The University of Georgia
Center for Agribusiness and Economic Development
College of Agricultural and Environmental Sciences
The Feasibility of Operating a Youth Park
in South Georgia
Kent Wolfe, Christopher Ferland, and John McKissick
FR-02-12
September 2002
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Arena/Auditorium Complex Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Industry Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Potential Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Arena Needs Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 1: Importance of Facility Features - Arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 2: What Special Features Required? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Competitive Arena Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 3: Competing Daily Rental Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Arena Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Arena Market Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Conference/Meeting Center Industry Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 4: Q. Would You Consider Using a Covered Open-Air Arena in Douglas? . . . . . 8
Table 5: Estimated Market Potential for a Covered Open-Air Arena in Douglas . . . . . . 9
Conference Facility Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Conference/Meeting Center Industry Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 6: Meeting Room Expense Breakdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Conference/Auditorium Needs Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 7: Q. Importance of Facility Features - Conference Center . . . . . . . . . . . . . . . . 12
Conference Center Facility Competitive Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Conference/Meeting Facility Market Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 8: Large Area Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 9: Q. Would You Consider Using a Conference Center Facility in Douglas? . . 15
Meeting/Breakout Rooms Market Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 10: Estimated Revenue Potential for Meeting/Breakout Room Facilities . . . . . . 16
Conference Center/Auditorium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 11. Estimated Market Potential for Conference Center/Auditorium Facility . . . . 17
Conference Center Market Potential Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Educational Activities Market Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 12. Estimated Market Potential for Education Activities Entire Center . . . . . . . . 18
Concession Revenue Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 13: Estimated Number of Conference Center Participants
and Concession Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Ropes/Leadership Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
“Other Activities” Market Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Estimated Revenue Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table 14: Estimate Total Annual Revenue Generated by the Youth Park . . . . . . . . . . . 21
Economic Feasibility of Operating a Youth Park in South Georgia . . . . . . . . . . . . . . . . . . . . . . 21
Capital Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table 15: Capital Cost for a Covered Arena with Concession Stand . . . . . . . . . . . . . . . 22
Fixed Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table 16: Fixed Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Direct Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 17: Labor Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Variable Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Table 18. Variable Cost Per Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Table 19: Income for Covered Arena and Rope Course . . . . . . . . . . . . . . . . . . . . . . . . . 24
Table 20: Income for Conference Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Total Cost and Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Table 21: Projected Net Revenue/Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Net Revenue Versus Budgeted Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Graph 1. Change in Net Revenue versus Change in Budgeted Cost, Arena . . . . . . . . . . 26
Graph 2. Change in Net Revenue verus Change in Budgeted Cost,
Arena Rope Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Graph 3. Change in Net Revenue versus Change in Budgeted Cost, Conference . . . . . 27
Net Revenue versus Percent Change in Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Graph 4. Net Revenue versus Percent Change in Income, Arena . . . . . . . . . . . . . . . . . . 28
Graph 5. Net Revenue versus Percent Change in Income, Arena with Rope Course . . . 28
Graph 6. Net Revenue versus Percent Change in Income, Conference Facility . . . . . . . 29
Impact Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table 22. Impacts for a Covered Arena for Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table 23. Impacts for a Covered Arena for Coffee County . . . . . . . . . . . . . . . . . . . . . . 30
Table 24. Impacts for a Covered Arena with Rope Course for Georgia . . . . . . . . . . . . . 30
Table 25. Impacts for a Covered Arena with Rope Course for Coffee County . . . . . . . 31
Table 26. Impacts on Visitors of the Covered Arena to Georgia . . . . . . . . . . . . . . . . . . 31
Table 27. Impacts on Visitors of the Covered Arena to Coffee County . . . . . . . . . . . . . 31
Table 28. Total Economic Impact for Covered Arena in Georgia . . . . . . . . . . . . . . . . . 32
Table 29. Total Economic Impact for Covered Arena in Coffee County . . . . . . . . . . . . 32
Table 30. Total Impacts for a Conference Facility in Georgia . . . . . . . . . . . . . . . . . . . . 32
Table 31. Total Economic for a Conference Facility to Coffee County . . . . . . . . . . . . . 32
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Executive Summary
The University of Georgia’s Center for Agribusiness and Economic Development (CAED), was
commissioned by the South Georgia Youth Park Board in Douglas, Georgia, to conduct a
feasibility study on the construction of a multipurpose facility to host various agriculture,
educational, and business events. A top-line summary of the results are as follows:
C
According to a national survey of similar facilities, 54% receive dedicated tax
support to help cover operating costs.
C
These facilities are typically found in communities with 200,000 or more
residents.
C
The majority of the facilities interviewed were not operated to make a net revenue.
Once established, the Youth Park, including conference facility has the potential to
generate a maximum $192,800 annually.
C
C
C
C
C
C
Arena facilities rental
Arena facilities
Meeting/breakout room rental
Conference/auditorium rental
Conference/meeting concession revenue
Educational activities
$58,000
$42,300
$ 7,200
$4,500
$71,700
$ 9,100
C
Total Facility Annual Revenue
$192,800
It appears there is a lack of market potential among area businesses to utilize the facilities at a
breakeven level. The CAED contacted over 100 of the area’s largest employers, and businesses
to determine the potential for such a facility. They indicated they have similar in-house facilities
or would not be interested.
C
At the assumed levels of operation, both the arena and conference center would
fail to cover direct costs.
C
Even with the limited market potential, the Youth Park’s impact on the Georgia
economy is significant, estimated to be $766,039 annually.
Introduction
The South Georgia Youth Park Board in Douglas, Georgia, commissioned The University
of Georgia, Center for Agribusiness and Economic Development (CAED), to determine the
economic feasibility of constructing and operating a multi-functional facility in Douglas. The
facility will be constructed in three phases. A 200 by 300 square foot covered open-air arena will
be constructed during the first phase of the project. The arena will contain an office, conference
room, and restroom facilities. The second phase will add a 300 by 300 square foot structure
housing 476 livestock stalls. The third phase will include the construction of a conference
facility that included educational and meeting rooms and a conference room /auditorium with a
seating capacity of 200-300 people.
By constructing a multi-functional complex, the City of Douglas and Coffee County,
expects to be able to host a variety of events, making the area more attractive for new industry,
and providing additional civic center functions. According to the Board, the proposed Youth
Park is expected to:
•
enhance the quality of life for all population segments; i.e., youth, adults, and seniors, in
the region and state;
•
enhance and facilitate educational programs and opportunities for all people;
•
provide an adjunct site for students of all grades and levels to use in conjunction with
traditional sites;
•
provide adequate space for various groups to show, exhibit, meet, and perform;
•
provide a centrally located site in Georgia for all levels of large and small animal shows,
including Class A events;
•
provide a unique recreational and entertainment facility to serve the public in many
aspects;
•
enhance the area for industrial development opportunities;
•
provide a potentially positive economic impact in the region through hosting events that
would attract visitors;
•
continue the commitment of keeping agricultural and environmental education paramount
for present and future generations: This is one of the most important goals of the center.
Background
Citizens and officials of the City of Douglas and Coffee County believe there is a need for
a complex that can accommodate large local functions like agricultural exhibitions, competitions,
2
proms, graduation ceremonies, beauty pageants, business conferences, educational activities,
festivals, business meetings, and concerts. As a result they organized the South Georgia Youth
Park Board to investigate the opportunities for such a complex.
The purpose of this study is to provide the South Georgia Youth Park Board with revenue
and cost analysis based on the Board’s proposal. This study is intended to be a decision-aid and
the Board will make the final decision.
This study consists of three main sections: revenue analysis, cost/net revenue analysis,
and impact analysis. Potential revenues are calculated by determining the number of expected
facility users. There are three main revenue generating portions of the complex: the covered
open-air arena, conference center auditorium, and the conference center meeting rooms. Each is
addressed separately and then summed to determine total revenue. Both building and operating
costs are included in the cost. Building costs and operating costs are based on figures provided
by the Board and supplemented by additional research. Costs are subtracted from potential
revenues to determine net revenue. Impact analysis examines the effects the complex will have
on the local economy.
The proposed facility is a complex with several components. For purposes of this paper,
references to the complex will include both the arena and conference center. More specifically,
the complex will encompass an educational center and nature trails. Facilities which do not
generate revenue such as the nature trail, will not be discussed in the revenue section of this
paper. However, the associated costs will be in the financial section that deals with the complex.
At times, it will be more appropriate to refer to the arena and/or conference center as separate
entities. In these cases, the total figures for the complex will be presented as well.
Market Analysis
Arena/Auditorium Complex
The event hosting industry is well established, with hundreds of facilities nationwide,
and is represented by the International Association of Auditorium Managers (IAAM). The
IAAM conducts a periodic industry profile survey that covers arenas, amphitheaters,
auditorium/theaters, convention centers/exhibition centers, stadiums, and complexes. Based on
IAAM classifications, a complex is a facility that combines two or more of the above facilities on
a single property. Given the plans for the Youth Park, the CAED has determined that the IAAM
survey’s results for “complexes” is the most pertinent to this study and used the most recent
IAAM industry profile as a benchmark. Further, the CAED has identified numerous facilities in
the state and region that offer similar structures including; meeting rooms, auditoriums, and
arenas. The CAED conducted extensive interviews with managers of these facilities to collect
additional information and to supplement the information obtained from the IAAM study.
3
Industry Trends
The multi-functional complex market is very diverse with little national data to determine
market trends. However, IAAM has determined that the number of new complexes being
constructed around the nation. According to IAAM, there is considerable building, renovation,
and expansion occurring around the nation, and this is interpreted as a sign of an expanding
market.
According to the 1996 IAAM Industry Profile, 54% of all complexes received dedicated
tax or other support to help cover operating costs. The study found the majority of the facilities
were not operating with the objective to make positive net revenues. According to the study
results, 41% of the complexes reported direct operating revenue will be less than operating
expenses, while an additional 24% indicated that direct operating revenue will only cover
operating expenses. In addition, the facilities indicated they planned to incur extraordinary
expenditure over the next three years to cover new equipment, facility improvements, and facility
repairs. The majority (84%) of the facilities indicated they did not pay any taxes from their
operating budget.
Potential Activities
Complexes are multi-functional facilities that are capable of hosting a wide variety of
events. The potential events that could be hosted by the proposed complex include:
•
•
•
•
•
•
•
•
•
•
•
•
•
Livestock shows (cattle, horses, poultry,
sheep, swine, goats)
Fall fair/festival (Halloween)
Agricultural equipment shows
Chemical shows
4-H/FFA fairs or shows
Arts & craft shows
Green Industry shows
Rodeos
Concerts
Religious events
Trade shows
Dances
School functions
•
•
•
•
•
•
•
•
•
•
•
•
•
•
School graduations
Auctions
Beauty pageants
Banquets
Merchandise sales
Automobile shows
Easter egg hunts
Antique shows
Birthday parties
Company picnics
Gun and knife shows
Commodity groups
Theatrical productions
Family reunions
These events are heavily dependent on attracting large numbers of people and are usually
found in cities with 200,000 or more. These complexes have the ability to bring in people from
outside the community, thus, generating a positive economic impact on a community. There are
a number of complexes in the state of Georgia and surrounding states, however, not all are
identical to the one being proposed in Douglas.
4
Arena Needs Assessment
The CAED implemented a needs assessment survey to determine if there is a need for
such a complex in the Coffee County area. There are two purposes for conducting a needs
assessment. First, there may be facilities that will be competing with the proposed Youth Park’s
covered open-air arena. These facilities offer some or all of the same amenities being proposed.
At the regional level, the number of competing facilities increases significantly. Therefore, a
needs assessment is critical in identifying real or perceived gaps that may exist between existing
facilities and potential users. The CAED interviewed representatives from a number of
associations, clubs and businesses in Georgia and the region that were identified as potential
users of the arena. The results are used in the competitive analysis and in estimating the market
potential. In order to attract potential users, the Youth Park must offer facilities the users need
and want at a competitive price. Table 1 provides insight into which facility features are
important to potential arena users.
Table 1.
Q. “Now I’d like to ask you the importance of different factors in your organization’s site selection
process for meetings, shows, etc. Please tell me if you think the following criteria are very important, somewhat
important, neutral, not very important, or not at all important.”
Feature
Local lodging availability
Accessability for attendees
Rental rate/cost
Location
Available facilities/structures
Local restaurants
Reputation for center/community
Climate controlled environment
Food service
Enclosed arena
Paging system
Handicapped accessability
Concrete floor
Announcers stand
Multiple configurations for rings
Covered, open-air arena
Show office
Bleacher seating
Wash racks
Open air arena
Holding pens
Audio/visual equipment
Area attractions
Separate livestock barn
Total
(n=72)
4.67
4.64
4.58
4.51
4.49
4.32
4.31
4.26
4.23
4.14
4.00
3.94
3.46
3.44
3.35
3.33
3.15
2.95
2.84
2.44
2.39
2.36
2.36
1.88
Horse
Show/Assoc.
(n=9)
4.89
4.89
4.67
4.89
4.44
4.89
4.11
3.11
3.67
5.00
4.22
3.56
3.00
4.78
3.89
4.67
4.44
4.00
4.78
2.63
3.78
1.67
2.44
1.88
Cattle
Assoc.
(n=9)
4.33
4.33
4.63
3.63
4.78
3.89
4.56
4.11
4.00
4.13
4.63
3.89
4.00
4.44
4.75
4.25
4.00
4.33
4.78
3.63
4.67
2.67
2.78
3.33
Dog
Ag. Mach./
Show/Assoc. Rodeo
Equip.
Trade Shows
(n=25)
(n=4)
(n=17)
(n=6)
4.96
4.75
4.50
4.00
4.72
4.75
4.67
4.17
4.80
4.67
4.11
4.83
4.68
4.25
4.44
5.00
4.36
4.00
4.56
4.83
4.48
4.50
4.33
3.17
4.17
5.00
4.06
4.83
4.80
4.00
4.06
5.00
4.72
3.75
3.94
4.33
4.36
3.75
3.56
3.67
4.32
4.50
3.17
3.50
4.44
4.75
3.12
4.33
3.88
3.50
3.00
3.17
3.92
4.50
2.88
2.33
4.05
3.50
2.11
1.83
2.40
2.67
3.60
2.75
2.72
2.25
3.00
2.17
2.88
5.00
1.83
1.00
2.55
3.25
1.50
1.17
2.32
3.50
1.94
1.67
1.59
4.00
1.65
1.00
2.46
2.00
2.44
2.33
2.28
1.50
2.50
2.00
1.59
3.00
1.61
1.17
The Youth Park should offer amenities that are important to each of the various market
segments. Overall, lodging was rated most important in an organization’s decision to utilize a
5
facility. Accessibility and location are the second and third most important. Food accessibility
appears in the second tier of importance. Potential users need access to food, through food
service and/or local restaurants both of which are abundant in Douglas.
However, it is important to remember that it is easier to sell something people want than
it is to sell something they do not want. The cattle associations consider wash racks, holding
pens and multiple configuration for rings to be very important in selecting a site for their shows.
The absence of holding pens in the initial construction phase of the arena facility may discourage
potential users from utilizing the facility. Horse shows and associations consider different
factors to be important when they select facilities. For example, accessibility, local lodging,
location, and local restaurants, are more important to this market than multiple configuration for
rings or holding pens. The absence of factors considered to be important to each market will
decrease the likelihood of them utilizing the facility. The following provides the most important
facility features by market.
Horse Show & Associations
Enclosed arena
Local lodging availability
Accessability for attendees
Location
Local restaurants
Wash racks
Rodeo
Bleacher seating
Reputation for center/community
Accessability for attendees
Local lodging availability
Handicapped accessability
Cattle Show & Associations
Wash racks
Available facilities/structures
Multiple configurations for rings
Holding pens
Ag. Machinery and Equipment
Accessability for attendees
Available facilities/structures
Local lodging availability
Location
Local restaurants
Dog Show & Associations
Local lodging availability
Rental rate/cost
Climate controlled environment
Accessability for attendees
Food service
Location
Trade Shows
Location
Climate controlled environment
Reputation for center/community
Available facilities/structures
Rental rate/cost
In addition to the facility features mentioned above, many organizations appear to have
special security, water, and sewer requirements (Table 2). These special needs should be
investigated in more detail to determine exactly what is needed for each segment i.e., security
meals. Special needs will have to be addressed in order to entice these users to the Youth Park.
There does not appear to be an overwhelming need for breakout rooms and special loading docks
among these organizations.
