May 30, 2014

Conventions, Sports & Leisure International

520 Nicollet Mall, Suite 440 Minneapolis, Minnesota 55402 Telephone 612.294.2000 Facsimile 612.294.2045



May 30, 2014


Ms. Karen Williams
President & Chief Executive Officer
Louisville Convention & Visitors Bureau
401 West Main Street, Suite 2300
Louisville, Kentucky 40202


Dear Ms. Williams:

Conventions, Sports & Leisure International (CSL) is pleased to present this report
regarding the economic and fiscal impacts generated by the operation of the KFC Yum!
Center since its opening. The attached report summarizes our research, analyses and
findings.

The information contained in this report considers various sources, including historical
KFC Yum! Center operations, University of Louisville sports operations, results of patron
intercept surveys, and other information developed from research of the market,
knowledge of the industry, and other factors, including certain information provided by
you.

We sincerely appreciate the opportunity to assist you with this project, and would be
pleased to be of further assistance in the interpretation and application of the studys
findings.


Very truly yours,



CSL International

Table of Contents









I. INTRODUCTION ........................................................................................ 1



II. OVERVIEW OF KFC YUM! CENTER ................................................................ 2



III. STUDY METHODOLOGY .............................................................................. 3



IV. SURVEY RESULTS ...................................................................................... 8



V. ECONOMIC & FISCAL IMPACT ANALYSIS ....................................................... 13



I. Introduction

1

Conventions, Sports, & Leisure International (CSL) was retained by the Louisville
Convention & Visitors Bureau (LCVB) to develop an independent estimate of the
quantifiable benefits of the KFC Yum! Center (Center) to Louisville since its opening.
Typically, and for purposes of this report, quantifiable effects are characterized in terms
of economic impacts and fiscal impacts. Economic impacts are conveyed through
measures of direct spending, total output, personal earnings, and employment. Fiscal
impacts denote changes in tax revenues.

The assumptions underlying the estimates of economic and fiscal impacts are based on
the historical operations of the Center over the four-year period since its 2010 opening,
the results of 1,100 random patron-intercept surveys conducted at various Center
events, industry data, the use of IMPLAN multipliers, and CSLs experience in quantifying
the economic and fiscal impacts of similar projects.

The studys findings are presented in the following sections:

II. Overview of KFC Yum! Center
III. Study Methodology
IV. Survey Results
V. Economic & Fiscal Impact Analysis

This study is designed to assist the Louisville Convention and Visitors Bureau, the City of
Louisville and other stakeholders in understanding the positive impacts that the KFC
Yum! Center has had on the Louisville community, and should not be used for any other
purposes. This report should be read in its entirety to obtain the background, methods
and assumptions underlying the findings.














II. Overview of KFC Yum! Center

2

The KFC Yum! Center is located in downtown Louisville, Kentucky and is home to the
University of Louisville mens basketball program and womens basketball and volleyball
programs. The multi-purpose arena is owned by the Louisville Arena Authority and
operated, as of July 1, 2012, by third-party facility manager, Anschutz Entertainment
Group (AEG). Prior to AEG assuming operating responsibilities, the Kentucky State Fair
Board was the sole managing agent of the Center. In 2013, the Center was ranked 53 in
the world (and 25
th
in the country) in terms of ticket sales.

Since hosting its first event, in October of 2010, the Center has evolved into a multi-
faceted sports, entertainment, and event venue, hosting an average of over 100 events
annually. In addition to hosting nearly 50 pre-season and regular season home games
for the University of Louisville, the Center attracts a wide range of other events,
including concerts, family shows, other sporting events and conventions. Notable
concert acts have included Taylor Swift, Justin Bieber, Lady Gaga, the Eagles, Elton John,
Beyonce, Justin Timberlake, Katy Perry, Bruno Mars, and George Strait. Additionally, the
Center has acted as host for numerous major post-season NCAA basketball and
volleyball tournament events.

The table below illustrates the number of events held annually at the Center since its
opening in 2010.

