Civic Theatre Feasibility and Business Plan

Transcription

Nelson Civic Theatre
Feasibility Study Results
and Business Plan
Submitted by the Nelson Civic Theatre Society
October 15, 2012
Nelson Civic Theatre Society – Feasibility Study Results and Business Plan
Table of Contents
Executive Summary..............................................................................................i!
1. Feasibility Study Results ................................................................................1!
1.1 Demographic Study .............................................................................................. 1!
1.2 Economic Benefits of our Theatre....................................................................... 3!
1.3 Social Benefits of our Theatre ............................................................................. 3!
1.4 What the experts told us....................................................................................... 3!
1.5 Industry context .................................................................................................... 4!
1.6 Stakeholders.......................................................................................................... 5!
1.7 Barriers To Entry ................................................................................................... 7!
2. Business Plan ..................................................................................................8!
2.1 Description of project ........................................................................................... 8!
2.2 Financial Analyses ................................................................................................ 9!
2.3 Comparative Pricing Model ................................................................................ 12!
2.4 Revenue Model .................................................................................................... 12!
2.5 Funding Model..................................................................................................... 12!
2.6 Social outcomes.................................................................................................. 14!
3. Operations ......................................................................................................15!
3.1 Legal structure .................................................................................................... 15!
3.2 Concession .......................................................................................................... 15!
3.3 Sales and marketing plan ................................................................................... 16!
3.4 Staffing ................................................................................................................. 16!
4. Management and Oversight..........................................................................18!
4.1 The Board of Directors ....................................................................................... 18!
4.2 Committees of the Board specific to management.......................................... 18!
5. Building Renovations ....................................................................................19!
5.1 Leasehold Improvements ................................................................................... 19!
5.2 Building Program ................................................................................................ 21!
5.2.1 Option A ............................................................................................................ 21!
5.2.2 Option B ............................................................................................................ 23!
Appendix I: Board of Directors and Key Advisors .........................................25!
Appendix II: Financial Reports .........................................................................26!
Table 2: Balance Sheet – Single-screen, Years 1-3................................................ 26!
Table 3: Cash Flow Statement – Single-screen, Years 1-3.................................... 27!
Table 4: Stmt of Income & Expenses – Single-screen, Years 1-3......................... 28!
Table 5: Statement of Cash Flows (Projected) ....................................................... 29!
Table 6: Statement of Income & Expenses (Projected) ......................................... 30!
Table 7: Capital Budget, Option A, Option B .......................................................... 31!
Table 8: Audio & Video Equipment Budget ............................................................ 32!
Table 9: Funding Mix................................................................................................. 33!
Table 10: Civic Theatre Box Office Model (single-screen) .................................... 34!
Table 11: Box Office & Concession......................................................................... 35!
Table 12: Salaries & Wages...................................................................................... 36!
Table 13: Actual financials ....................................................................................... 37!
Table 14: Pricing Comparative................................................................................. 38!
Appendix III: Population Breakdown for Nelson & Region............................39!
Appendix IV: NCTS Membership Breakdown..................................................39!
Appendix V: Membership Breakdown, Distance from Theatre .....................40!
Appendix VI: Membership Distribution Sample..............................................41!
Appendix VII: Survey Results, Yearly Cinema Visits......................................42!
Appendix VIII: Member Comments...................................................................43!
Appendix IX: Letters of Support.......................................................................44!
Nelson & District Youth Centre ................................................................................ 44!
Watershed Productions ............................................................................................ 45!
Nelson Youth Theatre ............................................................................................... 46!
BR 51 BC Senior Citizens ......................................................................................... 47!
Astral Media ............................................................................................................... 48!
The Capitol Theatre Restoration Society ................................................................ 49!
Association des Francophones des Kootenays Ouest ......................................... 50!
Lions Club of Nelson ................................................................................................ 51!
Nelson & District Chamber of Commerce ............................................................... 52!
Appendix X: Abandoned single-screen theatre model ..................................53!
Appendix XI: Capital Cost Estimate for Theatre Conversion ........................54!
Appendix XII: Approximate breakdown of City's capital costs .....................55!
Appendix XIII: Conceptual Diagrams ...............................................................56!
Lobby View ................................................................................................................ 56!
Auditorium Plan......................................................................................................... 57!
Upper Auditorium Plan ............................................................................................. 58!
Section Through Auditorium Plan ........................................................................... 59!
Option A - New Construction ................................................................................... 60!
Option B - New Construction ................................................................................... 61!
Executive Summary
Preamble
Nelson has been without a movie theatre since 2010. Moviegoers must now drive to
Castlegar or Trail to see a big screen movie, where shopping and dinner out may be part
of the experience, and with travel time of one to two hours and sometimes in the dark or
inclement weather. The Nelson Civic Theatre Society began as a group of citizens with a
shared vision: to restore the Civic Theatre to be able to present first run and second run
Hollywood films, independent and art films, and related activities for the entertainment,
education, and inspiration of Nelson and area citizens.
In four months, since receiving the mandate from the City to undertake the work
contained in this document, our group of dedicated volunteers has:
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Recruited a board of directors with a range of experience
Organized a solid membership drive that has resulted in 1,268 paid members,
raising a total in membership fees of over $27,000
Run a very successful “film night and information session” at the Capitol Theatre
with 225 in attendance as part of our community engagement
Consulted with industry experts, equipment suppliers, architects, contractors, film
booking agents and for-profit and non-profit theatre owner/operators
Consulted with the City of Nelson, Enterprising Non Profits, local groups, and
potential funding agencies
Engaged in cost and market analysis, and financial modeling to determine (a)
whether a movie theatre in Nelson makes sense and (b) if it will be sustainable.
Worked with a quantity surveyor and other professionals to establish cost
breakdowns for a phased approach to leasehold improvements
Our objective is firstly to be financially self-sustaining—we intend to operate the movie
theatre on the basis of sound business principles—and secondly to be a “social
enterprise”—a business operated by a non-profit for the blended purpose of generating
income and achieving social, cultural or environmental goals. Our discussions with
industry experts, including other cinema operators, combined with our own financial
analysis concluded that:
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When comparing single screen models with multi screens, the multi-screen
model provides greater programming options, which in turn results in greater box
office revenues and also greater concession sales for a defined market area;
Programming flexibility is key to ensuring sustainability;
Concession revenues can contribute as much to the “bottom line” as net box
office receipts; and
The Civic Centre is the best-suited location for a movie theatre.
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Feasibility
With the advent of digital technology, relaxed distribution rules, reduced shipping and
box office charges, and with a community-focused programming model in a renovated
space, we believe that the new Nelson Civic Theatre will be a viable enterprise, and a
considerably different model to what our community has experienced.
Our study of market demographics ascertains a total resident market of 26,000+, as well
as a considerable tourist market, and has assisted us in determining audience
demographics. We determined that, using actual box office receipts from available
western Canada cinemas, we could reasonably expect box office receipts in the range of
$550,000 for a three-screen theatre, with revenues for a single screen coming in at
approximately $155,000.
The new Nelson Civic Theatre is positioned as a key aspect to Nelson’s vibrant
downtown. Its situation as a landmark building in the downtown core offers visibility and
accessibility. It offers both economic benefits (direct and peripheral) and social benefits
(through partnerships with organizations and business, employment policies, and
benefits to other nonprofits).
As a part of our process we consulted with stakeholders, including the City of Nelson,
our members, the business community, various local institutions, and funding agencies.
We consulted with industry experts with regard to operations, and building professionals
with regard to leasehold improvements. A combination of operational and building
considerations determined our prudent, phased approach to achieving three-screen
flexibility and increased revenues.
Business Plan
As a community organization, we are uniquely placed to respond to community interests,
unlike a chain cinema. By involving our membership in programming and by building
partnerships with local organizations, we can develop a diverse program that speaks to
the community and that will result in long-term financial success. A standard industry
estimate shows that concession sales can amount to 50% of gross box office receipts,
and yet Nelson has particular demands when it comes to use of local products, therefore
we will seek a mix of traditional concession goods with some that are locally produced.
Using conservative models for attendance and concession spending based on industry
standards, we have conducted a full financial analysis comparing two phased theatre
renovation options towards an identical goal of a three-screen theatre. As a non-profit,
NCTS will return profits to the community through annually reviewed funding programs in
consultation with stakeholders.
Operations
The Nelson Civic Theatre Society is an incorporated non-profit society operating as a
social enterprise (profitability combined with social goals). Through careful and diverse
programming and concession planning, a staffing policy that considers youth and people
with barriers to employment (ideally working with Nelson and District Youth Centre), and
the inclusion of volunteer opportunities as a support to staff and Board, we expect to
satisfy both aspects of social enterprise.
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Management and oversight
Our board of nine directors includes people with business and financial backgrounds,
experience in the cinema industry, and people who have worked in cultural
development. The Board and committees of the board work to oversee and support staff.
