due to higher forecast gamer visitor volume, higher average spend per visit, and slightly more capacity.  Possibly also due to almost $20M more spent on Marketing.  Margin difference due to higher PGP Marketing and G&A, expenses and GGS’s hotel and other non- gaming profit. GGS PGP GAMING REV. $157M $202M ALL OTHER REV. $ 24M $ 24M TOTAL REVENUE $181M $226M EBITDA $ 67M $ 59M % margin 37% 26%
  • 36. FINANCIAL RESULTS – PROFIT & LOSS STATEMENT: GGS 2016 REVENUE - CASH REVENUE - COMP. REVENUE TOTAL GAMING TAXES & LICENCES LABOR COST OF SALES MARKETING OTHER EXPENSES TOTAL EXPENSES DEPT. PROFIT CASINO Electronic Gaming Machines $134,685,000 $0 $134,685,000 Pit Revenue - all table games 21,900,000 0 21,900,000 Poker 0 0 0 Subtotal - Casino $156,585,000 $0 $156,585,000 $45,606,448 $25,200,207 $0 $3,998,482 $0 $74,805,137 $81,779,863 Ratios 100% 0% 100% 29% 16% 0% 3% 0% 48% 52% HOTEL 2,513,755 0 2,513,755 0 0 0 0 0 0 2,513,755 Ratios 100% 0% 100% 0% 0% 0% 0% 0% 0% 100% FOOD 6,972,143 0 6,972,143 0 297,135 4,880,500 0 27,318 5,204,953 1,767,190 Ratios 100% 0% 100% 0% 4% 70% 0% 0% 75% 25% BEVERAGE 3,762,281 0 3,762,281 0 61,717 940,570 0 28,138 1,030,426 2,731,855 Ratios 100% 0% 100% 0% 2% 25% 0% 1% 27% 73% ENTERTAINMENT 1,936,000 0 1,936,000 0 0 2,420,000 0 0 2,420,000 -484,000 Ratios 100% 0% 100% 0% 0% 125% 0% 0% 125% -25% RETAIL 82,500 0 82,500 0 59,427 22,688 0 0 82,115 385 Ratios 100% 0% 100% 0% 72% 28% 0% 0% 100% 0% TRAVEL PLAZA 9,000,000 0 9,000,000 0 382,800 8,010,000 0 0 8,392,800 607,200 Ratios 100% 0% 100% 0% 4% 89% 0% 0% 93% 7% TOTAL DEPARTMENTAL $180,851,679 $0 $180,851,679 $45,606,448 $26,001,286 $16,273,758 $3,998,482 $55,456 $91,935,431 $88,916,248 Ratios 100% 0% 100% 25% 14% 9% 2% 0% 51% 49% TOTAL DEPARTMENTAL Advertising and Promotion $10,000,000 $10,000,000 Labor $1,485,672 1,485,672 Real Estate Taxes 2,843,517 2,843,517 Utilities 2,924,106 2,924,106 Insurance 1,688,263 1,688,263 Supplies 1,125,509 1,125,509 Repairs and Maintenance 1,000,000 1,000,000 Staff Amenities 168,826 168,826 Equipment Rental or Lease 112,551 112,551 Uniforms 90,041 90,041 Other General and Administrative 112,551 112,551 Subtotal - General and Administrative $0 $1,485,672 $0 $10,000,000 $10,065,364 $21,551,036 -$21,551,036 Ratios 0% 1% 0% 6% 6% 12% -12% EBITDA $45,606,448 $27,486,958 $16,273,758 $13,998,482 $10,120,820 $113,486,467 $67,365,212 Ratios 25% 15% 9% 8% 6% 63% 37% DEPRECIATION AND AMORTIZATION 14,544,360 14,544,360 -14,544,360 Ratios 8% 8% -8% EBIT $24,665,180 $128,030,827 $52,820,852 Ratios 14% 71% 29% INTEREST 6,440,630 6,440,630 -6,440,630 Ratios 4% 4% -4% PRE-TAX NET INCOME $31,105,810 $134,471,457 $46,380,222 Ratios 17% 74% 26%
