St. Michael-Albertville Ice Arena Market Demand Study...NSC Consulting agreed to study the market...

St. Michael-Albertville Ice Arena Market

Demand Study

National Sports Center Consulting

2015

TABLE OF CONTENTS

SCOPE OF STUDY .................................................................................................. 3 Objectives and Methods ........................................................................................................................ 3 General Limiting Conditions ................................................................................................................ 3 NSC Consulting ...................................................................................................................................... 4 National Sports Center .......................................................................................................................... 5

PROJECT SUMMARY ............................................................................................ 8 Location ................................................................................................................................................... 8 Site ............................................................................................................................................................ 9 Facility Description ................................................................................................................................ 9 Management ......................................................................................................................................... 10 User Group Commitments and Contracts ........................................................................................ 10 St. Michael-Albertville Youth Hockey Association ......................................................................... 10

COMPETITIVE ICE ARENA FACILITIES ........................................................12 Buffalo .................................................................................................................................................... 12 Elk River ................................................................................................................................................ 13 Monticello.............................................................................................................................................. 13 Rogers .................................................................................................................................................... 13 Others..................................................................................................................................................... 13

MARKET DEMAND ............................................................................................13 Market Area Definition ....................................................................................................................... 13 Primary Market Area ........................................................................................................................... 14 Total Market Area ................................................................................................................................ 15 Population Characteristics .................................................................................................................. 16

CONCLUSION ......................................................................................................17 Market Demand ................................................................................................................................... 17

SCOPE OF STUDY Objectives and Methods

NSC Consulting agreed to study the market demand for a second sheet of ice at the St. Michael-Albertville Ice Arena pro bono. Research for this project was conducted in 2014. The research included interviews with northwest metro area ice arenas staff, officers of local area youth athletic clubs and other potential facility tenants. Secondary research was conducted for demographic and other relevant information. The market demand consists of:

• Determining the boundaries of the Market Area,

• Representing the characteristics of the population within the Market Area using both current statistics and future trends,

• Describing the local community, and

• Evaluating the competition within the Market Area.

To determine the boundaries of the Market Area, several factors were taken into consideration, such as the location of the current competition, the geographic area from which competitive facilities draw, traffic patterns of the area, accessibility and visibility of the site location, the location of current club members at the arenas, and any geographic or socio-economic barriers that influence transportation decisions. Demographic characteristics that were compiled and analyzed include: population, number of households, income, age, education, school attendance, and employment. Community characteristics that were compiled and analyzed include public school enrollment and an inventory of local youth hockey clubs. General Limiting Conditions

Every reasonable effort has been made to ensure that the data contained in this study reflect the most accurate and timely information possible and the data are believed to be reliable. In some cases, this study is based on estimates, assumptions and other information reviewed and evaluated by NSC Consulting from its consultations with the client and the client’s representatives and within its general knowledge of the industry. No responsibility is assumed for inaccuracies in reporting by the client, the client’s agent and representatives or any other data source used in preparing or presenting this study.

St. Michael-Albertville Ice Arena Market Demand Study 3

This report is based on information that was current as of December 2014 or as noted in the report. NSC Consulting has not undertaken any update of its research effort since this date. No warranty or representation is made by NSC Consulting that any of the projected values or results contained in this study will actually be achieved. Possession of this study does not carry with it the right of publication thereof or to use the name “NSC Consulting” in any manner without first obtaining the prior written consent of NSC Consulting. No abstracting, excerpting or summarization of this study may be made without first obtaining the prior written consent of NSC Consulting. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations. NSC Consulting

Qualifications NSC Consulting is a national amateur sports facilities consulting firm specializing in:

♦ Feasibility studies

♦ Economic impact analysis

♦ Visitor projections

♦ Management

♦ Operations

♦ Marketing focus

♦ Sponsorships

NSC Consulting is the only consulting firm in the amateur sports facilities sector that owns and operates a facility – the National Sports Center (NSC) in Blaine, Minnesota. The NSC is a national and international destination for amateur sports events that was founded in 1990. NSC Consulting will analyze and make recommendations for the market opportunity based on the clients’ resources and operating projections in order to determine the market demand of the St. Michael-Albertville Ice Arena. Once acquired, NSC Consulting can share invaluable expertise with its clients, from staffing and maintenance to programming and revenue enhancement. NSC Consulting also creates projected attendance and spending estimates, giving clients solid economic impact numbers that can be used to garner local political and business support.