See Appendix I.
Building renovations
The theatre is in need of substantial work. There are building code deficiencies,
inadequate HVAC, and the Civic Centre have had minimal maintenance work over the
past decade. The building envelope appears to be sound, and we believe the costs to
bring it up to code are worthwhile to preserve this landmark building.
Working with architects, planners, and a quantity surveyor with expertise in theatres, we
have established, to the best of our ability, the costs of necessary leasehold
improvements with regard to building codes, standards, and public safety, and those
specific to our purposes. We look forward to working with the City to deal with these
problems in a manner that is mutually advantageous.
We propose two renovation options, A, and B. Option A sees the lower auditorium reopened quickly with minimal upgrades, followed by the development of two upper
balcony theatres as funding allows; Option B focuses on establishing two upper balcony
theatres first, followed by a restoration of the lower auditorium as funding allows. Both
options involve renovation of the lobby, concession, and washrooms. The final vision (a
tri-plex) is identical in both options so the final choice will be made based on further
investigation of the auditorium space, the success of our fundraising and grant
application, feedback from our members and support of the City. Support may include
the following:
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Rent relief in exchange for our funding of required leasehold improvements
Support and/or partnership in grant applications
Assistance from City staff in a timely manner to answer questions and provide
insight, knowledge, or advice
Assistance of City workers as in-kind donation from time to time
A minimum 20-year lease to satisfy funders and demonstrate City support
We anticipate raising funds for capital costs through a mix of community fundraising,
funding agencies including Federal, Provincial, regional, and corporate, crowd-funding,
and possibly the use of debt financing in the form of community bonds.
Summary
Given the current number of unknowns (city support, grant availability, the space itself)
we are confident that a phased approach is prudent, and that either option will result in a
sustainable, enjoyable cinema experience for our community.
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1. Feasibility Study Results
1.1 Demographic Study
We have segmented our market area into “Prime, Occasional and Tourist” markets.
Table 1: Market Populations, below, shows the populations from the 2011 census. Note
Castlegar and Trail are not shown, as they have their own cinemas.
Table 1: Market Populations
Population
Nelson & Surrounding Area
Nelson
10,230
RDCK – Area E
3,781
RDCK – Area F
3,976 17,987
Slocan, Ymir, Salmo, Kootenay Lake North of
Balfour
RDCK – Area H (Slocan)
4,289
RDCK – Area G (Ymir,
Salmo)
1,597
RDCK – Area D (Ainsworth,
north end of lake)
1,413
Kaslo
1,026
8,325
Total Resident Market
Comments
Prime market (within 40 km )
Occasional market
26,312
1.1.1 Prime Market
Local residents could reasonably be expected to attend the Civic Theatre as their
primary objective, with other activities in mind (dining, shopping, work, business).
1.1.2 Occasional Market
Residents living out of town could be expected to attend the Nelson Civic Theatre as one
of their objectives, although it is reasonable to assume this may not be the primary
objective. Other more critical objectives will be (1) shopping, (2) medical, (3) business or
(4) other entertainment or recreation.
Of this subset it is noted that the largest constituent, Slocan—because of proximity to
Castlegar—could travel to Castlegar or Nelson, depending upon their primary
motivation. We anticipate that unique programming will serve to draw moviegoers to
Nelson, which may result in combined purpose trips (shopping and a movie, dining and a
movie)
1.1.3 Tourist Market
Nelson & area has long had a reputation of being a four-season playground. The
occasional visitor market—specifically those visitors who spend multiple days in the
Nelson area—is significant. The average number of campsite bookings at Kokanee
Creek Campground is 12,000 (May to September) for an average total of 36,000
campers per season. It is estimated that 85% of these visitors—about 30,000—are from
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outside the area and therefore would not be included in the census numbers above, and
would potentially be interested in seeing a movie while on vacation.
While we were unable to obtain definitive winter visitor numbers, we believe they are
statistically significant to represent another potential draw to the Civic Theatre.
We have not included this tourist market in our financial modeling but it is reasonable to
assume that both summer and winter visitors are likely to be interested in having a
Cinema as a potential diversion (in particular during inclement weather in the summer
and after a day of skiing or after enjoying dinner at one of Nelson’s many dining
establishments).
1.1.4 Our Audience
According to the MPAA1, frequent moviegoers (who visit a cinema more than once a
month) drive the movie industry. While comprising of only 10% of the population, they
bought half of all movie tickets sold in 2011. Generally people between the ages of 18
and 39 are most likely to frequent the cinema and therefore a larger percentage of our
offerings should be targeted towards this age group2. We must also recognize that
movies targeted towards the 18 to 39 demographic may not be of interest to younger or
older viewers. To capture these demographics we will need to bring in product that is
targeted towards these age groups.
A key advantage in the long term goal of operating a cinema with three screens is that it
will allow us to target more than one demographic simultaneously, greatly increasing the
chances that there will be programming of interest to a potential viewer on any given
night. In Option A, Phase 1, we will maximize programming diversity by showing
matinees on weekends and by splitting the screen (different showings at 7 and 9pm)
when possible, although distribution restrictions make this more difficult.
According to the MPAA, the average Canadian visited the theatre 3.9 times in 2011.
Based on our modeling related to the Nelson and area permanent resident population
(excluding Castlegar, Trail and Nelson’s significant tourist market), it is reasonable to
expect box office receipts in the range of $550,000 for a three screen theatre (refer to
Table 11 and Table 14), with revenues for a single screen coming in at approximately
$155,000 (refer to Table 10).
Of the 799 members who responded to the question on our membership forms asking if
they had attended a movie in Castlegar in the last twelve months, 501 (63%) said they
had gone to Castlegar at least once. A further 180 people (23%) said they went to a
movie in Castlegar at least five times, and 310 (39%) went to Castlegar for a movie at
least twice.
1.1.5 Competitive Advantage
The well-known downtown location of the theatre in Nelson’s Entertainment District, near
to the majority of Nelson’s 50 restaurants and its vibrant nightlife, near to public
transportation routes, and walking distance for much of Nelson’s densely packed
population, is ideally suited for theatre operations.
The closest competition is the Kootenay Centre Cinemas located 45km from Nelson in
Castlegar. Due to the distances involved and the high level of support in the community
we are confident that we will capture the majority of the local and surrounding market.
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Motion Picture Association of America
http://www.mpaa.org/resources/5bec4ac9-a95e-443b-987b-bff6fb5455a9.pdf
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1.2 Economic Benefits of our Theatre
The City of Nelson’s Sustainable Waterfront and Downtown Master Plan offers a 20-year
view of Nelson with the downtown as its economic hub.
A key aspect of this plan is to maintain Nelson’s vibrant and sustainable downtown. Like
other major initiatives, including Kootenay Co-op’s Nelson Commons project; the
redevelopment of the CPR Station; Touchstones Museum, and the revitalized Hume
Hotel, the restoration of the Civic Theatre is an important initiative that will add to the
vitality of our city. We believe the Nelson Civic Theatre has the potential to become a
marquee attraction in the downtown area.
1.3 Social Benefits of our Theatre
As a community focused organization, we are uniquely positioned to respond to
community interests. By involving our membership in programming and by building
partnerships with local organizations, we can develop diverse programming that speaks
to the community, differs from our competition, and that will result in long-term financial
success. We reached out to local groups to discuss how a new cinema/multi-use space
could benefit them and we discussed with the Nelson and District Youth Centre
employment strategies for youth. We spoke to film instructors to see how affordable
screening rooms could benefit students, or how NCTS scholarships or bursaries could
help budding filmmakers, and we talked with local theatre producers to determine
interest in daytime rehearsal space and alternate small performance space, as a
complement to the Capitol Theatre. NCTS will, where possible, support local enterprise
through local products available in our concession.
1.4 What the experts told us
As part of our due diligence to ascertain the viability of a cinema in Nelson, we contacted
a number of industry experts and cinema operators. The message was consistent:
independent theatres can be highly successful operations, but it is important to
understand the challenges.
1.4.1 Mark Satok, Satok Cinema Services, Toronto
Satok Cinema Services is a film booking service that caters to independent cinemas
across Canada, acting as a liaison between the cinemas and the distributing studios,
brokering favorable terms and sharing industry information, trends, and analysis. Mark
Satok visited Nelson at our request for a site visit and consultation. He offered insights
into the industry and our theatre’s opportunities and challenges, and shared revenues
and scenarios from other B.C. theatres. Mark met with Nelson City Manager Kevin
Cormack, and councilors Bob Adams, Deb Kozak, and Donna Macdonald, where he
shared his inside knowledge of several successful small-town B.C. theatres, providing
observations regarding single vs. multi-screen theatres, and the benefits of digital
technology. Mark was of the opinion that a multi-screen model was the most viable
option, and that Nelson could easily support a movie theatre as a successful enterprise.