2010-11 2011-12 2012-13 2013-14
(2)
Average
Total Events
(1)
69 83 137 131 105
(1) Certain one-off local events in 2012/13 and 2013/14 were not considered in overall analysis.
(2) Budgeted information was included in 2013-14 numbers
Note: Original bond documents for KFC Yum! Center financing assumed 101 events in both 2012-12 and 2013-14.
Source: KFC Yum! Center Management, 2014
First Four Years of Operation
KFC Yum! Center Events


The KFC Yum! Center has successfully attracted events that generate economic impact,
and that enhance the entertainment options and quality of life of area residents. The
Center has contributed directly to a stronger Louisville economy by increasing visitation
to and spending in the City and providing and supporting jobs in the local marketplace.
The additional, qualitative, quality of life benefits, in the form of increased vibrancy
and excitement in downtown Louisville, are also realized through this new and dynamic
facility. These non-quantifiable benefits are important to recognize when considering
overall impacts. As the quantitative and qualitative effects continue to flow-through
and enhance the attractiveness of downtown Louisville, development has, and will likely
continue to follow, providing increasingly higher levels of activity and impact into the
future.

i

III. Study Methodology

3

The KFC Yum! Center provides significant quantifiable benefits to the City of Louisville
and the Commonwealth of Kentucky. Typically, and for purposes of this report,
quantifiable effects are characterized in terms of economic impacts and fiscal impacts.
Economic impacts are conveyed through measures of direct spending, total output,
personal earnings, and employment. Fiscal impacts denote changes in tax revenues.
Note that we have not audited information provided to us by third parties.


Direct Spending

In assessing the economic impact associated with the Center, the first important step
involves defining and quantifying the existing sources of direct spending. When
analyzing the direct spending generated by Center events, three major areas of
spending will be measured, as follows:

In-Arena Spending Spending by Center patrons within the Center, including the
purchase of admission tickets, food and beverage, and merchandise.

Out-of-Arena Spending Spending by Center patrons, at other local businesses,
that takes place in conjunction with attendance at the Center event, including
transactions at area restaurants, bars, hotels, retail centers, service stations and
other businesses.

Other Arena Spending Spending that takes place within the Center or as part of
general Center operations that doesnt necessarily get captured in the In-Arena
category, such as naming rights, sponsorships, certain premium seating charges,
and other various event and non-event revenue.

Gross direct spending represents the aggregate of the three streams of revenue defined
above. Spending flows to various economic entities, including the Center, restaurants,
hotel operators, retail businesses and other such entities.


Multiplier Effects

Economic impacts are further generated through re-spending of the direct spending.
The total impact is estimated by applying an economic multiplier to initial direct
spending to account for the total economic impact. The total output multiplier is used
to estimate the aggregate total spending that takes place beginning with direct spending
and continuing through each successive round of re-spending. Successive rounds of re-
spending are generally discussed in terms of their indirect and induced effects on the
area economy.

III. Study Methodology

4

Each is discussed in more detail as follows:

Indirect effects consist of the re-spending of the initial or direct expenditures.
These indirect impacts extend further as the dollars constituting the direct
expenditures continue to change hands. This process, in principle, could
continue indefinitely. However, recipients of these expenditures may spend all
or part of it on goods and services outside the market area, put part of these
earnings into savings, or pay taxes. This spending halts the process of
subsequent expenditure flows and does not generate additional spending or
impact within the community after a period of time.

Indirect impacts occur in a number of areas including the following:

wholesale industry as purchases of food and merchandise products are
made;
transportation industry as the products are shipped from purchaser to
buyer;
manufacturing industry as products used to service complex vendors and
others are produced;
utility industry as the power to produce goods and services is consumed;
and,
other such industries.


Induced effects consist of the positive changes in spending, employment,
earnings and tax collections generated by personal income associated with or
directly resulting from the Center and Center events. Specifically, as the
economic impact process continues, wages and salaries are earned, increased
employment and population are generated, and spending occurs in virtually all
business, household and governmental sectors. This represents the induced
spending impacts generated by direct expenditures.

Indirect and induced effects are calculated by applying the appropriate multipliers to
the net new direct spending estimates. The appropriate multipliers to be used are
dependent on certain regional characteristics and also the nature of the expenditure.
Generally, an area which is capable of producing a wide range of goods and services
within its borders will have high multipliers, a positive correlation existing between the
self-sufficiency of an area's economy and the higher probability of re-spending occurring
within the region. If a high proportion of the expenditures must be imported from
another geographical region, lower multipliers will result.


III. Study Methodology

5

The following graphic illustrates the flow of direct spending through the successive
rounds of re-spending including indirect and induced effects.




