Qualcomm Stadium: Business and Facility Assessment Plan. Project No Presented to: City of San Diego. Presented by: AECOM

Transcription

1 Qualcomm Stadium: Business and Facility Assessment Plan Project No Presented to: City of San Diego Presented by: AECOM May 3, 2011

2 Introduction AECOM was retained by the City of San Diego to provide business planning guidance and a facility assessment for Qualcomm Stadium AECOM conducted a market and financial evaluation of the Stadium and its associated parking lot based on an analysis of the venue s current operations, available markets, and comparable and competitive facilities During the study, the project team toured the site multiple times, including during the National Football League (NFL) game between the Oakland Raiders and San Diego Chargers on December 5, 2010, and the week following, and interviewed and met with Qualcomm Stadium and City staff numerous times for input and feedback This final draft report provides conclusions and recommendations for the Qualcomm Stadium business plan based on three scenarios: Scenario 1: Chargers stay at Qualcomm Stadium Scenario 2: Chargers leave Qualcomm Stadium after 5 years but stay in the San Diego market Scenario 3: Chargers leave Qualcomm Stadium and the San Diego market immediately Page 2

3 Table of Contents Revenue and Event Projection Market Analysis Slides Introduction 5 Local and Regional Market Overview 6-14 Qualcomm Stadium San Diego Sports & Entertainment Market Benchmark Stadiums Conclusions Financial Analysis Introduction Assumed Lease Terms 47 Event Estimate Attendance Estimate 50 Projected Operating Profile Recommendations Appendix Page 3

4 Market Analysis Page 4

5 Market Analysis Introduction The operating performance of Qualcomm Stadium is a function of the events hosted in the building and the surrounding parking lots, as well as the markets available to serve it In evaluating the historic, current and projected business plan for Qualcomm Stadium, AECOM reviewed the following: Local and Regional Market Qualcomm Stadium Overview San Diego Sports & Entertainment Market Benchmark Stadiums The Market Analysis provides the basis for the Financial Analysis and Recommendations for Qualcomm Stadium. Based on the analysis, AECOM has derived Conclusions based on: Demographic Trends Industry Trends Page 5

6 Degrees (Fahrenheit) Market Analysis Local and Regional Market Overview Overview of San Diego The City of San Diego is ranked as the eighth largest city in terms of population in the United States and second largest city in California after Los Angeles It is part of the San Diego-Carlsbad-San Marcos Metropolitan Statistical Area (MSA) San Diego's top four industries are manufacturing, defense, tourism, and agriculture Top employers include: United States Navy; San Diego Unified School District; University of California, San Diego; San Diego County; Sharp HealthCare San Diego's climate is characterized by warm, dry summers and mild winters with most of the annual precipitation falling between November and March Average Low Average Average High Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Weatherbase Page 6

7 Market Analysis Local and Regional Market Overview Overview of San Diego AECOM analyzed the demographics of the resident market in order to understand the markets available to Qualcomm Stadium The following slides provide an overview of the following key market demographics covering: Overview market maps with market areas (segments) The market areas are segmented by drive times, which calculate average expected speed based on traffic and route, among other factors, using ESRI Geographic Information Systems (GIS) data and AECOM estimates based on San Diego and surrounding area conditions Population size and growth trends Household size Age distribution Household income Page 7

8 Market Analysis Local and Regional Market Overview Drive-time Market AECOM analyzed the 0-15 minute, minute, minute and minute markets in order to assess the primary resident market areas available to serve Qualcomm Stadium Source: ESRI (ArcGIS); AECOM Page 8

9 Market Analysis Local and Regional Market Overview 75-mile Market In addition to the 2-hour drive-time market, AECOM also analyzed the 75-mile market, as gauged by a distance ring drawn around Qualcomm Stadium, in order to compare Qualcomm Stadium against other NFL benchmarks (as will be shown in the Benchmark Stadium section of the study) Source: ESRI (ArcGIS); AECOM The NFL assigns each team in the league a primary market and secondary market, which is typically defined by an area where any part of the market falls within 75 miles of the stadium Page 9

10 Market Analysis Local and Regional Market Overview Population and Households The total market area (0 120 minutes driving distance from Qualcomm Stadium) has approximately 16.4 million residents with 5.2 million households Within the City of San Diego there are approximately 1.3 million residents with nearly 485,000 households Available Markets 2010 Population Households San Diego, CA 1,330, ,521 Market Area Drive Times 0-15 Minutes 1,346, , Minutes 1,106, , Minutes 882, , Minutes 13,062,421 4,003,846 Total 16,397,190 5,163, Mile NFL Ring 4,727,290 1,657,573 Source: ESRI (ArcGIS); AECOM Qualcomm Stadium s NFL 75-mile market for broadcasting games is composed of approximately 4.7 million residents with a total of approximately 1.7 households Page 10

11 Market Analysis Local and Regional Market Overview Age Distribution Drive-Time Rings San Diego 0-15 mins mins mins mins Total % % % % % % Population by Age (2010) 0-4 years 90, % 94, % 78, % 67, % 1,079, % 1,319, % 5-9 years 84, % 85, % 77, % 64, % 1,021, % 1,249, % years 76, % 75, % 75, % 61, % 915, % 1,127, % years 96, % 94, % 81, % 64, % 1,035, % 1,276, % years 121, % 128, % 75, % 62, % 1,027, % 1,293, % years 221, % 228, % 150, % 117, % 1,959, % 2,456, % years 188, % 183, % 155, % 118, % 1,780, % 2,237, % years 180, % 176, % 167, % 128, % 1,718, % 2,190, % years 129, % 129, % 123, % 92, % 1,236, % 1,581, % years 70, % 73, % 64, % 52, % 679, % 868, % years 47, % 51, % 39, % 36, % 418, % 546, % Over 85 years 22, % 25, % 18, % 15, % 189, % 249, % Source: ESRI (ArcGIS); AECOM The median age of market area residents ranges from 32.2 to 36 years 0 15 minute market area: 33.4 years minute market area: 36.0 years minute market area: 35.2 years minute market area: 32.2 The California and United States median age is 34.4 and 37 years respectively Page 11

12 Market Analysis Local and Regional Market Overview Household Income Drive-Time Rings San Diego 0-15 mins mins mins mins % % % % % Median HH Income (2010) $58,858 $52,966 $70,955 $66,060 $57,068 Avg HH Income (2010) $76,797 $66,310 $93,699 $83,131 $74,527 Households by Income (2010) Less than $15,000 48, % 55, % 21, % 18, % 440, % $15,000 - $24,999 41, % 48, % 22, % 19, % 363, % $25,000 - $34,999 40, % 48, % 24, % 21, % 382, % $35,000 - $49,999 70, % 81, % 46, % 40, % 546, % $50,000 - $74, , % 111, % 76, % 67, % 822, % $75,000 - $99,999 70, % 70, % 58, % 48, % 589, % $100,000 - $149,999 66, % 56, % 63, % 48, % 512, % $150,000 - $199,999 22, % 15, % 24, % 15, % 179, % Over $200,000 21, % 12, % 25, % 13, % 165, % Source: ESRI (ArcGIS); AECOM United States median household income is approximately $54,333 The 0 15 minute market area has the lowest median household income of the four market areas ($52,966), while the minute market area has the highest ($70,955) The highest proportion of households (21% - 23%) earn between $50,000 to $75,000 Page 12

13 Market Analysis Local and Regional Market Overview Mexico Market Mexico is a major contributor to visitation to San Diego and events at Qualcomm Stadium The largest Mexican neighboring city is Tijuana (approximately 20 miles south of the city of San Diego), which is located in the state of Baja California In 2009, the Tijuana metropolitan area was the 5th largest in Mexico with approximately 1.8 million residents Approximately 31 million people crossed the San Ysidro border in 2009, making it the world s busiest land border crossing Bus Passengers: 453,000 Personal Vehicle Passengers: 24 million Pedestrians: 6.2 million Source: National Population Council; Research and Innovative Technology Administration; Bureau of Transportation Statistics Page 13

14 Market Analysis Local and Regional Market Overview Visitor Market San Diego had an estimated 29.6 million visitors in 2009 Overnight commercial travelers (business or convention/meetings) recorded nearly three times higher spending per person than leisure travelers ($909 v. $328) Leisure travelers represented 81% of overnight visitors and 63% of spending Average length of stay for leisure visitors is 3.8 nights and for business travelers is approximately 2.9 Average daily spending (including hotel) per leisure visitor is approximately $86 and $313 for business visitors Data provided by the San Diego Convention and Visitors Bureau Page 14

