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Presented to:Kansas Lottery Gaming Facility Review Board
Presented by:Dean M. Macomber
Macomber International, Inc.
December 1, 2010
REVIEW OF ANCILLARY DEVELOPMENT
South Central Zone
INTRODUCTION
ASSIGNMENT
REVIEW THE ANCILLARY AMENITIES AS PROPOSED BY EACH APPLICANT FOR THE SOUTH CENTRAL ZONE GAMING LICENSE
Global Gaming Solutions, LLC (“GGS”) Peninsula Gaming Partners, LLC (“PGP”)
Definition
Ancillary Amenities = Non-Gaming Facilities
PROCESS REVIEWED APPLICANT SUBMISSION MATERIAL
MACOMBER INTERNATIONAL, INC. (“MI”) EXTRACTED INFORMATION PERTINENT TO THE ANCILLARY DEVELOPMENT REVIEW AND CATEGORIZED IT AS FOLLOWS:
I. Goal SetII. External ConsiderationsIII. Internal ConsiderationsIV. Targeted Market SegmentsV. Product Marketing PlanVI. Demand Stimulation Marketing PlanVII. Sum of the Parts
• MI THEN COMPARED AND RATED EACH SUBMISSION
PROCESS … continued
THIS PRESENTATION WILL FOCUS ON HOW THE ANCILLARY DEVELOPMENT PROPOSAL OF EACH APPLICANT:o Satisfies and optimizes the State of Kansas goals
set forth by its gaming legislation.o Supports and optimizes the gaming effort.o Act as independent activities.
BY ITS NATURE THIS REVIEW, EVALUATION, AND CONCLUSIONS IS …o Part objective, tangible, and quantitativeo Part subjective, intangible, and qualitative
QUALIFICATIONSThis review and evaluation was conducted solely by Dean M. Macomber, President, Macomber International, Inc.
36 years in the gaming industry.
Held operation positions ranging from Dealer to President.
Worked as a consultant for a public accounting firm as well as my own company, MI.
Involved in the opening of 7 casinos and 2 takeovers.
Projects have included:o Scope: 200 unit slot operation to >$2B mega Casino-Resorts.o Positioning: Locals’, Regional, Domestic/International; Value driven slot to
VVIP table game operations; and virtually everything in between.o Location:
Operations: Nevada, New Jersey, Canada, Macau Consulting: U.S., Canada, Caribbean, Latin America, Europe, Asia, Australia, Internet gaming, and technology
o Projects similar to South Central Zone: Grove, OK; 2 in IA (not with PGP); 3 in suburban/rural WA; Pendleton, OR; Gary, IN; southeast WI; Greater LA market, CA
65 domestic/international presentations, university casino gaming courses, 14 articles
Masters Hotel School of Administration, Cornell University plus undergraduate Marketing
CONTEXT
CONTEXT
Development and subsequent operation will take place in the grip of the Financial Crises
The dynamics of casino demand show that the ‘inner’ and ‘middle’ ring markets produce the greatest volume and ‘quality’ gaming demand, i.e., more or less within 100 miles of the site.
Extensive and well developed competition already exists in many feeder markets, particularly the outer markets where the greatest population densities reside.
Most of the Midwest and the South Central Zone in particular is inherently a middle market.
CONCLUSION
The first and second goals of the Kansas gaming statutes – jobs and income to the State – are best achieved and sustained by each South Central Zone development …
First being …
The Best Locals’ Casino It Can Be
… and then second being …
The Best Regional Casino It Can Be
And, the derivative second conclusion is that gaming will be (and must be) the marketing and profit engine for each casino.
CONCLUSION … continued
Experience elsewhere shows that the driving considerations for a Local /Regional gamers are:
First and foremost … the games and gaming experience: e.g., selection of games, price/cost/time-on-device, incentives, playing environment.
A distant but still important second … the food, i.e., the minimum expectation is good food but preferably great food. In either case value pricing is expected and appreciated.
Everything else comes next: parking, beverage, entertainment, hotel.
Consequently, the primary goal of ancillary development should (must?) be to support gamers.
CONCLUSION … continued
Achieving the third goal of the Kansas gaming statutes –generating tourism – follows after gaming and the gaming experience is fully supported.