The multiplier estimates used in this analysis are based on the IMPLAN system. IMPLAN,
which stands for Impact Analyses and Planning, is a computer software package that
consists of procedures for developing local input-output models and associated
databases. Input-output models are a technique for quantifying interactions between
firms, industries and social institutions within a local economy.

IMPLAN was originally developed by the U.S. Forest Service in cooperation with the
Federal Emergency Management Agency and the U.S. Department of the Interior's
Bureau of Land Management to assist in land and resource management planning.
Since 1993, the IMPLAN system has been developed under exclusive rights by the
Minnesota Implan Group, Inc. which licenses and distributes the software to users.
Food & Merchandise Wholesaler
Transport Company
Manufacturers
Energy/Utilities
Numerous Other Industries
Business Services
Household Spending
Governmental Spending
All Other Economic Sectors
KFC Yum! Center Revenue
Ancillary Community Spending
The

III. Study Methodology

6

Currently, there are thousands of licensed users in the United States including
universities, government agencies, and private companies.

The economic data for IMPLAN comes from the system of national accounts for the
United States, based on data collected by the U. S. Department of Commerce, the U.S.
Bureau of Labor Statistics, and other federal and state government agencies. Data are
collected for 440 distinct producing industry sectors of the national economy
corresponding to the Standard Industrial Categories (SICs).

Industry sectors are classified on the basis of the primary commodity or service
produced. Corresponding data sets are also produced for each county and zip code in
the United States, allowing analyses at both the city and county level and for geographic
aggregations such as clusters of contiguous cities, counties, individual states, or groups
of states. For purposes of this analysis, economic multipliers specific to Jefferson
County were used.

Data provided for each industry sector include outputs and inputs from other sectors;
value added, employment, wages and business taxes paid; imports and exports; final
demand by households and government; capital investment; business inventories;
marketing margins and inflation factors (deflators). These data are provided both for
the 440 producing sectors at the national level and for the corresponding sectors at the
local level. Data on the technological mix of inputs and levels of transactions between
producing sectors are taken from detailed input-output tables of the national economy.
National and local level data are the basis for IMPLAN calculations of input-output tables
and multipliers for geographic areas. The IMPLAN software package allows the
estimation of the multiplier effects of direct spending (also termed changes in final
demand) for one industry on all other industries within a local economic area.

The multiplier effects estimated in this analysis include:

Total Output represents the total direct, indirect, and induced spending effects
generated by Center operations. Total output is calculated by multiplying the
appropriate total output multiplier by the estimated direct spending within each
industry.

Personal Earnings represent the wages and salaries earned by employees of
businesses impacted by Center operations. Personal earnings are calculated by
multiplying the appropriate personal earnings multiplier by the estimated direct
spending within each industry.

Employment is expressed in terms jobs supported by the different levels of
spending that occur as a result of Center operations. Employment is calculated

III. Study Methodology

7

by dividing the appropriate employment multiplier by one million, and then
multiplying by the estimated direct spending within each industry.

Fiscal Impacts

In addition to the economic impacts generated by the
Center operations, the public sector benefits from
increased tax revenues. In preparing estimates of
fiscal impacts, total tax revenues attributable to the
direct spending are estimated, as well as estimates of
the effect of total output and earnings on the tax
collections. Tax revenues estimated herein include
those generated through state sales taxes and other
various visitor-industry related taxes applied to hotel
direct spending.


Primary Data Collection

In order to accurately quantify initial direct spending that has occurred since the Center
opened, CSL obtained operational history from KFC Yum! Center management, including
event levels by event type; attendance by event type; average ticket price by event
type; in-arena per-capita spending for food, beverage and merchandise by event type;
and arena financial operating information showing additional revenue streams.
Additionally, over 1,100 intercept surveys, representing groups consisting of 3,200 total
attendees, were completed with KFC Yum! Center patrons during the months of March
and April of 2014. The results of the patron-intercept surveys are the primary basis for
developing assumptions related to fan origination and out-of-arena spending, both of
which are essential to determining direct spending. Detail on the survey process and
results are provided in the next section of this report.