15 Market Analysis Qualcomm Stadium AECOM reviewed the historic and current profiles of Qualcomm Stadium s anchor tenants (San Diego Chargers and San Diego State University Aztecs) and other events in order to understand the market, event and revenue potential at Qualcomm Stadium Overview Opened in 1967, the stadium footprint occupies 15 acres of the 166 acre Qualcomm Stadium site Owned and operated by the City of San Diego Current seating capacity of approximately 70,500 (increased from the original 52,000 over the course of three renovations in 1980, 1983 and 1997) $86 million renovation in 1997 funded through a bond issuance and the sale of naming rights 18,500 on-site parking spaces Page 15

16 Market Analysis Qualcomm Stadium Overview Anchor tenants are the San Diego Chargers NFL Franchise and the SDSU Aztecs Chargers are in Western Division of AFC, have a 10-game annual home schedule (2 preseason and 8 regular season) not including playoffs, and average 95%+ capacity Aztecs are in the Mountain West Conference of the NCAA, have a 6-game annual home schedule and average approximately 12,000-15,000 attendees per game Annual recurring events include the Holiday Bowl, Poinsettia Bowl and High School Football games Other events include concerts, dirt shows, and international soccer games, among others Parking lot events include San Diego Auto Connection events, RV shows, and RaceLegal events, among others Page 16

17 Market Analysis San Diego Sports & Entertainment Market AECOM reviewed the spectrum of sports and entertainment venues in the San Diego region in order to assess the broader competitive market of discretionary spending on sports and entertainment events The San Diego regional market possesses a strong sports and entertainment base: - Home of the Chargers (NFL); Padres (MLB); SDSU Aztecs (NCAA Football and Basketball) - Several amusement parks and attractions, including SeaWorld, San Diego Zoo, LEGOLAND, San Diego Zoo s Wild Animal Park, and numerous museums and cultural attractions - Major event venues competing for entertainment dollars include: Major Stadiums / Large Scale Venues Qualcomm Stadium PETCO Park Del Mar Racetrack Other Regional Event Venues include: Torero Stadium Tony Gwynn Stadium Valley View Casino Center Jenny Craig Pavilion Viejas Arena RIMAC Arena Cricket Wireless Amphitheatre Peterson Gym Starlight Bowl - Strong transportation network including a light rail system to Qualcomm Stadium and the San Diego International Airport Page 17

18 Market Analysis San Diego Sports & Entertainment Market Source: ESRI (ArcGIS); AECOM Page 18

19 Market Analysis San Diego Sports & Entertainment Market The following slides provide an overview of the metrics analyzed for the facilities competing for sports and entertainment spending in the San Diego market. Factors include: General Year Opened Owner Stadium Operator/Manager Estimated Construction Cost/Renovation Seating Capacity In-Stadium Events Main Tenants Annual Re-Occurring Other Parking Lot Facilities Event Types Dedicated On-Site Parking Spaces Lease Rate Ranges Per Car Parking Rates Annual Parking Lot Event Days Page 19

20 Market Analysis San Diego Sports & Entertainment Market Selected Venues Name Year Opened Owner Main Tenants Capacity Dedicated On-Site Parking Qualcomm Stadium 1967 City of San Diego Stadiums San Diego Chargers, San Diego State Aztecs, Holiday Bowl, Poinsettia Bowl 70,561 18,500 PETCO Park 2004 City of San Diego (70%); San Diego Padres (30%) San Diego Padres 42,500 1,903 Torero Stadium 1961 University of San Diego University of San Diego Football and Soccer 6,000 1,022 Arenas Valley View Casino Center (formerly San Diego Sports Arena) 1966 Arena Group 2000 N/A 16,100 3,800 Viejas Arena 1997 San Diego State University Ampitheaters San Diego State University Men's and Women's Basketball 12,414 2 structures, 1 lot Cricket Wireless Amphitheatre 1998 Live Nation Concerts 19,492 N/A Other Del Mar Racetrack 1937 Del Mar Thouroughbred Club American Thoroughbred horse racing 14,304 13,000 Source: Individual Stadiums; Revenues From Sports Venues, 2011 College Edition & 2010 Pro Edition; AECOM Note: All data based on available information from individual venues and interviews with the operators. Page 20

21 Market Analysis San Diego Sports & Entertainment Market Selected Venues Name Year Opened Owner Stadium Operator/Manager Estimated Construction Costs/Renovations Qualcomm Stadium 1967 City of San Diego City of San Diego $27 million in initial construction costs/$86 million renovation in 1997/$5 million renovation in 2002 Stadiums PETCO Park 2004 City of San Diego (70%); San Diego Padres (30%) San Diego Padres $450 million Torero Stadium 1961 University of San Diego University of San Diego $3.5 million renovation Arenas Valley View Casino Center (formerly San Diego Sports Arena) 1966 Arena Group 2000 AEG $6.5 million Viejas Arena 1997 San Diego State University San Diego State University $29 million Ampitheaters Cricket Wireless Amphitheatre 1998 Live Nation Live Nation N/A Other Del Mar Racetrack 1937 Del Mar Thouroughbred Club Del Mar Thouroughbred Club $9 million recent renovation Source: Individual Stadiums; Revenues From Sports Venues, 2011 College Edition & 2010 Pro Edition; AECOM Note: Construction costs/renovations are relative to year of construction/renovation. N/A indicates data was not available or not released from the venue operator. All data based on available information from individual venues and interviews with the operators. Page 21

22 Market Analysis San Diego Sports & Entertainment Market Selected Venues Name Main Tenants Annual Re-Occurring Events Other Events Parking Lot Events Range of Parking Lot Lease Rates Dedicated On-Site Parking Parking Rates Per Car Annual Parking Lot Event Days Qualcomm Stadium San Diego Chargers, San Diego State Aztecs, Holiday Bowl, Poinsettia Bowl CIF high school football, dirt shows International soccer, concerts, religious conventions Car sales, RV shows, RaceLegal, antique and collector car parts exchange $1,000 - $5,000 18,500 $15 - $ Stadiums PETCO Park San Diego Padres Baseball Concerts, convention center overflow, networking receptions, social events Concerts, street fairs, convention center overflow, closing ceremonies for organizations $3,750 - $7,500 1,903 $3 - $20 7 Torero Stadium Arenas University of San Diego Football and Soccer Football, soccer Lacrosse None N/A 1,022 $5.50 N/A Valley View Casino Center (formerly San Diego Sports Arena) N/A Arena football Ice hockey, basketball, concerts, family shows, mixed martial arts/wrestling Flea market N/A 3,800 $15 - $20 N/A Viejas Arena San Diego State University Men's and Women's Basketball Basketball Concerts, cheer competitions, ceremonies None N/A 2 structures, 1 lot $10 N/A Ampitheaters Cricket Wireless Amphitheatre N/A Concerts Concerts Other Concerts, car shows, RV and car sales, ride and drive, marathons $9,000 - $10,000 N/A $6 - $25 3 Del Mar Racetrack N/A Horse racing, dog racing, concerts Concerts Car shows, rv shows, family shows, crafts, festivals $2,000 - $3,400 13,000 $8 - $20 N/A Source: Individual Stadiums; Revenues From Sports Venues, 2011 College Edition & 2010 Pro Edition; AECOM Note: N/A indicates data was not available or not released from the venue operator. All data based on available information from individual venues and interviews with the operators. Parking lot rate cards for available venues attached in Appendix. Page 22

23 Market Analysis Benchmark Stadiums AECOM identified national benchmarks (with input from the Qualcomm Stadium staff and the City of San Diego) in order to analyze event and revenue potential at Qualcomm Stadium Benchmarks were selected based on their configuration and anchor events (major football stadiums), seasonality (outdoor, warm weather facilities), and associated parking facilities - Benchmark Football Stadiums Alamodome (San Antonio, TX) Candlestick Park (San Francisco, CA) - Benchmark Baseball Stadiums Angel Stadium of Anaheim (Anaheim, CA) Dodger Stadium (Los Angeles, CA) EverBank Field (Jacksonville, FL) Los Angeles Memorial Coliseum (Los Angeles, CA) LP Field (Nashville, TN) Raymond James Stadium (Tampa, FL) Rose Bowl (Pasadena, CA) - Benchmark Baseball/Football Stadiums Oakland-Alameda County Coliseum (Oakland, CA) Sun Life Stadium (Miami, FL) Page 23

24 Market Analysis Benchmark Stadiums The following slides provide an overview of the metrics analyzed for the benchmark stadiums. Factors include: General Year Opened Owner Seating Capacity Market Demographics including Population, Age and Household Income In-Stadium Events Main Tenants Annual Re-Occurring Other Parking Lot Facilities Event Types Dedicated On-Site Parking Spaces Lease Rate Ranges Per Car Parking Rates Annual Parking Lot Event Days Page 24

