1. December 13, 2010
MEMORANDUM
To: The Review Board
From: Dean Macomber
Re: The Efficacy of a Race Track as a Tourism Generator
I have contended that a race course (road course track such as that
proposed by Global Gaming in Wellington) is qualitatively and
quantitatively different than a NASCAR track in terms of generating visitors:
pure race fans (local, regional, and/or “tourists”), gamers who might also
be race fans, and race fans that might also be gamers. I will accept the
contention at face value that a full blown NASCAR track such as Dover
Downs and Kansas Speedway has the ability to draw visitation among these
race, gaming, and tourism market segments. Dover Downs is an example
that I believe supports this generalized contention. Harrah’s and other
surveys/information provided by Global Gaming support this contention as
well.
However, I would point out that in reviewing Global’s response to the
Board’s and consultants questions, the preponderance of their responses
support NASCAR racing as synergistic with gaming but are less specific and
persuasive as to whether they apply to smaller race course visitation
patterns as well.
I do not believe they do. Anecdotally, for example, I have heard that the
Formula 1 Grand Prix races when held at Casino de Montreal and more
recently at Singapore/Marina Bay Sands did not bring either casino any
great benefit because of the interruption these races caused for their
normal visitor and player base; that race attendees seemed to spend most
of their time watching the race then going home; and whatever benefit that

2. remained was not overcome by any great increase in gaming visitation
quantity or quality. The same kinds of discussions occurred when the
Board was considering the casino at the Kansas Speedway in Wyandotte
County, I understand.
Even so, I want to evaluate the likelihood of Global Gaming’s forecast that
their track could secure a “large event” that has the potential to generate
50,000 to 100,000 visitors. If I am reading their analysis correctly, I believe
they are forecasting 100,000 annual visitors to the track, of which one “Big
Event” is projected to generate 50,000 visitors, and a multitude of small to
medium events attracting more like 500 to 1000 visitors per event day
accounting for the remaining 50,000 visitors.
Evaluating the “Big Event” first, Global Gaming lists discussions with the
Indy Racing League (IRL), Grand Am, and the LeMans Series. I reviewed the
schedule of these race series for 2011. All six races in the LeMans series are
scheduled for Europe in 2011. The cost of holding one race in the U.S. to
the racers would, I believe, be prohibitive. That leaves the IRL and Grand
Am as two remaining major road racing events referenced.
With regard to the IRL, they are proposing to hold 16 races in 2011
according to their website. The location of the season finale has not been
decided, leaving 15 races to discuss. Three of the races are outside the
United States, implyingt 12 races will be held in the U.S. Six of the
remaining races are held on NASCAR/Indianapolis like ovals, not what is
being planned by Global Gaming. That leaves six road races. Three of these
are city ‘street’ races. I have no knowledge whether Global Gaming has the
capability to pull one of these race dates away from a city, but most cities
sponsor such races to bring visitation. If they were unable to do so, that
leaves three actual road races of the sort Global Gaming is proposing ‘up
for bid.’ Each of these three road races are already at reasonably well
established race courses that might fight vigorously if someone tried to
take them away.
With regard to the Grand-Am schedule, there are 12 races planned, one of
which is in Canada. They are all races that take place on purpose built,
dedicated road courses. As before, however, almost all are at well