  • 37. REVENUE - CASH REVENUE - COMP. REVENUE TOTAL GAMING TAXES & LICENCES LABOR COST OF SALES MARKETING OTHER EXPENSES TOTAL EXPENSES DEPT. PROFIT CASINO Electronic Gaming Machines $169,562,567 $0 $169,562,567 Pit Revenue - all table games 30,076,000 0 30,076,000 Poker 2,704,172 0 2,704,172 Subtotal - Casino $202,342,739 $0 $202,342,739 $60,702,822 $20,329,571 $0 $8,680,471 $7,284,339 $96,997,203 $105,345,536 Ratios 100% 0% 100% 30% 10% 0% 4% 4% 48% 52% HOTEL (third party) 0 0 0 0 0 0 0 0 0 0 Ratios 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% FOOD 3,905,780 4,773,731 8,679,511 0 5,229,757 5,381,297 0 1,041,541 11,652,595 -2,973,084 Ratios 45% 55% 100% 0% 60% 62% 0% 12% 134% -34% BEVERAGE 5,786,341 0 5,786,341 0 1,868,485 2,314,536 0 694,361 4,877,382 908,958 Ratios 100% 0% 100% 0% 32% 40% 0% 12% 84% 16% ENTERTAINMENT 4,243,679 2,708,240 6,951,919 0 2,619,622 4,866,343 0 0 7,485,965 -534,046 Ratios 61% 39% 100% 0% 38% 70% 0% 0% 108% -8% RETAIL 175,792 996,157 1,171,950 0 187,043 585,975 0 0 773,018 398,932 Ratios 15% 85% 100% 0% 16% 50% 0% 0% 66% 34% CHECK CASHING, ATM FEES, LEASES 1,011,714 0 1,011,714 0 0 0 0 0 0 1,011,714 Ratios 100% 0% 100% 0% 0% 0% 0% 0% 0% 100% TOTAL DEPARTMENTAL $217,466,044 $8,478,128 $225,944,173 $60,702,822 $30,234,478 $13,148,151 $8,680,471 $9,020,241 $121,786,163 $104,158,010 Ratios 96% 4% 100% 27% 13% 6% 4% 4% 54% 46% TOTAL DEPARTMENTAL Advertising and Promotion $25,182,019 $25,182,019 Labor $4,787,558 4,787,558 Real Estate Taxes 5,108,854 5,108,854 Energy (electricity, gas, etc.) 2,434,271 2,434,271 Utilities 270,475 270,475 Other General and Administrative 7,592,731 7,592,731 Subtotal - General and Administrative $0 $4,787,558 $0 $25,182,019 $15,406,331 $45,375,908 -$45,375,908 Ratios 0% 2% 0% 11% 7% 20% -20% EBITDA $60,702,822 $35,022,036 $13,148,151 $33,862,491 $24,426,572 $167,162,071 $58,782,102 Ratios 27% 16% 6% 15% 11% 74% 26% DEPRECIATION AND AMORTIZATION 9,237,207 9,237,207 -9,237,207 Ratios 4% 4% -4% EBIT $33,663,778 $176,399,277 $49,544,895 Ratios 15% 78% 22% INTEREST 6,119,571 6,119,571 -6,119,571 Ratios 3% 3% -3% PRE-TAX NET INCOME $39,783,350 $182,518,849 $43,425,324 Ratios 18% 81% 19% FINANCIAL RESULTS – PROFIT & LOSS STATEMENT: PGP 2016
  • 38. EQUIVALENCIES, DIFFERENCES, AND ‘FINAL COMPARATIVE RATING’
  • 39. EQUIVALENCIES - ‘Big Picture’ GGS PGP Entertainment destination, destination resort Mid-market Theme and development adopted to Midwest, Kansas, Sumner County Community partnership and partnering program Midwest, successful development, operating, and marketing history Reasonably well developed pre- and post opening Marketing Plan Investment at full build out: $280M for GGS and $285M for PGP
  • 40. EQUIVALENCIES GGS PGP GAMING DIRECT GAMING: Full build out capacity … Slots 2200 Table games 40 Poker tables 20 GAMING: Full build out capacity … Slots 2000 Table games 50 Poker tables 10 FOOD 510 seats / 4 outlets FOOD 430 seats / 4 outlets BEVERAGE 140 seats / 2 outlets BEVERAGE 185 seats / 2 outlets HOTEL: 80-100 room 3-star hotel 90 space RV Park at full build out HOTEL: 150 room 3-star hotel 100 space RV Park TOURISM ORIENTED MEETING AND CONVENTION Multi-use event center + pre-function area + 4 breakout rooms MEETING AND CONVENTION Multi-use indoor event center + pre- function area + 2 breakout rooms