6
Table 2. Q. What Special Features are Required?
Percentage of Respondents Reporting They Have Special Needs - Arena
Feature
Breakout rooms
Special Security Needs
Special loading dock needs
Special water/sewer requirements
Total
(%)
Horse
Show/Assoc.
(%)
Cattle
Assoc.
(%)
27
44
15
34
0
11
0
48
33
56
11
33
Dog
Ag. Mach./
Show/Assoc. Rodeo
Equip.
(%)
(%)
(%)
34
54
12
48
33
50
25
25
28
33
28
6
Trade
Shows
(%)
17
67
17
0
Competitive Arena Facilities
A competitive analysis of existing arena/auditorium facilities was also conducted. The
CAED was able to identify eleven covered and eleven open air arenas in counties around Coffee
County. These facilities appear to have an agricultural mission and should be considered direct
competitors. In addition, there are nine major competing facilities identified in Georgia, as well
as a number of agricultural arena facilities located in the surrounding southern states.
The majority of the local arenas service 4-H and related events and may compete for other
livestock shows, craft fairs and arena events. Five of the nine major facilities in Georgia are
heavily involved with agricultural functions. The remaining four cater to a broader base but are
considered competitors because they have the capabilities to host the same type of events
targeted by the Youth Park arena. These facilities are located in Columbus, Macon, Dalton, and
the Atlanta area. For example, the Columbus Civic Center, and the Macon Centraplex facilities
host concerts, trade shows, sporting events, rodeos, religious events, and other activities which
could compete directly with the Youth Park in attracting these types of events. These centers are
located near larger populations and as a result, Douglas will have to attract events to its facility in
order to compete. It may be difficult to obtain event sponsors to move from high population
areas because of the difficulties in attracting people from larger markets.
Table 3 presents a partial listing of competing facilities and their daily rental rates. One
important point to remember is that rental rates are very complex and depend on a number of
factors that are associated with attendance and special requirements. There appears to be add-on
costs for equipment and space besides the cost of renting the arena. The Youth Park will have to
develop a pricing structure similar to the ones being used by competing facilities, which range
from free to $200 per day depending on the facility and activity.
7
Table 3. Competing Daily Rental Rates
Facility
Daily Rental Rate
Heritage Park (Oconee County, GA)
$350
Georgia National Fair Grounds Multipurpose Arena
(Perry, GA)
$150 - does not include dirt which is an
additional cost as are stalls.
Chicopee Woods Agricultural Center
(Gainesville, GA)
$250 - small arena
$350 - large arena
Georgia Mountain Center Arena (Gainesville, GA)
$1,000 per day or 10% of gross sales if it is
a ticketed event
Georgia International Horse Park (Conyers, GA)
$1,000 - additional charges depending on
needs and attendance
Coweta County Fairgrounds & Conference Center (GA)
$900 - plus $300 cleanup deposit
McWherter Agricultural Complex (Jackson, TN)
$500-$1,000 - additional equipment for a
fee
Garrison Livestock Center (Clemson, SC)
$750 - additional equipment for a fee
Pilot Agricenter (Rochelle, GA)
$150 per day
Ben Hill County (GA)
Not sure yet, brand new
Arena Specifications
According to the IAAM industry profile study, arenas range from 550 seats to 26,000
seats in larger facilities. Auditoriums/theaters seat between 200 and 6,000 spectators while
exhibition spaces range from 1,200 square feet to 560,000 square feet. The proposed Douglas
Youth Park will fall within each of these facility ranges.
Arena Market Potential
Market potential is a method for estimating the maximum number of potential users. The
market analysis utilizes potential user’s stated intent regarding their use of a facility. Research
has shown there is a disconnect between stated intent and actual follow-through. Market
potential estimates are based on stated intent by those surveyed, but there is no exact method for
determining actual usage in advance. The following figures will serve to estimate total market
potential.
According to industry data, a complex can expect to attract business as far away as 75
miles (i.e., a 75-mile radius from the complex), increasing the population base. Organizations
that host events in larger complexes depend on the area population to support the event.
8
Therefore, it is important to determine the population within 75 miles of Douglas to determine if
the population is great enough to support large events. Within in a 25-mile radius of Douglas,
there are an estimated 64,321 people. Expanding the radius to 75 miles, the population increases
significantly to 782,392 people.
The area population exceeds the minimum 200,000 population requirements. However,
within this 75-mile radius, there are numerous competing facilities, although not identical, but
offering some or all of the aspects of the facility being proposed by the Douglas Youth Park
Board. The Douglas Youth Park Board will have to compete with these facilities to attract
potential users. However, according to a feasibility study prepared by Mr. Darrell Day, Facility
Manager in Irving Texas, people from larger towns will not go to smaller towns for an event.
To get a first-hand feel for the market, the CAED surveyed 71 organizations that use
arena facilities. Again, it is important to note that different facility features are important to
different groups of potential users. Given the fact that holding pens will not be constructed
during the first phase of the facility, the number of cattle shows or associations that utilize the
facility may be lower than reported as these facility amenities are very important to this group.
According to survey results, 21% of the respondents indicated they would consider a facility in
Douglas, Table 4. Trade show and agricultural machinery respondents are less likely to use the
proposed facility than any other organizational category.
Table 4. Q. Would You Consider Using a Covered Open-Air Arena in Douglas?
Feature
Yes
Total
(n=71)
21%
Horse
Show/Assoc.
(n=9)
44%
Cattle
Assoc.
(n=9)
44%
Dog
Show/Assoc. Rodeo
(n=25)
(n=4)
16%
50%
Ag. Mach./
Equip.
Trade Shows
(n=18)
(n=6)
5%
0%
The arena’s maximum market potential can be calculated using the data in Table 5, and
the number of identified potential users in each organizational breakout. The estimated “real”
market potential figure was derived by multiplying the percentage of organizations that would
consider a multipurpose facility in Douglas by the percentage of those same organizations that
utilize an open covered arena. For example, with horse shows/associations, identified real
market potential is estimated to be 23 organizations with the real estimated market potential
being10 organizations ( 23 *44% *100%=10). Table 5 assumes that each organization would
rent the Youth Park’s covered, open-air arena once a year for a three-day period.
9
Table 5. Estimated Market Potential for a Covered Open-Air Arena in Douglas
Organization (number of
additional interview)
Identified
M arket
Potential
Consider
Facility in
Douglas
Use
Covered
Arena
Estimated
“Real”
M arket
Potential
Estimated
Number of
Days
Reserved
Estimated
Potential
Revenue*
Horse Shows/Associations
23
44%
100%
10
3.0
$15,000
Cattle Associations
22
44%
100%
10
2.0
$10,000
Dog Shows/Associations
53
16%
40%
9
4.0
$18,000
Rodeos
14
50%
100%
7
3.0
$10,500
Ag. Equipment/Machinery
65
5%
100%
3
3.0
$4,500
Trade Shows
12
0%
25%
0
3.0
$0
Total Identified Potential
189
76%
39
117
$58,000
* Assumes that the covered open-air arena facilities.
Note: Due to rounding, all columns may not sum to equal.
Determining a daily rental rate is difficult (Table 3). For example, the Heritage Park
facility in Oconee County, rents for $350 per day while the Georgia National Fair Grounds Multipurpose area in Perry, rents for $150 per day. However, the Perry facility charges a one-time fee
of $900 to have dirt hauled in and spread and charges an additional $450 one-time cost to set up
the show ring. In addition, they rent stalls for $25 for two days. This add-on pricing strategy
makes determining an actual daily arena rental cost difficult. Therefore, the median price of $500
per day as reported by the survey respondents, was used as the daily rental figure for the covered,
open-air arena, based on information in Table 3.
The maximum revenue potential for a covered, open-air arena is estimated to be $58,000
annually. This assumes the facility is rented 117 days of the year or 32% occupancy rate. Trade
show contacts indicated blowing rain and cold weather would keep them from using such a
facility during the winter. Dog show associations also indicated small dog breeds would not use
such a facility in the winter or colder months because of the stress it creates for the animals.
Given inclement weather conditions in late fall, winter, and early spring, it is unrealistic to
assume a covered open-air facility will be used heavily during these times.
