FORSYTH ARENA ECONOMIC AND FISCAL IMPACT ANALYSIS Forsyth County, GeorgiaDecember 17, 2022 Mr. Carl Hirsh Mr. Rich Orolo Managing Partner Principal Stafford Sports Stafford Sports Dear Mr. Hirsh and Mr. Oriolo: Stone Planning LLC has completed its economic impact analysis of the planned Forsyth Arena. The attached report presents the results of our research, analysis, and estimates, The analyses presented in this report are based on estimates, assumptions, and other information developed from data provided by Stafford Sports and others. The sources of information and the basis of assumptions and estimates are stated in this report. Some assumptions inevitably will not materialize and unanticipated events and circumstances may occur. Therefore, actual results achieved will vary from those described and the variations may be material. The findings presented are based on analysis of present conditions in the Forsyth County area. Any significant changes in the characteristics of the local community could materially impact conclusions developed in this study. Furthermore, all information provided to us by others was not audited or verified and was assumed to be accurate. ‘This report has been prepared for use by our client and its stakeholders, and should not be relied upon by any other party. The report has been structured to Provide the research, conclusions, and estimates to provide you with information to strategically analyze the economic- ard fiscal-related benefits from construction and operation of the arena. This report and its findings may not be included or reproduced in any public offering statement or other financing document. We very much appreciate the assistance and cooperation that has been provided in the completion of this report, and have enjoyed working with you. Should you need anything else, please let us know. Sine Stone Planrfag LLCTABLE OF CONTENTS EXECUTIVE SUMMARY ECONOMIC IMPACTS OVERVIEW: ECONOMIC & FISCAL IMPACTS - FORSYTH ARENA ..EXECUTIVE SUMMARYEXECUTIVE SUMMARY Stone Planning LLC was engaged by Stafford Sports to provide an economic and fiscal impact analysis of the planned Forsyth Arena. This section summarizes the estimated impacts from operations and construction of the facility. Summary of Economic and Fiscal Impacts ‘As described in more detail in this report, the ‘ollowing economic and fiscal impacts are estimated for the arena and NHL franchise, for their first year and the arena’s construction project. All impacts are estimated at the county level, with the exception of taxes, which also include state taxes. Operational impacts (annually recurring) © Spending - $198.3 million in net direct spending, $78.4 million in net indirect spending, and a resulting $276.7 million in total net spending, (© Jobs - 73 net direct jobs, 17 net direct jobs, and a resulting 90 total net jobs. © Income - $26.1 milion in net direct income, $10 milion in net indirect income, and $36.1 million in total net income. © Taxes - $6.6 million in county sales taxes; $17.9 million in state sales, payroll, and income taxes. © Construction impacts (one-time): © Spending - $156 million in net direct spending, $81.7 milion in net indirect “spending, and a resulting $237.7 million in total net spending. (© Jobs ~ 1,385 net direct jobs, 1,141 net indiract jabs, and a resulting 2,526 total net jobs. © Income ~ $84 million in net direct income, $54 million in net indirect income, and $138 million in total net income. © Taxes - $18.4 million in state income taxes.EXECUTIVE SUMMARY Economic and Fiscal Impacts Overview Economic impacts estimate the incremental spending, as well as the resulting jobs, income, and tax revenues, that are captured by a geographic area. In this analysis, we estimate both the gross and net impacts to Forsyth County; gross impacts are based on the total revenues of the arena and NHL team, and net impacts include only the revenues that are generated from out-of-county residents and those that would not have otherwise occurred but for the presence of the arena and team. This analysis focuses only on the impacts generated within the arena and from team operations; impacts associated with attendee spending outside of the arena is addressed separately. And while we include impacts from the NHL team’s office operations, we do not include the business operations of any other arena tenants. The following operational impacts are estimated: © Spending/Revenues ~ this includes the revenues captured by the team and arena, from attendee spending and othar sources. In addition to the direct spending (such as the amount spent by an attendee for a ticket), multipliers are used to estimate later rounds of indirect spending before the direct spending leaves the local economy. (© Jobs and Income ~ these impacts estimate new employment and the associated income earned by local residents as a result of the operations of the team and arena. © Fiscal impacts - represent new tax revenues that are created by the spending impacts, based on local and state tax rates, Economic and fiscal impacts will also be genevated by the construction of the arena, to the extent that county businesses and workers participate in the construction project. These impacts are alea estimated. Estimated Economic and Fiscal Impacts Based on the projected operations of the team and facility, as well as assumptions regarding attendee characeeristics and the arena's, construction, the following table summarizes the facility's estimated economic and fiscal impacts from its first year of operations and its construction. The operational impacts will recur from year to year (but will vary based on actual team and arena operations); the construction impacts are one-time impacts. able 1. Summary of Economic and Fiscal Impacts