The proposals validate these contentions: Visitors within 100 miles : Total Visits 84% to 90% Gamers : Non-gamer visits 96% Gaming revenue : Total Revenue 87% to 91% Gaming departmental profit : EBITDA 121% to 201%
MI’s review and evaluation took place in this context and based upon these conclusions.
PROPONENT’S SUBMISSION EVALUATION AND REVIEWGlobal Gaming Solutions, LLC(“GGS”)Peninsula Gaming Partners, LLC(“PGP”)
TOTAL PROJECT – full build out and 2016
Both are designated as “destinations,” “regional” and “entertainment” destinations.
Both claim to have conceptualized and designed their projects specific to Midwest, Sumner County dynamics.
Both invest $280M to $285M
Both will depend largely upon gamers and visitors within 100 miles of the site.
GGS PGPCONCEPT “Entertainment
destination”“Regional destination”
THEME Midwest / Sumner CountyEXPERIENCE Midwest successful operationsPOSITIONING Mid-market …
3-star hotelsAverage food check $9 to $13
INVESTMENT $280M “all in” $285M “all in”
VISITORS 2016
<100 mi.>100 mi. Total
Gamers Non-gamersTotal
2,113K 84%417K 16%
2,530K 100%
2,429K 96%101K 4%
2,530K 100%
2,611K 90%291K 10%
2,902K 100%
2,786K 96%116K 4%
2,902K 100%
GAMING (a reference point) – 2016
Both are proposing virtually the same gaming capacity
GGS’s forecast spend per visitor is 84% of PGP’s.
GGS is forecasting 86% of the gaming visitors and 78% of the GGR of PGP.
Profit margins are the same so GGS departmental profit is also 78% of PGP.
* MI calculations ** GGS table includes poker
GGS PGPCapacity 2000 slots
40 tables20 poker
2000 slots 50 tables 20 poker
Demand – physicalDemand – financial
2.4M gamers $157M GGR
2.8M gamers $202M GGR
GGR/visitor $64 $76Utilization*PhysicalFinancial – WPPD
39%$172
42%$214
Slot revenueTable**PokerTotal RevenueDepart. ProfitMargin
$135M$ 22M
n.a.$157M$ 82M
52%
$170M$ 30M$ 3M$202M$105M
52%
DINING – full build out, all by 2016
GGS: Partnering with Emerging Brands/ Jimmy’s Egg and Rock bottom.
GGS: Higher margin may be due to 3rd
party involvement. PGP: Higher BE
average check implies higher ‘quality.’
PGP: Loss leader average check implies attempt to use food as a marketing tool
PGP forecasting twice the total comp $ of GGS although GGS shows $0 on P&L.
GGS PGPDESCRIPTION (ave. check)
Deli $10Sports bar $14Buffet $15Upscale $35
Snack bar $ 7 Food court $ 9 Buffet $11Upscale $43
CAPACITY“S.F.” = square feet
510 seats 21,377 S.F.
430 seats 22,250 S.F.
AVE. CHECK* $13 average $10 breakeven
$ 9 average$14 breakeven
UTILIZATION* 73% ave. day 84% ave. dayREVENUE – cashREVENUE – compREVENUE - totalPROFIT/(LOSS)Margin
$7.0M $0.0M $7.0M $1.8M
25%
$ 3.9M$ 4.8M$ 8.7M
($3.0M)- 34%
* MI calculationsBE average check = total departmental expense / total covers
BARS / LOUNGES – full build out, all by 2016
Both propose two bars, each with a casino bar plus one other.
GGS casino bar is a “center bar.”
PGP proposes a stage in their casino bar while GGS proposes a stage in their Lounge.
GGS’s margin may be due to 3rd parties.
GGS’s revenue is 66% of PGP’s but has 82% of PGP’s capacity.
* MI calculation
GGS PGPDESCRIPTION“S.F.” = square feet
Center casino bar 2,700 S.F. Lounge and bar 2,000 S.F.
Casino bar2,700 S.F.
Sports bar3,000 S.F.
CAPACITY 4,700 S.F. 5,700 S.F.AVE. CHECK n.a. n.a.UTILIZATION* 75% ave. day 71% ave. dayREVENUE – cashREVENUE – compREVENUE - totalPROFIT/(LOSS)Margin
$3.8M $0.0M $3.8M $2.7M
73%
$5.8M$0.0M$5.8M$0.9M
16%
ENTERTAINMENT – full build out, by 2016
GGS: 1400 seat multi-use theater mimic-ing their highly utilized Riverwind model.