IV. Survey Results

8

CSL, with the assistance of Custom Intercept Solutions, a national market research
company, developed surveys that were administered to KFC Yum! Center patrons at
various Center events. Staff from IQS Research administered the survey process. The
surveys acted as an instrument to capture primary market data regarding attendance
and spending behaviors surrounding these events. The event names and a breakdown
of the number of surveys conducted at each of these events are outlined below.


People
Surveys Represented
Louisville Men's Basketball
University of Louisville men's regular season basketball game 310 818
Family Shows
Monster Jam 238 816
Cirque Du Soleil 144 418
Concerts
Billy Joel 215 479
Conventions
Together for the Gospel 202 685
Total 1,109 3,216
Patron Intercept Surveys - 2014



A total of over 1,100 intercept surveys were completed with event patrons at five
different KFC Yum! Center events. The events selected are used to provide a basis for
distinguishing the spending and origination data between the different event categories
held at the Center in a given year. Individuals participating in the surveys were
randomly selected by members of the research team at various locations of each event.
The process was strategically randomized to ensure a representative cross-section of
patrons was sampled for the study. The following text presents notable findings derived
from the survey process.


Place of Residence

Survey respondents were asked to indicate their primary place of residency in order to
determine the geographic origin of those attending Center events. The following chart
presents a summary of patron place of residency for those attending University of
Louisville mens basketball games, conventions, family shows, and concerts. These
general event categories were used as a basis for representing event activity at the
Center.


IV. Survey Results

9

For purposes of understanding the survey data, local attendance, when referenced,
refers to Louisville and suburban-Louisville (collectively Louisville metro area)
residents; and non-local attendees are those beyond the Louisville metro area.



As shown in the chart, the share of attendees originating from outside the Louisville
metro area ranged between 24 percent and 44 percent for non-convention events.
Concerts are generally known for having a relatively high percentage of non-local
visitation, with a somewhat lower non-local attendee base for family shows. University
of Louisville Mens Basketball drew largely from the local area; however, 24 percent of
attendees originated from outside the Louisville metro area. Surveys at a recent
national convention understandably show a very high proportion of attendees as non-
local.





Note: Fami l y shows represent a wei ghted-average of Monster Jam and Ci rque du Sol ei l
Source: Patron i ntercept surveys, 2014
Place of Residence
KFC Yum! Center Event Attendees
73%
4%
56%
76%
27%
96%
44%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Family Shows
Conventions
Concerts
Louisville Men's Basketball
Louisville Metro Area Outside Louisville Metro Area

IV. Survey Results

10

Non-local Attendees Purpose for Visit

Of the non-local attendees referenced in the above chart, a large majority were visiting,
first and foremost, to attend the Center event. In other words, had the event not been
held, the large majority would not have been visiting and spending money in Louisville.
This gives insight into the impact that the Center has with respect to non-local
attendees to the market. The following chart presents the percentage of non-local
attendees whose primary purpose for visiting Louisville was to attend a Center event.



Overnight Stay in Louisville

Visitors to the Louisville metro area were asked to indicate whether they were staying
overnight in Louisville in conjunction with their event attendance. The following chart
presents a summary of the percentage of non-local event attendees staying overnight in
Louisville, segmented by the four identified event types.

Note: Fami l y shows represent a wei ghted-average of Monster Jam and Ci rque du Sol ei l
Source: Patron i ntercept surveys, 2014
Non-Local Attendees
Event is Primary Purpose for Visit to Louisville
97%
100%
98%
87%
3%
2%
13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Family Shows
Conventions
Concerts
Louisville Men's Basketball
Yes No

IV. Survey Results

11


As can be seen in the chart above, aside from those attending conventions in Louisville,
the percentage of non-local attendees staying in hotels ranged from 11 percent for
concerts to 26 percent for Louisville Mens basketball. Conventions, understandably,
draw attendees that often require overnight accommodations.


Out-of-Arena Spending Levels

Patrons were asked to estimate the amount they spent before and after the event (out-
of-arena) in conjunction with their attendance at a Yum! Center event. Further,
respondents were asked to break down that spending into several categories including
lodging, food and beverage, shopping/retail, entertainment, transportation, and other
spending. These numbers provide the bases for developing out-of-arena direct
spending estimates.