os | Neti) @ | as Year) impacts. Opens Spancng ($0003 sz29se1 | $196,265 | 570395 | s276.000 Income $0008) $97,140 | s26,148 $96,113 County Sales Ta $0008) ses76 : a ‘State Sales Tex (60008 $876 e - ‘State Payal Tax ($0009 = = 2 Ses of Mater ($0003) ss20,000 | s1s6.000 | ser.66 | saa Income ($0008) s2eo,a00 | se4 ssaoa | $139,046 Jobe aoe | izes | 2526 sisaz | - - 7ECONOMIC IMPACTS OVERVIEWECONOMIC IMPACTS OVERVIEW In general, economic impacts estimate the incremental spending, as well as the jobs, income, and tax revenues, that are ceptured by a geographic area as a result of an event. In this case, “event” can refer to anything renging from a weather event to the presence of an irstitution, industry, facility, or an event such as a concert. For the purposes ofthis analysis, the event is the future operations of the Forsyth Arena and its NHL franchise, as well as the arena's construction. The geographic area for which we are interested in quantifying these impacts is primarily Forsyth County, although state taxes are also estimated For a sports and entertainment venue, economic impacts to an area (such Forsyth County) are generally considered to be based on the revenues generated from spending by non-local residants that come to the area primarily for the purpose of attending a facility event, as well as other facility and team revenues that would not otherwise be generated but for their local presence. As an example, the spending by a county resident who attends a hockey game at the arena is considered to be part of the gross ‘economic activity created by the facility, but not the economic impacts. An Atlanta (Fulton County) resident who travels to the arena for an event would generate economic impacts to Forsyth County from her visit. In addition, seem and arena revenues generated fom sources suchas sponsorships and media rights are considered to be impacts, as they are the result of the presence of the arena and team entities and would not otherwise occur locally; for example, there are no similar facilities and franchises in the county that would attract this spending in their place, if they did not exist. This analysis estimates spending impacts that occur within the arena, as 3 separate study is quantifying impacts in the surrounding district (by arena attendees and other visitors). Economic impacts that can be estimated include the following: © Spending — for the arena, this includes revenues captured from the actual spending by event attendees for curchases of tickets, food and drinks, merchandise, and other items. The spending that is captured locally is part ofa facility's economic impacts. As mentioned above, also included as an economic impact is otter team- and facilty-related revenue such as from sponsorships and media revenues These revenues can be separated into gross and net impacts. Gross impacts include the revenues generated from spending by local residents, as described above, and can be considered the full economic activity associated with the arena and team. This revenue from local residents’ spending is considered to be “transfer spending” that would have otherwise been spent locally, althouch some would likely leave the area for entertainment in other markets (for example, @ Haviks game in Atlanta instead of a hockey game). Net impacts, which are a subset of gross impacts, only include the revenue from spending by non-local residents and other revenues that would not occur but for the presence of the team and arena, ©. Jobs and Income ~ these impacts estimate new employment and the associated income earned by local residen's as a result of the operations of the arena and team. To the extent that these employees live in Forsyth County, they will create local joks, and their income will also benefit the local economy. © Fiscal impacts — represent new tax revenues that are created by the spending impacts. For example, the purchase of a merchandise item will generate sales tax revenue. For the arena, relevant local taxes include the county's 3% sales tax, and we also include the state's 4% sales tax and its payroll and income taxes. © Construction impacts ~ in addition to the recurring impacts generated from operations, the construction of the facility will also create economic impacts, to the extent that local firms and individuals participate in the construction project. Similar to the other types of impacts, construction- related impacts will include spending on local firms and workers, and the associated employment and resulting taxes.ECONOMIC IMPACTS OVERVIEW In addition to the direct spending impacts, economic multipliers (which are Unique for every geographic area) are applied to estimate later rounds of spending before the initial spending leaves the local economy. For example, some of the spending captured by the arena is then spent on various items to support its operations, and these multipliers estimate the amount that is spent locally based on the presence of suppliers and other industry partners within a geographic area. This later spending - or indirect impacts - are added to the direct impacts to estimate total impacts. Multipliers are also applied to direct jobs and income.ECONOMIC & FISCAL IMPACTS — FORSYTH ARENAECONOMIC & FISCAL IMPACTS - FORSYTH ARENA Assumptions Arona and T: ‘As primary inputs to our economic impact assumptions, we have adopted Stafford Sports’ projections of future arena and team operations, including arena usage (events and attendance) and revenues. ‘The revenues generated by the facility and team, which are largely driven by arena usage, represent a significant part of the overall economic activity that is created. These revenues include spending on items such as tickets, concessions, and others, although some of these revenues