Former Illinois Bell and Ameritech Director of Corporate Planning Joseph L. Daleiden who also served as Economic Advisor to the Executive Office of the White House, Office of Management and the Budget during the Carter Administration, prepared the following report about the viability of Lakewood’s proposed SportsPlex. He did it after examining the SportsPlex’ application for bonding underwriting to the Upper Illinois River Valley Development Authority.
In his preface to the report, he wrote,
In my position with Ameritech I reviewed plans for acquisitions and major business ventures. Although quite often proposal estimates appeared exaggerated and few won my support, I never saw a proposal more half-baked and poorly prepared than the Lakewood Sports complex.
Part – 3 Financials
1. The estimates in the report are inconsistent and the tables contradict the text.
For example, page 5 states “The goal is activation by maximizing the more than 800,000 visits to the center per year by spectator (sic) and 300,000 plus athletic visits.”
However, by adding up the estimated visits in the accompanying tables (upon which the revenue estimates are based, the athletic visits amount to 777,100 and spectators account for only 432,000 visits. Moreover, in the section on revenue from sponsorships, the study assumes 1.5 million spectators annually.
2. Recall from the demographic information, the actual market within ten miles is a population of only 160,000 compared to the average population within the ten miles of the sports centers they reviewed was 530,000 Even including all of McHenry County the population is only about 350,000.
3. What is the basis for the estimates of visits? There are no studies or surveys to support the data provided. They appear to be pulled out of thin air.
4. Less than ½ the estimated revenues come from fees for athletes and spectators. Over half (56%) of the revenues are expected to come from retail, concessions, restaurants and “admissions.” But the admission revenue is already included in the spectator fees, hence it is counted twice
5. The detailed assumptions provided for outdoor sports amounts to $3.7 million annually, only 21% of the estimated $17 million revenue for the first full year of operation. Although half the total athletic and spectator visits are due to soccer – 756,000 (69%) of the 1.1 million visit estimate – soccer revenues amount to only about $1 million in revenue.
6. The alternative sports including BMX, Moto Cross, Obstacle Course and Skateboard account for another $1.4 million of outdoor revenue. Not only does this estimate not take into consideration that the huge Elgin complex about ten miles away already attracts 50,000 BMX riders each year for its tournaments thus taking this market, but it is questionable that such facilities may not be included in the Sportsplex construction estimates.
7. The indoor sports revenue is estimated at $3.3 million but no breakdown of the sports generating this revenue is provided. Another number pulled out of thin air?
The estimates for the Sportsplex are
- riddled with errors, and
- wildly optimistic with no empirical support.
The proposal seems so unprofessional and naïve that I can’t imagine any knowledgeable financial analyst giving this proposal a second thought.