PGP proposes a larger multi-use center for enter-tainment and equine events.
* MI calculation
GGS PGP
DESCRIPTION Event / Conv. Center
Event/ Conv. Center
Equine Support Ctr.
CAPACITY SeatsSpace (S.F. = sq. ft.)
Pre-functionBreakout rms.
1,400 seats42,549 S.F.
1,657 S.F.1,360 S.F.
3,000 seated/ 4,200 concerts
100,000 S.F.1,200 S.F.
unclear
1,500 seats covered, outdoor arena, 24 acres
Implied attend. @ $X ave. ticket
Implied events @ Y attend./event*
~ 55,000$35 ticket
55 annually1000/show
~ 200,000$35/ticket
80 annually2500/show
REVENUE – cashREVENUE – compREVENUE - totalPROFIT/(LOSS)Margin
$1.9M$0.0M$1.9M
($0.5)M- 25%
$4.2M $2.7M $7.0M
($0.5)M- 8%
ENTERTAINMENT … continued
GGS PGPGGS’s Event Center is positioned as a flexible entertainment venue with meeting / convention capabilities (pre-function area, 4 breakout rooms, and flat ground floor in Event Center with non-fixed seats, movable partitions).
PGP’s Event Center is positioned as an equine-based multi-use entertainment venue with meeting / convention capabilities (pre-function area, 2 breakout rooms in hotel).
Tout their extensive experience with entertainment in Oklahoma … 49 acts appeared at their Riverwind Casino in Oklahoma City in 2009.
The equine nature of the center is supported with stalls, feed, wash area(s), dirt storage area(s), and cleaning/odor control capabilities.
Entertainment would ostensibly be stars, acts, and shows appearing on stage.
Entertainment would be equinebased events in the indoor or outdoor arenas plus ostensibly stars, acts, and shows appearing on the stage.
HOTEL – by 2016 and full build out
GGS PGPBy 2016
Comparables Sq. ft. per roomOther amenities
After 2016
80-100 rm., 3-star, $10MHoliday Inn Express/La Quinta Suites
320 standard/620 premium Business center, pool, spa, exercise
area, small meeting area, brkftst. area.120 key, 4-star, $10-$15M*
300 rm., 3-star, $38M Hol. Inn Exprss./Hilton Grdn Inn
450 standard/900 premium Business center, pool, spa, fitness center, laundry, 2 meeting rooms
NoneAve. occ. / ADR 71% / $97 85% / $84REVENUEPROFITMargin
$2.5M$2.5M100%
$0.0M$0.0M
0%OTHER 3rd party to manage first hotel.
Expect initial 30% to 40% comped increasing to 70% in a stabilized year, translates into 56 to 70 rooms/night. *2nd hotel subject to market conditions
Equity stake, but 3rd party management. Initial roomblock 5 MW/10 WE. Comps 7%-10% + discount rooms 20% = 30% casino, ~ 90 rooms/night.
RV PARK – 2016 and full build out
GGS PGP2016
Year 10
Existing 37 space RV Park with 2 lodges, 1 cabin. Add 60 spaces. $7M
100 space RV Park with water/electric hookup.
Results No utilization, price, or financial results segregated out or shown
No utilization, price, or financial results segregated out or shown
RETAIL – 2016 and full build out
GGS PGP2016 1,200 S.F. store 650 S. F. storeGoods/items sold Sundries and logo
merchandise.Gift shop, sundries, and
logo merchandise*REVENUE – cashREVENUE – compREVENUE – totalPROFITMargin
$0.1M$0.0M$0.1M$0.0M
0%
$0.2M$1.0M$1.2M$0.4M
34%MI: high comp revenuesuggests possible LoyaltyClub “points for merchandise” program may be credited here as comp revenue.
PARKING – 2016 and full build out
GGS PGP2016
POST 2016
0.9M square feet paved parking
2,357 parking spaces485 valet spaces384 employee spaces27 RV space
996 space parking garage3,353 total spaces
Ostensibly, the parking garage could be built sooner if demand so dictates.