are retained by ‘an event, promoter, and/or artist rather than the arena or team. For the purposes of this analysis, we have relied on projections of future operations of the arena and NHL franchise as developed by Stafford Sports. However, we have made adjustments and have applied various assumptions to their projections for the purposes of estimating ecoromic impacts, as described in more detail below. © Ticket revenues - this category includes general-admission and premium-seat tickets, from NHL preseason, regular-season, and playoff ‘games. Only NHL ticket sales are considered as part of the economic impacts, as these revenues would be retained by the franchise (a local entity). Other ticketed events held at the arena, such as concerts, are assumed to be rented to a promoter who would retain all ticket revenues and/or share with performers. As a result, these revenues would not affect the local economy, assuming that these promoters/performers are generally non-local. In order to later estimate ‘the net impacts from ticket revenues, we epply assumptions regarding the share of non-local attendees who will purchase tickets. (© Event rental income — consists of fees paid to the arena entity from events that rent the facility (including a share of NHL ticket revenues that constitute the team’s rent). Because of the lack of a similar venue in the ‘county, these gross revenues are considered to be net impacts locally © Attendee spending on F&B, merchandise, ticket rebates, faclity fees, ‘and parking: © FRB, ticket rebates, facility fees, and parking — similar to ticket revenues, these revenues (from all events) will be reduced by the estimated share of revenues generated by local attendees, in order to arrive at net impacts. However, F&E and facility fee revenues are also reduced by a percentage of reverves that are assumed to be shared with concert promoters, who are presumably non-local. © Merchandise — gross revenues from NHL franchise-related merchandise are also reduced by the estimated share of revenues by local attendees. Merchandise sales from other events are similar to ticket sales from these events in that much of the revenue never impacts the local economy, as it is captured directly by the event/performer, with the arena retaining small commission, This commission from non-NHL garres is considered the gross impact, which is then reduced by local zttendees' spending. Advertising, sponsorship, and naming rights; premium seating; media: and other revenues ~ with one exception, all gross team and facility revenues in these categories are considered to be net impacts to the county, due to the lack of a similar venue and team that provide the ‘opportunities to generate the revenues. However, it is assumed that concert promoters will retain luxury suite ticket sales and this revenue is the one item that is deducted from gross revenues,ECONOMIC & FISCAL IMPACTS - FORSYTH ARENA ‘Attendees’ Geographic Oriain Because impacts are being considered for Forsyth County, we differentiate between facility attendees who are county residents and those who live outside of the county. As previously described, spending by all attendees is ‘considered the gross spending impact; however, only those who are non local residents are considered in the calculations of net economic impacts to the county. Based on analysis of available data from other professional sports teams and arenas, as well as local geography (such as the site's location at the Fulton County border), we make the following assumptions regarding the geographic origin of event attendees: © NHL games - 25% of attendees live in Forsyth County and 75% live outside of the county. (© Other sports ~ 20% live in Forsyth County and 80% live outside of the county. © Family shows ~ 25% live in Forsyth County and 75% live outside of the county. Concerts ~ 20% live in Forsyth County and 80% live outside of the county. © Civicfoutdoor events - 40% live in Forsyth County and 60% live outside of the county.ECONOMIC & FISCAL IMPACTS - FORSYTH ARENA Projected Impacts from Operations Spending First, we estimate the gross direct economic activity generated by the arena ‘and team, which includes transfer spending by local residents. This transfer spending is then deducted from gross spending to arrive at the estimated net economic impacts to the county. As previously described, we also reduce gross impacts by any amounts that essentially do not enter the local economy, such as ticket sales from concerts. Gross impacts from ticket revenues, event rentals, F&B, merchandise, advertising and sponsorships, ticket rebates and fees, premium seating, parking, media revenues, and other revenues are estimated to be ‘approximately $230 million in the first year of the arena's operations. Because a majority of the arena’s attendees ate assumed to live outside of Forsyth County, most of the gross impacts are considered net impacts to the county (approximately $198 million of $230 million). Multiplier Effect and Indirect Spending As the spending from the direct economic activity takes place in the county's economy, it will tigger other, indirect, levels of economic activity. For example, the arena and team entities will purchase various goods and services from local and regional vendors (e.g.. utilities, inventory, supplies, labor, and the like). As this occurs, these workers and vendors receive income and, in turn, make purchases of goods and services themselves. Within each round, some spending occurs in the local economy and some flows outside of that economy (referred to as “leakage”). The total amount of spending that stays within the local economy includes both the first round (‘direct”) and all subsequent rounds of econorric activity (“indirect”). These total impacts are