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  • http://www.cirquedusoleil.com/en/press/kits/shows.aspx
  • Casino Revenues- breakdownGlobal tourism industry
  • Finally, Resident shows are where we already have strong partnerships built on trust.Focus on Resident Shows.
  • Finally, Resident shows are where we already have strong partnerships built on trust.Focus on Resident Shows.
  • Now that we know we would like to grow the resident segment, how do we pick our partnerships.Here are the criteria for selecting partners.Criteria:Is there a creative freedom or controlÉIs the partnership sustainableÉ3. Will the partner adhere to cirques social responsibility criteria4. Is there a good return
  • Now that we know we would like to grow the resident segment, how do we pick our partnerships.Here are the criteria for selecting partners.Criteria:Is there a creative freedom or controlÉIs the partnership sustainableÉ3. Will the partner adhere to cirques social responsibility criteria4. Is there a good return
  • Criteria:Tourism GrowthTourist ExpendituresGambling DestinationExisting Presence Economic growthOverall Harvey
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • Cannibalization in VegasInexperience in other entertainment industries (by starting in a region we are comfortable in, we can grow our experience in other industries so investors in the future believe in our credibility in other industries)
  • How does this fit with Rec 1 (Transition)We need to tell a storyFind a locationYou go to a show
  • How does this fit with Rec 1 (Transition)We need to tell a storyFind a locationYou go to a show
  • How does this fit with Rec 1 (Transition)We need to tell a storyFind a locationYou go to a show
  • We don`t want to limit our growth onto gambling and casino destinationsLimiting overall growth potentialOther high tourism expenditure locations
  • Criteria:Tourism GrowthTourist ExpendituresGambling DestinationExisting Presence Economic growthOverall Harvey
  • Criteria:Tourism GrowthTourist ExpendituresGambling DestinationExisting Presence Economic growthOverall Harvey

Transcript

  • 1. PRESENTED BY WYNNE CHYOU | NIKITA MAHESHWARI | GANNON SHIH | JENNY ZHOU HAAS SCHOOL OF BUSINESS
  • 2. AGENDA 2010 I. Situational Analysis II. Current Objectives III. Executive Summary IV. Recommendations V. Financial Analysis VI. Implementation VII. Q&A Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 3. SITUATIONAL ANALYSIS| CIRQUE DU SOLEIL VALUES 2010 Core Values Creativity: Never compromise creativity; full creative control Exclusivity: We don’t bring the show to you; each location has its own show Expertise: Concentrate on what we are good at without stretching ourselves too thin Mission Goal: Pursue high-growth markets and opportunities without compromising on any of our core values Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 4. SITUATIONAL ANALYSIS| FAILED PROJECTS 2010 Past failed projects violated core values Failed Project Reason for Failure Core Value Violated London Battersea Lack of creative control; Slowness of development Creativity Project Montreal Cirque Lack of expertise in new industries eroded investor Expertise Complex confidence Columbia Pictures Limited creative Creativity Battleship involvement Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 5. SITUATIONAL ANALYSIS| CURRENT ISSUES AND OBJECTIVES 2010 Current Objectives Select Compatible Partners for show expansion Show Distribution: Resident vs. Arena vs. Big top Enter new industries and overcome inexperience issues Avoid Brand Cannibalization in Vegas Build revenues in existing locations Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 6. EXECUTIVE SUMMARY| RECOMMENDATION OVERVIEW 2010 Expand Develop Attract Leverage existing