December 14, 2009

1. December 14, 2009 Assessing the Potential of an OHL / AHL Franchise in Thunder BayStudy Presentation to Thunder Bay City Council

2. Background Project Overview • Deloitte retained by the City of Thunder Bay to assess the ability of the city to support an OHL / AHL franchise and a new multi-use spectator event centre • Report addresses the following elements: • The long-term viability of an OHL / AHL Team operating successfully in Thunder Bay • The impact on an OHL / AHL Team on other existing hockey teams in Thunder Bay • A review of leases which other municipalities have with OHL teams Scope of Review • History of hockey in Thunder Bay • History of the Ontario and American Hockey Leagues • Assessment of the operating potential of new multi-use spectator event centres • Assessment of the economic benefits of OHL / AHL teams and spectator event centre • Overall conclusions and recommendations

3. Hockey in Thunder Bay • City has had a long and successful history of hosting junior, senior and semi-professional hockey. City has hosted teams playing in a broad number of leagues: • Thunder Bay Junior Hockey League • Thunder Bay Hockey League • United States Hockey League • Colonial / United Hockey League • Superior International Junior Hockey League • Thunder Bay Junior B Hockey League • OHA Senior A Hockey League • Most popular and perhaps most successful team is the Lakehead University Thunderwolves. Success appears to be driven by: • Quality of the on-ice product • Quality of the league vis-à-vis other levels of hockey currently being played in Thunder Bay • Despite the City’s long hockey history, Thunder Bay has never been home to a Major Junior A (Tier I) franchise. • Location has also been an issue in keeping teams in the City

4. Ontario Hockey League Overview • In operation since 1974, the OHL is one of three Tier 1 Major Junior hockey leagues operating in Canada • Comprised of 20 teams – 17 located in Ontario, 2 in Michigan and 1 in Pennsylvania • Produce the highest percentage of players drafted into the National Hockey League • Teams generally attract some 4,000 fans per game • League has realized significant jumps in attendance coinciding with the construction of new multi-purpose spectator event facilities

5. Ontario Hockey League Building Boom • Since 1996, 10 new 5,000+-seat multi-use spectator facilities have been constructed: • Barrie Molson Centre (1996) – 4,200 seats • Sarnia Sports and Entertainment Centre (1998) – 5,000 seats • Brampton Powerade Centre (1998) – 5,000 seats • Mississauga Hershey Centre (1998) – 5,400 seats • Guelph Sleeman Centre (2000) – 5,100 seats • London John Labatt Centre (2002) – 9,100 seats • Sault Ste. Marie Essar Centre (2005) – 5,000 seats • Oshawa General Motors Centre (2006) – 5,400 seats • Kingston K-Rock Centre (2008) – 5,200 seats • Windsor WFCU Centre (2008) – 7,000 seats • Buildings designed to mimic NHL venues and contain many of the same amenities found within these buildings: • luxury suites • club seats • in-house restaurants • retail outlets • enhanced food & beverage • larger concourses • wider seating • better advertising opportunities

6. Confidential Phase 1 Report – Proposed Multi-Plex Facility Ontario Hockey League Fort William Gardens

7. Ontario Hockey League Essar Centre – Sault Ste. Marie

8. Ontario Hockey League K-Rock Centre - Kingston

9. Ontario Hockey League General Motors Centre - Oshawa

10. Ontario Hockey League WFCU Centre - Windsor

11. Ontario Hockey League John Labatt Centre - London

12. Ontario Hockey League Sleeman Centre - Guelph

13. American Hockey League Overview • In operation since 1936 • 29 teams have direct affiliations with NHL parent teams • Teams stocked with younger, recently drafted players who have yet to make an NHL roster (plus aging veterans) • Teams generally attract 5,000 to 6,000 fans per game • League has witnessed significant franchise relocations • at one time there have been 15 different Canadian teams • currently one team is “dormant” • 40 different teams / centres have existed in the 2000s • Less than 50% of the league’s 29 teams predate the 2000-01 season • Player and coach salaries covered by NHL parent club • Team travel costs generally higher compared to OHL teams

14. Multi-Use Spectator Event Facilities Uses Operations • Depending on the market, new multi-purpose spectator event centres can make or lose money from operations (Fort Williams Gardens loses $400,000 to $500,000 annually) Lease Agreements • Leases in new buildings generally run for a 10 / 15 / 20 period and provide the OHL team tenant with priority booking access. In addition: • rent generally based on a portion of gross ticket revenue • teams / building “split” food & beverage and advertising • building retains revenue from club seats and suites

15. Economic Benefits Team • As an economic entity, the operations of an OHL / AHL team will create employment and spending within the community • Fosters visitor attraction, increased room night demand and spending (scouts, agents, player families, etc.) • Provides “brand name” marketing for the community • Supports local philanthropic endeavours Building • As an economic entity the operations of a multi-use spectator event facility will create employment and spending within the community • The construction of the building could generate $90 million in total spending impacts and support more than 550 person years of employment • Used by local economic development / marketing officials as part of the “quality of life” package to help attract business and investment, and to assist in luring professionals to Thunder Bay • Allows the city to attract a broader range of other sporting, entertainment and corporate events to the community • Buildings have been used as catalysts for additional entertainment-related economic development

16. Conclusions Can an OHL / AHL Team Operate Successfully in Thunder Bay • Attendance projected to average 4,200 per game over the course of a season • Experience is that teams playing in new buildings will experience a “honeymoon” period of significantly higher average attendance and some games will attract significantly more fans • Recommended building size is roughly 5,200 to 5,600 seats – cost would be $50 million - $60 million • An OHL / AHL team will require a new, larger building in order to be successful • As most buildings will strive to achieve break-even operating results, 100% of the cost of the building would be borne by the City of Thunder Bay, offset somewhat by the sale of naming rights and other building sponsorships Impact on Existing Teams • OHL / AHL will have little impact on most existing Thunder Bay teams • OHL / AHL will likely have significant impact on the Lakehead University Thunderwolves, particularly from an attendance and corporate sponsorship perspective • City should attempt to secure some form of covenant / guarantee from the OHL / AHL team that it will be resident in the City for the long term Terms and Conditions in a New Facility • OHL / AHL provided with priority booking rights as “featured tenant” • OHL / AHL to pay rent based on gross ticket sales – team and building to share other revenue streams (including concessions, advertising, etc.)

17. Questions