PricewaterhouseCoopers LLP

Greater Louisville Inc.
NBA Market Assessment Executive Summary May 2013
Strictly Private and Confidential - For Internal Company Use Only

Executive Summary

NBA Market Assessment

PricewaterhouseCoopers LLP ("PwC") was engaged by Greater Louisville Inc. ("GLI") to analyze the potential location of a National Basketball Association ("NBA") franchise in the Louisville market. This document provides an executive summary of findings related to the potential viability of a Louisvillebased NBA franchise. Findings have been based on industry trends and a high-level market assessment which to date included market benchmarking and personal interviews with a sample of Louisville-based companies. Additional analyses including surveys of Louisville market residents and supplemental interviews with other local and non-local companies could further refine the findings summarized in this document. PwC previously analyzed the potential location of a NBA franchise in the Louisville market on behalf of GLI in 2000 as part of a study which focused, to a certain extent, on the development of a new arena in Louisville and was based exclusively on industry trends and market benchmarking. Current study findings related to market potential reflect personal interviews with a sample of Louisville-based companies and changes over the past 13 years in industry trends and market benchmarking. 1. The resident and corporate base in Louisville is similar to several existing NBA markets. o Louisville ranks fifth both in terms of households with minimum income of $75,000 and companies with annual sales of at least $5 million when compared to existing NBA markets with less than two million residents. The ranking of the Louisville corporate base drops to seventh when the competitive supply of suites available in each market is taken into consideration. Existing NBA Markets Households: Seat 0.06 0.22 0.20 0.15 0.11 0.12 0.10 0.10 0.13 0.06 0.22 5/8 Companies: Suite 3.5 5.1 4.6 7.0 3.2 2.3 3.6 4.8 4.4 2.3 7.0 7/8

Households Milwaukee Charlotte Indianapolis Salt Lake City Louisville New Orleans Memphis Oklahoma City Average Min Max Rank 323,000 300,000 251,000 251,000 165,000 152,000 140,000 139,000 222,286 139,000 323,000 5/8

Companies 1,147 1,101 983 790 687 449 566 518 793 449 1,147 5/8

2. Louisville has several potential relative strengths, yet other potential NBA relocation markets could be more attractive to the league and/or potential ownership groups based on the relative size of the market, particularly its corporate base. o Potential relative strengths of the Louisville market include a modern arena, a well-established basketball fan base, aboveaverage support of existing sport and entertainment in the market, the absence of other major professional sports, and the availability of a proximate resident base available outside the immediate market should a local NBA team be properly positioned to the broader region.

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Louisville ranks last and seventh, respectively, in terms of households with minimum income of $75,000 and companies with annual sales of at least $5 million when compared to other potential relocation markets. When the competitive supply of seats and suites available in each market is taken into consideration, the ranking of the Louisville resident base improves to fourth while the ranking of the Louisville corporate base remains relatively unfavourable.

Limited to NBA markets with less than two million residents (MSA) Households (minimum income of $75,000) within 60-minute drive of arena Companies (minimum annual sales of $5 million) within a 50-mile radius of arena Ratios based on seat and suite inventory available in each market (MLB, MLS, NBA, NFL, NHL, NCAA) Louisville NBA seat and suite inventory based on league averages Source: ESRI (2012), Dow Jones Companies & Executives (2013), Industry Resources

This information has been prepared solely for the use and benefit of Greater Louisville Inc. and is not intended for reliance by any other person.

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Executive Summary

NBA Market Assessment

3. While the level of support generated by NBA teams in existing markets of similar size varies widely, a few unique challenges, among other typical ones, could impair the ability of a Louisville-based NBA franchise to achieve similar results. o Limited corporate base - a local NBA team would likely need a disproportionately higher level of support per company given the relative lack of corporate depth available in the Louisville market. Feedback from a sample of the corporate market, however, suggests that despite a common desire for a NBA team to serve as a catalyst for community development, there is a general lack of available support for a NBA team, including those local companies who have demonstrated a propensity for such investments; current private suite and premium box holders at the KFC Yum! Center Proximity to an existing NBA market - no two existing NBA markets with less than 3.5 million residents are located within a five hour drive of one another. A portion of the resident base within a 90-minute drive of the KFC Yum! Center also resides within a 90-minute drive of Bankers Life Fieldhouse, home of the Indiana Pacers. Support for college basketball - Louisville has a well-established basketball fan base, but the unique dynamic that exists between the community and college basketball could serve as a potential constraint should a local NBA team be improperly positioned as a competitive versus complementary or differentiated offering.

Potential Relocation Markets Households: Seat 0.29 0.23 0.12 0.11 0.10 0.09 0.06 0.06 0.05 0.13 0.05 0.29 4/9 Companies: Suite 5.0 5.5 5.3 3.2 3.3 3.6 4.1 3.7 3.1 4.2 3.1 5.5 8/9

Households Las Vegas Virginia Beach Anaheim Louisville Columbus Seattle Kansas City St. Louis Pittsburgh Average Min Max Rank 228,000 184,000 1,924,000 165,000 294,000 565,000 304,000 351,000 296,000 518,250 184,000 1,924,000 9/9

Companies 415 459 5,455 687 1,014 1,434 1,091 1,349 1,486 1,588 415 5,455 7/9

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Households (minimum income of $75,000) within 60-minute drive of arena Companies (minimum annual sales of $5 million) within a 50-mile radius of arena Ratios based on seat and suite inventory available in each market (MLB, MLS, NBA, NFL, NHL, NCAA) NBA seat and suite inventory in each market based on league averages Source: ESRI (2012), Dow Jones Companies & Executives (2013), Industry Resources

4. A NBA franchise in Louisville would likely shift existing corporate funds rather than expand the base of support available within the community for sport and entertainment in at least the short-term. o Feedback from a sample of the corporate market suggests any expenditure or investment in a NBA team by local companies would likely not warrant an appropriation of new funds and therefore would require interested companies to reallocate existing funds from other commitments.

This information has been prepared solely for the use and benefit of Greater Louisville Inc. and is not intended for reliance by any other person.

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