Enter nightlife partnership with MGM Launch Reality TV business in areas Mirage to develop Series to build brand with established new resident shows recognition presence in attractive cities Recommendation 1 Recommendation 2 Recommendation 3 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 7. RECOMMENDATION 1| RESIDENT VS. TOURING 2010 Objective: Grow shows in the Resident segment Resident Shows Touring Shows Profitability Higher Margins Lower Margins Occupancy 90-95% 80% Break-Even 60% 65% Highest Ticket Price $150 $100 Shows Per Year 480 shows 324 shows Although resident shows require a larger capital expenditure, they deliver more value in the longer term due to higher profitability Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 8. RECOMMENDATION 1| PARTNERSHIP CRITERIA 2010 Four Criteria for Establishing Partnerships Creative freedom Sustainability Socially Responsible High ROI Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 9. RECOMMENDATION 1| PARTNERSHIP CRITERIA 2010 MGM is a trustworthy, experienced partner to continue resident expansions Four Criteria for Establishing Partnerships Creative freedom Sustainability Socially Responsible High ROI Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 10. RECOMMENDATION 1| EXPAND MGM PARTNERSHIP 2010 Cirque du Soleil should expand into Abu Dhabi, Atlantic City, and Macau City Tourism Growth Tourist Shopping Room for CdU Show Expenditures Establishment Macau Abu Dhabi Atlantic City Detroit Detroit is not a viable expansion due to low tourism growth and low revenue potentials Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 11. RECOMMENDATION 1| RESIDENT EXPANSION BEYOND MGM 2010 Several cities of high potential exist that are not currently in MGM`s plans Potential Tourism Revenue Expansion in 2007 ($Can) LEGEND London $12.1 Billion LONDON NEW YORK CITY New York City $28.9 Billion LOS ANGELES Los Angeles $13.3 Billion BERLIN SYDNEY Berlin $11.3 Billion SHANGHAI Sydney $9.7 Billion Shanghai $39.0 Billion Cirque du Soleil should strongly consider future establishments in Shanghai, New York City and Los Angeles due to high tourism revenue and traffic Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion Source: www.ChinaDaily.com Source: www.sflnc.com
  • 12. RECOMMENDATION 1| ACCOMPLISHMENTS 2010 Current Objectives Select Compatible Partners for show expansion Show Distribution: Resident vs. Arena vs. Big top Enter new industries and overcome inexperience issues Avoid Brand Cannibalization in Vegas Build revenues in existing locations Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 13. RECOMMENDATION 2| EXPANSION INTO NIGHT LOUNGES 2010 Create a unique night long Cirque du Soleil experience that maintains Cirque`s image as a creative, exclusive brand "Only 20% actually stay at the casino hotel but show goers drop an average of $30 apiece [elsewhere]" -- B.Baldwin Lounge Theme Marketing Strategy `Soleil by Night` 2 Prong Strategy • Masquerade themed lounges • Cross-selling tickets • Showcase colorful decor & between show and club latest technology • Synergies in marketing • High ceilings and acrobats expenses throughout • Promote club in current shows Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 14. RECOMMENDATION 2| EXPANSION INTO NIGHT LOUNGES " SOLEIL BY NIGHT " 2010 Create Cirque du Soleil themed night clubs to increase avg. expenditure per consumer and avoid cannibalization of existing shows. Target Location Criteria Short Term vs. Long Term Length Place Partner Location with Cirque du Soleil Show Short Term Vegas Places where people stay overnight Long Term •Atlantic City Places with lively night •Macau life •Abu Dhabi Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 15. RECOMMENDATION 2| IMPLEMENTATION CASE IN LAS VEGAS 