1.4.2 Kevin DeRijck, Cinematronix, Vancouver:
Kevin DeRijck from Cinematronix, a motion picture supplier and technical service
provider, evaluated the theatre space and provided insight on the various options of a
single, double and tri-plex from a technical standpoint. Kevin provided technical
information on digital projectors with 3D capability, silver screens, and Digital Dolby®
surround-sound system. He advised on challenges in, and solutions for, achieving
optimum sound quality within the space. It was his opinion that a tri-plex would make
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better business sense for programming versatility, and recommended a phased
approach.
1.4.3 Daila Duford and Bruce Killick, Salmar Theatre, Salmon Arm
Geographically nearby and offering real-world experience, operators of the Salmar
Theatre in Salmon Arm, also a non-profit, shared insight into the trends and responses
of the movie-going public. We were fortunate to learn a great deal about technical
considerations and day-to-day operations through two site visits to the Salmar. The
Salmar board has offered to assist us in learning the theatre business, and has been
generous in sharing information. They have indicated that the slower economy, a rise in
minimum wage, and a subsequent increase in ticket price have all affected the Salmar’s
bottom line, and yet the Salmar remains a community success story, having repaid the
initial loan of 1.4M to build the Salmar Grand (a 4-plex) in less than ten years and has
since upgraded their theatres while providing grants to local community groups from
surplus revenues.
1.4.4 Tom Hutchinson, President, Magic Lantern Theatres, Edmonton
Tom Hutchinson has become a valuable resource. Magic Lantern Theatres began in
1984 and operates 81 screens across Canada. In his early days Tom sold and serviced
cinema technology and this work brought him to Nelson when our theatre operated as a
Famous Players under its original owner, Dale Jackson. His knowledge of our cinema’s
history through its incarnations offered new insights into the past and present-day—
including the complexities of operating a theatre, working with distributors, projector
technology, seating, programming and the importance of owner involvement.
1.4.5 Lisa Milne, Royal Theatre, Trail
Lisa and her husband purchased Trail’s run-down Royal theatre with intent to renovate
the space to sell for a profit. During the renovation Lisa learned enough about the
cinema industry to realize she couldn’t let the theatre go—she had fallen in love with the
business. Due to the legacy of the previous operators, Lisa’s biggest challenge was
rebuilding professional relationships with film bookers and distributors.
1.4.6 Carl Rankin, Roxy Theatre, Revelstoke
Carl purchased the Roxy, a single-screen theatre, approximately 19 years ago. Carl is a
businessman and the theatre is but one of his activities. He is very enthusiastic about
the movie industry and firmly believes that Nelson—given its larger regional population
base—should have a theatre. He believes the demographics of Nelson make it a “no
brainer”. Further, he commented that the winter tourist trade in Revelstoke is responsible
for sustaining his theatre during the “slow months”. (NB Revelstoke population 7,139
census 2011). “I would put in multiple screens in the Roxy if I could” commented Carl,
but the size of the Roxy constrains further expansion.
1.5 Industry context
Movie content drives the industry and box office receipts can fluctuate greatly based on
the strength of that content. A cinema programmer or film booker brokers the terms that
must be satisfied to show a particular movie, based primarily on how recently it was
released. The cinema pays a set percentage of box office gross revenue to the
distributing studio at the end of the title’s run.
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1.5.1 Purchasing/programming Summary
Cinemas can follow one or a combination of the following models: First-run, Off-release,
Second-run and Repertory.
First-run theatres3 pay a box office percentage of 60% or higher to the distributing studio.
Terms on first-run titles are also restrictive: in many cases the cinema may not “split the
screen” with any other titles on the screen during the run of the film, and a multi-week
commitment may be required.
Off-release4, and second-run5 theatres are becoming more popular thanks to digital
distribution and increased print availability. By showing off-release titles, cinemas gain
flexibility, may split the screen with a second title, and pay lower box office percentages
(35-40%).
Repertory cinemas show notable titles from cinema’s history such as classics, foreign
and independent films. Box office percentages vary depending on studio, but tend to
remain at 35%.
We expect to be a combination of all of these options to best suit the interests of our
community.
1.5.2 Technology – now and then
Theatres now use digital projectors, which load the movie via a shipped hard drive or
satellite system. The result is a perfect picture and sound without the problems of older
mechanical film systems. Gone are the days of scratches, noise of the film running
through the projector, breakage and choppy sound. Sound has advanced as well: Dolby
Digital® 5.1 surround sound reproduces multi-channel audio to deliver a truly immersive
audio experience.
1.5.3 Procurement of films
Digital prints are a fraction of the cost of a film print, increasing print availability and ease
of shipping via proprietary digital hard drives. Satellite transmission will be the next major
shift in distribution to theatres, but securing the content is still an issue. Currently,
satellite feed is predominately used for the presentation of live events such as, “Live at
the Met” opera, “Bolshoi Ballet”, “National Theatre” and various sporting and concert
events.
1.6 Stakeholders
1.6.1 The City of Nelson
As the owner of the building that houses the Nelson Civic Theatre, the City is a primary
stakeholder in the timely and responsible negotiation of mutually beneficial leasehold
improvements to ensure the operational success of the enterprise. Excellent
communication between the City and NCTS is essential, as is City support in providing
information and assistance with regard to the undertaking of leasehold improvements,
and support for grant applications. We expect the City to work with NCTS to develop a
lease agreement satisfactory to NCTS and its funders, as well as a schedule for rent
relief in exchange for the needed leasehold improvements for which a landlord would
normally be responsible.
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“First-run” theatres: A theater that runs new films as soon as they are released, or “off the break”
“Off-release” theatres show new films in the third or fourth week after release
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“Second-run” theatres show new films after they have completed their initial release
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1.6.2 Members
As a member-based non-profit organization, our members are primary stakeholders. Our
members expect delivery of film and other programming at the Nelson Civic Theatre, as
well as input into programming, member pricing and similar benefits, and participation in
the Annual General Meeting. We see good communication with our membership and
with our greater community as fundamental to our operation.
1.6.3 The Business Community
Nelson’s business community stands to benefit from a re-opened movie theatre as local
residents and visitors no longer need to travel outside of Nelson to see movies, which
often includes shopping and dining (see Appendix VIII.) We hope to engage the
business community directly in our operations through:
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Locally produced items in our concession
On screen advertising for local business before screenings
On screen tourism advertising through Nelson Kootenay Lake Tourism
Association before screenings
Promotions such as “dinner-and-a-movie” or “ski-pass-and a movie” deals
Being open to feedback and suggestions from the business community.
1.6.4 The Capitol Theatre
The primary function of the new Nelson Civic Theatre is a venue for screen
entertainment, with occasional stage use for rehearsal or small presentations when the
screen is not in use. Conversations with the Capitol Theatre president, Martin Oets, and
interim Executive Director Stephanie Fischer confirm that our 240-seat Theatre 1 and its
stage have the potential to be a complement to the Capitol Theatre’s programming. We
may partner on special events such as film festivals or youth festivals. NCTS will work
closely with the Capitol to find efficiencies and complementary practices.
1.6.5 Funding Agencies
Without City approval and a lease agreement in place our discussions with funding
agencies have been preliminary. We have had several consultations with the Columbia
Basin Trust, who are poised to assist as soon as we receive City approval and secure a
lease. We are keenly aware of our responsibilities to our funders with regard to the
timely completion of our funded projects, sound financial management, and complete
and timely reporting. See 2.5.2 Funding agencies.
1.6.6 User Groups
The new Nelson Civic Theatre is an excellent venue for space rentals to specific user
groups. These may include special film showings for private events such as retirement or
birthday parties, or targeted user groups for documentaries and discussion. They might
also include daytime stage rental for schools and rehearsal space. The Outreach
Committee will work to identify potential user groups. The Marketing Committee will
ensure information regarding user group rentals will appear on the Website and in other
advertising where appropriate.
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1.7 Barriers To Entry
1.7.1 High capital costs
Our modeling shows that a significant amount of funding is required to renovate the
theatre. Much of this capital will be spent on the building itself so as to comply with
current building code, and to split up a one-screen theatre into a multiplex.
1.7.2 Publically owned building
The private sector is not as likely to invest capital into a building that is owned by
someone else (the City).
1.7.3 Market size
While we believe there is a sufficient local market to operate a sustainable non-profit
cinema in Nelson, the market size is not attractive to larger, profit-focused chains such
as Cineplex.
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2. Business Plan
2.1 Description of project
The re-opened Nelson Civic Theatre will be a different operation than its predecessor.
The previous first-run, single-screen model faced challenges relating to distribution
requirements and community choice. Having a first-run film meant it had to stay on the
screen long after community interest had waned. With smaller box office revenues come
smaller concession sales.
Our initial study focused on the restoration of a modern single-screen, code compliant
theatre. As costing information became available, it became apparent that a renovated
single-screen venue was unlikely to generate the cash flow necessary to support the
costs involved. See Appendix II, Table 4.