25 Market Analysis Benchmark Stadiums General Overview Name Year Opened Owner Main Tenants Capacity Dedicated On-site Parking Qualcomm Stadium 1967 City of San Diego Benchmark Football Stadiums San Diego Chargers, San Diego State Aztecs, Holiday Bowl, Poinsettia Bowl 70,561 18,500 Alamodome 1993 City of San Antonio Valero Alamo Bowl 65,000 3,000 Candlestick Park 1958 City of San Francisco San Francisco 49ers 63,000 7,000 EverBank Field 1955 City of Jacksonville Jacksonville Jaguars 82,000 6,500 Los Angeles Memorial Coliseum 1923 State of California, City and County of Los Angeles LP Field 1999 City of Nashville Raymond James Stadium 1998 Tampa Sports Authority Rose Bowl 1922 City of Pasadena Benchmark Baseball Stadiums University of Southern California Football 93,607 5,500 Tennessee Titans, Tennessee State Tigers, Franklin American Mortgage Music City Bowl Tampa Bay Buccaneers, University of South Florida Bulls and the Outback Bowl University of California Los Angeles Football and Rose Bowl 67,000 7,500 65,000 10,581 92,542 8,900 Angel Stadium of Anaheim 1966 City of Anaheim Los Angeles Angels of Anaheim 45,050 14,000 Dodger Stadium 1962 Frank McCourt Los Angeles Dodgers 56,000 16,000 Benchmark Baseball/Football Stadiums Oakland-Alameda County Coliseum 1968 City of Oakland and Alameda County Oakland Raiders and Oakland Athletics 62,500 10,000 Sun Life Stadium 1987 Stephen M. Ross Miami Dolphins and Florida Marlins 75,540 24,000 Source: Individual Stadiums; Revenues From Sports Venues, 2010 Pro Edition & 2011 College Edition; AudArena 2011; AECOM Note: N/A indicates data was not available or not released from the venue operator. All data based on available information from individual venues and interviews with the operators. Page 25

26 Market Analysis Benchmark Stadiums Event Mix Name Main Tenants Annual Re-Occurring Events Other Events Parking Lot Events Range of Parking Lot Lease Rates Dedicated On-Site Parking Parking Rates Per Car Annual Parking Lot Event Days Qualcomm Stadium San Diego Chargers, San Diego State Aztecs, Holiday Bowl, Poinsettia Bowl CIF high school football, dirt shows International soccer, concerts, religious conventions Car sales, RV shows, RaceLegal, antique and collector car parts exchange $1,000 - $5,000 18,500 $15 - $ Benchmark Football Stadiums Alamodome Valero Alamo Bowl Football, high school football, Valero Alamo Bowl, U.S. Army All-American Bowl Music Festivals, concerts, family shows, Monster Jam, NCAA Men's Division I Basketball Tournament, marching band contests, trade shows Test drives, marathons, carnivals, convention center overflow $3,000 - $6,000 3,000 $10 - $ Candlestick Park San Francisco 49ers Football Soccer, concerts, off-road races, commercial shoots, filming, social events, religious rallies, 49ers school events Ride and drive events, antiques show, car shows, fireworks show $1,156 - $5,780 7,000 $25 - $40 25 to 30 EverBank Field Jacksonville Jaguars Football Concerts, monster truck events, religious rallies Bus rodeo, CSX - driver competition, JTA, ride and drive, marketing events, charity walks and runs $1,750 - $3,500 6,500 $5 - $80 10 Los Angeles Memorial Coliseum University of Southern California Football Football Soccer, concerts, X Games, filming, social events Marathons, festivals, filming $10 - $25 per car 5,500 $3 - $10 25 to 30 LP Field Tennessee Titans, Tennessee State Tigers, Franklin American Mortgage Music City Bowl Football Concerts, festivals, meetings, social events Car shows, bicycle races, ride and drive, concerts, charity walks $2,000 7,500 $5 - $52 50 Raymond James Stadium Tampa Bay Buccaneers, University of South Florida Bulls and the Outback Bowl Football, Outback Bowl, ACC Football Championship Soccer, concerts, monster jam, equestrian showjumping Christmas tree sales, fireworks show, auto shows, concerts, circus $2,000 10,581 $25 - $75 90 Rose Bowl University of California Los Angeles Football and Rose Bowl Football, Rose Bowl Soccer, concerts, fireworks shows, commencement ceremonies Ride & drive events, film crew parking, festivals, filming, RV & car sale events, flea market, staging areas for marathons $10 - $20 per car; $350 for catering services 8,900 $15 - $40 60 Benchmark Baseball Stadiums Angel Stadium of Anaheim Los Angeles Angels of Anaheim Baseball Concerts, monster truck events, supercross, religious rallies, filming Car shows, ride and drive events, car drifting events, charity walks, concerts, Angel fan fests $20 per car; $5,000 - $10,000 14,000 $8 - $16 15 Dodger Stadium Los Angeles Dodgers Baseball Concerts, monster truck events, supercross, religious rallies, marathons, filming, social events, conventions RV shows, flea market, concerts, marathons, filming $1,500 - $25,000 16,000 $15 - $35 10 to 15 Benchmark Baseball/Football Stadiums Oakland-Alameda County Coliseum Oakland Raiders and Oakland Athletics Football, baseball Concerts, soccer, conventions Car club, vehicular testing, basketball tournaments $3,500 - $5,000 10,000 $17 - $85 7 Sun Life Stadium Miami Dolphins and Florida Marlins Football, baseball, Orange Bowl Basketball, soccer, Australian football, WWE WrestleMania, concerts, monster truck events, circus, trade shows, filming RV & boat shows N/A 24,000 $10 - $80 15 to 20 Source: Individual Stadiums; Revenues From Sports Venues, 2010 Pro Edition & 2011 College Edition; AudArena 2011; AECOM Note: LA Memorial Coliseum and Rose Bowl do not lease lot on an event basis rather only charge on a per car basis during events. N/A indicates data was not available or not released from the venue operator. All data based on available information from individual venues and interviews with the operators. Parking lot rate cards for available venues attached in Appendix. Page 26

27 Market Analysis Benchmark Stadiums 75-mile Market In addition to the 2-hour drive-time market, AECOM also analyzed the 75-mile market, as gauged by a distance ring drawn around Qualcomm Stadium, in order to compare Qualcomm Stadium against other NFL benchmarks (as will be shown in the Benchmark Stadium section of the study) Source: ESRI (ArcGIS); AECOM The NFL assigns each team in the league a primary market and secondary market, which is typically defined by an area where any part of the market falls within 75 miles of the stadium Page 27

28 Market Analysis Benchmark Stadiums 75-mile Market Demographics Name Location Population Median Age Average HH Income Median HH Income Qualcomm Stadium San Diego, CA 4,727, $86,305 $65,004 Benchmark Football Stadiums Alamodome San Antonio, TX 2,990, $65,807 $51,110 Candlestick Park San Francisco, CA 8,859, $104,917 $76,679 EverBank Field Jacksonville, FL 2,135, $63,119 $50,218 Los Angeles Memorial Coliseum Los Angeles, CA 17,499, $79,506 $60,000 LP Field Nashville, TN 2,623, $65,411 $51,923 Raymond James Stadium Tampa, FL 5,356, $61,910 $48,392 Rose Bowl Pasadena, CA 17,675, $79,157 $59,711 Benchmark Baseball Stadiums Angel Stadium of Anaheim Anaheim, CA 18,486, $80,082 $60,366 Dodger Stadium Los Angeles, CA 17,551, $79,399 $59,930 Benchmark Baseball/Football Stadiums Oakland-Alameda County Coliseum Oakland, CA 9,792, $100,844 $73,382 Sun Life Stadium Miami, FL 5,556, $69,584 $51,837 Source: ESRI (ArcGIS); AECOM Page 28

29 Market Analysis Benchmark Stadiums TV Households In addition to the 75-mile market, AECOM also analyzed the comparative TV markets of the benchmarks in order to assess San Diego s relative strength for TV-driven sports and entertainment events As stated previously, the NFL assigns each team in the league a primary market and secondary market, which is typically defined by an area where any part of the market falls within 75 miles of the stadium. It should be noted that not all of the benchmarks are NFL stadiums Name Location DMA Name 2010 TV Homes Qualcomm Stadium San Diego, CA San Diego 1,073,390 Benchmark Football Stadiums Alamodome San Antonio, TX San Antonio 830,000 Candlestick Park San Francisco San Francisco-Oak-San Jose 2,503,400 EverBank Field Jacksonville, FL Jacksonville 679,120 Los Angeles Memorial Coliseum Los Angeles, CA Los Angeles 5,659,170 LP Field Nashville, TN Nashville 1,019,010 Raymond James Stadium Tampa, FL Tampa-St. Pete (Sarasota) 1,805,810 Rose Bowl Pasadena, CA Los Angeles 5,659,170 Benchmark Baseball Stadiums Angel Stadium of Anaheim Anaheim, CA Los Angeles 5,659,170 Dodger Stadium Los Angeles, CA Los Angeles 5,659,170 Benchmark Baseball/Football Stadiums Oakland-Alameda County Coliseum Oakland, CA San Francisco-Oak-San Jose 2,503,400 Sun Life Stadium Miami, FL Miami-Ft. Lauderdale 1,538,090 Source: Nielsen Media Research; AECOM Page 29

30 Market Analysis Conclusions The following slides provide an overview of the comparative market demographics and operational industry trends among the identified benchmarks facilities. The conclusions are broken into two sections Demographic Trends Population Age Average Household Income TV Market Size Industry Trends Stadium Capacity Other In-Stadium Non-Anchor Events Dedicated, On-Site Parking Lot Capacity Average Annual Parking Lot Events Average Parking Lot Lease Rates per Event Page 30

31 Market Analysis Conclusions (Demographic Trends) Population Qualcomm Stadium has a 75-mile market population of approximately 4.7 million The average market population of the benchmark stadium is approximately 6.3 million. However, the average market population excluding the LA and SF-Oakland markets is 3.9 million Population 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Qualcomm Stadium Los Angeles Market SF-Oakland EverBank Field Raymond LP Field Alamodome Sun Life Market James Stadium Stadium Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum Qualcomm s 75-mile population is below the average population per benchmark venue but above the average population per benchmark if the LA and SF-Oakland markets are removed. Based on population size, the San Diego market is large enough to compete at the level of the comparable venues The population data above does not include Mexico, which is accessible for the San Diego market and a significant source of attendees for events at Qualcomm Stadium. Tijuana has 1.8 million residents and 31 million people crossed the San Ysidro border in Page 31 Average

32 Market Analysis Conclusions (Demographic Trends) Age Qualcomm Stadium s 75-mile market population has a median age of 35.6 The average age of the benchmark stadiums is slightly higher than Qualcomm s at Median Age 0 Qualcomm Stadium Los Angeles Market SF-Oakland EverBank Field Raymond Market James Stadium LP Field Alamodome Sun Life Stadium Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum Qualcomm s median age of the 75-mile market is younger than the majority of the benchmark stadiums giving Qualcomm an opportunity to capture the higher spending year old market segment Page 32

33 Market Analysis Conclusions (Demographic Trends) Average Household Income Qualcomm Stadium s market has an average household income of approximately $86,000 The average household income across the selected benchmark stadiums is approximately $74,000 $120,000 Average HH Income $100,000 $80,000 $60,000 $40,000 $20,000 $0 Qualcomm Stadium Los Angeles Market SF-Oakland EverBank FieldRaymond Market James Stadium LP Field Alamodome Sun Life Stadium Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum The average household income in the Qualcomm market is higher than all of the benchmarks other than the Oakland-San Francisco market, suggesting the potential for discretionary spending on sports and entertainment is higher in the San Diego market than the benchmarks Page 33

34 Market Analysis Conclusions (Demographic Trends) TV Market Households Qualcomm Stadium s television market is approximately 1.1 million The average number of households in television market among the selected benchmark stadiums is approximately 1.9 million. However, the average number of households excluding the LA and SF-Oakland markets is 1.2 million TV Market Households 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Qualcomm Stadium Los Angeles SF-Oakland EverBank Market Market Field Raymond James Stadium Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum Qualcomm s TV household market is below the average benchmark market, suggesting that the overall drawing power from the television market is weaker in terms of their TV market to household ratio as compared to the benchmarks The TV household data does not include population in Mexico, which is accessible and a significant source of attendees for events at Qualcomm Stadium Page 34 LP Field Alamodome Sun Life Stadium Average

35 Market Analysis Conclusions (Industry Trends) Stadium Capacity Qualcomm Stadium has a seating capacity of approximately 70,600 The average capacity of the selected benchmark stadiums is approximately 70,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Capacity 0 Qualcomm Stadium Los Angeles Market SF-Oakland EverBank Field Raymond Market James Stadium LP Field Alamodome Sun Life Stadium Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum Qualcomm Stadium is comparable to the selected benchmark stadiums in terms of seating capacity Page 35

36 Market Analysis Conclusions (Industry Trends) Other In-Stadium Non-Anchor Events Qualcomm Stadium hosts approximately 8 in-stadium non-anchor tenant events annually The average in-stadium non-anchor tenant events hosted per benchmark market is between 5 and 6 events Average Annual Non-Anchor In-Stadium Events 0 Qualcomm Stadium LA Market SF-Oakland Market EverBank FieldRaymond James Stadium LP Field Sun Life Stadium Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum. Alamodome removed from Other In-Stadium Non-Anchor Events, because it operates more like an arena than a stadium in this respect. Qualcomm Stadium is performing above the market average other than the Alamodome, which is removed from this section because it operates more like an arena than a stadium, suggesting there may be limited opportunity to drive additional large scale non-anchor events to Qualcomm Stadium Page 36

37 Market Analysis Conclusions (Industry Trends) Dedicated, On-Site Parking Lot Capacity The average dedicated on-site parking lot spaces is slightly over 10,000 while Qualcomm Stadium has 18,500 spaces 30,000 Dedicated, On-Site Parking Lot Spaces 25,000 20,000 15,000 10,000 5,000 0 Qualcomm Stadium LA Market SF-Oakland EverBank FieldRaymond James Market Stadium LP Field AlamodomeSun Life Stadium Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF- Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum Qualcomm Stadium has the second most on-site, dedicated parking spaces behind Sun Life Stadium suggesting significant capacity to host on-site parking lot events on non-stadium event days Page 37

38 Market Analysis Conclusions (Industry Trends) Annual Parking Lot Events The benchmark stadiums host an average of 47 parking lot events annually 300 Average Annual Parking Lot Events Qualcomm Stadium LA Market SF-Oakland Market EverBank FieldRaymond James Stadium LP Field Alamodome Sun Life Stadium Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum. Sun Life Stadium removed from analysis as venue operator would not release data specific to parking lot operations. Qualcomm Stadium, with an average of over 200 parking lot events annually, significantly outperforms the benchmarks in terms of generating on-site events in its parking on non-stadium event days Page 38

39 Market Analysis Conclusions (Industry Trends) Average Parking Lot Lease Rate per Event The benchmark stadiums charge an average of $2,500-$3,000 per event to lease the stadium parking lot $5,000 Qualcomm Stadium, the Alamodome, Candlestick Park and Raymond James Stadium have official rate cards, the rest charge based on market demand (see Appendix for rate cards) Average Parking Lot Lease Rate per Lot per Event Day $4,000 $3,000 $2,000 $1,000 $0 Qualcomm Stadium SF-Oakland MarketEverBank FieldRaymond James Stadium LP Field Alamodome Average Note: LA Market considers the average of the LA Coliseum, Rose Bowl, Angel Stadium, and Dodger Stadium and the SF-Oakland market considers the average of Candlestick Park and the Oakland-Alameda Coliseum. LA market removed from analysis because only Dodger Stadium leases the lot for the full day and its pricing range is not comparable, the rest of the LA market lots charge on a per car basis. Sun Life Stadium removed from analysis as venue operator would not release data specific to parking lot operations. Qualcomm Stadium has a tighter range ($1,000-$5,000) and more specific pricing by event type in its parking lot than other benchmarks Based on the population per available venue, supporting household income and on-site dedicated parking lot capacity, Qualcomm Stadium has the opportunity to drive more revenue from its parking lots on a per event basis Page 39

40 Market Analysis Conclusions (Summary) Demographics The market demographics of the population serving Qualcomm Stadium are strong and compare favorably with the selected national benchmark venues Based on the strong market base, Qualcomm Stadium should be able to drive events and attendance at the venue on a level equal to the national industry trends Operational Industry Trends Qualcomm Stadium is performing above the market average for In-Stadium Non-Anchor Events based on an analysis of the national benchmarks Qualcomm is performing significantly above the industry average for Parking Lot Events, but on average leases the lot at a lower level than other facilities, suggesting there may be room to broaden the range of event pricing and price more on market demand as opposed to a predetermined rate Page 40