3. established tracks that might be expected to fight to keep the races they
have.
So, even if all of the IRL and LeMans races were candidates to be the “Big
Event” Global Gaming alludes to, this means they are vying for 28 races, 16
IRL and 12 Grand-Am. More likely, however, only three road course races
in the IRL series are directly comparable to what Global is proposing
meaning the number of Big Event road races that Global could compete to
secure might be from as few as 15 races.
In reviewing the inventory of tracks around the U.S. I found a website that
indicated there are 71 road course tracks in the U.S., 27 temporary road
courses (e.g., presumably city ‘street’ and airport type race courses) for a
total of 98 road courses and temporary race tracks. As a side note, there
are 60 oval race tracks, some of which have road courses as well. Focusing
strictly on the road courses, however, we need to subtract the 15 races
already held at one of these tracks, leaving 56 tracks along with Global
Gaming’s track fighting for 15 to 28 races.
Bottom line, 50 percent of Global Gaming’s visitor projections for the race
course appear are predicated on securing a “Big Event.” Intuitively, it
seems that prying a race away from an existing race venue may be difficult
and, even if that could be done, there may be substantial competition
among the other existing race courses for any race that becomes available.
While the above discussion is speculative, if Global Gaming were able to
present a signed contract with a major race series capable of attracting
50,000 to 100,000 visitors, that would be one thing. However, they have
not done so. Thus, the portion of Global Gaming’s forecast visitor count
that is predicated on a “Big Event” needs to be interpreted accordingly and
in lieu of the above information.
With respect to the smaller races, an Internet survey reveals that there is a
road course and drag strip race track already in existence and in operation
in Topeka, i.e., Heartland Park (website: http://www.hpt.com). They
admit to it having a checkered history financially, but the track was bought
by new investors and renovated and upgraded relatively recently. I have

4. not seen the course nor spoken to anyone who operates it, but its website
would indicate that it currently does not draw any “Big (road course)
Events,” appears to be more actively used for its drag strip than its road
course except for allegedly holding SCCA runoffs which would be a medium
sized event. The rest of the events there are club events and track rentals.
Their website indicates they are running events for 2011. Presumably, the
Global track would have to compete with Heartland Park for the small and
medium sized racing events in the region. In other words, there already is a
racetrack in existence and operation that serves the greater Kansas City and
east-central Kansas market area.
Lest there be no mistake, I am a race course fan at a club and “Big Race”
level. I understand the cost of owning and running a race car. It has
become a sport of the rich (who hire shops to build their race cars, bring
them to the track, do the repair and maintenance so the owner can just
show up and “drive”) as well as for the “Average Joe” who runs less
expensive classes and does the work himself on a fairly tight budget. At the
club/weekend racer level it is a niche sport more for the racers than for any
huge race fan following. Global’s acknowledgement that such races attract
on average 500 race fans per race is testimony to this. Note that at even
500 to 1,000 race fans per race, the 50,000 remaining visitor count implies
50 to 100 races a year. Given the winter seasonality of central Kansas, this
may be aggressive.
To be fair, the Equine/Event Center proposed by Peninsula has some of the
same ‘capture’ issues: i.e., can it attract the number of events forecast by
Crossroads? Two things I can say to this issue: first, it appears that equine
and agricultural events are in greater number than race events and more
embedded in the culture and lifestyle of the I-35 corridor and the mid-
western states. Second, if equine and agricultural events cannot be
attracted, then the complex can still be used for entertainment, festivals,
and meeting/convention activity.
In all, I still hold my contention that while any non-gaming activity that can
attract incremental visitors to Kansas and/or Sumner County is a good
thing, I still believe that the Equine/Event/Entertainment complex is a more
effective tool when compared to a road race course.