Our long-term goal is a three-screen cinema. A multi-screen model offers far greater
programming flexibility, allowing films to cycle through the cinemas so as to satisfy
distribution agreements with as few empty seats as possible. This in turn results in
greater box revenues, and by inference greater concession sales. A multi-screen model
turns a break even or small profit business case into a thriving entity that can fulfill the
needs of a community such as Nelson and allows us to invest surpluses in the
community in order to fulfill our social mandate.
Our multi-purpose model is designed for maximum use of the space, with activities that
put all viewing areas in use, including daytime activities such as matinees and film
school screening space. Some offerings include:
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First and second-run Hollywood, independent, classic, and Canadian films
Films by local filmmakers and youth
Film festivals: sport, themed, traveling or local
Satellite feed television: hockey and other sports, opera and theatre
Web-sourced screenings of TEDtalks or YouTube
Theatre rentals for private events, home movies or multi-media presentations
As a member-driven organization, we are uniquely positioned to consult with our
members to satisfy community interests. We will consistently monitor attendance and
review programming in order to achieve maximum attendance. As stated, programming
flexibility with Option A, Phase 1 is more difficult due to the limitations of a single screen.
As a typical theatre-goer spends the equivalent of 50% of the movie ticket price on
concession items, we can assume viability even when using conservative attendance
numbers. A made-in-Nelson approach to concession goods combined with traditional
offerings allows us to respond to community tastes and maximize revenue. A sampling
of concession items may include:
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Traditional fountain drinks
Natural bottled drinks
Local coffee
Traditional candy
Locally-made candy and baked goods by approved bakers
Non-GMO or organic popcorn with real butter and natural toppings
8
We are eligible for employment programs that will positively impact our bottom line. A
strong volunteer program in support of paid staff will also serve to mitigate costs.
NCTS also hopes to give back to the community by offering reduced rental rates to other
non-profit and social enterprise groups for community fundraisers. Profits that are not
used to improve the enterprise will be returned to the community through initiatives such
as educational bursaries and scholarships relating to film.
While patrons find their seats, we will project on our screen advertising for local
businesses and tourism marketing, as well as to promote our sponsors and major donors
of the renovation project. As a “Virtual Bulletin Board”, we hope to promote upcoming
local events, community announcements, and local causes on our “big screens”.
2.2 Financial Analyses
Comments on Projections of Single Screen, Years 1-3:
Recognizing the significant capital costs of a full build out, we modeled a single theatre
scenario for the first three years of operation. This enables us to open the theatre
earlier—fulfilling a clear desire of the membership—and also recognizes that the timing
of fundraising or grant application success is difficult to determine, and so the theatre
would need to operate on a positive cash flow basis in the meantime.
The table below, all referring to the Appendix II, Table 2-4 and the other relevant sheets
Nelson Cinema Box Office Model (Table 10), Box office & concession (Table 11),
Salaries & Wages (Table 12), Capital Costs (Table 7) & Funding (Table 9), summarizes
our findings:
ITEM
AMOUNT
Opening projected cash balance
Operating loss over three years
Positive cash flow over three years
Cash on hand, end of three years
Wages and Benefits – year ONE
Capital costs to complete this portion
Community bonds outstanding, end of three years
$27,000
-$73,309
$45,666
$72,666
$98,000
$793,000
$81,000
We anticipate an opening cash balance of approximately $27,000 (balance as of
October 8 is $24,000).
The cash flow statement provides for $15,000 being used to fund the opening
concession inventory. Total required funding - $809,000 including inventory, is
anticipated to be funded $380,000 through community fundraising efforts, cash and inkind, $348,000 through various granting applications and $81,000 of community bonds,
a debt vehicle.
We forecast gross box office of approximately $156,000 (refer to Nelson Cinema Box
Office Model, Table 10—which shows that achieving 19,200 movie goers over one year
is achievable—even with occupancy of 15% or less, 73% of the time).
Film rental costs are calculated at 56% of box office gross, which is in line with other
cinemas (see “Actual Financials”, Table 13). Concession sales are forecast to be 50% of
box office with a 30% cost of sales (again, in line with industry experience).
9
The other large expenditure is salaries and wages, which is forecast to be about
$98,000, including benefits.
Under this scenario, there is a positive cash flow. The model shows this accumulating
($45,666 over three years), though some of it could be used to retire a portion of the
expected community bond. The operating loss is due entirely to $119,000 of
amortization of capital assets, which is a non-cash item. To be clear, a successful
operating business must generate sufficient cash to ultimately replace aging capital
assets (i.e. must generate positive operating income, not cumulative losses). This is not
the objective of this three-year model. The three year model is only presented to
recognize the time required to raise capital to complete the multi-screen model, and also
to get a screen open so people can see movies again—and to show that positive cash
flow is reasonable to assume. This cash flow will of course be used to fund the phasing
of additional capital as the additional screens are added.
Operating in this mode (single theatre) does present some challenges, as follows:
•
•
•
While this model does generate cash, there are operating losses. This model is
not sustainable in the long run, as it would not be possible to build cash reserves
for equipment replacement or upgrade or for reinvestment in the community (part
of our social mandate).
Some operating costs—specifically wages and benefits—consume a
considerable portion of overall operating costs. For example, in year ONE wages
and benefits represent 39% of expenses.
Box office revenues are significantly constrained as we are catering to one
demographic at a time. While the overall Nelson and area resident market is
26,000—sufficient to support a theatre—once demographics are broken out, the
potential viewing public for any given movie is much smaller. Under the single
screen model, increases in box office revenues are essentially a function of ticket
price increases, not additional moviegoers.
Comments on Phasing:
It became clear in our research and discussions with management and owners of other
theatres and other industry experts that the industry had changed dramatically in the last
several years. The single screen model is gradually being replaced with multiple screen
models. We believe there are essentially two primary reasons for this. Programming
flexibility allows for showing more products to more diverse demographic types.
However, an equally important advantage is that of cost characteristics. A prime
example of this is one of the largest cost items of wages and benefits. In a single screen
scenario, wages and benefits can represent 40% of overall costs (refer our single screen
model). However, as you add additional screens, incremental wage costs are much less.
Other costs can behave similarly. Examples are advertising and promotion, telephone
and Internet and property taxes. In accounting parlance, costs are sometimes referred to
as fixed or variable. In reality there are variations of this including step fixed or stepped
variable. This is sometimes referred to as “economies of scale” but basically it means
that you are spreading your costs over a—in this case—greater number of tickets being
sold. The result is a lower overall cost per ticket sold which results in greater cash flows
and more profitability.
Our modeling for the phasing (Option A and Option B) considers the issues of capital
costs and funding sources as the primary purpose of the modeling. Presenting three
year income and expense statements and cash flow statements for each of the phases
10
will be overly complicated. As such, we have modeled the income and cash flow
statements based on the completion of each phase (essentially, the first year after
completion of that phase). Our assumption of course is that if the model is profitable
when the phase is complete, then it follows that the profitability will continue.
The table below, referring to the Phasing Options A and B—Appendix II Table 5-9, as
well as the supporting schedules Appendix II, Table 10-13—summarizes our findings:
Item
Opening projected cash balance
ANNUAL Operating income per year when phasing
completed
Positive operating cash flow, annually, at completion
of phasing
Wages and Benefits – as a % of gross box office at
completion
Capital costs to complete Option A / Option B
Community bonds outstanding, end of three yrs (after
repayment)
Community bonds repaid, year ONE at full operation
Debt to Equity Ratio (approximate), (grants/fundraising
as equity)
Option A
Option B
$27,000
$103,671
$27,000
$165,835
$242,852
$245,052
19.2%
17.5%
$2,770,000
$445,000
$2,690,000
$380,000
$100,000
1:5
$150,000
1:5
As in the single screen model, we anticipate an opening cash balance of approximately
$27,000 (balance as of October 8 is $24,000).
The cash flow statement provides for $15,000 being used to fund the opening
concession inventory. At completion of Option A, funding sources of $2,770,000 is
anticipated to be approximately 48% from community fundraising efforts—cash and inkind, 32% through various granting applications and 20% community bonds, a debt
vehicle.
The highest level of community bonds under either option is anticipated to be no more
than $445,000. An interest rate of 4% has been modeled, which is very competitive in
this low interest rate environment. We anticipate there will be interest in this from the
community, in particular those individuals who are looking for a return on their savings as
well as supporting a good cause. As an example, assuming only one in four of our
current membership-base invested in a community bond in the amount of $1,500 each—
we would achieve our objective. Similarly, 100 individuals, in a community of 10,000 (i.e.
1%), each investing $5,000 in a community bond would raise $500,000.
We forecast gross box office of approximately $557,000 at full operation (refer to Box
Office and Concession, Table 11). We modeled revenues for two and three screens from
actual gross box office figures provided to us by industry participants, adjusted for the
resident market size of the Nelson area (resident population only, not tourist potential).