1.5M sq. ft. paved parking
3,965 parking spaces200 valet spaces295 employee spaces100 RV spaces
No additional
3,965 parking spaces
ANCILLARY REVENUE – 2016GGS PGPTotal Total Cash Comp % Rev
CRITICAL GAMING SUPPORT ACTIVITIESFOOD $ 7.0M $ 8.7M $ 3.9M $ 4.8M 55%BEVERAGE $ 3.8M $ 5.8M $ 5.8M $ 0.0M 0%ENTERTAINMENT $ 1.9M $ 7.0M $ 4.2M $ 2.7M 39%HOTEL $ 2.5M $0.0M* $0.0M* $0.0M* n.a.RETAIL $ 0.1M $ 1.2M $ 0.2M $ 1.0M 85%
Subtotal $15.3M $22.7M $14.1M $ 8.5M 37%% Total Rev.
Comp Expense/%GGR8.5%
$4.0M/ 2.6%10.0%
$8.5M/4.2%
TRAVEL PLAZA $ 9.0MATM/CHK/LEASES $ 1.0MTOTAL ANC. REV. $24.3M $23.7M
ANCILLARY REVENUE – 2016GGS PGPTotal Total Cash Comp % Rev
CRITICAL GAMING SUPPORT ACTIVITIESFOOD $ 7.0M $ 8.7M $ 3.9M $ 4.8M 55%BEVERAGE $ 3.8M $ 5.8M $ 5.8M $ 0.0M 0%ENTERTAINMENT $ 1.9M $ 7.0M $ 4.2M $ 2.7M 39%HOTEL $ 2.5M $0.0M $0.0M $0.0M n.a.RETAIL $ 0.1M $ 1.2M $ 0.2M $ 1.0M 85%
Subtotal $15.3M $22.7M $14.1M $ 8.5M 37%% Total Rev.
Comp Expense/%GGR8.5%
$4.0M/ 2.6%10.0%
$8.5M/4.2%
TRAVEL PLAZA $ 9.0MATM/CHK/LEASES $ 1.0MTOTAL ANC. REV. $24.3M $23.7M
MARKETING – 2016GGS PGP
$ % TR $ % TRCOMP EXPENSEIncludes pref. guest expense if applicable $ 3.9M 2% $ 8.5M 4%BAD DEBT EXPENSE $ 0.0M n.a. $ 0.2M nilADVERTISING AND PROMOTION $10.0M 6% $25.2M 11%TOTAL MARKETING $14.0M $33.9M
% TR$ TR
8%$181M
15% $226M
OTHER MARKETING $2.4M$ unk.$ unk.
Entert. CoSGolfSpeedway
$4.9M Enter. CoS
M.I.C.E. – by 2016 and full build outM.I.C.E. = Meeting, Incentive, Convention and Exhibition
GGS PGPM.I.C.E. 42,549 square foot multi-use
event center with 1,657 S.F. pre-function area plus1,360 S.F. breakout room space (4 rooms)
100,000 square foot multi-use event/equine center, includes 31,700 S.F. pre-function space and 1,200 S.F. breakout room space (2 rooms) in hotel.
AS SUPPORTED BY HOTEL OPERATIONS (previously reviewed)HOTEL by 2016
Sq. ft. per roomOther amenities
After 2016
80-100 rm., 3-star, $10M320 std./620 prem.
Business center, pool, spa, exercisearea, small meeting area, brkfst area.
120 key, 4-star, $10-$15M*
300 rm., 3-star, $38M450 std./900 prem.
Bus ctr., pool, spa, fitness center,laundry, 2 mtg. rms.
None
TRAVEL PLAZA – full build out, by 2016
GGS PGPBy 2016 OnCue travel plaza.
5000 S.F. convenience store and other premises.
None
Goods/items sold Convenience: snacks, beverage, and limited hot food.Trucker services: overnight parking, showers, and laundry.Fuel: multiple unleaded octanes, multiple ethanol, and diesel.