Therefore, assuming that the arena’s use will drop during November through February
because of weather conditions, the total number of usable days decreased from 365 to 245. This
reduces the number of weekends (prime usage) that the arena is useable from 52 to36. As a
result, the number of days estimated Table 5 may actually be lower.
In addition to possible weather implications, dog show/association, agricultural
machinery, and trade show respondents explained open facilities do not offer the level of security
10
they require. Assembling and disassembling their show every day and leaving their equipment
and materials in an open building during the off-hours is a major concern. Additional security
would have to be employed if an open facility is constructed.
Conference Facility Market Analysis
The proposed conference center would have two separate facilities available for rental.
The conference center will have one large room which would serve as a conference
room/auditorium depending on the needs of the group. The conference center will also have
smaller meeting rooms/breakout rooms.
Conference/Meeting Center Industry Trends
The conference center industry is continuing to grow with little effect from the current
economic slowdown. Companies and corporations continue to utilize such facilities to have
meetings to train employees to maintain their competitiveness. There is some indication that an
increase in facility demand combined with shortened booking times (how far in advance facilities
are booked) has created a situation where conference organizers are no longer able to book their
first choice in facilities, but settle for their second or third choices. In addition, there has been a
slowdown in the construction of these high fixed cost facilities.
In 2001, the International Association of Conference Centers (IACC) conducted a survey
of North American Conference Centers. The study, published in Trends in the Conference
Center Industry, provided valuable insight into conference centers’ occupancy rates, pricing and
cost structures, seasonality, and “draw” potential.1 Executive and corporate conference centers
reported an impressive occupancy rate; however, this is seasonal. The study reported occupancy
rates exceeding 60% during the peak season which starts in late spring (May) and continues
through mid fall (October). Conference centers’ occupancy rates range from a low of 39.9% in
January to a high of 69.7% in October. According to industry research, the per person median
rental rates for meeting rooms range between $70-$79/day. More simply, each conference or
meeting attendee generates $70 to $79 in revenue. Per person daily revenue can be further
broken down into different services (Table 6).
1
Trends in the Conference Center Industry-North America. 2001 Edition. International Association of
Conference Centers.
11
Table 6. Meeting Room Expense Breakdown
Activity*
Allocation per Person
Meeting Room
$26.00
Conference planning
$12.50
Basic Audio/Visual
$6.50
Coffee Breaks
$13.00
Lunch
$19.00
Misc. Expenses
Total
$2.00
$79.00
*Trends in the Conference Center Industry - North America, 2001
Of the $79 generated by one participant, $26 is from the meeting room while $12.50 is
from planning the meeting or conference. This information is valuable in determining services
offered by the conference center such as lunch and coffee breaks, which have a large mark-up.
Business organizations are the largest source of demand for conference centers2 and
account for 54%, followed by academic institutions, 13%, and trade associations, 8%. The bulk
of a conference center’s usage is for management and training/continuing education meetings.
The local organizations are responsible for the largest source of bookings with nearly half of all
conference center meetings originating from the local area. The regional market contributes an
additional third of all bookings, with national and international meetings accounting for the
remaining 20%.
Conference/Auditorium Needs Assessment
There are a number of facilities in Coffee County and even more in the surrounding
counties that offer some or all of the accommodations being proposed. At the state level, the
number of competing facilities increases significantly. Therefore, the needs assessment is critical
in identifying real or perceived service and facility gaps that may exist between existing facilities
and the needs of organizations that use these facilities. The CAED interviewed representatives
from a number of associations, clubs, and local businesses that were identified as potential users.
These results are used in the competitive analysis and in estimating the market potential for the
conference portion of the facility.
Potential conference center users were interviewed by telephone to determine which
features they deem important in selecting a conference/meeting facility. This sample consisted of
2
Trends in the Conference Center Industry- North America, 2001.
12
state agricultural commodity and agribusiness associations, other associations, and area
businesses that employ more than 20 people. Unfortunately, only one the area’s larger employers
in Coffee County indicated they would use such a facility. As a result, the importance of various
facility amenities only reflects one businesses needs. The Other Association category, in Table 7,
includes organizations such as Ducks Unlimited and the Georgia Christmas Tree Association.
Table 7.
Q. Importance of Facility Features -Conference Center
“Now I’d like to ask you the importance of different factors in your organization’s site selection process for
meetings, shows, etc. Please tell me if you think the following criteria are very important, somewhat
important, neutral, not very important, or not at all important.”
Feature
Total
Other
Associations
(n=5)
Commodity Assoc.
& Agribusinesses
(n=8)
Rental rate/cost
4.86
5.00
Accessability for attendees
4.76
4.80
Location
4.71
3.60
Local Lodging availability
4.71
5.00
Food service
4.43
4.80
Local restaurants
4.29
4.20
Available facility/structures
4.24
4.60
Audio/visual capabilities
4.24
4.20
Rep. for community
4.20
4.20
Meeting/breakout rooms
4.10
4.80
Conference room/audit.
4.00
3.20
Handicapped accessability
3.57
4.20
Conference concierge
3.14
4.40
Auditorium
3.05
3.40
Covered -open air arena
2.62
3.60
Enclosed arena
2.57
4.00
Area attractions
2.57
2.40
Bus parking
2.00
2.60
- - - Values above the line of demarcation are significantly higher than those
4.75
4.88
2.88
4.75
4.63
3.75
4.13
4.25
4.25
3.88
4.50
3.25
2.75
3.00
2.88
2.38
2.88
2.13
below.
Area
Businesses
(n=1)
5.00
4.00
5.00
4.00
5.00
4.00
5.00
4.00
4.00
2.00
4.00
5.00
4.00
2.00
4.00
4.00
4.00
5.00
Overall, the results of the question can be broken down into four categories to distinguish
the relative importance of different facility features. Overall, cost, accessibility, location, and
available lodging are the most important factors in determining these organizations’ facility
selections. Excluding the cost of renting the facility, the most important criteria were not related
to the physical facility but its location. Unfortunately, these features cannot be controlled by the
Youth Park. However, it is important to note all of these features are important as they received
an average rating of 4.10 or higher on a five-point scale. The issues of location, accessibility,
and area lodging will have to be addressed by the Youth Park’s marketing campaign to make the
facility attractive to potential users.
Again, it is important to remember that it is easier to sell something people want that it is
to sell something they do not want. This is noticeable when examining individual markets, there
are noticeable differences in facility needs. The absence of facility amenities that are important
13
to the various groups may discourage potential users from utilizing the conference facility. For
example, commodity associations and agribusinesses need a conference room and auditorium
while the one area business needs handicap accessibility. The following indicates the most
important facility features by market.
Other Associations
Rental rate/cost
Local lodging availability
Accessability for attendees
Meeting/breakout rooms
Food service
Available facility/structures
Commodity Associations and
Agribusinesses
Accessability for attendees
Local lodging availability
Rental rate/cost
Food service
Conference room/auditorium
Coffee County Area Businesses
Handicapped accessability
Rental rate/cost
Food service
Available facility/structures
Location
Bus parking
Table 7 provides the Youth Park with a wealth of marketing information. When a
marketing plan is developed, it will be important to educate potential users on the facility’s
accessibility and location to major population centers. In addition, it will be valuable to provide
information on area lodging and eateries.
Conference Center Facility Competitive Analysis
It is necessary to assess competing facilities in order to create a baseline of existing
products and services. The CAED’s competitor analysis attempted to identify local, state, and
regional operations that offer conference, convention, and meeting facilities and/or arenas.
The CAED was able to identify six conference/meeting facilities within Douglas and an
additional 15 in the surrounding eight counties by contacting the local chambers of commerce.
To identify competing facilities in the state and the southeastern region, a specialized software
program (SelectPhone) was employed as well as the tripsouth.com travel guide. SelectPhone
software identifies businesses by their Standard Industry Classification (SIC) code. The software
only identifies businesses that are registered with a specific SIC code. Not all facilities that offer
conference/meeting facilities are registered under this code. This is especially true with hotels
and motels. To supplement the SelectPhone results, the Tripsouth.com website was used to find
motels and hotels with conference/meeting facilities. The Tripsouth.com web site provided
limited information and only identified conference/meeting facilities in larger metropolitan areas.