Film rental costs are calculated at 56% of box office gross, which is in line with other
cinemas (see “Actual Financials,” Table 13). Concession sales are forecast to be 50% of
box office with a 30% cost of sales (again, in line with industry experience).
The other large expenditure is salaries and wages, forecast to be about $150,000,
including benefits. Note that while this is a much larger absolute dollar figure than under
11
the single screen modeling, it represents a much smaller percentage of gross receipts—
(20% under the three screen compared to 40% under a single screen) (an example of
step variable costs, referred to earlier).
Under option A or B there is positive cash flow. Operating cash flow is similar at full
build-out for either option. This cash flow—projected to be approximately $245,000 per
year, will be used for (1) retirement of debt, (2) replacement reserve and (3) reinvested
in the community, which is part of our social mandate. The above table shows debt
retirement commencing one year after project completion.
In summary, at full build-out under either of Option A or B, the three-screen model is
profitable and it is sustainable. Sufficient cash flow exists to establish equipment and
leasehold replacement reserves—thereby ensuring the movie viewing public will have an
enjoyable experience at the Civic theatre again. It also allows Nelson Civic Theatre
Society to fulfill its mandate of returning funds to the community.
2.3 Comparative Pricing Model
Our research has shown average adult ticket prices across B.C. to be approximately
$9.25. We expect to be within industry averages. We recognize that historically Nelson
residents enjoyed lower than average prices. However, we believe our community will
support our pricing structure in exchange for the brand new theatre experience they will
be able to enjoy. Refer to Appendix II, Table 14 for pricing comparisons of theatres
throughout B.C. Bear in mind that these ticket prices include HST of 12%, so what the
operator receives is somewhat less.
2.4 Revenue Model
The gross box office projections in our modeling are consistent with the information we
have gathered on box office sales from other theatres operating in Western Canada
(mostly in British Columbia) with similar permanent resident market sizes. Some of this
information has been given to us on a confidential basis and thus we are precluded from
divulging the source. (Refer to Appendix II, Table 14)
2.5 Funding Model
Funding for this project will be achieved through a mix of community and crowd-sourced
fundraising, Regional, Provincial and Federal grants, and, if necessary, debt financing.
(Refer to Appendix II, Table 9)
2.5.1 Community Fundraising
Raising money locally in a City with many admirable causes can be challenging,
however our highly successful membership drive and indications of interest from a few
local donors who have made enquiries on an unsolicited basis suggest that there is the
will and enthusiasm to see the Civic Theatre re-opened, and people are willing to back
that enthusiasm financially. Our membership sales have raised more than $27,000 to
date. We expect that certain contributions made through the City of Nelson may qualify
for a charitable tax receipt. This has been discussed with City management but not yet
confirmed.
Our community fundraising drive will include:
Seat sales: We will invite the community to purchase (sponsor) seats within the theatre.
We anticipate a total of approximately 480 seats in the renovated Civic Theatre available
for sponsorship.
12
Sponsorships: Donors (corporate or individual) may sponsor certain areas of the
theatre and have naming rights, for example each of the three theatre spaces, the lobby,
and concession area.
Special events: Special events will serve to raise awareness and funds. These may
include film nights, film festivals, and other related events, held at the Capitol Theatre or
at the Civic Theatre once sufficiently renovated.
2.5.2 Funding agencies
Regional Provincial and Federal Grants have been researched to determine those
grants most applicable to our project, their criteria, and intake timelines. Preliminary
discussions have taken place with Columbia Basin Trust (Rona Park), RDCK Director
Ramona Faust, Community Futures Development Corporation (Paul Weist), Tom Atkins
from the Nelson District Credit Union, and Osprey Foundation Chair Vivien Bowers.
Once our project has the go-ahead from the City and we have secured a lease
agreement, we will move forward with these and other funding agencies.
Potential Funders may include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
BC Gaming
Columbia Basin Trust Community Development Program
Columbia Basin Trust Community Initiatives
Columbia Basin Trust Heritage Arts and Culture program
Corporate funders
Cultural Spaces Canada
Heritage Canada Cultural Spaces Fund
Nelson and District Credit Union
Osprey Foundation
Regional District of Central Kootenay
Southern Interior Beetle Action Coalition (SIBAC)
Southern Interior Development Initiative Trust (SIDIT)
The Vancouver Foundation
Western Diversification Community Infrastructure Initiative
As a non-profit society, we look forward to assisting the City of Nelson, as owners of the
Civic Centre, in applications for infrastructure and community development grants.
These grants will be used to assist in financing the building’s capital improvements.
2.5.3 Crowd-Sourced Funding
Earlier this year, an independent theatre in a rural B.C. community fully funded their
$90,000 digital projector by receiving $90 donations from 1,000 community members.
Using the professional social-marketing experience within our group, we are planning an
additional web-based fundraising campaign using successful "crowd-funding" platforms
such as kickstarter.com or indigogo.com.
2.5.4 Debt financing
Our ability to complete this project is subject to the success of our fund raising efforts
and our ability to access grants. As is common in any successful business launch or
expansion, debt financing needs to be considered. Our modeling contemplates up to
13
20% of project costs being raised through the issuance of community bonds6. Using 20%
leverage implies a debt to equity ratio of 1:5, which is conservative. Where debt appears
in our modeling, we have used an interest rate of 4%.
2.6 Social outcomes
As a Social Enterprise7, the Nelson Civic Theatre provides a safe, accessible venue for
people of all ages to enjoy big screen programming for entertainment and education.
The new Nelson Civic Theatre:
•
•
•
•
•
•
•
•
•
•
Offers an affordable family entertainment for parents and children, grandparents
and grandchildren, and a safe place for youth.
Offers community-building opportunities through partnerships with business and
other community groups and institutions for mutual benefit.
Endeavours to employ youth and partner with programs that assist in jobreadiness and skill development.
Partners with community institutions and non-profit organizations to create coefficiencies in marketing, budget, and manpower through shared resources and
reciprocal arrangements.
Partners with local educational institutions to offer new space for local film
screenings, multi-media presentations, and other opportunities.
Provides a community venue for film to encourage creativity and skill
development, recognize talent and enterprise, and to share the results of these
endeavours with the greater community.
Regularly surveys its members with regard to programming and member
satisfaction.
Offers opportunities for community engagement through volunteerism as a
complement to paid staff, or as a member of a committee of the board, such as
special programming or community outreach
Eventually returns surplus funds to the community through special programs to
encourage film and theatre endeavours, especially by youth.
Shares the knowledge and expertise we have developed with others.
6
Please refer to www.socialinvesting.ca for details on community bonds
A Social Enterprise is an organization that applies commercial strategies to maximize
improvements in human and environmental well-being, rather than maximising profits for external
shareholders – Wikipedia.com
7
14
3. Operations
3.1 Legal structure
The Nelson Civic Theatre Society is an incorporated non-profit society (Registration
number S0059962) under the British Columbia Society Act. The society is governed by a
Board of Directors (Refer to Appendix I), which in turn is governed by the society’s
constitution8.
NCTS is a social enterprise, a model that is experiencing an unprecedented evolution as
a tool for community development and non-profit sustainability.9 As a social enterprise, a
sound business case for profitability is combined with social goals towards building a
stronger community.
In August of this year, five members of the board of directors attended a workshop
presented by Enterprising Non Profits (ENP), a collaborative program that promotes and
supports social enterprise development and growth. ENP’s granting body assisted in
funding our feasibility study.
ENP introduced us to a recent initiative by the Province of British Columbia relating to
the “Community Contribution Corporation” (CCC). A British Columbia order to amend the
BC Corporations Act to enable the CCC model is in process10. The CCC is a blend of
profit and non-profit models with benefits that include increased attraction for investors.
As a non-profit organization operating a profitable business, we will explore this new
model as it develops.
NCTS does not have charitable status. The ability to raise funds is greatly enhanced by
the ability to issue receipts for tax purposes, which give the donor tax credits. We are
working with the City to determine how this might be accomplished, since gifts to a
municipality qualify under the Income Tax Act as charitable contributions.
3.2 Concession
The concession is a significant profit centre in the theatre business. Typically,
concession sales have averaged $3-5/ patron with profit margins of 70%, which we have
verified with other theatres across the province. We recognize that the profit margin will
be lower on locally-made products.
Initial costing puts new concession equipment, including popcorn maker, butter
dispenser, pizza warmer, commercial refrigerator and freezer, refrigerated display case,
and ice cube machine at a maximum of $30,000. We will seek partnership and
sponsorship opportunities (for example, The Coca-Cola Company).