5. December 13, 2010
MEMORANDUM
To: The Review Board
From: Dean Macomber
Re: Further Observations on Equestrian Centers
When I began the consulting arrangement with the State of Kansas, I had only limited
experience with Equestrian Centers. To build my own knowledge base, I did have an
extensive interview with Bill Purcell, the Associate General Manager of the Equestrian
Center at the South Point Hotel and Casino in Las Vegas. He was blunt in his
assessments (here paraphrased): “The center is not a profit center, per se, as a stand-
alone entity. We have tweaked it so that it just about breaks even based upon stall
rentals, feed and other equine services provided, plus revenue from our use of the
center for non-equine entertainment and other events (e.g., the circus). The owner,
Michael Gaughn, made it clear that the role of the Center is to fill hotel rooms.”
During our tour and discussion, Bill pointed out that many of the equestrian events have
no admission charge and for most that do South Point does not get a share of it. He did
feel that the Center generated casino players but he admitted he could not produce any
real numbers to back up his claim because there is always too much “noise” in the
gaming results whenever they hold an event.
His guiding metric for equine events is how many stalls they rent over a given period.
Currently they have a run rate of about 20,000 stall rentals per year. Ostensibly, there
are about 4.3 ‘humans’ that come with every stall that is rented, meaning that the pure
equestrian events attract between 80,000 and 86,000 visitors per year. Assuming they
stay approximately 3 to 4 days per event, this translates into roughly 250,000 to 300,000
visitor-days per year, a non-trivial sum of people. Note that Mr. Gaughn does not allow
anyone to sleep onsite in their trucks, trailers, or RV’s; rather, they send the RV’ers
down the road to an independent RV operator. They do not allow dogs either, another
accompaniment to people who bring their horses to equestrian events. All of this is
done to support their primary goal, filling hotel rooms.
They do use the center for entertainment and other events (e.g., circus, dirt-oriented
auto/truck/ motorcycle activities). However, the Center was originally conceived as an
equine-centric facility because when it was built Mr. Gaughn also owned/operated the
Gold Coast Hotel and Casino in Las Vegas that had a large, purpose-built, multi-use
event center designed to cater to entertainment and other non-equine events. Mr.

6. Gaughn did not want to compete against himself. Having later sold his portfolio of
properties to Boyd Gaming, joining them, and then leaving with South Point being part
of his severance “package,” Mr. Gaughn only owns and operates the South Point Hotel
and Casino at the present time.
Bill Purcell indicated that the South Point Equine Center could have been more
entertainment, festival, and non-equine friendly if it were designed from the start for
that purpose. For example, he indicated the cross beams over the arena can only
support 50 tons. When they get entertainers and other non-equine events (some of
which use speaker systems that weigh 200 or so tons!), they have to stage the speakers
from the ground up. If the Center was going to cater to more Entertainment usage, they
would have designed the cross beams to support the extra weight. The same thing with
the seats: now they are plastic. Bill Purcell indicated they could be upgraded to ‘better
plastic’ in the stands or even perhaps upholstered on the floor area (to be removed
when an equine event was being held).
This points to my observation and general conclusion: I believe that the Peninsula
Equine Event Center is a valid amenity and a more effective use of assets than the race
track proposed by Global because:
• it is larger than Global’s entertainment facility;
• it can be used for Equine, entertainment, and MICE (meetings, incentive events,
conventions, and exhibitions); and
• if properly designed from the start, management will have the flexibility to use
the facility for casino-driven events, visitor/tourism entertainment events, MICE
events, AND/OR equine/agricultural events … a triple use.
I am a little bit confused why there are concerns raised regarding profitability of such a
center. Entertainment and multi-use centers typically do not operate at a profit. They
operate at a breakeven level or as a loss leader, the cost of which is considered by most
managers/owners to be a marketing tool. Both Global’s and Peninsula’s pro forma show
their respective Entertainment Departments operating at a loss in 2016, about -
$500,000 for Global (-25% margin) and about -$500,000 for Peninsula (-8% margin).
Peninsula’s pro forma also shows that 39% of its entertainment revenue of
approximately $7,000,000 in revenue will be comped. Global does not show comp
revenue but as a reference point, their P&L shows approximately $2,000,000 in
entertainment revenue. I assume these departments are where the revenues and
expenses of their respective entertainment centers are reported.
With respect to the tourism aspect, it is discussed in my other Memorandum regarding
Global’s racetrack. Note that Global did not submit any feasibility study for the race
track and has only crudely defended their forecast visitation with fragmented responses
to interrogatories from the KLGFRB. And, for Peninsula, I would point to the Crossroads
study, a more contemplative and better argued defense, and the reasonableness of it.

7. Dan Houston seemed to think the Crossroads study was a bit aggressive relative to his
understanding of performance at other comparable I-35/Midwest facilities. Crossroads
rebutted that in a follow-up report.
When comparing a racetrack against an Equestrian Center, I believe the Equestrian
Center is the better tourism draw, particularly when coupled with a larger hotel for
Peninsula (300 rooms vs. 80 to 100 rooms for Global).