Note: Fami l y shows represent a wei ghted-average of Monster Jam and Ci rque du Sol ei l
Source: Patron i ntercept surveys, 2014
Overnight Stay in Louisville
Non-Local Resident Event Attendees
13%
99%
11%
26%
87%
1%
89%
74%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Family Shows
Conventions
Concerts
Louisville Men's Basketball
Yes - Staying Over Night No - Not Staying

IV. Survey Results

12

The following chart provides a breakdown of total out-of-arena, per-capita spending
estimated to take place over the time of the event, separated by local and non-local
attendees, for the four event categories surveyed.


Local Attendees Non-local Attendees
Louisville Men's Basketball $21.13 $118.22
Concerts $13.43 $143.38
Family Shows $6.45 $123.02
Conventions $44.06 $278.81
Note: Represents out-of-arena spending ov er the course of the ev ent
Source: Intercept surv ey s, 2014
Out-of-Arena, Per-capita Spending



As noted above, per-attendee spending for Louisville metro area attendees has been
estimated at between $6.45 for family shows, increasing to $21.13 for Louisville Mens
Basketball, and $44.06 for conventions. Note that there are very few local convention
attendees. For attendees originating from outside the Louisville metro area, spending
ranged from $118.22 for family shows, to $143.38 for concerts. Again, conventions
generate a significantly higher spending level at $278.81.


**********

The results of the patron intercept surveys are considered in conjunction with the
historical operating data for KFC Yum! Center as a means of quantifying the economic
and fiscal benefits generated by the Center.




V. Economic & Fiscal Impact Analysis

13

The purpose of this section is to provide a detailed analysis of the specific economic and
fiscal benefits generated within the Louisville economy as a result of KFC Yum! Center
operations. This section is divided into the following areas:

Event-Level Data & Assumptions
Direct Spending
Economic Impacts
Fiscal Impacts


Event-Level Data & Assumptions

The following is a description of key data and assumptions obtained from KFC Yum!
Center management, University of Louisville representatives and patron surveys
conducted for the purposes of generating economic impact estimates. These
assumptions are used throughout the remainder of this section to estimate the
economic and fiscal benefits generated to Louisville by KFC Yum! Center operations.

Events & Attendance:

Event categories, for purposes of this study and encompassing all Center activity,
were assumed as follows: Louisville mens basketball, Concerts, Family Shows,
Conventions, Other Sports/Tournaments, Louisville womens
basketball/volleyball, and Meetings & Banquets/other. These categories are
used throughout the remainder of the study to estimate direct spending levels
associated with Center operations. The following chart provides an event
breakdown by year:


2010-11 2011-12 2012-13 2013-14
(1)
Louisville Men's Basketball 22 23 21 23
Concerts 16 18 22 26
Family Shows 13 18 24 19
Conventions 0 2 2 4
Other Sports/Tournaments 0 3 8 3
Louisville Women's Basketball/Volleyball 18 19 32 26
Meetings & Banquets/Other 0 0 28 30
Total 69 83 137 131
(1) Budgeted information was included in 2013-14 numbers
Source: KFC Yum! Center Management, 2014
KFC Yum! Center Events, by Event Type
First Four Years of Operation




V. Economic & Fiscal Impact Analysis

14

Annual drop attendance figures for the event categories were provided by
Center management and are displayed in the following chart. As can be seen,
attendance levels all four years have hovered around 800,000 attendees. The
largest group, Louisville mens basketball, has ranged from approximately
330,000 to 385,000 attendees.

2010-11 2011-12 2012-13 2013-14
(1)
Louisville Men's Basketball 384,605 358,198 324,075 331,839
Concerts 183,582 173,411 238,979 249,609
Family Shows 95,878 103,518 63,766 71,215
Conventions 0 20,000 14,000 54,000
Other Sports/Tournaments 0 78,500 40,113 23,110
Louisville Women's Basketball/Volleyball 138,109 77,901 157,234 109,495
Total 802,000 812,000 838,000 839,000
(1) Budgeted information was included in 2013-14 numbers
Source: KFC Yum! Center Management, 2014; University of Louisville, 2014
First Four Years of Operation
KFC Yum! Center Annual Drop Attendance, By Event Type



Per the patron intercept surveys, non-local attendee percentages were
identified. In some cases, category-specific data wasnt available and/or a
certain level of event variance within a category needed to be addressed. For
example, within the concert category, there are numerous genres represented,
and variances are likely in spending levels and attendee origination.
Adjustments are made to reflect these nuances. Additionally, attendance at
smaller meetings and banquets were estimated to be nearly 100 percent local
and has not been included in the analysis.