8
http://www.civictheatre.ca/wp-content/uploads/2012/10/NCTS_Constitution.pdf
The Canadian Social Enterprise Guide, Enterprising Non Profits
10
http://www.leg.bc.ca/39th4th/1st_read/gov23-1.htm
9
15
3.3 Sales and marketing plan
Our marketing plan involves four key strategies:
•
•
•
Building our membership
Support for programming
Promote the space to outside user groups
3.3.1 Building our membership
The relationship between the members and the theatre is reciprocal: our members
provide programming feedback and help direct the choices we make. Our members are
also our first targeted marketing group, already engaged and invested and reachable
through our member newsletter. NCTS works with members and member groups to
achieve targeted interest programming, and may liaise with specific-interest groups to
take advantage of advertising opportunities such as in-house newsletters, e-newsletters,
our website, Facebook pages, and other means of member communication.
3.3.2 Program Marketing
Marketing of films and special events will be done through a mix of print advertising
(individual and co-operative), web advertising, marquee, and co-advertising of special
promotions with partner businesses. A Marketing Committee will make
recommendations to the Board and undertake regular assessments of the Marketing
Strategy. Box office sales and special offer coupon use (dinner-and-a-movie, for
example) will be indicators of success. Web advertising and social networking will be key
components. A more diverse program will require a different approach to marquee
advertising, with a changing digital screen an attractive option. Film reviews, columns,
and other means of engagement through print or radio will provide interest and
advertising at no cost.
3.3.3 Rentals and outside use
Based on our conversations with local live theatre presenters, we anticipate interest in
daytime space rental for rehearsal. Instructors in filmmaking have indicated interest in
daytime screenings. Our theatre spaces may at times be rented for screenings of home
movies or other group-specific needs. NCTS will promote these opportunities through
community networking, web advertising, in-house advertising, and community outreach.
3.4 Staffing
Theatre Manager: The theatre manager, who will also serve as a projectionist11 will be
responsible for the day-to-day running of the theatre, including staff hiring (with
Management Committee), training and supervision of the concession workers and
cleaner. The Theatre Manager maintains financial records, reporting, and payroll, and is
responsible for the preparation of an annual budget in consultation with the Management
Committee for review by the Board.
Floor Manager: The Floor manager, who is also the film programmer and a projectionist,
is responsible for working closely with the Programming/Planning Committee and the
Theatre Booker. The Floor Manager develops the monthly film and event program,
books the films, provides simple maintenance to the equipment and assists with
operations when needed.
11
Prior to digital technology, running the projector and loading films was a very specialized skill.
16
Both the Theatre Manager and Floor manager liaise with Committees of the Board
concerned with Theatre operations and are both responsible for publicity and overall
community relations.
Staff: Regular staff includes concession workers, who are responsible for service of
customers, cleaning, stocking the concession, and other related duties. These staff may
also be responsible for some janitorial work. A cleaner will be hired for daily theatre
cleaning.
Volunteers: Volunteers may include work experience students, people with barriers to
employment who seek meaningful activity, and any community members wishing to
assist the general operations of the theatre, or sit on subcommittees. Volunteer duties
may include, but are not restricted to: Concession assistance, ticket taking, customer
flow assistance, and cleaning. They may also take part in subcommittees such as the
Youth Committee or Outreach Committee.
17
4. Management and Oversight
For advice on Management and Oversight, as well as operations staffing, we turned to
the model developed by the Salmar Theatre, who has generously offered to train us in
Theatre operations, as well as models provided by Enterprising Non Profits.
4.1 The Board of Directors
Oversight of the Nelson Civic Theatre is the responsibility of its Board of Directors as
executed through its management and supervisory staff. The day-to-day running of the
Theatre involves the Manager, Floor managers, Projectionists, Concession and Box
Office staff, and volunteers, with support from specific Committees of the Board.
The Board of Directors will hire and work to support its Theatre Manager, and undertake
a performance review with the Theatre Manager on an annual basis or as necessary.
The Board will work to ensure clear communications between the Board and its
Committees and Management staff.
4.2 Committees of the Board specific to management
All Committees are liaisons between Board and Staff.
The Management Committee is the direct liaison with the Theatre Manager. The
Committee develops and adjusts job descriptions, researches and applies for
employment assistance programs, responds to staffing and management concerns and
brings issues to the Board as necessary. The Management Committee consists of at
least three Board members who have experience in enterprise management, and may
include individuals drawn from its membership who hold expertise in financial
management, staff management, theatre operations, or have legal expertise, to a
maximum of seven Committee Members.
The Technical Committee is responsible for procurement or repair of technical
equipment, and is the direct liaison with the Manager regarding technical aspects of
theatre operations and responds to issues as they arise. The Technical Committee
consists of at least two Board members and may include individuals drawn from its
membership who hold expertise in technical operations, to a maximum of five Committee
Members.
The Programming/Planning Committee works closely with the Theatre Manager. The
Committee develops, with member input, community outreach, and advice from an
outside Film Booker, the general program of film, performance, and special events. The
Programming/Planning Committee consists of at least two Board members and may
include individuals drawn from its membership who hold expertise in theatre
programming, communications, community relations, or have an understanding of
opportunities in film or stage, to a maximum of five Committee Members.
Other Committees indirectly supporting management may include, but are not limited to
Marketing, Fundraising, and Outreach.
18
5. Building Renovations
It should be noted that the capital budget and timelines we have included in this plan are
based on full remediation of code non-compliance, market price labour, and “gutting” the
building back to a solid concrete base. We anticipate, based on discussions with various
stakeholders, that involvement from local builders and volunteers, and price breaks from
local building suppliers may allow us to reduce our costs and/or timelines.
To estimate our capital costs we hired Quantity Surveyor Jim Bush, of Jim Bush &
Associates Ltd., of Surrey, B.C. Jim has over 1000 projects under his belt, ranging from
$100,000 to $200 million, including a number of theatre conversions. Jim provided us
with an overall project estimate from which we derived our capital budget figures. (Refer
to Appendix XI)
5.1 Leasehold Improvements
5.1.1 Deficiencies
We are under no illusions that bringing the Civic theatre up to a standard that meets
today’s building code will be easy or inexpensive. There are major improvements to
infrastructure that should be undertaken. The BES Condition Assessment Report12
revealed “[The] condition assessment highlighted several serious building performance
and maintenance problems which should be addressed with the utmost urgency.” The
deficiencies identified include flammable construction materials within the theatre and
asbestos, present throughout the building.
In addition:
•
•
•
•
•
•
The existing ventilation does not meet code nor provide thermal comfort
There is no insulation in ceiling or walls
Neither auditorium nor lobby meet accessibility code requirements
The washrooms are not code compliant
There are no dedicated parking facilities
We cannot know the full extent of required remediation until we have access to
alter the space.
5.1.2 Leaseholder/Owner Responsibilities
These deficiencies must be corrected, and we see this as a shared responsibility
between the NCTS and City of Nelson. The table on the next page details the typical
division of responsibilities in most leases between leaseholder and building owner.
12
Building Energy Solutions Ltd. (BES) was commissioned by the City of Nelson to complete a
visual condition assessment of the Civic Centre, 719 Vernon Street, Nelson, BC. The report was
th
completed on completed on 29 June 2011
19
TENANT - Leaseholder Responsibilities
Tenant Improvements include:
Finishes
Equipment
Signage
Special occupancy requirements re:
mechanical/electrical/AC
Specialties:
Ticketing, acoustics, lighting, stage
theatrical equipment
OWNER - Base Building Provisions
Access/site parking
Structure: adequacy for purpose
intended is assumed
Envelope: roof, insulation, walls,
Utility and service connections
Safe occupancy: space is ready to be
used as intended; hazmat remediation
as required (asbestos, lead paint
issues, PCBs if found)
Insurance
Special purpose code requirements
include:
Washroom and accessibility upgrades
Sprinkler upgrades for 3-screen
partitioning and deluge at stage
proscenium
Fire alarm for different zoning
Exit signage for 3-screen
We look forward to working with the City to deal with these problems together in a
manner that is mutually advantageous. Our building program is going to depend on the
full support of the City.
Of our capital budget, approximately $667,000.00, or 36%, is allocated for some of the
base building provisions listed above (See Appendix XII), specifically, structural
improvements, envelope upgrades, utility and service connections and hazmat
remediation. NCTS will work with the City to achieve funding for these costs.
5.1.3 Risk Analysis and Mitigation
We are aware that there are many uncertainties in the building; historic restorations are
prone to problems. The City has advised the Society that until a lease agreement is in
place we are unable to do selective demolition to investigate building condition and
systems. This creates a high level of uncertainty and necessitates assumptions. We do
know that there are safety issues to be addressed and that safety is paramount. The
table below outlines risk factors and mitigation plans.
Risks
Mitigation
Design phase
• Hazardous materials
• Code compliance
• Structural, mechanical and
electrical adequacy
• Hazmat Testing
• Consultant to investigate code
variances
• Detailed engineering investigation
Construction
phase
• Hazardous materials
extent/cost
• Cost overruns
• Time delays
• Unforeseen elements
• Contingency fund of 10-15%
• Experienced construction
manager/general contractor
• Experienced trades
• Adequate scheduling
20
Besides the risks within the building itself, we recognize the additional risk of setting
unreasonable expectations on our community at the start of this project. With today’s
economy, and the interests of the community in mind, we have broken our building
program into multiple phases.