Hotels and motels in less populated areas were not provided. For instance, South Georgia
College has conference/meeting facilities that can accommodate small to large groups (18 - 472
people). These facilities offer audio/visual equipment and other necessities. Therefore, the
SelectPhone and Tripsouth.com resources only yielded partial results, representing only a portion
of the total number of conference/meeting facilities in the area, state, and region. By using the
SelectPhone software and Tripsouth.com, the CAED identified more than 200
conference/meeting centers in the state of Georgia. This does not include facilities that are
offered at some of Georgia’s state parks because they are registered under state parks and not
conference/meeting facilities. The CAED identified at least eight state parks in Georgia with
conference/meeting facilities. For instance, the McRae State Park and Conference Center offers
14
eight spacious meeting rooms, ballroom capabilities for up to 475 people, on-site conference
coordinators, theme events, and other amenities.
Expanding to a regional search, there were 147 conference/meeting facilities and 82
convention meeting facilities located within 350 miles of the proposed Youth Park. Again, it is
important to remember that these numbers do not include the numerous hotels and motels that
offer conference/meeting facilities on premises but failed to register their facilities as such.
Douglas already has the C.E. Weir Center that seats up to 225 people, in addition to three
meeting rooms.
Conference/Meeting Facility Market Potential
Based on the large number of local business, there appears to be market potential for the
conference/meeting room facility. Within a 25-mile radius of the proposed Youth Park, there are
approximately 2,522 businesses. This is encouraging as industry research indicates that over
one-half of all conference/meeting facility bookings and revenues are derived from local
businesses that are located within 25 miles. It is important to remember that the 2,522
businesses that were identified represent all sizes and types of businesses that use
conference/meeting facilities. The Coffee County Chamber of Commerce furnished a list of 74
businesses. Forty-two of these companies employed 20 or more people. The CAED contacted
the Chambers of Commerce in the eight surrounding counties and collected the same type of
information for each county. Table 8 indicates the number of large employers located in each
county.
Table 8. Large Area Employers
County
20 + Employees
Coffee
42
Berrien
12
Bacon
9
Jeff-Davis
8
Irwin
6
Ben-Hill
11
Telfair
8
W are
35
Atkinson*
0
Total
* Information was not available
151
15
Given the relatively small number of large employers in the nine county area, the
estimated market potential for area business conferences dropped from 2,522 in the 25-mile
radius to only 151.
The relatively small number of potential businesses in the Coffee County area poses a
problem for the Youth Park’s auditorium/conference center component. Industry data indicates
approximately 50% of a facility’s bookings are from local organizations. Therefore, additional
revenue will have to be generated from other organizations. The information in Table 9 indicates
the potential from other organizations by measuring whether they would consider the proposed
Youth Park conference facilities for their next function.
Table 9. Q. Would You Consider Using a Conference Center Facility in Douglas?
Response
Yes
Other Associations
(n=4)
Commodity Assoc. & Agribusinesses
(n=9)
Area Businesses
(n=71)
40%
0%
1%
The conference center and meeting room market potential can be calculated using the
information supplied in Table 9 and the number of identified potential users in each
organizational breakout.
Meeting/Breakout Rooms Market Potential
Assuming that only 1 of the 132 area businesses employing 20 or more people, might
utilize the Youth Park facility, it is possible to calculate the market potential from area
businesses. According to the results, most businesses would use about four meeting/breakout
rooms. These rooms would typically seat 30 people with each business bringing about 100
people. The median value was used, rather than the mean, given the small sample sizes
associated with each group. Therefore, if only 1 of the area’s largest employers utilized the
facility once a year, and it brought about 100 people, the Youth Park could expect to draw an
estimated 100 people to the conference center annually from local businesses.
The availability of meeting/breakout rooms is important to businesses in selecting a
facility as shown in Table 10. The addition of state-of-the-art meeting facilities equipped with
audio and visual equipment would be very appealing to area businesses.
16
Table 10. Estimated Revenue Potential for Meeting/Breakout Room Facilities
Identified
Market
Potential
Consider
Youth
Park
Use
Specific
Facility
Estimated
“Real”
Market
Potential
Estimated
Number of
Days
Reserved
Number
of Rooms
Reserved
Estimated
Potential
Revenue*
Other Associations
17
40%
67%
5
3
4
$6,000
Commodity
Ass./Agribusiness
21
0%
80%
--
3
4
$0
Area Businesses
132
1%
1%
1
3
4
$1,200
Total Identified
Potential
170
--
--
6
3
4
$7,200
Organization
* Assumes that each room is rented out for $100 per day
Estimating total market potential can be calculated using the information in Table 10 and
the number of potential users in each organizational breakout. Survey results indicate these types
of facilities generally rented for $75-100 per day and are typically reserved for three days.
Respondents indicated they are currently paying about $100 per day for meeting/breakout
rooms rather than a per person fee. Industry data in Table 1, should be used to calculate add-ons
such as providing coffee break supplies and meals. These additional fees will be added to the
$100 per day rental fee on a per person basis.
The estimated “real” market potential figure was derived by multiplying the percentage of
organizations that would consider a multi-functional facility by the percentage of those same
organizations that utilize meeting/breakout rooms. These results are shown in Table 10. For
example, with the “Other Association” category, the estimated real market potential is estimated
to be 5 organizations (17x40%x67%=5). Table 10 assumes that each organization would rent the
Youth Park’s breakout rooms once a year for a three-day period. In addition, the typical business
reserves four rooms which are rented for $100 per day, similar to what is being charged for
existing facilities in Douglas. The revenue calculation is based on the assumption that the
proposed Youth Park will have two meeting/breakout rooms that can be divided into four rooms
using a partition. Since the majority of organizations indicate they use four meeting rooms, four
are used in calculating the estimated potential revenue.
These results indicate the Youth Park might expect to generate $7,200 annually from
rental of it meeting/breakout rooms. The meeting rooms are assumed to be occupied 60 days, a
16% occupancy rate.
Conference Center/Auditorium
Table 11 contains similar information and estimates the market potential for the
conference/auditorium facility. The breakout rooms are not included in this section. It was
17
assumed that conference facility would be used for three days, similar to the number of days the
meeting/breakout rooms would are assumed to be utilized. Also, it is assumed a similar number
of people would utilize the conference center as would use the breakout meeting rooms.
Table 11. Estimated Market Potential for Conference Center/Auditorium Facility
Consider
Youth Park
Use
Specific
Facility
Estimated
“Real”
Market
Potential
Estimated
Number of
Days
Reserved
Estimated
Potential
Revenue*
17
40%
80%
5
3
$3,750
Commodity
Ass./Agribusiness
21
0%
75%
0
0
$0
Area Businesses
132
1%
1%
1
3
$750
Total Identified
Potential
170
--
--
6
3
$4,500
Identified
Market
Potential
Other Associations
Organization
* Assumes that the conference center/auditorium is rented out for $250 per day.
The majority of the respondents were unable to give a typical dollar amount they pay to
rent conference rooms and/or auditoriums. Respondents able to provide cost information
indicated they are paying an average of $250 per day. Rental rates for competing facilities
located in Douglas range from nothing (Satila Regional Library) to $500 (Ashley/Slater House).
The CAED assumed the center would charge a daily rental rate of $250 to be comparable with
other conference/auditorium facilities in town.
Given the results of the survey, the conference center facility could expect to generate
$4,500 annually from conference center/auditorium rentals. This figure is based on the facility
being occupied 18 days of the year, an occupancy rate of 5%. The 5% occupancy rate is
significantly below industry figures which suggest occupancy rates of 60% during peak periods.
Assuming the total number of days the facility was rented increased to 219 days annually (a 60%
occupancy rate) and a rental rate of $250 per day, the estimated potential revenue could be
expected to increase to $54,750 annually.
The most successful means of marketing conference facilities is generated through
referrals (word-of-mouth), repeat business, and personal sales calls. Other successful marketing
methods include newspaper advertising, web sites, and direct mail. The Youth Park will have to
implement an aggressive marketing campaign to inform and attract potential clients.
Conference Center Market Potential Conclusion
Given the results presented in Tables 10 & 11, the Youth Park is estimated to generate
$6,300 annually from its meeting/breakout rooms and an additional $4,500 annually from its
conference room/auditorium. In total, the Youth Park is estimated to generate a maximum of
18
$10,800 in revenue. These estimates are based on the responses to the potential user survey and
may vary depending on occupancy levels. Again, aggressive marketing will be a key factor in the
success of the Youth Park, as these results depend on the facility attracting customers from
existing facilities.