NSC Consulting draws on the combined experience and specific knowledge from over 50 employees of the National Sports Center. The staff of the National Sports Center has experience with ice arenas, indoor turf fieldhouse operations, golf course operations, sports event management, sports tourism promotion, economic impact analysis and visitor projections, sports programming, real estate development, turf management, non-profit financial administration, and strategic partnership development. National Sports Center

The National Sports Center is a 657-acre amateur sports complex located north of Minneapolis in Blaine, Minnesota. It operates as a private non-profit. It includes:

♦ 52 outdoor fields, the world’s largest

♦ 8 indoor sheets of ice in one facility, the nation’s largest

♦ 12,000 seat outdoor stadium

♦ 52,000 square foot indoor turf field house

♦ 18-hole PGA-designed golf course

♦ 150 bed residence hall with cafeteria

♦ 35,000 square foot meeting facility

♦ All-wood outdoor velodrome

The National Sports Center is welcomed 4.2 million visitors in 2014, making it the most-visited sports facility in Minnesota.


Schwan Super Rink The Schwan Super Rink is the largest ice arena of its kind in the world. This state-of-the-art facility features eight sheets of ice under one roof. The $21 million project totals over 300,000 square feet. Included in the arena is the room temperature Hat Trick Café that overlooks four of the ice sheets, 32 oversized locker rooms that provide comfortable quarters for all user groups, a pro shop, and extensive dry land training facilities for hockey and figure skating. Stephen L Olson, Principal Stephen Olson is the Chief Operating Officer of the National Sports Center Foundation. In this role he directs the daily operations of the National Sports Center, Schwan Super Rink, and The National Youth Golf Center. Olson has significant experience working within the education and non-profit sectors. He served as Assistant Director of Intercollegiate Athletics and Recreational Sports at the University of Michigan. He served in facility operations, where his prior experience as general manager of local Ann Arbor architectural firm proved invaluable, and information technology, where he devised applications to manage facilities and program scheduling. After twenty years at the University of Michigan, Olson became Executive Director of the Minnesota Youth Soccer Association. During his tenure with MYSA, he served three years on the US Soccer National Board of Directors and gave many presentations to local, regional and national sports organizations on the role of non-profit sports organizations in regard to the Amateur Sports Act. He was also instrumental in the success of the Mighty Kicks Grant Program, which delivered approximately $3 million in state funds for the construction of sports fields in Minnesota. Olson is an accomplished soccer official, serving as one of only seven FIFA Assistant Referees from the US from 1992 to 1997. He appeared over 50 times in international soccer competitions including the qualifying games of the 1994 and 1998 World Cup and the 1996 Olympics. He was made a life member of US Soccer in 2000 for his accomplishments. Olson is a graduate of the University of Michigan, School of Law and the Gerald R Ford School of Public Policy Studies.


Mark Erickson, Research Analyst Mark Erickson is a Research Analyst for NSC Consulting. He creates the attendance and economic impact reports for the National Sports Center and other facilities developed by the Minnesota Amateur Sports Commission. He is the grant administrator for the Mighty Ducks Ice Arena statewide grant program that resumed in 2014 and the Hennepin Youth Sports Program, which has awarded over $15 million since 2009 to Hennepin County communities for sports facilities and equipment. Erickson also analyses and writes reports on many aspects of the operation the National Sports Center. He is very active in Minnesota’s boys’ lacrosse community. Completed Projects NSC Consulting has written feasibility studies for or has consulted with the following youth athletic facility organizations:

♦ Central Minnesota Event Center, St. Cloud, Minnesota

♦ Copper Igloo Ice Arena, Tucson, Arizona

♦ Herb Brooks Training Center, Blaine, Minnesota

♦ Minneapolis Sports Center, Minneapolis, Minnesota

♦ National Youth Golf Center, Blaine, Minnesota

♦ Northfield Ice Arena, Northfield, Minnesota

♦ St. Paul Inner-City Tennis Center, St. Paul, Minnesota

♦ Schwan Super Rink, Blaine, Minnesota

♦ Schwan Center, Blaine, Minnesota


PROJECT SUMMARY Location

St. Michael-Albertville Arena is located at 5898 Lachman Ave NE, Albertville, Minnesota 55301. The arena is a few blocks south of the Interstate 94 and Highway 19 interchange, providing easy access to the freeway. Albertville is 30 miles northwest of downtown Minneapolis and 35 miles southeast of St. Cloud. The I-94 corridor between Minneapolis and St. Cloud has experienced rapid population growth over the past 10 years and is expected to keep growing over the next 10.


Site

Facility Description

The current arena was built in 1998. It has seating for approximately 250 people, 7 locker rooms, a rink manager’s office and a concessions stand. Four compressors are original, one additional compressor was added in 2005. The refrigeration is indirect R-22. The parking lot has 130 stalls. A new dehumidification system was added in 2014. At that time other major repairs were completed.


Management

The current arena is governed by a six person board appointed by the three local government units. ISD 885 (St. Michael-Albertville School District) and the cities of St. Michael and Albertville each appoint two members to the Arena Board. There is a Joint Powers Agreement between the three entities that governs the operation of the arena. The finances are run through the city of Albertville, where the arena is located. The arena board hires and supervises the arena manager and all additional staff. There is one full-time rink manager and approximately two additional FTE’s for Zamboni drivers and concessions workers. User Group Commitments and Contracts

Hours Use 2012-2013 2013-2014 STMAYHA 948.8 936.8 Open Hockey / Skate 241.2 152.5 STMA HS Boys 149.3 128.8 STMA HS other 152.5 122.7 Rentals 132.5 73.2 STMA HS Girls 42.0 42.5 Men's Hockey League 32.0 32.0 Learn to Skate 38.5 14.0

1,736.8 1,502.5 Hours rented are from September 1 to August 31 of the following year. 2013-2014 hours were lower because the ice was taken out of the rink for two months during the summer to install a new dehumidification system. Prime time hours are defined as 6 pm to 10 pm each weekday and 8 am to 10 pm each weekend. This totals 48 prime time hours per week. There are 30 weeks from September through March that are in-season. This results in 1,440 prime time in-season hours per year. Based on the current rental pattern, all prime time in-season hours are currently being used. St. Michael-Albertville Youth Hockey Association

The St. Michael-Albertville Youth Hockey Association (STMAYHA) is currently the largest purchaser of ice hours at the STMA Ice Arena and would remain the largest after the addition of a second ice sheet. Currently STMAYHA has demand for more prime-time hours than are available at their home arena. It has regularly rented hours of ice at Moose Sherritt Arena in


Monticello, Buffalo Ice Arena, Schwan Super Rink in Blaine, and Rogers Ice Arena. Below is a chart showing rental hours at these arenas and others from September 2013 to March 2014. Facility Hours Monticello 200 Buffalo 60 Schwan Super Rink 47 St. Cloud area 21 Sartell 20 Fogerty 14 Rogers 12 Litchfield 11 Anoka 10 Sauk Rapids 10 Princeton 9 Wilmer 9 New Hope 8 Elk River 7 Centennial 5 443

Several of these rentals were for special events or practices around tournaments. However, it shows the level of demand for practice time from the STMAYHA. STMAYHA ice rental purchase was $176,000 from their May 2013 to April of 2014 fiscal year. The operating revenue of the association was $544,000, operating expenses were $547,000, and operating net income was -$3,000. However, over the previous three years, operating net incomes were $54,000 in 2012-13, $37,000 in 2011-12, and $32,000 in 2010-11. STMAYHA has approximately 410 boys and 80 girls in its programs.