5.2 Building Program
Our plan is to ultimately divide the auditorium into three separate theatres.
Our first step is to hire a Project Manager and develop a masterplan that will set the
context for the entire building program. A Request for Proposal from local architectural
firms will be issued. A code analysis will be undertaken as will testing for hazardous
materials. Structural, mechanical and electrical system condition and suitability will also
be examined in detail.
We have identified two different approaches to our phasing: Option A and Option B.
5.2.1 Option A
Phase 1
Option A Phase 1 is a transitional phase while we raise funds for phase 2. The building
program for Phase 1 will focus on rebuilding the lobby, washrooms and make minimal
updates to the lower, single-screen auditorium to enable us to reopen the theatre as
quickly as possible.
Lobby
The lobby will be completely refurbished with new lighting, flooring, drywall, ticket booth
and concession stand built-ins and cabinetry.
Washrooms
Washrooms will be completely renovated with additional stalls added to both the men’s
and women’s rooms. A new wheelchair accessible washroom will be built in place of the
existing office. The renovation will include new fixtures and fittings, new tile on the floor
and walls, new mirrors and accessories.
Auditorium
The lower auditorium will be separated from the upper balconies with a temporary wall
that will allow us to proceed with construction of theatres 2 and 3 during Phase 2 without
disrupting our ongoing programming in theatre 1.
To save time and costs, upgrades to theatre 1 will be minimal but would include:
• Patching and painting the floor
• Modifying and installing the existing seats on the raked floor
• Installing new aisle lighting, and emergency exit signage
• Carpeting the aisles and the ramp
It should be noted that Option A Phase 1 requires approved code variances from city
council.
Phase 2
In phase 2, we will split the upper balcony into theatres 2 and 3.
21
Theatres 2 and 3
Renovations will include code compliance, complete fire separation, a new heating,
cooling and ventilation system, electrical upgrades, acoustic treatment and new lighting,
seating and audio/video equipment. At the end of phase 2 we will operate two new
theatres, and continue to operate theatre 1 while we fundraise for phase 3.
Upper Washrooms
To ensure enough washrooms for our patrons, we will convert the existing projector
room into two small washrooms.
Phase 3
In phase 3, we will return to theatre 1, which received minimal updates in phase 1.
Renovated Auditorium
The auditorium will be refurbished to the level of theatres 2 and 3 with new seats,
lighting, heating and cooling, electrical upgrades and a new sound and lighting booth to
serve the stage. The projector and audio equipment will remain, as they were upgraded
in Phase 1.
Pros of Option A:
•
•
•
•
•
Opens a single-screen theatre as quickly as possible
New lobby, concession, and bathrooms
Spreads renovation costs over three phases, with lower initial capital required
Defers the risks of unknown issues (asbestos, lead paint, structural) present in
the auditorium until Phase 2, by which point we would have a better
understanding of the state of the building
Shorter initial construction time allows a single-screen theatre to re-open sooner
Cons of Option A:
•
•
•
•
While sustainable, we would see lower revenues and programming flexibility than
Option B
Minimal renovations would require variances on existing code deficiencies within
the auditorium
Additional cost of the temporary dividing wall, designed to allow future phases
while the theatre remains open
Minimal cosmetic and mechanical upgrades to the auditorium, preventing the
“new theatre” feeling
22
Timelines – Option A
Please Note: This timeline does not include fundraising schedules.
Phase 1: Year 1
Design
Construction
• Develop masterplan
• Issue RFP
• Tendering
• Renovate Lobby, concession
• Washrooms
• Temporary wall
• Minimal upgrades, theatre 1
2-4 Months
6 Months
8-10 Months
Phase 2: Year 5-7 or as funds permit
Design
Construction
• Issue RFP
• Tendering
• Theatres 2, 3
• Erect new sound-proof walls
• Upper washrooms
• Emergency exit corridor
2-3 Months
6 Months
8-9 Months
Phase 3: Years 8 - 10, or as funds permit
Design
Construction
• Issue RFP
• Testing
• Theatres 1 upgrade
• Remove temporary wall and construct
permanent theatre 1 rear wall
• Stage upgrade
• Lighting and sound booth
2 Months
6 Months
8 Months
5.2.2 Option B
Option B also rebuilds the washrooms and concession in Phase 1, but focuses on
opening theatres 2 and 3 immediately and retains theatre 1 (the lower theatre) until
phase 2. This is attractive as it allows us to open immediately with 2 new theatres (the
balcony theatres), saves the cost of building temporary walls, and most importantly
increases our initial cash flow and programming flexibility. It would mean, however, a
higher initial capital requirement and additional design and construction time. This option
is preferred from a revenue and programming perspective and will be selected if our
initial round of financing proves successful enough to support the additional capital cost.
Phase 1
In Phase 1, we develop the lobby and washrooms, the upper balcony theatres 2 and 3,
and two additional upstairs washrooms.
23
Phase 2
Phase 2 of Option B will see a full redevelopment of the lower auditorium and would
receive new audio/video equipment.
Pros of Option B:
•
•
•
•
New lobby, concession, and bathrooms
New two-screen theatre experience from the start
Requires only two construction phases and two fundraising campaigns
Increased revenue and programming flexibility from the start
Cons of Option B:
•
•
•
A higher upfront financial and time commitment
Delays our re-opening due to a few additional months of construction
Uncertainties (asbestos, lead paint, structural) present in the existing auditorium
must be dealt with now
Timelines – Option B
Please Note: This timeline does not include fundraising schedules.
Phase 1: Year 1
Design
Construction
• Issue RFP
• Testing
• Renovate Lobby, concession
• Lower and upper washrooms
• Theatres 2, 3
• Erect new sound-proof walls
• Emergency exit corridor
5-6 Months
6-8 Months
11-14 Months
Phase 2: Years 5 - 7, or as funds permit
Design
Construction
• Issue RFP
• Testing
• Theatres 1 upgrade
• Stage upgrade
• Lighting and sound booth
2-3 Months
4-5 Months
6-8 Months
24
Appendix I: Board of Directors and Key Advisors
Board of Directors:
Anne DeGrace, president works at the Nelson Library, is a published author,
and has been working in cultural development in Nelson for 30 years.
• Roger Ley, vice president works as a software developer, systems architect,
and business consultant, and has more than 18 years experience in live theatre.
• Rick Dietrich, treasurer is a Certified General Accountant with 32 years
experience in public practice and the investment industry.
• Ken Spencer, secretary is a software engineer and entrepreneur with 12 years
experience managing web projects for corporations and government clients.
• Jason Asbell is a graduate of Simon Fraser University Film Program with
knowledge and experience in independent cinemas.
• John Brand is manager of Kootenay Savings Credit Union. He has served as a
director of the Nelson and District Chamber of Commerce and Nelson Rotary.
• Marilyn Mint is an interior designer specializing in interior architecture, space
planning, and design development.
• Darryl Santano is a power engineer currently employed at Kootenay Lake
Hospital. He is a former projectionist at the Nelson Civic Theatre.
Advisors:
•
•
•
•
•
•
•
•
Peter Gosney is a building contractor with more than 20 years experience in
Nelson and area.
Graeme Leadbeater is an architect with many years of experience in dealing
with public buildings.
Rob Stacey is an architect donating his time and talents to the project.
Mark Satok is an independent theatre booker and former vice-president of
Cineplex Canada.
Kevin DeRijck is a principle of Cinematronix and an expert in digital projection
and sound.
Daila Duford is Manager of the Salmar Theatres, and Bruce Killick is ithe
society’s Treasurer
John Southam is a former City of Nelson building inspector.
Others who have given time and advice include: Scott Grimshaw, Terratherma Heating;
Ken Shukin, ComfortZone Heating; Brian Garvey, Quality Interior Kontracting; Rick
Dawson, Heritage Roofing; Joe Arcovio, Arcovio Electric; Stephen Collens, Plumber;
Sharon Huizinga, Dutch Dame Productions (lighting).
25
Appendix II: Financial Reports
Table 2: Balance Sheet – Single-screen, Years 1-3
26
Appendix II (Con’t): Financial Reports
Table 3: Cash Flow Statement – Single-screen, Years 1-3
27
Table 4: Stmt of Income & Expenses – Single-screen, Years 1-3
28
Table 5: Statement of Cash Flows (Projected)
29
Table 6: Statement of Income & Expenses (Projected)
30
Table 7: Capital Budget, Option A, Option B
31
Table 8: Audio & Video Equipment Budget
32
Table 9: Funding Mix
33
Table 10: Civic Theatre Box Office Model (single-screen)
34
Table 11: Box Office & Concession
35
Table 12: Salaries & Wages
36
Table 13: Actual financials
These numbers are actual numbers obtained from a non-profit society operating a theatre and a for profit
operator.
