Sierra Planning and Management Velodrome - Town of Milton

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Velodrome Business Plan – Town of Milton 43 Notwithstanding the potential associated with the infield, , the greater likelihood is for some level of incompatibility between certain infield uses and the high speed cycling of the track itself. This may include natural conflicts between ball sports which despite netting may still cause distraction to riders, as well as the set-up and take-down requirements for certain sports which may raise issues for interference with track cycling and other activities. Recognizing this, and that an effective management and operations response to combining multiple uses within this facility can occur only through the operation of the facility and learning overtime, supported by best practice elsewhere, it is likely that this will denude the revenues associated with infield sport. Accordingly, a discount factor is applied to reflect the potential for conflict. This is progressively reduced in Scenario 2 and Scenario 3 to reflect more efficient operations and the easing of any compatibility problems. Exhibit 23 shows the additional gross revenues from fitness and other programs which can also occur in the facility. The achievement of these revenues is subject to confirmation that the functional space program can accommodate the spaces in question. The sizing of the spaces are fully detailed in Appendix A to this report. In Scenario 1, the operation of a small fitness centre is assumed to be undertaken by a private operator with the facility achieving a lease revenue. In Scenarios 2 and 3, the facility is assumed to act as operator of the centre. The additional activities also include some Town programming for a range of fitness and health and wellness courses. The utilization for both the infield and the auxiliary spaces which can be programmed is considered reasonable. 7.3.4 TICKETED EVENTS The facility is projected to hold events based on its Category 2 homologation and in recognition of the competitive process by which facilities are awarded major international tournaments. Exhibit 24 lists the major international tournaments which are relevant to this facility. All of these events are annual. Based on the likelihood of being able to achieve these events overtime, there is reasonable potential for the facility to accommodate up to 11-12 event days for track cycling related to major events. In addition, the existence of the velodrome offers the opportunity to develop a range of programs. It is likely that club track meets can be developed quickly which may or may not have significant spectator demand associated with them. There is potential for a number of other Provincial events– and the analysis estimates some 4 events, each of 1 day in duration. The basis for estimating event revenues is conservative – in Scenario 1 the assumption is that the facility is rented by the event organizers with no risk attached to the facility itself in terms of the performance of the event. In Scenario 2 and 3, additional revenues are assumed based on a more active management of the facility and an achievement of a percentage of gate revenues. Notwithstanding Town policy for ticket surcharges, no ticket surcharges are attached to the ticketing for the Velodrome. 7.3.5 OTHER OPPORTUNITIES Infield use opportunities also extend to a range of corporate events, trade shows and other activities including university convocations. The analysis is conservative in this regard reflective of the primary use of the facility as a cycling venue and the potential limits that may exist to seating on the infield and overall person load governed by the Ontario Building Code. Accordingly modest revenues are assumed from these opportunities. Business Plan | January 2012 Sierra Planning & Management 43
Sierra Planning & Management 44 44 Velodrome Business Plan – Town of Milton Auxiliary revenues arising from corporate events, advertising, lease hold space, vending and concessions are sensitive to the range of amenities which are included in the velodrome. As the functional space program and capital cost estimates are further refined, it may be necessary to revise projections associated with auxiliary revenues. For example, analysis demonstrates the potential for tenant occupancies for several organizations which may generate the potential for as much as 4,000-5,000 sq. ft. of commercial office space. In addition, the opportunity exists for the development of a café as opposed to a pending area for a small concession space. However, these opportunities are highly dependent on the outcome of current functional space requirements and as such are not included. Our Scenarios include low, moderate and higher expectations with regard to the amount of space and therefore revenue associated with those items. 7.3.6 ADVERTISING AND NAMING RIGHTS Naming rights are excluded as a source of annual operating income. It is assumed that the naming rights which will be achieved by the facility will be capitalized as an upfront payment to meet the capital funding requirements of the project. With respect to advertising throughout the building and particularly with regard to the field of play (comprising both the infield and the track), there are significant opportunities over the long-term, for revenues associated with track boards both on the floor of the track as well as rails, as well as infield advertising opportunities. 7.3.7 FACILITY EXPENSES Estimated expenses vary by scenario . The estimated expenses for Scenarios 1, 2 and 3 are each included in the detailed profit and loss statements contained in Appendix F. Below is a generic schedule of expenses in the Velodrome which vary by scenario. Business Plan | January 2012
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Sierra Planning and Management Velodrome - Town of Milton

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