Educational Activities Market Potential
The CAED was provided with a list of activities that could possibly be held at the facility.
Using the figures provided by the Coffee County Extension Service and the South Georgia Youth
Park Board, it is estimated that $9,100 could be generated from educational activities (Table 12).
A number of potential users were not included in the estimated revenue, these groups would be
granted access at no cost, i.e., 4-H and FFA competitions.
Table 12. Estimated Market Potential for Educational Activities Entire Center
Number of
Activities
Number of
days
Total Market
Potential (days)
Rental Rate
Estimated
Revenue
9
2.5
23
$250
$5,750
Youth field days - arena
25
1.0
25
$100
$2,500
Adult field days - arena
4
1.0
4
$100
$400
Farm Safety - Conf.
1
1.0
1
$250
$250
Special Olympics - arena
2
1.0
2
$100
$200
Activity
Day Camps - Conf.
Total
$9,100
Concession Revenue Estimates
Previous research suggests that arena events average 300 attendees and/or participants per
event. Multiplying the 300 event participants by the estimated 39 events (Table 5) and including
the participant estimated provided by the South Georgia Youth Park, the arena facility is
estimated to attract a total of 14,100 arena users annually.
The conference center is estimated to attract an estimated 22,100 people to various events
(Table 13). It is estimated that a total of 14,700 event participants would visit the combined
facility annually and spend $3.00 per person, gross. The $3.00 per person gross concession
expenditure was derived from conversations with a number of facility managers.
19
Table 13. Estimated Number of Conference Center Participants and Concession Revenue
Number of
Participants
Concession Expenditures per
Person
Estimated Concession
Revenue
Youth field days - arena
1,000
$3.00
$3,000
Adult field days - arena
600
$3.00
$1,800
Special Olympics - arena
800
$3.00
$2,400
11,700
$3.00
$35,100
Activity
Arena Activities
Arena Participants
Total
14,100
$42,300
Conference Facility Activities
Day Camps - Conference
300
$3.00
$900
Farm Safety - Conference
200
$3.00
$600
Breakout/Meeting Rooms1
1,800
$3.25 2
$5,850
Conference/auditorium Facility1
19,800
$3.25 2
$64,350
Total
22,100
Total Estimated Concession Revenue
$71,700
$114,000
1
Reflect the number of potential users multiplied by a three day reservation and again multiplied by 300 event participants.
The conference facility also includes visitor estimates for fair and craft events and other similar activities provided by the
South Georgia Youth Park Board.
2
$3.50 represents a 25% net mark-up on coffee break and lunch catering services.
Ropes/Leadership Course
The CAED was able to identify a number of ropes/leadership courses in the region, but
only three are currently serving the public:
•
•
•
•
•
•
•
Darton College in Albany - Public
Peak Pursuits- St. Simons Island - Church groups and the public
Georgia Southern- Public
Woodbine - run by the Presbyterian church
Fort Stewart Baxley - services the youth detention facility
Coastal Georgia Community College in Waycross - under consideration
Darton College in Albany has an Alpine Tower, a climbing wall, and a low ropes course.
They offer a 4-hour course on the low ropes for $25-35/person, limited to 20 people. The
coordinator estimated they host approximately1,200 annually, on average. Their course was
designed and built by Alpine Towers/Cornerstone Design of North Carolina.
20
Peak Pursuits operates an outdoor challenge course at Epworth by the Sea Conference
and Retreat Center, St. Simons Island. They offer one day and two-day challenges, priced at $75
and $140/per person, respectively. The minimum number of participants is 10 and 8,
respectively. In addition, the facility has both high and low element courses. The facility hosts,
on average, 2,000 to 2,500 people annually. The majority of Peak Pursuits’ clients are from
Epworth, a Methodist retreat but do have some corporate clients. According to Peak Pursuits, the
most important element of a challenge or ropes course is the facilitator. Clients patron the facility
year-round, with December and January being slower months. Alpine Towers also designed their
course.
Georgia Southern’s ropes course activities “utilize a network of ropes, beams, cables,
swings, pulleys, and initiative games which enable the group to visualize strengths and
weaknesses. This insight creates a more effective way of completing the task. It also serves as a
constructive forum where friendships are enhanced, and co-workers, family and friends can learn
more about themselves and each other. Our Challenge Course also provides an opportunity to
discard the worries of the day and have fun.” They cater mainly to University affiliated groups,
students, faculty and staff but do host corporate outing. Given that South Georgia College does
not have a program, modeling the Youth Park’s rope course after the Georgia Southern Course
may provide access to the schools students, faculty and staff in addition to other groups. The
Georgia Southern course costs $10-$20 depending on the course, high or low with an ideal group
size of 20-25 people.
Using the participation figures supplied by similar facilities in the region, the CAED is
going to assume that the ropes course will attract 1,000 participants annually each paying $50 to
utilize the course. This would generate $50,000 annually in ropes course revenue.
“Other Activities” Market Potential
In addition to the activities previously discussed, the CAED explored the possibilities of
hosting wedding, graduation ceremonies, and reunions. There appears to be a limited potential
for hosting weddings and/or wedding receptions. There were 367 marriage licenses issued in
Coffee County in 2001. One high school means only one high school graduation ceremony per
year and only a few class reunions annually.
Estimated Revenue Summary
The CAED has estimated the maximum potential revenue from various activities that
may be hosted at the proposed Youth Park (Table 14). Overall, the Youth Park can expect to
generate an estimated $192,800 annually. It is important to remember that these figures are
estimated using a combination of survey and industry data. The actual realized revenue
generated from the facility could differ significantly. It will take several years to market the
Youth Park and generate the level of activity needed to make the estimated $192,800 annually.
21
Table 14. Estimated Total Annual Revenue Generated by the Youth Park
Revenue Source
Complex with Covered Arena
Arena Facilities Rental
$58,000
Arena Facilities Concessions
$42,300
Meeting/Breakout Room Rental
$7,200
Conference/Auditorium Rental
$4,500
Conference Facility Concessions
$71,700
Educational Activities
$9,100
Ropes Course
$50,000
Total Estimate Facility Revenue
$242,800
Economic Feasibility of Operating a Youth Park in South Georgia
This sections utilizes information obtained from youth park committee members and
previous research performed by the Center of Agribusiness and Economic Development. This
section investigates the true economic cost of operating an arena and conference facility in the
Coffee County area. The assumed costs are for an average operating year with the arena and
conference center used at the market levels calculated in the first section of this report. The
economic analysis is provided to determine true net revenue potential of the proposed operation.
Most public projects do not cover all economic costs such as private enterprise. However, the
calculation of a public project costs is critical for public decision makers in making informed
investment and financing decisions.
The arena equipment and building cost including park improvements and designs were
supplied by the Coffee County Cooperative Extension Service. Specifications for the covered
arena and equipment make it suitable for hosting craft, animal, car, and machinery shows. The
facilities include restrooms and a concession unit. Conference facility costs were compiled by
the CAED from a previous project and the Coffee County Cooperative Service.
Capital Cost
Capital cost figures include necessary equipment and building structures for operating a
covered arena. Land costs are minimal based on the assumptions that Coffee County provides
the land.
Working capital is included in the capital costs. Working capital are resources used to
support a business until it begins to generate its own support, generally in the form of positive net
revenues. Initial working capital is obtained from start-up and/or short-term loans. Enough
capital is needed to cover expenses incurred by the business during the startup phases and slow
22
sales periods to remain in operation. Enough working capital to cover three months of operation
is assumed (Appendix pages 37, 41, and 47).
Table 15 indicates a total capital cost of $967,458 for the arena and $819,918 for the
conference center.
Table 15. Capital Cost for a Covered Arena with Concession Stand
Arena
Arena with Rope
Course
Conference
Building/Land
$609,988
$609,988
$722,000
Equipment
$270,055
$435,355
$44,500
W orking Capital
$87,415
$107,273
$53,418
Total Capital
$967,458
$1,152,16
$819,918
Fixed Costs
Total fixed costs are expenditures which do not change with the number of days used.