estimated through the use of multipliers that are applied to the estimates of direct impacts. The multipliers are calculated by the federal government's Bureau of Economic Analysis and are unique to each geographic area. Multipliers differ from area to area because of geography; proximity to other business centers and the size of an area will affect the length of time that direct spending is retained within an economy before fully leaking out. In addition, different sectors of an economy have unique multipliers, based on their own proximity to other industry-specific ‘economies, vendors and suppliers, and the like. For this analysis, unique multipliers for different industries are used, as every type of spending that comprises the direct impacts ("Category") has @ multiplier, based on a corresponding “Industry Sector." As the following table shows, the muktipliers for various incustries generally range from approximately 1.3 to 1.5. In other words, a multiplier of 1.5 indicates that total economic activity is estimated at 1.5 times the estimate of direct impacts; this includes the direct impacts (at 1.0) and the indirect impacts (at 0.5). Multipliers typically increase as the size of a geographic ares increases, as it takes more time for later rounds of spending to leave a larger area (for example, Georgia compated to Forsyth County)ECONOMIC & FISCAL IMPACTS - FORSYTH ARENA Based on these multipliers, the total of $198 milion in nat direct impacts result in an additional $78 million in indirect spending. As a result, the total net spending impacts to Forsyth County are approximately $277 million. Jobs and Payroll The operation of the arene and team will create jobs and associated personal income; these employment and income impacts to the county refer to jobs and income that are captured by residents of the county only, Direct employment (fulltime and part-time) of arena and team staff (including players), as well as their earnings and location of residence, are based on assumptions developed by Stafford Sports and Stone Planning, For the purposes of this analysis, we have assumed that 30% of all employees, including players, will live in the county. Similar to spending, multipliers are used to estimate indirect employment and earnings, based on the direct impacts. For Forsyth County, the employment and earings multipliers for the "Performing Arts, Spectator Sports, Museums, and Related Activities" industry sector are 1.2286 and 1.3811, respectively. Gross employment and income impacts of the arena and team are assumed to be approximately 245 full-time equivalent jobs and $87 million in payroll Based on the assumption that 30% are county residents, the resulting net impacts are 73 FTE jobs and $26 milion in payroll After applying the relevant multipliers, the total net impacts to the county are 90 FTE jobs and $36 million in payrollECONOMIC & FISCAL IMPACTS - FORSYTH ARENA Fiscal Impacts ‘As previously described, fiscal impacts represent new public-sector tax revenues that are generated based on the presence of the facility and team. The following taxes and rates are considered: © Sales tax ~ 3% to the county and 4% to the state. Sales taxes are assumed to be generated by spending on tickets, premium seating, F&B, parking, and merchandise. © Payroll tax - 5% of salaries, to be captured by the state, based on projected salary expense (including 50% of players) © Personal income tax — 5.19% of salaries, based on state tax rates that will take effect in 2027. © Corporate income tax ~ 5.75% of arena and team net income (likely not including all expenses of either entity), o be captured by the state. The following table summarizes the estimated county and state taxes to be generated in the arena's first year, based on the rates and the projected {gr08s spending, as well as other assumptions described above. ‘As shown, total county taxes are estimated to be approximately $6.6 million and state taxes are estimated to be $17.9 millon.ECONOMIC & FISCAL IMPACTS - FORSYTH ARENA Projected Impacts from Construction Construction of the arena will also generate economic and fiscal impacts to the county and state. First, we make the following assumptions regarding the construction project: © The arena’s construction cost will be $800 million © Of the total cost, 65% ($520 milion) will be for materials and 35% ($280 milion) will be for labor. © 30% of contracting firms and construction workers will be based in Forsyth County. Similar to other impacts, multipliers are used to estimate indirect construction-related impacts, based on the direct impacts, For Forsyth County, the construction industry multipliers are 1.5235 (spending), 1.8242 (employment), and 1.6434 (earings). Based on these assumptions, the estimated construction-related impacts to Forsyth County are summarized below. (© Business income (from purchases of materials and services) — total net impacts of $238 million © Employment - total net impacts of approximately 2,525 FTE jobs. © Worker income - total net impacts of $138 million Also, based on these impacts, we estimate the state's fiscal impacts from personal income (at an assumed 5.49% rate that will be in effect in 2024) and corporate income (at a 5.75% rate applied to 10% of total captured income, which is assumed to be the taxable net income). The resulting taxes are approximately $3 milion in corporate income tax and $15.4 million in personal income tax.ECONOMIC & FISCAL IMPACTS — FORSYTH ARENA Summary of Projected Economic and Fiscal Impacts The following table summarizes all impacts estimated in this analysis from the operations of the arena and team in their first year, as well as the construction of the arena, Table 4. Summary of Economic and FiSTONE PLANNING www.stoneplanningllc.com