ENTERTAINMENT FACILITY STUDY

August 14, 2018City Council Briefing

David Stone, Stone Planning

LIVE MUSIC/ ENTERTAINMENT

INDUSTRY TRENDS

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LIVE MUSIC/ ENTERTAINMENT INDUSTRY TRENDS

THE TOURING EVENTS INDUSTRY

o The live entertainment industry is thriving – music, sports, comedy, speakers, and other forms of entertainmento For music in particular, technology has increased the importance of live performances to artists:

o Loss of revenue from physical saleso Number of concerts has increased dramaticallyo Increasing ticket prices and ticket sales

o Top 200 tours:o 36% average 5,000 or fewer attendeeso 18% average 5,000 to 7,500 attendees

o Consolidation of promoters:o Live Nation sells 40%+ of worldwide ticketso AEG 12%, all others 46%

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LIVE MUSIC/ ENTERTAINMENT INDUSTRY TRENDS

COMPARABLE FACILITIES

o The indoor/outdoor model is becoming more popular, particularly within broader mixed-use/entertainment developments o Facilities analyzed:

Columbus, OHColumbus Arena District

5,200 outdoor / 2,200 indoor

Adjacent venues: 300 and 400 seats

Performance:Indoor/Outdoor: ~85 events, 2,100 avg. atten,

$33 avg. ticket price

The Basement: 85 events, 200 avg. atten., $14 avg. ticket price

A&R Music Lounge: 67 events, 290 avg. atten., $16 avg. ticket price

Pittsburgh, PANorth Shore

5,000 outdoor / 2,300 indoor

Other indoor capacities: 400, 450, and 1,500

Performance:Indoor/Outdoor: 100 events (70 indoor/30

outdoor), 1,800 avg. atten, $33 avg. ticket price

The Club: ~15 events, 270 avg. atten., $18 avg. ticket price

55 private events

Irving, TXToyota Music Factory

8,000 outdoor / 2,500 and 4,000indoor

Performance:First 8 Months: 59 events, 3,400 avg. atten, $55

avg. ticket price

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FEASIBILITY AND ECONOMIC

IMPACT STUDY SUMMARY

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THE LOCAL MARKET

o Virginia Beach has 450,000+ residents, and the Designated Market Area has 1.5 million residents

o The area is a major tourist market – 19 million “person trips” in 2017o Characteristics of the DMA market compared to the US:

o Demographics:o Young – lower average ageo Affluent – higher household incomeo Educated – higher percent of post-high school

educationso Employed – higher percent of full-time employees

o Activities:o More likely to attend concerts (rock, country, and hip-

hop/rap) o More likely to attend comedy clubs

FEASIBILITY AND ECONOMIC IMPACT STUDY SUMMARY

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THE LOCAL/REGIONAL ENTERTAINMENT MARKET

o Multiple indoor and outdoor facilities host ticketed and free events in the areao Indoor facilities:

o The need for a 2,500-to-3,500-seat venue at the beachfront was identified in 2002o A new facility would compete somewhat with the Chrysler Hall and The NorVa, and to a lesser extent, the Sandler Center

o Outdoor facilities:o A new facility would compete somewhat with Union Bank & Trust Pavilion, and to a lesser extent, Veterans United Home Loans

Amphitheatero Free programming: there is a significant amount of free event offerings in the market, but the new venue is expected to complement

current offerings and work with the City to provide more

FEASIBILITY AND ECONOMIC IMPACT STUDY SUMMARY

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CONCLUSIONS AND RECOMMENDATIONS

o Virginia Beach/Hampton Roads is a strong and attractive marketo Demand for live entertainment is increasingo The Event Center is sized to attract more than half of touring eventso There has long been an identified need for a new indoor entertainment venue at the beachfronto Competition with existing venues (particularly within Virginia Beach) will be minimalo Market feasibility for 3,200-seat indoor venue and 5,000-seat outdoor venue

o Flexibility with capacities and configurationso OVG’s involvemento Routing for touring eventso Open booking policyo Built-in sound and lighto Ability to host free and ticketed events outdoors

FEASIBILITY AND ECONOMIC IMPACT STUDY SUMMARY

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OPERATING AND ECONOMIC IMPACT FORECASTS

FEASIBILITY AND ECONOMIC IMPACT STUDY SUMMARY

PROJECTED EVENTS AND ATTENDANCE

# of Events Avg. Atten. Total Atten.

Concerts - Indoor Reserved 30 2,167 65,000Concerts - Indoor GA 40 2,719 108,750Concerts - Outdoor 20 3,600 72,000Concerts - Minor 40 300 12,000Other Ticketed Sports/Entertainment 5 2,250 11,250Community Events 32 1,500 48,000Private/Social Events 50 250 12,500Festivals 3 3,000 9,000Surf Park Events 3 500 1,500

TOTAL 223 340,000

Source: Stone Planning

SUMMARY PRO FORMA ($000S)

Operating Revenues

Event Revenues $8,496

Non-Event Revenues 743

Total Operating Revenues $9,239

Operating Expenses

Event Expenses $6,641

Non-Event Expenses 1,497

Total Operating Expenses $8,138

Net Operating Income (Loss) $1,101

Source: Stone Planning

SUMMARY OF ECONOMIC/FISCAL IMPACTS FROM OPERATIONS ($000s)

Operations (Annual)

Total Spending - Direct and Indirect $18,249Total Jobs (Full-Time Equivalent) 105Total Earnings $4,398Room Nights 20,970New Tax Revenues to the City $232

Construction (One-Time)Labor Expenditures $18,255Sales of Materials $7,947Employment 314New Tax Revenues to the City $201

Source: Stone Planning

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