REVENUE – cashREVENUE – compREVENUE – totalPROFITMargin
$9.0M$0.0M$9.0M$0.6M
7%
TOURIST ACTIVITIES – full build out
GGS PGP (with MI adjustments)
HOTEL 80 – 100 room, 3-star120 room, 4-star subject to market conditions
TRAVEL PLAZA Previously described
GOLF COURSE RENOVATION Upgrade greens and clubhouse (“destination clubhouse”) of Wellington Municipal Golf Course
SPEEDWAY 260 ac. Sports car racecourse for vintage car, motorcycle, performance production racing
ADDITIONAL 420-acres AVAILABLE
HOTEL 300 room, 3-star
EQUESTRIAN CENTERPreviously described
TOURIST ACTIVITIES – full build out
GGS PGP (with MI adjustments)
TRAVEL PLAZA $8MPreviously described
GOLF COURSE RENOVATION $3MUpgrade greens and clubhouse (“destination clubhouse”) of Wellington Municipal Golf Course
SPEEDWAY $7M to $10M260 ac. Sports car racecourse for vintage car, motorcycle, performance production racing
TOTAL TOURIST INVEST. $18M-$21M% of total $280M investment 6%-8%Forecast Tourist visitors 417,000
HOTEL with MI ADJUSTMENT300-rm. Hotel $38MLess GGS 220-rm. 1 & 2 - $25M“Net” large hotel add $13M
EQUESTRIAN CENTER with MI ADJUSTMENTTotal Event/Equine/ Convention Complex $25MLess GGS 1400 seat MI adj. - $10M“Net” Equine add $15M
TOTAL TOURIST INVEST. ADJ. ~$28M% of total $285M investment 10%Forecast Tourist visitors 291,000
TOURIST ACTIVITIES – full build out
GGS PGP (with MI adjustments)
TRAVEL PLAZA $8MPreviously described
GOLF COURSE RENOVATION $3MUpgrade greens and clubhouse (“destination clubhouse”) of Wellington Municipal Golf Course
SPEEDWAY $7M to $10M260 ac. Sports car racecourse for vintage car, motorcycle, performance production racing
TOTAL TOURIST INVEST. $18M - $21M% of total $280M investment 6%-8%Forecast Tourist visitors 417,000
HOTEL with MI ADJUSTMENT300-rm. Hotel $38MLess GGS 100-rm. Hotel 1 - $13M“Net” large hotel add $25M
EQUESTRIAN CENTER with MI ADJUSTMENTTotal Event/Equine/ Convention Complex $25MLess GGS 1400 seat MI adj. - $10M“Net” Equine add $15M
TOTAL TOURIST INVEST. ADJ. ~$40M% of total $285M investment 14%Forecast Tourist visitors 291,000
JOBS – 2016 GGS forecasts 1,103 FTEs
vs. GGP’s 879. The primary variance is in
gaming with GGS showing 141 more FTE’s or 21% greater than PGP even though PGP having 4% more capacity.
The 68 more FTE’s in GGS Entertain./Retail may be due to the Travel Plaza.
It is likely that the number of employees and labor cost may not be apples-to-apples due to accounting treatment of third-party employees.
* MI calculations
GGS PGPCASINO 660 519HOTEL 67 73FOOD
185 186BEVERAGEENTERTAINMENT
134 66RETAILOTHER 20 6G & A 37 20TOTAL 1,103 879LABOR $
% Tot. Rev.*Labor/Employ.*
$31.2M17%
$28,269
$35.0M16%
$39,843
PHASINGGGS PGP
+ 9 MONTHS – PHASE 1A Nov. 20111310 slots, 32 table games50 seat snack bar, several F&B kiosks
+14 MONTHS – PHASE 1A1300 slots, 30 tables, 20 poker tables100 seat food court, 250 seat buffet, 140 seat sports bar, steakhouse50 seat center bar, 90 seat show lounge
1400 seat event center
+18 MONTHS – PHASE 1B80 to 100 room 3-star hotel
+21 MONTHS – PHASE 1B Nov. 20121500 slots, 42 table games, 10 pokerFood court (2 outlets), 250 seat buffet, 110 seat steakhouse100,000 sq. ft. indoor arena150 room 3-star hotel, 20 space RV park
PHASING – Non-critical to GamingGGS PGP
+36 MONTHS – PHASE 1B1550 slots, 40 tables, 20 poker tablesGolf course renovation + clubhouse and Travel Plaza
+45 MONTHS – PHASE 2 Nov. 20142000 slots, 50 table games, 20 poker3-star hotel expanded to 300 rooms, 40 space RV park24 acre Equine/Rodeo Center expansion
+60 MONTHS – PHASE 1B1800 slots, 40 tables, 20 poker tables
BEYOND 2016
PHASE 2AYr. 7: 2200 slots, 40 tables, 20 pokerYr. 8: 996 space parking garageYr. 10: 120 key 4-star hotel + additional RV spaces + race track.
FUTURE DEVELOPMENTAdditional hotelMaster planned retail developmentPhase 2 expansion of Equine Center100 space RV Park
PHASING - SummaryGGS PGP
Opens with permanent facility but 5 mo’s. after PGP – Month 14.Opens with 1300 slots, 30 tables, 20 poker tables and full FB&E.
Gets to 2200 slots, 40 tables, 20 poker in Year 7
80 to 100 room hotel opens in Month 18
Opens 5 months ahead of GGS but with interim facility – Month 9.Opens with 1310 slots, 32 table games
Full permanent facility with full FBE, 1500 slots, 42 tables, 10 poker, and 150 room hotel opens Month 21
Gets to 2000 slots, 50 tables, 10 poker and expansion to 300 room hotel in Month 45 (approx. Year 4)
Performance: GR / Tot. Rev.2013 $129M / $141M2016 $157M / $181M
Performance: GR / Tot. Rev.2013 $148M / $163M2016 $202M / $226M
P&L – 2016 Higher PGP gaming
revenue due to higher forecast gamer visitor volume, higher average spend per visit, and slightly more capacity.
Possibly also due to almost $20M more spent on Marketing.
Margin difference due to higher PGP Marketing and G&A, expenses and GGS’s hotel and other non-gaming profit.
GGS PGPGAMING REV. $157M $202MALL OTHER REV. $ 24M $ 24MTOTAL REVENUE $181M $226MEBITDA $ 67M $ 59M% margin 37% 26%
FINANCIAL RESULTS – PROFIT & LOSS STATEMENT: GGS 2016
REVENUE - CASH
REVENUE - COMP.
REVENUE TOTAL
GAMING TAXES &
LICENCES LABORCOST OF
SALES MARKETINGOTHER
EXPENSESTOTAL
EXPENSESDEPT.
PROFITCASINO Electronic Gaming Machines $134,685,000 $0 $134,685,000 Pit Revenue - all table games 21,900,000 0 21,900,000 Poker 0 0 0 Subtotal - Casino $156,585,000 $0 $156,585,000 $45,606,448 $25,200,207 $0 $3,998,482 $0 $74,805,137 $81,779,863
Ratios 100% 0% 100% 29% 16% 0% 3% 0% 48% 52%HOTEL 2,513,755 0 2,513,755 0 0 0 0 0 0 2,513,755
Ratios 100% 0% 100% 0% 0% 0% 0% 0% 0% 100%FOOD 6,972,143 0 6,972,143 0 297,135 4,880,500 0 27,318 5,204,953 1,767,190
Ratios 100% 0% 100% 0% 4% 70% 0% 0% 75% 25%BEVERAGE 3,762,281 0 3,762,281 0 61,717 940,570 0 28,138 1,030,426 2,731,855
Ratios 100% 0% 100% 0% 2% 25% 0% 1% 27% 73%ENTERTAINMENT 1,936,000 0 1,936,000 0 0 2,420,000 0 0 2,420,000 -484,000
Ratios 100% 0% 100% 0% 0% 125% 0% 0% 125% -25%RETAIL 82,500 0 82,500 0 59,427 22,688 0 0 82,115 385
Ratios 100% 0% 100% 0% 72% 28% 0% 0% 100% 0%TRAVEL PLAZA 9,000,000 0 9,000,000 0 382,800 8,010,000 0 0 8,392,800 607,200
Ratios 100% 0% 100% 0% 4% 89% 0% 0% 93% 7%TOTAL DEPARTMENTAL $180,851,679 $0 $180,851,679 $45,606,448 $26,001,286 $16,273,758 $3,998,482 $55,456 $91,935,431 $88,916,248
Ratios 100% 0% 100% 25% 14% 9% 2% 0% 51% 49%TOTAL DEPARTMENTAL Advertising and Promotion $10,000,000 $10,000,000 Labor $1,485,672 1,485,672 Real Estate Taxes 2,843,517 2,843,517 Utilities 2,924,106 2,924,106 Insurance 1,688,263 1,688,263 Supplies 1,125,509 1,125,509 Repairs and Maintenance 1,000,000 1,000,000 Staff Amenities 168,826 168,826 Equipment Rental or Lease 112,551 112,551 Uniforms 90,041 90,041 Other General and Administrative 112,551 112,551 Subtotal - General and Administrative $0 $1,485,672 $0 $10,000,000 $10,065,364 $21,551,036 -$21,551,036
Ratios 0% 1% 0% 6% 6% 12% -12%EBITDA $45,606,448 $27,486,958 $16,273,758 $13,998,482 $10,120,820 $113,486,467 $67,365,212
Ratios 25% 15% 9% 8% 6% 63% 37%DEPRECIATION AND AMORTIZATION 14,544,360 14,544,360 -14,544,360
Ratios 8% 8% -8%EBIT $24,665,180 $128,030,827 $52,820,852
Ratios 14% 71% 29%INTEREST 6,440,630 6,440,630 -6,440,630
Ratios 4% 4% -4%PRE-TAX NET INCOME $31,105,810 $134,471,457 $46,380,222
Ratios 17% 74% 26%
REVENUE - CASH
REVENUE - COMP.
REVENUE TOTAL
GAMING TAXES &
LICENCES LABORCOST OF
SALES MARKETINGOTHER
EXPENSESTOTAL
EXPENSESDEPT.
PROFITCASINO Electronic Gaming Machines $169,562,567 $0 $169,562,567 Pit Revenue - all table games 30,076,000 0 30,076,000 Poker 2,704,172 0 2,704,172 Subtotal - Casino $202,342,739 $0 $202,342,739 $60,702,822 $20,329,571 $0 $8,680,471 $7,284,339 $96,997,203 $105,345,536
Ratios 100% 0% 100% 30% 10% 0% 4% 4% 48% 52%HOTEL (third party) 0 0 0 0 0 0 0 0 0 0
Ratios 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%FOOD 3,905,780 4,773,731 8,679,511 0 5,229,757 5,381,297 0 1,041,541 11,652,595 -2,973,084
Ratios 45% 55% 100% 0% 60% 62% 0% 12% 134% -34%BEVERAGE 5,786,341 0 5,786,341 0 1,868,485 2,314,536 0 694,361 4,877,382 908,958
Ratios 100% 0% 100% 0% 32% 40% 0% 12% 84% 16%ENTERTAINMENT 4,243,679 2,708,240 6,951,919 0 2,619,622 4,866,343 0 0 7,485,965 -534,046
Ratios 61% 39% 100% 0% 38% 70% 0% 0% 108% -8%RETAIL 175,792 996,157 1,171,950 0 187,043 585,975 0 0 773,018 398,932
Ratios 15% 85% 100% 0% 16% 50% 0% 0% 66% 34%CHECK CASHING, ATM FEES, LEASES 1,011,714 0 1,011,714 0 0 0 0 0 0 1,011,714
Ratios 100% 0% 100% 0% 0% 0% 0% 0% 0% 100%TOTAL DEPARTMENTAL $217,466,044 $8,478,128 $225,944,173 $60,702,822 $30,234,478 $13,148,151 $8,680,471 $9,020,241 $121,786,163 $104,158,010
Ratios 96% 4% 100% 27% 13% 6% 4% 4% 54% 46%TOTAL DEPARTMENTAL Advertising and Promotion $25,182,019 $25,182,019 Labor $4,787,558 4,787,558 Real Estate Taxes 5,108,854 5,108,854 Energy (electricity, gas, etc.) 2,434,271 2,434,271 Utilities 270,475 270,475 Other General and Administrative 7,592,731 7,592,731 Subtotal - General and Administrative $0 $4,787,558 $0 $25,182,019 $15,406,331 $45,375,908 -$45,375,908
Ratios 0% 2% 0% 11% 7% 20% -20%EBITDA $60,702,822 $35,022,036 $13,148,151 $33,862,491 $24,426,572 $167,162,071 $58,782,102
Ratios 27% 16% 6% 15% 11% 74% 26%DEPRECIATION AND AMORTIZATION 9,237,207 9,237,207 -9,237,207
Ratios 4% 4% -4%EBIT $33,663,778 $176,399,277 $49,544,895
Ratios 15% 78% 22%INTEREST 6,119,571 6,119,571 -6,119,571
Ratios 3% 3% -3%PRE-TAX NET INCOME $39,783,350 $182,518,849 $43,425,324
Ratios 18% 81% 19%
FINANCIAL RESULTS – PROFIT & LOSS STATEMENT: PGP 2016
EQUIVALENCIES, DIFFERENCES, AND ‘FINAL COMPARATIVE RATING’
EQUIVALENCIES - ‘Big Picture’ GGS PGP
Entertainment destination, destination resortMid-market
Theme and development adopted to Midwest, Kansas, Sumner CountyCommunity partnership and partnering program
Midwest, successful development, operating, and marketing historyReasonably well developed pre- and post opening Marketing PlanInvestment at full build out: $280M for GGS and $285M for PGP
EQUIVALENCIESGGS PGP
GAMING DIRECTGAMING: Full build out capacity …
Slots 2200Table games 40Poker tables 20
GAMING: Full build out capacity … Slots 2000Table games 50Poker tables 10
FOOD 510 seats / 4 outlets FOOD 430 seats / 4 outletsBEVERAGE 140 seats / 2 outlets BEVERAGE 185 seats / 2 outletsHOTEL: 80-100 room 3-star hotel
90 space RV Park at full build outHOTEL: 150 room 3-star hotel
100 space RV Park TOURISM ORIENTEDMEETING AND CONVENTIONMulti-use event center + pre-function area + 4 breakout rooms
MEETING AND CONVENTION Multi-use indoor event center + pre-function area + 2 breakout rooms
DIFFERENCESGGS PGP
GAMING DIRECTGAMING: • Gaming opens Month 14 in
permanent building with all critical FBE.