V. Economic & Fiscal Impact Analysis

15

The following chart presents the percentage of attendees assumed to be non-
local, or originating outside the Louisville metro area, based on survey data:

2014
Louisville Men's Basketball 24%
Concerts
(1)
37%
Family Shows 27%
Conventions 96%
Other Sports/Tournaments 30%
Louisville Women's Basketball/Volleyball 12%
(1) Survey data are adjusted to reflect concerts with a more local attendee base.
Source: Intercept surveys, 2014
Event Attendance - Percent Non-Local
Per Patron-Intercept Surveys



Direct Spending

As mentioned, the initial step in estimating KFC Yum! Center economic impacts is to
calculate the direct spending that occurs as a result of Center operations. Direct
spending occurs in three areas In-Arena spending, Out-of-Arena spending, and Other
Arena spending. Spending estimates for each of these areas, specific to Louisville and
the KFC Yum! Center, are explained below.

In-Arena Spending:

In-Arena spending consists of event spending by Center patrons that takes place
within the Center. In order to arrive at an annual total for this level of spending, a
number of key data points, specific to event type, are needed, including total annual
paid attendance, average ticket price, total annual actual attendance (or drop
attendance), and per-capita spending for food and beverage (f&B) sales and
merchandise sales. CSL worked with Center management and University of
Louisville athletic department officials to gather the necessary information. The
close of the 2013/2014 fiscal year is not until June 30
th
, so some degree of year-end
budgeted or expected event, attendance, and pricing data for the year, provided by
Center management, was included in the model.

Applying per-ticket pricing and per-capita f&B and merchandise sales to attendance
figures provides total sales estimates for event-related, in-arena spending, broken
down by three categories Ticket Sales, Concessions Sales, and Merchandise Sales.
The following chart presents direct in-arena spending for the four years, 2010 to
2014.


V. Economic & Fiscal Impact Analysis

16

Gross I n-Arena Spending by Category
2010-11 2011-12 2012-13 2013-14
(1)
Tickets $30,149,883 $31,333,385 $32,112,989 $38,202,175
Concessions 7,170,149 7,238,294 8,021,177 7,401,998
Merchandise 1,674,397 1,628,973 2,445,276 2,179,564
Total $39,000,000 $40,200,000 $42,600,000 $47,800,000
(1) 2013-14 numbers based in part on budgeted event and financial data



As can be seen in the above chart, in fiscal year 2013/2014, direct in-arena spending
totalled $47.8 million, inclusive of $38 million in ticket sales, $7.4 million in
concessions, and $2.2 million in merchandise sales.

When considering the impact of non-local event attendance and the generation of
spending that wouldnt necessarily have occurred in the market otherwise, it is
important to break down each direct spending channel to show the amount
generated by non-local attendees. Based on survey data, as to attendee origination,
approximately 30 percent of total gross in-arena spending was generated by non-
local attendees.


Out-of-Arena Spending:

Out-of-arena spending consists of spending by Center patrons at local businesses
that takes place in conjunction with attendance at Center events. This spending is
generally separated into six categories, including lodging, food & beverage,
shopping, entertainment, transportation and other.

To estimate gross out-of-arena spending, per-capita figures for the six spending
areas, obtained via the patron-intercept surveys discussed earlier in the report, were
applied to Center event attendance figures. Per-capita spending data were gathered
with specific to both local and non-local event attendees, and applied to relevant
total attendee figures. In some cases, assumptions were made in order to apply
survey data to specific event categories.


V. Economic & Fiscal Impact Analysis

17

The following chart present total out-of-arena direct spending by spending category
generated by all attendees to the Center over the past four years.


Total Out-of-Arena Direct Spending
2010-11 2011-12 2012-13 2013-14
(1)
Lodging $1,381,789 $4,823,086 $3,792,407 $10,166,647
Food & Beverage 10,620,692 13,098,801 12,912,275 16,617,905
Shopping 929,412 1,649,763 1,448,610 2,748,129
Entertainment 428,406 545,481 514,497 680,990
Transportation 673,714 772,930 779,100 874,615
Other 881,130 992,240 1,060,094 1,259,380
Total $14,900,000 $21,900,000 $20,500,000 $32,300,000
(1) 2013-14 numbers based in part on budgeted event and financial data


As noted above, total out-of-arena spending has ranged from $14.9 million in the
initial year of Center operations, to $32.3 million in the current fiscal year. The
considerable year-over-year increase that occurred between 2012-13 and 2013-14 is
the result of an additional 40,000 convention attendees in the latter year. Only
convention events that would not have booked in Louisville without the availability
of the KFC Yum! Center were included in this analysis. Nearly all of those attendees
were non-local, which had a dramatic effect on lodging and food and beverage
spending.