Stated another way, it does not matter if the facility is used for one weekend or every weekend
during the operation period; these cost remain the same. Fixed costs are consistent with the same
costs occurring each period, whereas other costs are related to the level of use. Included in fixed
costs are interest, depreciation, taxes and insurance, and administrative costs. Economic
depreciation is used to cover physical deterioration of equipment. If helpful, depreciation can be
thought of as annual average principal debt payment occurring if a 100% loan is structured for
the entire useful life of the facility. Return on invested capital can be thought of as average
annual interest payment for a loan capitalized over the anticipated useful life of the facility.
Annual fixed costs associated with the arena totaled $168,988, while the conference facility
totaled $96,698 (Table 16).
Salaried employees are considered "fixed" for this analysis since their costs do not easily
change with use. There is one administrative employee assumed for both facilities earning a
salary of $35,000 with benefits totaling $11,550. Specific fixed costs calculations can be found
in the Appendix, pages 35, 40 and 45.
23
Table 16. Fixed Cost
Arena
Arena with Rope Course
Conference
Taxes and Insurance
$18,000
$18,000
$16,130
Administration
$46,550
$46,550
$0
Depreciation - Building
$23,499
$23,499
$34,225
Depreciation - Equipment
$31,436
$55,051
$5,643
Interest - Building/Startup Cost
$35,999
$30,499
$38,475
Interest - Equipment
$13,503
$21,768
$2,225
Total Fixed Cost
$168,988
$195,367
$96,698
Due to the conference facility being phase 2 of the Youth Park the administration cost
were subsidized by phase 1. The manger of the arena can schedule the usage of the conference
facility and meeting room.
Direct Labor
Labor costs for the arena are based on one full-time maintenance/engineer earning $12
per hour working 2,080 hours annually, and a concession stand staff of 5 people earning $8 per
hour for 480 hours annually, which is 16 hours per weekend for the 30 weeks of estimated use
based on seasonal weather. The full-time maintenance employee receives benefits. Contract
labor of $10,000 was included for repairs that could not be covered by the full-time employee.
Labor costs calculations can be found in the Appendix, pages 35, 39, 40, 44, 45 and 49.
Table 17. Labor Cost
Arena
Arena with Rope Course
Conference
Maintenance
$24,960
$24,960
$12,480
Concession
$19,200
$19,200
$3,840
Accounting
$ 7,500
$ 7,500
$7,500
Payroll Taxes
$4,133
$7,533
$1,906
Benefits
$6,989
$18,832
$2,496
Contract labor
$10,000
$10,000
$5,000
N/A
$42,500
N/A
$72,782
$130,525
$33,222
Instructor/Motivation Leader
Total
24
The conference facility was assumed to have a part time (20 hours per week) maintenance
worker and one concession stand operator. The ropes course requires a certified bonded
instructor with experience in motivational talks.
Variable Costs
Other direct variable costs associated with this project include utilities, repairs, interest on
working capital, and operating costs. Positive relationships exist among the days used and the
variable costs, although this is not linear. An increase in use increases the variable costs. This is
seen significantly in the operating materials (paper products and concession goods). The costs of
goods sold for the concession stand was derived by using one-third of the gross concession sales
($42,300 in sales ÷ 3 = $14,100 of concession material). Table 18 provides the variable cost for
the arena, $116,630. The variable cost for the conference facility totaled $89,095 as seen in
Table 18. A detailed list of these costs can be found in the Appendix pages 35, 40, and 45.
Table 18. Variable Cost Per Scenario
Variable Cost
Arena
Arena with Rope Course
Conference
$116,630
$120,427
$89,095
Income
Maximum income was derived from survey results conducted by the CAED for market
potential and daily rates as competitive to surrounding facilities. Tables 19 and 20 income
summarizes the incomes estimates for the covered arena and conference facility obtained from
Table 14. The estimated revenue from the arena is $109,400 and from the conference facility
$83,400.
Table 19. Income for Covered Arena and Rope Course
Arena
Arena with Rope Course
Arena Facilities
$58,000
$58,000
Educational programs
$9,100
$9,100
Concessions
$42,300
$42,300
Rope Course
N/A
$50,000
$109,400
$159,400
Total
25
Table 20. Income for Conference Facility
Meeting Room
$7,200
Auditorium Rental
$4,500
Concessions
$71,700
Total
$83,400
Total Cost & Net Revenue
Total costs for the arena with concession stand can be determined by adding variable
(labor, supplies, and operating cost) and fixed (administrative labor, depreciation, taxes and
insurance) costs. Table 21 summarizes the total net revenue/loss costs for both phases .
Table 21 indicates the arena requires a subsidy, if it is to cover all economic cost. The
arena will result in a loss of $248,999 annually and the conference facility will lose $135,615,
based on the figures used in this model (Appendix pages 35, 40 and 45). The arena would fail by
about $80,000 per year to cover direct costs of operation and the conference center fails by about
$39,000 per year. In other words, a subsidy of $80,000 per year would be required to operate the
arena and $39,000 to operate the conference center at the assumed levels even if the facility itself
was provided to the South Georgia Youth Park at no cost.
Table 21. Projected Net Revenue/Loss
Arena
Arena with Rope Course
Conference
$109,400
$159,400
$83,400
Labor
$72,782
$130,525
$33,222
Variable
$116,630
$120,427
$89,095
Fixed
$168,988
$195,367
$96,698
Total Cost
$358,399
$446,319
$219,015
Net Revenue/Loss
($248,999)
($286,919)
($135,615)
Net Revenue (Total Costs - Deprecation)
($194,064)
($208,369)
($ 95,747)
Net Revenue over Direct Costs
($80,011)
($91,552)
($38,916)
Income
26
Sensitivity Analysis
Net Revenue versus Budgeted Cost
In order to determine the potential viability and risk of a project, a sensitivity analysis is
performed. The sensitivity analysis adjusts the budgeted cost by 5% increments to test net
revenue of the operation if cost increased.
Budget numbers included operating expenses (utilities, taxes, labor, and supplies), fixed
costs (interest on start-up cost, depreciation), and income. Total costs are subtracted from
income, resulting in net revenue/loss.
This information is useful for decision planning and risk aversion, as costs are subject to
change. Utilities for example, can fluctuate periodically through the year depending on supply of
their inputs. The CAED suggests allowing for a 10-15% over budgeted cost for this size project.
Often, costs change after the start up of the business or the feasibility report. To ensure all cost
are covered, a buffer should be included.
Graph 1 indicates how the arena responds to an increase in cost at 5% intervals. The
graph indicates potential net revenue/loss incurred when costs fluctuate.
Graph 1. Change in Net Revenue versus Change in Budgeted Cost, Arena
Graph 1 demonstrates that when cost are reduced by 20%, the facility still does not create
a positive net revenue. Only when cost are reduced by 70%, does the facility breakeven.
27
Graph 2. Change in Net Revenue versus Change in Budgeted Cost, Arena Rope Course
Graph 2 indicates that the arena with ropes course needs to reduce cost by 69% to
breakeven.
Graph 3. Change in Net Revenue versus Change in Budgeted Cost, Conference
Graph 3 indicates that costs for the conference center will have to be reduced 62% to
breakeven.
Net Revenue Versus Percent Change in Income
This section of the sensitivity analysis displays how a change in income affects net
revenue of the operation. The obvious result is as prices decrease, net revenue decreases. A new
28
facility may have to offer a reduced rate to attract customers. In response, the competition may
respond by also offering reduced rates or other incentives. To understand the outcome of income
based on usage, Graph 3 indicates how a 5% change in income affects the outcome of the
facility.
Graph 4. Net Revenue versus Percent Change in Income, Arena.
The arena needs to increase income by 326% to breakeven. However, the facility is
rented by day and there are not enough days in the year to accomplish a 326% increase in
income, so the only other option is to increase rates. This too is unlikely due to competition in
the area that currently offers similarly priced rates.
Graph 5. Net Revenue versus Percent Change in Income, Arena With Rope Course
Graph 5 reveals revenues need to increase 298% prior to breaking even.
29
Graph 6. Net Revenue versus Percent Change in Income, Conference Facility.
Graph 6 indicates the income for the conference center needed to be raised by 225% to reach a
zero net return. This is also unlikely due to the competitive market.
Impact Analysis
Impact analysis is a key component of any feasibility study. An impact analysis shows
the effect of a new venture on the local and state economy. Building and implementing a
covered arena with a concession stand in Douglas, Georgia would impact the economy on two
levels. The new facility would generate output with rentals and concession sales. These
activities would, in turn, generate additional sales as the facility purchases inputs. The suppliers
to the arena will increase the purchase of their inputs, thus increasing demand for those items.
