ARENA y r a m m u s e v i t u c e x e Y D U T S Y T I L I B I S A E F August 28, 2012 Contents 1.0 Executive Summary 2.0 Strategy Development 3.0 Market Comparisons 4.0 Site Analysis 5.0 Arena Financial Opportunities 6.0 Market Analysis 7.0 Public Opinion 8.0 Conclusions 9.0 Acknowledgements EEYY VV RR ARENA 0Y TITIAA UUMM . CC 1R MM EE XXUU A EESS Y M R AM M U S M UE V S I ET VU IC T E U X C E E X 11..00 E In the spring of 2011, the City of Virginia Beach was presented with an unsolicited and unexpected proposal regarding the development of a 23,000 seat arena capable of hosting a professional sports franchise. While that specific proposal was determined not to be of interest to the City, civic leadership believed that the concept of a properly planned major sports, entertainment and convention venue warranted further study and consideration. 1.1 y r a m m u s e v ti u C e x e The Virginia Beach Development Authority retained the services of HKS Sports and Entertainment to assist the Authority in determining: » Whether virginia Beach and the surrounding region possessed the population and economic strength to properly support a modern arena of 18,000+ seats » Whether the existing sports and entertainment venues in the region were providing residents with sufficient number and variety of events to properly service public demand » Whether the region possessed the demand to properly support the potential arrival of a major league sports franchise » Whether enough corporate support existed in the region to commit to the important arena revenue sources such as Naming rights, Premium seating and Corporate Partnerships » Whether an attractive site was available in the City to properly develop a state of the art arena venue of approximately 750,000 square feet » Whether transportation infrastructure currently exists to properly service and accommodate approximately 150 events per year, with over 1 million people attending those events » Whether hotel and tourism infrastructure currently exists to properly host and support a large number of anticipated out of town event attendees » Whether a large state-of-the-art arena could have significant positive impact on new development in the surrounding strategic Growth area Beginning in the spring of 2011 and continuing through the issuance of this report, HKS Sports and Entertainment conducted a thorough and comprehensive study to properly address all of the issues and questions listed above. It is important to note that this extensive study is actually the cumulative result of four separate engagements between HKS and the Virginia Beach Development Authority. Each phase was designed to a specific scope and 1.3 was only approved after a full review of the results of the previous phase. y r a m As each new phase was begun, new questions and issues were targeted m u s e and the proper specialists in those respective disciplines were added to v ti u C the team to properly address those specific needs. e x e Much of the initial work was performed by HKS specialty teams such as HKS Sports and Entertainment, HKS World Events, HKS Brandspace and HKS Urban Design. As the goals and objectives expanded, new entities were added to the collaborative team. Each firm that joined the study team is highly respected in their respective fields. team memBers iNCLuDe: Comcast-spectacor One of the largest companies operating in the live sports and entertainment industry, Comcast- Spectacor entities include Global Spectrum venue management, Ovations Food Service, New Era Ticketing, Front Row Marketing and the Philadelphia Flyers (NHL) and Wells Fargo Center arena in Philadelphia. Global Spectrum manages the Sandler Center for the Performing Arts in Virginia Beach and the Ted Constant Center in Norfolk. Ovations provides the food service at Harbor Park and Norfolk Scope. Live Nation The world’s largest producer and promoter of live music events, Live Nation Entertainment also includes Ticketmaster, the largest ticket company in the industry. Live Nation has been partners with the City of Virginia Beach in the Farm Bureau Live Amphitheater for over 16 years. amP (aristarchus management Partners) Leading edge market research and financing solutions firm, founded by former senior executives from Wal-Mart, Blockbuster and McDonalds. On message sports One of the country’s most respected public opinion research firms specializing in issues related to the development of sports and entertainment venues.