41 Market Analysis Conclusions (Summary) Parking Lot Events AECOM surveyed industry leading car dealerships and promoters of ride and drive events in the Southern California region regarding parking lot events at Qualcomm Stadium Many of those surveyed have utilized Qualcomm Stadium s parking lot for events or have attended a parking lot event at the stadium Summary of Interview Findings Qualcomm Stadium s parking lot is an asset (best parking lot site on the West Coast) Qualcomm Stadium has a reputation of setting up exclusives with certain vendors Need to market to major users (Ride and Drive, Vehicular Sales, Fairs / Festivals, etc.) Users need to be able to have access to utilities, catering, security Parking lot needs some repair to make it first class Large ride and drive events could generate approximately $10,000 per day Vehicular sales events have potential to generate a minimum of $6,500 per day depending on market conditions Page 41

42 Market Analysis Conclusions (Summary) Recommendations AECOM recommends that Qualcomm Stadium replaces the current parking lot rate card, which sets specific lease rates for events and binds the City to those rates, with one that only sets minimums and allows for more pricing flexibility A rate card that only sets minimums will allow for clarity and efficiency, but also enable Qualcomm to increase the price of events where the market allows it Such a system will allow for market based pricing on an event by event basis to achieve higher rates where possible. The majority of comparable venues do not have rate cards (only 3 of the 10 national benchmarks have rate cards). Discussions with the benchmarks suggest that the primary reason is a rate card prohibited them from achieving the full value of the events when priced on an event by event basis However, it is important to note that Qualcomm s rate card allows for operational efficiency (staff do not have to price every event) and clarity to event promoters Page 42

43 Market Analysis Conclusions (Summary) Recommendations Below are the recommended minimum rates per event type for Parking Lot events at Qualcomm Stadium Parking Lot Event Current Rates Recommended Minimums Non-Profit Weekday $1,000 $1,200 Non-Profit Weekend $2,000 $2,400 For Profit Weekday $2,000 $2,750 For Profit Weekend $4,000 $5,500 Commercial Events $5,000 $7,000 Event Parking (per car) $15 $20 Event Parking (per RV) $46 $60 Based on pricing and event mix at the benchmarks and discussions with promoters of major parking lot events in Southern California, the minimum price per event for Qualcomm parking lot events could be set at approximately 20% to 40% higher per event than the current rate card This will allow Qualcomm to drive more revenue per event but remain competitively priced within the market and not sacrifice its existing competitive pricing advantage Page 43

44 Financial Analysis Page 44

45 Financial Analysis Introduction AECOM analyzed the historic and current operations of Qualcomm Stadium based on data received from the City of San Diego, discussions with Stadium management, interviews with San Diego venues and national benchmark stadiums, and the firm s extensive experience in the sports and entertainment industry Three Scenarios AECOM analyzed Qualcomm Stadium s operating profile from three separate scenarios over a 10-year period: Scenario 1: Chargers stay at Qualcomm Stadium Assumed that the Chargers, SDSU, Poinsettia Bowl and Holiday Bowl remain at stadium for the 10 year period Scenario 2: Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market Assumed that the Chargers build a new stadium locally, but remain in Qualcomm Stadium for the next five years until the Stadium is completed. During the initial five years, SDSU, Poinsettia Bowl and Holiday Bowl also remain at Qualcomm Stadium. Upon opening of the new Stadium, the Chargers, SDSU, Poinsettia Bowl and Holiday Bowl all move to the new San Diego venue Scenario 3: Chargers leave Qualcomm Stadium and San Diego market immediately Assumed that the Chargers build a new stadium outside of the SD market and immediately vacate Qualcomm Stadium to play their games at a stadium in their new market. All other tenants remain at Qualcomm. Page 45

46 Financial Analysis Introduction In each of the three scenarios, it is assumed that all of the current lease arrangements for the Chargers, SDSU and other events remain constant (and that current NFL schedule (number of home games) remains the same) Based on the current lease agreement between the Chargers and the City of San Diego, the Chargers have had the right to terminate the Agreement any time after 2008 season The lease termination payment the Chargers would have to make to the City of San Diego is as follows (but is not included in the projected operating estimates made on the following slides) Early Termination Notice Delivered On or Between Termination Fee 2/1/11 and 5/1/11 $25,820,000 2/1/12 and 5/1/12 23,980,000 2/1/13 and 5/1/13 22,015,000 2/1/14 and 5/1/14 19,900,000 2/1/15 and 5/1/15 17,630,000 2/1/16 and 5/1/16 15,195,000 2/1/17 and 5/1/17 12,575,000 2/1/18 and 5/1/18 9,760,000 2/1/19 and 5/1/19 6,740,000 2/1/20 and 5/1/20 3,490,000 If the Chargers exercise the early termination right, the City will receive the appropriate termination fee and the City will retain the debt service reserve account for the Stadium bonds ($5.8 million) The City s bond debt for Qualcomm Stadium matures in 2027 Page 46

47 Financial Analysis Assumed Lease Terms Rental Rates (Stadium/City receives) Base Net General Ticketmaster Net Net Net Revenue/Event Rent Tickets Royalties Concessions Novelties Parking Anchor Tenants San Diego Chargers (Regular Season) 1 $2,500, % $0.25/ticket 0.0% 0.0% 0.0% San Diego Chargers (Preseason) 1 San Diego State Aztecs 2 $1.00/ticket 0.0% $ % 0.0% 0.0% Other Stadium Events Poinsettia Bowl $10,000 0% $ % 100% 100% Holiday Bowl $10,000 0% $0.25/ticket 100% 100% 100% Major Concerts N/A 10% $ % 100% 100% Minor Concerts N/A 10% $ % 100% 100% International Soccer N/A 10% $0.25/ticket 100% 100% 100% Dirt Events N/A 10% $0.25/ticket 100% 100% 100% Miscellaneous (Stadium) N/A 10% $ % 100% 100% High School Sports N/A 10% $ % 100% 100% Other Sports Auto Events 3 $211,000 0% $ % 100% 100% Parking Lot Concerts N/A 10% $ % 100% 100% Misc/Comm Film (Parking Lot) 3 $5,500 0% $ % 100% 100% 1 Chargers Rent (for 10 games including Preseason and Regular Season, but no Playoffs) assumed at $2.5 million annually ( ); $3.0 million annually ( ); $4.0 million annually ( ). 2 SDSU Rent also includes repayment by SDSU to City of San Diego of all operational expenses for gameday operations. 3 SDAC pays an annual rent of $211,000 for use of the parking lot. In addition, based on average rents received for analyzed historical Qualcomm Stadium parking lot events, an average per event rent $3,500, for non-sdac events was assumed. Note: Percentages shown in table are those retained by Qualcomm Stadium. Assumed that the remainder goes to act/promoter The illustrative lease agreement above, which was discussed and reviewed with the City of San Diego and Qualcomm Stadium staff, provides a snapshot of the assumed rents and percentages of revenue retained by the City of San Diego / Qualcomm Stadium for each event type Assumed the same lease terms (where applicable given the respective tenant situation) in all 3 scenarios Page 47

48 Financial Analysis Event Estimate AECOM estimated the annual in-stadium events at Qualcomm Stadium for each of the three scenarios In-Stadium Events Scenario 1 Scenario 2 Scenario 3 Scenario 1 (Chargers stay at Qualcomm Stadium): Qualcomm Stadium operates at its current level hosting approximately 24 events annually over the next 10 years ( ) Scenario 2 (Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market): Between , Qualcomm Stadium hosts the same number of events. However, between , with the assumed departure of the Chargers, SDSU, Poinsettia Bowl and Holiday Bowl, it is assumed that on-site events will drop to 4 Scenario 3 (Charger leave Qualcomm Stadium and San Diego market immediately): With the immediate departure of the Chargers, Qualcomm Stadium will lose 10 guaranteed events annually, however, it is estimated that it will still host a total of 14 with the retention of SDSU and the Poinsettia and Holiday Bowls Page 48

49 Financial Analysis Event Estimate AECOM estimated the annual parking lot events at Qualcomm Stadium for each of the three scenarios Parking Lot Events Scenario 1 Scenario 2 Scenario 3 It is assumed that there may be multiple parking lot events in a single day. Therefore, 242 parking lot events does not equate to 242 individual days of parking lot events, but more likely 200 or less. Scenario 1 (Chargers stay at Qualcomm Stadium): Qualcomm Stadium operates at its current level hosting approximately 242 parking lot events annually over the next 10 years ( ) Scenario 2 (Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market): Between , Qualcomm Stadium hosts the same number of events. However, between , with the assumed departure of the Chargers, SDSU, Poinsettia Bowl and Holiday Bowl, it is assumed that annual on-site parking lot events will increase, as there will be fewer days (especially prime weekends) lost to in-stadium event parking Scenario 3 (Charger leave Qualcomm Stadium and San Diego market immediately): With the immediate departure of the Chargers, Qualcomm Stadium will gain 10 weekend days annually during which parking lot events can be hosted, increasing the opportunity to drive events to the lot during those times Page 49