These increased sales will ripple through the economy. An input-output model will capture and
quantify these effects.
The input-output model, IMPLAN (Impact Analysis for PLANning, Minnesota IMPLAN
Group) was utilized for this project. IMPLAN can predict the effects of a new venture on output
(sales), employment, and tax revenue. IMPLAN models can be constructed for a state, a region
or a county. Input-output models work by separating the economy into its various sectors, such
as agriculture, construction, manufacturing, and so on. An IMPLAN model will show each
sector and industry in the specific region's economy. The model can capture how a change in one
industry (for example, arenas) will change output and employment in other industries. The
changes in the initial industry are labeled direct effects and the changes in the other industries are
called indirect effects. The direct and indirect effects are summed to give the total economic
impact.
The building of an arena complex in Douglas will create direct economic impacts for the
Georgia and Coffee County economy in two different ways. First, new economic activity will be
generated due to the operating budget and salaries. Second, economic activity will be
attributable to the Douglas complex due to visitors’ expenditures. However, this cannot be
30
considered completely new economic activity as many visitors to Douglas may have utilized a
different facility in Georgia. A portion of visitors’ expenditures will be new dollars in the
economy if the building of the complex in Douglas encourages new activities, such as
conferences, to occur.
Table 22 and 23 examine the impact of just the arena to the state (Table 22) and Coffee
County (Table 23) . It will employ 8 people. Revenues from the arena will increase economic
activity by $109,400, bringing the actual total state impact of the facility to $472,263 and the
total county impact to $293,630. In addition to the 8 jobs at the arena, another 4 jobs would be
created in Georgia and Coffee County. Finally, the arena will increase state and local tax revenue
by $35,077 at the state level impact and $24,119 at the county level.
Table 22. Impacts for a Covered Arena for Georgia
Output
Employment
Tax Revenue(State)
Direct
Indirect
Total
$109,400
$362,863
$472,263
8
4
12
NA
NA
$35,077
Table 23. Impacts for a Covered Arena for Coffee County
Output
Employment
Tax Revenue(State)
Direct
Indirect
Total
$109,400
$184,230
$293,630
8
4
12
NA
NA
$24,119
Table 24 and 25 examine the impact of an arena with ropes course to the state (Table 24) and
Coffee County (Table 25) . It will employ 9 people. Revenues from the arena will increase
economic activity by $159,400, bringing the actual total state impact of the facility to $516,901
and the total county impact to $333,445. In addition to the 9 jobs at the arena, another 4 jobs
would be created in Georgia and 2 in Coffee County. Finally, the arena will increase state and
local tax revenue by $35,644 at the state level impact and $24,948 at the county level.
Table 24. Impacts for a Covered Arena with Rope Course for Georgia
Output
Employment
Tax Revenue(State)
Direct
Indirect
Total
$159,000
$357,901
$516,901
9
4
13
N/A
N/A
$35,644
31
Table 25. Impacts for a Covered Arena with Rope Course for Coffee County
Output
Employment
Tax Revenue(State)
Direct
Indirect
Total
$159,000
$174,045
$333,445
9
2
11
N/A
N/A
$24,948
Users of the new complex will make expenditures during their trip. This is the most
difficult impact to quantify. It is anticipated that 12,000 people will use the facility in an average
year, 30 weekends with 200 people per day. Since the majority of conference attendees are from
within 50 miles of Douglas, it is assumed that only 17% of the visitors will spend the night. It is
assumed these overnight visitors would spend $50 per night on lodging, $18 per day on food not
including the concession stand purchases, $10 per day on gas, and $5 on miscellaneous items.
These estimates are derived from University of Georgia allowances, recent conference trips, and
previous CAED surveys. This creates a $293,776 economic impact to Georgia and $235,108 for
Coffee County. Table 25 indicates the impact of the overnight visitors to Georgia, while Table
26 indicates the impact of visitors to Coffee County.
Table 26 Impacts on visitors of the Covered Arena to Georgia
Output
Employment
Tax Revenue(State)
Direct
Indirect
Total
$181,000
$112,776
$293,776
3
2
5
NA
NA
$22,640
Table 27 Impacts on visitors of the Covered Arena to Coffee County
Output
Employment
Tax Revenue(State)
Direct
Indirect
Total
$181,000
$54,108
$235,108
3
1
4
NA
NA
$18,011
The total effect of the covered arena on Georgia and Coffee County economy can be seen
in Tables 27 and 28. These tables add the results from the previous tables per impact (State or
Coffee County) together to show the total generated increase in economic activity produced by
the covered arena.
32
Table 28.Total Economic Impact for a Covered Arena in Georgia
Direct
Indirect
Total
$290,400
$475,639
$766,039
Employment
11
6
17
Tax Revenue (State)
NA
NA
$57,717
Output
Table 29. Total Economic Impact for a Covered Arena in Coffee County
Direct
Indirect
Total
$290,400
$238,337
$528,738
Employment
11
5
16
Tax Revenue (State)
NA
NA
$42,130
Output
The impact of conference facility (Tables 29 and 30) examine the conference facility’s
impact to Georgia and Coffee County. It will employ 3 people. Revenues from the conference
facility will increase economic activity by $83,400, bringing the actual total state impact of the
facility to $164,001 and the impact to Coffee County to $150,317. In addition to the 3 jobs at the
arena, another job would be created in Georgia or Coffee County. Finally, the arena will increase
state and local tax revenue to the state by $42,451 and $8,620 . The impact of visitors to the
conference facility was not examined, since all users of the facility reside in the local district and
would not travel to utilize the facility. Many of the users would substitute one conference facility
in the area for the proposed facility.
Table 30. Total Impacts for a Conference Facility to Georgia
Output
Employment
Tax Revenue (State)
Direct
Indirect
Total
$83,400
$80,601
$164,001
3
1
4
NA
NA
$42,451
Table 31. Total Impacts for a Conference Facility to Coffee County
Output
Employment
Tax Revenue (State)
Direct
Indirect
Total
$83,400
$66,917
$150,317
3
1
4
NA
NA
$8,620
33
Conclusion
The income estimates produced by the market analysis do not cover the economic cost of
operating an arena and conference facility. To have a successful operation the arena and
conference facility need to increase usage. The market investigation indicated that a usage
increase may be difficult due to the competition and low numbers of consumer groups in the
area. The income produced was not sufficient to cover total costs. Several issues need to be
examined by the local youth park committee about operating the proposed facility. If the county
government could subsidize construction and provide labor or a reduced utility bill a potential
for breaking even with variable cost exist.
Competition in the arena and conference facility industry in southeast Georgia continues
to grow with more structures being built to meet a stable demand. To attract attendees,
incentives may need to be offered which will also modify the economic analysis.
The impact of the facility to Coffee County and the Georgia economy was found to be
marginal but did increase employment in Coffee County by16 new jobs and state revenue tax by
approximately $70,000.
The Center for Agribusiness
& Economic Development
The Center for Agribusiness and Economic Development is a unit of the College of
Agricultural and Environmental Sciences of the University of Georgia, combining the
missions of research and extension. The Center has among its objectives:
To provide feasibility and other short term studies for current or potential Georgia
agribusiness firms and/or emerging food and fiber industries.
To provide agricultural, natural resource, and demographic data for private and
public decision makers.
To find out more, visit our Web site at: http://www.caed.uga.edu
Or contact:
John McKissick, Director
Center for Agribusiness and Economic Development
Lumpkin House
The University of Georgia
Athens, Georgia 30602-7509
Phone (706)542-0760
caed@agecon.uga.edu
The University of Georgia and Fort Valley State University, and the U.S. Department of
Agriculture and counties of the state cooperating. The Cooperative Extension Service
offers educational programs, assistance and materials to all people without regard to race,
color, national origin, age, sex or disability.
An equal opportunity/affirmative action organization committed to a diverse work force.
FR-02-12
September 2002
Issued in furtherance of Cooperation Extension Acts of May 8 and June 30, 1914, the
University of Georgia College of Agricultural and Environmental Sciences, and the U.S.
Department of Agriculture cooperating.
J. Scott Angle, Dean and Director