• Maximum capacity Year 7 but can be accelerated if demand warrants.
GAMING: • Gaming opens Month 9 in interim
facility with sufficient but modest FBE. Permanent opens Month 21.
• Maximum capacity completed by end of Year 4
FOOD PRICE: $13 ave. food check FOOD PRICE: $9 average food checkENTERTAINMENT
1400 seat multi-use event centerENTERTAINMENTLarger 3000 TO 4200 seat multi use event/equine center
PARKING 2357 spaces / 485 valetYear 8 or upon demand – 996 space parking garage
PARKING 3965 spaces / 200 valet
MARKETING (2016): $14M, 8% TR MARKETING (2016): $34M, 15% TR
DIFFERENCESGGS PGP
TOURISM ORIENTEDGOLF Upgraded of municipal golf course and clubhouse expansion/ upgrade Month 36
HOTEL Expansion of initial 150 room 3-star hotel to 300 rooms in Month 45
TRAVEL PLAZA Month 36 ENTERTAINMENT 24-acre expansion for Equine/Rodeo Center in Mo. 45
HOTEL Year 10 – 2nd hotel, 120 room, 4 star hotel. Additional spaces in RV Park. Add speedway.PERFORMANCE - 2016Gaming Revenue $157MOther Revenue $ 24MTotal Revenue $181MEBITDA $ 67MMargin 37%
Gaming Revenue $202MOther Revenue $ 24MTotal Revenue $226MEBITDA $ 59MMargin 26%
RATING
GGS 93% of PGP score
Category Weight Score Score
PRODUCT MARKETING 50% 6.5 3.3 7.4 3.7Casino 0% n.a. n.a. n.a. n.a.Food 25% 8 2.0 8 2.0Beverage 15% 7 1.1 7 1.1Entertainment 20% 8 1.6 9 1.8Meeting / Convention 3% 4 0.1 4 0.1Hotel 20% 3 0.6 6 1.2RV Park 5% 7 0.4 7 0.4Retail 2% 5 0.1 5 0.1Other (cumulative) *** 10% 7 0.7 8 0.8 Subtotal - Product Marketing 100%
DEMAND STIMULATIONMARKETING 25% 7.4 1.9 7.6 1.9Pre-opening 40% 8 3.2 7 2.8Post opening 60% 7 4.2 8 4.8
100%
SUM OF THE PARTS 25% 8 2.0 8 2.0
TOTAL 100% 7.1 7.6
GGS PGPResult Result
RATING – one person’s (consultant’s) view
GLOBAL GAMING SOLUTIONS LLC SCORE 7.1, 93% of PGP
• Concept, positioning, investment same or about equal with PGP• Opens with permanent casino in 14 months• Critical FBE gaming support about equal with PGP• Tourism activities deemed not as compelling as PGP
PENINSULA GAMING PARTNERS LLC SCORE 7.6 Opens with interim casino in 9 months 4 yr. full build out PGP apparent willingness to use food as a marketing tool (price subsidy) PGP’s apparent more aggressive marketing ($ spent). PGP larger hotel with no outs. PGPs larger, triple use Event, Equine, and Meeting/Convention Center. More effective use of capex on Tourism generators (hotel + event center).
Thank you.
Dean M. MacomberMacomber International, Inc.