50 Financial Analysis Attendance Estimate AECOM estimated the annual attendance at Qualcomm Stadium for each of the three scenarios Annual Paid Attendance (000) 1,250 1,051 1,051 1, Scenario 1 Scenario 2 Scenario 3 Scenario 1 (Chargers stay at Qualcomm Stadium): Qualcomm Stadium operates at its current level receiving approximately 1.1 million attendees annually over the next 10 years ( ) Scenario 2 (Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market): Between , Qualcomm Stadium receives the same level of attendees. However, between , with the assumed departure of the Chargers, SDSU, Poinsettia Bowl and Holiday Bowl, annual attendance is estimated to drop to less than 100,000 Scenario 3 (Charger leave Qualcomm Stadium and San Diego market immediately): With the immediate departure of the Chargers, attendance is assumed to drop significantly, however, it remains at approximately 400,000 with SDSU, the Holiday Bowl and Poinsettia Bowl remaining as tenants at the building Page 50

51 Financial Analysis Projected Operating Profile AECOM estimated the annual operating profile for Qualcomm Stadium for each of the three scenarios Revenues may include: Ticket sales Luxury suites/club seats Concessions and novelty sales Parking Advertising Naming rights/sponsorships Facility rental fees and lease income Other Estimated expenses may include: Event-related expenses Parking/security/admissions Advertising Maintenance Utilities Insurance General administration (including salaries, wages and benefits) Management fees, as appropriate Capital replacement Other Page 51

52 Financial Analysis Projected Operating Profile AECOM estimated the annual operating profile for Qualcomm Stadium for each of the three scenarios Scenario 1: Chargers stay at Qualcomm Stadium ( ) Revenues are projected to increase from an average of approximately $7.8 million annually ( ) to $9.2 million annually ( ), primarily due to the increases in Chargers Rent as outlined in the Lease Agreement with the City of San Diego For 10 games including Preseason and Regular Season, but no Playoffs, the Chargers pay a rent of $2.5 million annually ( ); $3.0 million annually ( ); $4.0 million annually ( ) City receives an early termination fee based on schedule in slide 46 Expenses are projected to increase at a market average of 2.5% annually from their current level of $18.4 million in the first five years ( ) to $20.8 million in the last five years ( ) of Scenario 1 The deficit from operations (excluding bond debt service) is assumed to increase from approximately $10.6 million annually to $11.6 million annually between Page 52

53 Financial Analysis Projected Operating Profile Scenario 2: Chargers leave Qualcomm Stadium after 5 years (after 2015 NFL season) but stay in San Diego market After remaining at the status quo for the first five years, revenues are projected to decrease from $7.8 million annually ( ) to $1.8 million annually ( ), due to the loss of rent from the Chargers, SDSU, the Holiday Bowl and the Poinsettia Bowl and other large scale stadium events such as dirt shows and concerts, which are assumed to go to the new building in the San Diego market The fees received for the Chargers early termination (based on the schedule in slide 46) would be in addition to these revenues After remaining at the status quo for the first five years, expenses are projected to decrease from their current level of $18.4 million in the first five years ( ) to $15.6 million in the last five years ( ) due to a lower operating cost based on fewer events Costs such as security and other general maintenance are assumed to continue throughout the year despite the assumed loss of tenants between in Scenario 2. These adjustments to expenses have been incorporated into the projections The deficit from operations (excluding bond debt service) is assumed to increase from approximately $10.6 million annually to $13.8 million annually between Page 53

54 Financial Analysis Projected Operating Profile Scenario 3: Chargers leave Qualcomm Stadium and San Diego market immediately With the immediate departure of the Chargers but retention of SDSU, the Poinsettia Bowl and Holiday Bowl, as well as an increase in parking lot events, revenues are projected at approximately $5.0 million to $5.3 million annually over the next 10 years ( ) The fees received for the Chargers early termination (based on the schedule in slide 46) would be in addition to these revenues Expenses are projected to increase at a market average of 2.5% annually from their current level of $15.6 million in the first five years ( ) to $17.7 million in the last five years ( ) of Scenario 3 Costs such as security and other general maintenance are assumed to continue throughout the year despite the assumed loss of tenants between in Scenario 3. These adjustments to expenses have been incorporated into the projections The deficit from operations (excluding bond debt service) is assumed to increase from approximately $10.6 million annually to $12.4 million annually between Page 54

55 Financial Analysis Projected Operating Profile Scenario 1 Scenario 2 Scenario 3 Qualcomm Stadium Operations Chargers Stay Chargers Leave; Stay in SD Chargers leave SD (Annual Averages) Number of Events In-Stadium Parking Lot Annual Paid Attendance (000) 1,051 1,051 1, Operating Revenues (000) Rental Revenues (000) $4,464 $5,604 $4,464 $1,183 $1,665 $1,709 Other Revenues (000) $3,340 $3,594 $3,340 $653 $3,344 $3,601 Total Operating Revenues (000) $7,803 $9,199 $7,803 $1,835 $5,009 $5,310 Total Operating Expenses (000) $18,386 $20,802 $18,386 $15,601 $15,628 $17,681 Surplus / Deficit from Operations (000) ($10,582) ($11,603) ($10,582) ($13,766) ($10,619) ($12,372) Source: AECOM Note: Assumed annual inflation on expenses of 2.5%. Estimates are based on AECOM s analysis of the historic and current operations of Qualcomm Stadium based on data received from the City of San Diego (specifically revenues and expenses to the building), discussions with Stadium management, interviews with San Diego venues and national benchmark stadiums, and the firm s extensive experience in the sports and entertainment industry The fees received for the Chargers early termination (based on the schedule in slide 46) would be in addition to the revenues in each Scenario Page 55

56 Financial Analysis Projected Operating Profile Total Operating Revenues (000) $10,000 $9,199 $7,803 $7,803 $7,500 $5,009 $5,310 $5,000 $2,500 $1,835 $ Scenario 1 Scenario 2 Scenario 3 Source: AECOM Note: Estimates are based on AECOM s analysis of the historic and current operations of Qualcomm Stadium based on data received from the City of San Diego (specifically revenues and expenses to the building), discussions with Stadium management, interviews with San Diego venues and national benchmark stadiums, and the firm s extensive experience in the sports and entertainment industry Explanation of Scenarios: Scenario 1: Chargers stay at Qualcomm Stadium Scenario 2: Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market Scenario 3: Chargers leave Qualcomm Stadium and San Diego market immediately Page 56

57 Financial Analysis Projected Operating Profile Total Operating Expenses (000) $25,000 $20,802 $20,000 $18,386 $18,386 $15,601 $15,628 $17,681 $15,000 $10,000 $5,000 $ Scenario 1 Scenario 2 Scenario 3 Source: AECOM Note: Assumed annual inflation on expenses of 2.5%. Estimates are based on AECOM s analysis of the historic and current operations of Qualcomm Stadium based on data received from the City of San Diego (specifically revenues and expenses to the building), discussions with Stadium management, interviews with San Diego venues and national benchmark stadiums, and the firm s extensive experience in the sports and entertainment industry Explanation of Scenarios: Scenario 1: Chargers stay at Qualcomm Stadium Scenario 2: Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market Scenario 3: Chargers leave Qualcomm Stadium and San Diego market immediately Page 57

58 Financial Analysis Projected Operating Profile $5,000 Surplus / Deficit from Operations (000) Scenario 1 Scenario 2 Scenario $0 ($5,000) ($10,000) ($10,582) ($11,603) ($10,582) ($10,619) ($12,372) ($15,000) Source: AECOM ($13,766) Note: Assumed annual inflation on expenses of 2.5%. Estimates are based on AECOM s analysis of the historic and current operations of Qualcomm Stadium based on data received from the City of San Diego (specifically revenues and expenses to the building), discussions with Stadium management, interviews with San Diego venues and national benchmark stadiums, and the firm s extensive experience in the sports and entertainment industry Explanation of Scenarios: Scenario 1: Chargers stay at Qualcomm Stadium Scenario 2: Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market Scenario 3: Chargers leave Qualcomm Stadium and San Diego market immediately Page 58

59 Financial Analysis Projected Operating Profile (Conclusion) Three Scenarios Scenario 1: Chargers stay at Qualcomm Stadium Scenario 2: Chargers leave Qualcomm Stadium after 5 years but stay in San Diego market Scenario 3: Chargers leave Qualcomm Stadium and San Diego market immediately Based on the Three Scenarios reviewed in the Financial Analysis, the projected operating deficit for Qualcomm Stadium is the highest in Scenario 2 when Qualcomm Stadium would not have any anchor tenants and a significantly reduced number of in-stadium large scale events In both Scenario 2 and Scenario 3, it is assumed that the number of parking lot events will increase in the years without an anchor tenant, as the parking lot will be available for use on a greater number of dates However, the estimated revenues generated by the additional parking lot events are not enough to offset the decline in revenues that will come with the loss of the anchor tenants and events in the Stadium Page 59

