Superpark! - Operating Pro Forma(s)

1,670 Views | 14 Replies | Last: 9 days ago by EBrazosAg
Brian Alg
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When the election for mayor was going on, I heard a clip from one of the debates where Mayor Nelson mentioned that he expects the Regional Park to bring in "hundreds of thousands of visitors into this park." He also said that it "pays for itself operationally within 4 years. If you look at the EBITDA, it makes money starting in year 4."

This let me know that there was something floating around city hall that folks felt comfortable relying on.

I asked the city and they gave me this:

Bryan Regional Park - Indoor | Five-Year Operating Pro Forma | May 2019

A few things stuck out at me. One was a "% of Total" formula goof on page 10 that has not been corrected to date. These mistakes happen. But the fact that nobody has corrected the mistake in 6 months indicates to me that nobody is really paying close attention to the numbers here. I think that supports my hypothesis that nobody really takes this Pro Forma seriously except to pull numbers from it when you want to pretend this is not going to be the boondoggle it so obviously is going to be.

Other things that I thought were interesting in the Pro Forma:

- As far as I can tell the economic impact does not account for diversion to College Station.
- The EBITDA figure that Mayor Nelson seems to be talking about is a little under $80k in year 5, which I believe is when they figure the facility is hitting its stride.
- Around $250k of the gross margin is supposed to be coming from a ninja warrior/ropes course facility with a Virtual Reality area.
- This assumes 45,813 visits each year at $10 each
- The Pro Forma assumes there will be around $120k in revenue from advertising/sponsorship
- The Pro Forma assumes there will be 2 "Extra Large" volleyball tournaments each year with 1,280 players and 3,200 fans. That seems like a lot to me. I have no idea if this size of tournament is common. But it seems like it would be a lot to expect for the 15th largest metro area in Texas and a facility that is slated to have 600 parking spots and "Seating for at least 1,500 spectators."
- The other tournament numbers are also listed on pages 12-14. These numbers look very optimistic to me. The Pro Forma does not show any benchmarking or other reality check to indicate these are reasonable.
- It assumes there will be a little over $100k in alcohol sales. If I am reading the TABC figures right (https://data.texas.gov/d/naix-2893/visualization), this is on the order of what Johnny Carino's or Embassy Suites did in 2018. That doesn't seem unreasonable or anything, it just seems odd to me that the city is planning on getting into the bar business.
- It looks like they expect the facility to be booked for 48 tournaments and 3 trade shows per year. If that means booking 51 weekends a year, I am skeptical.
- Even with what seem to me to be very optimistic figures, they are talking about making around $80k per year before accounting for the capital costs of building the structure and the opportunity cost of whatever else they could do with that land.
- The economic impact they come up with (ignoring rosy projections and apparent failing to account for diversion to CS), when you multiply them out by the tax rates, do not seem that impressive when you look at the amount they are planning to spend on this thing.


TL;DR - The numbers the Mayor is using to justify this are almost certainly overly optimistic and unreliable. And even the unreliable numbers he is relying on are not that good.

I also asked them for updated numbers or backup for these numbers. Feel free to give me grief about including "or" there. I suspect there is no backup/benchmarking to justify their figures, but technically I do not know that for sure. They gave me these:

Bryan Regional Park - Indoor | Five-Year Operating Pro Forma | June 2019

Bryan Regional Park - Indoor | Five-Year Operating Pro Forma | June 2019 | With final construction costs page and duplicate "Total Revenue & Expenses - Indoor Facility" page

Bryan Regional Park - Indoor & Outdoor Full Complex | Five-Year Operating Pro Forma | June 2019

Bryan Regional Park - Indoor & Outdoor Less 4-plex | Five-Year Operating Pro Forma | June 2019

I have not dug into these June ones in much detail. But they appear to have similar issues to what I found in that May 2019 Pro Forma.

Given

- Nobody is paying me to do analysis on this
- Any work I do is probably not going to affect the decision makers one iota
- I don't directly pay taxes in Bryan

I don't plan on doing much more on this.
dgonzo99
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It's really nice for you to do this, especially since you pay no taxes to Bryan. Here is a phone number you can call and discuss it with the City Council members including the Mayor. (979) 209-5008. I am sure that the Mayor would like to address your concerns. Have a great day.
techno-ag
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AG
Looking forward to Bryan's new Superpark!
Brian Alg
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I went ahead and contacted them via the Email the City of Bryan form. Last time (before the election) Southerland was the only one to respond. I suspect the others are already uncritically on board with building the facility.

Hopefully you're right about the Mayor, though.
Captn_Ag05
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AG
Brian Alg said:


- Around $250k of the gross margin is supposed to be coming from a ninja warrior/ropes course facility with a Virtual Reality area.


Any more information about this? I hadn't heard about this feature before.
EBrazosAg
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AG
Those numbers for volleyball or basketball tournaments are not excessive or unrealistic IMHO and I've spent quite a bit of time at those kind of events all over Texas in last 12 years.
birdman
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Of course the numbers are inflated. Politicians are trying to sell something.

The volleyball numbers might be a little high, but close enough. But those numbers would be for big tourney in Houston or Dallas. You just aren't going to get the biggest tournaments in Bryan.
Brian Alg
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I have only heard about it in the Pro Forma. And I only learned about the Pro Forma because the mayor was bragging about it [edit: the facility] not loosing money (looking at EBITDA) after year 4. I am not sure if it [edit: the ninja warrior/virtual reality area] is something council or staff are serious about beyond a way to boost the profitability of the facility in these preliminary docs.

Page 4 - It is supposed to be 5,400 sq ft.
Page 19 has the revenue and expenses figures.
Brian Alg
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Can you point to an example of one of these large tournaments and the facility that hosts it? I am curious how the proposed facility stacks up to the ones that usually host these things.
Captn_Ag05
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AG
One of my coworkers has a daughter that goes to large volleyball tournaments at the Wichita Falls Convention Center a couple of times a year.
EBrazosAg
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AG
Brian Alg said:

Can you point to an example of one of these large tournaments and the facility that hosts it? I am curious how the proposed facility stacks up to the ones that usually host these things.


There are 3-4 in Houston. Several in Austin area. Half a dozen in DFW. They vary from 4 to 6 to 8 to 12 courts.
Brian Alg
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This is also useful information, thanks.

Can anyone point to an example of one of these large tournaments and the facility that hosts it? I am curious how the proposed facility stacks up to the ones that usually host these things.
turfman80
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AG
The resident Superpark sunshine pumper will be along shortly to cast dispersions on your analysis
"Yeah, well, sometimes nothing is a pretty cool hand"
SPI-FlatsCatter 84
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AG
https://www.dallassports.org/microsites/lone-star-classic/index.html

1850 teams in Dallas. Details in the link
Second largest in the world
_________________________________________________________
Nothing is getting fixed in D.C. until we get term limits for both the House and the Senate
EBrazosAg
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AG
SPI-FlatsCatter 84 said:

https://www.dallassports.org/microsites/lone-star-classic/index.html

1850 teams in Dallas. Details in the link
Second largest in the world


That one is at the convention center. Not a usual venue. Tournaments like that are always in really big cities. I figured anyone interested enough to post several times about examples had the Google skills to find examples on their own.....
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