  • 41. DIFFERENCES GGS PGP GAMING DIRECT GAMING: • Gaming opens Month 14 in permanent building with all critical FBE. • Maximum capacity Year 7 but can be accelerated if demand warrants. GAMING: • Gaming opens Month 9 in interim facility with sufficient but modest FBE. Permanent opens Month 21. • Maximum capacity completed by end of Year 4 FOOD PRICE: $13 ave. food check FOOD PRICE: $9 average food check ENTERTAINMENT 1400 seat multi-use event center ENTERTAINMENT Larger 3000 TO 4200 seat multi use event/equine center PARKING 2357 spaces / 485 valet Year 8 or upon demand – 996 space parking garage PARKING 3965 spaces / 200 valet MARKETING (2016): $14M, 8% TR MARKETING (2016): $34M, 15% TR
  • 42. DIFFERENCES GGS PGP TOURISM ORIENTED GOLF Upgraded of municipal golf course and clubhouse expansion/ upgrade Month 36 HOTEL Expansion of initial 150 room 3-star hotel to 300 rooms in Month 45 TRAVEL PLAZA Month 36 ENTERTAINMENT 24-acre expansion for Equine/Rodeo Center in Mo. 45 HOTEL Year 10 – 2nd hotel, 120 room, 4 star hotel. Additional spaces in RV Park. Add speedway. PERFORMANCE - 2016 Gaming Revenue $157M Other Revenue $ 24M Total Revenue $181M EBITDA $ 67M Margin 37% Gaming Revenue $202M Other Revenue $ 24M Total Revenue $226M EBITDA $ 59M Margin 26%
  • 43. RATING GGS 93% of PGP score Category Weight Score Score PRODUCT MARKETING 50% 6.5 3.3 7.4 3.7 Casino 0% n.a. n.a. n.a. n.a. Food 25% 8 2.0 8 2.0 Beverage 15% 7 1.1 7 1.1 Entertainment 20% 8 1.6 9 1.8 Meeting / Convention 3% 4 0.1 4 0.1 Hotel 20% 3 0.6 6 1.2 RV Park 5% 7 0.4 7 0.4 Retail 2% 5 0.1 5 0.1 Other (cumulative) *** 10% 7 0.7 8 0.8 Subtotal - Product Marketing 100% DEMAND STIMULATION MARKETING 25% 7.4 1.9 7.6 1.9 Pre-opening 40% 8 3.2 7 2.8 Post opening 60% 7 4.2 8 4.8 100% SUM OF THE PARTS 25% 8 2.0 8 2.0 TOTAL 100% 7.1 7.6 GGS PGP Result Result
  • 44. RATING – one person’s (consultant’s) view GLOBAL GAMING SOLUTIONS LLC SCORE 7.1, 93% of PGP • Concept, positioning, investment same or about equal with PGP • Opens with permanent casino in 14 months • Critical FBE gaming support about equal with PGP • Tourism activities deemed not as compelling as PGP PENINSULA GAMING PARTNERS LLC SCORE 7.6  Opens with interim casino in 9 months  4 yr. full build out  PGP apparent willingness to use food as a marketing tool (price subsidy)  PGP’s apparent more aggressive marketing ($ spent).  PGP larger hotel with no outs.  PGPs larger, triple use Event, Equine, and Meeting/Convention Center.  More effective use of capex on Tourism generators (hotel + event center).
  • 45. Thank you. Dean M. Macomber Macomber International, Inc.