60 Financial Analysis Projected Operating Profile (Conclusion) This analysis is solely on the basis of the Operations of Qualcomm Stadium and does not make any judgment on the relative economic impact to the region with or without a major anchor tenant at Qualcomm Stadium or within the San Diego market area Finally, it is important to note that Qualcomm Stadium operating at a loss is not a unique example of a major stadium with an NFL franchise operating at a deficit and receiving city funding Many city-operated, NFL buildings receive some form of public funding on an annual basis For example, Oakland Alameda Coliseum, which receives approximately $14 million annually, and Raymond James Stadium, which receives approximately $3 million from a combination of City and County funds Page 60

61 Financial Analysis Recommendations Based on the Market and Financial Analysis, AECOM has identified the following four areas, in which the City of San Diego might be able to enhance revenues at Qualcomm Stadium Current lease arrangements with Holiday Bowl and Poinsettia Bowl Ticket distribution deals Marketing opportunities with the Gridiron Stadium Network Parking lot pricing and events Page 61

62 Financial Analysis Recommendations (Current Lease Arrangements) Holiday Bowl and Poinsettia Bowl Leases Renegotiate leases, which ended with 2010 games Currently, the City receives payment of operational expenses and all revenue from sale of concessions and 100% of parking lot fees in addition to the $10,000 per game rent charge Particular area for enhancement is the facility fee Current lease agreement clause states City is granted the right to charge a per ticket facility fee for both games. City and Association will use their best efforts to mutually agree to the amount of any facility fee charged. (page 4 of lease agreement) However, it appears that no facility fee has been generated from the recent games A facility fee of $1.00 would generate up to $100,000 in additional revenue, based on the current combined attendance to the two games For example, Raymond James Stadium receives a ticket surcharge in addition to payback of operational expenses for the Outback Bowl Rental rate After examination of the Bowl Association Agreement with the City of San Diego, AECOM believes there is room to increase rent, food and beverage shares and commissions in the new lease Page 62

63 Financial Analysis Recommendations (Ticket Distribution Deals) Qualcomm Stadium currently receives an estimated 4% of gross customer convenience fees from Ticketmaster for events subject to the City Royalty Although no two venues have exact ticket distribution deals, based on discussions with other venues and industry professionals, Qualcomm Stadium is receiving below market average fees from their current arrangement Among the selected benchmark venues, ticket royalties paid to the building owner range up to 8% of customer convenience fees or as much as $2.50/ticket for anchor tenant events, and $1.25/ticket for other events such as Dirt Shows Based on the current agreement with Ticketmaster, the City of San Diego only receives $0.25/ticket sold by Ticketmaster, and that fee only applies to Chargers games, the Holiday Bowl, dirt shows, and international soccer matches AECOM recommends adding ticket royalties for the Poinsettia Bowl like those existing for the Holiday Bowl Ticket royalties paid to the City for Chargers, Holiday Bowl, Poinsettia Bowl, dirt shows, soccer games should be increased to $0.50/ticket to bring Qualcomm Stadium s agreement with Ticketmaster closer to market rates Page 63

64 Financial Analysis Recommendations (Gridiron Stadium Network) AECOM reviewed other marketing opportunities for bringing events to Qualcomm Stadium such as the Gridiron Stadium Network (GSN) and analyzed its value to the City of San Diego Other venue marketing networks (such as Venue Coalition for arenas) and event and venue operators (such as AEG) exist. However, GSN deemed most appropriate and applicable for Qualcomm based on building type and operational structure Overview of Gridiron Stadium Network Founded in 2005, network of 10 NFL stadiums and 1 Major League Soccer (MLS) stadium Optimize opportunities to increase stadium events and attendance Knowledge sharing $15,000 annual fee Annual meeting Conference calls Training Extended network Since 2005, GSN has co-promoted % capacity concerts in member stadiums Page 64

65 Financial Analysis Recommendations (Gridiron Stadium Network) Return on Investment Average metrics for GSN events not including Stock Shows and events that would not be hosted at Qualcomm: 1.5 events per venue Average ticket price of $75 Average % occupancy of 95% and tickets sold of 41,000 per event Assuming Qualcomm Stadium achieves similar performance, potential revenues are as follows: 1.5 events per year of 40,000 attendees/event $75/ticket (assumed that the act will retain all of the ticket revenues based on typical major act promoter agreements) $17.50/capita concessions and novelty sales $5.00/capita parking revenue (based on $15 per car and assumed 3.0 persons/car) Concessions and novelties estimated to generate $1 million+ in revenues before COGS Parking revenues estimated to generate approximately $300,000 in revenues before parking expenses The GSN venues annually generate an estimated $1.3 million+ of revenues before COGS and expenses from GSN copromoted events It is not possible to attribute directly concerts and events to membership in the GSN, however, the GSN network provides venue operators a significant avenue by which to drive events and revenue to the facility Finally, it is important to note that there is a risk involved with membership and that the City will be liable for the success or lack thereof of events Page 65

66 Financial Analysis Recommendations (Parking Lot Events and Pricing) Based on the Market Analysis, the Benchmark Venues and Parking Lots, AECOM concluded the following: Qualcomm Stadium significantly outperforms the benchmarks in terms of generating onsite events in its parking on non-stadium event days However, Qualcomm Stadium has a tighter range and less differentiation in pricing by event type in its parking lot lease rates than the other benchmarks Only three of the 11 identified benchmarks use rate cards Based on the discussions with parking lot event promoters and analysis of the benchmarks including population per available venue, supporting household income and on-site dedicated parking lot capacity, AECOM believes Qualcomm Stadium has the opportunity to drive more revenue from its parking lots on a per event basis Qualcomm is performing significantly above the industry average for Parking Lot Events, but on average leases the lot at a lower level than other facilities, suggesting there may be room to broaden the range of event pricing and price more on market demand as opposed to a predetermined rate Page 66

67 Financial Analysis Recommendations (Parking Lot Events and Pricing) Qualcomm Stadium should consider the following: Broaden the range of pricing by event type All of the price ranges for the identified benchmarks are wider than Qualcomm s evidenced by the benchmarks with rate cards The average price per parking lot event at the benchmark is approximately $3,000 whereas Qualcomm s average is closer to $2,500 per event Price on an event by event, market-driven basis as opposed to a set rate card Only 3 of the 11 national benchmarks, as well as Del Mar Racetrack in San Diego, have rate cards (see Appendix for rate cards) The other 8 benchmarks price parking lot events on a per event basis Based on discussions with venue operators, the per event pricing allows for greater flexibility in pricing Important to note that Qualcomm has significantly more events than any of the other benchmarks, which may in part be a result of the lower pricing per event Raising pricing will not necessarily allow Qualcomm to maintain the current number of events it generates Page 67

68 Financial Analysis Recommendations (Parking Lot Events and Pricing) AECOM recommends implementing a rate card that sets minimums and allows for more pricing flexibility Recommended minimum rates are as follows: Parking Lot Event Current Rates Recommended Minimums Non-Profit Weekday $1,000 $1,200 Non-Profit Weekend $2,000 $2,400 For Profit Weekday $2,000 $2,750 For Profit Weekend $4,000 $5,500 Commercial Events $5,000 $7,000 Event Parking (per car) $15 $20 Event Parking (per RV) $46 $60 Based on pricing and event mix at the benchmarks and discussions with promoters of major parking lot events in Southern California, AECOM recommends setting the minimum price per event for Qualcomm parking lot events at approximately 20% to 40% higher per event than the current rate card This will allow Qualcomm to drive more revenue per event but remain competitively priced within the market and not sacrifice the existing competitive pricing advantage Page 68

69 Appendix Page 69

70 Appendix Qualcomm Stadium AECOM reviewed the historic and current profiles of Qualcomm Stadium s anchor tenants (San Diego Chargers and San Diego State University Aztecs) and other events in order to understand the market, event and revenue potential at Qualcomm Stadium Football in San Diego/Southern California Southern California has a history of hosting professional football Los Angeles Dons of the All American Football Conference ( ) Cleveland Rams (1946) became the first NFL franchise to locate in Los Angeles and then to Anaheim Stadium for 1980 and left Southern California altogether in 1995 Los Angeles Chargers (1960) at the Los Angeles Memorial Coliseum Los Angeles Raiders ( ) at the Los Angeles Memorial Coliseum Currently the only NFL team located in Southern California is the San Diego Chargers Other major Southern California and San Diego football includes: Mountain West Conference (San Diego State), the Holiday Bowl and Poinsettia Bowl, Pacific-10 Conference (USC and UCLA), and West Coast Conference (University of San Diego) Page 70