COMPETITIVE ICE ARENA FACILITIES

Rings are at 5 and 10 mile radius. Buffalo

The Buffalo Civic Center has two NHL-sized rinks. The original rink was built in 1977 and the additional rink opened in 2001. The ice is taken out at the older rink in the summer and rented for various uses. There is a weight room and a dryland training area. Prime-time rate is $195 and off-peak is $139.


Elk River

Elk River Arena also has two rinks, the first built in 1972 and the second in 1997. However, they are different sizes. The older rink is close to NHL-size and seats around 400 people. The ice is taken out in the summer and rented for various purposes. The newer rink is 200 by 100 feet and seats 1,200 people. Regular rate is $190. Monticello

Moose Sherritt Arena is an older single sheet facility that removes the ice in the late summer. The rate is $190 per hour for almost all available hours mid-September through mid-March. Off-season rates are $150 per hour. Rogers

The Rogers Activity Center opened in 2007. The single NHL-sized rink is open year-round. Prime-time rates are $190 per hour and $155 in the non-prime hours. Others

Other nearby arenas are found in Champlin, Maple Grove, Anoka, Princeton and Plymouth. The rates range from $200 closer to Minneapolis to $180 in Anoka.

MARKET DEMAND Market Area Definition

The Total Market Area is defined as everything within an approximately 15-minute drive from the arena. Within this area, the Primary Market Area is the borders of the St. Michael-Albertville School District. This market will provide most of the demand for ice rink rentals, especially for prime-time hours. The Total Market Area extends further, from the borders of the school district out to the 15-minute drive limit. The Total Market Area is used for demographic and demand information.


Primary Market Area

The St. Michael-Albertville School district had a 2012-2013 enrollment of 5,747 students. Enrollment in 1999-2000 was 2,564 students. Enrollment has grown, on average, 245 students each year. Projections for the coming years expect enrollment to increase over 100 students each year. Students in the district are 92% white, not of Hispanic origin, and 13% qualify for Free/Reduced Priced Lunch. Statewide averages for these categories are 72% and 39%, respectively.


Total Market Area

The Total Market Area is defined as the area within a 15-minute drive. This area is represented in the diagram above. However, for precise statistical analysis, the secondary market consists of Zip Codes: 55301, 55311, 55341, 55357, 55362, 55374 and 55376.


Population Characteristics The information below is based on the Market Areas described above. The data is from the 2008-2012 American Community Survey. The Metropolitan Statistical Area (MSA) is Minneapolis-St. Paul-Bloomington, MN-WI Metro Area.

Population Primary MA % Total MA % MSA % Population 23,094 96,407 3,290,811 Households 7,577 33,727 1,279,694 HH with children 6,336 84% 15,044 45% 404,751 32% 0-19 year olds 8,384 36% 31,962 33% 680,237 20% 20-34 year olds 3,865 17% 17,602 18% 694,748 21%

Income Total MA MSA US HHs above $50,000 77% 63% 53% Median HH Income $91,740 $66,751 $53,046 Current Unemployment 6.1% 7.3% 9.3%

Education Total MA MSA US Completed HS or higher 97% 93% 86% BA or higher 41% 38% 29%


CONCLUSION Market Demand

Current usage of the ice arena by the youth hockey association and local school district fills the available hours of prime-time ice during the regular hockey season. The youth hockey association uses non-prime hours at the ice arena and other arenas in the area. It also uses outdoor rinks for its youngest age divisions. With the expected growth in population, the youth hockey association would be able to purchase a significant amount of prime-time in-season hours if a second sheet of ice was added to the arena. There is also excess demand for prime-time in-season hours from several of the surrounding ice rinks. It is expected that a second sheet of ice would operate close to capacity for prime-time in-season hours. The overall success, meaning operating revenue is higher than operating expenses, of an ice arena depends on the “shoulder” times and seasons, after 10 pm during the season and the months outside the traditional hockey season. There are several indications that there is rental demand for these hours and months in the area. Another avenue for getting revenue from these hours is running ice arena programming, such as a figure skating program, adult hockey league, or youth tournaments. NSC Consulting is willing to help the St. Michael-Albertville Ice Arena develop, market, and create operating plans for these options if a second sheet of ice is added.


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