2010 Identify poor performing, low profit generating lounges and leverage partnerships to rent that venue Case Study: Prive and Living Room Nightclub in Las Vegas Criteria Met:  Venue located 1 block from MGM hotel  Low profitability, threat of bankruptcy with pressure to sell or close  Large venue with in place infrastructure for Cirque du Soleil design Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 16. RECOMMENDATION 2| ACCOMPLISHMENTS 2010 Current Objectives Select Compatible Partners for show expansion Show Distribution: Resident vs. Arena vs. Big top Enter new industries and overcome inexperience issues Avoid Brand Cannibalization in Vegas Build revenues in existing locations Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 17. RECOMMENDATION 3| TALENT REALITY SHOW ‘THE ARTISTE’ 2010 Strengthen presence on television media and increase brand awareness among new demographics The Artiste: Become a part of the Next Cirque du Soleil Show... The Basis Location Logistics • Weekly challenges are USA: there is a large Cirque du assigned to candidates and Soleil presence in North weekly elimination rounds America and huge trend in large procure finalist reality show viewership • Cirque du Soleil staff will coach candidates prior to Network Logistics challenge events ABC Network : ABC is already a subsidiary of Disney, an existing partner Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 18. RECOMMENDATION 3| TALENT REALITY SHOW CASE STUDIES 2010 Similar reality shows with parallel structure have enjoyed success The Apprentice The Ultimate Fighter • The Apprentice applicant • Applicants are pre-selected process through application process • Donald Trump assigns • Elimination fights occur weekly challenges to weekly candidates • Aired 15 episodes per • Aired 129 episodes total season for 4 seasons • Boosted an esoteric "UFC" • Earned #7 in number of brand into mainstream viewers, with 20.7M viewers viewership and recognition weekly • Has greatly increased brand recognition of the Trump brand and logo Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 19. RECOMMENDATION 3| ACCOMPLISHMENTS 2010 Current Objectives Select Compatible Partners for show expansion Show Distribution: Resident vs. Arena vs. Big top Enter new industries and overcome inexperience issues Avoid Brand Cannibalization in Vegas Build revenues in existing locations Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 20. IMPACT ANALYSIS 2010 IRR Payback Single Resident Expansion 1-Yr: 94% 5-Yr: 216% 0.52 Years Single Nightclub Expansion 2-Yr: 24% 5-Yr: 64.9% 1.43 Years Reality Show 1-Yr: 30% 2-Yr: 331% 0.77 Years Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 21. CONCLUSION| IMPLEMENTATION TIMELINE 2010 Task Year 0 Year 1 Year 2 Year 3 Year 4 Year 5+ Recommendation 1: Residence Expansions Development of program Begin partnership talks with MGM Construction of theater Acrobat training Hiring of acrobats and technicians Promotion of the event Begin showing Recommendation 2: Club "Soleil Night" Development talks with MGM Secure rental of club venue Promotion of club Hiring of staff Evaluate success Expand nightclub reach to branches Remodel club venue Recommendation 3: Reality TV Show Develop program proposal and business model Establish deal with a potential network Hold auditions and hire cast and technicians Filming of program Airing of program Promotion through advertisement of show Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 22. CONCLUSION| RECOMMENDATION SUMMARY 2010 Expand Develop Attract Expand Into New Markets ``Soleil by Night`` The Artiste Access Spending ⁄Location Occupancy Rate Creativity . Sustainability . Profitability Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 23. Q&A 2010 Content Appendix Slides (cont.) Situational Analysis - Values Why Not Expand Touring Shows Situational Analysis – Failures Arena Over Big Top Situational Analysis – Current Issues Cirque du Soleil`s Value-add for Casinos Executive Summary Top 10 Gambling Getaways Recommendation 1 Why Cirque Complex Did Not Work Recommendation 2 Recommendation 3 Financials Impact Analysis Historical Revenue & Ticket Sales Data Conclusion – Summary Show Profit Model Implementation Timeline Show Break-Even Analysis Resident Show Expansion Model Appendix Slides Nightclub ROI (1) Risks & Mitigations (Rec 1) Nightclub ROI (2) Risks & Mitigations (Rec 2) Nightclub Revenue Projection Risks & Mitigations (Rec 3) Nightclub Operating Profit Projection Partnership Implementation Reality Show Revenue Projection Managing Creativity Reality Show Operating Profit Projection Mitigating Creativity Risks Alternative Strategies Competitor Analysis Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 24. APPENDIX|RISKS & MITIGATIONS 2010 Risks for Recommendation 1: Expansion Mitigation Large investment expenditure for venue Historical growth has shown that construction does not receive due ROI even worst-case is still sufficient Competing with established competitor Differentiate the show as exclusive shows in target geographic location with premium ticket pricing Cultural differences per geographic Tailor new show to the specific location may hinder acceptance of a show regions culture Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 25. APPENDIX|RISKS & MITIGATIONS 2010 Risks for Recommendation 2: Night Club Mitigation Inability to find a new locale for venue on Expand into an existing venue that the Vegas strip by leasing Cannibalism of existing MGM-owned clubs Look into revamping poor and equivalents in its hotels performing clubs outside of MGM Low attendance rate or insufficient brand Extensively use promotions, awareness of new club development advertisements and discounts Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 26. APPENDIX|RISKS & MITIGATIONS 2010 Risks for Recommendation 3: Reality TV Mitigation Low amount of viewers due either to Promote heavily with existing unawareness or disinterest membership base Lack of advertisement sponsors to Leverage existing partnerships and generate sufficient revenue returns introduce new show to them Reality TV and related industry is not our Hire outside directors as well as expertise utilize past case studies Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 27. APPENDIX| PARTNERSHIP IMPLEMENTATION 2010 City Example of Partner Capacity Example Shows Los Angeles Kodak Theater 3,401 “Hollywood“ Los Angeles Pantages Theater 2,703 “Hollywood“ Shanghai Grand Theater 1,800 “Asia“ New York City Broadway Theater 500 “Broadway“ New York City WaMu Theater 5,600 “In the City“ Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 28. APPENDIX| MANAGING CREATIVITY 2010 Creativity is the Cornerstone of Cirque du Soleil Guiding Quotes by Management How to Maintain Creative Edge ``Always put creativity first`` Rotate Stage Directors Set strict partnership selection ``Maintain full creative control`` criteria No outsourcing talent ``Show comes before business`` Spend 2-3 years planning shows Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 29. APPENDIX| MITIGATING CREATIVITY RISKS 2010 Don`t Overextend Example: Cirque Complex Familiar Territory Leverage Existing Partnerships Start in Existing Markets (MGM for masquerade) (Las Vegas) Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 30. APPENDIX| WHY NOT EXPAND TOURING SHOWS 2010 ``We deliberately chose a strategy of exclusivity`` We want to be a ``diamond`` Exclusivity Core Value Maintain prestigious image value Demand High Prices and Margins Maintain current number of tour shows (7) How Maintain current tour locations and length Arena over Big-Top Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 31. APPENDIX| WHY ARENA STYLE OVER BIG TOP STYLE 2010 Arenas are more efficient to set-up, less expensive to operate, and more modern Arena Big Top Show Length Full Week Less Than Week Set-up Employees 96 people 200 people Set-up Time 9 hours 9 days Take-down Time 2 hours 2.5 days Capacity 2,500 seats 8,000-12,000 seats Source: Gateway Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 32. APPENDIX| CIRQUE DU SOLEIL`S VALUE-ADD FOR CASINOS 2010 Introduction of a Cirque du Soleil Show has benefited MGM Mirage`s other segments Casino Show Seats Benefit New York New York Zumanity 1,250 23% increase in Net Revenue The Mirage Love 2,000 $25 mn growth in EBITDA impact in following year MGM Grand Ka 2,000 13% increase in slot revenues Note: Show goers drop an average of $30 apiece on dinner or drinks Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 33. APPENDIX| TOP 10 GAMBLING GETAWAYS 2010 MSNBC Casino City Times 1. Aruba 1. Las Vegas 2. Atlantic City 2. Macau 3. Goa 3. Atlantic City 4. Las Vegas 4. Australia 5. Macau 5. Mississippi 6. Mississippi Gulf Coast 6. France 7. Monte Carlo 7. Los Angeles Source: msnbc Source: Casino City Times Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 34. APPENDIX| WHY THE CIRQUE COMPLEX DID NOT WORK 2010 `Interactive museums, night clubs where customers dance in water and hotels that add a surreality to five-star service` Location Features Cost Reasons Failed Takeaway London`s High-end retail 1 Bn Slowness of Choose Battersea Restaurant Pounds + Developments partnerships Power Entertainment Center carefully with Station 2,000-seat Theater Lack of creative focus on vision 2 Hotels Control over Project and creative Convention Center control Montreal 100-room Hotel, Spa, C$100Mn Lack of investors Concentrate on Restaurant what we are Multi-use Theater Lack of expertise in good at hotels and restaurants business Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 35. APPENDIX|HISTORICAL REVENUE & TICKET SALE DATA 2010 Annual Tickets Cumulative Tickets Year Revenues ($C) % Growth Sold (Mil) % Growth Revenue/# Tickets Sold (Mil) 1992 35 -- 0.5 -- 70.0 3.0 1993 50 42.86% 1.0 100.00% 50.0 4.0 1994 80 60.00% 2.0 100.00% 40.0 6.0 1995 100 25.00% 2.0 0.00% 50.0 8.0 1996 140 40.00% 2.5 25.00% 56.0 10.0 1997 150 7.14% 2.5 0.00% 60.0 13.0 1998 180 20.00% 2.5 0.00% 72.0 15.0 1999 300 66.67% 4.0 60.00% 75.0 19.0 2000 380 26.67% 4.0 0.00% 95.0 23.0 2001 420 10.53% 5.0 25.00% 84.0 28.0 2002 450 7.14% 6.0 20.00% 75.0 34.0 2003 475 5.56% 7.0 16.67% 67.9 41.0 2004 500 5.26% 7.0 0.00% 71.4 48.0 2005 590 18.00% 7.0 0.00% 84.3 54.0 2006 630 6.78% 8.0 14.29% 78.8 61.0 2007 700 11.11% 10.0 25.00% 70.0 71.0 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 36. APPENDIX|SHOW PROFIT MODEL 2010 Resident Show Touring Show Fixed Cost Big top $0 $13,000,000 Equipment $0 $7,000,000 Production $15,000,000 $30,000,000 Total $15,000,000 $50,000,000 Average ticket price $120 $150 Average Profit Margin 80% 80% Total Operating Expenses/ Show $164,160 $240,000 Shows per week 10 9 Weeks per year 48 36 Shows per year 480 324 Available seats per show 1900 2500 Occupancy rate 90% 80% Occupied seats per show 1710 2000 Occupied seats per year 820800 648000 Total Revenue (M) $98,496,000 $97,200,000 Revenue per show $205,200 $300,000 Profit per show $41,040 $60,000 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 37. APPENDIX|SHOW BREAK-EVEN ANALYSIS 2010 Resident Show Touring Show Average ticket price $120 $150 Shows per year 480 324 Available seats per show 1900 2500 Profit per show $41,040.00 $ 60,000.00 Break-Even Statistics Breakeven occupancy rate 60% 65% Revenue at Break-even Occupancy $65,664,000 $78,975,000 Revenue per show to Break-even $136,800 $243,750 Shows to Break-even 365.5 833.3 Years to Break-even 0.76 years 2.57 years Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 38. APPENDIX|RESIDENT SHOW EXPANSION MODEL 2010 Year 0 1 2 3 4 5 Number of shows opened 0 1 0 0 0 0 Total Shows 0 1 1 1 1 1 Average ticket price $120 $120 $130 $130 $130 $130 Shows per year 480 480 480 480 480 480 Avg. Available seats per show 2000 2000 2000 2000 2000 2000 Occupancy rate 90% 90% 90% 93% 93% 95% Occupied seats per show 1,800 1,800 1,800 1,860 1,860 1,900 Occupied seats per year 864,000 864,000 864,000 892,800 892,800 912,000 Revenue per new show $0 $103,680,000 $0 $0 $0 $0 Total Revenue $0 $103,680,000 $112,320,000 $116,064,000 $116,064,000 $118,560,000 Production costs per show $ 180,000,000 $ 180,000,000 $ 180,000,000 $ 180,000,000 $ 180,000,000 $ 180,000,000 Production Costs to MGM 91.7% 91.7% 91.7% 91.7% 91.7% 91.7% Fixed Cost : Production Costs $15,000,012 $0 $0 $0 $0 $0 Variable Cost: Theater and Show Ops $0 $88,128,000 $88,128,000 $88,128,000 $88,128,000 $88,128,000 Total Cost $15,000,012 $88,128,000 $88,128,000 $88,128,000 $88,128,000 $88,128,000 Operating profit -$15,000,012 $15,552,000 $24,192,000 $27,936,000 $27,936,000 $30,432,000 Creative Royalty $13,478,400 $14,601,600 $15,088,320 $15,088,320 $15,412,800 Net Cash Flow -$15,000,012 $29,030,400 $38,793,600 $43,024,320 $43,024,320 $45,844,800 1-Year IRR 94% 5-Year IRR 216% Break-even 0.52 Years Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 39. APPENDIX|SHOW PROFIT MODEL 2010 Resident Show Touring Show Fixed Cost Big top $0 $13,000,000 Equipment $0 $7,000,000 Production $15,000,000 $30,000,000 Total $15,000,000 $50,000,000 Average ticket price $120 $150 Average Profit Margin 80% 80% Total Operating Expenses/ Show $164,160 $240,000 Shows per week 10 9 Weeks per year 48 36 Shows per year 480 324 Available seats per show 1900 2500 Occupancy rate 90% 80% Occupied seats per show 1710 2000 Occupied seats per year 820800 648000 Total Revenue (M) $98,496,000 $97,200,000 Revenue per show $205,200 $300,000 Profit per show $41,040 $60,000 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 40. APPENDIX|NIGHTCLUB ROI (PART 1) 2010 2008 2009 2010 2011 2012 2013 Total clubs 1 1 1 1 1 Club capacity 2,000 2,000 2,000 2,000 2,000 Club occupancy rate 60% 60% 60% 60% 60% Average club occupancy 1,200 1,200 1,200 1,200 1,200 Cirque attendees 1,800 1,800 1,860 1,860 1,900 % of Cirque attendees 35% 45% 55% 60% 60% Cirque and club attendees 630 810 1,023 1,116 1,140 Outside attendees 570 390 177 84 60 Entrance price - Cirque attendees $40 $40 $45 $45 $50 Entrance price - Outside attendees $50 $50 $55 $55 $60 Consumption expenditure per person $40 $45 $50 $55 $60 Cirque attendee revenue $25,200 $32,400 $46,035 $50,220 $57,000 Outside attendee revenue $28,500 $19,500 $9,735 $4,620 $3,600 Consumption revenue $48,000 $54,000 $60,000 $66,000 $72,000 Number of Tables 50 50 50 50 50 Table Occupancy rate 50% 50% 50% 50% 50% Table Reservations 25 25 25 25 25 Price per Table $3,000 $3,000 $3,000 $3,000 $3,000 Table Revenue $75,000 $75,000 $75,000 $75,000 $75,000 Total Ticket Revenue $53,700 $51,900 $55,770 $54,840 $60,600 Total Consumption Revenue $48,000 $54,000 $60,000 $66,000 $72,000 Nights open a year 234 234 234 234 234 Annual revenue per club $12,565,800 $12,144,600 $13,050,180 $12,832,560 $14,180,400 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 41. APPENDIX|NIGHTCLUB ROI (PART 2) 2010 2008 2009 2010 2011 2012 2013 Total nightclub revenue $12,565,800 $12,144,600 $13,050,180 $12,832,560 $14,180,400 Consumption Margin 70% 70% 70% 70% 70% Total COGS $ 14,400.00 $ 16,200.00 $ 18,000.00 $ 19,800.00 $ 21,600.00 Gross Profit $12,551,400.00 $12,128,400.00 $13,032,180.00 $12,812,760.00 $14,158,800.00 Expenses (per club) SG&A $ 2,513,160.00 $ 2,428,920.00 $ 2,610,036.00 $ 2,566,512.00 $ 2,836,080.00 Rent Expense $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 Utilities Expense $ 628,290.00 $ 607,230.00 $ 652,509.00 $ 641,628.00 $ 709,020.00 Total Expenses (per club) $ 5,541,450.00 $ 5,436,150.00 $ 5,662,545.00 $ 5,608,140.00 $ 5,945,100.00 Total Operating Expenses $ 5,541,450.00 $ 5,436,150.00 $ 5,662,545.00 $ 5,608,140.00 $ 5,945,100.00 Operating Profit $7,009,950.00 $6,692,250.00 $7,369,635.00 $7,204,620.00 $8,213,700.00 Net Cash Flow -$ 10,000,000 $7,009,950.00 $6,692,250.00 $7,369,635.00 $7,204,620.00 $8,213,700.00 2-Yr IRR 24.0% 5-Yr IRR 64.9% Payback Period 1.43 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 42. APPENDIX|NIGHTCLUB REVENUE PROJECTION 2010 2009 2010 2011 2012 2013 Number of new clubs 1 3 0 0 0 Total clubs 1 4 4 4 4 Club capacity 2,000 2,000 2,000 2,000 2,000 Club occupancy rate 60% 60% 60% 60% 60% Average club occupancy 1,200 1,200 1,200 1,200 1,200 Cirque attendees 1,800 1,800 1,860 1,860 1,900 % of Cirque attendees 35% 45% 55% 60% 60% Cirque and club attendees 630 810 1,023 1,116 1,140 Outside attendees 570 390 177 84 60 Entrance price - Cirque attendees $40 $40 $45 $45 $50 Entrance price - Outside attendees $50 $50 $55 $55 $60 Consumption expenditure per person $40 $45 $50 $55 $60 Number of Tables 50 50 50 50 50 Table Occupancy rate 50% 50% 50% 50% 50% Table Reservations 25 25 25 25 25 Price per Table $3,000 $3,000 $3,000 $3,000 $3,000 Table Revenue $75,000 $75,000 $75,000 $75,000 $75,000 Total Ticket Revenue $53,700 $51,900 $55,770 $54,840 $60,600 Total Consumption Revenue $48,000 $54,000 $60,000 $66,000 $72,000 Nights open a year 234 234 234 234 234 Annual revenue per club $12,565,800 $12,144,600 $13,050,180 $12,832,560 $14,180,400 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 43. APPENDIX|NIGHTCLUB OPERATING PROFIT PROJECTION 2010 2008 2009 2010 2011 2012 2013 Total nightclub revenue $12,565,800 $48,578,400 $52,200,720 $51,330,240 $56,721,600 Consumption Margin 70% 70% 70% 70% 70% Total COGS $ 14,400.00 $ 16,200.00 $ 18,000.00 $ 19,800.00 $ 21,600.00 Gross Profit $12,551,400.00 $48,562,200.00 $52,182,720.00 $51,310,440.00 $56,700,000.00 Expenses (per club) SG&A $ 2,513,160.00 $ 2,428,920.00 $ 2,610,036.00 $ 2,566,512.00 $ 2,836,080.00 Rent Expense $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 Utilities Expense $ 628,290.00 $ 607,230.00 $ 652,509.00 $ 641,628.00 $ 709,020.00 Total Expenses (per club) $ 5,541,450.00 $ 5,436,150.00 $ 5,662,545.00 $ 5,608,140.00 $ 5,945,100.00 Total Operating Expenses $ 5,541,450.00 $ 21,744,600.00 $ 22,650,180.00 $ 22,432,560.00 $ 23,780,400.00 Operating Profit $7,009,950.00 $26,817,600.00 $29,532,540.00 $28,877,880.00 $32,919,600.00 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 44. APPENDIX|REALITY SHOW REVENUE PROJECTION 2010 2008 2009 2010 2011 2012 2013 Revenue Touring Shows Average number of seats 2,000 2,000 2,000 2,000 2,000 Number of shows 6 7 6 6 6 Total number of seats 12,000 14,000 12,000 12,000 12,000 Total shows per year 324 324 324 324 324 Annual seats 3,888,000 4,536,000 3,888,000 3,888,000 3,888,000 Resident Shows Average number of seats 1,710 1,710 1,710 1,710 1,710 Number of shows 7 8 8 8 8 Total number of seats 11,970 13,680 13,680 13,680 13,680 Total shows per year 480 480 480 480 480 Annual seats 5,745,600 6,566,400 6,566,400 6,566,400 6,566,400 Total number of seats 9,633,600 11,237,270 10,611,722 10,602,964 10,772,489 % increase in attendees 1.4% 1.4% 1.4% 3.0% 3.0% Total increase in attendees 134870.4 157,322 148,564 318,089 323,175 Average price per ticket $100 $100 $100 $100 $100 Increase in attendee revenue $13,487,040 $15,732,179 $14,856,410 $31,808,892 $32,317,467 % of attendees who purchase DVDs 0% 20% 20% 20% 20% Price per DVD 25 25 25 25 25 DVD Revenue $0 $56,186,352 $53,058,609 $53,014,821 $53,862,445 Total Revenue $13,487,040 $71,918,531 $67,915,019 $84,823,713 $86,179,911 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 45. APPENDIX|REALITY SHOW OPERATING PROFIT PROJECTION 2010 2008 2009 2010 2011 2012 2013 Total Revenue $13,487,040 $71,918,531 $67,915,019 $84,823,713 $86,179,911 Operating costs: Average cost per episode $700,000 $700,000 $700,000 $700,000 $700,000 Number of episodes 10 10 10 10 10 Production costs $7,000,000 $7,000,000 $7,000,000 $7,000,000 $7,000,000 Winner's new contract 0 75,000 75,000 75,000 75,000 Total costs $7,000,000 $7,075,000 $7,075,000 $7,075,000 $7,075,000 Operating profit $6,487,040 $64,843,531 $60,840,019 $77,748,713 $79,104,911 Development Cost -$5,000,000 Net Cash Flow -$5,000,000 $6,487,040 $64,843,531 $60,840,019 $77,748,713 $79,104,911 1-Yr IRR 30% 2-Yr IRR 331% Payback 0.77 Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 46. APPENDIX| ALTERNATIVE STRATEGIES 2010 Alternative Strategy Pros Cons Cruises -Targets high-end -Lower viewership per sophisticated customers performance -Global audience -Limited number of shows -Infrastructure available for per week general shows -Low ROI Hotel Operation -Huge revenue potential -Lack of experience in this -Potential venue for future business segment shows -High fixed cost to operate Interactive Museum - Engages cutting-edge -Low Revenue potential technologies -Many competing museums, lack of differentiation High-End Dining - New market segment -Not our expertise -Chain could overextend brand Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 47. APPENDIX| COMPETITIVE POSITIONING 2010 Competitor Line of Business The Cirque Advantage Dragone • Director from Cirque du Soleil •Larger scale •Similar Productions •Partnerships with global •Upcoming Project in Macau businesses Feld Entertainment • Ringling Bros. • Different Target Demographic •Disney on Ice of Adults vs. Families •Disney Live •No repeats of shows Dodger Properties •Major Broadway Productions •Huge creative team that handles all aspects of creative process •Production of more creative, interpretive shows Source: Businessweek Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 48. APPENDIX| WHY ABU DHABI & ATLANTIC CITY 2010 Tourism Reviews • The survey demonstrates that Atlantic City remains an attractive destination for tourists • 96% of visitors view Atlantic City as becoming more attractive. • 99% would recommend Atlantic City to friends or family members. • Eleven casinos where you also get to enjoy the pleasures of celebrity chef restaurants, nightclubs in New York style and sprawling spas. historic concert hall where musical bands like The Police, The Rolling Stones and Madonna • Casinos are great attractions with sparkling new retail, dining and entertainment complexes like The Pier Shops at Caesars (where Tiffany & Gucci boutiques hold court) and the Havana-inspired The Quarter at Tropicana. Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion
  • 49. APPENDIX| WHY ABU DHABI & ATLANTIC CITY 2010 Annual Visit-Trips to Atlantic City (in thousands) Franchise Year Automobile Casino Bus Air Rail Total Bus 2008 25,903 4,910 505 250 245 31,813 2007 26,929 5,408 501 260 202 33,300 2006 27,545 6,041 526 260 162 34,534 2005 27,889 6,104 519 261 151 34,924 2004 25,815 6,600 495 261 152 33,323 2003 24,553 6,764 504 261 142 32,223 2002 24,676 7,586 514 268 143 33,188 2001 23,501 7,985 519 276 139 32,420 2000 23,177 9,015 536 323 133 33,184 1999 23,247 9,342 539 396 128 33,652 1998 23,293 9,903 530 447 127 34,300 Source: South Jersey Transportation Authority Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion