Cairns Rectangular Pitch Stadium Needs Study - Cairns Regional ...

Cairns Rectangular Pitch Stadium Needs Study COFFEY PROJECTS

Draft Report Presentation INSERT HEADING HERE October 2011

2 Project Update Part 1: • Phase 1- Project Inception • Phase 2- Situation and Market Analysis • Phase 3- Stakeholder Engagement • Phase 4 - Market Research • Phase 5- Detailed Demand Assessment • Phase 6- Development Options • Phase 7- Draft and Final Reports

Complete Complete Complete Complete Complete Complete In Progress

3 Situation Analysis – Demographics Year Local Government Area Cairns (R) Gold Coast (C) Ipswich (C) Mackay (R) Sunshine Coast (R) Toowoomba (R) Townsville (C) Queensland

• • • •

2011 172,890 544,165 175,469 121,397 338,429 164,501 191,119 4,611,491

2016 2021 2026 2031 190,657 207,756 224,426 241,494 613,280 677,929 739,276 798,417 221,713 286,430 369,185 461,990 138,348 156,117 172,604 187,367 376,733 420,439 464,552 508,177 180,052 198,591 220,571 244,340 216,524 241,684 268,330 295,578 5,092,858 5,588,618 6,090,548 6,592,858

Growth Rate Per Annum 1.7% 1.9% 5.0% 2.2% 2.1% 2.0% 2.2% 1.8%

Cairns LGA population is 172,890 (2011), increasing to 241,494 by 2031 (Source: Queensland Treasury - Office of Economic & Statistical Research). The average annual growth rate of Cairns for the period is 1.7%. Significantly higher unemployment than QLD (8.3% vs. 5.5%). Lower proportion of high & low income households compared to QLD.

4 Situation Analysis – Literature Review •

As part of the analysis the following documents were reviewed: – – – – – – –

Cairns Regional Council Corporate Plan 2009-2014. Parks and Recreation Strategic Plan 2010-2015. Tropical North Queensland Events Strategy 2010-2015. Tourism Queensland - Tourism Action Plan to 2012. Events Queensland Regional Development Program. Toward Q2: Tomorrow’s Queensland. Feasibility Study of the Barlow Park Master Plan (2003).

5 Situation Analysis – Literature Review •

Key outcomes include: – Council’s Parks and Recreation Strategic Plan and Corporate Plan identify the requirement to undertake a study into a stadium. – The TNQ Event Strategy indicates that a 20,000 seat stadium is currently not considered viable and a staged upgrade of Barlow Park is considered. – Many of the documents do not specifically mention the development of a stadium, however a development would support many of the principles, goals and objects within these documents.

6 Situation Analysis – Trends and Benchmarking •

Stadium design and the product offering is continuing to evolve, key areas include: – – – – –

•

Spectators Experience: ‘Game is only part of experience’ Corporate Experience: ‘Not just a traditional function space’ Membership experience: ‘A different experience from the normal punter’ Design: ‘Must cater for multiple users’ Ancillary Services: ‘More than just a sporting venue’

Queensland Stadia have unique design trends including: – Multiple levels of corporate hospitality. – Focus on outdoor entertainment.

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Situation Analysis – Competition Venue

Seats

Capacity

Annual Core Tennant Use (NRL, Super 15’s, ALeague)

Skilled Park (Gold Coast)

27,400

27,400

25

Suncorp Stadium (Brisbane)

52,500

52,500

33

Dairy Farmers Stadium (Townsville)

26,500

26,500

12

Virgin Australia Stadium (Mackay)

2,000

12,000

0

Ausgrid Stadium (Newcastle)

17,000

23,000

25

Blue Tongue Stadium (Gosford)

20,000

20,000

19

Canberra Stadium (Canberra)

25,011

25,011

20

NIB Stadium (Perth)

20,000

20,000

21

Win Stadium (Wollongong)

11,000

20,000

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Situation Analysis – Competition • •

There are a number of stadium developments in Queensland being considered including at Townsville, Rockhampton and Ipswich. When considering Townsville as the closest competition the following observations are made: – Dairy Farmers Stadium is owned/managed by Stadiums Qld (consulted as part of study) with the State covering operating loss and capital works. – North Qld Cowboys team (only anchor tenant). – No new (or existing) national teams for (rectangular codes) currently requiring a stadium in the region, therefore Cairns not competing with Townsville on this aspect. – Some competition will exist for annual and/or one-off events in various codes, which is consistent with the current situation. – The Cowboys new 30,000 seat stadium proposal is aspirational with development site still being used by QRN.

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Situation Analysis – Stadia Financial Performance •

Based on high level discussions with Stadium operators (including Queensland stadiums) the financial performance of stadiums are in general marginal (especially when factoring in significant maintenance, sinking fund/renewal funding and depreciation costs).

•

Stadiums need 20+ plus significant events annually to breakeven operationally (excluding significant maintenance, sinking fund/renewal funding and depreciation costs).

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Situation Analysis – Stadia Financial Performance •

10

Stadiums Queensland currently manage the following stadiums: – Metricon Stadium (management outsourced to the Gold Coast Suns) • Queensland Government $71.9m in funding; • Other funding parties Commonwealth Government $36m; Gold Coast City Council $23m; and the AFL $13.3m. – The Gabba. • $50 million Queensland Government funding for 2005 redevelopment. – Suncorp Stadium. • $280 million Queensland Government funding. – Skilled Park. • $160 million Queensland Government funding. – QSAC. – Dairy Farmers Stadium.

Situation Analysis – Stadia Financial Performance

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•

The Queensland State Government was a significant capital funding partner in the above facilities.

•

In 2008/2009 the Queensland Government contributed $70 million into the upkeep and development of sports infrastructure operated by Stadiums Queensland.

•

Verbal advice from Stadiums Queensland is that these venues are managed around an objective of operational break-even, with the sinking fund and large capital works funded by the Queensland State Government on a case-by-case basis.

12 Consultation – Overview •

Consultation/engagement included four main methods: – – – –

•

Workshop. One on One Interviews. Focus Group. Market Research.

Key groups consulted included: – National/State/Local Sporting organisations. – Government Departments. – Community and business groups.

Consultation – Key Themes •

The key themes identified as part of the engagement process included: – – – – – – – – – –

Stadium Size. Stadium Location. Existing Facilities. Stadium Content. Elite Training Facilities. Sports House. Sports Development. Economic Development. Sustainability. Multi-Purpose and Ancillary Facilities to activate the precinct.

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14 Consultation – Issues and Opportunities Issues •

Poor standard of current facilities.

•

Mix of sports (athletics and

Opportunities •

Improved facilities and spectator experience.

rectangular sports).

•

National event attraction.

•

Spectator experience.

•

Staged approach to delivery.

•

Attracting events and costs.

•

Economic/tourism development.

•

On going viability.

•

Development of facilities to support local

•

No core major tenant.

•

Cost of use by sports.

•

Location and access.

sport. •

Inclusion of other facilities to activate the site.

•

Possible consideration of integrating showground and Barlow Park precinct.

15 Market Research Findings – General •

• • • • • • •

75% rated current Barlow Park facilities poor to average. This value is higher when compared to Council’s Community Satisfaction Survey where Barlow Park facilities which scored 3.5 out 5. 60% believe athletics track impacts spectator experience. Strongest support is for NRL games then Super 15’s and A-League. 75.6% would definitely/very likely attend national competition games. 42.2% indicated they would attend 7-12 games. 33% indicated extremely interested in stadium membership. 20.7% would like a membership which included 1-7 games and 79.2% would like 8 plus games. Other facilities identified for inclusion at a stadium include:

– Elite training facilities. – Sports administration facilities.

16 Market Research Findings – Business • • • • • •

42.2% of respondents spend under $5,000 annually on hospitality. Current hospitality undertaken by companies include restaurants (61.4%), Sporting events (54.3%) and functions (48.6%). 52.9% of respondents believe there is a lack of hospitality options in Cairns. 42.9% of respondents were interested in a casual corporate experience. Of those that had undertaken corporate hospitality at rectangular sporting events, 84.2% of respondents had attended rugby league. Highest interest was to attending NRL games (34.4% definitely interested) then Super 15’s (32.8%) and A-League (21.9%).

17 Market Research Findings – Business • •

•

61.3% of respondents indicated they would likely use events at the stadium between 1-5 times per year with 35.9% bringing 5-8 guests. 46.9% were only ‘maybe interested’ or ‘Not interested at all’ at attending NRL games and 43% and 59.4% indicating the same response for Super 15’s and A-League.’ 61.3% of respondents indicated that their company would likely use events at the stadium between 1-5 times per year with 35.9% bringing 5-8 guests.

18 Market Research - Issues and Opportunities Community

Issues

•

Poor current standard of

Business

•

facilities.

Opportunities

•

Ensuring right mix of events.

•

Higher end price points.

•

Interest in attending multiple

hospitality. •

Membership options at a

•

The development of ancillary facilities.

Support for hosting corporate hospitality events.

•

stadium. •

Lack of large scale business operations.

games. •

Capacity to pay for corporate

Lack of corporate hospitality options in Cairns.

•

Sponsorship signage.

19 Demand Assessment - Overview •

In considering likely demand for a stadium, CSL considered a range of factors, including: – Consultation (including NRL, Cronulla Sharks, Sydney Roosters, QRL/Queensland Red, A-League and Brisbane Roar). – Market research. – Trend data. – Competition.

•

Demand analysis has considered likely: – Content – Spectator attendance – Competition. NB: Anecdotal information suggests that a stadium of size greater than 15,000-20,000 seats needs a population catchment of in the order of 300,000 plus people, which is the case of many of the stadium location included in the competitor analysis (Slide 7).


National Rectangular Sports (NRL, Super 15’s, A-League) – All codes/clubs indicated a level of interest in playing games in Cairns. – It is unlikely that a national Cairns team would form part of a national competition in the short – medium term. – Currently no demand by any national code/club for a new stadium. – Number of games would need to be limited due to potential impacts on membership at home venues. – Key decision making driver for codes/club was focused on the financial deal/return. – Based on consultation an indicative annual national competition stadium content base includes: Trial/Preseason Home

A-League 1 1-2

NRL 1 1-2

Super 15’s 1 1

21 Demand Assessment – Expansion •

Expansion of National Code Sports is Generally Governed by: – Growth in TV Audience. – Growth of the Game linked to population growth.

•

NRL Expansion Plans. • Verbal advice from the NRL is that growth in the NRL competition, should it decide to expand, is likely to be in Brisbane, Perth and/or the Central Coast of NSW. • Expansion is likely to be based around growing TV audiences and population growth allowing for growth of the game.

22 Demand Assessment – Expansion •

A-League Expansion Plan • Verbal advice from the FFA is that growth in the A-League competition is unlikely to happen in the short term. • When it does it is likely to focus on population growth areas such as Western Sydney. • If the FNQ was to be a market then the FFA’s priority would likely be re-establishment of a team in Townsville.

•

Expansion of National Code Sports : – Super Rugby Expansion Plans. • Queensland Rugby indicated that it saw the Queensland Reds as “Queensland's” team and therefore had no plans to add another Super Rugby team to the Queensland market. • The ARU indicated that they had no intention at this stage to expand the Super Rugby Competition in Australia.


Attendance (National Rectangular Sports) – A review of national attendance figures (excluding finals) over the last five years highlights the following: Year

A-League

NRL

Super 15’s

2006-07

12,898

15,474

21,241

2007-08

14,644

15,308

20,483

2008-09

12,116

15,523

19,254

2009-10

9,719

15,896

19,301

2010-11 5 Year Average

8,429

16,576

19,216

11,561

15,755

19,899

– Consultation with national codes/clubs was that consideration to stadium size should be measured.


Local Attendance at National Rectangular Sports games in Cairns: Year

NRL

Super 15’s

AFL

2009

14,000

-

-

2010

8,000

-

-

2011

4,500*

7,000*

11,000

* Denotes pre season games.


Market Research – Interest in attending national sporting games was strong. – Strong desire to attend multiple games and to purchase memberships. – Spectator experience is being impacted by current facilities at Barlow Park including viewing due to the athletics track.

•

Competition – Queensland has 5 existing rectangular stadiums ranging in standard and size. – Queensland does not appear to have a strategic position on stadium development. – There are a number of stadium proposals being considered in Queensland including 2 new stadiums and the possible upgrade of Townsville and Ballymore.


Competition Cont’d – These stadiums would compete for content against a Cairns stadium development. – Cairns stadium would need to provide a guaranteed return (on top of match day cost such as accommodation and transport) to attract clubs to use the stadium. – The guaranteed return/ match return⃰ would range from $150,000 $250,000 per game depending on the code.

⃰ Guaranteed return/match return is the cost to procure the game. National code teams require this return to be guaranteed or underwritten by the stadium or third party. The difference between the revenue from the gate and the fixed return guaranteed is paid by the stadium or the third party.

27 Demand Assessment - Summary •

In assessing the demand the following key outcomes are identified: – Content not likely to include Cairns based national team in the short to medium term. – Current facilities at Barlow Park have been identified by spectators and sports as an issue for staging games in Cairns. – While national codes/club have an interest in playing games in Cairns there is not direct demand for the development of a stadium to address a current market need. – Codes/clubs will require significant financial returns. – Available stadium content is limited and competition for content will continue to be high amongst stadiums in Queensland (and interstate). – Initial market research indicates strong local support to attend a stadium staging national competition games. – Average attendance at NRL, Super 15’s and A-League all under 20,000 spectators.

28 Demand Assessment – 10,000 seats/20,000 capacity •

10,000 seats/20,000 capacity was chosen as the optimum capacity on the following basis: • Likely content; • Code expectation as to minimum seats and quality of seats; • Demand in the Cairns market: – Average attendance at previous events in Cairns; – Direct market research in Cairns; • Average sporting code attendance nationally; • Design considerations: – Optimal design and spectator experience; – Seating on all four sides of venue; – Maximising amenity, player facilities, media facilities and corporate facilities in the Western Grandstand.

29 Demand Assessment – 10,000 seats/20,000 capacity •

10,000 seats/20,000 capacity was chosen as the optimum capacity on the following basis: • Creating a point of differentiation in the Queensland stadia market (there are at present no current of planned facilities of this size); • Allows for the master planned development of the facility up to 20,000 if supported by demand in the future; • Reasonable capital costs; • Reasonable operating costs to allow community sports to continue to use the stadia.

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Options Analysis •

Four options have been prepared for consideration following detailed analysis including: – – – –

Industry trends and facility benchmarking. Stakeholder consultation. Market research. Facility demand assessment. Option

•

Summary

Option 1

Upgrade Barlow Park.

Option 2

10,000 seats and 10,000 standing plus player, coaching, media and corporate amenity.

Option 3

16,000 seats and 4,000 standing.

Option 4

20,000 seats (no/minimal standing).

Options 2, 3 and 4 are not site specific and could be developed on a greenfield site.

Option 1 – Summary • • •

Maintain existing facilities at Barlow Park. Continue to upgrade in line with previous Master Plan. Consider development options that improve venue for spectators, player and officials, including: – – – – – –

Removal of the athletics track. Improved corporate facilities. Improved food and beverage facilities. Upgrade lights. Additional undercover seating. Improved media facilities.

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Option 2 – Summary •

The major development features of Option 2 are as follows:

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Option 3 and 4 – Summary •

The major development features of Option 3 are the same as Option 2 plus: – – – –

•

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Additional eastern stand incorporating 6000 seats (undercover) No additional corporate. No additional food and beverage outlets. No additional public amenity.

The major development features are the same as Option 3 plus: – – – –

Additional stand at north and south with 1,850 seats(undercover) respectively. No additional corporate. No additional food and beverage outlets. No additional public amenity.

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Options Analysis Pluses

Minuses

Option 1

– Provides affordable option for community sport. – Maintains multi use focus as a community recreation facility. – Potential for reduced capital cost option that may partly address sports issues.

– Spectator experience not addressed. – Does not address all sports issues. – Attracting and staging national games will be impacted and compromised unless appropriate upgrades are made to address current issues. – Conflict between user sports.

Option 2

– Larger capacity in terms of seating and more undercover seating. – Creates atmosphere with seating around the ground. – Improved corporate facilities. – Improved player/official amenity. – Improved broadcast and media amenity. – Possible improved non match day revenue through functions business, concerts and entertainment events. – Capacity/size point of difference in market. – Potential economic benefit to town/region from staging larger events.

– Capital cost to deliver additional seating and corporate facilities. – Ongoing operational costs of the stadium. – Ongoing cost of maintaining two stadiums if Barlow Park is maintained. – Affordability of use by community level sport. – Costs associated with separating athletics and field. – Risk of not attracting required level of content on an annual basis. – Potential competition from other existing and potential stadiums.

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Options Analysis Pluses

Minuses

Option 3.

– As per Option 2 plus: – More seating (undercover)

– Large capital cost to deliver additional seating. – Large ongoing operational costs of the stadium. – Potentially even less affordability of use by community level sport.

Option 4.

– As Per Option 3 plus: – More seating (undercover)

– Significant capital cost to deliver additional seating. – Significant ongoing operational costs of the stadium. – Potentially even less affordability of use by community level sport.

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Preliminary Financial Analysis Option 1*

Option 2

Option 3

Option 4

Revenue

$0.432m

$1.610m

$1.610m

$1.610m

Expenses

($0.847m)

($1.686m)

($1.692m)

($1.725m)

Operating Profit/Loss (EBITDA)

($0.415m)

($0.075m)

($0.081m)

($0.114m)

Sinking Fund

$-

($0.830m)

($1.365m)

($1.732m)

($0.822)

($0.996m)

($1.638m)

($2.079m)

($1.237m)

($1.901m)

($3.084m)

($3.925m)

(Including match return)

(1.25% of capital)

Depreciation (1.5% of capital)

Annual Reserve/Shortfall

*Based on actual budget and current content.

Preliminary Financial Analysis - Assumptions •

Financial analysis excludes land cost and debt financing costs (if applicable).

•

Option 3 & 4 assumes that the national event content in terms of number of games remains unchanged. – This is on the basis that the content is governed by availability of the content and the willingness of the respective codes to relocate content to a new Cairns Stadium. – Advice from the governing bodies is that the content will not increase with an increase in stadium size. – The financial modelling excludes Cairns attracting a full time National code team in the medium-long term.

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Preliminary Financial Analysis - Assumptions •

Change in revenue from option 2 to option 3 & 4 is primarily in terms of crowd composition.

– Options 3 & 4 include a greater number of premium seats and therefore greater revenue from these seats. – The additional premium seat and other revenue has little effect on overall revenue as this additional revenue is passed onto the host team as part of the fixed match return.

•

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EBITDA is improved as the additional revenue offsets the payment required to be made by the stadium to the host club as part of the fixed match return.

– The financial model assumes a fixed match return to the host club, with the stadium paying the host club the difference between the revenue from the match return (ticket sales etc) and the fixed match returned required by the host club.

Questions for Consideration •

Is there a level of demand for a rectangular pitch stadium in Cairns capable of hosting national code games and events?

– Yes.

•

Is the demand sufficient to allow the venue to be sustainable in its own right?

– No. – Financial analysis indicates that, based on likely available content, local demand, stadia operational costs, depreciation costs and sinking fund that no stadium development option will be financially sustainable in its own right. – The current Barlow Park facility runs at an operational loss of $415K, or $1.237m after depreciation. – Very few stadia across Queensland and Australia are operationally viable after depreciation and sinking fund.

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40

Is there sufficient demand for a 20,000 seat stadium in Cairns that can be sustainable in its own right?

– No. – There is not sufficient demand, in terms of content, at present or likely in the immediate future for a stadium with 20,000 seats that will enable the stadium to be sustainable in its own right.

•

Is there national code content available for a stadium in Cairns?

– Yes. – Approximately six games made up of practice/pre-season and home and away matches across the NRL, A-League and Super Rugby.


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Would the current facilities at Barlow Park allow Cairns to attract the six games of national code content?

– No. – The facilities at Barlow Park are currently insufficient in terms of: • Seating numbers (including undercover seating); • Seating quality; • Spectator amenity; • Spectator experience (i.e. seating distance from field); • Media and TV facilities; • Lighting quality; and • Corporate facilities. – The current facilities at Barlow Park would at a maximum allow Cairns to attract pre-season/practice games.


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Would a new stadia in Cairns, with the right amenity and facilities, allow Cairns to attract more national code content than what is currently achieved at Barlow Park?

– Yes. – Advice from the governing bodies is that a stadium of an adequate standard in Cairns would allow them to allocate home and away and preseason/practice games to Cairns on a regular basis. – The amount of content is unlikely to be greater than 6-8 games per year across the codes.

•

Will a new stadia in Cairns generate an economic impact greater than the operational costs/sinking fund costs of the stadia?

– The estimated one off value added benefit from the construction is $57.4m and a total of 576 jobs. – The estimated ongoing annual benefit from stadium operations and induced visitations $9.6m and 132 jobs.


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What is the optimum size of a stadia in Cairns?

– A stadium capacity of no more than 20,000 is considered appropriate. – In the short to medium term a seating provision of 6,000-10,000 would be appropriate, with 10,000 standing providing a total capacity 20,000. – In the long term seating numbers could be increased if the population base for Cairns increases to in excess of 300,000 and/or national code tenant is based at the stadium. – The optimum size is based on: • • • • • • •

Likely content; Catchment population under 300,000; Demand in the Cairns market; Creating a point of differentiation in the Queensland stadia market; Allows for a master planned development of the facility up to 20,000 seats; Reasonable capital costs; Reasonable operating costs to allow community sports to continue to use the stadia;

Options For Consideration •

•

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In considering the options there was a need to determine what is an appropriate capital cost and financial underwrite of a stadium and the planning timeline. Based on the projected content, capital cost, financial operations of the stadium and timelines, two options (Options 1 and 2) were considered for further analysis: – Option 1 – To cater for current demand: Will provide a reduced capital and operational financial underwrite, however will not address all issues associated with the stadium and will impact potential content beyond current arrangements. – Option 2 – Subject to Future Demand: Requires greater capital funding and the operational financial underwrite, however addresses current issues with stadium and may position Cairns to attract additional events and is likely to improve attendance at events due to improved facilities.

Strategic Considerations •

In considering the options going forward Council need to consider their Strategic position on whether they wish to: – Invest in a stadium on the basis of bringing event content and the subsequent economic impact; – If yes what level of investment are they willing to make (in terms of the stadium this will be in capital and operational funding).

•

The answers to the above will dictate which option is to be pursued if any option at all.

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Options Going Forward •

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Subject to Council’s strategic position on its investment strategy there are the two scenarios that could be considered: – Scenario A: Barlow Park. That Council makes a decision that the investment in the stadia, both operationally and in capital, is too great in terms of the economic and social ROI and acknowledges that the investment in attracting events to be an unacceptable risk, so determines the existing facility provision to be appropriate. – Scenario B: Option 2 Development Option (as outlined in section 11). That Council makes the decision that the investment in the initial capital and ongoing operations is justified in principle based on the identified potential for broader economic and social benefits and seeks to investigate further how and when the outcomes of Option 2 can be delivered.

Next Steps • • •

Public exhibition. Community feedback. Prepare final report.

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