The share of total out-of-arena spending taking place as a result of attendees from
outside the metro area was nearly 60 percent over the four-year period.


Other Arena Spending:

There are certain revenue streams that flow through the KFC Yum! Center and/or
that are directly related to Center operations that arent accounted for in traditional
per-capita ticket, f&b and merchandise calculations, such as naming rights,
sponsorships, certain premium seating charges, and other various event and non-
event revenue. These streams are considered direct spending and should be
accounted for in overall impacts.

The following chart presents other arena direct spending identified in the review of
Louisville Arena Authority and KFC Yum! Center financial information. It should be
noted that upon the arrival of AEG as operator (July 1, 2012), Center operations
were placed on a 7/1 to 6/30 fiscal year for reporting purposes. Louisville Arena
Authority financial information reflects a calendar year. Because of this, certain
discrepancies in the information had to be adjusted and/or assumptions were made
in order to aggregate relevant data on a consistent calendar basis.

V. Economic & Fiscal Impact Analysis

18



Other Arena Direct Spending
2010-11 2011-12 2012-13 2013-14
(1)
Premium Seating $15,132,050 $13,141,096 $13,581,456 $13,990,096
Naming Rights 1,114,286 1,300,000 1,300,000 1,300,000
Sponsorships 3,861,740 2,756,732 2,855,023 2,756,732
Event Revenue 2,547,058 3,693,705 3,972,547 3,267,400
Other I ncome 55,058 96,218 167,364 352,340
Total $22,700,000 $21,000,000 $21,900,000 $21,700,000
(1) 2013-14 numbers based in part on budgeted event and financial data



It is difficult to break-out local vs non-local other arena spending. However, it is
likely that many of the premium seating patrons are located outside the Louisville
metro area and may not have otherwise made purchases at the Center.


Total Direct Spending:

Total direct spending is simply the aggregate of In-Arena, Out-of-Arena, and Other
Arena spending, representing all spending associated with KFC Yum! Center
operations. The following chart presents total direct spending over the four years
since the Centers opening, broken down by individual revenue streams.


2010-11 2011-12 2012-13 2013-14
(1)
I n-Arena Spending $38,994,428 $40,200,652 $42,579,442 $47,783,737
Out-of-Arena Spending 14,915,142 21,882,301 20,506,984 32,347,666
Other Arena Spending 22,710,192 20,987,749 21,876,390 21,666,567
Total $76,600,000 $83,100,000 $85,000,000 $101,800,000
(1) 2013-14 numbers based in part on budgeted event and financial data
Total Direct Spending



Again, the dramatic out-of-arena spending year-over-year increase between 2012-13
and 2013-14 is generally a result of the increased convention business in the latter
year.

Based on survey research, it is estimated that approximately 30 percent of total
direct spending (including other arena spending), or nearly 40 percent (including just
in-arena and out-of-arena spending) originates from non-local attendees. Survey
results show that most non-local attendees would not have been visiting Louisville

V. Economic & Fiscal Impact Analysis

19

had they not been attending a Center event, meaning very little of that direct
spending would have occurred.

Cumulative direct spending figures for the four years since opening, shown below,
are used as a basis throughout the remaining sections of the report to estimate
economic and fiscal impacts.


2010-2014
I n-Arena Spending $169,558,259
Out-of-Arena Spending $89,652,093
Other Arena Spending $87,240,898
Total $346,500,000
Total Direct Spending - Four-year Cumulative Total



Economic Impacts

As the direct spending flows throughout the local and state economy, additional rounds
of spending, employment and earnings are generated. The total impact generated is
estimated by applying specific industry multipliers to the initial expenditure to account
for the total economic impact of the re-spending activity, as described in the
Methodology section above.

The multipliers used in this economic impact analysis as generated by the IMPLAN
economic analysis system specifically for the Jefferson County area are presented
below.