37
Table 14: Pricing Comparative
Actual finances of a non-profit and for-profit model
38
Appendix III: Population Breakdown for Nelson & Region
Age
0-14
15 - 24
25 - 34
35 - 44
45 - 54
55 - 64
65 - 74
75+
Total
Population
Breakdown for
Nelson
1,620
1,245
1,370
1,435
1,535
1,450
700
875
10,230
% of
Population
15.84%
12.17%
13.39%
14.03%
15%
14.17%
6.84%
8.55%
Extrapolated
breakdown for entire
market area
4,277
3,286
3,615
3,788
4,050
3,826
1,847
2,309
26,998
Appendix IV: NCTS Membership Breakdown
39
Appendix V: Membership Breakdown, Distance from Theatre
Using Postal Codes, we calculated the distance from our theatre to our member’s home addresses.
40
Appendix VI: Membership Distribution Sample
Using Postal Codes & Google Maps we have plotted our memberships geographically.
Figure 1 - Memberships - Region
Figure 2 - Memberships - Nelson
41
Appendix VII: Survey Results, Yearly Cinema Visits
We asked our members “How many times have you traveled to Castlegar to watch a movie in
the past year?”
799 members and website visitors answered this question.
42
Appendix VIII: Member Comments
A sampling of member comments, collected from membership forms.
*Important to have public film choice * Vegan popcorn * Coconut oil popcorn *Opportunity for guest speakers
& presentations
A town without a movie theatre is like a town without a grocery store.
Been going to the Civic Theatre for 50 years, nearly every week.
Bring back Thursday night movies.
Each time we traveled to Castlegar it included dinner and a show.
For my grandkids!
Having grown up in Nelson I can't imagine my childhood or teen years without almost every weekend going
to see a movie. Kids need movies and so do adults.
I am a chef at XXX X XXXXX & owner. I have suggestions regarding concessionary.
I am so thrilled all of you are making this happen! I hope the theatre stays. I have many memories for going
with my friends in the past.
I can't wait to see movies again. Not quite an artsy city without a movie house.
I grew up in Nelson and I have many fond memories of movies at the Civic. I want to see them continue even
though I live in Vancouver.
I grew up with the theatre & want to be able to see movies in Nelson again !
I hope you are successful - I'm tired of ONLY DVD's on my TV !
I REALLY want our theatre back…… and please try to include intermissions (great chance for more
concession sales) & possibly wine, beer & ice cream (Little Miss G)
I was born and raised here in Nelson. I have a lot of memories of the theatre. I could not imagine being a
youth in this city now without a movie theatre.
I would like to see alternative movies (as well as regular releases).
I would like to see the Civic Theatre remain a theatre. I'm sure that tourists would welcome the opportunity to
attend a movie.
I'm hoping you will be able to "stream" live performances - I have heard it is even done from London West
End Theatres. Also foreign films, documentaries. Thank you!
Important to re open the Nelson Civic Theatre (cinema) as a meeting place for all again.
Lots of labour and handyman experience/visual arts/interior deco
Love going to the theatre; love what ur doing. Traveling for the next few months, then available to volunteer.
Love Nelson and want to help it survive.
Matinee if possible, French Canadian (with sub titles)
No senior should be denied theatre (movie) entertainment in Nelson, BC!!!
Really miss the theatre! I have been coming every summer for 50 years and we always went to the movies.
The movies of late (Castlegar) have not been great, otherwise I would most certainly have traveled to
Castlegar to see one.
This is an essential part of our community - an opportunity to share culture, art and fun!
We need this theatre for the city and its people near & far.
We really would use the movie theatre here in town - much rather spend $$ locally. Glad this group has
formed.
Will be willing to help with labour when work commences.
Would love to see foreign film nights and TED talks live stream.
43
Appendix IX: Letters of Support
Nelson & District Youth Centre
44
Appendix IX (Con’t): Letters of Support
Watershed Productions
45
Nelson Youth Theatre
46
BR 51 BC Senior Citizens
47
Astral Media
48
The Capitol Theatre Restoration Society
49
Association des Francophones des Kootenays Ouest
50
Lions Club of Nelson
51
Nelson & District Chamber of Commerce
52
Appendix X: Abandoned single-screen theatre model
Estimated development costs of an up-to-date, code compliant single-screen venue, which was
abandoned once it was deemed unsustainable.
BUILDING DEMOLITION AND ASBESTOS REMOVAL
150,000
FOYER CONCESSION AND WASHROOMS
321,200
AUDITORIUM
593,885
Walls:
69,500
stud and insulation to lower 15' of side walls
31,800
upgrade firerating at back of stage
enclose truss for proscenium arch
partition walls to washroom
24,800
9,000
3,900
Doors:
4 light and lock
1pr exterior exit
repaint existing dressing room
10,845
6,545
4,000
300
Finishes
82,900
Fittings and Equipment:
86,150
theatre seats, 485 @ 150
roof hatch and ladder
wc partitions and accessories, incl. Vanities
signage
Electrical Systems
72,750
4,000
5,400
4,000
95,000
Mechanical Systems
195,500
GC Overheads and Fee
53,990
Design & Pricing Contingency
53,990
TOTAL CONSTRUCTION COST
1,605,085
Design, fees, permits, project contingency 25%
266,271
TOTAL PROJECT COST
1,331,356
53
Appendix XI: Capital Cost Estimate for Theatre Conversion
Quantity Surveyor Jim Bush, of Jim Bush & Associates Ltd., of Surrey, B.C.
ORDER OF MAGNITUDE ESTIMATE - Existing Building Renovations
October 2, 2012
1 BUILDING DEMOLITION & ASBESTOS REMOVAL
1.1 Tear-out of Building Interiors
1.2 Asbestos Removal
1.3 Lead Paint Remediation
1.4 Other Environmental Remediation
$150,000
51,000
74,000
25,000
Not Included
2 MAIN THEATRE (incl. Access Ramp & Exit Corridor)
2.1 New Demising Walls, Fire Rating to Stage
2.2 Projection Booth
2.3 Doors
2.4 Finishes
2.5 Fittings & Equipment (incl. install seats)
2.6 Electrical Systems
2.7 Mechanical Systems
2.8 Elevators
2.9 GC Overheads & Fee
2.10 Design & Pricing Contingency
3 2No. CINEMA'S FITOUT (incl. Storage & Upper washrooms)
3.1 New Walls
3.2 Storage Room Construction
3.3 Doors
3.4 Finishes
3.5 Fittings & Equipment (incl. install seats)
4 FOYER, CONCESSION & WASHROOMS
4.1 New Walls
4.2 Doors
4.3 Finishes
4.4 Fittings & Equipment (incl. Concession Equipment)
5 EXISTING BUILDING UPGRADES
5.1 Roof Replacement including insulation upgrade
5.2 Seismic & Structural Upgrade of existing building
5.3 Base Building Systems Upgrade - Electrical Service, Water Supply etc.
$811,600
142,600
42,700
22,300
60,400
40,000
157,400
199,300
NONE
73,100
73,800
$557,200
53,500
12,600
14,400
42,000
67,400
95,700
170,700
50,200
50,700
$321,200
9,200
9,800
40,900
37,500
32,700
130,800
30,500
29,800
Not Included
Not Included
Not Included
Not Included
TOTAL CONSTRUCTION COST (Excl HST - Oct 2012 Dollars)
$1,840,000
Design Fees & Expenses
Project Contingency (incl Change Orders during construction)
Permits, Insurance, Project Administration, Legal Fees etc Payable TAX
25%
$460,000
TOTAL PROJECT COST
James Bush & Associates Ltd.
Professional Quantity Surveyors
$2,300,000
Order of Magnitude Cost Estimate
JBA
54
Appendix XII: Approximate breakdown of City's capital costs
These costs appear in our overall funding plan and estimated budget, and look forward to
working with the City to secure outside funding. See Section 5.1.2
Demolition
Asbestos removal
Lead paint remediation
Electrical upgrades
Wall insulation
ceiling drywall
Fire rating upgrade
Deluge @ proscenium
HVAC
Testing for hazmat
TOTAL
GC overheads and fee
Design and pricing contingency
TOTAL
Percentage of Total Capital Budget:
$38,250.00
$74,000.00
$25,000.00
$95,000.00
$31,800.00
$21,600.00
$24,800.00
$10,000.00
$257,640.00
75% of 51,000
60% of 158,100
60% of 429,400
unknown
$578,090.00
$44,084.00
$44,084.00
10% of total
10% of total
$666,258.00
36%
55
Appendix XIII: Conceptual Diagrams
Lobby View
56
Appendix XIII (Con’t): Conceptual Diagrams
Auditorium Plan
57
Upper Auditorium Plan
58
Section Through Auditorium Plan
59
Option A - New Construction
60
Option B - New Construction
61

Civic Theatre Feasibility and Business Plan

Transcription

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