71 Appendix San Diego Sports & Entertainment Market PETCO Park Opened in 2004 with a seating capacity of approximately 42,500 Estimated construction costs are approximately $450 million Public Financing: 57%: $206 million from the city, from the county, $21 million from the Port of San Diego $76 million San Diego Private Financing: 43%: $146 million from the San Diego Padres Architects Populous and Antoine Predock s designed the venue so that the ballpark s concourses are open not only to the playing field but also to the surrounding city PETCO purchased naming rights for $60 million which will expire in 2025 Other events include concerts, convention center overflow, networking receptions, social events Parking lot events include concerts, street fairs, convention center overflow, closing ceremonies for organizations Page 71

72 Appendix San Diego Sports & Entertainment Market Torero Stadium Torero Stadium was built in 1961 and is the home of the University of San Diego Football and Soccer programs Seating capacity is approximately 6,000 at the stadium for Pioneer Football League action, as well as West Coast Conference Soccer play The stadium has been through two phases of renovation totaling over $3.5 million dollars In 2001, the stadium underwent renovations including upgraded lighting system, repaving of walkways, installation of a new state of the art sound system and a Daktronics video board Other events held at the stadium include lacrosse and former women s professional soccer Page 72

73 Appendix San Diego Sports & Entertainment Market Valley View Casino Center (formerly San Diego Sports Arena) The arena was built in 1966 by Robert Breitbard The arena can seat up to 16,100 for wrestling and boxing matches Naming rights have been purchased by Valley View Casino for $1.5 million and expires in 2015 Total construction costs are estimated to be $6.4 million Other events held in the arena include: arena football, ice hockey, basketball, concerts, family shows and mixed martial arts/wrestling Parking lot events include flea markets Page 73

74 Appendix San Diego Sports & Entertainment Market Viejas Arena Viejas Arena, located on the San Diego State University (SDSU) campus, is the home of the SDSU Aztecs men s and women s basketball teams Viejas Arena opened its doors in July of 1997 and seats 12,414 for basketball and up to 12,845 for concerts and is also used as a large concert venue Viejas acquired naming rights to the arena under a 10-year naming rights agreement announced March 17, 2009 The naming rights agreement with the Viejas Band of Kumeyaay Indians went into effect July 1, 2009 and will pay the university about $6 million over the next 10 years Total construction costs are estimated to be approximately $29 million Other events held at the arena include basketball, concerts, cheer competitions, ceremonies Page 74

75 Appendix San Diego Sports & Entertainment Market Cricket Wireless Amphitheatre Cricket Wireless Amphitheatre, formerly known as Coors Amphitheatre, is a 19,492-seat amphitheatre It is the largest concert venue of its size in the San Diego area and is owned and operated by Live Nation During the spring, summer and fall months it is used for most first-tier concert tours, due primarily to its capacity Page 75

76 Appendix Benchmark Stadiums Los Angeles Memorial Coliseum The Los Angeles Memorial Coliseum opened in Los Angeles, California in 1923 and has a capacity of approximately 93,600 The owner is the State of California and the City of Los Angeles The Los Angeles Coliseum Commission operates the stadium The primary tenant is the University of Southern California s football team Stadium has undergone numerous renovations Non-football events include soccer, concerts, X Games, films and social events Parking lot events include marathons Page 76

77 Appendix Benchmark Stadiums Rose Bowl The Rose Bowl opened in 1922 in Pasadena, California Capacity is approximately 92,500 Stadium owner is the City of Pasadena and the Rose Bowl Operating Company operates the stadium Main tenants are the University of California Los Angeles football team and the annual Rose Bowl game The Rose Bowl has approximately 44 suites with pricing ranging from $2,850 to $12,635 Stadium has undergone numerous renovations Non-football events include soccer, concerts, fireworks shows and commencement ceremonies Parking lot events include ride and drive events, film crew parking, small festivals, filming, RV & car sale events, flea market and staging areas for marathons Page 77

78 Appendix Benchmark Stadiums Candlestick Park Candlestick Park is located in San Francisco, California and opened in 1958 with a capacity of approximately 63,000 The City of San Francisco owns the stadium Primary tenant is the San Francisco 49ers Holds 94 suites ranging from $50,000 to $150,000; no club seats Stadium has undergone numerous renovations Non-football events include soccer, concerts, off-road races, commercial shoots, filming, social events, religious rallies, 49ers school events Parking lot events include ride and drive events, antiques show, car shows, fireworks show Page 78

79 Appendix Benchmark Stadiums EverBank Field EverBank Field is located in Jacksonville, Florida and opened in 1955 and renovated in 1995 The stadium has a capacity of approximately 82,000 Stadium owner is the City of Jacksonville Primary tenant is the Jacksonville Jaguars EverBank Field has approximately 90 suites ranging from $75,000 to $135,000; approximately 10,500 club seats ranging from $1,200 to $1,925 Non-football events include concerts, religious rallies and monster truck events Page 79

80 Appendix Benchmark Stadiums Raymond James Stadium Raymond James Stadium opened in 1988 in Tampa, Florida Capacity is approximately 65,000 Stadium owner is the Tampa Sports Authority Primary tenants are the Tampa Bay Buccaneers and University of South Florida Bulls and the Outback Bowl Raymond James Stadium has 195 suites ranging from $45,000 to $150,000; approximately 12,000 club seats ranging from $1,799 to $3,668 Estimated costs at the time of construction were $168.5 million Non-football events include soccer, concerts, equestrian show jumping and monster truck events Parking lot events include Christmas tree sales, fireworks show, auto shows, concerts and circus Page 80

81 Appendix Benchmark Stadiums LP Field LP Field opened in Nashville, Tennessee in 1999 Capacity is approximately 67,000 Stadium owner is the City of Nashville Primary tenant is the Tennessee Titans LP Field has 175 suites ranging in price from $52,000 to $125,000; approximately 9,600 club seats ranging from $995 to $2,495 Estimated construction cost of $292 million Non-football events include concerts, festivals, meetings and social events Page 81

82 Appendix Benchmark Stadiums Angel Stadium of Anaheim Angels Stadium of Anaheim is located in Anaheim, California and opened in 1966 with a capacity of approximately 45,050 The City of Anaheim owns the stadium Primary tenant is the LA Angels of Anaheim Angel Stadium holds approximately 74 suites ranging in price of approximately $57,000 to $189,000; club seats total to 5,000 ranging in price of approximately $1,640 to $3,444 Non-baseball events include concerts, monster truck events, supercross, religious rallies, marathon and filming Parking lot events include car shows, ride and drive events, car drifting events, charity walks, concerts, Angel fan fests Page 82

83 Appendix Benchmark Stadiums Dodger Stadium Dodger stadium opened in Los Angeles, California in 1962 Capacity is approximately 56,000 Stadium owner is the McCourt Family Primary tenant is the Los Angeles Dodgers Dodger Stadium has 33 suites ranging in price from $150,000 to $300,000; club seats total to 565 ranging from $2,592 to $2,592 Stadium has undergone numerous renovations since opening Non-baseball events include concerts, monster truck events, supercross, religious rallies, marathons, filming, social events and conventions Parking lot events include RV shows, flea market, concerts, marathons and filming Page 83

84 Appendix Benchmark Stadiums Sun Life Stadium Sun Life stadium opened in Miami, Florida in 1987 Capacity is approximately 75,540 Stadium owner is Stephen M. Ross Main tenants are the Miami Dolphins, Florida Marlins and the annual Orange Bowl game Sun Life Stadium has 183 suites ranging in price from $50,000 to $300,000; club seats total to 10,209 ranging from $1,250 to $3,250 Stadium has undergone numerous renovations since opening Non-baseball and football events include soccer, basketball, concerts, monster truck events, circus, Australian football, trade shows, WWE s WrestleMania, trade shows and filming Parking lot events include RV and boat shows Page 84

85 Appendix Benchmark Stadiums Oakland-Alameda County Coliseum Oakland-Alameda County Coliseum is located in Oakland, California and opened in 1968 with a capacity of approximately 62,500 The City of Oakland and Alameda County own the stadium Primary tenants are the Oakland Raiders and the Oakland Athletics The Coliseum holds 143 suites ranging in price from $30,000 to $150,000; club seats total to 9,000 ranging from $1,260 to $1,510 Estimated construction cost of $25 million Non-baseball and football events include soccer, concerts and conventions Parking lot events include car clubs, vehicular testing and basketball tournaments Page 85