Economic Impact Multipliers for Jefferson County
Industry Output Employment Earnings
Arena Operations 1.750 26.547 0.961
Hotel 1.457 12.062 0.458
Restaurant 1.477 20.070 0.599
Entertainment 1.470 22.362 0.722
Retail 1.401 21.444 0.651
Other Local Transit 1.470 22.396 0.827
Other Industries 1.411 12.232 0.574
Note: Employment multiplier is applied to direct spending divided by 1,000,000.
Source: Minnesota IMPLAN Group, 2014




V. Economic & Fiscal Impact Analysis

20

The total estimated direct spending generates effects on the economy that extend
beyond the initial expenditures. The chart below summarizes the overall economic
effects associated with KFC Yum! Center direct spending over the four-year period, 2010
to 2014. Total impacts, as well as those impacts generated through non-local direct
spending, are presented.

Total Estimated Economic Impacts (2010 - 2014)
Total Direct Spending $346,000,000
Non-Local Attendee Direct Spending $101,000,000
Total Jobs
Non-Local
8,400
$162,000,000 Non-Local $77,000,000 2,200
Total Earnings $581,000,000
Non-Local
Direct Spending
Employee Earnings Economic Output Employment
Total Output $299,000,000


As outlined in the exhibit, it is estimated that the KFC Yum! Center, in its first four years
of operation, generated $346 million in direct spending, $581 million in total output
(total direct and secondary spending), nearly $300 million in total employee earnings
and supported an estimated 8,400 full and part-time jobs. Of those totals, non-local
attendee direct spending accounted for $162 million in output, $77 million in employee
earnings and supported 2,200 jobs.


Fiscal Impacts

Beyond spending, output, earnings and employment data, KFC Yum! Center operations
generate incremental tax revenues for the state, county and city. The following
assumptions were made in preparing such estimations:
It is estimated that 95 percent of restaurant and hotel sales are taxable,
reflecting the fact that there is occasional event activity from tax exempt
organizations.
Approximately 95 percent of entertainment expenditures are subject to
tax, reflecting the tax base specific to various entertainment activities.
Approximately 95 percent of retail industry transactions are taxed.

V. Economic & Fiscal Impact Analysis

21

An estimated 80 percent of local transportation, including gasoline sales,
which are not included in the State tax base, is assumed to be taxed.
It is estimated that 90 percent of employee earnings are subject to the
Occupational Fee.
Twenty nine percent of indirect spending (total output less direct
spending) is assumed to be taxed as general sales.
Tax rates used for the analysis reflect 6.0 percent state sales tax, 2.0
percent for bond debt service, 4.5 percent for LCVB funding, 1.0
percent for the Kentucky Center for the Arts, 1.0 percent for the Tourism,
Meeting and Convention marketing fund, and a 0.51 percent transient
room tax (which represents the application of state sales tax to the other
taxes). Additionally, a 2.2 percent Occupational Fee is assessed on all
employee earnings.

Based on the assumptions above and the application of state and local tax rates to the
spending associated with KFC Yum! Center operations in its first four years, the
following tax estimates have been calculated. Note that these estimates do not include
any property tax impacts that can be attributed to the Center.

Current Tax
Tax Rates Collections
Sales Taxes:
State Sales Tax 6.00% $22,000,000
Other Taxes on Hotel Spending:
Bond Debt Service (for 30 years or the retirement of all bonds) 2.00% 400,000
Louisville CVB funding 4.50% 900,000
Kentucky Center for the Arts 1.00% 200,000
Tourism, Meeting and Convention Marketing Fund 1.00% 200,000
Transient Room Tax (State sales tax on the other taxes) 0.51% 100,000
Occupational Fee on Earnings:
Portion allocated to local government 1.25% 3,400,000
Portion allocated to Louisville school board 0.75% 1,400,000
Portion allocated to Louisville TARC 0.20% 500,000
TOTALS $29,100,000
Summary of Tax Collections Generated by KFC Yum! Center Operations
First Four Years of Operations



As shown in the figure, over $29.1 million in tax revenue has been generated through
direct spending related to the KFC Yum! Centers four years of operations. This was
made up primarily of $22.0 million in revenue generated through the States 6.0 percent
sales tax applied to total direct and indirect spending over the period.